CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED BECAUSE SUCH INFORMATION (i) IS
NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
EXCLUDED INFORMATION HAS BEEN MARKED AT THE APPROPRIATE PLACES AS FOLLOWS:
[****]

Exhibit 10.7

Execution Version

SECOND AMENDMENT TO LEASE (JOLIET)

THIS SECOND AMENDMENT TO LEASE (JOLIET) (this “Agreement”), is made as of
July 20, 2020 (the “Effective Date”), by and among Harrah’s Joliet Landco LLC, a
Delaware limited liability company (together with its successors and assigns,
“Landlord”), Des Plaines Development Limited Partnership, a Delaware limited
partnership (together with its successors and assigns, “Tenant”), and, solely
for the purposes of the last paragraph of Section 1.1 of the Lease (as defined
below), Propco TRS LLC, a Delaware limited liability company (“Propco TRS”).

RECITALS

A.    Landlord and Tenant are parties to that certain LEASE (JOLIET), dated as
of October 6, 2017, as amended by (i) that certain First Amendment to Lease
(JOLIET), dated as of December 26, 2018 and (ii) that certain Omnibus Amendment
to Leases, dated as of June 1, 2020 (collectively, as amended, the “Lease”);

B.    Solely for the purposes of the last paragraph of Section 1.1 of the Lease,
the parties hereto wish to add Propco TRS as a party to the Lease; and

C.    As more particularly set forth in this Agreement, Landlord and Tenant
desire to modify certain provisions of the Lease.

NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto do hereby stipulate, covenant and
agree as follows:

1.    Terms and References. Unless otherwise stated in this Agreement (a) terms
defined in the Lease have the same meanings when used in this Agreement, and
(b) references to “Sections” are to the Lease’s sections.

2.    Joinders. On the Effective Date:

(a)    Propco TRS hereby agrees, solely for the purposes of the last paragraph
of Section 1.1 of the Lease, to join the Lease.

(b)    Landlord and Tenant hereby accept the joinder of Propco TRS to the Lease
pursuant to this Section 2.

3.    Amendments to the Lease. Effective as of the Effective Date, the Lease is
hereby amended in its entirety to read as set forth in Exhibit A hereto.

4.    Other Documents. Any and all agreements entered into in connection with
the Lease which make reference therein to “the Lease” shall be intended to, and
are deemed hereby, to refer to the Lease as amended by this Agreement.

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

5.    Miscellaneous.

a.    This Agreement shall be construed according to and governed by the laws of
the jurisdiction(s) which are specified by the Lease without regard to its
conflicts of law principles. The parties hereto hereby irrevocably submit to the
jurisdiction of any court of competent jurisdiction located in such applicable
jurisdiction in connection with any proceeding arising out of or relating to
this Agreement.

b.    If any provision of this Agreement is adjudicated to be invalid, illegal
or unenforceable, in whole or in part, it will be deemed omitted to that extent
and all other provisions of this Agreement will remain in full force and effect.

c.    Neither this Agreement nor any provision hereof may be changed, modified,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of such change, modification,
waiver, discharge or termination is sought.

d.    The paragraph headings and captions contained in this Agreement are for
convenience of reference only and in no event define, describe or limit the
scope or intent of this Agreement or any of the provisions or terms hereof.

e.    This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
permitted assigns.

f.    This Agreement may be executed in any number of 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.

g.    Except as specifically modified in Sections 2 and 3 of this Agreement, all
of the provisions of the Lease remain unchanged and continue in full force and
effect.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

2

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the Effective Date.

LANDLORD:

HARRAH’S JOLIET LANDCO LLC,

a Delaware limited liability company

 

By:

 

/s/ David Kieske

  Name: David Kieske   Title: Treasurer

[Signatures Continue on Following Pages]

[Signature page to Second Amendment to Joliet Lease]

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

TENANT:

DES PLAINES DEVELOPMENT

LIMITED PARTNERSHIP,

a Delaware limited partnership

 

By:

 

Harrah’s Illinois LLC,

 

a Nevada limited liability company,

its general partner

By:

 

/s/ Edmund L. Quatmann, Jr.

 

Name: Edmund L. Quatmann, Jr.

 

Title: Secretary

[Signature page to Second Amendment to Joliet Lease]

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

Acknowledged and agreed, solely for the purposes of the last paragraph of
Section 1.1 of the Lease:

PROPCO TRS LLC,

a Delaware limited liability company

 

By:

 

/s/ David Kieske

 

Name: David Kieske

 

Title: Treasurer

[Signature page to Second Amendment to Joliet Lease]

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

CEOC, LLC hereby acknowledges this Agreement and reaffirms its joinder attached
to the Lease.

CEOC, LLC,

a Delaware limited liability company

 

By:

 

/s/ Edmund L. Quatmann, Jr.

Name:

 

Edmund L. Quatmann, Jr.

Title:

 

Secretary

[Signature page to Second Amendment to Lease (Joliet)]

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

Exhibit A

COMPOSITE LEASE

Conformed through Second Amendment

[To be attached]

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

LEASE (JOLIET)

Conformed through Second Amendment

By and Between

HARRAH’S JOLIET LANDCO LLC

(together with its permitted successors and assigns)

as “Landlord”

and

DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP

(together with its permitted successors and assigns)

as “Tenant”

dated

October 6, 2017

for

Harrah’s Joliet - Joliet, Illinois

 

2

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TABLE OF CONTENTS

 

     Page  

ARTICLE I DEMISE; TERM

     2  

1.1

   Leased Property      2  

1.2

   Single, Indivisible Lease      3  

1.3

   Term      3  

1.4

   Renewal Terms      3  

1.5

   Maximum Fixed Rent Term      4  

ARTICLE II DEFINITIONS

     4  

ARTICLE III RENT

     56  

3.1

   Payment of Rent      56  

3.2

   Variable Rent Determination      57  

3.3

   Late Payment of Rent or Additional Charges      59  

3.4

   Method of Payment of Rent      59  

3.5

   Net Lease      60  

ARTICLE IV ADDITIONAL CHARGES

     60  

4.1

   Impositions      60  

4.2

   Utilities and Other Matters      62  

4.3

   Compliance Certificate      62  

4.4

   Impound Account      63  

ARTICLE V NO TERMINATION, ABATEMENT, ETC.

     63  

ARTICLE VI OWNERSHIP OF REAL AND PERSONAL PROPERTY

     64  

6.1

   Ownership of the Leased Property      64  

6.2

   Ownership of Tenant’s Property      66  

ARTICLE VII PRESENT CONDITION & PERMITTED USE

     67  

7.1

   Condition of the Leased Property      67  

7.2

   Use of the Leased Property      67  

7.3

   Ground Leases      69  

7.4

   Third Party Reports      72  

7.5

   Operating Standard      72  

ARTICLE VIII REPRESENTATIONS AND WARRANTIES

     73  

ARTICLE IX MAINTENANCE AND REPAIR

     73  

9.1

   Tenant Obligations      73  

9.2

   No Landlord Obligations      73  

9.3

   Landlord’s Estate      74  

9.4

   End of Term      74  

 

i

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TABLE OF CONTENTS (CONT’D)

 

     Page  

ARTICLE X ALTERATIONS

     74  

10.1

   Alterations, Capital Improvements and Material Capital Improvements      74  

10.2

   Landlord Approval of Certain Alterations and Capital Improvements      75  

10.3

   Construction Requirements for Alterations and Capital Improvements      76  

10.4

   Landlord’s Right of First Offer to Fund Material Capital Improvements      77
 

10.5

   Minimum Capital Expenditures      81  

ARTICLE XI LIENS

     89  

ARTICLE XII PERMITTED CONTESTS

     91  

ARTICLE XIII INSURANCE

     92  

13.1

   General Insurance Requirements      92  

13.2

   Name of Insureds      95  

13.3

   Deductibles or Self-Insured Retentions      95  

13.4

   Waivers of Subrogation      96  

13.5

   Limits of Liability and Blanket Policies      96  

13.6

   Future Changes in Insurance Requirements      96  

13.7

   Notice of Cancellation or Non-Renewal      97  

13.8

   Copies of Documents      97  

13.9

   Certificates of Insurance      97  

13.10

   Other Requirements      97  

ARTICLE XIV CASUALTY

     98  

14.1

   Property Insurance Proceeds      98  

14.2

   Tenant’s Obligations Following Casualty      99  

14.3

   No Abatement of Rent      100  

14.4

   Waiver      100  

14.5

   Insurance Proceeds and Fee Mortgagee      100  

ARTICLE XV EMINENT DOMAIN

     101  

15.1

   Condemnation      101  

15.2

   Award Distribution      101  

15.3

   Temporary Taking      102  

15.4

   Condemnation Awards and Fee Mortgagee      102  

ARTICLE XVI DEFAULTS & REMEDIES

     102  

16.1

   Tenant Events of Default      102  

16.2

   Landlord Remedies      105  

16.3

   Damages      106  

16.4

   Receiver      107  

16.5

   Waiver      107  

16.6

   Application of Funds      107  

16.7

   Landlord’s Right to Cure Tenant’s Default      107  

16.8

   Miscellaneous      108  

 

ii

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TABLE OF CONTENTS (CONT’D)

 

     Page  

ARTICLE XVII TENANT FINANCING

     108  

17.1

   Permitted Leasehold Mortgagees      108  

17.2

   Landlord Cooperation with Permitted Leasehold Mortgage      116  

ARTICLE XVIII TRANSFERS BY LANDLORD

     117  

18.1

   Transfers Generally      117  

18.2

   Intentionally Omitted      118  

18.3

   Intentionally Omitted      118  

18.4

   Transfers to Tenant Competitors      118  

ARTICLE XIX HOLDING OVER

     120  

ARTICLE XX RISK OF LOSS

     120  

ARTICLE XXI INDEMNIFICATION

     120  

21.1

   General Indemnification      120  

21.2

   Encroachments, Restrictions, Mineral Leases, etc.      122  

ARTICLE XXII TRANSFERS BY TENANT

     124  

22.1

   Subletting and Assignment      124  

22.2

   Permitted Assignments and Transfers      124  

22.3

   Permitted Sublease Agreements      130  

22.4

   Required Subletting and Assignment Provisions      132  

22.5

   Costs      133  

22.6

   No Release of Tenant’s Obligations; Exception      134  

22.7

   Bookings      134  

22.8

   Merger of CEOC.      134  

22.9

   Permitted Transferee Lease      134  

22.10

   Merger of CEC      136  

ARTICLE XXIII REPORTING

     136  

23.1

   Estoppel Certificates and Financial Statements      136  

23.2

   SEC Filings; Offering Information      142  

23.3

   Landlord Obligations      143  

ARTICLE XXIV LANDLORD’S RIGHT TO INSPECT

     144  

ARTICLE XXV NO WAIVER

     145  

ARTICLE XXVI REMEDIES CUMULATIVE

     145  

ARTICLE XXVII ACCEPTANCE OF SURRENDER

     145  

ARTICLE XXVIII NO MERGER

     145  

ARTICLE XXIX INTENTIONALLY OMITTED

     146  

ARTICLE XXX QUIET ENJOYMENT

     146  

 

iii

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

TABLE OF CONTENTS (CONT’D)

 

     Page  

ARTICLE XXXI LANDLORD FINANCING

     146  

31.1

   Landlord’s Financing      146  

31.2

   Attornment      147  

31.3

   Compliance with Fee Mortgage Documents      148  

ARTICLE XXXII ENVIRONMENTAL COMPLIANCE

     150  

32.1

   Hazardous Substances      150  

32.2

   Notices      150  

32.3

   Remediation      151  

32.4

   Indemnity      151  

32.5

   Environmental Inspections      152  

ARTICLE XXXIII MEMORANDUM OF LEASE

     153  

ARTICLE XXXIV DISPUTE RESOLUTION

     153  

34.1

   Expert Valuation Process      153  

34.2

   Arbitration      155  

ARTICLE XXXV NOTICES

     156  

ARTICLE XXXVI END OF TERM GAMING ASSETS TRANSFER

     157  

36.1

   Transfer of Tenant’s Gaming Assets and Operational Control of the Leased
Property      157  

36.2

   Transfer of Intellectual Property      158  

36.3

   Determination of Gaming Assets FMV      158  

36.4

   Operation Transfer      160  

ARTICLE XXXVII ATTORNEYS’ FEES

     160  

ARTICLE XXXVIII BROKERS

     161  

ARTICLE XXXIX ANTI-TERRORISM REPRESENTATIONS

     161  

ARTICLE XL LANDLORD REIT PROTECTIONS

     161  

ARTICLE XLI MISCELLANEOUS

     163  

41.1

   Survival      163  

41.2

   Severability      164  

41.3

   Non-Recourse      164  

41.4

   Successors and Assigns      165  

41.5

   Governing Law      165  

41.6

   Waiver of Trial by Jury      165  

41.7

   Entire Agreement      166  

41.8

   Headings      166  

41.9

   Counterparts      166  

41.10

   Interpretation      166  

41.11

   Deemed Consent      167  

 

iv

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

TABLE OF CONTENTS (CONT’D)

 

     Page  

41.12

   Further Assurances      167  

41.13

   Gaming Regulations      167  

41.14

   Intentionally Omitted      168  

41.15

   Intentionally Omitted      168  

41.16

   Savings Clause      168  

41.17

   Integration with Other Documents      168  

41.18

   Intentionally Omitted      169  

41.19

   Intentionally Omitted      169  

41.20

   Intentionally Omitted      169  

41.21

   Intentionally Omitted      169  

41.22

   Confidential Information      169  

41.23

   Time of Essence      170  

41.24

   Consents, Approvals and Notices      170  

41.25

   No Release of Guarantor      170  

41.26

   Intentionally Omitted      171  

41.27

   Notice of IP Infringement      171  

41.28

   Amendments      171  

 

v

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

EXHIBITS AND SCHEDULES

 

EXHIBIT A

     —      FACILITY

EXHIBIT B

     —      LEGAL DESCRIPTION OF LAND

EXHIBIT C

     —      CAPITAL EXPENDITURES REPORT

EXHIBIT D

     —      FORM OF SCHEDULE CONTAINING ANY ADDITIONS TO OR RETIREMENTS OF ANY
FIXED ASSETS CONSTITUTING LEASED PROPERTY

EXHIBIT E

     —      INTENTIONALLY OMITTED

EXHIBIT F

     —      INTENTIONALLY OMITTED

EXHIBIT G

     —      FORM OF REIT COMPLIANCE CERTIFICATE

EXHIBIT H

     —      PROPERTY-SPECIFIC IP

EXHIBIT I

     —      DESCRIPTION OF TITLE POLICY

EXHIBIT J

     —      SPECIFIED ADDITIONAL L1 QUALIFIED TRANSFEREES

EXHIBIT K

     —      L1/L2 TRANSFER AND PERMITTED FACILITY SUBLEASE ADDITIONAL
INFORMATION

EXHIBIT L

     —      BRANDS

EXHIBIT M

     —      FORM OF GUARANTY

EXHIBIT N

     —      MANAGED FACILITIES IP TRADEMARKS

EXHIBIT O

     —      FORM OF FEE MORTGAGEE SNDA

SCHEDULE 1

     —      GAMING LICENSES

SCHEDULE 2

     —      GROUND LEASES

SCHEDULE 3

     —      MAXIMUM FIXED RENT TERM

SCHEDULE 4

     —      SPECIFIED SUBLEASES

SCHEDULE 5

     —      INTENTIONALLY OMITTED

SCHEDULE 6

     —      LONDON CLUBS

SCHEDULE 7

     —      2018 FACILITY EBITDAR

 

vi

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

LEASE (JOLIET)

THIS LEASE (JOLIET) (this “Lease”) is entered into as of October 6, 2017, by and
among HARRAH’S JOLIET LANDCO LLC (together with its successors and permitted
assigns, “Landlord”), DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP (together with
its successors and permitted assigns, “Tenant”) and, solely for the purposes of
the last paragraph of Section 1.1, Propco TRS LLC, a Delaware limited liability
company (“Propco TRS”).

RECITALS

A.    Commencing on January 15, 2015 and continuing thereafter, Caesars
Entertainment Operating Company, Inc., a Delaware corporation, and certain of
its direct and indirect subsidiaries (collectively, the “Debtors”) filed
voluntary petitions for relief under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court for the Northern District of Illinois
(the “Bankruptcy Court”), jointly administered under Case No. 15-01145, and the
“Debtors’ Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of
the Bankruptcy Code” (as it may be altered, amended, modified, or supplemented
from time to time in accordance with the terms of Article X thereof, the
“Bankruptcy Plan”) has been confirmed by the Bankruptcy Court and has gone
effective.

B.    Pursuant to the Bankruptcy Plan, on October 6, 2017 the Debtors
transferred the Leased Property to Landlord.

C.    Pursuant to the Bankruptcy Plan, Landlord and Tenant entered into that
certain Lease (Joliet), dated as of October 6, 2017 (the “Original Lease”),
whereby Landlord leased the Leased Property to Tenant and Tenant leased the
Leased Property from Landlord, upon the terms set forth in the Original Lease.

D.    Immediately following the execution of the Original Lease on the
Commencement Date (as defined below), Caesars Entertainment Operating Company,
Inc., a Delaware corporation, merged into CEOC, LLC.

E.    The Original Lease was thereafter amended by (i) that certain First
Amendment to Lease (Joliet), dated as of December 26, 2018 and (ii) the Omnibus
Amendment (as defined below) (the Original Lease, as so amended, collectively,
the “Amended Original Lease”).

F.    On or before the Second Amendment Date (as defined below), CEC (as defined
below), which is an indirect parent of Tenant, caused: (i) in a series of steps,
CEOC, LLC to be transferred from CEC to Caesars Resort Collection, LLC, a
Delaware limited liability company (“CRC”) and a wholly-owned indirect
subsidiary of CEC; and (ii) the Las Vegas Restructuring (as defined below) to be
completed. On the Second Amendment Date, contemporaneously with the execution of
the Second Amendment (as defined below) and as contemplated by the MTA (as
defined below), CEC merged with and into Colt Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of ERI (as defined below), with CEC
surviving the merger as a wholly owned subsidiary of ERI.

 

1

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

G.    The Parties desire to further amend the Amended Original Lease as
contemplated by the MTA to provide for (i) various modifications relating to the
merger described in Recital F above and (ii) certain other modifications as
provided herein.

H.    Capitalized terms used in this Lease and not otherwise defined herein are
defined in Article II hereof.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEMISE; TERM

1.1    Leased Property. Upon and subject to the terms and conditions hereinafter
set forth, Landlord demises and leases to Tenant and Tenant accepts and leases
from Landlord all of Landlord’s rights and interest in and to the following
(collectively, the “Leased Property”):

(a)    the real property described in Exhibit B attached hereto, together with
any ownership interests in adjoining roadways, alleyways, strips, gores and the
like appurtenant thereto (collectively, the “Land”);

(b)    the Ground Leases (as defined below), together with the leasehold estates
in the Ground Leased Property (as defined below), as to which this Lease will
constitute a sublease;

(c)    all buildings, structures, Fixtures and improvements of every kind now or
hereafter located on the Land or the improvements located thereon or permanently
affixed to the Land or the improvements located thereon, including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines appurtenant to such buildings and structures (collectively, the
“Leased Improvements”), provided, however, that the foregoing shall not affect
or contradict the provisions of this Lease which specify that Tenant shall be
entitled to certain rights with respect to or benefits of the Tenant Capital
Improvements as expressly set forth herein; and

(d)    all easements, development rights and other rights appurtenant to the
Land or the Leased Improvements.

The Leased Property is leased subject to all covenants, conditions,
restrictions, easements and other matters of any nature affecting the Leased
Property or any portion thereof as of the Commencement Date and such subsequent
covenants, conditions, restrictions, easements and other matters as may
thereafter arise in accordance with the terms of this Lease or as may otherwise
be agreed to in writing by Landlord and Tenant, whether or not of record,
including any matters which would be disclosed by an inspection or accurate
survey of the Leased Property or any portion thereof.

To the extent Landlord’s ownership of any Leased Property or any portion thereof
(including any improvement (including any Capital Improvement) or other
property) that does not constitute “real property” within the meaning of
Treasury Regulation Section 1.856-3(d), which would otherwise

 

2

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

be owned by Landlord and leased to Tenant pursuant to this Lease, could cause
Landlord REIT to fail to qualify as a REIT, then a portion of Landlord REIT’s
(or its subsidiary’s) direct ownership interest in Landlord shall instead
automatically be owned by Propco TRS, which is a “taxable REIT subsidiary”
(within the meaning of Section 856(l) of the Code, or any similar or successor
provision thereto) of Landlord REIT, to the extent necessary such that
Landlord’s ownership of such Leased Property does not cause Landlord REIT to
fail to qualify as a REIT, provided, there shall be no adjustment in the Rent as
a result of the foregoing.

1.2    Single, Indivisible Lease. This Lease constitutes one indivisible lease
of the Leased Property and not separate leases governed by similar terms. The
Leased Property constitutes one economic unit, and the Rent and all other
provisions have been negotiated and agreed upon based on a demise of all of the
Leased Property to Tenant as a single, composite, inseparable transaction and
would have been substantially different had separate leases or a divisible lease
been intended. Except as expressly provided in this Lease for specific, isolated
purposes (and then only to the extent expressly otherwise stated), all
provisions of this Lease apply equally and uniformly to all components of the
Leased Property collectively as one unit. The Parties intend that the provisions
of this Lease shall at all times be construed, interpreted and applied so as to
carry out their mutual objective to create an indivisible lease of all of the
Leased Property and, in particular but without limitation, that, for purposes of
any assumption, rejection or assignment of this Lease under 11 U.S.C.
Section 365, or any successor or replacement thereof or any analogous state law,
this is one indivisible and non-severable lease and executory contract dealing
with one legal and economic unit and that this Lease must be assumed, rejected
or assigned as a whole with respect to all (and only as to all) of the Leased
Property. The Parties may elect to amend this Lease from time to time to modify
the boundaries of the Land, to exclude one or more components or portions
thereof, and/or to include one or more additional components as part of the
Leased Property, and any such future addition to the Leased Property shall not
in any way change the indivisible and nonseverable nature of this Lease and all
of the foregoing provisions shall continue to apply in full force. For the
avoidance of doubt, the Parties acknowledge and agree that this Section 1.2 is
not intended to and shall not be deemed to limit, vitiate or supersede anything
contained in Section 41.16 hereof.

1.3    Term. The “Term” of this Lease shall commence on the Commencement Date
and expire on the Expiration Date (i.e., the Term shall consist of the Initial
Term plus all Renewal Terms, to the extent exercised as set forth in Section 1.4
below, subject to any earlier termination of the Term pursuant to the terms
hereof). The initial stated term of this Lease (the “Initial Term”) shall
commence on October 6, 2017 (the “Commencement Date”) and expire on July 31,
2035 (the “Initial Stated Expiration Date”). The “Stated Expiration Date” means
the Initial Stated Expiration Date or the expiration date of the most recently
exercised Renewal Term, as the case may be.

1.4    Renewal Terms. The Term of this Lease may be extended for four
(4) separate “Renewal Terms” of five (5) years each if (a) at least twelve (12),
but not more than eighteen (18), months prior to the then current Stated
Expiration Date, Tenant (or, pursuant to Section 17.1(e), a Permitted Leasehold
Mortgagee) delivers to Landlord a “Renewal Notice” stating that it is
irrevocably exercising its right to extend this Lease for one (1) Renewal Term;
and (b) no Tenant Event of Default shall have occurred and be continuing on the
date Landlord receives the Renewal Notice or on the last day of the then current
Term (other than a Tenant Event of Default that is in the process of being cured
by a Permitted Leasehold Mortgagee in compliance in all respects with

 

3

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

Section 17.1(d) and Section 17.1(e)). Subject to the provisions, terms and
conditions of this Lease, upon Tenant’s timely delivery to Landlord of a Renewal
Notice, the Term of this Lease shall be extended for the then applicable Renewal
Term. During any such Renewal Term, except as specifically provided for herein,
all of the provisions, terms and conditions of this Lease shall remain in full
force and effect. After the last Renewal Term, Tenant shall have no further
right to renew or extend the Term. If Tenant fails to validly and timely
exercise any right to extend this Lease, then all subsequent rights to extend
the Term shall terminate.

1.5    Maximum Fixed Rent Term. Notwithstanding anything herein to the contrary,
the Term with respect to the Leased Property shall expire as of the end of the
Renewal Term immediately prior to the Renewal Term that would cause the Term to
extend beyond the expiration of the Maximum Fixed Rent Term (after taking into
account Maximum Fixed Rent Term extensions, if any, pursuant to clause (c)(iv)
of the definition of “Rent”), in which event the Leased Property shall revert to
Landlord and all Tenant’s Property relating thereto (including any Gaming
Licenses relating thereto) shall remain owned by Tenant.

ARTICLE II

DEFINITIONS

For all purposes of this Lease, except as otherwise expressly provided or unless
the context otherwise requires, (i) the terms defined in this Article II have
the meanings assigned to them in this Article and include the plural as well as
the singular and any gender as the context requires; (ii) all accounting terms
not otherwise defined herein have the meanings assigned to them in accordance
with GAAP; (iii) all references in this Lease to designated “Articles,”
“Sections,” “Exhibits” and other subdivisions are to the designated Articles,
Sections, Exhibits and other subdivisions of this Lease; (iv) the word
“including” shall have the same meaning as the phrase “including, without
limitation,” and other similar phrases; (v) the words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Lease as a whole and
not to any particular Article, Section or other subdivision; (vi) all Exhibits,
Schedules and other attachments annexed to the body of this Lease are hereby
deemed to be incorporated into and made an integral part of this Lease;
(vii) all references to a range of Sections, paragraphs or other similar
references, or to a range of dates or other range (e.g., indicated by “-” or
“through”) shall be deemed inclusive of the entire range so referenced;
(viii) for the calculation of any financial ratios or tests referenced in this
Lease, this Lease, regardless of its treatment under GAAP, shall be deemed to be
an operating lease and the Rent payable hereunder shall be treated as an
operating expense and shall not constitute indebtedness or interest expense;
(ix) the fact that CEOC is sometimes named herein as “CEOC” is not intended to
vitiate or supersede the fact that CEOC is included as one of the entities
constituting Tenant; (x) the words “arithmetic average” (or the term “average”
when the context requires) shall be construed in accordance with the definition
of “Base Net Revenue Amount”; and (xi) the word “or” is not exclusive unless
used in conjunction with the word “either”.

“2018 Facility EBITDAR”: (x) With respect to the Facility and each Regional
Facility that is included in the Regional Lease as of the First Amendment Date
(calculated on an individual Facility-by-Facility basis (which
Facility-by-Facility calculation shall, for the avoidance of doubt, include the
Regional Facilities as of the First Amendment Date)), the EBITDAR of Tenant or
Regional Tenant, as applicable, for the 2018 Fiscal Year, that is generated

 

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by the Facility or each such Regional Facility individually, and (y) with
respect to each Regional Facility corresponding to the “Fifth Amendment
Additional Property” (as defined in the Regional Lease) that is incorporated in
the Regional Lease as of the Second Amendment Date (calculated on an individual
Facility-by-Facility basis), the EBITDAR of Regional Tenant for the Trailing
Test Period ending immediately prior to the Second Amendment Date (and, to the
extent applicable, any predecessor tenant(s) or owner(s) of such Regional
Facility during such Trailing Test Period), that is generated by each such
Regional Facility individually (in each case under clause (x) and clause (y), as
set forth on Schedule 7 attached hereto). The aggregate amount of 2018 Facility
EBITDAR of Tenant and Regional Tenant for the Facility and all of such Regional
Facilities, as applicable, under clause (x) and of Regional Tenant (and, to the
extent applicable, any predecessor tenant(s) or owner(s)) for all of such
Regional Facilities under clause (y), collectively, is referred to in this Lease
as the “2018 EBITDAR Pool.” The 2018 Facility EBITDAR of Tenant and Regional
Tenant (and, to the extent applicable, any predecessor tenant(s) or owner(s))
for the Facility and each Regional Facility is set forth on Schedule 7 annexed
hereto.

“2018 EBITDAR Pool”: As defined in the definition of 2018 Facility EBITDAR.

“AAA”: As defined in the definition of Appointing Authority.

“Accepted MCI Financing Proposal”: As defined in Section 10.4(b).

“Accountant”: Either (i) a firm of independent public accountants designated by
Tenant, CEOC or ERI, as applicable and reasonably acceptable to Landlord, or
(ii) a “big four” accounting firm designated by Tenant.

“Accounts”: All Tenant’s accounts, including deposit accounts (but excluding any
impound accounts established pursuant to Section 4.4), all rents, profits,
income, revenues or rights to payment or reimbursement derived from Tenant’s use
of any space within the Leased Property or any portion thereof and/or from goods
sold or leased or services rendered by Tenant from the Leased Property or any
portion thereof (including, without limitation, from goods sold or leased or
services rendered from the Leased Property or any portion thereof by the
Affiliated property manager or Affiliated Subtenants) and all Tenant’s accounts
receivable derived from the use of the Leased Property or goods or services
provided from the Leased Property, in each case whether or not evidenced by a
contract, document, instrument or chattel paper and whether or not earned by
performance, including without limitation, the right to payment of management
fees and all proceeds of the foregoing.

“Acquirer”: As defined in Article XVIII.

“Additional Charges”: All Impositions and all other amounts, liabilities and
obligations (excluding Rent) which Tenant assumes or agrees or is obligated to
pay under this Lease and, in the event of any failure on the part of Tenant to
pay any of those items (except (i) to the extent that such failure is due to the
wrongful acts or omissions of Landlord and (ii) where Tenant shall have
furnished Landlord with no less than ten (10) days’ Notice of any such act or
omission of which Tenant is aware), every fine, penalty, interest and cost which
may be added for non-payment or late payment of such items pursuant to the terms
hereof or under applicable law.

“Additional Fee Mortgagee Requirements”: As defined in Section 31.3.

 

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“Affiliate”: When used with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. In no event
shall Tenant or any of its Affiliates be deemed to be an Affiliate of Landlord
or any of Landlord’s Affiliates as a result of this Lease, the Other Leases, the
Guaranty, the Other Guaranty and/or as a result of any consolidation by Tenant
or Landlord of the other such party or the other such party’s Affiliates with
Tenant or Landlord (as applicable) for accounting purposes.

“Affiliated Persons”: As defined in Section 18.1.

“All Property Tests”: Collectively, the Annual Minimum Cap Ex Requirement and
the Triennial Minimum Cap Ex Requirement A.

“Alteration”: Any construction, demolition, restoration, alteration, addition,
improvement, renovation or other physical changes or modifications of any nature
in, on or to the Leased Improvements that is not a Capital Improvement.

“Alteration Threshold”: As defined in Section 10.1.

“Amended Original Lease”: As defined in the recitals.

“Annual Minimum Cap Ex Amount”: An amount equal to One Hundred Twenty Million
Nine Hundred Thousand and No/100 Dollars ($120,900,000.00), provided, however,
that for purposes of calculating the Annual Minimum Cap Ex Amount, Capital
Expenditures during the applicable Fiscal Year shall not include Capital
Expenditures in respect of the London Clubs in excess of Four Million and No/100
Dollars ($4,000,000.00). The Annual Minimum Cap Ex Amount shall be decreased
from time to time (u) if Regional Tenant elects to cease “Continuous Operations”
(as defined in the Regional Lease) of a Regional Facility under the Regional
Lease that is not a “Continuous Operation Facility” (as defined in the Regional
Lease) thereunder for at least twelve (12) consecutive months, (v) upon (1) the
execution of a Severance Lease in accordance with Section 18.2 of the Regional
Lease or the execution of a “Severance Lease” (as defined in the Las Vegas
Lease) with respect to the Leased Property (CPLV) in accordance with
Section 18.2 of the Las Vegas Lease, (2) the occurrence of an “L1/L2 Transfer”
(as defined in the Regional Lease) or (3) the occurrence of an L1/L2 Transfer;
(w) upon any transfer or other conveyance of the Leased Property to an Acquirer
that is not an Affiliate of Landlord in accordance with Section 18.1 hereof;
(x) in the event of any termination or partial termination of this Lease, the
Regional Lease or the Las Vegas Lease (with respect to the Leased Property
(CPLV)) in connection with any Condemnation, Casualty Event or “Casualty Event”
(as defined in the applicable Other Lease), or in the event of the expiration of
any applicable Maximum Fixed Rent Term or “Maximum Fixed Rent Term” (as defined
in the Regional Lease), in any case in accordance with the express terms of this
Lease or the Other Leases (as applicable), and in any case that results in the
removal of Material Leased Property from, or the termination of, this Lease, the
Regional Lease or the Las Vegas Lease (with respect to the Leased Property
(CPLV)) (as applicable); (y) in connection with any disposition of all of the
Other Leased Property under any Other Lease in accordance with Article XVIII of
such Other Lease and the assignment of such Other Lease to the Acquirer (as
defined in such Other Lease); and (z) with respect to the London Clubs, upon the
disposition of any Material London Property; with such decrease, in each case of

 

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clause (u), (v), (w), (x), (y) or (z) above, being equal to the applicable
Minimum Cap Ex Reduction Amount. Notwithstanding the foregoing: (1) the sum of
all decreases in the Annual Minimum Cap Ex Amount under clause (z) in respect of
any dispositions of any London Clubs property shall not exceed Four Million and
No/100 Dollars ($4,000,000.00) and (2) in the event of a disposition (in one or
a series of transactions) of all or substantially all of the London Clubs, the
Annual Minimum Cap Ex Amount shall be decreased by an amount equal to Four
Million and No/100 Dollars ($4,000,000.00). Notwithstanding anything herein to
the contrary but subject to the next sentence, fifty percent (50%) of all
Capital Expenditures and Other Capital Expenditures constituting Material
Capital Improvements or Other Material Capital Improvements shall be credited
toward the Annual Minimum Cap Ex Amount applicable to the Fiscal Years during
which such Capital Expenditures or Other Capital Expenditures were incurred, and
the other fifty percent (50%) of such Capital Expenditures and Other Capital
Expenditures constituting Material Capital Improvements or Other Material
Capital Improvements shall not be credited toward the Annual Minimum Cap Ex
Amount. Notwithstanding anything to the contrary contained herein, (i) in no
event shall any “Capital Expenditures” (as defined in the Regional Lease)
expended in connection with the “HNO License Extension Improvements” (as defined
in the Regional Lease) be credited towards the Annual Minimum Cap Ex Amount and
(ii) one hundred percent (100%) of the “Capital Expenditures” (as defined in the
Regional Lease) expended in connection with the “Southern Indiana Redevelopment
Project” (as defined in the Regional Lease) in an aggregate amount not to exceed
Eighty-Five Million and No/100 Dollars ($85,000,000.00) shall be credited in
full toward the Annual Minimum Cap Ex Amount. “Capital Expenditures” (as defined
in the Regional Lease) expended in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) were:
(a) approximately Nineteen Million One Hundred Thousand and No/100 Dollars
($19,100,000.00) in the Fiscal Year that commenced on January 1, 2018; and
(b) approximately Fifty-Eight Million Seven Hundred Thousand and No/100 Dollars
($58,700,000.00) in the Fiscal Year that commenced on January 1, 2019. As of the
Second Amendment Date, it is anticipated that “Capital Expenditures” (as defined
in the Regional Lease) made in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) will be Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000.00) in the Fiscal Year that
commenced on January 1, 2020.

“Annual Minimum Cap Ex Requirement”: As defined in Section 10.5(a)(i).

“Annual Minimum Per-Lease B&I Cap Ex Requirement”: As defined in
Section 10.5(a)(ii).

“Applicable Renewal Term VRP Joliet Percentage of Aggregate Net Revenues”: As
defined in clause (c)(ii)(A) of the definition of Rent.

“Applicable Renewal Term VRP Net Revenue Amount”: As defined in
clause (c)(ii)(A) of the definition of Rent.

“Applicable Standards”: The standards generally and customarily applicable from
time to time during the Term to gaming facilities located in the applicable
gaming market in which the Facility is located (or, if no such facilities exist,
facilities located in similar markets that have reasonably similar tax rates,
competition, population and demographics to the market where the Facility is
located), which facilities (a) are reasonably similar to the Facility in size
and quality,

 

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(b) have reasonably similar related facilities as the Facility (e.g., resort,
hotel, restaurants, nightclubs and/or other types of offerings) and (c) are of
an age comparable to the age and quality of the Facility, in each case, at the
time this standard is being applied.

“Applicable Triennial Cap Ex Period”: As defined in Section 10.5(a)(iii).

“Applicable Triennial Cap Ex Period Multiplier”: As defined in
Section 10.5(a)(iii).

“Appointing Authority”: Either (i) the Institute for Conflict Prevention and
Resolution (also known as, and shall be defined herein as, the “CPR Institute”),
unless it is unable to serve, in which case the Appointing Authority shall be
(ii) the American Arbitration Association (“AAA”) under its Arbitrator Select
Program for non-administered arbitrations or whatever AAA process is in effect
at the time for the appointment of arbitrators in cases not administered by the
AAA, unless it is unable to serve, in which case (iii) the Parties shall have
the right to apply to any court of competent jurisdiction to appoint an
Appointing Authority in accordance with the court’s power to appoint
arbitrators. The CPR Institute and the AAA shall each be considered unable to
serve if it no longer exists, or if it no longer provides neutral appointment
services, or if it does not confirm (in form or substance) that it will serve as
the Appointing Authority within thirty (30) days after receiving a written
request to serve as the Appointing Authority, or if, despite agreeing to serve
as the Appointing Authority, it does not confirm appointment within sixty
(60) days after receiving such written request.

“Arbitration Notice”: As defined in Section 34.2(a).

“Arbitration Panel”: As defined in Section 34.2(a).

“Arbitration Provision”: Each of the following: certain items as provided in
Sections 13.6(a) and 13.6(b); the calculation of the Annual Minimum Cap Ex
Amount; the determination of whether a Capital Improvement constitutes a
Material Capital Improvement; the determination of whether all or a portion of
the Leased Property or Other Leased Property constitutes Material Leased
Property; the determination of whether all or a portion of the London Clubs
constitutes Material London Property; the determination of whether the Minimum
Facility Threshold is satisfied; the calculation of Net Revenue; the calculation
of Rent (without limitation of the procedures set forth in Section 3.2); the
calculation of the Triennial Allocated Minimum Cap Ex Amount B Floor; the
calculation of the Triennial Minimum Cap Ex Amount A; the calculation of the
Triennial Minimum Cap Ex Amount B; without limitation of the EBITDAR Calculation
Procedures, any EBITDAR calculation made pursuant to this Lease or any
determination or calculation made pursuant to this Lease for which EBITDAR is a
necessary component of such determination or calculation and the calculation of
any amounts under Sections 10.1, 10.3, 10.5(a), and 10.5(b).

“Architect”: As defined in Section 10.2(b).

“Average EBITDAR”: As of any date of determination, the aggregate EBITDAR of
Tenant for the applicable Triennial Test Period divided by three (3).

 

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“Award”: All compensation, sums or anything of value awarded, paid or received
from the applicable authority on a total or partial Taking or Condemnation,
including any and all interest thereon.

“Bankruptcy Court”: As defined in the recitals.

“Bankruptcy Plan”: As defined in the recitals.

“Base Net Revenue Amount”: An amount equal to the arithmetic average of the
following: (i) One Hundred Seventy-Three Million Seven Hundred Eighty-Three
Thousand One Hundred Fifty-Six and No/100 Dollars ($173,783,156.00), which
amount Landlord and Tenant agree represents Net Revenue for the Fiscal Period
immediately preceding the first (1st) Lease Year (i.e., the Fiscal Period ending
September 30, 2017), (ii) One Hundred Seventy-Three Million Six Hundred
Thirty-Five Thousand One Hundred Sixty-Nine and No/100 Dollars
($173,635,169.00), which amount Landlord and Tenant agree represents the Net
Revenue for the Fiscal Period immediately preceding the end of the first (1st)
Lease Year (i.e., the Fiscal Period ending September 30, 2018) and (iii) One
Hundred Seventy Million Four Hundred Thirty-Seven Thousand Five Hundred
Seventy-Six and No/100 Dollars ($170,437,576.00), which amount Landlord and
Tenant agree represents the Net Revenue for the Fiscal Period immediately
preceding the end of the second (2nd) Lease Year (i.e., the Fiscal Period ending
September 30, 2019). For the avoidance of doubt, the term “arithmetic average”
as used in this definition refers to the quotient obtained by dividing (x) the
sum of the amounts set forth in clauses (i), (ii) and (iii) by (y) three (3).

“Base Rent”: The Base Rent component of Rent, as defined in more detail in
clauses (b) and (c) of the definition of Rent.

“Beginning CPI”: As defined in the definition of CPI Increase.

“Bookings”: Reservations, bookings and short-term arrangements with conventions,
conferences, hotel guests, tours, vendors and other groups or individuals (it
being understood that whether or not such arrangements or agreements are
short-term or temporary shall be determined without regard to how long in
advance such arrangements or agreements are entered into), in each case entered
into in the ordinary course consistent with past practices.

“Brands”: The Trademarks listed on Exhibit L attached hereto and reputation
symbolized thereby.

“Business Day”: Each Monday, Tuesday, Wednesday, Thursday and Friday that (i) is
not a day on which national banks in the City of Las Vegas, Nevada or in New
York, New York are authorized, or obligated, by law or executive order, to
close, and (ii) is not any other day that is not a “Business Day” as defined
under an Other Lease.

“Caesars Palace” shall mean Caesars Palace LLC, a Delaware limited liability
company.

“Caesars Rewards Program”: The Caesars Rewards® customer loyalty program as
implemented from time to time.

 

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“Cap Ex Reserve”: As defined in Section 10.5(b)(ii).

“Cap Ex Reserve Funds”: As defined in Section 10.5(b)(ii).

“Capital Expenditures”: All expenditures incurred and accrued in accordance with
GAAP by or on behalf of Tenant or CEOC, on a consolidated basis, to the extent
capitalized in accordance with GAAP and in a manner consistent with Tenant’s or
CEOC’s annual Financial Statements, provided that the foregoing shall exclude
(i) capitalized interest and (ii) any expenditures incurred by Services Co and
allocated to Tenant.

“Capital Improvement”: Any construction, restoration, alteration, addition,
improvement, renovation or other physical changes or modifications of any nature
(excluding maintenance, repair and replacement in the ordinary course) in, on,
or to the Leased Improvements, including, without limitation, structural
alterations, modifications or improvements of one or more additional structures
annexed to any portion of the Leased Improvements or the expansion of existing
Leased Improvements, in each case, to the extent that the costs of such activity
are or would be capitalized in accordance with GAAP and in a manner consistent
with Tenant’s or CEOC’s Financial Statements, and any demolition in connection
therewith.

“Cash”: Cash and cash equivalents and all instruments evidencing the same or any
right thereto and all proceeds thereof.

“Casualty Event”: Any loss, damage or destruction with respect to the Leased
Property or any portion thereof.

“CEC”: Caesars Entertainment Corporation, a Delaware corporation, together with
its successors and permitted assigns so long as CEC remains a Controlled
Subsidiary of ERI. Contemporaneously with the Second Amendment Date, CEC was
renamed Caesars Holdings, Inc.

“CEOC”: CEOC, LLC, a Delaware limited liability company, as successor by merger
to Caesars Entertainment Operating Company, Inc., a Delaware corporation.

“Change of Control”: With respect to any party, the occurrence of any of the
following: (a) the direct or indirect sale, exchange or other transfer (other
than by way of merger, consolidation or amalgamation), in one or a series of
related transactions, of all or substantially all the assets of such party and
its Subsidiaries, taken as a whole, to one or more Persons; (b) an officer of
such party becomes aware (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of
the consummation of any transaction or series of related transactions
(including, without limitation, any merger, consolidation or amalgamation), the
result of which is that any “person” or “group” (as used in Section 13(d)(3) of
the Exchange Act or any successor provision) becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor
provision), directly or indirectly, of more than fifty percent (50%) of the
Voting Stock of such party or other Voting Stock into which such party’s Voting
Stock is reclassified, consolidated, exchanged or changed, measured by voting
power rather than number of securities or other ownership interests; (c) the
occurrence of a “change of control”, “change in control” (or similar definition)
as defined in any indenture, credit agreement or similar debt instrument under
which such party is an issuer, a borrower or other obligor, in each case
representing outstanding indebtedness in excess of One Hundred Million and
No/100 Dollars

 

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($100,000,000.00); or (d) such party consolidates with, or merges or amalgamates
with or into, any other Person (or any other Person consolidates with, or merges
or amalgamates with or into, such party), in any such event pursuant to a
transaction in which any of such party’s outstanding Voting Stock or any of the
Voting Stock of such other Person is converted into or exchanged for Cash,
securities or other property, other than any such transaction where such party’s
Voting Stock outstanding immediately prior to such transaction constitutes, or
is converted into or exchanged for, a majority of the outstanding Voting Stock
of the surviving Person or any direct or indirect Parent Entity of the surviving
Person immediately after giving effect to such transaction measured by voting
power rather than number of securities or other ownership interests. For
purposes of the foregoing definition: (x) a party shall include any Parent
Entity of such party; and (y) “Voting Stock” shall mean the securities or other
ownership interests of any class or classes having general voting power under
ordinary circumstances, in the absence of contingencies, to elect the directors,
managers or trustees (or other similar governing body) of a Person.
Notwithstanding the foregoing: (A) the transfer of assets between or among a
party’s wholly owned subsidiaries and such party shall not itself constitute a
Change of Control; (B) the term “Change of Control” shall not include a merger,
consolidation or amalgamation of such party with, or the sale, assignment,
conveyance, transfer or other disposition of all or substantially all of such
party’s assets to, an Affiliate of such party (1) incorporated or organized
solely for the purpose of reincorporating such party in another jurisdiction,
and (2) the owners of which and the number and type of securities or other
ownership interests in such party, measured by voting power and number of
securities or other ownership interests, owned by each of them immediately
before and immediately following such transaction, are materially unchanged;
(C) a “person” or “group” shall not be deemed to have beneficial ownership of
securities subject to a stock or asset purchase agreement, merger agreement or
similar agreement (or voting or option or similar agreement related thereto)
prior to the consummation of the transactions contemplated by such agreement;
(D) [intentionally omitted]; (E) a transaction will not be deemed to involve a
Change of Control in respect of a party if (1) such party becomes a direct or
indirect wholly owned subsidiary of a holding company, and (2) the direct or
indirect owners of such holding company immediately following that transaction
are the same as the owners of such party immediately prior to that transaction
and the number and type of securities or other ownership interests owned by each
such direct and indirect holder immediately following such transaction are
materially unchanged from the number and type of securities or other ownership
interests owned by such direct and indirect holder in such party immediately
prior to that transaction; and (F) a transaction will not be deemed to involve a
Change of Control in respect of a party (the “Subject Entity”) if (1) the
Subject Entity becomes a direct or indirect wholly owned subsidiary (or, in the
case of Tenant, if Tenant is a direct or indirect majority owned (eighty percent
(80%) or greater) subsidiary at the time of the Subject Transaction, as defined
below, Tenant becomes a direct or indirect majority owned (eighty percent (80%)
or greater) subsidiary) of an entity (an “Intervening Entity”) (which
Intervening Entity may own other assets in addition to its equity interests in
the Subject Entity), and (2) all of the direct and indirect owners of the
Subject Entity immediately following that transaction (the “Subject
Transaction”) are the same as all of the direct and indirect owners of the
Subject Entity immediately prior to the Subject Transaction and the number and
type of securities or other ownership interests owned by each such direct and
indirect owner of the Subject Entity immediately following such transaction are
materially unchanged from the number and type of securities or other direct and
indirect ownership interests in the Subject Entity owned by such direct and
indirect owners of the Subject Entity immediately prior to that transaction
(except, in the case of each direct and indirect owner

 

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of the Intervening Entity immediately following such transaction, by virtue of
being held through the Intervening Entity; it being understood that, immediately
following the Subject Transaction, each direct and indirect owner of the
Intervening Entity shall indirectly own the same proportion and percentage of
the ownership interests in the Subject Entity as such direct or indirect owner
owned immediately prior to the Subject Transaction). Notwithstanding anything to
the contrary contained herein, in no event shall ERI be a Subject Entity under
clause (F) hereof.

“Chester Property”: All of the Leased Property (as defined in the Regional
Lease) pertaining to the casino and race track facility commonly known as
Harrah’s Philadelphia Casino and Racetrack, having an address of 777 Harrah’s
Boulevard, Chester, Pennsylvania; the real property with respect thereto is more
particularly described in Exhibit B to the Regional Lease.

“Code”: The Internal Revenue Code of 1986 and, to the extent applicable, the
Treasury Regulations promulgated thereunder, each as amended from time to time.

“Commencement Date”: As defined in Section 1.3.

“Condemnation”: The exercise of any governmental power, whether by legal
proceedings or otherwise, by any public or quasi-public authority, or private
corporation or individual, having such power under Legal Requirements, either
under threat of condemnation or while legal proceedings for condemnation are
pending.

“Confidential Information”: In addition to information described in
Section 41.22, any information or compilation of information relating to a
business, procedures, techniques, methods, concepts, ideas, affairs, products,
processes or services, including source code, information relating to
distribution, marketing, merchandising, selling, research, development,
manufacturing, purchasing, accounting, engineering, financing, costs, pricing
and pricing strategies and methods, customers, suppliers, creditors, employees,
contractors, agents, consultants, plans, billing, needs of customers and
products and services used by customers, all lists of suppliers, distributors
and customers and their addresses, prospects, sales calls, products, services,
prices and the like, as well as any specifications, formulas, plans, drawings,
accounts or sales records, sales brochures, catalogs, code books, manuals, trade
secrets, knowledge, know-how, operating costs, sales margins, methods of
operations, invoices or statements and the like.

“Control”: The possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, partnership interests or any other Equity
Interests or by contract, and “Controlling” and “Controlled” shall have meanings
correlative thereto.

“CPI”: The United States Department of Labor, Bureau of Labor Statistics Revised
Consumer Price Index for All Urban Consumers (1982-84=100), U.S. City Average,
All Items, or, if that index is not available at the time in question, then the
index designated by such Department as the successor to such index, and if there
is no index so designated, an index for an area in the United States that most
closely corresponds to the entire United States, published by such Department,
or if none, by any other instrumentality of the United States, all as reasonably
determined by Landlord and Tenant.

 

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“CPI Increase”: The greater of (a) zero and (b) a fraction, expressed as a
decimal (to such number of decimal places utilized by the CPI, to the extent the
CPI is expressed as a decimal, or, otherwise, to such number of decimal places
as is reasonably agreed to by Landlord and Tenant), determined as of the first
(1st) day of each Lease Year, (x) the numerator of which shall be the difference
between (i) the average CPI for the three (3) most recent calendar months (the
“Prior Months”) ending prior to such first (1st) day (for which the CPI has been
published as of such first (1st) day) and (ii) the average CPI for the three
(3) corresponding calendar months occurring one (1) year prior to the Prior
Months (such average CPI, the “Beginning CPI”), and (y) the denominator of which
shall be the Beginning CPI.

“CPLV Facility”: As defined in the Las Vegas Lease.

“CPLV Landlord”: As defined in the Las Vegas Lease.

“CPLV Sportsbook Operating Agreement”: That certain form of Operating Agreement
by and between Desert Palace LLC, doing business as Caesars Palace Las Vegas, a
Nevada limited liability company, and William Hill Nevada I, doing business as
William Hill Race & Sports Book, a Nevada corporation, provided by Tenant’s
counsel to Landlord’s counsel at 10:52 pm New York City time on July 19, 2020,
together with modifications to such agreement to cause it to comply with the
provisions of Section 22.4 hereof and the modifications to Section 16.14 thereof
agreed to by email between Tenant’s counsel and Landlord’s counsel at 2:34 am
New York City time on July 20, 2020.

“CPLV Tenant”: As defined in the Las Vegas Lease.

“CPR Institute”: As defined in the definition of Appointing Authority.

“CRC”: As defined in the recitals.

“Debtors”: As defined in the recitals.

“Dollars” and “$”: The lawful money of the United States.

“EBITDA”: The same meaning as “EBITDAR” as defined herein but without giving
effect to clause (xi) in the definition thereof (it being understood that to the
extent any Gaming Lease Rent is accounted for as interest expense in accordance
with GAAP, such interest expense will be accounted for as rent and thus included
in clause (xi) of the definition of EBITDAR).

“EBITDAR”: For any applicable twelve (12) month period, the consolidated net
income or loss of a Person on a consolidated basis for such period, determined
in accordance with GAAP, provided, however, that without duplication and in each
case to the extent included in calculating net income (calculated in accordance
with GAAP): (i) income tax expense shall be excluded; (ii) interest expense
shall be excluded; (iii) depreciation and amortization expense shall be
excluded; (iv) amortization of intangible assets shall be excluded;
(v) write-downs and reserves for non-recurring restructuring-related items (net
of recoveries) shall be excluded; (vi) reorganization items shall be excluded;
(vii) any impairment charges or asset write-offs, non-cash gains, losses, income
and expenses resulting from fair value accounting required by the

 

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applicable standard under GAAP and related interpretations, and non-cash charges
for deferred tax asset valuation allowances, shall be excluded; (viii) any
effect of a change in accounting principles or policies shall be excluded;
(ix) any non-cash costs or expense incurred pursuant to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement or any stock subscription or shareholder agreement shall be excluded;
(x) any nonrecurring gains or losses (less all fees and expenses relating
thereto) shall be excluded; (xi) rent expense shall be excluded; and (xii) the
impact of any deferred proceeds resulting from failed sale accounting shall be
excluded. In connection with any EBITDAR calculation made pursuant to this Lease
or any determination or calculation made pursuant to this Lease for which
EBITDAR is a necessary component of such determination or calculation,
(i) promptly following request therefor, Tenant shall provide Landlord with all
supporting documentation and backup information with respect thereto as may be
reasonably requested by Landlord, (ii) such calculation shall be as reasonably
agreed upon by Landlord and Tenant, and (iii) if Landlord and Tenant do not
agree within twenty (20) days of either Party seeking to commence discussions,
the same may be determined by an Expert in accordance with and pursuant to the
process set forth in Section 34.2 hereof (clauses (i) through (iii),
collectively, the “EBITDAR Calculation Procedures”).

“EBITDAR Calculation Procedures”: As defined in the definition of EBITDAR.

“Eligible Account”: A separate and identifiable account from all other funds
held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity that has a Moody’s rating of at least “Baa2” and which, in the case of
a state chartered depository institution or trust company, is subject to
regulations substantially similar to 12 C.F.R. §9.10(b), having, in either case,
a combined capital and surplus of at least Fifty Million and No/100 Dollars
($50,000,000.00) and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

“Eligible Institution”: Either (a) a depository institution or trust company
insured by the Federal Deposit Insurance Corporation, the short-term unsecured
debt obligations or commercial paper of which are rated at least “A-1+” by S&P
and “P-1” by Moody’s in the case of accounts in which funds are held for thirty
(30) days or less (or, in the case of Letters of Credit and accounts in which
funds are held for more than thirty (30) days, the long-term unsecured debt
obligations of which are rated at least “A+” by S&P and “Aa3” by Moody’s), or
(b) Wells Fargo Bank, National Association, provided that the rating by S&P and
Moody’s for the short term unsecured debt obligations or commercial paper and
long term unsecured debt obligations of the same does not decrease below the
ratings set forth in clause (a) hereof.

“Embargoed Person”: Any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act
(including the anti-terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder including those related to Specially Designated Nationals and
Specially Designated Global Terrorists, with the result that the applicable
transaction is prohibited by law or in violation of law.

 

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“End of Term Gaming Assets Transfer Notice”: As defined in Section 36.1.

“Enterprise Services”: All of the corporate and other centralized services
provided by Services Co or any of its Subsidiaries to, or on behalf of, Tenant,
CEC, CEOC, CRC and their respective Subsidiaries and Affiliates, including,
without limitation, the services described in Section 8 of the Omnibus Agreement
(as defined in the Amended Original Lease).

“Environmental Costs”: As defined in Section 32.4.

“Environmental Laws”: Any and all federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, orders, decrees or judgments, whether
statutory or common law, as amended from time to time, now or hereafter in
effect, or promulgated, pertaining to the environment, public health and safety
and industrial hygiene and relating to the use, generation, manufacture,
production, storage, release, discharge, disposal, handling, treatment, removal,
decontamination, cleanup, transportation or regulation of any Hazardous
Substance, including the Industrial Site Recovery Act, the Clean Air Act, the
Clean Water Act, the Toxic Substances Control Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act, the Federal Insecticide, Fungicide, Rodenticide Act, the Safe
Drinking Water Act and relevant provisions of the Occupational Safety and Health
Act.

“Equity Interests”: With respect to any Person, any and all shares, interests,
participations, equity interests, voting interests or other equivalents,
including membership interests (however designated, whether voting or
non-voting), of equity of such Person, including, if such Person is a
partnership, partnership interests (whether general or limited) and any other
interest or participation that confers on a Person the right to receive a share
of the profit, and losses of, or distributions of assets of, such partnership.

“ERI”: Eldorado Resorts, Inc., a Nevada corporation, together with its
successors and permitted assigns. Contemporaneously with the Second Amendment
Date, ERI was renamed Caesars Entertainment, Inc. and converted to a Delaware
corporation.

“Escalator”: (a) Commencing on the Escalator Adjustment Date in respect of the
second (2nd) Lease Year and continuing through the end of the fifth (5th) Lease
Year, one (1.0) plus fifteen one-thousandths (0.015) and (b) commencing on the
Escalator Adjustment Date in respect of the sixth (6th) Lease Year and
continuing through the end of the Term, one (1.0) plus the greater of (I) two
one-hundredths (0.02) and (II) the CPI Increase.

“Escalator Adjustment Date”: The first (1st) day of each Lease Year, excluding
the first (1st) Lease Year of the Initial Term and the first (1st) Lease Year of
each Renewal Term.

“Estoppel Certificate”: As defined in Section 23.1(a).

“Exchange Act”: The Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.

“Existing Original Fee Financing”: Those certain 8.00% Second Priority Senior
Secured Notes due 2023 issued pursuant to the Second Lien Indenture, dated as of
the

 

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Commencement Date, among PropCo 1 and VICI FC Inc., as issuers, the subsidiary
guarantors party thereto from time to time and UMB Bank, National Association,
as trustee.

“Existing Fee Mortgage”: Collectively, the Fee Mortgages entered into in
connection with (i) the Existing Original Fee Financing, and (ii) that certain
loan made pursuant to that certain Credit Agreement, dated as of December 22,
2017, among Propco 1, as borrower, the other parties thereto, the Lenders (as
defined therein) from time to time party thereto, and Goldman Sachs Bank USA, as
Administrative Agent, as amended by Amendment No. 1 dated September 24, 2018,
and Amendment No. 2, dated May 15, 2019, and as amended and restated pursuant to
Amendment No. 3 dated May 15, 2019, as in effect as of the Second Amendment
Date.

“Expert”: An independent third party professional, with expertise in respect of
a matter at issue, appointed by the agreement of Landlord and Tenant or
otherwise in accordance with Article XXXIV hereof.

“Expert Valuation Notice”: As defined in Section 34.1.

“Expiration Date”: The Stated Expiration Date, or such earlier date as this
Lease is terminated pursuant to its terms.

“Facility”: Collectively, (a) the assets comprising (i) a part of the Leased
Property as listed on Exhibit A attached hereto, including the respective Leased
Improvements, easements, development rights, and other tangible rights (if any)
forming a part thereof or appurtenant thereto, including any and all Capital
Improvements (including any Tenant Material Capital Improvements), and (ii) all
of Tenant’s Property primarily related to or used in connection with the
operation of the business conducted on or about the Leased Property or any
portion thereof, and (b) the business operated by Tenant on or about the Leased
Property or Tenant’s Property or any portion thereof or in connection therewith.

“Fair Market Base Rental Value”: The Fair Market Rental Value, as determined
with respect to Base Rent only (and not Variable Rent nor Additional Charges),
assuming and taking into account that Variable Rent and Additional Charges shall
continue to be paid hereunder during any period in which such Fair Market Base
Rental Value shall be paid.

“Fair Market Ownership Value”: The fair market purchase price of the Leased
Property, Facility or any applicable part thereof, as the context requires, as
of the estimated transfer date, in its then-condition, that a willing purchaser
would pay to a willing seller for Cash on arm’s-length terms (assuming
(1) neither such purchaser nor seller is under any compulsion to sell or
purchase and that both have reasonable knowledge of all relevant facts, are
acting prudently and knowledgeably in a competitive and open market, and
assuming price is not affected by undue stimulus and (2) neither party is paying
any broker a commission in connection with the transaction), taking into account
the provisions of Section 34.1(f) if applicable, and otherwise taking all
then-relevant factors into account (whether favorable to one, both or neither
Party) and subject to the further factors, as applicable, that are set forth in
the definition of “Fair Market Rental Value” herein below as applicable, either
(i) as agreed in writing by Landlord and Tenant, or (ii) as determined in
accordance with the procedure specified in Section 34.1 of this Lease.

 

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“Fair Market Property Value”: The fair market purchase price of the applicable
personal property, as the context requires, as of the estimated transfer date,
in its then-condition, that a willing purchaser would pay to a willing seller
for Cash on arm’s-length terms (assuming (1) neither such purchaser nor seller
is under any compulsion to sell or purchase and that both have reasonable
knowledge of all relevant facts, are acting prudently and knowledgeably in a
competitive and open market, and assuming price is not affected by undue
stimulus and (2) neither party is paying any broker a commission in connection
with the transaction), and otherwise taking all then-relevant factors into
account (whether favorable to one, both or neither Party), either (i) as agreed
in writing by Tenant and either Landlord or Successor Tenant (as applicable), or
(ii) if not agreed upon in accordance with clause (i) above, as determined in
accordance with the procedure specified in Section 34.1.

“Fair Market Rental Value”: The annual fixed fair market rental value for the
Leased Property or any applicable part thereof (excluding Tenant Material
Capital Improvements), as the context requires, as of the first (1st) day of the
period for which the Fair Market Rental Value is being determined, in its
then-condition, that a willing tenant would pay to a willing landlord on arm’s
length terms (assuming (1) neither such tenant nor landlord is under any
compulsion to lease and that both have reasonable knowledge of all relevant
facts, are acting prudently and knowledgeably in a competitive and open market,
and assuming price is not affected by undue stimulus, (2) such lease contained
terms and conditions identical to the terms and conditions of this Lease, other
than with respect to the length of term and payment of Rent, (3) neither party
is paying any broker a commission in connection with the transaction, and
(4) that the tenant thereunder will pay such Fair Market Rental Value for the
entire term of such demise (i.e., no early termination)), taking into account
the provisions of Section 34.1(g), and otherwise taking all then-relevant
factors into account (whether favorable to one, both or neither Party), either
(i) as agreed in writing by Landlord and Tenant, or (ii) as determined in
accordance with the procedure specified in Section 34.1 of this Lease. In all
cases, for purposes of determining the Fair Market Ownership Value or the Fair
Market Rental Value, as the case may be, (A) the Leased Property or any
applicable part thereof to be valued pursuant hereto (as improved by all then
existing Leased Improvements, and all Capital Improvements thereto, but
excluding any Tenant Material Capital Improvements), shall be valued (X) as (or
as part of) a fully-permitted Facility operated in accordance with the
provisions of this Lease for the Primary Intended Use and (Y) free and clear of
any lien or encumbrance evidencing a debt (including any Permitted Leasehold
Indebtedness) or judgment (including any mortgage, security interest, tax lien,
or judgment lien) (provided, however, for purposes of determining Fair Market
Ownership Value of any applicable Tenant Material Capital Improvements pursuant
to Section 10.4(e), the same shall be valued on the basis of the then-applicable
status of any applicable permits, free and clear of only such liens and
encumbrances that will be removed if and when conveyed to Landlord pursuant to
said Section 10.4(e)), (B) in determining the Fair Market Ownership Value or
Fair Market Rental Value with respect to damaged or destroyed Leased Property,
such value shall be determined as if such Leased Property had not been so
damaged or destroyed (unless otherwise expressly provided herein), except that
such value with respect to damaged or destroyed Tenant Material Capital
Improvements shall only be determined as if such Tenant Material Capital
Improvements had been restored if and to the extent Tenant is required to
repair, restore or replace such Tenant Material Capital Improvements under this
Lease (provided, however, for purposes of determining Fair Market Ownership
Value pursuant to Section 10.4(e), the same shall be valued taking into account
any then-existing damage), and (C) the price shall represent the normal
consideration for the

 

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property sold (or leased) unaffected by sales (or leasing) concessions granted
by anyone associated with the transaction. In addition, the following specific
matters shall be factored in or out, as appropriate, in determining Fair Market
Ownership Value or Fair Market Rental Value as the case may be: (i) the negative
value of (x) any deferred maintenance or other items of repair or replacement of
the Leased Property to the extent arising from breach or failure of Tenant to
perform or observe its obligations hereunder, (y) any then current or prior
Gaming or other licensure violations by Tenant, Guarantor or any of their
Affiliates, and (z) any breach or failure of Tenant to perform or observe its
obligations hereunder (in each case with respect to the foregoing clauses (x),
(y) and (z), without giving effect to any applicable cure periods hereunder),
shall, in each case, when determining Fair Market Ownership Value or Fair Market
Rental Value, as the case may be, not be taken into account; rather, the Leased
Property and every part thereof shall be deemed to be in the condition required
by this Lease and Tenant shall at all times be deemed to have operated the
Facility in compliance with and to have performed all obligations of Tenant
under this Lease (provided, however, for purposes of determining Fair Market
Ownership Value under Section 10.4(e), the negative value of the items described
in clauses (x), (y) and (z) shall be taken into account); and (ii) in the case
of a determination of Fair Market Rental Value, such determination shall be
without reference to any savings Landlord may realize as a result of any
extension of the Term of this Lease, such as savings in free rent and tenant
concessions, and without reference to any “start-up” costs a new tenant would
incur were it to replace the existing Tenant for any Renewal Term or otherwise.
The determination of Fair Market Rental Value shall be of Base Rent and Variable
Rent (but not Additional Charges), and shall assume and take into account that
Additional Charges shall continue to be paid hereunder during any period in
which such Fair Market Rental Value shall be paid. For the avoidance of doubt,
the annual Fair Market Rental Value shall be calculated and evaluated as a whole
for the entire term in question, and may reflect increases in one or more years
during the applicable term in question (i.e., the annual Fair Market Rental
Value need not be identical for each year of the term in question).

“Fee Mortgage”: Any mortgage, pledge agreement, security agreement, assignment
of leases and rents, fixture filing or similar document creating or evidencing a
lien on Landlord’s interest in the Leased Property or any portion thereof (or an
indirect interest therein, including without limitation, a lien on direct or
indirect interests in Landlord) in accordance with the provisions of Article
XXXI hereof.

“Fee Mortgage Documents”: With respect to each Fee Mortgage and Fee Mortgagee,
the applicable Fee Mortgage, loan agreement, pledge agreement, debt agreement,
credit agreement or indenture, lease, note, collateral assignment instruments,
guarantees, indemnity agreements and other documents or instruments evidencing,
securing or otherwise relating to the loan made, credit extended, or lease or
other financing vehicle entered into pursuant thereto.

“Fee Mortgagee”: The holder(s) or lender(s) under any Fee Mortgage or the agent
or trustee acting on behalf of any such holder(s) or lender(s).

“Financial Statements”: (i) For a Fiscal Year, consolidated statements of a
Person’s and its Reporting Subsidiaries’, if any, income, stockholders’ equity
and comprehensive income and cash flows for such period and the related
consolidated balance sheet as at the end of such period, together with the notes
thereto, all in reasonable detail and setting forth in comparative

 

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form the corresponding figures for the corresponding period in the preceding
Fiscal Year and prepared in accordance with GAAP and audited by a “big four” or
other nationally recognized accounting firm, and (ii) for a Fiscal Quarter,
consolidated statements of a Person’s and its Reporting Subsidiaries’, if any,
income, stockholders’ equity and comprehensive income and cash flows for such
period and for the period from the beginning of the Fiscal Year to the end of
such period and the related consolidated balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding Fiscal Year or Fiscal Quarter, as the case may be, and prepared
in accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes).

“First Amendment Date”: December 26, 2018.

“First Variable Rent Period”: As defined in clause (b)(ii)(A) of the definition
of Rent.

“First VRP Joliet Percentage of Aggregate Net Revenues”: As defined in
clause (b)(ii)(A) of the definition of Rent.

“First VRP Net Revenue Amount”: As defined in clause (b)(ii)(A)(x) of the
definition of Rent.

“Fiscal Period”: With respect to any Person, for any date of determination, the
period of the four (4) most recently ended consecutive Fiscal Quarters of such
Person for which Financial Statements are available.

“Fiscal Quarter”: With respect to any Person, for any date of determination, a
fiscal quarter for each Fiscal Year of such Person. In the case of each of
Tenant and ERI, “Fiscal Quarter” means each calendar quarter ending on March 31,
June 30, September 30 and December 31, for each Fiscal Year of Tenant.

“Fiscal Year”: The annual period commencing January 1 and terminating
December 31 of each year.

“Fixtures”: All equipment, machinery, fixtures and other items of property,
including all components thereof, that are now or hereafter located in or on, or
used in connection with, and permanently affixed to or otherwise incorporated
into the Leased Improvements or the Land.

“Foreclosure Purchaser”: As defined in Section 31.1.

“Foreclosure Successor Tenant”: Either (i) any assignee pursuant to Sections
22.2(i)(b) or (c), or (ii) any Permitted Leasehold Mortgagee or its Permitted
Leasehold Mortgagee Designee that enters into a New Lease in compliance in all
respects with Section 17.1(f) and all other applicable provisions of this Lease.

“GAAP”: Generally accepted accounting principles in the United States
consistently applied in the preparation of financial statements, as in effect
from time to time.

 

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“Gaming”: Casino, racetrack, racino, video lottery terminal or other gaming
activities, including, but not limited to, the operation of slot machines, video
lottery terminals, table games, pari-mutuel wagering or other applicable types
of wagering (including, but not limited to, sports wagering).

“Gaming Assets”: As defined in Section 36.1.

“Gaming Assets FMV”: As defined in Section 36.1.

“Gaming Authorities”: Any gaming regulatory body or any agency or governmental
authority which has, or may at any time after the Commencement Date have,
jurisdiction over the gaming activities at the Leased Property or any successor
to such authority.

“Gaming Facility”: A facility at which there are operations of slot machines,
video lottery terminals, blackjack, baccarat, keno operation, table games, any
other mechanical or computerized gaming devices, pari-mutuel wagering or other
applicable types of wagering (including, but not limited to, sports wagering),
or which is otherwise operated for purposes of Gaming, and all related or
ancillary real property.

“Gaming Lease Rent”: To the extent applicable in connection with any EBITDA
calculation under this Lease, (x) Rent, plus (y) Rent (as defined in the Other
Leases), plus (z) actual rent (excluding additional rent such as pass-through
expenses) payable under all Gaming Leases (other than this Lease and the Other
Leases) by the applicable Person for whom its EBITDA is being calculated and its
Subsidiaries on a consolidated basis, in each case, during the applicable period
of time for which such EBITDA calculation is being made.

“Gaming Leases”: A lease entered into by any applicable Person or any of its
Subsidiaries to occupy and use real property, vessels or similar assets for, or
primarily in connection with, the operation of the Gaming Facilities thereat.

“Gaming License”: Any license, qualification, registration, accreditation,
permit, approval, finding of suitability or other authorization issued by a
state or other governmental regulatory agency (including any Native American
tribal gaming or governmental authority) or Gaming Authority to operate, carry
on or conduct any gaming, gaming device, slot machine, video lottery terminal,
table game, race book or sports pool on the Leased Property or any portion
thereof, or to operate a casino at the Leased Property required by any Gaming
Regulation, including each of the licenses, permits or other authorizations set
forth on Schedule 1, and including those related to the Leased Property that may
be added to this Lease after the Second Amendment Date.

“Gaming Regulation(s)”: Any and all laws, statutes, ordinances, rules,
regulations, policies, orders, codes, decrees or judgments, and Gaming License
conditions or restrictions, as amended from time to time, now or hereafter in
effect or promulgated, pertaining to the operation, control, maintenance,
alteration, modification or capital improvement of a Gaming Facility or the
conduct of a person or entity holding a Gaming License, including, without
limitation, any requirements imposed by a regulatory agency, commission, board
or other governmental body pursuant to the jurisdiction and authority granted to
it under applicable law, and all other rules, regulations, orders, ordinances
and legal requirements of any Gaming Authority.

 

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“Gaming Revenues”: As defined in the definition of Net Revenue.

“Government List”: (1) Any list or annex to Presidential Executive Order 13224
issued on September 24, 2001 (“EO13224”), including any list of Persons who are
determined to be subject to the provisions of EO13224 or any other similar
prohibitions contained in the rules and regulations of OFAC (as defined below)
or in any enabling legislation or other Presidential Executive Orders in respect
thereof, (2) the Specially Designated Nationals and Blocked Persons Lists
maintained by OFAC, (3) any other list of terrorists, terrorist organizations or
narcotics traffickers maintained pursuant to any of the Rules and Regulations of
OFAC, or (4) any similar lists maintained by the United States Department of
State, the United States Department of Commerce or any other governmental
authority or pursuant to any Executive Order of the President of the United
States of America.

“Ground Leased Property”: The real property leased pursuant to the Ground
Leases.

“Ground Leases”: Collectively, those certain leases with respect to real
property that is a portion of the Leased Property, pursuant to which Landlord is
a tenant and which leases are (i) in existence as of the Commencement Date and
listed on Schedule 2 hereto, or (ii) subject to Section 7.3, subsequently added
to the Leased Property in accordance with the provisions of this Lease. Each of
the Ground Leases is referred to individually herein as a “Ground Lease.”

“Ground Lessor”: As defined in Section 7.3.

“Guarantor”: ERI, together with its successors and permitted assigns, in its
capacity as guarantor under the Guaranty.

“Guaranty”: That certain Guaranty of Lease, dated as of the Second Amendment
Date, made by Guarantor and Landlord, in the form of Exhibit M attached hereto.

“Guest Data”: Any and all information and data identifying, describing,
concerning or generated by prospective, actual or past guests, family members,
website visitors and customers of casinos, hotels, retail locations,
restaurants, bars, spas, entertainment venues, or other facilities or services,
including without limitation any and all guest or customer profiles, contact
information (e.g., addresses, phone numbers, facsimile numbers and email
addresses), histories, preferences, game play and patronage patterns,
experiences, results and demographic information, whether or not any of the
foregoing constitutes personally identifiable information, together with any and
all other guest or customer information in any database of Tenant, Services Co
or any of their respective Affiliates, regardless of the source or location
thereof, and including without limitation such information obtained or derived
by Tenant, Services Co or any of their respective Affiliates from: (i) guests or
customers of the Facility (for the avoidance of doubt, including Property
Specific Guest Data); (ii) guests or customers of any Other Facility (including
any condominium or interval ownership properties) owned, leased, operated,
licensed or franchised by Tenant or any of its Affiliates, or any facility
associated with any such Other Facility (including restaurants, golf courses and
spas); or (iii) any other sources and databases, including websites, central
reservations databases, operational data base (ODS) and any player loyalty
programs (e.g., the Caesars Rewards Program).

 

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“Handling”: As defined in Section 32.4.

“Hazardous Substances”: Collectively, any petroleum, petroleum product or by
product or any substance, material or waste regulated pursuant to any
Environmental Law.

“HLV/CC Capital Expenditures”: The “Capital Expenditures,” as defined in the Las
Vegas Lease, to the extent incurred in respect of the Leased Property (HLV) and,
if the “Convention Center Property” (as defined in the Las Vegas Lease) is added
to the “Leased Property” under the Las Vegas Lease, to the extent incurred in
respect of the Convention Center Property.

“HLV Tenant”: As defined in the Las Vegas Lease.

“Impositions”: Collectively, all taxes, including capital stock, franchise,
margin and other similar taxes of Landlord, ad valorem, sales, use, single
business, gross receipts, transaction privilege, rent or similar taxes;
assessments, including assessments for public improvements or benefits, whether
or not commenced or completed prior to the Commencement Date and whether or not
to be completed within the Term; ground rents pursuant to Ground Leases in
effect as of the Commencement Date or otherwise entered into in accordance with
this Lease; all sums due under any Property Documents (in effect as of the
Commencement Date or otherwise entered into in accordance with this Lease or as
may otherwise be entered into or agreed to in writing by Tenant); water, sewer
and other utility levies and charges; use and occupancy taxes; excise tax
levies; license, permit, inspection, authorization and similar fees; bonds and
all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character to the
extent in respect of (or in the case of franchise taxes, capital stock or other
similar taxes, arising from, based on, or relating, attributable or allocable
to) the Leased Property or any portion thereof, the Rent and Additional Charges
(or in the case of franchise taxes, capital stock or other similar taxes, any
direct or indirect interest therein or any investment of capital deployed
therein or allocable thereto) (but not, for the avoidance of doubt, in respect
of Landlord’s income (as specified in clause (a) below)) and all interest and
penalties thereon attributable to any failure in payment by Tenant, which at any
time prior to or during the Term may be assessed or imposed on (or in the case
of franchise taxes, capital stock or other similar taxes, calculated or
otherwise based on, or allocable to) or in respect of or be a lien upon
(i) Landlord or Landlord’s interest in the Leased Property or any portion
thereof, (ii) the Leased Property or any portion thereof or any rent therefrom
or any estate, right, title or interest therein (or in the case of franchise
taxes, capital stock or other similar taxes, the investment of capital deployed
therein or allocable thereto) or (iii) any occupancy, operation, use or
possession of, or sales from or activity conducted on or in connection with the
Leased Property or any portion thereof or the leasing or use of the Leased
Property or any portion thereof; provided, however, that nothing contained in
this Lease shall be construed to require Tenant to pay (a) any tax, fee or other
charge based on net income (whether denominated as a franchise or capital stock,
margin or other tax, fee or charge) imposed on Landlord or any other Person
(except Tenant and its successors and Affiliates), (b) any transfer, or net
revenue tax of Landlord or any other Person (except Tenant and its successors
and Affiliates), (c) any tax imposed with respect to the sale, exchange or other
disposition by Landlord of the Leased Property or any portion thereof or the
proceeds thereof, (d) any principal or interest on or other amount in respect of
any indebtedness on or secured by the Leased Property or any portion thereof for
which Landlord (or any of its Affiliates) is the obligor,

 

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or (e) any principal or interest on or other amount in respect of any
indebtedness of Landlord or its Affiliates that is not otherwise included as
“Impositions” hereunder; provided, further, however, that Impositions shall
include (and Tenant shall be required to pay in accordance with the provisions
of this Lease) (x) any tax, assessment, tax levy or charge set forth in clause
(a) or clause (b) of the preceding proviso that is levied, assessed, imposed or
charged in lieu of, or as a substitute for, any Imposition (and, without
limitation, if at any time during the Term the method of taxation prevailing at
the Commencement Date shall be altered so that any new, non-income-based tax,
assessment, levy (including, but not limited to, any city, state or federal
levy), imposition or charge, or any part thereof, shall be measured by or be
based in whole or in part upon the Leased Property, or any part thereof, and
shall be imposed upon Landlord, then all such new taxes, assessments, levies,
impositions or charges, or the part thereof to the extent that they are so
measured or based, shall be deemed to be included within the term “Impositions”
for the purposes hereof, to the extent that such Impositions would be payable if
the Leased Property were the only property of Landlord subject to such
Impositions, and Tenant shall pay and discharge the same as herein provided in
respect of the payment of Impositions), (y) any transfer taxes or other levy or
assessment imposed by reason of any assignment of this Lease or any interest
therein subsequent to the execution and delivery hereof, or any transfer or
Sublease or termination thereof (other than assignment of this Lease or the
sale, transfer or conveyance of the Leased Property or any interest therein made
by Landlord) and (z) any mortgage tax or mortgage recording tax imposed by
reason of any Permitted Leasehold Mortgage or any other instrument creating or
evidencing a lien in respect of indebtedness of Tenant or its Affiliates (but
not any mortgage tax or mortgage recording tax imposed by reason of a Fee
Mortgage or any other instrument creating or evidencing a lien in respect of
indebtedness of Landlord or its Affiliates). For purposes of this definition,
taxes of Landlord shall include any taxes of Landlord REIT or any of its
Subsidiaries which are imposed on a combined, consolidated or unitary basis
solely to the extent such taxes relate to Landlord.

“Incurable Default”: Collectively or individually, as the context may require,
the defaults referred to in Sections 16.1(c), 16.1(d), 16.1(e), 16.1(h) (as to
judgments against Guarantor only), 16.1(i), 16.1(n) and 16.1(r) and any other
defaults not reasonably susceptible to being cured by a Permitted Leasehold
Mortgagee or a subsequent owner of the Leasehold Estate through foreclosure
thereof.

“Initial Stated Expiration Date”: As defined in Section 1.3.

“Initial Term”: As defined in Section 1.3.

“Insurance Requirements”: The terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy and of any insurance
board, association, organization or company necessary for the maintenance of any
such policy.

“Intellectual Property” or “IP”: All rights in, to and under any of the
following, as they exist anywhere in the world, whether registered or
unregistered: (i) all patents and applications therefor and all reissues,
divisions, divisionals, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and all patents, applications, documents and
filings claiming priority to or serving as a basis for priority thereof,
(ii) all inventions (whether or not patentable), invention disclosures,
improvements, business information, Confidential Information, Software,
formulas, drawings, research and development, business and marketing plans and
proposals,

 

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tangible and intangible proprietary information, and all documentation relating
to any of the foregoing, (iii) all copyrights, works of authorship,
copyrightable works, copyright registrations and applications therefor, and all
other rights corresponding thereto, (iv) all industrial designs and any
registrations and applications therefor, (v) all trademarks, service marks,
trade dress, logos, trade names, Brands, assumed names and corporate names,
Internet domain names and other numbers, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith (“Trademarks”), (vi) all databases and data collections
(including all Guest Data) and all rights therein, (vii) all moral and economic
rights of authors and inventors, however denominated, (viii) all Internet
addresses, sites and domain names, numbers, and social media user names and
accounts, (ix) any other similar intellectual property and proprietary rights of
any kind, nature or description; and (x) any copies of tangible embodiments
thereof (in whatever form or medium).

“Intervening Entity”: As defined in the definition of Change of Control.

“Investment Fund”: A bona fide private equity fund or bona fide investment
vehicle arranged by and managed by or controlled by, or under common control
with, a private equity fund (excluding any private equity fund investment
vehicle the primary assets of which are Tenant and its Subsidiaries, Regional
Tenant and its Subsidiaries, this Lease and assets related thereto and/or the
Regional Lease and assets related thereto) that is engaged in making,
purchasing, funding or otherwise or investing in a diversified portfolio of
businesses and companies and is organized primarily for the purpose of making
equity investments in companies.

“Joliet Partner”: Des Plaines Development Holdings, LLC.

“L1/L2 Severance Lease”: A separate lease on terms and conditions reasonably
acceptable to Landlord and Tenant, provided, for any terms and conditions of
such lease as to which the Parties cannot reasonably agree, such terms and
conditions shall be substantially the same as the terms and conditions in the
then-current market precedent leases for similar single asset gaming-REIT lease
transactions with tenants having similar management experience and
creditworthiness as the proposed transferee and shall comply with the
requirements of Section 22.9. If the Parties cannot agree on which leases shall
serve as the “market precedents,” then the precedent lease shall be the Penn
Master Lease, subject to (i) such revisions that are reasonably and mutually
agreed by the Parties to reflect a single-asset transaction (as opposed to a
master lease transaction) and (ii) such other revisions that are reasonably and
mutually agreed by the Parties.

“L1/L2 Severance Lease Term”: With respect to any L1/L2 Severance Lease, an
initial term (commencing on the applicable L1/L2 Transfer Date) of fifteen
(15) years, subject to four (4) five-year renewal terms, provided, that, such
term (inclusive of any such renewal terms) shall not exceed eighty percent (80%)
of the remaining useful life of the Leased Improvements (as of the applicable
L1/L2 Transfer Date) that are subject to the applicable L1/L2 Severance Lease
(as shall be determined by a valuation expert or such other appropriate
reputable consultant mutually reasonably agreed by the Parties).

“L1/L2 Transfer”: As defined in Section 22.9.

 

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“L1/L2 Transfer Date”: As defined in Section 22.9(a).

“L1/L2 Transferee Lease Rent”: As defined in Section 22.9(c).

“L1 Qualified Transferee”: A transferee that meets all of the following
requirements: (a) such transferee, together with its Affiliates, owns or manages
Gaming Facilities that, together with the related assets of such transferee and
its Affiliates that are operated at the same locations as such Gaming Facilities
(such as hotel and other entertainment facilities), shall have generated EBITDA
for the most recently ended Fiscal Year for which financial statements are
available (which financial statements shall have been prepared by a certified
public accounting firm of national standing (it being understood that such firms
of national standing shall not be limited to the “big four” accounting firms))
of at least One Hundred Million and No/100 Dollars ($100,000,000.00) (such
amount increasing annually as of the first (1st) day of each Lease Year
following the First Amendment Date in proportion to the amount of any applicable
CPI Increase), (b) such transferee, together with its Affiliates, has (1) at
least five (5) years of experience operating or managing Gaming Facilities that,
together with the related assets operated by such transferee and its Affiliates
that are operated at the same locations as such Gaming Facilities (such as hotel
and other entertainment facilities), have aggregate revenues in the immediately
preceding fiscal year of at least Five Hundred Million and No/100 Dollars
($500,000,000.00) (such amount increasing annually as of the first (1st) day of
each Lease Year following the First Amendment Date in proportion to the amount
of any applicable CPI Increase) (or retains a manager with such qualifications,
which manager shall not be replaced unless such transferee is able to satisfy
the requirements of this definition without such manager), or (2) agreement(s)
in place in a form reasonably satisfactory to Landlord to retain for a period of
eighteen (18) months (or more) after the effective time of the transfer at least
(I) eighty percent (80%) of Tenant’s and its Subsidiaries’ personnel employed at
the Facility, and (II) eighty percent (80%) of the ten most highly compensated
employees of Tenant and/or its Affiliates as of the date of the relevant
agreement to transfer who are full time dedicated employees at the Facility, and
are responsible for direct managerial and/or operational aspects of the Facility
(including Gaming activities); (c) such transferee and all of its applicable
officers, directors and Affiliates (including the officers and directors of its
Affiliates), to the extent required under applicable Gaming Regulations or other
Legal Requirements, are licensed and certified by applicable Gaming Authorities
and hold all required Gaming Licenses to operate the Facility in accordance with
the applicable L1/L2 Severance Lease and are otherwise found suitable to lease
the Leased Property in accordance with the applicable L1/L2 Severance Lease;
(d) such transferee is Solvent (defined herein below), and, if such transferee
has a Parent Company, the Parent Company of such transferee is Solvent; (e)(i)
such transferee has sufficient assets so that, after giving effect to such
transferee’s assumption of Tenant’s obligations hereunder or the applicable
assignment, its L1 Total Net Leverage Ratio for the Trailing Test Period is less
than 6:1 on a pro forma basis based on projected earnings and after giving
effect to the proposed transaction, or, if such transferee has a Parent Company,
such Parent Company of such transferee has such sufficient assets or (ii) such
transferee has an investment grade credit rating from a nationally recognized
rating agency with respect to such entity’s long term, unsecured debt, or, if
such transferee has a Parent Company, such Parent Company of such transferee has
such a credit rating; (f) such transferee has not been the subject of a material
governmental or regulatory investigation which resulted in a conviction for
criminal activity involving moral turpitude and has not been found liable
pursuant to a non-appealable judgment in a civil proceeding for attempting to
hinder, delay or defraud creditors; (g) such transferee has never

 

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been convicted of, or pled guilty or no contest to, a Patriot Act Offense and is
not on any Government List; (h) such transferee has not been the subject of a
voluntary or involuntary (to the extent the same has not been discharged)
bankruptcy proceeding during the prior five (5) years from the applicable date
of determination; (i) such transferee is not, and is not Controlled by, an
Embargoed Person or a Person that has been found “unsuitable” for any reason or
has had any application for a Gaming License withdrawn “with prejudice” by any
applicable Gaming Authority; (j) such transferee shall not be a Landlord
Prohibited Person; and (k) such transferee is not associated with a Person who
has been found “unsuitable”, denied a Gaming License or otherwise precluded from
participation in the Gaming Industry by any Gaming Authority where such
association would reasonably be expected to adversely affect any of Landlord’s
or its Affiliates’ Gaming Licenses or Landlord’s or its Affiliates’ then-current
standing with any Gaming Authority. For purposes hereof, a Person shall be
“Solvent” if such Person shall (I) not be “insolvent” as such term is defined in
Section 101 of title 11 of the United States Code, (II) be generally paying its
debts (other than those that are in bona fide dispute) when they become due, and
(III) be able to pay its debts as they become due. Notwithstanding anything to
the contrary contained herein, those certain Persons identified in Exhibit J
hereto, or any wholly owned subsidiary thereof, shall be deemed to satisfy
clauses (a), (b) and (e) of this definition, provided, that, the arithmetic
average of the annual gross revenues of any such Person identified in Exhibit J
for the most recently ended three (3) Fiscal Years prior to the applicable L1/L2
Transfer Date for which financial statements are available (which financial
statements shall have been prepared by a certified public accounting firm of
national standing (it being understood that such firms of national standing
shall not be limited to the “big four” accounting firms)), shall be equal to no
less than the amount of the arithmetic average of the annual gross revenues for
such Person for the three (3) calendar years 2015, 2016 and 2017 (such amount
increasing annually as of the first (1st) day of each Lease Year following the
First Amendment Date in proportion to the amount of any applicable CPI
Increase).

“L1 Successor Tenant”: Any transferee that consummates an L1 Transfer pursuant
to Section 22.2(vii).

“L1 Total Net Leverage Ratio”: With respect to any Person and its Subsidiaries
on a consolidated basis, on any date, the ratio of (i) (a) the aggregate
principal amount of (without duplication) all indebtedness consisting of
indebtedness for borrowed money, unreimbursed obligations in respect of drawn
letters of credit (but excluding contingent obligations under outstanding
letters of credit) and other purchase money indebtedness and guarantees of any
of the foregoing obligations of such Person and its Subsidiaries determined on a
consolidated basis on such date in accordance with GAAP, less (b) the aggregate
amount of all Cash of such Person and its Subsidiaries that would not appear as
“restricted” on a consolidated balance sheet of such Person and its Subsidiaries
to (ii) EBITDA of such Person. Notwithstanding the foregoing, for purposes of
calculating any L1 Total Net Leverage Ratio all leases of real property
(including this Lease, the Other Leases and any Gaming Leases) shall be treated
as operating leases (and not capital leases) and therefore shall not be
accounted as indebtedness, regardless of how they are treated under GAAP.

“L1 Transfer”: As defined in Section 22.2(vii).

 

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“L1 Transfer Cap Amount”: An amount equal to twenty-five percent (25%) of the
2018 EBITDAR Pool.

“L2 Qualified Transferee”: “L2 Qualified Transferee” shall have the same meaning
as “L1 Qualified Transferee” without taking into account clauses (a), (b) and
(e) of such definition.

“L2 Successor Tenant”: Any transferee that consummates an L2 Transfer pursuant
to Section 22.2(viii).

“L2 Transfer”: As defined in Section 22.2(viii).

“L2 Transfer Cap Amount”: An amount equal to two percent (2%) of the 2018
EBITDAR Pool.

“Land”: As defined in clause (a) of the first sentence of Section 1.1.

“Landlord”: As defined in the preamble.

“Landlord Indemnified Parties”: As defined in Section 21.1(i).

“Landlord MCI Financing”: As defined in Section 10.4(b).

“Landlord Party”: As defined in the definition of Licensing Event.

“Landlord Prohibited Person”: Any Person that, in the capacity it is proposed to
be acting (but not in any other capacity), is more likely than not to jeopardize
Landlord’s or any of its Affiliates’ ability to hold a Gaming License or to be
associated with a Gaming licensee under any applicable Gaming Regulations (other
than any Gaming Authority established by any Native American tribe).

“Landlord REIT”: VICI Properties Inc., a Maryland corporation, the indirect
parent of Landlord.

“Landlord Specific Ground Lease Requirements”: As defined in Section 7.3(a).

“Landlord Tax Returns”: As defined in Section 4.1(b).

“Landlord Work”: As defined in Section 10.5(e).

“Landlord’s Enforcement Condition”: Either (i) there are no Permitted Leasehold
Mortgagees or (ii) Landlord has delivered to each Permitted Leasehold Mortgagee
for which notice to Landlord has been properly provided pursuant to
Section 17.1(b)(i) hereof, a copy of the applicable notice of default pursuant
to Section 17.1(c) hereof and the Right to Terminate Notice pursuant to
Section 17.1(d) hereof, and (solely for purposes of this clause (ii)) either of
the following occurred:

(a)    Either (1) no Permitted Leasehold Mortgagee has satisfied the
requirements in Section 17.1(d) within the thirty (30) or ninety (90) day
periods, as applicable, described therein, or (2) a Permitted Leasehold
Mortgagee satisfied the requirements in Section 17.1(d) prior to the

 

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expiration of the applicable period, but did not cure a default that is required
to be so cured by such Permitted Leasehold Mortgagee and such Permitted
Leasehold Mortgagee discontinued efforts to cure the applicable default(s)
thereby failing to satisfy the conditions for extending the termination date as
provided in Section 17.1(e) or otherwise failed at any time to satisfy the
conditions for extending the termination date as provided in Section 17.1(e)(i);
or

(b)    Both (1) this Lease is rejected in any bankruptcy, insolvency or
dissolution proceeding or is terminated by Landlord following a Tenant Event of
Default, and (2) no Permitted Leasehold Mortgagee has acted in accordance with
Section 17.1(f) hereof to obtain a New Lease prior to the expiration of the
period described therein.

“Landlord’s MCI Financing Proposal”: As defined in Section 10.4(a).

“Las Vegas Lease”: As defined in the definition of Other Leases.

“Las Vegas Restructuring”: CEC causing CRC to cause, in a series of steps, the
transfer (including via a series of contributions) of (i) the equity interests
in HLV Tenant from CRC to Caesars Palace and (ii) the equity interests in the
following entities from CRC to Caesars Nevada Newco, LLC, which is a
wholly-owned direct subsidiary of Caesars Palace: (a) Flamingo Las Vegas
Operating Company LLC, (b) Rio Properties LLC, (c) Paris Las Vegas Operating
Company LLC, (d) Caesars Growth PH Fee LLC, (e) Laundry NewCo LLC, (f) Caesars
Growth PH LLC, (g) Caesars Growth Cromwell LLC, (h) Caesars Growth Quad LLC,
(i) Caesars Growth Bally’s LV LLC and (j) Harrah’s Laughlin LLC.

“Lease”: As defined in the preamble. References to “Lease” hereunder shall mean
this Lease as amended as of the Second Amendment Date.

“Lease Assumption Agreement”: As defined in Section 22.2(i).

“Lease Foreclosure Transaction”: Either (i) an assignment pursuant to
Section 22.2(i)(b) or (c), or (ii) entry by any Permitted Leasehold Mortgagee or
its Permitted Leasehold Mortgagee Designee into a New Lease in compliance in all
respects with Section 17.1(f) and all other applicable provisions of this Lease.

“Lease Related Agreements”: Collectively, this Lease, the Other Leases, the
Guaranty and the Other Guaranty.

“Lease Year”: The first (1st) Lease Year of the Initial Term shall be the period
commencing on the Commencement Date and ending on the last day of the calendar
month in which the first (1st) anniversary of the Commencement Date occurs and
each subsequent Lease Year during the Initial Term shall be each period of
twelve (12) full calendar months after the last day of the prior Lease Year,
except that the final Lease Year of the Initial Term shall end on the Initial
Stated Expiration Date or such earlier date as this Lease is terminated pursuant
to its terms. The first (1st) Lease Year of the first (1st) Renewal Term shall
commence on August 1, 2035 and end on July 31, 2036, and each subsequent Lease
Year during a Renewal Term shall be each period of twelve (12) full calendar
months after the last day of the prior Lease Year, except that the final Lease
Year of the Term shall end on the Expiration Date.

 

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“Leased Improvements”: As defined in clause (c) of the first sentence of
Section 1.1.

“Leased Property”: As defined in Section 1.1. For the avoidance of doubt, the
Leased Property includes all Alterations and Capital Improvements, provided,
however, that the foregoing shall not affect or contradict the provisions of
this Lease which specify that Tenant shall be entitled to certain rights with
respect to or benefits of the Tenant Capital Improvements as and to the extent
expressly set forth herein. Notwithstanding the foregoing, provisions of this
Lease that provide for certain benefits or rights to Tenant with respect to
Tenant Material Capital Improvements, such as, by way of example only and not by
way of limitation, the payment of the applicable insurance proceeds to Tenant
due to a loss or damage of such Tenant Material Capital Improvements pursuant to
Section 14.1, shall remain in effect notwithstanding the preceding sentence.

“Leased Property (CPLV)”: As defined in the Las Vegas Lease.

“Leased Property (HLV)”: As defined in the Las Vegas Lease.

“Leased Property Tests”: Collectively, the Annual Minimum Per-Lease B&I Cap Ex
Requirement and the Triennial Minimum Cap Ex Requirement B.

“Leasehold Estate”: As defined in Section 17.1(a).

“Legal Requirements”: All applicable federal, state, county, municipal and other
governmental statutes, laws (including securities laws), rules, policies,
guidance, codes, orders, regulations, ordinances, permits, licenses, covenants,
conditions, restrictions, judgments, decrees and injunctions, whether now or
hereafter enacted and in force, as applicable to any Person or to the Facility,
including those (a) that affect either the Leased Property or any portion
thereof and/or Tenant’s Property, all Capital Improvements and Alterations
(including any Material Capital Improvements) or the construction, use or
alteration thereof, or otherwise in any way affecting the business operated or
conducted thereat, as the context requires, and (b) which may (i) require
repairs, modifications or alterations in or to the Leased Property or any
portion thereof and/or any of Tenant’s Property, (ii) without limitation of the
preceding clause (i), require repairs, modifications or alterations in or to any
portion of any Capital Improvements (including any Material Capital
Improvements), (iii) in any way adversely affect the use and enjoyment of any of
the foregoing, or (iv) regulate the transport, handling, use, storage or
disposal or require the cleanup or other treatment of any Hazardous Substance.

“Letter of Credit”: An irrevocable, unconditional, clean sight draft letter of
credit reasonably acceptable to Landlord and Fee Mortgagee (as applicable) in
favor of Landlord or, at Landlord’s direction, Fee Mortgagee and entitling
Landlord or Fee Mortgagee (as applicable) to draw thereon based solely on a
statement executed by an officer of Landlord or Fee Mortgagee (as applicable)
stating that it has the right to draw thereon under this Lease in a location in
the United States reasonably acceptable to Landlord or Fee Mortgagee (as
applicable), issued by a domestic Eligible Institution or the U.S. agency or
branch of a foreign Eligible Institution, and upon which letter of credit
Landlord or Fee Mortgagee (as applicable) shall have the right to draw in full:
(a) if Landlord or Fee Mortgagee (as applicable) has not received at least
thirty (30) days prior to the

 

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date on which the then outstanding letter of credit is scheduled to expire, a
notice from the issuing financial institution that it has renewed the applicable
letter of credit; (b) thirty (30) days prior to the date of termination
following receipt of notice from the issuing financial institution that the
applicable letter of credit will be terminated; and (c) thirty (30) days after
Landlord or Fee Mortgagee (as applicable) has given notice to Tenant that the
financial institution issuing the applicable letter of credit ceases to either
be an Eligible Institution or meet the rating requirement set forth above.

“Licensing Event”:

(a)    With respect to Tenant, (i) a communication (whether oral or in writing)
by or from any Gaming Authority to Tenant or any of its Affiliates (each, a
“Tenant Party”) or to a Landlord Party (as defined below) or other action by any
Gaming Authority that indicates that such Gaming Authority would reasonably be
expected to find that the association of a Tenant Party with Landlord is likely
to (A) result in a disciplinary action relating to, or the loss of, inability to
reinstate or failure to obtain, any Gaming License or any other rights or
entitlements held or required to be held by Landlord or any of its Affiliates
(each, a “Landlord Party”) under any Gaming Regulations or (B) violate any
Gaming Regulations to which a Landlord Party is subject; or (ii) a Tenant Party
is required to be licensed, registered, qualified or found suitable under any
Gaming Regulations, and such Tenant Party does not become so licensed,
registered, qualified or found suitable or, after becoming so licensed,
registered, qualified or found suitable, fails to remain so, and, solely for
purposes of determining whether a Tenant Event of Default has occurred under
Section 16.1(l), the same causes cessation of Gaming activity at a Continuous
Operation Facility (as defined in the Regional Lease) and would reasonably be
expected to have a material adverse effect on the Facility (taken as a whole
with the Regional Facilities); and

(b)    With respect to Landlord, (i) a communication (whether oral or in
writing) by or from any Gaming Authority to a Landlord Party or to a Tenant
Party or other action by any Gaming Authority that indicates that such Gaming
Authority would reasonably be expected to find that the association of a
Landlord Party with Tenant is likely to (A) result in a disciplinary action
relating to, or the loss of, inability to reinstate or failure to obtain, any
Gaming License or any other rights or entitlements held or required to be held
by a Tenant Party under any Gaming Regulations or (B) violate any Gaming
Regulations to which a Tenant Party is subject; or (ii) a Landlord Party is
required to be licensed, registered, qualified or found suitable under any
Gaming Regulations, and such Landlord Party does not become so licensed,
registered, qualified or found suitable or, after becoming so licensed,
registered, qualified or found suitable, fails to remain so, and, solely for
purposes of determining whether a default has occurred under Section 41.13
hereunder, the same causes cessation of Gaming activity at a Continuous
Operation Facility (as defined in the Regional Lease) and would reasonably be
expected to have a material adverse effect on the Facility (taken as a whole
with the Regional Facilities).

“Liquor Authority”: As defined in Section 41.13.

“Liquor Laws”: As defined in Section 41.13.

“London Clubs”: Those certain assets described on Schedule 6 attached hereto.

 

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“Losses”: As defined in Section 23.2(b).

“Managed Facilities IP”: All Intellectual Property owned by or licensed to
Services Co, Tenant or its Subsidiaries that is necessary for the operation or
management of the Facility, including, without limitation, any Property Specific
Guest Data and Guest Data, the Brands, the Trademarks included in Exhibit N
attached hereto, and the Property Specific IP.

“Material Capital Improvement”: Any single or series of related Capital
Improvements that would or does (i) have a total budgeted or actual cost (as
reasonably evidenced to Landlord) (excluding land acquisition costs) in excess
of Fifty Million and No/100 Dollars ($50,000,000.00) and (ii) either
(a) materially alter the Facility (e.g., shoring, permanent framework
reconfigurations), (b) expand the Facility (i.e., construction of material
additions to existing Leased Improvements) or (c) add improvements to
undeveloped portion(s) of the Land.

“Material Leased Property”: Leased Property or Other Leased Property, or any
portion thereof, having a value greater than Fifty Million and No/100 Dollars
($50,000,000.00).

“Material London Property”: All or any portion of the London Clubs having a
value greater than Fifty Million and No/100 Dollars ($50,000,000.00).

“Material Sublease”: A Sublease (excluding a management agreement or similar
agreement to operate but not occupy as a tenant a particular space at the
Facility) under which (i) the monthly rent and/or fees and other payments
payable by the Subtenant (or manager) exceed Fifty Thousand and No/100 Dollars
($50,000.00) (which amount shall be increased by the Escalator on the first
(1st) day of each Lease Year (commencing on the first (1st) day of the second
(2nd) Lease Year)) per month or (ii) such tenant Subleases the entire Facility
to the extent permitted pursuant to Section 22.3(v).

“Maximum Fixed Rent Term”: With respect to the Leased Property, the Maximum
Fixed Rent Term as set forth on Schedule 3 attached hereto, as it may be
extended in accordance with clause (c) of the definition of Rent.

“Minimum Cap Ex Amount”: Collectively or individually, as the context may
require, the Annual Minimum Cap Ex Amount, the Triennial Minimum Cap Ex Amount A
and/or the Triennial Minimum Cap Ex Amount B.

“Minimum Cap Ex Reduction Amount”: In each instance in which (a) any Material
Leased Property is removed from this Lease, the Regional Lease or the Las Vegas
Lease (with respect to the Leased Property (CPLV)) (as applicable) or this
Lease, the Regional Lease or the Las Vegas Lease (with respect to the Leased
Property (CPLV)) is terminated or partially terminated with respect to Material
Leased Property, (b) Regional Landlord disposes of a Regional Facility and a
third party “Severance Lease” (as defined in the Regional Lease) is executed or
CPLV Landlord disposes of the CPLV Facility and a third party “Severance Lease”
(as defined in the Las Vegas Lease) is executed, (c) an L1/L2 Transfer or “L1/L2
Transfer” (as defined in the Regional Lease) occurs, (d) Landlord disposes of
all of the Leased Property and this Lease is assigned to a third party Acquirer,
(e) an Other Lease (and all the Other Leased Property thereunder) is assigned to
a third party “Acquirer” (as defined in such Other Lease), (f) Material London
Property is disposed of or (g) Regional Tenant elects to cease “Continuous
Operations”

 

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(as defined in the Regional Lease) of a Regional Facility that is not a
“Continuous Operation Facility” (as defined in the Regional Lease) for more than
twelve (12) consecutive months, all as described in the definitions of Annual
Minimum Cap Ex Amount, Triennial Minimum Cap Ex Amount A and Triennial Minimum
Cap Ex Amount B (as applicable), the product of (i) the applicable Minimum Cap
Ex Amount or Triennial Allocated Minimum Cap Ex Amount B Floor in effect
immediately prior thereto (each determined, for the avoidance of doubt, without
giving effect to any adjustments thereto pursuant to the provisos in Sections
10.5(a)(i), 10.5(a)(iii) and 10.5(a)(iv)), multiplied by (ii) a fraction, the
numerator of which shall be equal to the portion of the Net Revenue of Tenant
and “Net Revenue” (as defined in the applicable Other Lease) of Regional Tenant
and/or CPLV Tenant (as applicable) for the Triennial Test Period attributable to
the Facility, Leased Property, Other Leased Property or London Clubs (or portion
of any thereof) (as applicable) being so rendered inoperative, removed or
disposed of (as applicable), and the denominator of which shall be equal to the
aggregate Net Revenue of Tenant and “Net Revenue” (as defined in the applicable
Other Lease) of Regional Tenant and/or CPLV Tenant, as applicable, for the
Triennial Test Period attributable to all assets then included in the
calculation of Capital Expenditures for purposes of the All Property Tests (with
respect to the Annual Minimum Cap Ex Amount and the Triennial Minimum Cap Ex
Amount A) or the Leased Property Tests (with respect to the Triennial Minimum
Cap Ex Amount B and the Triennial Allocated Minimum Cap Ex Amount B Floor)
(including, for this purpose, the Facility, Leased Property, Other Leased
Property or London Clubs (or portion of any thereof) (as applicable) being so
rendered inoperative, removed or disposed of (as applicable)).

“Minimum Cap Ex Requirements”: Collectively or individually, as the context may
require, the Annual Minimum Cap Ex Requirement, the Annual Minimum Per-Lease B&I
Cap Ex Requirement, the Triennial Minimum Cap Ex Requirement A and the Triennial
Minimum Cap Ex Requirement B.

“Minimum Facility Threshold”: (i) Not less than two thousand five hundred
(2,500) rooms, one hundred thousand (100,000) square feet of casino floor
containing no less than one thousand three hundred (1,300) slot machines and one
hundred (100) gaming tables, (ii) revenue of no less than Seventy-Five Million
and No/100 Dollars ($75,000,000.00) per year is derived from high limit VVIP and
international gaming customers, (iii) extensive operated food and beverage
outlets, and (iv) at least one (1) large entertainment venue; provided, however,
that the foregoing clause (ii) may be satisfied if the Qualified Replacement
Manager has managed a property that satisfies the requirements of such clause
(ii) within the immediately preceding two (2) years.

“MTA”: That certain Master Transaction Agreement by and between PropCo and ERI,
dated June 24, 2019, together with all exhibits and schedules thereto, including
Exhibit A thereto.

“MTSA”: That certain Master Transaction & Stockholders Agreement by and among WH
US Holdco, William Hill Holdings Limited, a private limited company registered
in England and Wales, William Hill PLC, a public limited company incorporated in
England and Wales and ERI, dated September 4, 2018, as amended by that certain
First Amendment to Master Transaction & Stockholder Agreement dated November 25,
2018, and as the same may be hereafter amended or modified.

 

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“Net Revenue”: The net sum of the following, without duplication, over the
applicable time period of measurement: (i) the amount received by Tenant (and
its Subsidiaries and, to the extent provided in the following provisions of this
definition of “Net Revenue”, its Subtenants) from patrons at the Facility for
gaming, less, (A) to the extent otherwise included in the calculation of Net
Revenue, refunds and free promotional play provided pursuant to a rewards,
marketing, and/or frequent users program (including rewards granted by
Affiliates of Tenant (or any such Subtenant, as applicable)) and (B) amounts
returned to patrons through winnings at the Facility (the net amount described
in this clause (i), “Gaming Revenues”); plus (ii) the gross receipts of Tenant
(and its Subsidiaries and, to the extent provided in the following provisions of
this definition of “Net Revenue”, its Subtenants) for all goods and merchandise
sold, room revenues derived from hotel operations, food and beverages sold, the
charges for all services performed, or any other revenues generated by or
otherwise payable to Tenant (and its Subsidiaries and, to the extent provided in
the following provisions of this definition of “Net Revenue”, its Subtenants)
(including, without limitation, use fees, retail and commercial rent, revenue
from rooms, accommodations, food and beverage, and the proceeds of business
interruption insurance) in, at or from the Facility for Cash, credit or
otherwise (without reserve or deduction for uncollected amounts), but excluding
pass-through revenues collected by Tenant (or any such Subtenant, as applicable)
to the extent such amounts are remitted to the applicable third party entitled
thereto (the net amounts described in this clause (ii), “Retail Sales”); less
(iii) to the extent otherwise included in the calculation of Net Revenue, the
retail value of accommodations, merchandise, food and beverage and other
services furnished to guests of Tenant (or any such Subtenant, as applicable) at
the Facility without charge or at a reduced charge (and, with respect to a
reduced charge, such reduction in Net Revenue shall be equal to the amount of
the reduction of such charge otherwise included in Net Revenue) (the amounts
described in this clause (iii), “Promotional Allowances”). Notwithstanding
anything herein to the contrary, the following provisions shall apply with
respect to the calculation of Net Revenue:

(a)    For purposes of calculating adjustments to Variable Rent, the following
provisions shall apply, as applicable:

(1)    Intentionally omitted.

(2)    In the event of expiration, cancellation or termination of any Ground
Lease for any reason whatsoever whether voluntary or involuntary (by operation
of law or otherwise) prior to the expiration date of this Lease, including
extensions and renewals granted thereunder, then, thereafter, the Net Revenue
attributable to the portion of the Leased Property subject to such Ground Lease
shall not be included in the calculation of Net Revenue for the applicable base
year, provided, that, if Landlord (or any Fee Mortgagee) enters into a
replacement lease with respect to substantially the same Ground Leased Property
(or if the formerly Ground Leased Property is acquired by Landlord and leased
directly to Tenant pursuant to this Lease), then the Net Revenue attributable to
such expired, cancelled or terminated Ground Lease shall once again be included
in the calculation of Net Revenue for the applicable base year.

(3)    If Tenant enters into a Sublease (other than a Permitted Sportsbook
Sublease) with a Subtenant that is not directly or indirectly wholly-owned by
Guarantor (such that, after entering into such Sublease, rather than the Gaming
Revenues, Retail Sales and Promotional Allowances generated by the space covered
by such Sublease being included in the calculation of

 

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Tenant’s Net Revenue, instead the revenue from such Sublease would be governed
by clause (b)(1) or (b)(2) below), then, thereafter, any Gaming Revenues, Retail
Sales and Promotional Allowances that would otherwise be included in the
calculation of Net Revenue for the applicable base year with respect to the
applicable subleased (or managed) space shall be excluded from the calculation
of Net Revenue for the applicable base year, and the rent and/or fees and other
consideration to be received by Tenant pursuant to such Sublease shall be
substituted therefor.

(4)    If Tenant assumes operation of space that in the applicable base year was
operated under a Sublease (other than a Permitted Sportsbook Sublease) with a
Subtenant that was not directly or indirectly wholly-owned by Guarantor, or if
all of the direct or indirect ownership interests in a Person that was a
Subtenant in the applicable base year are acquired by Guarantor (in either case,
such that after such assumption or such acquisition, revenue that would
otherwise be included in Net Revenue for the applicable base year pursuant to
clause (b)(1) or (b)(2) below is converted to revenue with respect to which
Gaming Revenues, Retail Sales and Promotional Allowances are included in Net
Revenue for the applicable base year), then, thereafter, the rent and/or fees
and other consideration received by Tenant pursuant to such Sublease that would
otherwise be included in the calculation of Net Revenue for the applicable base
year shall be excluded from the calculation of Net Revenue for the applicable
base year, and the Gaming Revenues, Retail Sales and Promotional Allowances to
be received by Tenant pursuant to its operation of such space shall be
substituted therefor.

(5)    Notwithstanding the foregoing, the adjustments provided for in clauses
(a)(3) and (a)(4) above shall not be implemented in the calculation of Net
Revenue with respect to any transaction involving any space for which aggregate
Gaming Revenues, Retail Sales and Promotional Allowances do not exceed Ten
Million and No/100 Dollars ($10,000,000.00) in each transaction and Fifteen
Million and No/100 Dollars ($15,000,000.00) in the aggregate per Lease Year.

(b)    Amounts received pursuant to Subleases shall be included in Net Revenue
as follows:

(1)    With respect to any Sublease (other than a Permitted Sportsbook Sublease)
from Tenant to a Subtenant in which Guarantor directly or indirectly owns less
than fifty percent (50%) of the ownership interests, Net Revenue shall not
include Gaming Revenues, Retail Sales or Promotional Allowances received by such
Subtenant but shall include the rent and/or fees and all other consideration
received by Tenant pursuant to such Sublease.

(2)    With respect to any Sublease (other than a Permitted Sportsbook Sublease)
from Tenant to a Subtenant in which Guarantor directly or indirectly owns fifty
percent (50%) or more of the ownership interests, but less than all of the
ownership interests, Net Revenue shall not include Gaming Revenues, Retail Sales
or Promotional Allowances received by such Subtenant but shall include an amount
equal to the greater of (x) the rent and/or fees and all other consideration
actually received by Tenant for such Sublease from such Affiliate and (y) the
rent and/or fees and other consideration that would be payable under such
Sublease if at arms-length, market rates.

 

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(3)    With respect to any Sublease (other than a Permitted Sportsbook Sublease)
from Tenant to a Subtenant that is directly or indirectly wholly-owned by
Guarantor, Net Revenue shall not include the rent and/or fees or any other
consideration received by Tenant pursuant to such Sublease but shall include
Gaming Revenues, Retail Sales and Promotional Allowances received by such
Subtenant.

(4)    With respect to any Permitted Sportsbook Sublease, Net Revenue shall not
include the rent and/or fees or any other consideration received by Tenant
pursuant to such Sublease but shall include Gaming Revenues, Retail Sales and
Promotional Allowances received by the Subtenant under such Permitted Sportsbook
Sublease.

(c)    For the avoidance of doubt, (i) gaming taxes, casino operating expenses
(such as salaries, income taxes, employment taxes, supplies, equipment, cost of
goods and inventory, rent, office overhead, marketing and advertising and other
general administrative costs) and any expenses incurred to negotiate and enter
into a Permitted Sportsbook Sublease will not be deducted in arriving at Net
Revenue and (ii) amounts paid by Tenant to the Subtenant under a Permitted
Sportsbook Sublease or amounts retained by the Subtenant under a Permitted
Sportsbook Sublease (including pursuant to a profit or revenue sharing
arrangement) will not be deducted in arriving at Net Revenue.

(d)    Net Revenue will be calculated on an accrual basis for purposes of this
definition, as required under GAAP. For the absence of doubt, (x) if Gaming
Revenues, Retail Sales or Promotional Allowances of a Subsidiary or Subtenant,
as applicable, are taken into account for purposes of calculating Net Revenue,
any rent received by Tenant from such Subsidiary or Subtenant, as applicable,
pursuant to any Sublease of Leased Property with such Subsidiary or Subtenant,
as applicable, shall not also be taken into account for purposes of calculating
Net Revenue, (y) if Gaming Revenues, Retail Sales or Promotional Allowances of a
Subsidiary or Subtenant, as applicable, are not taken into account for purposes
of calculating Net Revenue, any rent received by Tenant from such Subsidiary or
Subtenant, as applicable, pursuant to any Sublease of Leased Property with such
Subsidiary or Subtenant, as applicable, shall be taken into account for purposes
of calculating Net Revenue and (z) if Gaming Revenues, Retail Sales or
Promotional Allowances with respect to any Permitted Sportsbook Sublease are
required to be taken into account for purposes of calculating Net Revenue,
amounts received by Tenant or its Affiliates from the applicable Subtenant
pursuant to such Permitted Sportsbook Sublease shall under no circumstances be
taken into account for purposes of calculating Net Revenue.

“New Lease”: As defined in Section 17.1(f).

“Non-Core Tenant Competitor”: A Person that is engaged, or is an Affiliate of a
Person that is engaged, in the ownership or operation of a Gaming business so
long as (i) such Person’s consolidated annual gross gaming revenues do not
exceed Five Hundred Million and No/100 Dollars ($500,000,000.00) (which amount
shall be increased by the Escalator on the first (1st) day of each Lease Year,
commencing with the second (2nd) Lease Year) and (ii) such Person does not,
directly or indirectly, own or operate a Gaming Facility within thirty
(30) miles of a Gaming Facility directly or indirectly owned or operated by ERI.
For purposes of the foregoing, ownership of the real estate and improvements
where a Gaming business is conducted, without ownership of the Gaming business
itself, shall not be deemed to constitute the ownership of a Gaming business.

 

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“Notice”: A notice given in accordance with Article XXXV.

“Notice of Termination”: As defined in Section 17.1(f).

“OFAC”: As defined in Article XXXIX.

“Omnibus Amendment”: That certain Omnibus Amendment to Leases by and among
Landlord, CPLV Landlord, Regional Landlord, Tenant, CPLV Tenant and Regional
Tenant, dated as of June 1, 2020, as it may be otherwise amended, restated,
modified or supplemented from time to time. For the avoidance of doubt, the
Omnibus Amendment shall remain in full force and effect following the Second
Amendment Date subject to, and in accordance with, the terms thereof.

“Original Lease”: As defined in the recitals.

“Other Capital Expenditures”: The “Capital Expenditures” as defined in each of
the Other Leases, collectively or individually, as the context may require.

“Other Facility”: A “Facility” as defined in each of the Other Leases,
collectively or individually, as the context may require.

“Other Guaranty”: Collectively or individually as the context may require,
(i) that certain Guaranty of Lease, dated as of the Second Amendment Date, made
by Guarantor and “Landlord” as defined in the Las Vegas Lease, and (ii) that
certain Guaranty of Lease, dated as of the Second Amendment Date, made by
Guarantor and Regional Landlord.

“Other Leases”: Collectively or individually, as the context may require,
(i) that certain Lease (Non-CPLV), dated as of the Commencement Date, by and
between an Affiliate of Landlord, as “Landlord,” and various Affiliates of
Tenant, as “Tenant,” as amended by that certain First Amendment to Lease
(Non-CPLV), dated as of December 22, 2017, that certain Second Amendment to
Lease (Non-CPLV) and Ratification of SNDA, dated as of February 16, 2018, that
certain Third Amendment to Lease (Non-CPLV), dated as of April 2, 2018, that
certain Fourth Amendment to Lease (Non-CPLV), dated as of the First Amendment
Date, the Omnibus Amendment, and that certain Fifth Amendment to Lease
(Non-CPLV), dated as of the Second Amendment Date (which lease was renamed,
effective as of the Second Amendment Date, the “Regional Lease”), and as further
amended, restated or otherwise modified from time to time (collectively, the
“Regional Lease”), and (ii) that certain Lease (CPLV), dated as of the
Commencement Date, by and between an Affiliate of Landlord, as “Landlord,” and
various Affiliates of Tenant, as “Tenant,” as amended by that certain First
Amendment to Lease (CPLV), dated as of the First Amendment Date, the Omnibus
Amendment, and that certain Second Amendment to Lease (CPLV), dated as of the
Second Amendment Date (which lease was renamed, effective as of the Second
Amendment Date, the “Las Vegas Lease”), and as further amended, restated or
otherwise modified from time to time (collectively, the “Las Vegas Lease”).

 

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“Other Leased Property”: At any time, the “Leased Property” as defined in each
of the Other Leases at such time, collectively or individually, as the context
may require. For the avoidance of doubt, and without limiting the generality of
the foregoing, any sale or transfer of Other Leased Property that causes such
Other Leased Property to cease to be “Leased Property” under the applicable
Other Lease, will cause such Other Leased Property to cease being Other Leased
Property hereunder.

“Other Material Capital Improvements”: The “Material Capital Improvements” as
defined in each of the Other Leases, collectively or individually, as the
context may require (except that, in the case of the Las Vegas Lease, the term
“Other Material Capital Improvements” as used in this Lease refers solely to
“Material Capital Improvements” with respect to the Leased Property (CPLV)).

“Other Tenants”: The “Tenant” as defined in each of the Other Leases,
collectively or individually, as the context may require.

“Overdue Rate”: On any date, a rate equal to five (5) percentage points above
the Prime Rate, but in no event greater than the maximum rate then permitted
under applicable law.

“Parent Company”: With respect to any L1 Qualified Transferee or L2 Qualified
Transferee, any Person (other than an Investment Fund) (x) as to which such L1
Qualified Transferee or L2 Qualified Transferee is a Subsidiary; and (y) which
is not a Subsidiary of any other Person (other than an Investment Fund).

“Parent Entity”: With respect to any Person, any corporation, association,
limited partnership, limited liability company or other entity which at the time
of determination (a) owns or controls, directly or indirectly, more than fifty
percent (50%) of the total voting power of shares of capital stock (without
regard to the occurrence of any contingency) entitled to vote in the election of
directors, managers or trustees of such Person, (b) owns or controls, directly
or indirectly, more than fifty percent (50%) of the capital accounts,
distribution rights, total equity and voting interests or general and limited
partnership interests, as applicable, of such Person, whether in the form of
membership, general, special or limited partnership interests or otherwise, or
(c) is the controlling general partner or managing member of, or otherwise
controls, such entity.

“Partial Taking”: As defined in Section 15.1(b).

“Party” and “Parties”: Landlord and/or Tenant, as the context requires.

“Patriot Act Offense”: Any violation of the criminal laws of the United States
of America or of any of the several states, or that would be a criminal
violation if committed within the jurisdiction of the United States of America
or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under (A) the criminal laws against
terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy
Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or
(E) the USA Patriot Act. “Patriot Act Offense” also includes the crimes of
conspiracy to commit, or aiding and abetting another to commit, a Patriot Act
Offense.

 

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“Payment Date”: Any due date for the payment of the installments of Rent or
Additional Charges payable under this Lease.

“Penn Master Lease”: That certain Master Lease, dated as of November 1, 2013, by
and among GLP Capital, L.P., Penn Tenant, LLC and the other parties thereto.

“Permitted Exception Documents”: (i) Property Documents (x) that are listed on
the title policies described on Exhibit I attached hereto, or (y) that (a)
Landlord entered into, as a party thereto, after the Commencement Date and
(b) Tenant is required hereunder to comply with and (ii) the Specified Subleases
(in each case of clauses (i)(x) and (ii), together with any renewals or
modifications thereof made in accordance with the express terms thereof), but
excluding Specified Subleases as to which the applicable Subtenant is CEOC, ERI
or any of their respective Affiliates. For the avoidance of doubt, the Permitted
Exception Documents do not include any Ground Leases.

“Permitted Facility Sublease”: As defined in Section 22.3(v).

“Permitted Facility Sublease Cap Amount”: An amount equal to ten percent (10%)
of the 2018 EBITDAR Pool.

“Permitted Leasehold Mortgage”: Any mortgage, pledge agreement, security
agreement, assignment of leases and rents, fixture filing or similar document
creating or evidencing a lien on Tenant’s leasehold interest (or subleasehold
interest) in all of the Leased Property, subject to exclusions with respect to
items that are not capable of being mortgaged and that, in the aggregate, are de
minimis (or a lien on at least eighty percent (80%) of the direct or indirect
Equity Interests in Tenant at any tier of ownership), granted to or for the
benefit of a Permitted Leasehold Mortgagee as security for the indebtedness of
Tenant or its Affiliates.

“Permitted Leasehold Mortgagee”: The lender or noteholder or any agent or
trustee or similar representative on behalf of one or more lenders or
noteholders or other investors in connection with indebtedness secured by a
Permitted Leasehold Mortgage, in each case as and to the extent such Person has
the power to act (subject to obtaining the requisite instructions) on behalf of
all lenders, noteholders or investors with respect to such Permitted Leasehold
Mortgage; provided such lender or noteholder or any agent or trustee or similar
representative (but not necessarily the lenders, noteholders or other investors
which it represents) is a banking or other institution that in the ordinary
course acts as a lender, agent or trustee or similar representative (in each
case, on behalf of a group of lenders or noteholders) in respect of financings
of such type; and provided, further, that, in all events, (i) no agent, trustee
or similar representative shall be Tenant, CEOC, ERI, Guarantor or any of their
Affiliates, respectively (each, a “Prohibited Leasehold Agent”), and (ii) no (A)
Prohibited Leasehold Agent, (excluding any Person that is a Prohibited Leasehold
Agent as a result of its ownership of publicly-traded shares in any Person), or
(B) entity that owns, directly or indirectly (but excluding any ownership of
publicly-traded shares in ERI or any of its Affiliates), higher than the lesser
of (1) ten percent (10%) of the Equity Interests in Tenant or (2) a Controlling
legal or beneficial interest in Tenant, may collectively hold an amount of the
indebtedness secured by a Permitted Leasehold Mortgage higher than the lesser of
(x) twenty-five percent (25%) thereof and (y) the principal amount thereof
required to satisfy the threshold for requisite consenting lenders to amend the
terms of such indebtedness that affect all lenders thereunder.

 

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“Permitted Leasehold Mortgagee Designee”: An entity (other than a Prohibited
Leasehold Agent) designated by a Permitted Leasehold Mortgagee and acting for
the benefit of the Permitted Leasehold Mortgagee, or the lenders, noteholders or
investors represented by the Permitted Leasehold Mortgagee.

“Permitted Sportsbook Sublease”: Any operating agreement hereafter entered into
pursuant to the MTSA by and between Tenant, on the one hand, and WH US Holdco,
or any subsidiary thereof, on the other hand, relating to the operation of a
sportsbook or similar wagering activities at the Facility under this Lease,
which operating agreement (including all provisions thereof) is identical in
both form and substance to the CPLV Sportsbook Operating Agreement (including
all provisions thereof, including the definitional and other provisions of the
MTSA in effect as of the date hereof that are incorporated into the CPLV
Sportsbook Operating Agreement) (other than solely (i) in respect of the real
property to which such operating agreement relates, (ii) such changes that are
necessary or advisable (based on the determination of outside legal counsel) to
allow the provisions that are heretofore contained in the CPLV Sportsbook
Operating Agreement (as embodied in the CPLV Sportsbook Operating Agreement or
such other operating agreement entered into in accordance with this Lease) to
comply with applicable law (including Gaming Regulations) and (iii) such other
changes as do not adversely affect Landlord in any material respect).

“Person”: Any individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other form of entity.

“Preceding Lease Year”: As defined in clause (c)(i) of the definition of Rent.

“Preliminary Studies”: As defined in Section 10.4(a).

“Primary Intended Use”: (i) Hotel and resort and related uses, (ii) gaming
and/or pari-mutuel use, including, without limitation, horsetrack, dogtrack and
other similarly gaming-related sporting uses, (iii) ancillary retail and/or
entertainment use, (iv) such other uses required under any Legal Requirements
(including those mandated by any applicable regulators), (v) such other
ancillary uses (including convention center and related uses), but in all events
consistent with the current use of the Leased Property or any portion thereof as
of the Commencement Date or with then-prevailing hotel, resort and gaming
industry use, and/or (vi) such other use as shall be approved by Landlord from
time to time in its reasonable discretion.

“Prime Rate”: On any date, a rate equal to the annual rate on such date publicly
announced by JPMorgan Chase Bank, N.A. (provided that if JPMorgan Chase Bank,
N.A. ceases to publish such rate, the Prime Rate shall be determined according
to the comparable prime rate of another comparable nationally known money center
bank reasonably selected by Landlord), to be its prime rate for ninety (90)-day
unsecured loans to its corporate borrowers of the highest credit standing, but
in no event greater than the maximum rate then permitted under applicable law.

“Prior Months”: As defined in the definition of CPI Increase.

 

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“Proceeding”: As defined in Section 23.1(b).

“Prohibited Leasehold Agent”: As defined in the definition of Permitted
Leasehold Mortgagee.

“Prohibited Persons”: As defined in Article XXXIX.

“Promotional Allowances”: As defined in the definition of Net Revenue.

“PropCo”: VICI Properties L.P., a Delaware limited partnership.

“PropCo 1”: VICI Properties 1 LLC, a Delaware limited liability company.

“Propco TRS”: As defined in the preamble.

“Property Documents”: Reciprocal easement and/or operating agreements,
easements, covenants, exceptions, conditions and restrictions in each case
affecting the Leased Property or any portion thereof, but excluding, in any
event, all Fee Mortgage Documents.

“Property Specific Guest Data”: Any and all Guest Data, to the extent in or
under the possession or control of Tenant, Services Co or their respective
Affiliates, identifying, describing, concerning or generated by prospective,
actual or past guests, website visitors and/or customers of the Facility,
including retail locations, restaurants, bars, casino and Gaming Facilities,
spas and entertainment venues therein, but excluding, in all cases, (i) Guest
Data that has been integrated into analytics, reports, or other similar forms in
connection with the Caesars Rewards Program or any other customer loyalty
program of Services Co and its Affiliates (it being understood that this
exception shall not apply to such Guest Data itself, i.e., in its original form
prior to integration into such analytics, reports, or other similar forms in
connection with the Caesars Rewards Program or other customer loyalty program),
(ii) Guest Data that concerns facilities that are owned or operated by ERI or
its Affiliates, other than the Facility and that does not concern the Facility,
and (iii) Guest Data that concerns Services Co Proprietary Information and
Systems and is not specific to the Facility.

“Property Specific IP”: All Intellectual Property that is both (i) specific to
the Facility and (ii) currently or hereafter owned by CRC or its successors or
any of their Subsidiaries, including the Intellectual Property set forth on
Exhibit H, attached hereto.

“Qualified Replacement Guarantor”: The Qualified Replacement Guarantor (as
defined in the Regional Lease) that is serving in such capacity under the
Regional Lease.

“Qualified Replacement Manager”: The Qualified Replacement Manager (as defined
in the Regional Lease) that is serving in such capacity under the Regional
Lease.

“Qualified Successor Tenant”: As defined in Section 36.3.

“Qualified Transferee”: The Qualified Transferee (as defined in the Regional
Lease) that is serving in such capacity under the Regional Lease.

 

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“Regional Base Net Revenue Amount”: The “Base Net Revenue Amount” as defined in
the Regional Lease.

“Regional Capital Expenditures”: The “Capital Expenditures” as defined in the
Regional Lease, collectively or individually, as the context may require.

“Regional Facility” or “Regional Facilities”: A “Facility” or the “Facilities”,
as applicable, as defined in the Regional Lease, collectively or individually,
as the context may require.

“Regional Landlord”: The “Landlord” as defined in the Regional Lease.

“Regional Lease”: As defined in the definition of Other Leases.

“Regional Leased Property”: The “Leased Property” as defined in the Regional
Lease, collectively or individually, as the context may require.

“Regional Net Revenue”: The “Net Revenue” as defined in the Regional Lease and
calculated in accordance with the Regional Lease for purposes of determining
“Variable Rent” (as defined therein) thereunder.

“Regional Tenant”: The “Tenant” as defined in the Regional Lease.

“REIT”: A “real estate investment trust” within the meaning of Section 856(a) of
the Code or any similar or successor provision thereto.

“Renewal Notice”: As defined in Section 1.4.

“Renewal Term”: As defined in Section 1.4.

“Renewal Term Decrease”: As defined in clause (c)(ii)(B) of the definition of
Rent.

“Renewal Term Increase”: As defined in clause (c)(ii)(A) of the definition of
Rent.

“Renewal Term Variable Rent Period”: As defined in clause (c)(ii) of the
definition of Rent.

“Rent”: An annual amount payable as provided in Article III, calculated as
follows:

(a)    (i) For the first (1st) Lease Year, Rent shall be equal to Thirty Nine
Million Six Hundred Twenty-Five Thousand and No/100 Dollars ($39,625,000.00) and
(ii) for the second (2nd) through and including the seventh (7th) Lease Year,
Rent shall be equal to Forty Million Two Hundred Nineteen Thousand Three Hundred
Seventy-Five and No/100 Dollars ($40,219,375.00), adjusted annually as set forth
in the following sentence. On each Escalator Adjustment Date during the
third (3rd) through and including the seventh (7th) Lease Years, the Rent
payable for each such Lease Year shall be adjusted to be equal to the Rent
payable for the immediately preceding Lease Year (as in effect on the last day
of such preceding Lease Year), multiplied by the Escalator. For purposes of
clarification, there shall be no Variable Rent (defined below) payable during
the first seven (7) Lease Years.

 

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(b)    From and after the commencement of the eighth (8th) Lease Year, until the
Initial Stated Expiration Date, annual Rent shall be comprised of both a base
rent component (“Base Rent”) and a variable rent component (“Variable Rent”),
each such component of Rent calculated as provided below:

(i)    Base Rent shall equal (w) for the eighth (8th) Lease Year, the product of
seventy percent (70%) of Rent in effect as of the last day of the seventh (7th)
Lease Year, multiplied by the Escalator, (x) for the ninth (9th) and tenth
(10th) Lease Years, the Base Rent payable for the immediately preceding Lease
Year, as applicable (as in effect on the last day of such preceding Lease Year),
multiplied by the Escalator in each case, (y) for the eleventh (11th) Lease
Year, the product of eighty percent (80%) of Rent in effect as of the last day
of the tenth (10th) Lease Year, multiplied by the Escalator, and (z) for each
Lease Year from and after the commencement of the twelfth (12th) Lease Year
until the Initial Stated Expiration Date, the Base Rent payable for the
immediately preceding Lease Year, as applicable (as in effect on the last day of
such preceding Lease Year), multiplied by the Escalator in each case.

(ii)    Variable Rent shall be calculated as further described in this clause
(b)(ii). Throughout the Term, Variable Rent shall not be subject to the
Escalator.

(A)    For each Lease Year from and after commencement of the eighth (8th) Lease
Year through and including the end of the tenth (10th) Lease Year (the “First
Variable Rent Period”), Variable Rent shall be a fixed annual amount equal to
thirty percent (30%) of the Rent for the seventh (7th) Lease Year (such amount,
the “Variable Rent Base Amount”), adjusted as follows (such resulting annual
amount being referred to herein as “Year 8-10 Variable Rent”):

(x)    in the event that the sum of (1) average annual Net Revenue and (2) the
average annual Regional Net Revenue, in each case for the three (3) consecutive
Fiscal Periods ending immediately prior to the end of the seventh (7th) Lease
Year (such sum, the “First VRP Net Revenue Amount”; and the quotient (expressed
as a percentage) of (I) the average annual Net Revenue for such three
(3) consecutive Fiscal Periods divided by (II) the First VRP Net Revenue Amount,
the “First VRP Joliet Percentage of Aggregate Net Revenues”), exceeds the sum of
(1) the Base Net Revenue Amount and (2) the Regional Base Net Revenue Amount
(any such excess, the “Year 8 Increase”), the Year 8-10 Variable Rent shall
equal the Variable Rent Base Amount increased by an amount equal to (a) four
percent (4%) multiplied by (b)(i) the Year 8 Increase multiplied by (ii) the
First VRP Joliet Percentage of Aggregate Net Revenues; or

 

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(y)    in the event that the First VRP Net Revenue Amount is less than the sum
of (1) the Base Net Revenue Amount and (2) the Regional Base Net Revenue Amount
(any such difference, the “Year 8 Decrease”), the Year 8-10 Variable Rent shall
equal the Variable Rent Base Amount decreased by an amount equal to (a) four
percent (4%) multiplied by (b)(i) the Year 8 Decrease multiplied by (ii) the
First VRP Joliet Percentage of Aggregate Net Revenues.

(B)    For each Lease Year from and after the commencement of the eleventh
(11th) Lease Year through and including the end of the fifteenth (15th) Lease
Year (the “Second Variable Rent Period”), Variable Rent shall be equal to a
fixed annual amount equal to twenty percent (20%) of the Rent for the
tenth (10th) Lease Year (such amount, the “Second Variable Rent Base Amount”),
adjusted as follows (such resulting annual amount being referred to herein as
the “Year 11-15 Variable Rent”):

(x)    in the event that the sum of (1) the average annual Net Revenue and
(2) the average annual Regional Net Revenue, in each case for the three
(3) consecutive Fiscal Periods ending immediately prior to the end of the tenth
(10th) Lease Year (such sum, the “Second VRP Net Revenue Amount”; and the
quotient (expressed as a percentage) of (I) the average annual Net Revenue for
such three (3) consecutive Fiscal Periods divided by (II) the Second VRP Net
Revenue Amount, the “Second VRP Joliet Percentage of Aggregate Net Revenues”),
exceeds the First VRP Net Revenue Amount (any such excess, the “Year 11
Increase”), the Year 11-15 Variable Rent shall equal the Second Variable Rent
Base Amount increased by an amount equal to (a) four percent (4%) multiplied by
(b)(i) the Year 11 Increase multiplied by (ii) the Second VRP Joliet Percentage
of Aggregate Net Revenues; or

(y)    in the event that the Second VRP Net Revenue Amount, is less than the
First VRP Net Revenue Amount (any such difference, the “Year 11 Decrease”), the
Year 11-15 Variable Rent shall equal the Second Variable Rent Base Amount
decreased by an amount equal to (a) four percent (4%) multiplied by (b)(i) the
Year 11 Decrease multiplied by (ii) the Second VRP Joliet Percentage of
Aggregate Net Revenues.

(C)    For each Lease Year from and after the commencement of the sixteenth
(16th) Lease Year through and including the Initial Stated Expiration Date (the
“Third Variable Rent Period”), Variable Rent shall be equal to a fixed annual
amount equal to the Year 11-15 Variable Rent (such amount, the “Third Variable
Rent Base Amount”), adjusted as follows (such resulting annual amount being
referred to herein as the “Year 16-IED Variable Rent”):

(x)    in the event that the sum of (1) the average annual Net Revenue and
(2) the average annual Regional Net Revenue, in each case for

 

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the three (3) consecutive Fiscal Periods ending immediately prior to the end of
the fifteenth (15th) Lease Year (such sum, the “Third VRP Net Revenue Amount”;
and the quotient (expressed as a percentage) of (I) the average annual Net
Revenue for such three (3) consecutive Fiscal Periods divided by (II) the Third
VRP Net Revenue Amount, the “Third VRP Joliet Percentage of Aggregate Net
Revenues”), exceeds the Second VRP Net Revenue Amount (any such excess, the
“Year 16 Increase”), the Year 16-IED Variable Rent shall equal the Third
Variable Rent Base Amount increased by an amount equal to (a) four percent (4%)
multiplied by (b)(i) the Year 16 Increase multiplied by (ii) the Third VRP
Joliet Percentage of Aggregate Net Revenues; or

(y)    in the event that the Third VRP Net Revenue Amount, is less than the
Second VRP Net Revenue Amount (any such difference, the “Year 16 Decrease”), the
Year 16-IED Variable Rent shall equal the Third Variable Rent Base Amount
decreased by an amount equal to (a) four percent (4%) multiplied by (b)(i) the
Year 16 Decrease multiplied by (ii) the Third VRP Joliet Percentage of Aggregate
Net Revenues.

(c)    For each Renewal Term, annual Rent shall be comprised of both Base Rent
and Variable Rent, each such component of Rent calculated as provided below:

(i)    Subject to clause (c)(iii) below, Base Rent for the first (1st) Lease
Year of such Renewal Term shall be adjusted to be equal to the applicable annual
Fair Market Base Rental Value; provided that (A) in no event will the Base Rent
be less than the Base Rent in effect as of the last day of the Lease Year
immediately preceding the commencement of such Renewal Term (such immediately
preceding year, the respective “Preceding Lease Year”), (B) no such adjustment
shall cause Base Rent to be increased by more than ten percent (10%) of the Base
Rent in effect as of the last day of the Preceding Lease Year and (C) such Fair
Market Base Rental Value shall be determined as provided in Section 34.1. On
each Escalator Adjustment Date during such Renewal Term, the Base Rent payable
for such Lease Year shall be equal to the Base Rent payable for the immediately
preceding Lease Year (as in effect on the last day of such preceding Lease
Year), multiplied by the Escalator.

(ii)    Subject to clause (c)(iii) below, Variable Rent for each Lease Year
during such Renewal Term (for each Renewal Term, the “Renewal Term Variable Rent
Period”) shall be equal to the Variable Rent in effect as of the last day of the
Preceding Lease Year, adjusted as follows:

(A)    in the event that the sum of (1) the average annual Net Revenue and
(2) the average annual Regional Net Revenue, in each case for the three
(3) consecutive Fiscal Periods ending immediately prior to the end of the
Preceding Lease Year (such sum, the respective “Applicable Renewal Term VRP Net
Revenue Amount”; and the quotient (expressed as a percentage) of (I) the average
annual Net Revenue for such three (3) consecutive Fiscal Periods divided

 

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by (II) such Applicable Renewal Term VRP Net Revenue Amount, the respective
“Applicable Renewal Term VRP Joliet Percentage of Aggregate Net Revenues”),
exceeds the sum of (1) the average annual Net Revenue and (2) the average annual
Regional Net Revenue, in each case for the three (3) consecutive Fiscal Periods
ending immediately prior to the end of the Lease Year five (5) years prior to
the Preceding Lease Year (except, with respect to the first (1st) Renewal Term,
instead of the Lease Year five (5) years prior to the Preceding Lease Year, it
shall be the fifteenth (15th) Lease Year) (i.e., (x) in respect of the first
(1st) Renewal Term, the three (3) consecutive Fiscal Periods ending immediately
prior to the end of the fifteenth (15th) Lease Year, and (y) in respect of each
subsequent Renewal Term, the three (3) consecutive Fiscal Periods ending
immediately prior to the end of the Lease Year immediately preceding the first
(1st) Lease Year of the immediately preceding Renewal Term) (any such excess,
the respective “Renewal Term Increase”), the Variable Rent for such Renewal Term
shall equal the Variable Rent in effect as of the last day of the Preceding
Lease Year increased by an amount equal to (a) four percent (4%) multiplied by
(b)(i) such Renewal Term Increase multiplied by (ii) such Applicable Renewal
Term VRP Joliet Percentage of Aggregate Net Revenues; or

(B)    in the event that such Applicable Renewal Term VRP Net Revenue Amount is
less than the sum of (1) the average annual Net Revenue and (2) the average
annual Regional Net Revenue, in each case for the three (3) consecutive Fiscal
Periods ending immediately prior to the end of the Lease Year five (5) years
prior to the Preceding Lease Year (except, with respect to the first (1st)
Renewal Term, instead of the Lease Year five (5) years prior to the Preceding
Lease Year, it shall be the fifteenth (15th) Lease Year) (i.e., (x) in respect
of the first (1st) Renewal Term, the three (3) consecutive Fiscal Periods ending
immediately prior to the end of fifteenth (15th) Lease Year and (y) in respect
of each subsequent Renewal Term, the three (3) consecutive Fiscal Periods ending
immediately prior to the end of the Lease Year immediately preceding the first
(1st) Lease Year of the immediately preceding Renewal Term) (any such
difference, the respective “Renewal Term Decrease”), the Variable Rent for such
Renewal Term shall equal the Variable Rent in effect as of the last day of the
Preceding Lease Year decreased by an amount equal to (a) four percent (4%)
multiplied by (b)(i) such Renewal Term Decrease multiplied by (ii) such
Applicable Renewal Term VRP Joliet Percentage of Aggregate Net Revenues.

(iii)    Intentionally Omitted.

(iv)    Prior to delivery of any Renewal Notice for any Renewal Term that would
cause the Term through such Renewal Term to exceed the Maximum Fixed Rent Term
for the Leased Property, if Tenant obtains an appraisal reasonably satisfactory
to Landlord, prepared by an appraiser reasonably satisfactory to Landlord, which
appraisal concludes that, based on the condition of the Leased Property at the
time of such appraisal, the expected useful life of the Leased Property
(measured from the Commencement Date) exceeds one hundred twenty-five percent
(125%) of the Term through such Renewal Term, the Maximum Fixed Rent Term for
the Leased Property shall be extended through the end of such Renewal Term and
thereafter for the longest fixed rent term that would be supported by such
appraisal.

 

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The Parties hereby acknowledge and agree that in the event that (i) an “L1/L2
Transfer” (as defined in the Regional Lease) is consummated in accordance with
the terms and conditions thereof or (ii) the Regional Landlord disposes of
Regional Leased Property and a third party Severance Lease is executed, then the
Regional Net Revenue attributable to the portion of the Regional Leased Property
that was transferred or disposed of shall be disregarded for all purposes of
calculating Variable Rent hereunder (even if such Regional Leased Property had
not yet been transferred or disposed of from the Regional Lease as of the
applicable Lease Year for which Regional Net Revenue is being measured).

Notwithstanding anything herein to the contrary, (i) but subject to clause
(c)(iii) above and any reduction in Rent by the Rent Reduction Amount pursuant
to and in accordance with the terms of this Lease, in no event shall annual Base
Rent during any Lease Year after the seventh (7th) Lease Year be less than
seventy percent (70%) of the Rent in the seventh (7th) Lease Year, and (ii) in
no event shall the Variable Rent be less than Zero Dollars ($0.00).

“Rent Reduction Amount”: (i) With respect to the Base Rent, a proportionate
reduction of Base Rent, which proportionate amount shall be determined by
comparing (1) the EBITDAR of Tenant from the Leased Property for the Trailing
Test Period versus (2) the EBITDAR of Tenant from the Leased Property for the
Trailing Test Period calculated to remove the EBITDAR attributable to the
portion of the Leased Property affected by the Partial Taking or that is being
removed from this Lease (as applicable) and (ii) with respect to Variable Rent,
a proportionate reduction of Variable Rent calculated in the same manner as set
forth with respect to Base Rent above. Following the application of the Rent
Reduction Amount to the Rent hereunder, for purposes of calculating any
applicable adjustments to Variable Rent based on increases or decreases in Net
Revenue, such calculations of Net Revenue shall exclude Net Revenue attributable
to the portion of the Leased Property affected by the Partial Taking or that was
removed from this Lease (even if such portion of the Leased Property had not yet
been affected by the Partial Taking nor removed from this Lease as of the
applicable Lease Year for which Net Revenue is being measured).

“Replacement Guaranty”: A guaranty made by a Qualified Replacement Guarantor
which shall contain provisions, terms and conditions similar in form and
substance to the provisions, terms and conditions of the Guaranty.

“Replacement Guaranty (L1 Transfer)” or “Replacement Guaranty (L2 Transfer)”: A
guaranty of all obligations of an L1 Successor Tenant or L2 Successor Tenant, as
the case may be, under an L1/L2 Severance Lease, which shall contain provisions,
terms and conditions similar in substance to the form of guaranty used in
connection with the Penn Master Lease.

“Replacement Management Agreement”: A management agreement with respect to the
management of the Facility, between a Qualified Replacement Manager and a
Qualified Transferee, that provides for the management of the Leased Property on
terms and conditions not materially less favorable to Tenant (and the Leased
Property), (i) with respect to a Qualified

 

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Replacement Manager that is an Affiliate of the Qualified Transferee, than as
provided in the MLSA (as defined in the Amended Original Lease), or (ii) with
respect to a Qualified Replacement Manager that is not an Affiliate of the
Qualified Transferee, than would be obtained in an arm’s-length management
agreement with a third party, and, in all events the provisions, terms and
conditions thereof shall not be intended to or designed to frustrate, vitiate or
reduce the payment of Variable Rent or the other provisions of this Lease.

“Reporting Subsidiary”: Any entity required by GAAP to be consolidated for
financial reporting purposes by a Person, regardless of ownership percentage.

“Representatives”: With respect to any Person, such Person’s officers,
employees, directors, accountants, attorneys and other consultants, experts or
agents of such Person, and actual or prospective arrangers, underwriters,
investors or lenders with respect to indebtedness or Equity Interests that may
be incurred or issued by such Person or such Person’s Affiliates (including any
Additional Fee Mortgagee), to the extent that any of the foregoing actually
receives non-public information hereunder. In addition, and without limitation
of the foregoing, the term “Representatives” shall include, (a) in the case of
Landlord, PropCo 1, PropCo, Landlord REIT and any Affiliate thereof, and (b) in
the case of Tenant, CEOC, ERI and any Affiliate thereof.

“Required Capital Expenditures”: The applicable Capital Expenditures required to
satisfy the Minimum Cap Ex Requirements.

“Retail Sales”: As defined in the definition of Net Revenue.

“Right to Terminate Notice”: As defined in Section 17.1(d).

“ROFR Agreement”: That certain Second Amended and Restated Right of First
Refusal Agreement, dated as of the First Amendment Date, by and between CEC and
PropCo, as amended, modified or supplemented from time to time, as the same is
being terminated on the date hereof.

“SEC”: The United States Securities and Exchange Commission.

“Second Amendment”: The amendment to this Lease effected as of the Second
Amendment Date.

“Second Amendment Date”: July 20, 2020.

“Second Lien Indenture”: That certain Second-Priority Senior Secured Notes due
2023 Indenture dated as of the Commencement Date, among PropCo 1, VICI FC Inc.,
a Delaware corporation, the Subsidiary Guarantors (as defined therein) party
thereto from time to time, and UMB Bank, National Association, as trustee.

“Second Variable Rent Base Amount”: As defined in clause (b)(ii)(B) of the
definition of Rent.

“Second Variable Rent Period”: As defined in clause (b)(ii)(B) of the definition
of Rent.

 

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“Second VRP Net Revenue Amount”: As defined in clause (b)(ii)(B)(x) of the
definition of Rent.

“Second VRP Joliet Percentage of Aggregate Net Revenues”: As defined in
clause (b)(ii)(B)(x) of the definition of Rent.

“Section 34.2 Dispute”: As defined in Section 34.2.

“Securities Act”: The Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

“Services Co”: Caesars Enterprise Services LLC or any additional, replacement or
successor services company engaged in performing services on behalf of Tenant
and related entities similar, in whole or in part, to those performed by, or
contemplated to be performed by, Caesars Enterprise Services LLC on the
Commencement Date.

“Services Co Proprietary Information and Systems”: All of the following
Intellectual Property owned by or licensed to Services Co or its Subsidiaries:
(i) proprietary information, techniques and methods of operating gaming, hotel
and related businesses; (ii) proprietary information, techniques and methods of
designing games used in gaming and related businesses; (iii) proprietary
information, techniques and methods of training employees in the gaming, hotel
and related business; and (iv) proprietary business plans, projections and
marketing, advertising and promotion plans, strategies, and systems.

“Severance Lease”: As defined in the Other Leases (as applicable).

“Software”: As they exist anywhere in the world, any computer software,
firmware, microcode, operating system, embedded application, or other program,
including all source code, object code, specifications, databases, designs and
documentation related to such programs.

“Specified Sublease”: Any Sublease (i) affecting any portion of the Leased
Property, and (ii) in effect on the Commencement Date. A list of all Specified
Subleases is annexed as Schedule 4 hereto.

“Stated Expiration Date”: As defined in Section 1.3.

“Stub Period”: As defined in Section 10.5(a)(v).

“Stub Period Multiplier”: As defined in Section 10.5(a)(v).

“Subject Entity”: As defined in the definition of Change of Control.

“Subject Facility”: As defined in Section 13.10(a).

“Subject Transaction”: As defined in the definition of Change of Control.

 

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“Sublease”: (i) Any sublease, sub-sublease, license, management agreement to
operate (but not occupy as a tenant) a particular space at the Facility, or
other similar agreement in respect of use or occupancy of any portion of the
Leased Property, but excluding Bookings and (ii) without limitation of clause
(i), any Permitted Sportsbook Sublease.

“Subsidiary”: As to any Person, (i) any corporation more than fifty percent
(50%) of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time of determination owned by such
Person and/or one or more Subsidiaries of such Person, and (ii) any partnership,
limited liability company, association, joint venture or other entity in which
such Person and/or one or more Subsidiaries of such Person has more than a fifty
percent (50%) Equity Interest at the time of determination.

“Subtenant”: The tenant or, as the context may require, the manager or similar
counterparty, under any Sublease.

“Successor Tenant”: As defined in Section 36.1.

“Successor Tenant Rent”: As defined in Section 36.3.

“System-wide IP”: All of the Intellectual Property (in each case, excluding
Property Specific IP and Property Specific Guest Data) that (i) Services Co or
any of its Subsidiaries currently license, contemplate to license or otherwise
provide to facilitate the provision of services by or on behalf of Services Co
or any of its Subsidiaries to any properties owned by CEOC or its Affiliates,
(ii) Services Co or any of its Subsidiaries currently provide or contemplate to
provide pursuant to, or is otherwise necessary for the performance of, any
property management agreement applicable to a property owned by CEOC or an
Affiliate of CEOC, (iii) is necessary for the provision of Enterprise Services
by Services Co or any of its Subsidiaries, (iv) is generally used by CEOC, its
Affiliates and their respective Subsidiaries for their respective properties,
including any and all Intellectual Property comprising and/or related to the
Caesars Rewards Program, or (v) is developed, created or acquired by or on
behalf of Services Co or any of its Subsidiaries and is not a derivative work of
any Intellectual Property licensed to Services Co.

“Taking”: Any taking of all or any part of the Leased Property and/or the
Leasehold Estate or any part thereof, in or by Condemnation, including by reason
of the temporary requisition of the use or occupancy of all or any part of the
Leased Property by any governmental authority, civil or military.

“Tenant”: As defined in the preamble.

“Tenant Capital Improvement”: A Capital Improvement other than a Material
Capital Improvement funded by Landlord pursuant to a Landlord MCI Financing. The
term “Tenant Capital Improvement” shall not include Capital Improvements
conveyed by Tenant to Landlord.

 

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“Tenant Competitor”: As of any date of determination, any Person (other than
Tenant and its Affiliates) that is engaged, or is an Affiliate of a Person that
is engaged, in the ownership or operation of a Gaming business; provided, that,
(i) for purposes of the foregoing, ownership of the real estate and improvements
where a Gaming business is conducted, without ownership of the Gaming business
itself, shall not be deemed to constitute the ownership of a Gaming business,
(ii) any investment fund or other Person with an investment representing an
equity ownership of fifteen percent (15%) or less in a Tenant Competitor and no
Control over such Tenant Competitor shall not be a Tenant Competitor,
(iii) solely for purposes of Section 18.4(c), a Person with an investment
representing an equity ownership of twenty-five percent (25%) or less in a
Non-Core Tenant Competitor shall be deemed to not have Control over such Tenant
Competitor, (iv) Landlord shall not be deemed to become a Tenant Competitor by
virtue of it or its Affiliate’s acquiring ownership of, or engaging in the
ownership or operation of, a Gaming business, if Landlord or any of its
Affiliates first offered (prior to the Second Amendment Date) CEC (or its
Subsidiary, as applicable) the opportunity to lease and manage such Gaming
business pursuant to the ROFR Agreement and CEC (or its Subsidiary, as
applicable) did not accept such offer, and (v) neither Landlord nor any of its
Affiliates shall be a Tenant Competitor by reason of Landlord or its Affiliate’s
ownership of an interest in CR Baltimore Holdings, LLC, CBAC Gaming, LLC or any
of their respective subsidiaries.

“Tenant Event of Default”: As defined in Section 16.1.

“Tenant Indemnified Party”: As defined in Section 21.1.

“Tenant Material Capital Improvement”: As defined in Section 10.4(e).

“Tenant Party”: As defined in the definition of Licensing Event.

“Tenant Prohibited Person”: Any Person that is (or is owned or Controlled by a
Person that is) generally recognized in the community as being a Person of ill
repute or who has or is reasonably believed to have an adverse reputation or
character, in either case, which is more likely than not to jeopardize Tenant’s
or any of its Affiliates’ ability to hold a Gaming License or to be associated
with a Gaming licensee under any applicable Gaming Regulations (other than any
Gaming Authority established by any Native American tribe).

“Tenant Transferee Requirement”: As defined in Section 22.2(i).

“Tenant’s Initial Financing”: As defined in the Other Leases.

“Tenant’s MCI Intent Notice”: As defined in Section 10.4(a).

“Tenant’s Property”: All assets of Tenant and its Subsidiaries (other than the
Leased Property and, for purposes of Article XXXVI only, any Intellectual
Property that will not be transferred to a Successor Tenant under Article XXXVI)
primarily related to or used in connection with the operation of the business
conducted on or about the Leased Property or any portion thereof, together with
all replacements, modifications, additions, alterations and substitutes therefor
and including all goodwill and going concern value associated with Tenant’s
Property.

“Term”: As defined in Section 1.3.

 

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“Third-Party MCI Financing”: As defined in Section 10.4(c).

“Third Variable Rent Base Amount”: As defined in clause (b)(ii)(C) of the
definition of Rent.

“Third Variable Rent Period”: As defined in clause (b)(ii)(C) of the definition
of Rent.

“Third VRP Net Revenue Amount”: As defined in clause (b)(ii)(C)(x) of the
definition of Rent.

“Third VRP Joliet Percentage of Aggregate Net Revenues”: As defined in clause
(b)(ii)(C)(x) of the definition of Rent.

“Title Violation”: As defined in Section 21.2.

“Trademarks”: As defined in the definition of Intellectual Property.

“Trailing Test Period”: For any date of determination, the period of the four
(4) most recently ended consecutive calendar quarters prior to such date of
determination for which Financial Statements are available.

“Triennial Allocated Minimum Cap Ex Amount B Ceiling”: The difference of (a) the
Triennial Minimum Cap Ex Amount B, minus (b) the “Triennial Allocated Minimum
Cap Ex Amount B Floor” (as defined in the Las Vegas Lease). Notwithstanding
anything herein to the contrary but subject to the next sentence, fifty percent
(50%) of all Capital Expenditures constituting Material Capital Improvements
shall be credited toward the Triennial Allocated Minimum Cap Ex Amount B Ceiling
applicable to the Triennial Period during which such Capital Expenditures were
incurred and the other fifty percent (50%) of such Capital Expenditures
constituting Material Capital Improvements shall not be credited toward the
Triennial Allocated Minimum Cap Ex Amount B Ceiling. Notwithstanding the
foregoing, (i) in no event shall any “Capital Expenditures” (as defined in the
Regional Lease) expended in connection with the “HNO License Extension
Improvements” (as defined in the Regional Lease) be credited towards the
Triennial Allocated Minimum Cap Ex Amount B Ceiling, and (ii) one hundred
percent (100%) of all “Capital Expenditures” (as defined in the Regional Lease)
expended in connection with the “Southern Indiana Redevelopment Project” (as
defined in the Regional Lease) in an aggregate amount not to exceed Eighty-Five
Million and No/100 Dollars ($85,000,000.00) shall be credited in full toward the
Triennial Allocated Minimum Cap Ex Amount B Ceiling. “Capital Expenditures” (as
defined in the Regional Lease) expended in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) were:
(a) approximately Nineteen Million One Hundred Thousand and No/100 Dollars
($19,100,000.00) in the Fiscal Year that commenced on January 1, 2018; and
(b) approximately Fifty-Eight Million Seven Hundred Thousand and No/100 Dollars
($58,700,000.00) in the Fiscal Year that commenced on January 1, 2019. As of the
Second Amendment Date, it is anticipated that “Capital Expenditures” (as defined
in the Regional Lease) made in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) will be Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000.00) in the Fiscal Year that
commenced on January 1, 2020.

 

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“Triennial Allocated Minimum Cap Ex Amount B Floor”: An amount equal to Three
Hundred Thirty-Three Million Six Hundred Thousand and No/100 Dollars
($333,600,000.00), as reduced from time to time by the applicable Minimum Cap Ex
Reduction Amount in the event that the Triennial Minimum Cap Ex Amount B is
reduced by the applicable Minimum Cap Ex Reduction Amount. Notwithstanding
anything herein to the contrary but subject to the next sentence, fifty percent
(50%) of all Capital Expenditures constituting Material Capital Improvements
shall be credited toward the Triennial Allocated Minimum Cap Ex Amount B Floor
applicable to the Triennial Period during which such Capital Expenditures were
incurred and the other fifty percent (50%) of such Capital Expenditures
constituting Material Capital Improvements shall not be credited toward the
Triennial Allocated Minimum Cap Ex Amount B Floor. Notwithstanding the
foregoing, (i) in no event shall any “Capital Expenditures” (as defined in the
Regional Lease) expended in connection with the “HNO License Extension
Improvements” (as defined in the Regional Lease) be credited towards the
Triennial Allocated Minimum Cap Ex Amount B Floor, and (ii) one hundred percent
(100%) of all “Capital Expenditures” (as defined in the Regional Lease) expended
in connection with the “Southern Indiana Redevelopment Project” (as defined in
the Regional Lease) in an aggregate amount not to exceed Eighty-Five Million and
No/100 Dollars ($85,000,000.00) shall be credited in full toward the Triennial
Allocated Minimum Cap Ex Amount B Floor. “Capital Expenditures” (as defined in
the Regional Lease) expended in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) were:
(a) approximately Nineteen Million One Hundred Thousand and No/100 Dollars
($19,100,000.00) in the Fiscal Year that commenced on January 1, 2018; and
(b) approximately Fifty-Eight Million Seven Hundred Thousand and No/100 Dollars
($58,700,000.00) in the Fiscal Year that commenced on January 1, 2019. As of the
Second Amendment Date, it is anticipated that “Capital Expenditures” (as defined
in the Regional Lease) made in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) will be Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000.00) in the Fiscal Year that
commenced on January 1, 2020.

“Triennial Minimum Cap Ex Amount A”: An amount equal to Five Hundred
Ninety-Eight Million Four Hundred Thousand and No/100 Dollars ($598,400,000.00),
provided, however, that for purposes of calculating the Triennial Minimum Cap Ex
Amount A, Capital Expenditures during the applicable Triennial Period shall not
include Capital Expenditures in respect of the London Clubs in excess of Twelve
Million and No/100 Dollars ($12,000,000.00). The Triennial Minimum Cap Ex Amount
A shall be decreased from time to time (t) in the event Regional Tenant elects
to cease “Continuous Operations” (as defined in the Regional Lease) of a
Regional Facility that is not a “Continuous Operation Facility” (as defined in
the Regional Lease) for at least twelve (12) consecutive months, (u) upon the
execution of a “Severance Lease” (as defined in the Regional Lease) in
accordance with Section 18.2 of the Regional Lease or the execution of a
“Severance Lease” (as defined in the Las Vegas Lease) with respect to the Leased
Property (CPLV) in accordance with Section 18.2 of the Las Vegas Lease, (v) upon
the occurrence of an L1/L2 Transfer or an “L1/L2 Transfer” (as defined in the
Regional Lease), (w) upon any transfer or other conveyance of the Leased
Property to an Acquirer that is not an Affiliate of Landlord in accordance with
Section 18.1 hereof, (x) in the event of any termination or partial termination
of this Lease, the Regional Lease or the Las Vegas Lease (with respect to the
Leased Property (CPLV)) in connection with any Condemnation, Casualty Event or
“Casualty Event” (as defined in the applicable Other Lease), or in the event of
the expiration of any applicable Maximum Fixed Rent Term or “Maximum Fixed Rent
Term” (as defined in the Regional Lease), in any case

 

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in accordance with the express terms of this Lease or the Other Leases (as
applicable), and in any case that results in the removal of Material Leased
Property from, or the termination of, this Lease, the Regional Lease or the Las
Vegas Lease (with respect to the Leased Property (CPLV)) (as applicable), (y) in
connection with any disposition of all of the Other Leased Property under any
Other Lease in accordance with Article XVIII of such Other Lease and the
assignment of such Other Lease to a third party Acquirer (as defined in such
Other Lease), and (z) with respect to the London Clubs, upon the disposition of
any Material London Property; with such decrease, in each case of clause (t),
(u), (v), (w), (x), (y) or (z) above, being equal to the applicable Minimum Cap
Ex Reduction Amount. Notwithstanding the foregoing: (1) the sum of all decreases
in the Triennial Minimum Cap Ex Amount A under clause (z) in respect of any
dispositions of London Clubs property shall not exceed Twelve Million and No/100
Dollars ($12,000,000.00) and (2) in the event of a disposition (in one or a
series of transactions) of all or substantially all of the London Clubs, the
Triennial Minimum Cap Ex Amount A shall be decreased by an amount equal to
Twelve Million and No/100 Dollars ($12,000,000.00). Notwithstanding anything
herein to the contrary but subject to the next sentence, fifty percent (50%) of
all Capital Expenditures and Other Capital Expenditures constituting Material
Capital Improvements or Other Material Capital Improvements shall be credited
toward the Triennial Minimum Cap Ex Amount A applicable to the Triennial Period
during which such Capital Expenditures or Other Capital Expenditures were
incurred and the other fifty percent (50%) of such Capital Expenditures and
Other Capital Expenditures constituting Material Capital Improvements or Other
Material Capital Improvements shall not be credited toward the Triennial Minimum
Cap Ex Amount A. Notwithstanding the foregoing, (i) in no event shall any
“Capital Expenditures” (as defined in the Regional Lease) expended in connection
with the “HNO License Extension Improvements” (as defined in the Regional Lease)
be credited towards the Triennial Minimum Cap Ex Amount A and (ii) one hundred
percent (100%) of all “Capital Expenditures” (as defined in the Regional Lease)
expended in connection with the “Southern Indiana Redevelopment Project” (as
defined in the Regional Lease) in an aggregate amount not to exceed Eighty-Five
Million and No/100 Dollars ($85,000,000.00) shall be credited in full toward the
Triennial Minimum Cap Ex Amount A. “Capital Expenditures” (as defined in the
Regional Lease) expended in connection with the “Southern Indiana Redevelopment
Project” (as defined in the Regional Lease) were: (a) approximately Nineteen
Million One Hundred Thousand and No/100 Dollars ($19,100,000.00) in the Fiscal
Year that commenced on January 1, 2018; and (b) approximately Fifty-Eight
Million Seven Hundred Thousand and No/100 Dollars ($58,700,000.00) in the Fiscal
Year that commenced on January 1, 2019. As of the Second Amendment Date, it is
anticipated that “Capital Expenditures” (as defined in the Regional Lease) made
in connection with the “Southern Indiana Redevelopment Project” (as defined in
the Regional Lease) will be Seven Million Two Hundred Thousand and No/100
Dollars ($7,200,000.00) in the Fiscal Year that commenced on January 1, 2020.

“Triennial Minimum Cap Ex Amount B”: An amount equal to Four Hundred
Twenty-Seven Million Seven Hundred Thousand and No/100 Dollars
($427,700,000.00); provided, however, that for purposes of calculating the
Triennial Minimum Cap Ex Amount B, Capital Expenditures during the applicable
Triennial Period shall not include any of the following (without duplication):
(a) Capital Expenditures by any subsidiaries of Tenant that are non-U.S.
subsidiaries or are “unrestricted subsidiaries” as defined under Tenant’s debt
documentation, (b) any Capital Expenditures of Tenant related to gaming
equipment, (c) any Capital Expenditures of Tenant related to corporate shared
services, nor (d) any Capital Expenditures with respect to properties that are
not included in the Leased Property or Other Leased Property. The Triennial

 

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Minimum Cap Ex Amount B shall be decreased from time to time (t) in the event
Regional Tenant elects to cease “Continuous Operations” (as defined in the
Regional Lease) of a Regional Facility that is not a “Continuous Operation
Facility” (as defined in the Regional Lease) for at least twelve
(12) consecutive months, (u) upon the execution of a “Severance Lease” (as
defined in the Regional Lease) in accordance with Section 18.2 of the Regional
Lease or the execution of a “Severance Lease” (as defined in the Las Vegas
Lease) with respect to the Leased Property (CPLV) in accordance with
Section 18.2 of the Las Vegas Lease, (v) upon the occurrence of an L1/L2
Transfer or an “L1/L2 Transfer” (as defined in the Regional Lease), (w) upon any
transfer or other conveyance of the Leased Property to an Acquirer that is not
an Affiliate of Landlord in accordance with Section 18.1 hereof, (x) in the
event of any termination or partial termination of this Lease, the Regional
Lease or the Las Vegas Lease (with respect to the Leased Property (CPLV)) in
connection with any Condemnation, Casualty Event or “Casualty Event” (as defined
in the applicable Other Lease), or in the event of the expiration of any
applicable Maximum Fixed Rent Term or “Maximum Fixed Rent Term” (as defined in
an Other Lease), in any case in accordance with the express terms of this Lease
or the Other Leases (as applicable), and in any case that results in the removal
of Material Leased Property from, or the termination of, this Lease, the
Regional Lease or the Las Vegas Lease (with respect to the Leased Property
(CPLV)) (as applicable), and (y) in connection with any disposition of all of
the Other Leased Property under any Other Lease in accordance with Article XVIII
of such Other Lease and the assignment of such Other Lease to a third party
Acquirer (as defined in such Other Lease); with such decrease, in each case of
clause (t), (u), (v), (w), (x) or (y) above, being equal to the applicable
Minimum Cap Ex Reduction Amount. Notwithstanding anything herein to the contrary
but subject to the next sentence, fifty percent (50%) of all Capital
Expenditures and Other Capital Expenditures constituting Material Capital
Improvements or Other Material Capital Improvements shall be credited toward the
Triennial Minimum Cap Ex Amount B applicable to the Triennial Period during
which such Capital Expenditures or Other Capital Expenditures were incurred and
the other fifty percent (50%) of such Capital Expenditures and Other Capital
Expenditures constituting Material Capital Improvements or Other Material
Capital Improvements shall not be credited toward the Triennial Minimum Cap Ex
Amount B. Without limitation of anything set forth in the foregoing, it is
acknowledged and agreed that any Capital Expenditures with respect to any one or
more of the London Clubs shall not be included in the calculation of the
Triennial Minimum Cap Ex Amount B. Notwithstanding the foregoing, (i) in no
event shall any “Capital Expenditures” (as defined in the Regional Lease)
expended in connection with the “HNO License Extension Improvements” (as defined
in the Regional Lease) be credited towards the Triennial Minimum Cap Ex Amount B
and (ii) one hundred percent (100%) of all “Capital Expenditures” (as defined in
the Regional Lease) expended in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) in an aggregate amount
not to exceed Eighty-Five Million and No/100 Dollars ($85,000,000.00) shall be
credited in full toward the Triennial Minimum Cap Ex Amount B. “Capital
Expenditures” (as defined in the Regional Lease) expended in connection with the
“Southern Indiana Redevelopment Project” (as defined in the Regional Lease)
were: (a) approximately Nineteen Million One Hundred Thousand and No/100 Dollars
($19,100,000.00) in the Fiscal Year that commenced on January 1, 2018; and
(b) approximately Fifty-Eight Million Seven Hundred Thousand and No/100 Dollars
($58,700,000.00) in the Fiscal Year that commenced on January 1, 2019. As of the
Second Amendment Date, it is anticipated that “Capital Expenditures” (as defined
in the Regional Lease) made in connection with the “Southern Indiana
Redevelopment Project” (as defined in the Regional Lease) will be Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000.00) in the Fiscal Year that
commenced on January 1, 2020.

 

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“Triennial Minimum Cap Ex Requirement A”: As defined in Section 10.5(a)(iii).

“Triennial Minimum Cap Ex Requirement B”: A defined in Section 10.5(a)(iv).

“Triennial Period”: Each period of three (3) full Fiscal Years during the Term.

“Triennial Test Period”: With respect to any Person, for any date of
determination, the period of the twelve (12) most recently ended consecutive
Fiscal Quarters of such Person for which Financial Statements are available.

“Unavoidable Delay”: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the
reasonable control of the Party responsible for performing an obligation
hereunder; provided, that, lack of funds, in and of itself, shall not be deemed
a cause beyond the reasonable control of a Party.

“Unsuitable for Its Primary Intended Use”: A state or condition of the Leased
Property such that by reason of a Partial Taking the Leased Property cannot,
following restoration thereof (to the extent commercially practical), be
operated on a commercially practicable basis for the Primary Intended Use for
which it was primarily being used immediately preceding the taking, taking into
account, among other relevant economic factors, the amount of square footage and
the estimated revenue affected by such Partial Taking.

“Variable Rent”: The Variable Rent component of Rent, as defined in more detail
in clauses (b) and (c) of the definition of Rent.

“Variable Rent Base Amount”: As defined in clause (b)(ii)(A) of the definition
of Rent.

“Variable Rent Determination Period”: Each of (i) the three (3) consecutive
Fiscal Periods that ended immediately prior to the end of the second (2nd) Lease
Year (i.e., the three (3) consecutive Fiscal Periods ending September 30, 2019),
and (ii) the three (3) consecutive Fiscal Periods in each case that end
immediately prior to the end of the seventh (7th) Lease Year (i.e., the three
(3) consecutive Fiscal Periods ending September 30, 2024), the tenth (10th)
Lease Year (i.e., the three (3) consecutive Fiscal Periods ending September 30,
2027), the fifteenth (15th) Lease Year (i.e., the three (3) consecutive Fiscal
Periods ending September 30, 2032), the last Lease Year of the Initial Term
(i.e., the three (3) consecutive Fiscal Periods ending June 30, 2035) and the
last Lease Year of each Renewal Term (other than the final Renewal Term) (i.e.,
the three (3) consecutive Fiscal Periods ending June 30, 2040, June 30, 2045 and
June 30, 2050 respectively).

“Variable Rent Payment Period”: Collectively or individually, each of the First
Variable Rent Period, the Second Variable Rent Period, the Third Variable Rent
Period and each of the Renewal Term Variable Rent Periods.

“Variable Rent Statement”: As defined in Section 3.2(a).

 

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“WH Net Revenue”: As defined in Section 23.1(b)(xx).

“WH US Holdco”: William Hill U.S. Holdco, Inc., a Delaware corporation.

“Work”: Any and all work in the nature of construction, restoration, alteration,
modification, addition, improvement or demolition in connection with the
performance of any Alterations and/or any Capital Improvements.

“Year 8 Decrease”: As defined in clause (b)(ii)(A) of the definition of Rent.

“Year 8 Increase”: As defined in clause (b)(ii)(A) of the definition of Rent.

“Year 8-10 Variable Rent”: As defined in clause (b)(ii)(A) of the definition of
Rent.

“Year 11 Decrease”: As defined in clause (b)(ii)(B) of the definition of Rent.

“Year 11 Increase”: As defined in clause (b)(ii)(B) of the definition of Rent.

“Year 11-15 Variable Rent”: As defined in clause (b)(ii)(B) of the definition of
Rent.

“Year 16 Decrease”: As defined in clause (b)(ii)(C) of the definition of Rent.

“Year 16 Increase”: As defined in clause (b)(ii)(C) of the definition of Rent.

“Year 16-IED Variable Rent”: As defined in clause (b)(ii)(C) of the definition
of Rent.

ARTICLE III

RENT

3.1    Payment of Rent.

(a)    Generally. During the Term, Tenant will pay to Landlord the Rent and
Additional Charges in lawful money of the United States of America and legal
tender for the payment of public and private debts, in the manner provided in
Section 3.4.

(b)    Payment of Rent until Commencement of Variable Rent. On the Commencement
Date, a prorated portion of the first monthly installment of Rent shall be paid
by Tenant for the period from the Commencement Date until the last day of the
calendar month in which the Commencement Date occurs, based on the number of
days during such period. Thereafter, for the first seven (7) Lease Years, Rent
shall be payable by Tenant in consecutive monthly installments equal to
one-twelfth (1/12th) of the Rent amount for the applicable Lease Year on the
first (1st) day of each calendar month (or the immediately preceding Business
Day if the first (1st) day of the month is not a Business Day), in advance for
such calendar month, during that Lease Year. Notwithstanding anything to the
contrary in the foregoing sentence, (i) on the

 

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First Amendment Date, the amount of each remaining monthly installment of Rent
in the Lease Year in which the First Amendment Date occurs (i.e., each
installment of Rent payable in such Lease Year after the First Amendment Date)
shall be recalculated to give effect to the changes to Rent effectuated by the
amendments to this Lease on the First Amendment Date and (ii) on the First
Amendment Date, if the First Amendment Date occurs after the first (1st) day of
the second (2nd) Lease Year, a “catch-up” Rent payment in the amount of the
product of (1) Five Hundred Ninety-Four Thousand Three Hundred Seventy-Five and
No/100 Dollars ($594,375.00) multiplied by (2) a fraction, (I) the numerator of
which is the number of calendar days that have commenced from and after the
beginning of the second (2nd) Lease Year and (II) the denominator of which is
three hundred sixty-five (365), shall be paid by Tenant, which “catch-up”
payment represents incremental Rent that would have been due had the changes to
the definition of Rent effectuated by the amendments to this Lease on the First
Amendment Date been effective on the first (1st) day of the second (2nd) Lease
Year.

(c)    Payment of Rent following Commencement of Variable Rent. From the
commencement of the eighth (8th) Lease Year and continuing until the Expiration
Date, both Base Rent and Variable Rent during any Lease Year shall be payable in
consecutive monthly installments equal to one-twelfth (1/12th) of the Base Rent
and Variable Rent amounts for the applicable Lease Year on the first (1st) day
of each calendar month (or the immediately preceding Business Day if the first
(1st) day of the month is not a Business Day), in advance for such calendar
month, during that Lease Year; provided, however, that for each month where
Variable Rent is payable but the amount thereof depends upon calculation of Net
Revenue not yet known (e.g., the first few months of the eighth (8th) Lease
Year, the eleventh (11th) Lease Year, the sixteenth (16th) Lease Year and (if
applicable) the first (1st) Lease Year of each Renewal Term), the amount of the
Variable Rent payable monthly in advance shall remain the same as in the
immediately preceding month, and provided, further, that Tenant shall make a
payment to Landlord (or be entitled to set off against its Rent payment due, as
applicable) on the first (1st) day of the calendar month (or the immediately
preceding Business Day if the first (1st) day of the month is not a Business
Day) following the completion of such calculation in the amount necessary to
“true-up” any underpayments or overpayments of Variable Rent for such interim
period. Tenant shall complete such calculation of Net Revenue as provided in
Section 3.2 of this Lease.

(d)    Proration for Partial Lease Year. Unless otherwise agreed by the Parties
in writing, Rent and applicable Additional Charges shall be prorated on a per
diem basis as to any Lease Year containing less than twelve (12) calendar
months, and with respect to any installment thereof due for any partial months
at the beginning and end of the Term.

(e)    Rent Allocation. From and after the Second Amendment Date, Rent shall be
recognized for federal income tax purposes according to Section 467 of the Code
without a specific allocation of fixed rent within the meaning of Treasury
Regulation § 1.467-1(c)(2)(ii)(A). As prior versions of the Lease (including the
Lease, as in effect immediately prior to giving effect to the Second Amendment)
incorporated a specific rent allocation, for avoidance of doubt, Landlord and
Tenant hereby agree to terminate the prior rent allocation effective as of the
Second Amendment Date.

 

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3.2    Variable Rent Determination.

(a)    Variable Rent Statement. Tenant shall, no later than ninety (90) days
after the end of each Variable Rent Determination Period during the Term,
furnish to Landlord a statement (the “Variable Rent Statement”), which Variable
Rent Statement shall (i) set forth the sum of the Net Revenue realized with
respect to the Facility and the Regional Facilities (so long as a Regional
Facility is being leased to Regional Tenant by Regional Landlord pursuant to the
Regional Lease) during each of (x) such just-ended Variable Rent Determination
Period and (y) except with respect to the first (1st) Variable Rent Statement,
the Variable Rent Determination Period immediately preceding such just-ended
Variable Rent Determination Period, (ii) except with respect to the first (1st)
Variable Rent Statement, set forth Tenant’s calculation of the per annum
Variable Rent payable hereunder during the next Variable Rent Payment Period,
(iii) be accompanied by reasonably appropriate supporting data and information,
and (iv) be certified by a senior financial officer of Tenant and expressly
state that such officer has examined the reports of Net Revenue therein and the
supporting data and information accompanying the same, that such examination
included such tests of Tenant’s books and records as reasonably necessary to
make such determination, and that such statement accurately presents in all
material respects the Net Revenue for the applicable periods covered thereby, so
that Tenant shall commence paying the applicable Variable Rent payable during
each Variable Rent Payment Period hereunder (in accordance with the calculation
set forth in each such Variable Rent Statement) no later than the first (1st)
day of the fourth (4th) calendar month during such Variable Rent Payment Period
(or the immediately preceding Business Day if the first (1st) day of such month
is not a Business Day).

(b)    Maintenance of Records Relating to Variable Rent Statement. Tenant shall
maintain, at its corporate offices, for a period of not less than six (6) years
following the end of each Lease Year, adequate records which shall evidence the
Net Revenue realized by the Facility and the Regional Facilities (so long as a
Regional Facility is being leased to Regional Tenant by Regional Landlord
pursuant to the Regional Lease) during each Lease Year, together with all such
records that would normally be examined by an independent auditor pursuant to
GAAP in performing an audit of Tenant’s Variable Rent Statements. The provisions
and covenants of this Section 3.2(b) shall survive the expiration of the Term or
sooner termination of this Lease.

(c)    Audits. At any time within two (2) years of receipt of any Variable Rent
Statement, Landlord shall have the right to cause to be conducted an independent
audit of the matters covered thereby, conducted by a nationally-recognized
independent public accounting firm mutually reasonably agreed to by the Parties.
Such audit shall be limited to items necessary to ascertain an accurate
determination of the calculation of the Variable Rent payable hereunder, and
shall be conducted during normal business hours at the principal executive
office of Tenant. If it shall be determined as a result of such audit (i) that
there has been a deficiency in the payment of Variable Rent, such deficiency
shall become due and payable by Tenant to Landlord, within thirty (30) days
after such determination, or (ii) that there has been an excess payment of
Variable Rent, such excess shall become due and payable by Landlord to Tenant,
within thirty (30) days after such determination. In addition, if any Variable
Rent Statement shall be found to have understated the per annum Variable Rent
payable during any Variable Rent Payment Period by more than two and one-half
percent (2.5%), and Landlord is entitled to any additional Variable Rent as a
result of such understatement, then (x) Tenant shall pay to Landlord all
reasonable, out-of-pocket costs and expenses which may be incurred by Landlord
in determining and collecting the understatement or underpayment, including the
cost of the audit (if applicable) and (y) interest at the Overdue Rate on the
amount of the deficiency from the date when said payment should have been made
until

 

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paid. If it shall be determined as a result of such audit that the applicable
Variable Rent Statement did not understate the per annum Variable Rent payable
during any Variable Rent Payment Period by more than two and one-half percent
(2.5%), then Landlord shall pay to Tenant all reasonable, out-of-pocket costs
and expenses incurred by Tenant in making such determination, including the cost
of the audit. In addition, if any Variable Rent Statement shall be found to have
willfully and intentionally understated the per annum Variable Rent by more than
five percent (5%), such understatement shall, at Landlord’s option, constitute a
Tenant Event of Default under this Lease. Any audit conducted pursuant to this
Section 3.2(c) shall be performed subject to and in accordance with the
provisions of Section 23.1(c) hereof. The receipt by Landlord of any Variable
Rent Statement or any Variable Rent paid in accordance therewith for any period
shall not constitute an admission of the correctness thereof.

3.3    Late Payment of Rent or Additional Charges. Tenant hereby acknowledges
that the late payment by Tenant to Landlord of any Rent or Additional Charges
will cause Landlord to incur costs not contemplated hereunder, the exact amount
of which is presently anticipated to be extremely difficult to ascertain.
Accordingly, if any installment of Rent or Additional Charges payable directly
to Landlord shall not be paid within four (4) days after its due date, Tenant
shall pay to Landlord on demand a late charge equal to the lesser of (a) five
percent (5%) of the amount of such installment or Additional Charges and (b) the
maximum amount permitted by law. The Parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant. The Parties further agree that any such
late charge constitutes Rent, and not interest, and such assessment does not
constitute a lender or borrower/creditor relationship between Landlord and
Tenant. If any installment of Rent (or Additional Charges payable directly to
Landlord) shall not be paid within nine (9) days after its due date, the amount
unpaid, including any late charges previously accrued and unpaid, shall bear
interest at the Overdue Rate (from such ninth (9th) day after the due date of
such installment until the date of payment thereof) (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, whether or not a claim for such interest is allowed or allowable in
such proceeding), and Tenant shall pay such interest to Landlord on demand. The
payment of such late charge or such interest shall not constitute a waiver of,
nor excuse or cure, any default under this Lease, nor prevent Landlord from
exercising any other rights and remedies available to Landlord. No failure by
Landlord to insist upon strict performance by Tenant of Tenant’s obligation to
pay late charges and interest on sums overdue shall constitute a waiver by
Landlord of its right to enforce the provisions, terms and conditions of this
Section 3.3. No payment by Tenant nor receipt by Landlord of a lesser amount
than may be required to be paid hereunder shall be deemed to be other than on
account of any such payment, nor shall any endorsement or statement on any check
or any letter accompanying any check tendered as payment be deemed an accord and
satisfaction and Landlord, in its sole discretion, may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
payment due or pursue any other right or remedy in this Lease provided.

3.4    Method of Payment of Rent. Rent and Additional Charges to be paid to
Landlord shall be paid by electronic funds transfer debit transactions through
wire transfer, ACH or direct deposit of immediately available federal funds and
shall be initiated by Tenant for settlement on or before the applicable Payment
Date in each case (or, in respect of Additional Charges, as applicable, such
other date as may be applicable hereunder); provided, however, if the Payment
Date is not a Business Day, then settlement shall be made on the preceding
Business Day.

 

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Landlord shall provide Tenant with appropriate wire transfer, ACH and direct
deposit information in a Notice from Landlord to Tenant. If Landlord directs
Tenant to pay any Rent or any Additional Charges to any party other than
Landlord, Tenant shall send to Landlord, simultaneously with such payment, a
copy of the transmittal letter or invoice and a check whereby such payment is
made or such other evidence of payment as Landlord may reasonably require.

3.5    Net Lease. Landlord and Tenant acknowledge and agree that (i) this Lease
is and is intended to be what is commonly referred to as a “net, net, net” or
“triple net” lease, and (ii) the Rent (including, for the avoidance of doubt,
following commencement of the obligation to pay Variable Rent hereunder, the
Base Rent and Variable Rent components of the Rent) and Additional Charges shall
be paid absolutely net to Landlord, without abatement, deferment, reduction,
defense, counterclaim, claim, demand, notice, deduction or offset of any kind
whatsoever, so that this Lease shall yield to Landlord the full amount or
benefit of the installments of Rent (including, for the avoidance of doubt,
following commencement of the obligation to pay Variable Rent hereunder, the
Base Rent and Variable Rent components of the Rent) and Additional Charges
throughout the Term, all as more fully set forth in Article V and except and
solely to the extent expressly provided in Article XIV (in connection with a
Casualty Event), in Article XV (in connection with a Condemnation), in
Section 3.1 (in connection with the “true-up”, if any, applicable to the onset
of a Variable Rent Payment Period) and in Section 41.16. If Landlord commences
any proceedings for non-payment of Rent, Tenant will not interpose any defense,
offset, claim, counterclaim or cross complaint or similar pleading of any nature
or description in such proceedings unless Tenant would lose or waive such claim
by the failure to assert it. This shall not, however, be construed as a waiver
of Tenant’s right to assert such claims in a separate action brought by Tenant.
The covenants to pay Rent and Additional Charges hereunder are independent
covenants, and Tenant shall have no right to hold back, deduct, defer, reduce,
offset or fail to pay any such amounts for default by Landlord or for any other
reason whatsoever, except solely as and to the extent provided in Section 3.1
and this Section 3.5.

ARTICLE IV

ADDITIONAL CHARGES

4.1    Impositions.

(a)    Subject to Article XII relating to permitted contests, Tenant shall pay,
or cause to be paid, all Impositions before they become delinquent (other than
any payments with respect to (x) Ground Leases required to be made by Tenant
pursuant to Section 7.3(a) or (y) Property Documents required to be made by
Tenant pursuant to Section 7.2(f), which Tenant shall pay or cause to be paid
when such payments are due and payable, as required under the applicable Ground
Lease or Property Document) during the Term to the applicable taxing authority
or other party imposing the same before any fine, penalty, premium or interest
may be added for non-payment (provided, (i) such covenant shall not be construed
to require early or advance payments that would reduce or discount the amount
otherwise owed and (ii) Tenant shall not be required to pay any Impositions that
under the terms of any applicable Ground Lease or Property Document are required
to be paid by the Ground Lessor or counterparty thereunder). Tenant shall make
such payments directly to the taxing authorities where feasible, and on a
monthly basis furnish to Landlord a summary of such payments, together, upon the
request of Landlord, with copies of

 

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official receipts or other reasonably satisfactory proof evidencing such
payments. If Tenant is not permitted to, or it is otherwise not feasible for
Tenant to, make such payments directly to the taxing authorities or other
applicable party, then Tenant shall make such payments to Landlord at least ten
(10) Business Days prior to such payments becoming delinquent (except in the
case of any such payments with respect to (x) Ground Leases required to be made
by Tenant pursuant to Section 7.3(a) or (y) Property Documents required to be
made by Tenant pursuant to Section 7.2(f), which Tenant shall pay or cause to be
paid to Landlord at least ten (10) Business Days prior to such payments becoming
due and payable under the applicable Ground Lease or Property Document), and
Landlord shall make such payments to the taxing authorities or other applicable
party prior to delinquency (or, in the case of any such payments with respect to
(x) Ground Leases required to be made by Tenant pursuant to Section 7.3(a) or
(y) Property Documents required to be made by Tenant pursuant to Section 7.2(f),
the date that such payments are due and payable under the applicable Ground
Lease or Property Document). Landlord shall deliver to Tenant any bills received
by Landlord for Impositions, promptly following Landlord’s receipt thereof.
Tenant’s obligation to pay Impositions shall be absolutely fixed upon the date
such Impositions become a lien upon the Leased Property or any part thereof to
the extent payable during the Term, subject to Article XII. Notwithstanding
anything in the first sentence of this Section 4.1 to the contrary, if any
Imposition may, at the option of the taxpayer, lawfully be paid in installments,
whether or not interest shall accrue on the unpaid balance of such Imposition,
Tenant may pay the same, and any accrued interest on the unpaid balance of such
Imposition, in installments before the same respectively become delinquent and
before any fine, penalty, premium or further interest may be added thereto.

(b)    Landlord, Landlord REIT or their Affiliate shall prepare and file all tax
returns and reports as may be required by Legal Requirements with respect to
Landlord’s net income, gross receipts, franchise taxes and taxes on its capital
stock and any other returns required to be filed by or in the name of Landlord
(the “Landlord Tax Returns”) (irrespective of whether the same comprise
Impositions payable by Tenant hereunder or otherwise payable by Landlord,
Landlord REIT or any of their Affiliates), and Tenant or Tenant’s applicable
direct or indirect parent shall prepare and file all other tax returns and
reports as may be required by Legal Requirements with respect to or relating to
the Leased Property (including all Capital Improvements) and Tenant’s Property.
If any property covered by this Lease is classified as personal property for tax
purposes, Tenant shall file all required personal property tax returns in such
jurisdictions where it is required to file pursuant to applicable Legal
Requirements and provide copies to Landlord upon request.

(c)    Any refund due from any taxing authority in respect of any Imposition
paid by or on behalf of Tenant shall be paid over to or retained by Tenant, and
any refund due from any taxing authority in respect of any Imposition paid by or
on behalf of Landlord, if any, shall be paid over to or retained by Landlord.

(d)    Landlord and Tenant shall, upon request of the other, provide such data
as is maintained by the Party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required tax returns and
reports. Landlord, to the extent it possesses the same, and Tenant, to the
extent it possesses the same, shall provide the other Party, upon request, with
cost and depreciation records necessary for filing returns for any property
classified as personal property. Where Landlord is legally required to file
personal property tax returns, Landlord shall provide Tenant with copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Tenant to file a protest.

 

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(e)    Billings for reimbursement by Tenant to Landlord of personal property or
real property taxes and any taxes due under the Landlord Tax Returns, if and to
the extent Tenant is responsible for such taxes under the terms of this
Section 4.1 (subject to Article XII), shall be accompanied by copies of any
applicable Landlord Tax Returns (together with copies of all underlying
supporting documentation for any such Landlord Tax Returns), a bill therefor and
payments thereof, which shall identify in reasonable detail the personal
property or real property or other tax obligations of Landlord with respect to
which such payments are made.

(f)    Impositions imposed or assessed in respect of the tax-fiscal period
during which the Expiration Date occurs shall be adjusted and prorated between
Landlord and Tenant; provided, that, Tenant’s obligation to pay its prorated
share of Impositions imposed or assessed before the Expiration Date in respect
of a tax-fiscal period during the Term shall survive the Expiration Date (and
its right to contest the same pursuant to Article XII shall survive the Stated
Expiration Date). Landlord will not enter into agreements that will result in,
or consent to the imposition of, additional Impositions without Tenant’s
consent, which shall not be unreasonably withheld, conditioned or delayed;
provided, (i) in each case, Tenant is given reasonable opportunity to
participate in the process leading to such agreement and (ii) this sentence
shall not restrict entry into agreements with Persons other than governmental or
similar authorities or bodies on the basis that such agreements may have the
effect of increasing franchise, capital stock or similar taxes that are required
to be paid by Tenant hereunder. Impositions imposed or assessed in respect of
any tax-fiscal period occurring (in whole or in part) prior to the Commencement
Date, if any, shall be Tenant’s obligation to pay or cause to be paid.

4.2    Utilities and Other Matters. Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities used in the
Leased Property. Tenant shall also pay or reimburse Landlord for all costs and
expenses of any kind whatsoever which at any time with respect to the Term
hereof may be imposed against Landlord by reason of any Property Documents, or
with respect to easements, licenses or other rights over, across or with respect
to any adjacent or other property which benefits the Leased Property or any
Capital Improvement, including any and all costs and expenses associated with
any utility, drainage and parking easements relating to the Leased Property (but
excluding, for the avoidance of doubt, any costs and expenses under any Fee
Mortgage Documents).

4.3    Compliance Certificate. Landlord shall deliver to Tenant, promptly
following Landlord’s receipt thereof, any bills received by Landlord for items
required to be paid by Tenant hereunder, including, without limitation,
Impositions, utilities and insurance. Promptly upon request of Landlord (but, so
long as no Tenant Event of Default is continuing, no more frequently than one
(1) time per Fiscal Quarter), Tenant shall furnish to Landlord a certification
stating that all or a specified portion of Impositions, utilities, insurance
premiums or, to the extent specified by Landlord, any other amounts payable by
Tenant hereunder that have, in each case, come due prior to the date of such
certification have been paid (or that such payments are being contested in good
faith by Tenant in accordance herewith) and specifying the portion of the Leased
Property to which such payments relate.

 

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4.4    Impound Account. At Landlord’s option following the occurrence and during
the continuation of a monetary Tenant Event of Default (to be exercised by
thirty (30) days’ written notice to Tenant), Tenant shall be required to
deposit, at the time of any payment of Rent, an amount equal to one-twelfth
(1/12th) of the sum of (i) Tenant’s estimated annual real and personal property
taxes required pursuant to Section 4.1 hereof (as reasonably determined by
Landlord), and (ii) Tenant’s estimated annual insurance premium costs pursuant
to Article XIII hereof (as reasonably determined by Landlord). Such amounts
shall be applied to the payment of the obligations in respect of which said
amounts were deposited, on or before the respective dates on which the same or
any of them would become due. The reasonable cost of administering such impound
account shall be paid by Tenant. Nothing in this Section 4.4 shall be deemed to
affect any other right or remedy of Landlord hereunder.

ARTICLE V

NO TERMINATION, ABATEMENT, ETC.

Except as otherwise specifically provided in this Lease, Tenant shall remain
bound by this Lease in accordance with its terms. The obligations of Landlord
and Tenant hereunder shall be separate and independent covenants and agreements
and the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
as to all or any portion of the Leased Property other than by reason of a Tenant
Event of Default. Without limitation of the preceding sentence, the respective
obligations of Landlord and Tenant shall not be affected by reason of, except as
expressly set forth in Articles XIV and XV, (i) any damage to or destruction of
the Leased Property, including any Capital Improvement or any portion thereof
from whatever cause, or any Condemnation of the Leased Property, including any
Capital Improvement or any portion thereof or, discontinuance of any service or
utility servicing the same; (ii) the lawful or unlawful prohibition of, or
restriction upon, Tenant’s use of the Leased Property, including any Capital
Improvement or any portion thereof or the interference with such use by any
Person or by reason of eviction by paramount title; (iii) any claim that Tenant
has or might have against Landlord by reason of any default or breach of any
warranty by Landlord hereunder or under any other agreement between Landlord and
Tenant or to which Landlord and Tenant are parties; (iv) any bankruptcy,
insolvency, reorganization, consolidation, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Landlord or any assignee
or transferee of Landlord; or (v) for any other cause, whether similar or
dissimilar to any of the foregoing. Tenant hereby specifically waives all rights
arising from any occurrence whatsoever which may now or hereafter be conferred
upon it by law (a) to modify, surrender or terminate this Lease or quit or
surrender the Leased Property or any portion thereof, or (b) which may entitle
Tenant to any abatement, deduction, reduction, suspension or deferment of or
defense, counterclaim, claim or set-off against the Rent or other sums payable
by Tenant hereunder, except in each case as may be otherwise specifically
provided in this Lease. Notwithstanding the foregoing, nothing in this Article V
shall preclude Tenant from bringing a separate action against Landlord for any
matter described in the foregoing clauses (ii), (iii) or (v) and Tenant is not
waiving other rights and remedies not expressly waived herein. Tenant’s
agreement that, except as may be otherwise specifically provided in this Lease,
any eviction by paramount title as described in clause (ii) above shall not
affect Tenant’s obligations under this Lease, shall not in any way discharge or
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of title or other insurance, and, to the extent the recovery thereof is not
necessary to compensate Landlord for any damages incurred by any such eviction,
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance in respect of any such eviction up
to the maximum amount paid by Tenant to Landlord under this Article V and
Article XIV hereof in respect of any such eviction or the duration thereof, and
Landlord, upon request by Tenant, shall assign Landlord’s rights under such
policies to Tenant provided such assignment does not adversely affect Landlord’s
rights under any such policy and provided further, that Tenant shall indemnify,
defend, protect and save Landlord harmless from and against any liability, cost
or expense of any kind that may be imposed upon Landlord in connection with any
such assignment except to the extent such liability, cost or expense arises from
the gross negligence or willful misconduct of Landlord.

ARTICLE VI

OWNERSHIP OF REAL AND PERSONAL PROPERTY

6.1    Ownership of the Leased Property.

(a)    Landlord and Tenant acknowledge and agree that they have executed and
delivered this Lease with the understanding that (i) the Leased Property is the
property of Landlord, (ii) Tenant has only the right to the possession and use
of the Leased Property upon the terms and conditions of this Lease, (iii) this
Lease is a “true lease,” is not a financing lease, mortgage, equitable mortgage,
deed of trust, trust agreement, security agreement or other financing or trust
arrangement, and the economic realities of this Lease are those of a true lease,
(iv) the business relationship created by this Lease and any related documents
is and at all times shall remain that of landlord and tenant, (v) this Lease has
been entered into by each Party in reliance upon the mutual covenants,
conditions and agreements contained herein, and (vi) none of the agreements
contained herein is intended, nor shall the same be deemed or construed, to
create a partnership between Landlord and Tenant, to make them joint venturers,
to make Tenant an agent, legal representative, partner, subsidiary or employee
of Landlord, or to make Landlord in any way responsible for the debts,
obligations or losses of Tenant.

(b)    Each of the Parties covenants and agrees, subject to Section 6.1(d), not
to (i) file any income tax return or other associated documents, (ii) file any
other document with or submit any document to any governmental body or
authority, or (iii) enter into any written contractual arrangement with any
Person, in each case that takes a position other than that this Lease is a “true
lease” with Landlord as owner of the Leased Property (except as expressly set
forth below) and Tenant as the tenant of the Leased Property. For U.S. federal,
state and local income tax purposes, Landlord and Tenant agree that (x) Landlord
shall be treated as the owner of the Leased Property eligible to claim
depreciation deductions under Sections 167 or 168 of the Code with respect to
the Leased Property excluding the Leased Property described in clauses (y) and
(z) below, (y) Tenant shall be treated as owner of, and eligible to claim
depreciation deductions under Sections 167 or 168 of the Code with respect to,
all Tenant Capital Improvements (including, for the avoidance of doubt and for
purposes of this sentence, Tenant Material Capital Improvements) and Material
Capital Improvements funded by Landlord pursuant to a Landlord MCI Financing
that is treated as a loan for such income tax purposes, and (z) Tenant shall be
treated as owner of, and eligible to claim depreciation deductions under
Sections 167 and 168 of the Code with respect to,

 

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any Leased Improvements (related to any capital improvement projects ongoing as
of the Commencement Date for which fifty percent (50%) or less of the costs of
such projects have been paid or accrued as of the Commencement Date (the
completion of such capital improvement projects being an obligation of Tenant at
no cost or expense to Landlord). For the avoidance of doubt, Landlord shall be
treated as having received from the Debtors on the Commencement Date, as a
capital contribution together with the transfer of the Leased Property to
Landlord pursuant to the Bankruptcy Plan, an obligation of Tenant (at no cost or
expense to Landlord) to complete any Leased Improvements related to any capital
improvement projects ongoing as of the Commencement Date for which more than
fifty percent (50%) of the costs of such projects have been paid or accrued as
of the Commencement Date.

(c)    If, notwithstanding (i) the form and substance of this Lease, (ii) the
intent of the Parties, and (iii) the language contained herein providing that
this Lease shall at all times be construed, interpreted and applied to create an
indivisible lease of all of the Leased Property, any court of competent
jurisdiction finds that this Lease is a financing arrangement, then this Lease
shall be considered a secured financing agreement and Landlord’s title to the
Leased Property shall constitute a perfected first priority lien in Landlord’s
favor on the Leased Property to secure the payment and performance of all the
obligations of Tenant hereunder (and to that end, Tenant hereby grants, assigns
and transfers to Landlord a security interest in all right, title and interest
in or to any and all of the Leased Property, as security for the prompt and
complete payment and performance when due of Tenant’s obligations hereunder). In
such event, Tenant (and each Permitted Leasehold Mortgagee) authorizes Landlord,
at the expense of Tenant, to make any filings or take other actions as Landlord
reasonably determines are necessary or advisable in order to effect fully this
Lease or to more fully perfect or renew the rights of Landlord, and to
subordinate to Landlord the lien of any Permitted Leasehold Mortgagee, with
respect to the Leased Property (it being understood that nothing in this
Section 6.1(c) shall affect the rights of a Permitted Leasehold Mortgagee under
Article XVII hereof). At any time and from time to time upon the request of
Landlord, and at the expense of Tenant, Tenant shall promptly execute,
acknowledge and deliver such further documents and do such other acts as
Landlord may reasonably request in order to effect fully this Section 6.1(c) or
to more fully perfect or renew the rights of Landlord with respect to the Leased
Property as described in this Section 6.1(c). If Tenant should reasonably
conclude that, as a result of a change in law or GAAP accounting standards, or a
change in agency interpretation thereof, GAAP or the SEC require treatment
different from that set forth in Section 6.1(b) for applicable non-tax purposes,
then (x) Tenant shall promptly give prior Notice to Landlord, accompanied by a
written statement that references the applicable pronouncement that controls
such treatment and contains a brief description and/or analysis that sets forth
in reasonable detail the basis upon which Tenant reached such conclusion, and
(y) notwithstanding Section 6.1(b) and this Section 6.1(c), Tenant may comply
with such requirements.

(d)    Notwithstanding the foregoing, the Parties acknowledge that, as of the
Commencement Date, for GAAP purposes this Lease is not expected to be treated as
a “true lease” and that the Parties will prepare Financial Statements consistent
with GAAP (and for purposes of any SEC or other similar governmental filing
purposes), as applicable.

(e)    Landlord and Tenant acknowledge and agree that the Rent is the fair
market rent for the use of the Leased Property and was agreed to by Landlord and
Tenant on that basis, and the execution and delivery of, and the performance by
Tenant of its obligations under, this Lease does not constitute a transfer of
all or any part of the Leased Property, but rather the creation of the Leasehold
Estate subject to the terms and conditions of this Lease.

 

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(f)    Tenant waives any claim or defense based upon the characterization of
this Lease as anything other than a true lease of the Leased Property. Tenant
stipulates and agrees (1) not to challenge the validity, enforceability or
characterization of this Lease of the Leased Property as a true lease, and
(2) not to assert or take or omit to take any action inconsistent with the
agreements and understandings set forth in Section 1.2, Section 3.5 or this
Section 6.1. The expressions of intent, the waivers, the representations and
warranties, the covenants, the agreements and the stipulations set forth in this
Section 6.1 are a material inducement to Landlord entering into this Lease.

6.2    Ownership of Tenant’s Property. Tenant shall, during the entire Term,
(a) own (or lease) and maintain (or cause its Subsidiaries, if any, to own (or
lease) and maintain) on the Leased Property adequate and sufficient Tenant’s
Property and (b) maintain (or cause its Subsidiaries, if any, to maintain) all
of such Tenant’s Property in good order, condition and repair, in all cases as
shall be necessary and appropriate in order to operate the Leased Property for
the Primary Intended Use in material compliance with all applicable licensure
and certification requirements and in material compliance with all applicable
Legal Requirements, Insurance Requirements and Gaming Regulations. If any of
Tenant’s Property requires replacement in order to comply with the foregoing,
Tenant shall replace (or cause a Subsidiary to replace) it with similar property
of the same or better quality at Tenant’s (or such Subsidiary’s) sole cost and
expense. Subject to the foregoing and the other express terms and conditions of
this Lease, Tenant and its Subsidiaries, if any, may sell, transfer, convey or
otherwise dispose of Tenant’s Property in their discretion in the ordinary
course of their business and Landlord shall thereafter have no rights to such
sold, transferred, conveyed or otherwise disposed of Tenant’s Property. In the
case of any such Tenant’s Property that is leased (rather than owned) by Tenant
(or its Subsidiaries, if any), Tenant shall use commercially reasonable efforts
to ensure that any agreements entered into after the Commencement Date pursuant
to which Tenant (or its Subsidiaries, if any) leases such Tenant’s Property are
assignable to third parties in connection with any transfer by Tenant (or its
Subsidiaries, if any) to a replacement lessee or operator at the end of the
Term. To the extent not transferred to a Successor Tenant pursuant to Article
XXXVI hereof (and subject to the rights of any Permitted Leasehold Mortgagee
under Article XVII), Tenant shall remove all of Tenant’s Property from the
Leased Property at the end of the Term. Any Tenant’s Property left on the Leased
Property at the end of the Term whose ownership was not transferred to a
Permitted Leasehold Mortgagee or its designee or assignee that entered into or
succeeded to a New Lease pursuant to the terms hereof or to a Successor Tenant
pursuant to Article XXXVI hereof shall be deemed abandoned by Tenant and shall
become the property of Landlord. Notwithstanding anything to the contrary
contained herein, but without limitation of Tenant’s express rights to effect
replacements, make dispositions or grant liens with respect to Tenant’s Property
under this Section 6.2, Tenant shall own, hold and/or lease, as applicable, all
of the material Tenant’s Property relating to the Leased Property.

 

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ARTICLE VII

PRESENT CONDITION & PERMITTED USE

7.1    Condition of the Leased Property. Tenant acknowledges receipt and
delivery of possession of the Leased Property and confirms that Tenant has
examined and otherwise has knowledge of the condition of the Leased Property
prior to and as of the execution and delivery of this Lease and has found the
same to be satisfactory for its purposes hereunder, it being understood and
acknowledged by Tenant that, immediately prior to Landlord’s acquisition of the
Leased Property and contemporaneous entry into this Lease, Tenant (or its
Affiliates) was the owner of all of Landlord’s interest in and to the Leased
Property and, accordingly, Tenant is charged with, and deemed to have, full and
complete knowledge of all aspects of the condition and state of the Leased
Property as of the Commencement Date. Without limitation of the foregoing and
regardless of any examination or inspection made by Tenant, and whether or not
any patent or latent defect or condition was revealed or discovered thereby,
Tenant is leasing the Leased Property “as is” in its present condition. Without
limitation of the foregoing, Tenant waives any claim or action against Landlord
in respect of the condition of the Leased Property including any defects or
adverse conditions not discovered or otherwise known by Tenant as of the
Commencement Date. LANDLORD MAKES NO WARRANTY OR REPRESENTATION OF ANY KIND,
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,
INCLUDING AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE
OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE OR QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, OR THE STATUS OF TITLE TO THE LEASED PROPERTY OR THE
PHYSICAL CONDITION OR STATE OF REPAIR THEREOF, OR THE ZONING OR OTHER LAWS,
ORDINANCES, BUILDING CODES, REGULATIONS, RULES AND ORDERS APPLICABLE THERETO OR
TO ANY CAPITAL IMPROVEMENTS WHICH MAY BE NOW OR HEREAFTER CONTEMPLATED, THE
IMPOSITIONS LEVIED IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, OR THE
USE THAT MAY BE MADE OF THE LEASED PROPERTY OR ANY PART THEREOF, THE INCOME TO
BE DERIVED FROM THE FACILITY OR THE EXPENSE OF OPERATING THE SAME, OR THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, IT BEING AGREED THAT ALL SUCH RISKS,
LATENT OR PATENT, ARE TO BE BORNE SOLELY BY TENANT INCLUDING ALL RESPONSIBILITY
AND LIABILITY FOR ANY ENVIRONMENTAL REMEDIATION AND COMPLIANCE WITH ALL
ENVIRONMENTAL LAWS. This Section 7.1 shall not be construed to limit Landlord’s
express indemnities made hereunder.

7.2    Use of the Leased Property.

(a)    Tenant shall not use (or cause or permit to be used) the Facility,
including the Leased Property, or any portion thereof, including any Capital
Improvement, for any use other than the Primary Intended Use without the prior
written consent of Landlord, which consent Landlord may withhold in its sole
discretion. Landlord acknowledges that operation of the Leased Property for its
Primary Intended Use generally may require a Gaming License under applicable
Gaming Regulations and that without such a license, if applicable, neither
Landlord nor Landlord REIT may operate, control or participate in the conduct of
the gaming operations at the Facility. Tenant acknowledges that operation of the
Facility for its Primary Intended Use generally may

 

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require a Gaming License under applicable Gaming Regulations and that without
such a license, if applicable, Tenant may not operate, control or participate in
the conduct of the gaming operations at the Facility.

(b)    Tenant shall not commit or suffer to be committed any waste with respect
to the Facility, including on or to the Leased Property (and, without
limitation, to the Capital Improvements) or cause or permit any nuisance thereon
or, except as required by law, knowingly take or suffer any action or condition
that will diminish in any material respect, the ability of the Leased Property
to be used as a Gaming Facility (or otherwise for the Primary Intended Use)
after the Expiration Date.

(c)    Tenant shall not, without the prior written consent of Landlord, which
shall not be unreasonably withheld, conditioned or delayed, (i) initiate or
support any limiting change in the permitted uses of the Leased Property (or to
the extent applicable, limiting zoning reclassification of the Leased Property);
(ii) seek any variance under existing land use restrictions, laws, rules or
regulations (or, to the extent applicable, zoning ordinances) applicable to the
Leased Property or the use of the Leased Property in any manner that adversely
affects (other than to a de minimis extent) the value or utility of the Leased
Property for the Primary Intended Use; (iii) execute or file any subdivision
plat or condominium declaration affecting the Leased Property or any portion
thereof, or institute, or permit the institution of, proceedings to alter any
tax lot comprising the Leased Property or any portion thereof; or (iv) knowingly
permit or suffer the Leased Property or any portion thereof to be used by the
public or any Person in such manner as might make possible a claim of adverse
usage or possession or of any implied dedication or easement (provided that the
proscription in this clause (iv) is not intended to and shall not restrict
Tenant in any way from complying with any obligation it may have under
applicable Legal Requirements, including, without limitation, Gaming
Regulations, to afford to the public access to the Leased Property or any
portion thereof). Without limiting the foregoing, (1) Tenant will not impose or
permit the imposition of any restrictive covenants, easements or other
encumbrances upon the Leased Property (including, subject to the last paragraph
of Section 16.1, any restrictive covenant, easement or other encumbrance which
Tenant may otherwise impose or permit to be imposed pursuant to the provisions
of any Permitted Exception Document) without Landlord’s consent, which shall not
be unreasonably withheld, conditioned or delayed, provided, that, Landlord is
given reasonable opportunity to participate in the process leading to such
restrictive covenant, easement or other encumbrance, and (2) other than any
liens or other encumbrances granted to a Fee Mortgagee, Landlord will not enter
into, amend or otherwise modify agreements that encumber the Leased Property
(including the Property Documents) without Tenant’s consent, which shall not be
unreasonably withheld, conditioned or delayed, provided, that, Tenant is given
reasonable opportunity to participate in the process leading to such agreement,
amendment or other modification. Landlord agrees it will not withhold consent to
utility easements and other similar encumbrances made in the ordinary course of
Tenant’s business conducted on the Leased Property in accordance with the
Primary Intended Use, provided the same does not adversely affect in any
material respect the use or utility of the Leased Property for the Primary
Intended Use. Nothing in the foregoing is intended to vitiate or supersede
Tenant’s right to enter into Permitted Leasehold Mortgages or Landlord’s right
to enter into Fee Mortgages in each case as and to the extent provided herein.

(d)    Intentionally Omitted.

 

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(e)    Subject to Article XII regarding permitted contests, Tenant, at its sole
cost and expense, shall promptly (i) comply in all material respects with all
Legal Requirements and Insurance Requirements affecting the Facility and the
business conducted thereat, including those regarding the use, operation,
maintenance, repair and restoration of the Leased Property or any portion
thereof (including all Capital Improvements) and Tenant’s Property whether or
not compliance therewith may require structural changes in any of the Leased
Improvements or interfere with the use and enjoyment of the Leased Property or
any portion thereof, and (ii) procure, maintain and comply in all material
respects with all Gaming Regulations and Gaming Licenses, and other
authorizations required for the use of the Leased Property (including all
Capital Improvements) and Tenant’s Property for the applicable Primary Intended
Use and any other use of the Leased Property (and Capital Improvements then
being made) and Tenant’s Property, and for the proper erection, installation,
operation and maintenance of the Leased Property and Tenant’s Property. In an
emergency involving an imminent threat to human health and safety or damage to
property, or in the event of a breach by Tenant of its obligations under this
Section 7.2 which is not cured within any applicable cure period set forth
herein, Landlord or its representatives (and any Fee Mortgagee) may, but shall
not be obligated to, enter upon the Leased Property (and, without limitation,
all Capital Improvements) (upon reasonable prior written notice to Tenant,
except in the case of emergency, and Tenant shall be permitted to have Landlord
or its representatives accompanied by a representative of Tenant) and take such
reasonable actions and incur such reasonable costs and expenses to effect such
compliance as it deems advisable to protect its interest in the Leased Property,
and Tenant shall reimburse Landlord for all such reasonable out-of-pocket costs
and expenses actually incurred by Landlord in connection with such actions.

(f)    Without limitation of any of the other provisions of this Lease, Tenant
shall comply with all Property Documents (i) that are listed on the title
policies described on Exhibit I attached hereto, or (ii) made after the
Commencement Date in accordance with the terms of this Lease or as may otherwise
be entered into or agreed to in writing by Tenant.

(g)    Tenant shall operate the Facility under one or more Brands, provided,
that, (i) Tenant shall have the right, subject to receipt of any required
approval from any governmental authority, body or agency, to change the Brand
under which the Facility is operated to any other Brand, with the costs of such
rebranding borne by Tenant, (ii) Tenant shall give Landlord prior notice of any
change to the top-level Brand of the Facility, and (iii) the Facility shall in
all events continue to be operated under all other System-wide IP. If any Brand
is replaced by another Brand pursuant to the preceding sentence, Landlord and
Tenant shall cooperate with one another to make such changes to this Lease as
are necessary to give effect to such new Brand.

7.3    Ground Leases.

(a)    This Lease, to the extent affecting and solely with respect to the Ground
Leased Property, is and shall be subject and subordinate to all of the terms and
conditions of the Ground Leases and to all liens, rights and encumbrances to
which the Ground Leases are subject or subordinate. Tenant hereby acknowledges
that Tenant has reviewed and agreed to all of the terms and conditions of the
Ground Leases in effect as of the Commencement Date as listed on Schedule 2
attached hereto. Tenant hereby agrees that (x) Tenant shall comply with all
provisions, terms and conditions of the Ground Leases in effect as of the
Commencement Date as listed on Schedule 2 and, subject to Section 7.3(g) and
Section 7.3(h), any amendments or modifications thereto and

 

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any new Ground Leases, in each case except to the extent such provisions, terms
and conditions (1) apply solely to Landlord, (2) are not susceptible of being
performed (or if breached, are not capable of being cured) by Tenant, and (3) in
the case of the Ground Leases in effect as of the Commencement Date, are
expressly set forth in the copies of such Ground Leases that were furnished to
Landlord by Tenant on or prior to the Commencement Date (provisions, terms and
conditions satisfying clauses (1) through (3), “Landlord Specific Ground Lease
Requirements”), and (y) Tenant shall not do, or (except with respect to Landlord
Specific Ground Lease Requirements) fail to do, anything that would cause any
violation of the Ground Leases. Without limiting the foregoing, (i) Tenant
acknowledges that it shall be obligated to (and shall) pay, as part of Tenant’s
obligations under this Lease, all monetary obligations imposed upon Landlord as
the lessee under any and all of the Ground Leases as and when due thereunder,
including, without limitation, any rent and additional rent payable thereunder
and shall, upon request, provide satisfactory proof evidencing such payments to
Landlord, (ii) to the extent Landlord is required to obtain the written consent
of the lessor under any applicable Ground Lease (in each case, the “Ground
Lessor”) to alterations of or the subleasing of all or any portion of the Ground
Leased Property pursuant to any Ground Lease, Tenant shall likewise obtain the
applicable Ground Lessor’s written consent to alterations of or the
sub-subleasing of all or any portion of the Ground Leased Property (in each
case, to the extent the same is permitted hereunder), and (iii) (without
limitation of the Insurance Requirements hereunder) Tenant shall carry and
maintain general liability, automobile liability, property and casualty,
worker’s compensation, employer’s liability insurance and such other insurance,
if any, in amounts and with policy provisions, coverages and certificates as
required of Landlord as tenant under any applicable Ground Lease. The foregoing
is not intended to vitiate or supersede Landlord’s rights as lessee under any
Ground Lease, and, without limitation of the preceding portion of this sentence
or of any other rights or remedies of Landlord hereunder, in the event Tenant
fails to comply with its obligations with respect to Ground Leases as described
herein (without giving effect to any notice or cure periods thereunder),
Landlord shall have the right (but without any obligation to Tenant or any
liability for failure to exercise such right), following written notice to
Tenant and the passage of a reasonable period of time (except to the extent the
failure is of a nature such that it is not practicable for Landlord to provide
such prior written notice, in which event Landlord shall provide written notice
as soon as practicable) to cure such failure, in which event Tenant shall
reimburse Landlord for Landlord’s reasonable costs and expenses incurred in
connection with curing such failure. The parties acknowledge that the Ground
Leases on the one hand, and this Lease on the other hand, constitute separate
contractual arrangements among separate parties and nothing in this Lease shall
vitiate or otherwise affect the obligations of the parties to the Ground Leases,
and nothing in the Ground Leases shall vitiate or otherwise affect the
obligations of the parties hereto pursuant to this Lease (except as specifically
set forth in this Section 7.3).

(b)    Subject to Section 7.3(c) below, in the event of cancellation or
termination of any Ground Lease for any reason whatsoever whether voluntary or
involuntary (by operation of law or otherwise) prior to the expiration date of
this Lease, including extensions and renewals granted hereunder (other than the
cancellation or termination of a Ground Lease entered into in connection with a
sale-leaseback transaction by Landlord (other than if such cancellation or
termination resulted from Tenant’s default under this Lease), which cancellation
or termination results in the Leased Property leased under such Ground Lease no
longer being subject to this Lease), then, this Lease and Tenant’s obligation to
pay the Rent and Additional Charges hereunder and all other obligations of
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concern solely the applicable Ground Leased Property demised under the affected
Ground Lease) shall continue unabated; provided that if Landlord (or any Fee
Mortgagee) enters into a replacement lease with respect to the applicable Ground
Leased Property on substantially similar terms to those of such cancelled or
terminated Ground Lease, then such replacement lease shall automatically become
a Ground Lease hereunder and such Ground Leased Property shall remain part of
the Leased Property hereunder. Nothing contained in this Lease shall create, or
be construed as creating, any privity of contract or privity of estate between
Ground Lessor and Tenant.

(c)    With respect to any Ground Leased Property, the Ground Lease for which
has an expiration date (taking into account any renewal options exercised
thereunder or hereafter exercised) prior to the expiration of the Term (taking
into account any exercised renewal options hereunder), this Lease shall expire
solely with respect to such Ground Leased Property concurrently with such Ground
Lease expiration date (taking into account the terms of the following sentences
of this Section 7.3(c)). There shall be no reduction in Rent nor Required
Capital Expenditures by reason of such expiration with respect to, and the
corresponding removal from this Lease of, any such Ground Leased Property.
Landlord (as ground lessee) shall exercise all renewal options contained in each
Ground Lease so as to extend the term thereof (provided, that, Tenant shall
furnish to Landlord written notice of the outside date by which any such renewal
option must be exercised in order to validly extend the term of any such Ground
Lease; such notice shall be delivered no earlier than one hundred twenty
(120) days prior to the earliest date any such option may be validly exercised
and no later than forty-five (45) days prior to the outside date by which such
option must be validly exercised, which notice shall be followed by a second
notice from Tenant to Landlord of such outside date, such notice to be furnished
to Landlord no later than fifteen (15) days prior to the outside date), and
Landlord shall provide Tenant with a copy of Landlord’s exercise of such renewal
option. With respect to any Ground Lease that otherwise would expire during the
Term, Tenant, on Landlord’s behalf, shall have the right to negotiate for a
renewal or replacement of such Ground Lease with the third party ground lessor,
on terms satisfactory to Tenant (subject, (i) to Landlord’s reasonable consent
with respect to the provisions, terms and conditions thereof which would
reasonably be expected to materially and adversely affect Landlord, and (ii) in
the case of any such renewal or replacement that would extend the term of such
Ground Lease beyond the Term, to Landlord’s sole right to approve any such
provisions, terms and conditions that would be applicable beyond the Term).

(d)    Nothing contained in this Lease amends, or shall be construed to amend,
any provision of the Ground Leases.

(e)    Tenant shall indemnify, defend and hold harmless the Landlord Indemnified
Parties, the Ground Lessor, any master lessor to Ground Lessor and any other
party entitled to be indemnified by Landlord pursuant to the terms of any Ground
Lease from and against any and all claims arising from or in connection with the
Facility and/or this Lease with respect to which such party is entitled to
indemnification by Landlord pursuant to the terms of any Ground Lease, and from
and against all costs, attorneys’ fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon to the
extent provided in the applicable Ground Lease; and in case any such action or
proceeding be brought against any of the Landlord Indemnified Parties, any
Ground Lessor or any master lessor to Ground Lessor or any such party by reason
of any such claim, Tenant, upon notice from Landlord or any of its Affiliates or
such

 

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other Landlord Indemnified Party, such Ground Lessor or such master lessor to
Ground Lessor or any such party, shall defend the same at Tenant’s expense by
counsel reasonably satisfactory to the party or parties indemnified pursuant to
this paragraph or the Ground Lease. Notwithstanding the foregoing, in no event
shall Tenant be required to indemnify, defend or hold harmless the Landlord
Indemnified Parties, the Ground Lessor, any master lessor to Ground Lessor or
any other party from or against any claims to the extent resulting from (i) the
gross negligence or willful misconduct of Landlord, or (ii) the actions of
Landlord except if such actions are the result of Tenant’s failure, in violation
of this Lease, to act.

(f)    To the extent required under the applicable Ground Lease, Tenant hereby
waives any and all rights of recovery (including subrogation rights of its
insurers) from the applicable Ground Lessor, its agents, principals, employees
and representatives for any loss or damage, including consequential loss or
damage, covered by any insurance policy maintained by Tenant, whether or not
such policy is required under the terms of the Ground Lease.

(g)    Landlord shall not enter into any new ground leases with respect to the
Leased Property or any portion thereof (except as provided by Section 7.3(h)),
or amend, modify or terminate any existing Ground Leases (except as provided by
Section 7.3(b) or Section 7.3(c)), in each case without Tenant’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed,
provided, that, Landlord may amend or modify Ground Leases in a manner that will
not adversely affect Tenant (e.g., an amendment relating to a period following
the end of the Term), and Landlord may acquire the fee interest in the property
leased pursuant to any Ground Lease, so long as Tenant’s rights and obligations
hereunder are not adversely affected thereby.

(h)    Landlord may enter into new Ground Leases with respect to the Leased
Property or any portion thereof (including pursuant to a sale-leaseback
transaction) or amend or modify any such Ground Leases, provided that,
notwithstanding anything herein to the contrary (other than replacement Ground
Lease(s) made pursuant to Section 7.3(b) or Ground Lease(s) made pursuant to the
final sentence of Section 7.3(c)), Tenant shall not be obligated to comply with
any additional or more onerous obligations under such new ground lease or
amendment or modification thereof with which Tenant is not otherwise obligated
to comply under this Lease (and, without limiting the generality of the
foregoing, Tenant shall not be required to incur any additional monetary
obligations (whether for payment of rents under such new Ground Lease or
otherwise) in connection with such new Ground Lease) (except to a de minimis
extent), unless Tenant approves such additional obligations in its sole and
absolute discretion.

7.4    Third Party Reports. Upon Landlord’s reasonable request from time to
time, Tenant shall provide Landlord with copies of any third party reports
obtained by Tenant with respect to the Leased Property, including, without
limitation, copies of surveys, environmental reports and property condition
reports.

7.5    Operating Standard. Tenant shall, throughout the Term, cause the Facility
to be operated, managed, used, maintained and repaired in all material respects
in accordance with the Applicable Standards, as applicable to the Facility, in
each case except to the extent the failure to do so does not result in, and
would not reasonably be expected to have, a material adverse effect on Landlord
(taken as a whole with Regional Landlord) or the Facility (taken as a whole with
the Regional Facilities).

 

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ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants to the other that as of the Commencement
Date, as of the First Amendment Date and as of the Second Amendment Date:
(i) this Lease (as in effect on such date) and all other documents executed, or
to be executed, by it in connection herewith (as each such document is in effect
on such date) have been duly authorized and shall be binding upon it; (ii) it is
duly organized, validly existing and in good standing under the laws of the
state of its formation and is duly authorized and qualified to perform this
Lease within the State of Illinois; and (iii) neither this Lease nor any other
document executed or to be executed in connection herewith violates the terms of
any other agreement of such Party.

ARTICLE IX

MAINTENANCE AND REPAIR

9.1    Tenant Obligations. Subject to the provisions of Sections 10.1, 10.2 and
10.3 relating to Landlord’s approval of certain Alterations, Capital
Improvements and Material Capital Improvements, Tenant, at its expense and
without the prior consent of Landlord, shall maintain the Leased Property, and
every portion thereof, including all of the Leased Improvements and the
structural elements and the plumbing, heating, ventilating, air conditioning,
electrical, lighting, sprinkler and other utility systems thereof, all fixtures
and all appurtenances to the Leased Property including any and all private
roadways, sidewalks and curbs appurtenant to the Leased Property, and Tenant’s
Property, in each case in good order and repair whether or not the need for such
repairs occurs as a result of Tenant’s use, any prior use, the elements or the
age of the Leased Property, and, with reasonable promptness, make all reasonably
necessary and appropriate repairs thereto of every kind and nature, including
those necessary to ensure continuing compliance with all Legal Requirements
(including, without limitation, all Gaming Regulations and Environmental Laws)
(to the extent required hereunder), Insurance Requirements, the Ground Leases
and the Property Documents whether now or hereafter in effect (other than any
Ground Leases or Property Documents (or modifications to Ground Leases or
Property Documents) entered into after the Commencement Date that impose
obligations on Tenant (other than de minimis obligations) to the extent (x) in
the case of Property Documents, entered into by Landlord without Tenant’s
consent pursuant to Section 7.2(c) or (y) in the case of Ground Leases, Tenant
is not required to comply therewith pursuant to Section 7.3(b), Section 7.3(g)
or Section 7.3(h)) and, with respect to any Fee Mortgages, the applicable
provisions of such Fee Mortgage Documents as and to the extent Tenant is
required to comply therewith pursuant to Article XXXI hereof, in each case
except to the extent otherwise provided in Article XIV or Article XV of this
Lease, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to or first arising after the Commencement Date.

9.2    No Landlord Obligations. Landlord shall not under any circumstances be
required to (i) build or rebuild any improvements on the Leased Property;
(ii) make any repairs, replacements, alterations, restorations or renewals of
any nature to the Leased Property, whether ordinary or extraordinary, structural
or non-structural, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto; or (iii) maintain the Leased Property in any way.

 

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Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted. This Section 9.2 shall not be
construed to limit Landlord’s express indemnities, if any, made hereunder.

9.3    Landlord’s Estate. Nothing contained in this Lease and no action or
inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property, or any part thereof, or any Capital Improvement; or (ii) giving Tenant
any right, power or permission to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof or upon the
estate of Landlord in any Capital Improvement.

9.4    End of Term. Subject to Sections 17.1(f) and 36.1, Tenant shall, upon the
expiration or earlier termination of the Term, vacate and surrender and
relinquish in favor of Landlord all rights to the Leased Property (together with
all Capital Improvements, including all Tenant Capital Improvements, except to
the extent provided in Section 10.4 in respect of Tenant Material Capital
Improvements), in each case, in the condition in which such Leased Property was
originally received from Landlord and, in the case of Capital Improvements
(other than Tenant Material Capital Improvements to the extent provided in
Section 10.4), when such Capital Improvements were originally introduced to the
Facility, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear and subject to any Casualty Event or Condemnation as provided in
Articles XIV and XV.

ARTICLE X

ALTERATIONS

10.1    Alterations, Capital Improvements and Material Capital Improvements.
Tenant shall not be required to obtain Landlord’s consent or approval to make
any Alterations or Capital Improvements (including any Material Capital
Improvement) to the Leased Property; provided, however, that all such
Alterations and Capital Improvements (i) shall be of equal quality to or better
quality than the applicable portions of the existing Facility, as applicable,
except to the extent Alterations or Capital Improvements of lesser quality would
not, in the reasonable opinion of Tenant, result in any diminution of value of
the Leased Property (or applicable portion thereof), (ii) shall not have an
adverse effect on the structural integrity of any portion of the Leased
Property, and (iii) shall not otherwise result in a diminution of value to the
Leased Property (except to a de minimis extent). If any Alteration or Capital
Improvement would not or does not meet the standards of the preceding sentence,
then such Alteration or Capital Improvement shall be subject to Landlord’s
written approval, which written approval shall not be unreasonably withheld,
conditioned or delayed. Further, if any Alteration or Capital Improvement (or
the aggregate amount of all related Alterations or Capital Improvements) has a
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evidenced to Landlord) in excess of Seventy-Five Million and No/100 Dollars
($75,000,000.00) (the “Alteration Threshold”), then such Alteration or Capital
Improvement (or series of related Alterations or Capital Improvements) shall be
subject to the approval of Landlord and, if applicable, subject to Section 31.3,
any Fee Mortgagee, in each case which written approval shall not be unreasonably
withheld, conditioned or delayed. Landlord shall have the right (in addition to
any construction consultant engaged by Tenant, at Tenant’s sole cost and
expense, to satisfy any applicable Additional Fee Mortgagee Requirement) to also
select and engage, at Landlord’s cost and expense, construction consultants to
conduct inspections of the Leased Property during the construction of any
Material Capital Improvements, provided that (x) such inspections shall be
conducted in a manner as to not unreasonably interfere with such construction or
the operation of the Facility, (y) prior to entering the Leased Property, such
consultants shall deliver to Tenant evidence of insurance reasonably
satisfactory to Tenant and (z) (irrespective of whether the consultant was
engaged by Landlord, Tenant or otherwise) Landlord and Tenant shall be entitled
to receive copies of such consultants’ work product and shall have direct access
to and communication with such consultants.

10.2    Landlord Approval of Certain Alterations and Capital Improvements. If
Tenant desires to make any Alteration or Capital Improvement for which
Landlord’s approval is required pursuant to Section 10.1 above, Tenant shall
submit to Landlord in reasonable detail a general description of the proposal,
the projected cost of the applicable Work and such plans and specifications,
permits, licenses, contracts and other information concerning the proposal as
Landlord may reasonably request. Such description shall indicate the use or uses
to which such Alteration or Capital Improvement will be put and the impact, if
any, on current and forecasted gross revenues and operating income attributable
thereto. Landlord may condition any approval of any Alteration or Capital
Improvement (including any Material Capital Improvement), to the extent required
pursuant to Section 10.1 above, upon any or all of the following terms and
conditions, to the extent reasonable under the circumstances:

(a)    the Work shall be effected pursuant to detailed plans and specifications
approved by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed;

(b)    the Work shall be conducted under the supervision of a licensed architect
or engineer selected by Tenant (the “Architect”) and, for purposes of this
Section 10.2 only, approved by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed;

(c)    Landlord’s receipt from the general contractor and, if reasonably
requested by Landlord, any major subcontractor(s) of a performance and payment
bond for the full value of such Work, which such bond shall name Landlord as an
additional obligee and otherwise be in form and substance and issued by a Person
reasonably satisfactory to Landlord;

(d)    Landlord’s receipt of reasonable evidence of Tenant’s financial ability
to complete the Work without materially and adversely affecting its cash flow
position or financial viability; and

(e)    such Alteration or Capital Improvement will not result in the Leased
Property becoming a “limited use” within the meaning of Revenue Procedure
2001-28 property for purposes of United States federal income taxes.

 

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10.3    Construction Requirements for Alterations and Capital Improvements. For
any Alteration or Capital Improvement having a budgeted cost in excess of
Fifteen Million and No/100 Dollars ($15,000,000.00) (and as otherwise expressly
required under subsection (g) below), Tenant shall satisfy the following:

(a)    If and to the extent plans and specifications typically would be (or, in
accordance with applicable Legal Requirements, are required to be) obtained in
connection with a project of similar scope and nature to such Alteration or
Capital Improvement, Tenant shall, prior to commencing any Work in respect of
the same, provide Landlord copies of such plans and specifications. Tenant shall
also supply Landlord with related documentation, information and materials
relating to the Property or such Work in Tenant’s possession or control,
including, without limitation, surveys, property condition reports and
environmental reports, as Landlord may reasonably request from time to time;

(b)    No Work shall be commenced until Tenant shall have procured and paid for
all municipal and other governmental permits and authorizations required to be
obtained prior to such commencement (if any), including those permits and
authorizations required pursuant to any Gaming Regulations (if any), and, upon
Tenant’s request, Landlord shall join in the application for such permits or
authorizations whenever such action is necessary; provided, however, that
(i) any such joinder shall be at no cost or expense to Landlord; and (ii) any
plans required to be filed in connection with any such application which require
the approval of Landlord as hereinabove provided shall have been so approved by
Landlord;

(c)    Such Work shall not, and, if an Architect has been engaged for such Work,
the Architect shall certify to Landlord that such Architect is of the opinion
that construction will not, impair the structural strength of any component of
the Facility or overburden the electrical, water, plumbing, HVAC or other
building systems of any such component or otherwise violate applicable building
codes or prudent industry practices;

(d)    If an Architect has been engaged for such Work and if plans and
specifications have been obtained in connection with such Work, the Architect
shall certify to Landlord that such Architect is of the opinion that the plans
and specifications conform to, and comply with, in all material respects, all
applicable building, subdivision and zoning codes, laws, ordinances and
regulations imposed by all governmental authorities having jurisdiction over the
Leased Property;

(e)    During and following completion of such Work, the parking and other
amenities which are located on or at the Leased Property shall remain adequate
for the operation of the Facility for its Primary Intended Use and not be less
than that which is required by law (including any variances with respect
thereto) and any applicable Property Documents; provided, however, with
Landlord’s prior consent, which consent shall not be unreasonably withheld,
conditioned or delayed, and at no additional expense to Landlord, (i) to the
extent sufficient additional parking is not already a part of an Alteration or
Capital Improvement, Tenant may construct additional parking on or at the Leased
Property; or (ii) Tenant may acquire off-site parking to serve the Leased
Property as long as such parking shall be reasonably proximate to, and dedicated
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(f)    All Work done in connection with such construction shall be done promptly
and using materials and resulting in Work that is at least as good product and
condition as the remaining areas of the Leased Property and in conformity with
all Legal Requirements, including, without limitation, any applicable minority
or women owned business requirement; and

(g)    If applicable in accordance with customary and prudent industry
standards, promptly following the completion of such Work, Tenant shall deliver
to Landlord “as built” plans and specifications with respect thereto, certified
as accurate by the Architect supervising such Work, and copies of any new or
revised certificates of occupancy or other licenses, permits and authorizations
required in connection therewith. In addition, with respect to any Alteration or
Capital Improvement having a budgeted cost equal to or less than Fifteen Million
and No/100 Dollars ($15,000,000.00), Tenant shall endeavor in good faith to (and
upon Landlord’s request will) deliver to Landlord any “as-built” plans and
specifications actually obtained by Tenant in connection with such Alteration or
Capital Improvement.

Notwithstanding anything to the contrary contained herein, at any time during
the Term that Tenant is not a Controlled Subsidiary of ERI, this Section 10.3
shall be deemed modified by replacing all references therein to “Fifteen Million
and No/100 Dollars ($15,000,000.00)” to “Five Million and No/100 Dollars
($5,000,000.00)”.    

10.4    Landlord’s Right of First Offer to Fund Material Capital Improvements.

(a)    Landlord’s Right to Submit Landlord’s MCI Financing Proposal. In advance
of commencing any Work in connection with any Material Capital Improvement
(provided, for purposes of clarification, that preliminary planning, designing,
budgeting, evaluating (including environmental and integrity testing and the
like) (collectively, “Preliminary Studies”), permitting and demolishing in
preparation for such Material Capital Improvement shall not be considered
“commencing” for purposes hereof), Tenant shall provide written notice
(“Tenant’s MCI Intent Notice”) of Tenant’s intent to do so. Upon Landlord’s
request, such notice shall be followed by (i) a reasonably detailed description
of the proposed Material Capital Improvement, (ii) the then-projected cost of
construction of the proposed Material Capital Improvement, (iii) copies of the
plans and specifications, permits, licenses, contracts and Preliminary Studies
concerning the proposed Material Capital Improvement, to the extent
then-available, (iv) reasonable evidence that such proposed Material Capital
Improvement will, upon completion, comply with all applicable Legal
Requirements, and (v) reasonably detailed information regarding the terms upon
which Tenant is considering seeking financing therefor, if any. To the extent in
Tenant’s possession or control, Tenant shall provide to Landlord any additional
information about such proposed Material Capital Improvements which Landlord may
reasonably request. Landlord (or, with respect to financing structured as a loan
rather than as ownership of the real property by Landlord with a lease back to
Tenant, Landlord’s Affiliate) may, but shall be under no obligation to, provide
all (but not less than all) of the financing necessary to fund the applicable
Material Capital Improvement (along with related fees and expenses, such as
title fees, costs of permits, legal fees and other similar transaction costs) by
complying with the option exercise requirements set forth below. Within
thirty (30) days of receipt of Tenant’s MCI Intent Notice, Landlord shall notify
Tenant in writing as to whether Landlord (or, if applicable, its Affiliate) is
willing to provide financing for such proposed Material Capital Improvement and,
if so, the terms and conditions upon which Landlord (or, if applicable, its
Affiliate) is willing to do so in reasonable detail, in the

 

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form of a proposed term sheet (such terms and conditions, “Landlord’s MCI
Financing Proposal”). Upon receipt, Tenant shall have ten (10) days to accept,
reject or commence negotiating Landlord’s MCI Financing Proposal.

(b)    If Tenant Accepts Landlord’s MCI Financing Proposal. If Tenant accepts
Landlord’s MCI Financing Proposal (either initially or, after negotiation, a
modified version thereof) (an “Accepted MCI Financing Proposal”) and such
financing is actually consummated between Tenant and Landlord (or, if
applicable, its Affiliate) as more particularly provided in Section 10.4(f)
below (a “Landlord MCI Financing”), then, with respect to the applicable
Material Capital Improvements, as and when constructed, such Material Capital
Improvement shall be deemed part of the Leased Property for all purposes except
as specifically provided in Section 6.1(b) hereof (and, without limitation, such
Material Capital Improvements shall be surrendered to (and all rights therein
shall be relinquished in favor of) Landlord upon the Expiration Date).

(c)    If Landlord Declines to Make Landlord’s MCI Financing Proposal. If
Landlord declines or fails to timely submit Landlord’s MCI Financing Proposal,
Tenant shall be permitted to either (1) use then-existing available financing
or, subject to Article XVII, enter into financing arrangements with any lender,
preferred equity holder and/or other third party financing source (a
“Third-Party MCI Financing”) for such Material Capital Improvement or (2) use
Cash to pay for such Material Capital Improvement, provided, that, if Tenant has
not used then-existing, or entered into a new, Third-Party MCI Financing (or
commenced such Material Capital Improvement utilizing Cash) by the date that is
nine (9) months following delivery of Tenant’s MCI Intent Notice, then, prior to
entering into any such Third-Party MCI Financing and/or commencing such Material
Capital Improvement, Tenant shall again be required to send Tenant’s MCI Intent
Notice seeking financing from Landlord (on the terms contemplated by this
Section 10.4).

(d)    If Tenant Declines Landlord’s MCI Financing Proposal. If Landlord timely
submits Landlord’s MCI Financing Proposal and Tenant rejects or fails to accept
or commence negotiating Landlord’s MCI Financing Proposal within the applicable
ten (10)-day period (or, following commencing negotiating said proposal, Tenant
notifies Landlord of Tenant’s decision to cease such discussions), then, subject
to the remaining terms of this paragraph, Tenant shall be permitted to either
(1) use then-existing, or, subject to Article XVII, enter into a new,
Third-Party MCI Financing for such Material Capital Improvement (subject to the
following proviso) or (2) use Cash to pay for such Material Capital Improvement,
provided, that Tenant may not use then-existing, or enter into a new,
Third-Party MCI Financing for such Material Capital Improvement, except in each
case on terms that are, taken as a whole, economically more advantageous to
Tenant than those offered under Landlord’s MCI Financing Proposal. In
determining if financing is economically more advantageous, consideration may be
given to, among other items, (x) pricing, amortization, length of term and
duration of commitment period of such financing; (y) the cost, availability and
terms of any financing sufficient to fund such Material Capital Improvement and
other expenditures which are material in relation to the cost of such Material
Capital Improvement (if any) which are intended to be funded in connection with
the construction of such Material Capital Improvement and which are related to
the use and operation of such Material Capital Improvement and (z) other
customary considerations. Tenant shall provide Landlord with reasonable evidence
of the terms of any such financing. If Tenant has not used then-existing, or
entered into a new, Third-Party MCI Financing (or commenced such Material
Capital

 

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Improvement utilizing Cash) by the date that is nine (9) months following
receipt of Landlord’s MCI Financing Proposal, then, prior to entering into any
such Third-Party MCI Financing and/or commencing such Material Capital
Improvement after such nine (9) month period, Tenant shall again be required to
send Tenant’s MCI Intent Notice seeking financing from Landlord (on the terms
contemplated by this Section 10.4). For purposes of clarification, Tenant may
use Cash to finance any applicable Material Capital Improvement (subject to the
express terms and conditions hereof, including, without limitation, Tenant’s
obligation to provide Tenant’s MCI Intent Notice).

(e)    Ownership of Material Capital Improvements Not Financed by Landlord. If
Tenant constructs a Material Capital Improvement utilizing Third-Party MCI
Financing or Cash in accordance with Sections 10.4(c) or (d) (such Material
Capital Improvement being sometimes referred to in this Lease as a “Tenant
Material Capital Improvement”), then, (A) as and when constructed, such Tenant
Material Capital Improvement shall be deemed part of the Leased Property for all
purposes except as specifically provided in Section 6.1(b) hereof, (B) upon any
termination of this Lease prior to the Stated Expiration Date as a result of a
Tenant Event of Default (except in the event a Permitted Leasehold Mortgagee has
exercised its right to obtain a New Lease and complies in all respects with
Section 17.1(f) and any other applicable provisions of this Lease), such Tenant
Material Capital Improvements shall be owned by Landlord without any
reimbursement by Landlord to Tenant, and (C) upon the Stated Expiration Date,
such Tenant Material Capital Improvements shall be transferred to Tenant;
provided, however, upon written notice to Tenant at least one hundred eighty
(180) days prior to the Stated Expiration Date, Landlord shall have the option
to reimburse Tenant for such Tenant Material Capital Improvements in an amount
equal to the Fair Market Ownership Value thereof, and, if Landlord elects to
reimburse Tenant for such Tenant Material Capital Improvements, any amount due
to Tenant for such reimbursement shall be credited against any amounts owed by
Tenant to Landlord under this Lease as of the Stated Expiration Date and any
remaining portion of such amount shall be paid by Landlord to Tenant on the
Stated Expiration Date. If Landlord fails to deliver such written notice
electing to reimburse Tenant for such Tenant Material Capital Improvements at
least one hundred eighty (180) days prior to the Stated Expiration Date, or
otherwise does not consummate such reimbursement at least sixty (60) days prior
to the Stated Expiration Date (other than as a result of Tenant’s acts or
omissions in violation of this Lease), then Landlord shall be deemed to have
elected not to reimburse Tenant for such Tenant Material Capital Improvements.
If Landlord elects or is deemed to have elected not to reimburse Tenant for such
Tenant Material Capital Improvements in accordance with the foregoing sentence,
Tenant shall have the option to either (1) prior to the Stated Expiration Date,
remove such Tenant Material Capital Improvements and restore the affected Leased
Property to the same or better condition existing prior to such Tenant Material
Capital Improvement being constructed, at Tenant’s sole cost and expense, in
which event such removed Tenant Material Capital Improvements shall be owned by
Tenant, or (2) leave the applicable Tenant Material Capital Improvements at the
Leased Property on the Stated Expiration Date, at no cost to Landlord, in which
event such Tenant Material Capital Improvements shall be owned by Landlord. For
the avoidance of doubt, Tenant Material Capital Improvements not funded by
Landlord pursuant to Section 10.4 and not removed by Tenant in accordance
herewith shall be included in the “Leased Property” under any lease entered into
with a Successor Tenant pursuant to Article XXXVI, and shall be taken into
account in determining Successor Tenant Rent.

 

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(f)    Landlord MCI Financing. In the event of an Accepted MCI Financing
Proposal, Tenant shall provide Landlord with the following prior to any advance
of funds under such Landlord MCI Financing:

(i)    any information, certificates, licenses, permits or documents reasonably
requested by Landlord which are necessary and obtainable to confirm that Tenant
will be able to use the applicable Material Capital Improvements upon completion
thereof in accordance with the Primary Intended Use, including all required
federal, state or local government licenses and approvals;

(ii)    an officer’s certificate and, if requested, a certificate from Tenant’s
Architect providing appropriate backup information, setting forth in reasonable
detail the projected or actual costs related to such Material Capital
Improvements;

(iii)    except to the extent covered by the amendment referenced in clause (iv)
below, a construction loan and/or funding agreement (and such other related
instruments and agreements), in a form reasonably agreed to by Landlord and
Tenant, reflecting the terms of the Landlord MCI Financing, setting forth the
terms of the Accepted MCI Financing Proposal, and without additional
requirements on Tenant (including, without limitation, additional bonding or
guaranty requirements) except those which are reasonable and customary and
consistent in all respects with this Section 10.4 and the terms of the Accepted
MCI Financing Proposal;

(iv)    except to the extent covered by the construction loan and/or funding
agreement referenced in clause (iii) above, an amendment to this Lease, in a
form reasonably agreed to by Landlord and Tenant, which may include, among other
things, an increase in the Rent (in amounts as agreed upon by the Parties
pursuant to the Accepted MCI Financing Proposal), and other provisions as may be
necessary or appropriate;

(v)    a deed conveying title to Landlord to any additional Land acquired for
the purpose of constructing the applicable Material Capital Improvement, free
and clear of any liens or encumbrances except those approved by Landlord, and
accompanied by (x) an owner’s policy of title insurance insuring the Fair Market
Ownership Value of fee simple or leasehold (as applicable) title to such Land
and any improvements thereon, free of any exceptions other than liens and
encumbrances that do not materially interfere with the intended use of the
Leased Property or are otherwise approved by Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed, and (y) an ALTA survey
thereof;

(vi)    if Landlord obtains a lender’s policy of title insurance in connection
with such Landlord MCI Financing, for each advance, endorsements to any such
policy of title insurance reasonably satisfactory in form and substance to
Landlord (i) updating the same without any additional exception except those
that do not materially affect the value of such land and do not interfere with
the intended use of the Leased Property, or as may otherwise be permitted under
this Lease, or as may be approved by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed, and (ii) increasing

 

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the coverage thereof by an amount equal to the then-advanced cost of the
applicable Material Capital Improvement; and

(vii)    such other billing statements, invoices, certificates, endorsements,
opinions, site assessments, surveys, resolutions, ratifications, lien releases
and waivers and other instruments and information which are reasonable and
customary and consistent in all respects with this Section 10.4 and the terms of
the Accepted MCI Financing Proposal.

In the event that (1) Tenant is unable, for reasons beyond Tenant’s reasonable
control, to satisfy any of the requirements set forth in this Section 10.4(f)
(and Landlord is unable or unwilling to waive the same), (2) Landlord and Tenant
are unable (despite good faith efforts continuing for at least sixty (60) days
after agreement on the Accepted MCI Financing Proposal) to agree on any of the
requirements of, or the form of any document required under, this
Section 10.4(f), or (3) Landlord fails or refuses to consummate the Landlord MCI
Financing and/or advance funds thereunder, then, notwithstanding anything to the
contrary in this Section 10.4, Tenant shall be entitled to use then-existing,
or, subject to Article XVII, enter into a new, Third-Party MCI Financing for
such Material Capital Improvement or use Cash to pay for such Material Capital
Improvement, without any requirement to send a further Tenant’s MCI Intent
Notice to Landlord, provided, that, such Material Capital Improvement shall be
treated hereunder as a Tenant Material Capital Improvement, unless the
circumstances described in clause (1) shall have occurred.

10.5    Minimum Capital Expenditures.

(a)    Minimum Capital Expenditures.

(i)    Annual Minimum Cap Ex Requirement. During each full Fiscal Year during
the Term, commencing upon the first (1st) full Fiscal Year during the Term,
measured as of the last day of each such Fiscal Year, on a collective basis for
CEOC, Tenant, Other Tenants and their respective subsidiaries (excluding HLV
Tenant), Tenant and Other Tenants (excluding HLV Tenant) shall expend Capital
Expenditures and Other Capital Expenditures in an aggregate amount equal to no
less than the Annual Minimum Cap Ex Amount (the “Annual Minimum Cap Ex
Requirement”); provided, however, with respect to the 2020 Fiscal Year, the
Annual Minimum Cap Ex Amount shall be equal to (x) the Annual Minimum Cap Ex
Amount determined without giving effect to this proviso, minus (y) the product
of (I) Twenty Million Nine Hundred Thousand and No/100 Dollars ($20,900,000.00)
and (II) a fraction, expressed as a percentage, the numerator of which is the
number of days occurring from and including January 1, 2020 until and excluding
the Second Amendment Date, and the denominator of which is three hundred
sixty-five (365).

(ii)    Annual Minimum Per-Lease B&I Cap Ex Requirement. During each full Fiscal
Year during the Term, commencing upon the first (1st) full Fiscal Year during
the Term, measured as of the last day of each such Fiscal Year, Tenant shall
expend Capital Expenditures with respect to the Leased Property in an aggregate
amount that, when combined with the amount of Regional Capital Expenditures
expended with respect to the Regional Leased Property, is equal to at least one
percent (1%) of the sum of (a) the Net Revenue from the Facility for the prior
Fiscal Year plus (b) the “Net Revenue” (as defined in the Regional Lease) from
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Expenditures and Regional Capital Expenditures that, in each case, constitute
installation or restoration and repair or other improvements of items with
respect to (x) the Leased Property under this Lease and (y) the Regional Leased
Property under the Regional Lease (the “Annual Minimum Per-Lease B&I Cap Ex
Requirement”). In the event of expiration, cancellation or termination of any
Ground Lease for any reason whatsoever whether voluntary or involuntary (by
operation of law or otherwise), except for a cancellation or termination due to
Landlord’s failure to extend the term thereof where Landlord was required to do
so hereunder, prior to the expiration date of this Lease, including extensions
and renewals granted thereunder, then, for purposes of calculating the amount of
Net Revenue from the Facility for determining the Annual Minimum Per-Lease B&I
Cap Ex Requirement, the Net Revenue attributable to the portion of the Leased
Property subject to such Ground Lease for the Lease Year immediately prior to
such expiration, cancellation or termination of such Ground Lease thereafter
shall continue to be included in the calculation of Net Revenue (except to the
extent such Ground Lease is replaced by a replacement Ground Lease for all or
substantially all of such portion of the Leased Property). For purposes of
calculating the amount of “Net Revenue” (as defined in the Regional Lease) from
the “Fifth Amendment Additional Property” (as defined in the Regional Lease) for
determining the Annual Minimum Per-Lease B&I Cap Ex Requirement with respect to
the Fiscal Year in which the Second Amendment Date occurs, the “Net Revenue” (as
defined in the Regional Lease) attributable to the “Fifth Amendment Additional
Property” (as defined in the Regional Lease) from and after the Second Amendment
Date until the end of such Fiscal Year shall be used as such amount of Net
Revenue.

(iii)    Triennial Minimum Cap Ex Requirement A. During each full Triennial
Period during the Term, commencing upon the first (1st) full Triennial Period
during the Term, measured as of the last day of each such Triennial Period, on a
collective basis for CEOC, Tenant, Other Tenants and their respective
subsidiaries (excluding HLV Tenant), Tenant and Other Tenants (other than HLV
Tenant) shall expend Capital Expenditures and Other Capital Expenditures (other
than HLV/CC Capital Expenditures) in an aggregate amount equal to no less than
the Triennial Minimum Cap Ex Amount A (the “Triennial Minimum Cap Ex Requirement
A”); provided, however, with respect to the Triennial Periods ending
December 31, 2020, December 31, 2021 and December 31, 2022, respectively (each,
an “Applicable Triennial Cap Ex Period”) (it being understood that the duration
of the Applicable Triennial Cap Ex Period ending December 31, 2020 shall be
adjusted pursuant to Section 10.5(a)(v)), the Triennial Minimum Cap Ex Amount A
shall be equal to (x) the Triennial Minimum Cap Ex Amount A for such Applicable
Triennial Cap Ex Period determined without giving effect to this proviso, minus
(y) the product of (I) One Hundred Three Million Four Hundred Thousand and
No/100 Dollars ($103,400,000.00) (which amount set forth in this clause (I), for
purposes of determining the Triennial Minimum Cap Ex Amount A for the Applicable
Triennial Cap Ex Period ending December 31, 2020, shall be increased by the same
percentage as the Triennial Minimum Cap Ex Amount A was increased pursuant to
Section 10.5(a)(v)) and (II) a fraction, expressed as a percentage, the
numerator of which is the number of days occurring from and including the first
day of the Applicable Triennial Cap Ex Period until and excluding the Second
Amendment Date, and the denominator of which is the number of

 

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days in the Applicable Triennial Cap Ex Period (such percentage, with respect to
any Applicable Triennial Cap Ex Period, the “Applicable Triennial Cap Ex Period
Multiplier”).

(iv)    Triennial Minimum Cap Ex Requirement B. During each full Triennial
Period during the Term, commencing upon the first (1st) full Triennial Period
during the Term, measured as of the last day of each such Triennial Period,
Tenant shall expend Capital Expenditures in an aggregate amount that, when
combined with the amount of Regional Capital Expenditures expended by Other
Tenants under the Regional Lease, is equal to no less than the greater of
(a) the amount which, (x) when added to the amount of Other Capital Expenditures
(other than Regional Capital Expenditures and, for the avoidance of doubt,
HLV/CC Capital Expenditures) expended by Other Tenants (other than Other Tenants
under the Regional Lease and, for the avoidance of doubt, HLV Tenant) toward the
Triennial Minimum Cap Ex Requirement B (as defined in the Other Leases) during
the same time period, equals the Triennial Minimum Cap Ex Amount B, but (y) is
in no event more than the Triennial Allocated Minimum Cap Ex Amount B Ceiling,
and (b) the Triennial Allocated Minimum Cap Ex Amount B Floor (the “Triennial
Minimum Cap Ex Requirement B”); provided, however, with respect to each
Applicable Triennial Cap Ex Period, (x) the Triennial Minimum Cap Ex Amount B
shall be equal to (I) the Triennial Minimum Cap Ex Amount B for such Applicable
Triennial Cap Ex Period determined without giving effect to this proviso, minus
(II) the product of (1) Seventy-Seven Million Seven Hundred Thousand and No/100
Dollars ($77,700,000.00) (which amount set forth in this clause (1), for
purposes of determining the Triennial Minimum Cap Ex Amount B for the Applicable
Triennial Cap Ex Period ending December 31, 2020, shall be increased by the same
percentage as the Triennial Minimum Cap Ex Amount B was increased pursuant to
Section 10.5(a)(v)) and (2) the Applicable Triennial Cap Ex Period Multiplier
with respect to such Applicable Triennial Cap Ex Period and (y) the Triennial
Allocated Minimum Cap Ex Amount B Floor shall be equal to (I) the Triennial
Allocated Minimum Cap Ex Amount B Floor for such Applicable Triennial Cap Ex
Period determined without giving effect to this proviso, minus (II) the product
of (1) Seventy-Eight Million Six Hundred Thousand and No/100 Dollars
($78,600,000.00) and (2) the Applicable Triennial Cap Ex Period Multiplier with
respect to such Applicable Triennial Cap Ex Period.

(v)    Partial Periods. Subject to further adjustment as set forth in the
provisos in Sections 10.5(a)(iii) and 10.5(a)(iv) with respect to the applicable
Minimum Cap Ex Requirements for the Triennial Period ending December 31, 2020,
if the initial or final portion of the Term of this Lease is a partial calendar
year (i.e., the Commencement Date of this Lease is other than January 1 or the
Expiration Date is other than December 31, as applicable; any such partial
calendar year, a “Stub Period”), then the Triennial Minimum Cap Ex Amount A and
Triennial Minimum Cap Ex Amount B shall be adjusted as follows: (a) the initial
(or final, as applicable) Triennial Period under this Lease shall be expanded so
that it covers both the Stub Period and the first (1st) (or final, as
applicable) full period of three (3) calendar years during the Term, (b) the
Triennial Minimum Cap Ex Amount A for such expanded initial (or final, as
applicable) Triennial Period shall be equal to (x) Five Hundred Ninety-Eight
Million Four Hundred Thousand and No/100 Dollars ($598,400,000.00), plus (y) the
product of the Stub Period Multiplier (as defined below) multiplied by One
Hundred Ninety-Nine Million Four Hundred Sixty-Six Thousand Six

 

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Hundred Sixty-Six and 67/100 Dollars ($199,466,666.67) (and the Capital
Expenditures in respect of the London Clubs during such expanded initial (or
final, as applicable) Triennial Period shall not exceed (x) Twelve Million and
No/100 Dollars ($12,000,000.00) plus (y) the product of the Stub Period
Multiplier multiplied by Four Million and No/100 Dollars ($4,000,000.00)), (c)
the Triennial Minimum Cap Ex Amount B for such expanded initial (or final, as
applicable) Triennial Cap Ex Calculation Period shall be equal to (x) Four
Hundred Twenty-Seven Million Seven Hundred Thousand and No/100 Dollars
($427,700,000.00), plus (y) the product of the Stub Period Multiplier multiplied
by One Hundred Forty-Two Million Five Hundred Sixty-Six Thousand Six Hundred
Sixty-Six and 67/100 Dollars ($142,566,666.67), and (d) the Triennial Allocated
Minimum Cap Ex Amount B Floor for such expanded initial (or final, as
applicable) Triennial Period shall remain unchanged from the amounts then in
effect. Notwithstanding the foregoing, in the event that (1) the Triennial
Minimum Cap Ex Amount A is reduced in accordance with the definition thereof,
then (A) the Five Hundred Ninety-Eight Million Four Hundred Thousand and No/100
Dollars ($598,400,000.00) in the foregoing clause (b)(x) shall be modified to
reflect the Triennial Minimum Cap Ex Amount A then in effect at the time of
determination and (B) the One Hundred Ninety-Nine Million Four Hundred Sixty-Six
Thousand Six Hundred Sixty-Six and 67/100 Dollars ($199,466,666.67) in the
foregoing clause (b)(y) shall be modified to reflect the Triennial Minimum Cap
Ex Amount A then in effect divided by three (3), and (2) the Triennial Minimum
Cap Ex Amount B is reduced in accordance with the definition thereof, then
(A) the Four Hundred Twenty-Seven Million Seven Hundred Thousand and No/100
Dollars ($427,700,000.00) in the foregoing clause (c)(x) shall be modified to
reflect the Triennial Minimum Cap Ex Amount B then in effect at the time of
determination and (B) the One Hundred Forty-Two Million Five Hundred Sixty-Six
Thousand Six Hundred Sixty-Six and 67/100 Dollars ($142,566,666.67) in the
foregoing clause (c)(y) shall be modified to reflect the Triennial Minimum Cap
Ex Amount B then in effect divided by three (3). The term “Stub Period
Multiplier” means a fraction, expressed as a percentage, the numerator of which
is the number of days occurring in a Stub Period, and the denominator of which
is three hundred sixty-five (365). For the avoidance of doubt, if the Expiration
Date of this Lease is other than the last day of a Fiscal Year, then Tenant’s
compliance with each of the Minimum Cap Ex Requirements during the applicable
periods preceding such Expiration Date that would otherwise end after such
Expiration Date shall be measured as of such Expiration Date and be subject to
the prorations set forth above.

(vi)    Acquisitions of Material Property. If any real property having a value
greater than Fifty Million and No/100 Dollars ($50,000,000.00) (other than the
Chester Property, the “Leased Property (Octavius)” (as defined in the Las Vegas
Lease) or the Leased Property (HLV)) is acquired by Landlord or its Affiliate
and included in this Lease or an Other Lease as part of the Leased Property or
Other Leased Property (as applicable) after the Second Amendment Date, then the
applicable Minimum Cap Ex Requirements shall be adjusted as may be agreed upon
by Landlord and Tenant in connection with such acquisition and the inclusion of
such property as Leased Property or Other Leased Property hereunder or
thereunder.

(vii)    Dispositions of Material Property. In the event of a partial or total
termination of this Lease or partial or total termination of the Regional Lease
or the Las

 

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Vegas Lease (with respect to the Leased Property (CPLV) only) or the disposition
of any Material Leased Property (except with respect to the Leased Property
(HLV)) or Material London Property, in each case for which the Minimum Cap Ex
Amounts are to be decreased in accordance herewith, and such termination or
disposition occurs on any day other than the first (1st) day of a Fiscal Year,
then, for purposes of determining Required Capital Expenditures and adjusting
the Minimum Cap Ex Requirements, as applicable, such termination or disposition
and the associated reduction in the Minimum Cap Ex Requirements each shall be
deemed to have occurred on the first (1st) day of the then-current Fiscal Year,
such that Capital Expenditures with respect to the applicable terminated or
disposed property shall not be counted toward the calculation of Required
Capital Expenditures for such entire Fiscal Year, and the Minimum Cap Ex
Requirements shall be adjusted (as applicable) to reflect such termination or
disposition as applicable and the associated reduction in the Minimum Cap Ex
Requirements for such entire Fiscal Year.

(viii)    Application of Capital Expenditures. For the avoidance of doubt:
(A) Required Capital Expenditures counted toward satisfying one of the Minimum
Cap Ex Requirements also shall count (to the extent applicable) toward
satisfying the other Minimum Cap Ex Requirements except to the extent otherwise
provided herein; (B) expenditures with respect to any property that is not
included as Leased Property or Other Leased Property under this Lease or an
Other Lease (as applicable) shall not constitute “Capital Expenditures” nor
count toward the Minimum Cap Ex Requirements for purposes of the Leased Property
Tests; (C) expenditures with respect to any property acquired by CEOC, Tenant,
any Other Tenants or their respective subsidiaries after the Commencement Date
which is not included as Leased Property or Other Leased Property under this
Lease or an Other Lease (as applicable) shall not constitute “Capital
Expenditures” nor count toward the Minimum Cap Ex Requirements for purposes of
the Leased Property Tests or the All Property Tests; (D) expenditures with
respect to any property (other than the London Clubs) which is not included as
Leased Property or Other Leased Property under this Lease or an Other Lease (as
applicable) shall not constitute “Capital Expenditures” or count towards the
Minimum Cap Ex Requirements for purposes of the All Property Tests; and
(E) expenditures with respect to any property that is included as Leased
Property (as defined in the Las Vegas Lease) under the Las Vegas Lease, other
than the Leased Property (CPLV), shall not constitute “Capital Expenditures” nor
count toward the Minimum Cap Ex Requirements for purposes of the Leased Property
Tests or the All Property Tests.

(ix)    Unavoidable Delays. In the event an Unavoidable Delay occurs during any
full Fiscal Year or full Triennial Period during the Term that delays Tenant’s
or CEOC’s ability to perform Capital Expenditures prior to the expiration of
such period, the applicable period for satisfying the Minimum Cap Ex
Requirements applicable to such Fiscal Year or Triennial Period (as applicable)
during which such Unavoidable Delay occurred shall be extended, on a day-for-day
basis, for the same amount of time that such Unavoidable Delay affects Tenant’s
or CEOC’s ability to perform the Capital Expenditures, up to a maximum extension
in each instance of one (1) Fiscal Year (for the Annual Minimum Cap Ex
Requirement and the Annual Minimum Per-Lease B&I Cap Ex Requirement) or one
(1) Triennial Period (for the Triennial Minimum Cap Ex Requirement A and the
Triennial Minimum Cap Ex Requirement B). For the avoidance of doubt, Tenant’s
obligation to satisfy the Minimum Cap Ex Requirements during any period during
which an Unavoidable Delay did not occur shall not be extended as a result of
the occurrence of an Unavoidable Delay during a prior period.

 

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(x)    Certain Remedies. The Parties acknowledge that Tenant’s agreement to
satisfy the Minimum Cap Ex Requirements as required in this Lease is a material
inducement to Landlord’s agreement to enter into this Lease and, accordingly, if
Tenant fails to expend Capital Expenditures (or deposit funds into the Cap Ex
Reserve) as and when required by this Lease and then, further, fails to cure
such failure within sixty (60) days of receipt of written notice of such failure
from Landlord, then the same shall be a Tenant Event of Default hereunder, and
without limitation of any of Landlord’s other rights and remedies, Landlord
shall have the right to seek the remedy of specific performance to require
Tenant to expend the Required Capital Expenditures (or deposit funds into the
Cap Ex Reserve). Furthermore, for the avoidance of doubt, and without limitation
of Guarantor’s obligations under the Guaranty (and as more particularly provided
therein), Tenant acknowledges and agrees that the obligation of Tenant to expend
the Required Capital Expenditures (or deposit funds into the Cap Ex Reserve) as
provided in this Lease in each case constitutes a part of the monetary
obligations of Tenant that are guaranteed by Guarantor under the Guaranty and,
with respect to Required Capital Expenditures required to be spent during the
Term, shall survive termination of this Lease.

(b)    Cap Ex Reserve.

(i)    Deposits in Lieu of Expenditures. Notwithstanding anything to the
contrary set forth in this Lease, if Tenant and Other Tenants (other than HLV
Tenant) do not expend Capital Expenditures and Other Capital Expenditures (other
than HLV/CC Capital Expenditures) sufficient to satisfy the Minimum Cap Ex
Requirements, then, (subject to the last sentence of this Section 10.5(b)(i)),
so long as, as of the last date when such Minimum Cap Ex Requirements may be
satisfied hereunder, there are Cap Ex Reserve Funds (as defined below) and Cap
Ex Reserve Funds (as defined in each Other Lease) on deposit in the Cap Ex
Reserve (as defined below) or in the Cap Ex Reserve (as defined in each Other
Lease) in an aggregate amount at least equal to such deficiency, then Tenant
shall not be deemed to be in breach or default of its obligations hereunder to
satisfy the Minimum Cap Ex Requirements, provided that Tenant (or Other Tenants,
as applicable), shall spend such amounts so deposited in the Cap Ex Reserve (as
defined herein or in an Other Lease, as applicable) within six (6) months after
the last date when the Minimum Cap Ex Requirements to which such amounts relate
may be satisfied hereunder (subject to extension in the event of an Unavoidable
Delay during such six (6) month period, on a day-for-day basis, for the same
amount of time that such Unavoidable Delay affects Tenant’s ability to perform
the Capital Expenditures). For the avoidance of doubt, any funds disbursed from
the Cap Ex Reserve and spent on Capital Expenditures as described in this
Section shall be applied to the Minimum Cap Ex Requirements for the period for
which such funds were deposited (and shall be deemed to be the funds that have
been in the Cap Ex Reserve for the longest period of time) and shall not be
applied to the Minimum Cap Ex Requirements for the subsequent period in which
they are actually spent. Notwithstanding anything to the contrary contained
herein, in no event shall any “Cap Ex Reserve Funds” (as defined in the Las
Vegas Lease) deposited in respect of the “Minimum Cap Ex Requirements (HLV)” (as
defined in the Las Vegas Lease) (or, if the “Convention

 

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Center Facility” (as defined in the Las Vegas Lease) is incorporated as a part
of the “HLV Facility” (as defined in the Las Vegas Lease) under the Las Vegas
Lease, in respect of any “Capital Expenditure” (as defined in the Las Vegas
Lease) requirements pertaining to the “Convention Center Property” (as defined
in the Las Vegas Lease)) (x) be taken into consideration to satisfy any
requirement under, and/or otherwise be disbursed or spent as set forth in, this
clause (i), or (y) be restricted hereby or be retained or applied by Landlord or
any Fee Mortgagee hereunder or be subject to any security interest granted
herein.

(ii)    Deposits into Cap Ex Reserve. Tenant may, at its election, at any time,
deposit funds (the “Cap Ex Reserve Funds”) into an Eligible Account held by
Tenant (the “Cap Ex Reserve”). If required by Fee Mortgagee or Landlord,
Landlord and Tenant shall enter into a customary and reasonable control
agreement for the benefit of Fee Mortgagee and Landlord with respect to the Cap
Ex Reserve. Tenant shall not commingle Cap Ex Reserve Funds with other monies
held by Tenant or any other party. All interest on Cap Ex Reserve Funds shall be
for the benefit of Tenant and added to and become a part of the Cap Ex Reserve
and shall be disbursed in the same manner as other monies deposited in the Cap
Ex Reserve. Tenant shall be responsible for payment of any federal, state or
local income or other tax applicable to the interest earned on the Cap Ex
Reserve Funds credited or paid to Tenant.

(iii)    Disbursements from Cap Ex Reserve. Tenant shall be entitled to use Cap
Ex Reserve Funds solely for the purpose of paying for (or reimbursing Tenant
for) the cost of Capital Expenditures. Subject to compliance by Tenant with the
provisions of the Fee Mortgage Documents to the extent Tenant is required to
comply therewith pursuant to Article XXXI hereof, Landlord shall permit
disbursements to Tenant of Cap Ex Reserve Funds from the Cap Ex Reserve to pay
for Capital Expenditures or to reimburse Tenant for Capital Expenditures, within
ten (10) days following written request from Tenant, which request shall specify
the amount of the requested disbursement and a general description of the type
of Capital Expenditures to be paid or reimbursed using such Cap Ex Reserve
Funds. Tenant shall not make a request for disbursement from the Cap Ex Reserve
(x) more frequently than once in any calendar month nor (y) in amounts less than
Fifty Thousand and No/100 Dollars ($50,000.00). Any Cap Ex Reserve Funds
remaining in the Cap Ex Reserve on satisfaction of the Minimum Cap Ex
Requirements for which such Cap Ex Reserve Funds were deposited or on the
Expiration Date shall be returned by Landlord to Tenant, provided that Landlord
shall have the right to apply Cap Ex Reserve Funds remaining on the Expiration
Date against any amounts owed by Tenant to Landlord as of the Expiration Date
and/or the sum of any remaining Required Capital Expenditures required to have
been incurred prior to the Expiration Date.

(iv)    Security Interest in Cap Ex Reserve Funds. Tenant grants to Landlord a
first-priority security interest in the Cap Ex Reserve and all Cap Ex Reserve
Funds, as additional security for performance of Tenant’s obligations under this
Lease. Landlord shall have the right to collaterally assign the security
interest granted to Landlord in the Cap Ex Reserve and Cap Ex Reserve Funds to
any Fee Mortgagee. Notwithstanding the foregoing or anything herein to the
contrary, (i) Landlord may not foreclose upon the lien on the Cap Ex Reserve and
Cap Ex Reserve Funds, and Fee Mortgagee may not apply the Cap Ex Reserve Funds
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both (x) the Landlord’s Enforcement Condition and (y) the termination of this
Lease by Landlord pursuant to Section 16.2(x) hereof, (ii) any time during which
a Tenant Event of Default is continuing, Fee Mortgagee may apply Cap Ex Reserve
Funds toward the payment of Capital Expenditures incurred by Tenant, and
(iii) Landlord shall have the right to use Cap Ex Reserve Funds as provided in
Section 10.5(e) (in which event, such expenditures of Cap Ex Reserve Funds shall
be deemed Capital Expenditures of Tenant for purposes of the Required Capital
Expenditures). Landlord acknowledges that a Permitted Leasehold Mortgagee may
have a Lien on the Cap Ex Reserve; provided no such Lien in favor of a Permitted
Leasehold Mortgagee shall be granted unless such Lien is subject and subordinate
to the first priority lien thereon in favor of Landlord on terms substantially
similar to the “Intercreditor Agreement” (as defined in the Regional Lease).

(c)    Capital Expenditures Report. Within thirty (30) days after the end of
each calendar month during the Term, Tenant shall submit to Landlord a report,
substantially in the form attached hereto as Exhibit C setting forth, with
respect to such month, on an unaudited, Facility-by-Facility basis, (A) revenues
for the Leased Property and the Other Leased Property, (B) Capital Expenditures
with respect to the Leased Property and (C) Other Capital Expenditures with
respect to the Other Leased Property. Landlord shall keep each such report
confidential in accordance with Section 41.22 of this Lease.

(d)    Annual Capital Budget. Tenant shall furnish to Landlord, for
informational purposes only, a copy of the annual capital budget for the
Facility for each Fiscal Year, in each case (x) contemporaneously with Other
Tenant’s delivery to the applicable landlord of the applicable annual capital
budget for such Fiscal Year pursuant to the Other Lease, and (y) not later than
fifty-five (55) days following the commencement of the Fiscal Year to which such
annual capital budget relates. For the avoidance of doubt, without limitation of
Tenant’s Capital Expenditure requirements pursuant to Section 10.5(a), Tenant
shall not be required to comply with such annual capital budget and it shall not
be a breach or default by Tenant hereunder in the event Tenant deviates from
such annual capital budget.

(e)    Self Help. In order to facilitate Landlord’s completion of any work,
repairs or restoration of any nature that are required to be performed by Tenant
in accordance with any provisions hereof, upon the occurrence of the earlier of
(i) a Tenant Event of Default by Tenant hereunder, and (ii) any default by
Tenant in the performance of such work under this Lease or as required by any
applicable Additional Fee Mortgagee Requirement, then, so long as (x) Landlord
has provided Tenant thirty (30) days’ prior written notice thereof and Tenant
has not cured such default within such thirty day period) and (y) an “Event of
Default” has occurred under the Fee Mortgage Documents, Landlord shall have the
right, from and after the occurrence of a default beyond applicable notice and
cure periods under any applicable Fee Mortgage Documents, to enter onto the
Leased Property and perform any and all such work and labor necessary as
reasonably determined by Landlord to complete any work required by Tenant
hereunder or expend any sums therefor and/or employ watchmen to protect the
Leased Property from damage (collectively, the “Landlord Work”). In connection
with the foregoing, Landlord shall have the right: (i) to use any funds in the
Cap Ex Reserve for the purpose of making or completing such Landlord Work;
(ii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iii) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the Leased Property, or as may be necessary or desirable for the completion

 

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of such Landlord Work, or for clearance of title; (iv) to execute all
applications and certificates in the name of Tenant which may be required by any
of the contract documents; (v) to prosecute and defend all actions or
proceedings in connection with the Leased Property or the rehabilitation and
repair of the Leased Property; and (vi) to do any and every act which Tenant
might do on its own behalf to complete the Landlord Work. Nothing in this Lease
shall: (1) make Landlord responsible for making or completing any Landlord Work;
(2) require Landlord to expend funds in addition to the Cap Ex Reserve to make
or complete any Landlord Work; (3) obligate Landlord to proceed with any
Landlord Work; or (4) obligate Landlord to demand from Tenant additional sums to
make or complete any Landlord Work.

ARTICLE XI

LIENS

Subject to the provisions of Article XII relating to permitted contests, Tenant
will not directly or indirectly create or allow to remain and will promptly
discharge at its expense any lien, encumbrance, attachment, title retention
agreement or claim upon the Leased Property or any portion thereof or any
attachment, levy, claim or encumbrance in respect of the Rent, excluding,
however, (i) this Lease; (ii) the matters that existed as of the Commencement
Date with respect to the Leased Property or any portion thereof (it being
understood that nothing in this clause (ii) shall be deemed to vitiate or
supersede Tenant’s obligations under Sections 4.2, 7.2(f), 9.1 and 10.3(e) with
respect to the Property Documents to the extent provided herein);
(iii) restrictions, liens and other encumbrances which are consented to in
writing by Landlord (such consent not to be unreasonably withheld, conditioned
or delayed); (iv) liens for Impositions which Tenant is not required to pay
hereunder (if any); (v) Subleases permitted by Article XXII and any other lien
or encumbrance expressly permitted under the provisions of this Lease;
(vi) liens for Impositions not yet delinquent or being contested in accordance
with Article XII, provided that Tenant has provided appropriate reserves to the
extent required under GAAP and any foreclosure or similar remedies with respect
to such Impositions have not been instituted and no notice as to the institution
or commencement thereof has been issued except to the extent such institution or
commencement is stayed no later than twenty (20) days after such notice is
issued; (vii) liens of mechanics, laborers, materialmen, suppliers or vendors
for sums either disputed or not yet due, provided that (1) the payment of such
sums shall not be postponed under any related contract for more than sixty
(60) days after the completion of the action giving rise to such lien unless
being contested in accordance with Article XII and such reserve or other
appropriate provisions as shall be required by law or GAAP shall have been made
therefor and no foreclosure or similar remedies with respect to such liens has
been instituted and no notice as to the institution or commencement thereof have
been issued except to the extent such institution or commencement is stayed no
later than twenty (20) days after such notice is issued; (2) any such liens are
in the process of being contested as permitted by Article XII; or (3) in the
event any foreclosure action is commenced under any such lien, Tenant shall
immediately remove, discharge or bond over such lien; (viii) any liens created
by Landlord; (ix) liens related to equipment leases or equipment financing for
Tenant’s Property which are used or useful in Tenant’s business on the Leased
Property or any portion thereof, provided that the payment of any sums due under
such equipment leases or equipment financing shall either (1) be paid as and
when due in accordance with the terms thereof, or (2) be in the process of being
contested as permitted by Article XII (and provided that a lienholder’s removal
of any such Tenant’s Property from the Leased Property shall be subject to

 

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all applicable provisions of this Lease, and, without limitation, Tenant or such
lienholder shall restore the Leased Property from any damage effected by such
removal); (x) (1) liens granted as security for the obligations of Tenant and
its Affiliates under a Permitted Leasehold Mortgage (and the documents relating
thereto) or (2) liens granted as security for the obligations of Subtenant under
a financing arrangement that would be a Permitted Leasehold Mortgage
(disregarding for this purpose, however, the requirement that the liens created
by a Permitted Leasehold Mortgage encumber the entirety of Tenant’s Leasehold
Estate, so long as the applicable subleasehold mortgage covers all of the
applicable Subtenant’s subleasehold estate (other than items that are not
capable of being mortgaged and that, in the aggregate, are de minimis)) if
entered into by Tenant (and the documents relating thereto); provided, however,
in no event shall the foregoing be deemed or construed to permit Tenant to
encumber the Leasehold Estate (or a Subtenant to encumber its subleasehold
interest) in the Leased Property or any portion thereof (other than, in the case
of Tenant, to a Permitted Leasehold Mortgagee, or in the case of Subtenant, to a
lender or other provider of financing under a financing arrangement that would
be a Permitted Leasehold Mortgage (disregarding for this purpose, however, the
requirement that the liens created by a Permitted Leasehold Mortgage encumber
the entirety of Tenant’s Leasehold Estate, so long as the applicable
subleasehold mortgage covers all of the applicable Subtenant’s subleasehold
estate (other than items that are not capable of being mortgaged and that, in
the aggregate, are de minimis)) if entered into by Tenant (provided that no such
lien granted by a Subtenant to a lender or other provider of financing shall
encumber Landlord’s fee interest in the Leased Property, including by operation
of law or otherwise), or otherwise to the extent expressly permitted hereunder),
without the prior written consent of Landlord, which consent may be granted or
withheld in Landlord’s sole discretion; and provided further that upon request
Tenant shall be required to provide Landlord with fully executed copies of any
and all Permitted Leasehold Mortgages; and (xi) except as otherwise expressly
provided in this Lease, easements, rights-of-way, restrictions (including zoning
restrictions), covenants, encroachments, protrusions and other similar charges
or encumbrances, and minor title deficiencies on or with respect to the Leased
Property or any portion thereof, in each case whether now or hereafter in
existence, not individually or in the aggregate materially interfering with the
conduct of the business on the Leased Property for the Primary Intended Use,
taken as a whole. For the avoidance of doubt, the Parties acknowledge and agree
that Tenant has not granted any liens in favor of Landlord as security for its
obligations hereunder except as otherwise expressly provided under this Lease,
and nothing contained herein shall be deemed or construed to prohibit the
issuance of a lien on the Equity Interests in Tenant (it being agreed that any
foreclosure by a lien holder on such interests in Tenant shall be subject to the
restrictions on transfers of interests in Tenant and Change of Control set forth
in Article XXII) or to prohibit Tenant from pledging (A) its Accounts and other
Tenant’s Property as collateral (1) in connection with financings of equipment
and other purchase money indebtedness or (2) to secure Permitted Leasehold
Mortgages, or (B) its Accounts and other property of Tenant (other than Tenant’s
Property); provided that, Tenant shall in no event pledge to any Person that is
not granted a Permitted Leasehold Mortgage hereunder any of Tenant’s Property to
the extent that such Tenant’s Property cannot be removed from the Leased
Property without (I) damaging or impairing the Leased Property (other than in a
de minimis manner), (II) impairing in any material respect the operation of the
Facility for its Primary Intended Use, or (III) impairing in any material
respect Landlord’s or any Successor Tenant’s ability to acquire the Gaming
Assets at the expiration or termination of the Term in accordance with
Section 36.1 (after giving effect to the repayment of any indebtedness
encumbering the Gaming Assets and release of any liens thereon as required by
such Section 36.1).

 

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ARTICLE XII

PERMITTED CONTESTS

Tenant, upon prior written notice to Landlord (except that no such notice shall
be required to be given by Tenant to Landlord pursuant to this Article XII with
respect to matters not exceeding Five Million and No/100 Dollars
($5,000,000.00)), on its own or in Landlord’s name, at Tenant’s expense, may
contest, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount, validity or application, in whole or in part, of any
licensure or certification decision (including pursuant to any Gaming
Regulation), imposition of any disciplinary action, including both monetary and
nonmonetary, pursuant to any Gaming Regulation, Imposition, Legal Requirement,
Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim;
provided, that, (i) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Landlord and from the
Leased Property; (ii) neither the Leased Property or any portion thereof, the
Rent therefrom nor any part or interest in either thereof would be in any danger
of being sold, forfeited, attached or lost pending the outcome of such
proceedings; (iii) in the case of a Legal Requirement, neither Landlord nor
Tenant would be in any imminent danger of criminal or material civil liability
for failure to comply therewith pending the outcome of such proceedings; (iv) in
the case of a Legal Requirement, Imposition, lien, encumbrance or charge, Tenant
shall deliver to Landlord security in the form of cash, cash equivalents or a
Letter of Credit, if and as may be reasonably required by Landlord to insure
ultimate payment of the same and to prevent any sale or forfeiture of the Leased
Property or any portion thereof or the Rent by reason of such non-payment or
noncompliance; (v) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained; (vi) upon Landlord’s request,
Tenant shall keep Landlord reasonably informed as to the status of the
proceedings; and (vii) if such contest be finally resolved against Landlord or
Tenant, Tenant shall promptly pay the amount required to be paid, together with
all interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or Insurance Requirement. Landlord, at Tenant’s expense, shall
execute and deliver to Tenant such authorizations and other documents as may
reasonably be required in any such contest, and, if reasonably requested by
Tenant or if Landlord so desires, Landlord shall join as a party therein. The
provisions of this Article XII shall not be construed to permit Tenant to
contest the payment of Rent or any other amount (other than Impositions or
Additional Charges contested in accordance herewith) payable by Tenant to
Landlord hereunder. Tenant shall indemnify, defend, protect and save Landlord
harmless from and against any liability, cost or expense of any kind that may be
imposed upon Landlord in connection with any such contest and any loss resulting
therefrom, except to the extent resulting from actions independently taken by
Landlord (other than actions taken by Landlord at Tenant’s direction or with
Tenant’s consent).

 

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ARTICLE XIII

INSURANCE

13.1    General Insurance Requirements. During the Term, Tenant shall, at its
own cost and expense, maintain the minimum kinds and amounts of insurance
described below. Such insurance shall apply to the ownership, maintenance, use
and operations related to the Leased Property and all property located in or on
the Leased Property (including Capital Improvements and Tenant’s Property).
Except for policies insured by Tenant’s captive insurers, all policies shall be
written with insurers authorized to do business in all states where Tenant
operates and shall maintain A.M Best ratings of not less than “A-” “VII” or
better in the most recent version of Best’s Key Rating Guide. In the event that
any of the insurance companies’ ratings fall below the requirements set forth
above, Tenant shall have one hundred eighty (180) days within which to replace
such insurance company with an insurance company that qualifies under the
requirements set forth above. It is understood that Tenant may utilize so called
Surplus lines companies and will adhere to the standard above.

(a)    Property Insurance.

(i)    Property insurance shall be maintained on the Leased Property (including
barges and vessels used for gaming), Capital Improvements and Tenant’s Property
against loss or damage under a policy with coverage not less than that found on
Insurance Services Office (ISO) “Causes of Loss – Special Form” and ISO
“Building and Personal Property Form” or their equivalent forms (e.g., an “all
risk” policy), in a manner consistent with the commercially reasonable practices
of similarly situated companies engaged in the same or similar businesses
operating in the same or similar location. Such property insurance shall be in
an amount not less than Two Billion and No/100 Dollars ($2,000,000,000.00) and
shall apply on a replacement cost basis; provided, that, Tenant shall have the
right (i) to limit maximum insurance coverage for loss or damage by earthquake
(including earth movement) to a minimum amount of the projected ground up loss
with a 500-year return period (as determined annually by an independent firm
using RMS, AIR or equivalent catastrophe modeling software, and taking into
account all locations insured under Tenant’s property insurance, including other
locations owned, leased or managed by Tenant), less the applicable deductible,
(ii) to limit maximum insurance coverage for loss or damage by named windstorms
per occurrence to a minimum amount of the projected ground up loss (including
storm surge) with a 500-year return period (as determined annually by an
independent firm using RMS, AIR or equivalent catastrophe modeling software, and
taking into account all locations insured under Tenant’s property insurance,
including other locations owned, leased or managed by Tenant), less the
applicable deductible, and (iii) to limit maximum insurance coverage for loss or
damage by flood to a minimum amount of Two Hundred Fifty Million and No/100
Dollars ($250,000,000.00), to the extent commercially available; provided,
further, that in the event the premium cost of any earthquake, flood, named
windstorm or terrorism peril (as required by Section 13.1(b)) coverages are
available only for a premium that is more than two and one-half (2.5) times the
premium paid by Tenant for the third (3rd) year preceding the date of
determination for the insurance policy contemplated by this Section 13.1(a),
then Tenant shall be entitled and required to purchase the maximum amount of
insurance coverage it reasonably deems most efficient and prudent to purchase
for such peril and Tenant shall not be required to spend additional funds to
purchase

 

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additional coverages insuring against such risks; and provided, further, that
certain property coverages other than earthquake, flood and named windstorm may
be sub-limited as long as each sub-limit is commercially reasonable and prudent
as determined by Tenant and to the extent that the amount of such sub-limit is
less than the amount of such sub-limit in effect as of the Second Amendment
Date, such sub-limit is approved by Landlord, such approval not to be
unreasonably withheld.

(ii)    Such property insurance policy shall include, subject to
Section 13.1(a)(i) above: (i) agreed amount coverage and/or a waiver of any
co-insurance; (ii) building ordinance coverage (ordinance or law) including loss
of the undamaged portions, the cost of demolishing undamaged portions, and the
increased cost of rebuilding; and also including, but not limited to, any
non-conforming structures or uses; (iii) equipment breakdown coverage (boiler
and machinery coverage); (iv) debris removal; and (v) business interruption
coverage in an amount not less than two (2) years of Rent and containing an
Extended Period of Indemnity endorsement for an additional minimum six months
period. Subject to Section 13.1(a)(i), the property policy shall cover:
wind/windstorm, earthquake/earth movement and flood and any sub-limits
applicable to wind (e.g. named storms), earthquake and flood are subject to the
approval of Landlord and Fee Mortgagee. Except as otherwise set forth herein,
any property insurance loss adjustment settlement associated with the Leased
Property shall require the written consent of Landlord, Tenant, and each Fee
Mortgagee (to the extent required under the applicable Fee Mortgage Documents)
unless the amount of the loss net of the applicable deductible is less than One
Hundred Million and No/100 Dollars ($100,000,000.00) in which event no consent
shall be required.

(b)    Property Terrorism Insurance. Property Insurance shall be maintained for
acts of terrorism certified by the Terrorism Risk Insurance Program
Reauthorization Act of 2015 (“TRIPRA”) and acts of terrorism and sabotage not
certified by TRIPRA, with limits no less than (i) One Billion Five Hundred
Million and No/100 Dollars ($1,500,000,000.00) per occurrence for acts of
terrorism certified by TRIPRA and (ii) Two Hundred Twenty-Five Million and
No/100 Dollars ($225,000,000.00) for acts of terrorism and sabotage not
certified by TRIPRA. Both coverages shall apply to property damage and business
interruption. For the avoidance of doubt, Tenant may maintain an insurance
policy with a single limit of coverage for both acts of terrorism certified by
TRIPRA and acts of terrorism and sabotage not certified by TRIPRA and, if Tenant
maintains such an insurance policy, the full amount of the single limit
thereunder shall be applied toward each of the limits required under clauses
(i) and (ii) of this Section 13.1(b). If Tenant uses one or more of its captive
insurers to provide this insurance coverage, the captive(s) must secure and
maintain reinsurance from one or more reinsurers for those amounts which are not
insured by the Federal Government, and which are in excess of a commercially
reasonable policy deductible. Such reinsurers are subject to the same minimum
financial ratings set forth in Section 13.1. In the event TRIPRA is not extended
or renewed, Landlord and Tenant shall mutually agree (in accordance with the
procedures set forth in Section 13.6) upon replacement insurance requirements
applicable to terrorism related risks.

(c)    Flood Insurance. With respect to any portion of the Leased Property that
is security under a Fee Mortgage, if at any time the area in which such Leased
Property is located is designated a “Special Flood Hazard Area” as designated by
the Federal Emergency Management

 

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Agency (or any successor agency), Tenant shall obtain separate flood insurance
through the National Flood Insurance Program to the extent such insurance is
required by the terms of the applicable Fee Mortgage Documents. Such flood
insurance may be provided as part of Section 13.1(a) Property Insurance above.

(d)    Workers Compensation and Employers Liability Insurance. Workers
compensation insurance as required by applicable state statutes and Employers
Liability. This insurance shall include endorsements applicable to (i) Longshore
and Harbor Workers Compensation Act; and (ii) Maritime Coverage (including
transportation, wages, maintenance and cure, if not otherwise covered by
Section 13.1(g) Marine Liability Insurance).

(e)    Commercial General Liability Insurance. For bodily injury, personal
injury, advertising injury and property damage on an occurrence form with
coverage no less than ISO Form CG 0001 or equivalent.    This policy shall
include the following coverages: (i) Liquor Liability; (ii) Named Peril/Time
Element Pollution, to the extent commercially available to operators of
properties similar to the subject Leased Property; (iii) Non-owned Watercraft
Liability, to the extent commercially available to operators of properties
similar to the subject Leased Property; (iv) Terrorism Liability; and (v) a
Separation of Insureds clause.

(f)    Business Auto Liability Insurance. For bodily injury and property damage
arising from the ownership, maintenance or use of owned, hired and non-owned
vehicles (ISO Form CA 00 01 or equivalent).

(g)    Marine Liability Insurance. If Tenant utilizes watercraft in its
operations or special events, for bodily injury and property damage (Protection
and Indemnity) on an occurrence form. If not covered by the other insurance
policies required by this Article XIII, this policy shall include the following
coverages: (i) Liquor Liability; (ii) Pollution Liability; and (iii) injuries to
captains and crew. To the extent commercially available at a reasonable price,
this policy shall contain a Separation of Insureds clause. This coverage may be
met through the combination of primary marine liability and excess liability
coverage.

(h)    Excess Liability Insurance. Excess Liability coverage shall be maintained
over the required Employers Liability, Commercial General Liability, Business
Auto Liability and Marine Liability policies in an amount not less than Three
Hundred Fifty Million and No/100 Dollars ($350,000,000.00) per occurrence and in
the aggregate annually (where applicable). The annual aggregate limit applicable
to Commercial General Liability shall apply per location. Tenant will use
commercially reasonable efforts to obtain coverage as broad as the underlying
insurance, including Terrorism Liability coverage, so long as such coverage is
available at a commercially reasonable price.

(i)    Pollution Liability Insurance. For claims arising from the discharge,
dispersal, release or escape of any irritant or contaminant into or upon land,
any structure, the atmosphere, watercourse or body of water, including
groundwater. This shall include on and off-site clean up and emergency response
costs and claims arising from above ground and below ground storage tanks. If
this policy is provided on a “claims made” basis (i) the retroactive date shall
remain as June 26, 1998 for legal liability; and (ii) coverage shall be
maintained for two (2) years after the Term.

 

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(j)    Employment Practices Liability. Employment Practices Liability insurance
in an amount not less than Ten Million and No/100 Dollars ($10,000,000.00).

(k)    Crime. Crime insurance coverage in an amount not less than Eight Million
and No/100 Dollars ($8,000,000.00).

13.2    Name of Insureds. Except for the insurance required pursuant to
Section 13.1(d), Section 13.1(j) and Section 13.1(k), all insurance provided by
Tenant as required by this Article XIII shall include Landlord (including
specified Landlord related entities as directed by Landlord) and, to the extent
required by the applicable Fee Mortgage Documents, each applicable Fee Mortgagee
(i) with respect to the insurance required pursuant to Section 13.1(a),
Section 13.1(b) and Section 13.1(c), as a loss payee and as additional named
insured or additional insured without restrictions beyond the restrictions that
apply to Tenant and (ii) with respect to the other insurance maintained by
Tenant, as an additional named insured or additional insured without
restrictions beyond the restrictions that apply to Tenant; provided, however,
the insurance required pursuant to Section 13.1(i) and Section 13.1(g) shall be
permitted to include Landlord (including specified Landlord related entities as
directed by Landlord) and, to the extent required by the applicable Fee Mortgage
Documents, each applicable Fee Mortgagee as an additional insured without the
requirement that such policy expressly include language that such coverage is
without restrictions beyond the restrictions that apply to Tenant. In addition,
the insurance required pursuant to Section 13.1(a) and Section 13.1(b) shall
include a New York standard mortgagee clause (or its equivalent) in favor of
each applicable Fee Mortgagee. All insurance provided by Tenant as required by
this Article XIII may include any Permitted Leasehold Mortgagee as an additional
insured, and may include a New York standard mortgagee clause (or its
equivalent) in favor of any Permitted Leasehold Mortgagee. The coverage provided
to the additional insureds by Tenant’s insurance policies must be at least as
broad as that provided to the first named insured on each respective policy. For
the avoidance of doubt, Landlord looks exclusively to Tenant’s insurance
policies to protect itself from claims arising from the Leased Property and
Capital Improvements. The required insurance policies shall protect Landlord
against Landlord’s acts with respect to the Leased Property in the same manner
that they protect Tenant against its acts with respect to the Leased Property.
Except for the insurance required pursuant to Section 13.1(d), Section 13.1(j)
and Section 13.1(k), the required insurance policies shall include others as
additional insureds consistent with clause (ii) of this Section 13.2, as
required by Landlord and/or the Fee Mortgage Documents. The insurance protection
afforded to all insureds (whether named insureds or additional insureds) shall
be primary and shall not contribute with any insurance or self-insurance
programs maintained by such insureds (including deductibles and self-insured
retentions).

13.3    Deductibles or Self-Insured Retentions. Tenant may self-insure such
risks that are customarily self-insured by companies of established reputation
engaged in the same general line of business in the same general area. All
increases in deductibles and self-insured retentions (collectively referred to
as “Deductibles” in this Article XIII) that apply to the insurance policies
required by this Article XIII are subject to approval by Landlord, with such
approval not to be unreasonably withheld, conditioned or delayed. Tenant is
solely responsible for all Deductibles related to its insurance policies. The
Deductibles Tenant has in effect as of the Second Amendment Date satisfy the
requirements of this Section as of the Second Amendment Date.

 

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13.4    Waivers of Subrogation. Landlord shall not be liable for any loss or
damage insured by the insurance policies required to be maintained under this
Article XIII and policies issued by Tenant’s captive insurers (including related
Deductibles), it being understood that (i) Tenant shall look solely to its
insurance for the recovery of such loss or damage; and (ii) such insurers shall
have no rights of subrogation against Landlord. Each insurance policy shall
contain a clause or endorsement which waives all rights of subrogation against
Landlord, Fee Mortgagees and other entities or individuals as reasonably
requested by Landlord.

13.5    Limits of Liability and Blanket Policies. The insured limits of
liability maintained by Tenant shall be selected by Tenant in a manner
consistent with the commercially reasonable practices of similarly situated
tenants engaged in the same or similar businesses operating in the same or
similar location as the Leased Property. The limits of liability Tenant has in
effect as of the Second Amendment Date satisfy the requirements of this Section
as of the Second Amendment Date. The insurance required by this Article XIII may
be effected by a policy or policies of blanket insurance and/or by a combination
of primary and excess insurance policies (all of which may insure additional
properties owned, operated or managed by Tenant or its Affiliates), provided
each policy shall be satisfactory to Landlord, acting reasonably, including, the
form of the policy, provided such policies comply with the provisions of this
Article XIII.

13.6    Future Changes in Insurance Requirements.

(a)    In the event one or more additional locations become Leased Property or
Capital Improvements during the Term, whether through acquisition, lease, new
construction or other means, Landlord may reasonably amend the insurance
requirements set forth in this Article XIII to properly address new risks or
exposures to loss, in accordance with the procedures set forth in this
Section 13.6(a). For example, for construction projects, different forms of
insurance may be required, such as builders risk, and Landlord and Tenant shall
mutually agree upon insurance requirements applicable to the construction
contractors. Tenant and Landlord shall work together in good faith to exchange
information (including proposed construction agreements) and ascertain
appropriate insurance requirements prior to Tenant being required to amend its
insurance under this Section 13.6(a); provided, however, that any revision to
insurance shall only be required if the revised insurance would be customarily
maintained by similarly situated tenants engaged in the same or similar
businesses operating in the same or similar location as the Leased Property. If
Tenant and Landlord are unable to reach a resolution within thirty (30) days of
the original notice of requested revision, the arbitration provisions set forth
in Section 34.2 shall control.

(b)    In the event that (1) the operations of Tenant change in the future, and
Tenant believes adjustments in Deductibles, insured limits or coverages are
warranted, (2) Tenant desires to increase one or more Deductibles, reduce limits
of liability below those in place as of the Second Amendment Date or materially
reduce coverage, or (3) not more than once during any twelve (12) month period
(or more frequently in connection with a financing or refinancing of a Fee
Mortgage), Landlord reasonably determines that the insurance carried by Tenant
is not, for any reason (whether by reason of the type, coverage, deductibles,
insured limits, the reasonable requirements of Fee Mortgagees, or otherwise)
commensurate with insurance customarily maintained by similarly situated tenants
engaged in the same or similar businesses operating in the same or similar
location, the party seeking the change will advise the other party in writing of
the requested insurance revision. Tenant and Landlord shall work together in
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the requested insurance revision shall be made; provided, however, that any
revision to insurance shall only be made if the revised insurance would be
customarily maintained by similarly situated tenants engaged in the same or
similar businesses operating in the same or similar location as the Leased
Property. If Tenant and Landlord are unable to reach a resolution within thirty
(30) days of the original notice of requested revision, the arbitration
provisions set forth in Section 34.2 shall control. Solely with respect to the
insurance required by Section 13.1(h) above, in no event shall the outcome of an
insurance revision pursuant to this Section 13.6 require Tenant to carry
insurance in an amount which exceeds the sum of (i) the amounts set forth in
Section 13.1(h) hereof plus (ii) the product of (x) the amounts set forth in
Section 13.1(h) hereof, and (y) the CPI Increase.

13.7    Notice of Cancellation or Non-Renewal. Each required insurance policy
shall contain an endorsement requiring thirty (30) days prior written notice to
Landlord, Fee Mortgagees and Leasehold Mortgagees of any cancellation or
non-renewal. Ten (10) days’ prior written notice shall be required for
cancellation for non-payment of premium. Tenant shall secure replacement
coverage to comply with the stated insurance requirements and provide new
certificates of insurance to Landlord and others as directed by Landlord.

13.8    Copies of Documents. Tenant shall provide (i) binders evidencing renewal
coverages no later than the applicable renewal date of each insurance policy
required by this Article XIII; and (ii) copies of all insurance policies
required by this Article XIII (including policies issued by Tenant’s captive
insurers which are in any way related to the required policies, including
policies insuring Deductibles), within one hundred and twenty days (120) after
inception date of each, and if additionally required, within ten (10) days of
written request by Landlord. In addition, Tenant will supply documents that are
related to the required insurance policies on January 1 of each calendar year
during the Term and three (3) years afterwards, and as otherwise requested in
writing by Landlord. Such documents shall be in formats reasonably acceptable to
Landlord and include, but are not limited to, (a) statements of property value
by location, (b) risk modeling reports (e.g., named storms and earthquake), (c)
actuarial reports, (d) loss/claims reports and (e) detailed summaries of
Tenant’s insurance policies and, as respects Tenant’s captive insurers, the most
recent audited financial statements (including notes therein) and reinsurance
agreements. Landlord shall hold the contents of the documents provided by Tenant
as confidential; provided that Landlord shall be entitled to disclose the
contents of such documents (I) to its insurance consultants, attorneys,
accountants and other agents in connection with the administration and/or
enforcement of this Lease, (II) to any Fee Mortgagees, Permitted Leasehold
Mortgagees and potential lenders and their respective representatives, and
(III) as may be required by applicable laws. Landlord shall utilize commercially
reasonable efforts to cause each such person or entity to enter into a written
agreement to maintain the confidentiality thereof for the benefit of Landlord
and Tenant.

13.9    Certificates of Insurance. Certificates of insurance, evidencing the
required insurance, shall be delivered to Landlord on the Commencement Date,
annually thereafter, and upon written request by Landlord. If required by any
Fee Mortgagee, Tenant shall provide endorsements and written confirmations that
all premiums have been paid in full.

13.10    Other Requirements. Tenant shall comply with the following additional
provisions:

 

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(a)    In the event of a catastrophic loss or multiple losses at multiple
properties owned or leased directly or indirectly by ERI and that are insured by
ERI, then in the case (x) that at least one such property affected by the
catastrophic loss(es) or multiple losses is the Facility or an Other Facility
(in either case, a “Subject Facility”) and (y) at least one other such property
affected by the catastrophic loss(es) or multiple losses is not a Subject
Facility, (A) if such catastrophic loss or multiple losses exhaust any per
occurrence or aggregate insurance limits under the property or terrorism
insurance policies required by this Article XIII and any such property that is
not a Subject Facility is (w) directly or indirectly managed but not directly or
indirectly owned by ERI, (x) not wholly owned, directly or indirectly, by ERI,
(y) subject to a ground lease with a landlord party that is neither Landlord nor
its affiliates, or (z) is financed on a stand-alone basis, then the insurance
proceeds received in connection with such catastrophic loss or multiple losses
shall be allocated pro-rata based on the insured values of the impacted
properties, with no property receiving an allocation exceeding the loss suffered
by such property, and (B) if such catastrophic loss or multiple losses exhaust
any per occurrence or aggregate insurance limits under the property or terrorism
insurance policies required by this Article XIII and no property that is not a
Subject Facility is a property described in clauses (w) through (z) above, the
property(ies) that is a Subject Facility shall have first priority to insurance
proceeds from the property policy or terrorism policy in connection with such
catastrophic loss or multiple losses up to the reasonably anticipated amount of
loss with respect to the Subject Facility. Any property or terrorism insurance
proceeds allocable to a Subject Facility pursuant to clause (B) above shall be
paid to Landlord (or the landlord under the Other Lease, as applicable) and
applied in accordance with the terms of this Lease (or the Other Lease, as
applicable).

(b)    In the event Tenant shall at any time fail, neglect or refuse to insure
the Leased Property (including barges and vessels used for gaming) and Capital
Improvements, or is not in full compliance with its obligations under this
Article XIII, Landlord may, at its election, procure replacement insurance. In
such event, Landlord shall disclose to Tenant the terms of the replacement
insurance. Tenant shall reimburse Landlord for the cost of such replacement
insurance within thirty (30) days after Landlord pays for the replacement
insurance. The cost of such replacement insurance shall be reasonable
considering the then-current market.

ARTICLE XIV

CASUALTY

14.1    Property Insurance Proceeds. All proceeds (except business interruption
not allocated to rent expenses, if any) payable by reason of any property loss
or damage to the Leased Property, or any portion thereof, under any property
policy of insurance required to be carried hereunder shall be paid to Fee
Mortgagee or to an escrow account held by a third party depositary reasonably
acceptable to Landlord, Tenant and, if applicable, the Fee Mortgagee (in each
case pursuant to an escrow agreement reasonably acceptable to the Parties and
the Fee Mortgagee and intended to implement the terms hereof), and made
available to Tenant upon request for the reasonable costs of preservation,
stabilization, restoration, reconstruction and repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof;
provided, however, that the portion of any such proceeds that are attributable
to Tenant’s obligation to pay Rent shall be applied against Rent due by Tenant
hereunder; and provided, further, that if the total amount of proceeds payable
net of the applicable deductibles is Twenty Million and No/100

 

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Dollars ($20,000,000.00) or less, and, if no Tenant Event of Default has
occurred and is continuing, the proceeds shall be paid to Tenant and, subject to
the limitations set forth in this Article XIV used for the repair of any damage
to or restoration or reconstruction of the Leased Property in accordance with
Section 14.2. For the avoidance of doubt, any insurance proceeds payable by
reason of (i) loss or damage to Tenant’s Property and/or Tenant Material Capital
Improvements, or (ii) business interruption shall be paid directly to and belong
to Tenant. Any excess proceeds of insurance remaining after the completion of
the restoration or reconstruction of the Leased Property in accordance herewith
shall be provided to Tenant. So long as no Tenant Event of Default is
continuing, Tenant shall have the right to prosecute and settle insurance
claims, provided that, in connection with insurance claims exceeding Twenty
Million and No/100 Dollars ($20,000,000.00), Tenant shall consult with and
involve Landlord in the process of adjusting any insurance claims under this
Article XIV and any final settlement with the insurance company for claims
exceeding Twenty Million and No/100 Dollars ($20,000,000.00) shall be subject to
Landlord’s consent, such consent not to be unreasonably withheld, conditioned or
delayed.

14.2    Tenant’s Obligations Following Casualty

(a)    In the event of a Casualty Event with respect to the Leased Property or
any portion thereof (to the extent the proceeds of insurance in respect thereof
are made available to Tenant as and to the extent required under the applicable
escrow agreement), (i) Tenant shall restore such Leased Property (or any
applicable portion thereof, excluding, at Tenant’s election, any Tenant Material
Capital Improvement, unless such Tenant Material Capital Improvement is
integrated into the Facility such that the Facility could not practically or
safely be operated without restoring such Tenant Material Capital Improvement,
provided that with respect to such Tenant Material Capital Improvement that
Tenant is not required to rebuild or restore, Tenant shall repair and thereafter
maintain the portions of the Leased Property affected by the loss or damage of
such Tenant Material Capital Improvement in a condition commensurate with the
quality, appearance and use of the balance of the Facility and satisfying the
Facility’s parking requirements) to substantially the same condition as existed
immediately before such damage or otherwise in a manner reasonably satisfactory
to Landlord, and (ii) the damage caused by the applicable Casualty Event shall
not terminate this Lease; provided, however, that if the applicable Casualty
Event shall occur not more than two (2) years prior to the then-Stated
Expiration Date and the cost to restore the Leased Property (excluding, for the
avoidance of doubt, any affected Tenant Material Capital Improvements that
Tenant is not required to restore) to the condition immediately preceding the
Casualty Event, as determined by a mutually approved contractor or architect,
would equal or exceed twenty-five percent (25%) of the Fair Market Ownership
Value of the Facility immediately prior to the time of such damage or
destruction, then each of Landlord and Tenant shall have the option, exercisable
in such Party’s sole and absolute discretion, to terminate this Lease, upon
written notice to the other Party hereto delivered to such other Party within
thirty (30) days of the determination of the amount of damage and the Fair
Market Ownership Value of the Facility and, if such option is exercised by
either Landlord or Tenant, this Lease shall terminate and Tenant shall not be
required to restore the Facility and any insurance proceeds payable as a result
of the damage or destruction shall be payable in accordance with
Section 14.2(c). Notwithstanding anything to the contrary contained herein, if a
Casualty Event occurs (and/or if the determination of the amount of damage
and/or the thirty (30) day period referred to in the preceding sentence is
continuing) at a time when Tenant could send a Renewal Notice (provided, for
this purpose, Tenant shall be permitted to send a Renewal Notice under
Section 1.4 not more than twenty-four (24)

 

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months (rather than not more than eighteen (18) months) prior to the then
current Stated Expiration Date), if Tenant has elected or elects to exercise the
same at any time following Tenant’s receipt of such notice of termination from
Landlord, neither Landlord nor Tenant may terminate this Lease under this
Section 14.2(a).

(b)    If the cost to restore the affected Leased Property exceeds the amount of
proceeds received from the insurance required to be carried hereunder, then
(i) Tenant’s restoration obligations, to the extent required hereunder, shall
continue unimpaired, and (ii) Tenant shall provide Landlord with evidence
reasonably acceptable to Landlord that Tenant has (or is reasonably expected to
have) available to it any excess amounts needed to restore the Leased Property
to the condition required hereunder. Such excess amounts shall be paid by
Tenant.

(c)    In the event neither Landlord nor Tenant is required or elects to repair
and restore the Leased Property, all insurance proceeds (except business
interruption), other than proceeds reasonably attributed to any Tenant Material
Capital Improvements (or other property owned by Tenant), which proceeds shall
be and remain the property of Tenant, shall be paid to and retained by Landlord
(after reimbursement to Tenant for any reasonably-incurred expenses in
connection with the subject Casualty Event) free and clear of any claim by or
through Tenant except as otherwise specifically provided below in this Article
XIV.

(d)    If Tenant fails to complete the restoration of the Facility and gaming
operations do not recommence substantially in the same manner as prior to the
applicable Casualty Event by the date that is the fourth (4th) anniversary of
the date of any Casualty Event (subject to extension in the event of an
Unavoidable Delay during such four (4) year period, on a day-for-day basis, for
the same amount of time that such Unavoidable Delay delays Tenant’s ability to
perform such restoration in accordance with this Section 14.2), then, without
limiting any of Landlord’s rights and remedies otherwise, all remaining
insurance proceeds shall be paid to and retained by Landlord free and clear of
any claim by or through Tenant, provided, that, so long as no Tenant Event of
Default has occurred and is continuing, Landlord agrees to use such remaining
proceeds for repair and restoration with respect to such Casualty Event.

(e)    If, and solely to the extent that, the damage resulting from any
applicable Casualty Event is not an insured event under the insurance policies
required to be maintained by Tenant under this Lease, then Tenant shall not be
obligated to restore the Leased Property in respect of the damage from such
Casualty Event.

14.3    No Abatement of Rent. Except as expressly provided in this Article XIV,
this Lease shall remain in full force and effect and Tenant’s obligation to pay
Rent and all Additional Charges required by this Lease shall remain unabated
during any period following a Casualty Event.

14.4    Waiver. Tenant waives any statutory rights of termination which may
arise by reason of any damage or destruction of the Leased Property but such
waiver shall not affect any contractual rights granted to Tenant under this
Lease.

14.5    Insurance Proceeds and Fee Mortgagee. Notwithstanding anything herein
(including, without limitation, Article XXXI hereof) or in any Fee Mortgage
Documents to the

 

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contrary, Landlord shall require that any Fee Mortgage Documents (including,
without limitation, with respect to the Existing Fee Mortgage) shall permit
Tenant to rebuild in accordance with the terms and provisions of this Lease (and
any such Fee Mortgage Documents shall expressly provide that Tenant or Landlord,
as applicable, is entitled to the applicable insurance proceeds in accordance
with the terms and provisions of this Lease).

ARTICLE XV

EMINENT DOMAIN

15.1    Condemnation. Tenant shall promptly give Landlord written notice of the
actual or threatened Condemnation or any Condemnation proceeding affecting the
Leased Property of which Tenant has knowledge and shall deliver to Landlord
copies of any and all papers served in connection with the same.

(a)    Total Taking. If all of the Leased Property is subject to a total and
permanent Taking, this Lease shall automatically terminate as of the day before
the date of such Taking or Condemnation.

(b)    Partial Taking. If a portion (but not all) of the Leased Property (and,
without limitation, any Capital Improvements with respect thereto) is subject to
a permanent Taking (“Partial Taking”), this Lease shall remain in effect so long
as the Facility is not thereby rendered Unsuitable for its Primary Intended Use,
and Rent shall be adjusted in accordance with the Rent Reduction Amount with
respect to the subject portion; provided, however, that if the remaining portion
of the Facility is rendered Unsuitable for Its Primary Intended Use, this Lease
shall terminate as of the day before the date of such Taking or Condemnation.

(c)    Restoration. If there is a Partial Taking and this Lease remains in full
force and effect, Landlord shall make available to Tenant the Award to be
applied first to the restoration of the Leased Property in accordance with this
Lease and, to the extent required hereby, any affected Tenant Material Capital
Improvements, and thereafter as provided in Section 15.2. In such event, subject
to receiving such Award, Tenant shall accomplish all necessary restoration in
accordance with the following sentence (whether or not the amount of the Award
received by Tenant is sufficient) and the Rent shall be adjusted in accordance
with the Rent Reduction Amount. Tenant shall restore the Leased Property
(excluding any Tenant Material Capital Improvement, unless such Tenant Material
Capital Improvement is integrated into the Facility such that the Facility could
not practically or safely be operated without restoring such Tenant Material
Capital Improvement) as nearly as reasonably possible under the circumstances to
a complete architectural unit of the same general character and condition as the
Leased Property existing immediately prior to such Taking.

15.2    Award Distribution. Except as set forth below and in Section 15.1(c)
hereof, the Award resulting from the Taking shall be paid as follows: (i) first,
to Landlord to the extent of the Fair Market Ownership Value of Landlord’s
interest in the Leased Property subject to the Taking (excluding any Tenant
Material Capital Improvements), (ii) second, to Tenant to the extent of the Fair
Market Property Value of Tenant’s Property and any Tenant Material Capital
Improvements subject to the Taking (but for the avoidance of doubt, not
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any unexpired portion of the Term), and (iii) third, any remaining balance shall
be paid to Landlord. Notwithstanding the foregoing, Tenant shall be entitled to
pursue its own claim with respect to the Taking for Tenant’s lost profits value
and moving expenses and, the portion of the Award, if any, allocated to any
Tenant Material Capital Improvements and Tenant’s Property, shall be and remain
the property of Tenant free of any claim thereto by Landlord.

15.3    Temporary Taking. The taking of the Leased Property, or any part
thereof, shall constitute a Taking by Condemnation only when the use and
occupancy by the taking authority has continued for longer than one hundred
eighty (180) consecutive days. During any shorter period, which shall be a
temporary taking, all the provisions of this Lease shall remain in full force
and effect and the Award allocable to the Term shall be paid to Tenant.

15.4    Condemnation Awards and Fee Mortgagee. Notwithstanding anything herein
(including, without limitation, Article XXXI hereof) or in any Fee Mortgage
Documents to the contrary, Landlord shall require that any Fee Mortgage
Documents (including, without limitation, with respect to the Existing Fee
Mortgage) shall permit Tenant to rebuild in accordance with the terms and
provisions of this Lease (and any such Fee Mortgage Documents shall expressly
provide that Tenant or Landlord, as applicable, is entitled to the applicable
Award in accordance with the terms and provisions of this Lease).

ARTICLE XVI

DEFAULTS & REMEDIES

16.1    Tenant Events of Default. Any one or more of the following shall
constitute a “Tenant Event of Default”:

(a)    Tenant shall fail to pay any installment of Rent when due and such
failure is not cured within ten (10) days after written notice from Landlord of
Tenant’s failure to pay such installment of Rent when due (and such notice of
failure from Landlord may be given any time after such installment of Rent is
one (1) day late);

(b)    Tenant shall fail to pay any Additional Charge (excluding, for the
avoidance of doubt the Minimum Cap Ex Amount) within ten (10) days after written
notice from Landlord of Tenant’s failure to pay such Additional Charge when due
(and such notice of failure from Landlord may be given any time after such
payment of any Additional Charge is one (1) day late);

(c)    Tenant or Guarantor shall:

(i)    file a petition in bankruptcy or a petition to take advantage of any
insolvency law or statute under Federal law, specifically including Title 11,
United States Code, §§ 101-1532, or analogous state law;

(ii)    make an assignment for the benefit of its creditors; or

(iii)    consent to the appointment of a receiver of itself or of the whole or
substantially all of its property;

 

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(d)    (i) Tenant shall be adjudicated as bankrupt or a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
Tenant, a receiver of Tenant or of all or substantially all of Tenant’s
property, or approving a petition filed against Tenant seeking reorganization or
arrangement of Tenant under Federal law, specifically including Title 11, United
States Code, §§ 101-1532, or analogous state law, and such judgment, order or
decree shall not be vacated or set aside or stayed within sixty (60) days from
the date of the entry thereof; or

(ii) Guarantor shall be adjudicated as bankrupt or a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
Guarantor, a receiver of Guarantor or of all or substantially all of Guarantor’s
property, or approving a petition filed against Guarantor seeking reorganization
or arrangement of Guarantor under Federal law, specifically including Title 11,
United States Code, §§ 101-1532, or analogous state law, and such judgment,
order or decree shall not be vacated or set aside or stayed within sixty
(60) days from the date of the entry thereof;

(e)    entry of an order or decree liquidating or dissolving Tenant or
Guarantor, provided that the same shall not constitute a Tenant Event of Default
if such order or decree shall be vacated, set aside or stayed within ninety
(90) days from the date of the entry thereof;

(f)    Tenant shall fail to comply with Section 7.5, which failure is not cured
within thirty (30) days following notice thereof from Landlord to Tenant;
provided that, if: (i) such failure is not susceptible of cure within such
thirty (30) day period; and (ii) such failure would not expose Landlord to an
imminent and material risk of criminal liability or of material damage to its
business reputation, such thirty (30) day cure period shall be extended for such
time as is necessary (but in no event longer than ninety (90) days) to cure such
failure so long as Tenant commences to cure such failure or other breach within
such thirty (30) day period and thereafter proceeds with reasonable diligence to
complete such cure);

(g)    the estate or interest of Tenant in the Leased Property or any part
thereof shall be levied upon or attached in any proceeding relating to more than
Twenty-Five Million and No/100 Dollars ($25,000,000.00), and the same shall not
be vacated, discharged or stayed pending appeal (or paid or bonded or otherwise
similarly secured payment) within the later of ninety (90) days after
commencement thereof or thirty (30) days after receipt by Tenant of notice
thereof from Landlord; provided, however, that such notice shall be in lieu of
and not in addition to any notice required under applicable law;

(h)    if Tenant or Guarantor shall fail to pay, bond, escrow or otherwise
similarly secure payment of one or more final judgments aggregating in excess of
the amount of Seventy-Five Million and No/100 Dollars ($75,000,000.00), which
judgments are not discharged or effectively waived or stayed for a period of
forty-five (45) consecutive days;

(i)    Guarantor (A) shall fail to satisfy any of the Obligations (as defined in
the Guaranty) of a monetary nature or (B) shall otherwise fail to satisfy any
other Obligations or shall otherwise fail to perform or comply with any other
term, covenant or condition under the Guaranty, and, in any case under this
clause (B), such failure is not cured within ten (10) days following notice of
such failure from Landlord to Guarantor;

 

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(j)    intentionally omitted;

(k)    intentionally omitted;

(l)    if a Licensing Event with respect to Tenant under clause (a) of the
definition of Licensing Event shall occur and is not resolved in accordance with
Section 41.13 within the later of (i) thirty (30) days or (ii) such additional
time period as may be permitted by the applicable Gaming Authorities;

(m)    Tenant fails to comply with any Additional Fee Mortgagee Requirements,
which default is not cured within the applicable cure period set forth in the
Fee Mortgage Documents, if the effect of such default is to cause, or to permit
the holder or holders of the applicable Fee Mortgage (or a trustee or agent on
behalf of such holder or holders) to cause, such Fee Mortgage to become or be
declared due and payable (or redeemable) prior to its stated maturity;

(n)    a transfer of Tenant’s interest in this Lease (including pursuant to a
Change of Control) shall have occurred without the consent of Landlord to the
extent such consent is required under Article XXII or Tenant is otherwise in
default of the provisions set forth in Section 22.1 below;

(o)    if Tenant shall fail to observe or perform any other term, covenant or
condition of this Lease and such failure is not cured within thirty (30) days
after written notice thereof from Landlord, provided, however, if such failure
cannot reasonably be cured within such thirty (30) day period and Tenant shall
have commenced to cure such failure within such thirty (30) day period and
thereafter diligently proceeds to cure the same, such thirty (30) day period
shall be extended for such time as is reasonably necessary for Tenant in the
exercise of due diligence to cure such failure, provided that, with respect to
any failure to perform (i) that is still continuing on or after the first (1st)
day of the sixth (6th) Lease Year such cure period shall not extend beyond the
later of such first (1st) day of the sixth (6th) Lease Year or one hundred and
eighty (180) days in the aggregate, and (ii) that is first arising on or after
the first (1st) day of the sixth (6th) Lease Year, such cure period shall not
exceed one hundred and eighty (180) days in the aggregate, provided, further
however, that no Tenant Event of Default under this clause (o) or under clause
(q) below shall be deemed to exist under this Lease during any time the curing
thereof is prevented by an Unavoidable Delay, provided that upon the cessation
of the Unavoidable Delay, Tenant remedies the default within the time periods
otherwise required hereunder;

(p)    (i) A “Tenant Event of Default” (as defined in the Regional Lease) shall
occur under the Regional Lease or (ii) so long as the Existing Original Fee
Financing has not been replaced with replacement financing, a “Tenant Event of
Default” (as defined in the Las Vegas Lease) shall occur under the Las Vegas
Lease;

(q)    the occurrence of a Tenant Event of Default pursuant to
Section 10.5(a)(x); and

(r)    if Guarantor shall, in any judicial or quasi-judicial case, action or
proceeding, contest (or collude with or otherwise affirmatively assist any other
Person, or solicit or cause to be solicited any other Person to contest) the
validity or enforceability of Guarantor’s obligations under the Guaranty (or any
Qualified Replacement Guarantor’s obligations under a Replacement Guaranty).

 

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Notwithstanding anything contained herein to the contrary, (x) Landlord shall
deliver all notices required pursuant to Section 16.1 concurrently to Tenant and
Guarantor and (y) a default by Tenant under any Permitted Leasehold Mortgage
shall not in and of itself be a Tenant Event of Default hereunder (it being
understood that if the circumstances that cause such default independently
comprise a default hereunder that continues beyond all applicable notice and
cure periods hereunder then such circumstances would cause a Tenant Event of
Default hereunder).

Notwithstanding the foregoing, (i) Tenant shall not be in breach of this Lease
solely as a result of the exercise by the party (other than Tenant, ERI, CEOC or
any of their respective Affiliates) to any of the Permitted Exception Documents
of such party’s rights thereunder so long as Tenant undertakes commercially
reasonable efforts to cause such party to comply or otherwise minimize such
breach, and (ii) in the event that Tenant is required, under the express terms
of any Permitted Exception Document(s), to take or refrain from taking any
action, and taking or refraining from taking such action would result in a
default under this Lease, then Tenant shall advise Landlord of the same, and
Tenant and Landlord shall reasonably cooperate in order to address the same in a
mutually acceptable manner, and so as to minimize any harm or liability to
Landlord and to Tenant.    For the avoidance of doubt, in no event shall a
Permitted Exception Document excuse Tenant from its obligation to pay Rent or
Additional Charges.

16.2    Landlord Remedies. Upon the occurrence and during the continuance of a
Tenant Event of Default but subject to the provisions of Article XVII, Landlord
may, subject to the terms of Section 16.3 below, do any one or more of the
following: (x) terminate this Lease by giving Tenant no less than ten (10) days’
notice of such termination and the Term shall terminate and all rights and
obligations of Tenant under this Lease shall cease, subject to any provisions
that expressly survive the Expiration Date, (y) seek damages as provided in
Section 16.3 hereof or (z) except to the extent expressly otherwise provided
under this Lease, exercise any other right or remedy hereunder, at law or in
equity available to Landlord as a result of any Tenant Event of Default. Tenant
shall pay as Additional Charges all costs and expenses incurred by or on behalf
of Landlord, including reasonable and documented attorneys’ fees and expenses,
as a result of any Tenant Event of Default hereunder. Subject to Article XIX,
Article XXXVI and Section 17.1(f) hereof, at any time upon or following the
Expiration Date, Tenant shall, if required by Landlord to do so, immediately
surrender to Landlord possession of the Leased Property and quit the same and
Landlord may enter upon and repossess such Leased Property by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Tenant and all other
Persons and any of Tenant’s Property therefrom.

(a)    None of (i) the termination of this Lease, (ii) the repossession of the
Leased Property, (iii) the failure of Landlord to relet the Leased Property or
any portions thereof, (iv) the reletting of all or any portion of the Leased
Property, or (v) the inability of Landlord to collect or receive any rentals due
upon any such reletting, shall relieve Tenant of its liabilities and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. Landlord and Tenant agree that Landlord shall have no obligation to
mitigate Landlord’s damages under this Lease.

 

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(b)    If this Lease shall terminate pursuant to Section 16.2(x) or if Landlord
shall obtain a court order permitting reentry following the occurrence of a
Tenant Event of Default that is continuing, then, in any such event, Landlord or
Landlord’s agents and employees may immediately or at any time thereafter
reenter the Leased Property to the extent permitted by law (including applicable
Gaming Regulations), either by summary dispossess proceedings or by any suitable
action or proceeding at law, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any Person
therefrom, to the end that Landlord may have, hold and enjoy the Leased
Property. The words “enter,” “reenter,” “entry” and “reentry,” as used herein,
are not restricted to their technical legal meanings.

16.3    Damages.

(a)    If Landlord elects to terminate this Lease in writing upon a Tenant Event
of Default during the Term, Tenant shall forthwith (x) pay to Landlord all Rent
due and payable under this Lease to and including the date of such termination
(together with interest thereon at the Overdue Rate from the date the applicable
amount was due), and (y) pay on demand all damages to which Landlord shall be
entitled at law or in equity, provided, however, Landlord’s damages with regard
to unpaid Rent from and after the date of termination shall equal, as liquidated
and agreed current damages in respect thereof, the sum of: (A) the worth at the
time of award of the amount by which the unpaid Rent that (if the Lease had not
been terminated) would have been payable hereunder after termination until the
time of award exceeds the amount of such Rent loss that Tenant proves could have
been reasonably avoided; plus (B) (x) the Rent which (if the Lease had not been
terminated) would have been payable hereunder from the time of award until the
then Stated Expiration Date, discounted to present value by applying a discount
rate equal to the discount rate of the Federal Reserve Bank of New York at the
time of award, plus one percent (1%), less (y) the Rent loss from the time of
the award until the then Stated Expiration Date that Tenant proves could be
reasonably avoided, discounted to present value by applying a discount rate
equal to the discount rate of the Federal Reserve Bank of New York at the time
of award, plus one percent (1%). As used in clause (A), the “worth at the time
of award” shall be computed by allowing interest at the Overdue Rate from the
date the applicable amount was due. As used in clauses (A) and (B), Variable
Rent that would have been payable after termination for the remainder of the
Term shall be determined based on: (1) if the date of termination occurs during
a Variable Rent Payment Period, the Variable Rent amount payable during such
Variable Rent Payment Period (if the Lease had not been terminated), and (2) if
the date of termination occurs prior to the commencement of any Variable Rent
Payment Period, the Variable Rent that (if the Lease had not been terminated)
would be payable after termination for the remainder of the Term, assuming Net
Revenue for the balance of the Term equals Net Revenue for the Fiscal Period
ending immediately prior to the date of termination (it being understood the
foregoing calculation of damages for unpaid Rent applies only to the amount of
unpaid Rent damages owed to Landlord pursuant to Tenant’s obligation to pay Rent
hereunder and does not prohibit or otherwise shall not limit Landlord from
seeking damages for any indemnification or any other obligations of Tenant
hereunder, with all such rights of Landlord reserved).

(b)    Notwithstanding anything otherwise set forth herein, if Landlord chooses
not to terminate Tenant’s right to possession of the Leased Property (whether or
not Landlord terminates this Lease) and has not been paid damages in accordance
with Section 16.3(a), then each installment of Rent and all other sums payable
by Tenant to or for the benefit of Landlord under

 

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this Lease shall be payable as the same otherwise becomes due and payable,
together with, if any such amount is not paid when due, interest at the Overdue
Rate from the date when due until paid, and Landlord may enforce, by action or
otherwise, any other term or covenant of this Lease (and Landlord may at any
time thereafter terminate Tenant’s right to possession of the Leased Property
and seek damages under Section 16.3(a), to the extent not already paid for by
Tenant under Section 16.3(a) or this Section 16.3(b)).

(c)    If, as of the date of any termination of this Lease pursuant to
Section 16.2(x), the Leased Property shall not be in the condition in which
Tenant has agreed to surrender the same to Landlord at the expiration or earlier
termination of this Lease, then Tenant, shall pay, as damages therefor, the cost
(as estimated by an independent contractor reasonably selected by Landlord) of
placing the Leased Property in the condition in which Tenant is required to
surrender the same hereunder.

16.4    Receiver. Subject to the rights of Permitted Leasehold Mortgagees
hereunder, upon the occurrence and continuance of a Tenant Event of Default, and
upon commencement of proceedings to enforce the rights of Landlord hereunder,
but subject to any limitations of applicable law (including Gaming Regulations),
Landlord shall be entitled, as a matter of right, to the appointment of a
receiver or receivers acceptable to Landlord of the Leased Property and of the
revenues, earnings, income, products and profits thereof, pending the outcome of
such proceedings, with such powers as the court making such appointment shall
confer.

16.5    Waiver. If Landlord initiates judicial proceedings or if this Lease is
terminated by Landlord pursuant to this Article XVI, Tenant waives, to the
extent permitted by applicable law, (i) any right of redemption, re-entry or
repossession or similar laws for the benefit of Tenant; and (ii) the benefit of
any laws now or hereafter in force exempting property from liability for rent or
for debt.

16.6    Application of Funds. Any payments received by Landlord under any of the
provisions of this Lease during the existence or continuance of any Tenant Event
of Default which are made to Landlord rather than Tenant due to the existence of
a Tenant Event of Default shall be applied to Tenant’s obligations in the order
which Landlord may reasonably determine or as may be prescribed by applicable
Legal Requirements.

16.7    Landlord’s Right to Cure Tenant’s Default. If Tenant shall fail to make
any payment or to perform any act required to be made or performed hereunder
when due, including, without limitation, if Tenant fails to expend any Required
Capital Expenditures as required hereunder or fails to complete any work or
restoration or replacement of any nature as required hereunder, or if Tenant
shall take any action prohibited hereunder, or if Tenant fails to comply with
any Additional Fee Mortgagee Requirements, in all cases, after the expiration of
any cure period provided for herein, Landlord, without waiving or releasing any
obligation or default, may, but shall be under no obligation to, make such
payment or perform such act for the account and at the expense of Tenant, and
may, to the extent permitted by law, enter upon the Leased Property for such
purpose and take all such action thereon as, in Landlord’s reasonable opinion,
may be necessary or appropriate therefor. All sums so paid by Landlord and all
costs and expenses, including reasonable attorneys’ fees and expenses, so
incurred, together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Landlord, shall be paid by
Tenant to Landlord on demand as an Additional Charge.

 

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16.8    Miscellaneous.

(a)    Suit or suits for the recovery of damages, or for any other sums payable
by Tenant to Landlord pursuant to this Lease, 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 and the Term
would have expired by limitation had there been no Tenant Event of Default,
reentry or termination.

(b)    No failure by either Party to insist upon the strict performance of any
agreement, term, covenant or condition of this Lease or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance by Landlord of full
or partial Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of such agreement, term, covenant or condition. No
agreement, term, covenant or condition of this Lease to be performed or complied
with by either Party, and no breach thereof, shall be or be deemed to be waived,
altered or modified except by a written instrument executed by the Parties. No
waiver of any breach shall affect or alter this Lease, but each and every
agreement, term, covenant and condition of this Lease shall continue in full
force and effect with respect to any other then existing or subsequent breach
thereof. In the event Landlord claims in good faith that Tenant has breached any
of the agreements, terms, covenants or conditions contained in this Lease,
Landlord shall be entitled to seek to enjoin such breach or threatened breach
and shall have the right to invoke any rights and remedies allowed at law or in
equity or by statute or otherwise as though reentry, summary proceedings or
other remedies were not provided for in this Lease.

(c)    Except to the extent otherwise expressly provided in this Lease, each
right and remedy of a Party provided for in this Lease shall be cumulative and
shall be in addition to every other right or remedy provided for in this Lease.

(d)    Nothing contained in this Article XVI or otherwise shall vitiate or limit
Tenant’s obligation to pay Landlord’s attorneys’ fees as and to the extent
provided in Article XXXVII hereof, or any indemnification obligations under any
express indemnity made by Tenant of Landlord or of any Landlord Indemnified
Parties as contained in this Lease.

ARTICLE XVII

TENANT FINANCING

17.1    Permitted Leasehold Mortgagees.

(a)    Tenant May Mortgage the Leasehold Estate. On one or more occasions,
without Landlord’s consent, Tenant may mortgage or otherwise encumber Tenant’s
estate in and to the Leased Property (the “Leasehold Estate”) (or encumber the
direct or indirect Equity Interests in Tenant) to one or more Permitted
Leasehold Mortgagees under one or more Permitted Leasehold Mortgages and pledge
its right, title and interest under this Lease as security for such Permitted
Leasehold Mortgages or any related agreement secured thereby, provided, however,
that, (i) in order for a Permitted Leasehold Mortgagee to be entitled to the
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Permitted Leasehold Mortgagees pursuant to this Article XVII, such Permitted
Leasehold Mortgagee must hold or benefit from a Permitted Leasehold Mortgage
encumbering all of Tenant’s Leasehold Estate granted to Tenant under this Lease
(subject to exclusions with respect to items that are not capable of being
mortgaged and that, in the aggregate, are de minimis) or at least eighty percent
(80%) of the direct or indirect Equity Interests in Tenant at any tier of
ownership, and (ii) no Person shall be deemed to be a Permitted Leasehold
Mortgagee hereunder unless and until (a) such Person delivers a written
agreement to Landlord providing that in the event of a termination of this Lease
by Landlord pursuant to Section 16.2(x) hereof, such Permitted Leasehold
Mortgagee and any Persons for whom it acts as representative, agent or trustee,
will not use or dispose of any Gaming License for use at a location other than
at the Facility to which such Gaming License relates as of the date of the
closing of a Lease Foreclosure Transaction (or, in the case of any additional
facility added to this Lease after such date, as of the date that such
additional facility is added to the Lease), (b) the applicable Permitted
Leasehold Mortgage shall include an express acknowledgement that any exercise of
remedies thereunder that would affect the Leasehold Estate shall be subject and
subordinate to the terms of this Lease and (c) in the case of any subleasehold
mortgage granted by a Subtenant after the First Amendment Date that is to be
treated as a Permitted Leasehold Mortgage hereunder, such subleasehold mortgage
shall include an express acknowledgement that any exercise of remedies
thereunder that would affect the Leasehold Estate shall be subject and
subordinate to Landlord’s interest and estate in the applicable Leased Property,
as well as the interest of any Fee Mortgagee whose Fee Mortgage is senior to
this Lease, whether now or hereafter existing, in the applicable Leased
Property. Furthermore, as a condition to being deemed a Permitted Leasehold
Mortgagee hereunder, each Permitted Leasehold Mortgagee is deemed to acknowledge
and agree (and hereby does acknowledge and agree) that any foreclosure or
realization by any Permitted Leasehold Mortgagee pursuant to a Permitted
Leasehold Mortgage or upon Tenant’s interest under this Lease or that would
result in a transfer of all or any portion of Tenant’s interest in the Leased
Property or this Lease shall in any case be subject to the applicable
provisions, terms and conditions of Article XXII hereof.

(b)    Notice to Landlord.

(i)    If Tenant shall, on one or more occasions, mortgage Tenant’s Leasehold
Estate pursuant to a Permitted Leasehold Mortgage and if the holder of such
Permitted Leasehold Mortgage shall provide Landlord with written notice of such
Permitted Leasehold Mortgage (which notice with respect to any Permitted
Leasehold Mortgage not evidenced by a recorded security instrument, in order to
be effective, shall also state (or be accompanied by a notice of Tenant stating)
the relative priority of all then-effective Permitted Leasehold Mortgages
noticed to Landlord under this Section and shall be consented to in writing by
all then-existing Permitted Leasehold Mortgagees) together with a true copy of
such Permitted Leasehold Mortgage and the name and address of the Permitted
Leasehold Mortgagee, Landlord and Tenant agree that, following receipt of such
written notice by Landlord (which notice shall be accompanied by any items
required pursuant to Section 17.1(a) above), the provisions of this Section 17.1
shall apply to each such Permitted Leasehold Mortgage. In the event of any
assignment of a Permitted Leasehold Mortgage or in the event of a change of
address of a Permitted Leasehold Mortgagee or of an assignee of such Permitted
Leasehold Mortgage, written notice of such assignment or change of address and
of the new name and address shall be provided to Landlord, and the provisions of
this Section 17.1 shall continue to apply, provided such assignee is a Permitted
Leasehold Mortgagee.

 

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(ii)    Landlord shall reasonably promptly following receipt of a communication
purporting to constitute the notice provided for by subsection (b)(i) above (and
such additional items requested by Landlord pursuant to the first sentence of
Section 17.1(b)(iii)) acknowledge by written notice receipt of such
communication as constituting the notice provided for by subsection (b)(i) above
and confirming the status of the Permitted Leasehold Mortgagee as such or, in
the alternative, notify Tenant and the Permitted Leasehold Mortgagee of the
rejection of such communication and any such items as not conforming with the
provisions of this Section 17.1 and specify the specific basis of such
rejection.

(iii)    After Landlord has received the notice provided for by subsection
(b)(i) above, Tenant, upon being requested to do so by Landlord, shall with
reasonable promptness provide Landlord with copies of the note or other
obligations secured by such Permitted Leasehold Mortgage and any other documents
pertinent to the applicable Permitted Leasehold Mortgage reasonably requested by
Landlord. With respect to any Permitted Leasehold Mortgage documents not
publicly filed or upon Landlord’s request, Tenant shall, with reasonable
promptness, provide Landlord from time to time with a copy of each material
amendment or other modification or supplement to such documents. All recorded
documents shall be accompanied by the appropriate recording stamp or other
certification of the custodian of the relevant recording office as to their
authenticity as true and correct copies of official records and all nonrecorded
documents shall be accompanied by a certification by Tenant that such documents
are true and correct copies of the originals. From time to time upon being
requested to do so by Landlord, Tenant shall also notify Landlord of the date
and place of recording and other pertinent recording data with respect to such
instruments as have been recorded.

(iv)    Notwithstanding the requirements of this Section 17.1(b), it is agreed
and acknowledged that Tenant’s Initial Financing (and the mortgages, security
agreements and/or other loan documents in connection therewith) as of the
Commencement Date, as of the First Amendment Date and as of the Second Amendment
Date shall be deemed a Permitted Leasehold Mortgage (with respect to which
notice has been properly provided to Landlord pursuant to Section 17.1(b)(i))
without the requirement that Tenant or Landlord comply with the initial
requirements set forth in clauses (i) through (iii) above, (but, for the
avoidance of doubt, Tenant’s Initial Financing is not relieved of the
requirement that it satisfy the requirements of Section 17.1(a) or the last
sentence of Section 17.1(b)(i)). In addition, for the avoidance of doubt, the
Parties confirm that Tenant shall not be relieved of the requirement to comply
with Section 17.1(b)(iii) with respect to Tenant’s Initial Financing or any
other financing with a Permitted Leasehold Mortgagee.

 

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(c)    Default Notice to Permitted Leasehold Mortgagee. Landlord, upon providing
Tenant any notice of default under this Lease, shall at the same time provide a
copy of such notice to every Permitted Leasehold Mortgagee for which notice has
been properly provided to Landlord pursuant to Section 17.1(b)(i) hereof. No
such notice by Landlord to Tenant shall be deemed to have been duly given unless
and until a copy thereof has been sent, in the manner prescribed in Article XXXV
of this Lease, to every such Permitted Leasehold Mortgagee for which notice has
been properly provided to Landlord pursuant to Section 17.1(b)(i) hereof. From
and after the date such notice has been sent to a Permitted Leasehold Mortgagee,
such Permitted Leasehold Mortgagee shall have the same period, with respect to
its remedying any default or acts or omissions which are the subject matter of
such notice or causing the same to be remedied, as is given Tenant after the
giving of such notice to Tenant, plus in each instance, the additional periods
of time specified in subsections (d) and (e) of this Section 17.1 to remedy or
cause to be remedied the defaults or acts or omissions which are the subject
matter of such notice specified in any such notice. Landlord shall accept such
performance by or at the instigation of such Permitted Leasehold Mortgagee as if
the same had been done by Tenant. Tenant authorizes each such Permitted
Leasehold Mortgagee (to the extent such action is authorized under the
applicable loan documents to which it acts as a lender, noteholder, investor,
agent, trustee or representative) to take any such action at such Permitted
Leasehold Mortgagee’s option and does hereby authorize entry upon the Leased
Property by the Permitted Leasehold Mortgagee for such purpose.

(d)    Right to Terminate Notice to Permitted Leasehold Mortgagee. Anything
contained in this Lease to the contrary notwithstanding, if any Tenant Event of
Default shall occur which entitles Landlord to terminate this Lease, Landlord
shall have no right to terminate this Lease on account of such Tenant Event of
Default unless Landlord shall notify every Permitted Leasehold Mortgagee for
which notice has been properly provided to Landlord pursuant to Section 17.1(b)
hereof that the period of time given Tenant to cure such default or act or
omission has lapsed and, accordingly, Landlord has the right to terminate this
Lease (“Right to Terminate Notice”). The provisions of subsection (e) below of
this Section 17.1 shall apply if, during (x) the thirty (30) day period
following Landlord’s delivery of the Right to Terminate Notice if such Tenant
Event of Default is capable of being cured by the payment of money, or (y) the
ninety (90) day period following Landlord’s delivery of the Right to Terminate
Notice, if such Tenant Event of Default is not capable of being cured by the
payment of money, any Permitted Leasehold Mortgagee shall:

(i)    notify Landlord of such Permitted Leasehold Mortgagee’s desire to nullify
such Right to Terminate Notice;

(ii)    pay or cause to be paid all Rent, Additional Charges, and other payments
(A) then due and in arrears as specified in the Right to Terminate Notice to
such Permitted Leasehold Mortgagee, and (B) which may become due during such
thirty (30) or ninety (90) day (as the case may be) period (as and when the same
may become due);

(iii)    comply with or in good faith, with reasonable diligence and continuity,
commence to comply with all nonmonetary requirements of this Lease then in
default and reasonably susceptible of being complied with by such Permitted
Leasehold Mortgagee (e.g., defaults that are not personal to Tenant hereunder);
provided, however, that such Permitted Leasehold Mortgagee shall not be required
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to cure or commence to cure any default consisting of Tenant’s failure to
satisfy and discharge any lien, charge or encumbrance against Tenant’s interest
in this Lease or the Leased Property or any of Tenant’s other assets that is/are
(x) junior in priority to the lien of the mortgage or other security documents
held by such Permitted Leasehold Mortgagee and (y) would be extinguished by the
foreclosure of the Permitted Leasehold Mortgage that is held by such Permitted
Leasehold Mortgagee; and

(iv)    during such thirty (30) or ninety (90) day period, the Permitted
Leasehold Mortgagee shall respond, with reasonable diligence, to requests for
information from Landlord as to the Permitted Leasehold Mortgagee’s (and related
lender’s) intent to pay such Rent and other charges and comply with this Lease.

If the applicable default shall be cured pursuant to the terms and within the
time periods allowed in this Section 17.1(d), this Lease shall continue in full
force and effect as if Tenant had not defaulted under the Lease. If a Permitted
Leasehold Mortgagee shall fail to take all of the actions described in this
Section 17.1(d) with respect to a specific Tenant Event of Default for which the
Permitted Leasehold Mortgagee was provided notice prior to the deadlines set
forth herein, such Permitted Leasehold Mortgagee shall have no further rights
under this Section 17.1(d) or Section 17.1(e) with respect to such Tenant Event
of Default.

(e)    Procedure on Default.

(i)    If Landlord shall elect to terminate this Lease by reason of any Tenant
Event of Default that has occurred and is continuing and a Permitted Leasehold
Mortgagee shall have proceeded in the manner provided for by subsection (d) of
this Section 17.1, the applicable cure periods available pursuant to
Section 17.1(d) above shall continue to be extended so long as during such
continuance:

(1)    such Permitted Leasehold Mortgagee shall pay or cause to be paid the
Rent, Additional Charges and other monetary obligations of Tenant under this
Lease as the same become due, and continue its good faith efforts to perform or
cause to be performed all of Tenant’s other obligations under this Lease,
excepting (A) obligations of Tenant to satisfy or otherwise discharge any lien,
charge or encumbrance against Tenant’s interest in this Lease or the Leased
Property or any of Tenant’s other assets that is/are (x) junior in priority to
the lien of the mortgage or other security documents held by such Permitted
Leasehold Mortgagee and (y) would be extinguished by the foreclosure of the
Permitted Leasehold Mortgage that is held by such Permitted Leasehold Mortgagee
and (B) past non-monetary obligations then in default and not reasonably
susceptible of being cured by such Permitted Leasehold Mortgagee; and

(2)    subject to and in accordance with Section 22.2(i), if not enjoined or
stayed pursuant to a bankruptcy or insolvency proceeding or other judicial
order, such Permitted Leasehold Mortgagee shall diligently continue to pursue
acquiring or selling Tenant’s interest in this Lease and the Leased Property
(or, to the extent applicable, the direct or indirect interests in Tenant) by
foreclosure of the Permitted Leasehold Mortgage or other appropriate means and
diligently prosecute the same to completion.

 

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(ii)    Without limitation of Tenant’s right to deliver a Renewal Notice, it is
agreed that a Permitted Leasehold Mortgagee also shall have the right to deliver
a Renewal Notice on behalf of Tenant during any period in which such Permitted
Leasehold Mortgagee is complying with Section 17.1(d) or 17.1(e).

(iii)    If a Permitted Leasehold Mortgagee is complying with subsection (e)(i)
of this Section 17.1, upon the acquisition of Tenant’s Leasehold Estate (or, to
the extent applicable, the direct or indirect interests in Tenant) herein by
such Permitted Leasehold Mortgagee, a Permitted Leasehold Mortgagee Designee or
an assignee thereof permitted by Section 22.2(i) hereof, this Lease shall
continue in full force and effect as if Tenant had not defaulted under this
Lease provided that such successor cures all outstanding defaults that can be
cured through the payment of money and all other defaults that are reasonably
susceptible of being cured as provided in said subsection (e)(i).

(iv)    No Permitted Leasehold Mortgagee shall be deemed to be an assignee or
transferee of this Lease or of the Leasehold Estate hereby created by virtue of
the Permitted Leasehold Mortgage so as to require such Permitted Leasehold
Mortgagee, as such, to assume the performance of any of the terms, covenants or
conditions on the part of Tenant to be performed hereunder; but the purchaser at
any sale of this Lease (or, to the extent applicable, the purchaser of the
direct or indirect interests in Tenant) (including a Permitted Leasehold
Mortgagee if it is the purchaser at foreclosure) and of the Leasehold Estate
hereby created in any proceedings for the foreclosure of any Permitted Leasehold
Mortgage, or the assignee or transferee of this Lease and of the Leasehold
Estate hereby created (or, to the extent applicable, the assignee or transferee
of the direct or indirect interests in Tenant) under any instrument of
assignment or transfer in lieu of the foreclosure of any Permitted Leasehold
Mortgage, shall be subject to all of the provisions, terms and conditions of
this Lease including, without limitation, Section 22.2(i) hereof.

(v)    Notwithstanding any other provisions of this Lease, any Permitted
Leasehold Mortgagee, Permitted Leasehold Mortgagee Designee or other acquirer of
the Leasehold Estate of Tenant (or, to the extent applicable, the direct or
indirect interests in Tenant) in accordance with the requirements of
Section 22.2(i) of this Lease pursuant to foreclosure, assignment in lieu of
foreclosure or other similar proceedings of this Lease may, upon acquiring
Tenant’s Leasehold Estate (or, to the extent applicable, the direct or indirect
interests in Tenant), without further consent of Landlord, (x) sell and assign
interests in the Leasehold Estate (or, to the extent applicable, the direct or
indirect interests in Tenant) as and to the extent provided in this Lease, and
(y) enter into Permitted Leasehold Mortgages in the same manner as the original
Tenant, as and to the extent provided in this Lease, in each case under clause
(x) or (y), subject to the terms of this Lease, including Article XVII and
Section 22.2(i) hereof.

(vi)    Notwithstanding any other provisions of this Lease, any sale of this
Lease and of the Leasehold Estate hereby created (or, to the extent applicable,
the direct or indirect interests in Tenant) in any proceedings for the
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Leasehold Mortgage, or the assignment or transfer of this Lease and of the
Leasehold Estate hereby created (or, to the extent applicable, the direct or
indirect interests in Tenant) in lieu of the foreclosure of any Permitted
Leasehold Mortgage, shall, solely if and to the extent such sale, assignment or
transfer complies with the requirements of Section 22.2(i) hereof, be deemed to
be a permitted sale, transfer or assignment of this Lease; provided, that, the
foreclosing Permitted Leasehold Mortgagee or purchaser at foreclosure sale or
successor purchaser must satisfy the requirements set forth in
Section 22.2(i)(1) through (4).

(f)    New Lease. In the event that this Lease is rejected in any bankruptcy,
insolvency or dissolution proceeding or is terminated by Landlord following a
Tenant Event of Default other than due to a default that is subject to cure by a
Permitted Leasehold Mortgagee under Section 17.1(d) and Section 17.1(e) above,
Landlord shall provide each Permitted Leasehold Mortgagee with written notice
that this Lease has been rejected or terminated (“Notice of Termination”), and,
for the avoidance of doubt, upon delivery of such Notice of Termination, no
Permitted Leasehold Mortgagee shall have the rights as described in
Section 17.1(d) and Section 17.1(e) above, but rather such Permitted Leasehold
Mortgagee instead shall have the rights described in this Section 17.1(f)).
Following any such rejection or termination, Landlord agrees to enter into a new
lease (“New Lease”) of the Leased Property with such Permitted Leasehold
Mortgagee or its Permitted Leasehold Mortgagee Designee for the remainder of the
term of this Lease, effective as of the date of termination, at the rent and
additional rent, and upon the terms, covenants and conditions (including all
then-remaining options to renew but excluding requirements which have already
been fulfilled) of this Lease, provided:

(i)    such Permitted Leasehold Mortgagee or its Permitted Leasehold Mortgagee
Designee shall comply with the applicable terms of Section 22.2;

(ii)    such Permitted Leasehold Mortgagee or its Permitted Leasehold Mortgagee
Designee shall make a binding, written, irrevocable commitment to Landlord for
such New Lease within thirty (30) days after the date such Permitted Leasehold
Mortgagee receives Landlord’s Notice of Termination of this Lease given pursuant
to this Section 17.1(f);

(iii)    such Permitted Leasehold Mortgagee or its Permitted Leasehold Mortgagee
Designee shall pay or cause to be paid to Landlord at the time of the execution
and delivery of such New Lease, any and all sums which would at the time of
execution and delivery thereof be due pursuant to this Lease but for such
rejection or termination (including, for the avoidance of doubt, any amounts
that become due prior to and remain unpaid as of the date of the Notice of
Termination) and, in addition thereto, all reasonable expenses, including
reasonable documented attorney’s fees, which Landlord shall have incurred by
reason of such rejection or such termination and the execution and delivery of
the New Lease and which have not otherwise been received by Landlord from Tenant
or other party in interest under Tenant; and

(iv)    such Permitted Leasehold Mortgagee or its Permitted Leasehold Mortgagee
Designee shall agree to remedy any of Tenant’s defaults of which said Permitted
Leasehold Mortgagee was notified by Landlord’s Notice of Termination (or in any
other written notice of Landlord) and which can be cured through the payment of
money or, if such defaults cannot be cured through the payment of money, are
reasonably susceptible of being cured by Permitted Leasehold Mortgagee or its
Permitted Leasehold Mortgagee Designee.

 

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(g)    New Lease Priorities. If more than one Permitted Leasehold Mortgagee
shall request a New Lease pursuant to subsection (f)(i) of this Section 17.1,
Landlord shall enter into such New Lease with the Permitted Leasehold Mortgagee
whose mortgage is senior in lien, or with its Permitted Leasehold Mortgagee
Designee acting for the benefit of such Permitted Leasehold Mortgagee prior in
lien foreclosing on Tenant’s interest in this Lease. Landlord, without liability
to Tenant or any Permitted Leasehold Mortgagee with an adverse claim, may rely
upon (i) with respect to any Permitted Leasehold Mortgage evidenced by a
recorded security instrument, a title insurance policy (or, if elected by
Landlord in its sole discretion, a title insurance commitment, certificate of
title or other similar instrument) issued by a reputable title insurance company
as the basis for determining the appropriate Permitted Leasehold Mortgagee who
is entitled to such New Lease or (ii) with respect to any Permitted Leasehold
Mortgage not evidenced by a recorded security instrument, the statement with
respect to relative priority of Permitted Leasehold Mortgages contained in the
applicable notice delivered pursuant to Section 17.1(b)(i), provided that any
such statement that provides that any such Permitted Leasehold Mortgage
described in this clause (ii) is senior or prior to any Permitted Leasehold
Mortgage evidenced by a recorded security instrument shall only be effective to
the extent it is consented to in writing by the Permitted Leasehold Mortgagee in
respect of such Permitted Leasehold Mortgage evidenced by a recorded security
instrument.

(h)    Permitted Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing
herein contained shall require any Permitted Leasehold Mortgagee to cure any
Incurable Default in order to comply with the provisions of Sections 17.1(d) and
17.1(e), or as a condition of entering into the New Lease provided for by
Section 17.1(f). For the avoidance of doubt, upon such foreclosure and/or the
effectuation of such a New Lease in accordance with the provisions, terms and
conditions hereof, any such defaults are automatically deemed waived through the
effective date of such foreclosure or New Lease as to any such Permitted
Leasehold Mortgagee or its Permitted Leasehold Mortgagee Designee, as the new
tenant hereunder or under the New Lease, as applicable (it being understood that
the provisions of this sentence shall not be deemed to relieve such new tenant
of its obligations to comply with this Lease or such New Lease from and after
the effective date of such foreclosure or New Lease).

(i)    Casualty Loss. A standard mortgagee clause naming each Permitted
Leasehold Mortgagee for which notice has been properly provided to Landlord
pursuant to Section 17.1(b) hereof may be added to any and all insurance
policies required to be carried by Tenant hereunder on condition that (and, in
all events, Tenant agrees that) the insurance proceeds are to be applied in the
manner specified in this Lease and the Permitted Leasehold Mortgage shall so
provide; except that the Permitted Leasehold Mortgage may provide a manner for
the disposition of such proceeds, if any, otherwise payable directly to Tenant
(but not such proceeds, if any, payable jointly to Landlord and Tenant or to
Landlord, to the Fee Mortgagee or to a third party escrowee) pursuant to the
provisions of this Lease.

(j)    Arbitration; Legal Proceedings. Landlord shall give prompt notice to each
Permitted Leasehold Mortgagee (for which notice has been properly provided to
Landlord pursuant to Section 17.1(b) hereof) of any arbitration (including a
determination of Fair Market Ownership Value or Fair Market Base Rental Value)
or legal proceedings between Landlord and Tenant involving obligations under
this Lease.

 

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(k)    Notices. Notices from Landlord to the Permitted Leasehold Mortgagee for
which notice has been properly provided to Landlord pursuant to Section 17.1(b)
hereof shall be provided in the method provided in Article XXXV hereof to the
address furnished Landlord pursuant to subsection (b) of this Section 17.1, and
those from the Permitted Leasehold Mortgagee to Landlord shall be mailed to the
address designated pursuant to the provisions of Article XXXV hereof. Such
notices, demands and requests shall be given in the manner described in this
Section 17.1 and in Article XXXV and shall in all respects be governed by the
provisions of those sections.

(l)    Limitation of Liability. Notwithstanding any other provision hereof to
the contrary, (i) Landlord agrees that any Permitted Leasehold Mortgagee’s
liability to Landlord in its capacity as Permitted Leasehold Mortgagee hereunder
howsoever arising shall be limited to and enforceable only against such
Permitted Leasehold Mortgagee’s interest in the Leasehold Estate and the other
collateral granted to such Permitted Leasehold Mortgagee to secure the
obligations under the loan secured by the applicable Permitted Leasehold
Mortgage, and (ii) each Permitted Leasehold Mortgagee agrees that Landlord’s
liability to such Permitted Leasehold Mortgagee hereunder howsoever arising
shall be limited to and enforceable only against Landlord’s interest in the
Leased Property, and no recourse against Landlord shall be had against any other
assets of Landlord whatsoever.

(m)    Sale Procedure. If this Lease has been terminated, the Permitted
Leasehold Mortgagee for which notice has been properly provided to Landlord
pursuant to Section 17.1(b) hereof with the most senior lien on the Leasehold
Estate shall have the right to make the determinations and agreements on behalf
of Tenant under Article XXXVI, in each case, in accordance with and subject to
the terms and provisions of Article XXXVI.

(n)    Third Party Beneficiary. Each Permitted Leasehold Mortgagee (for so long
as such Permitted Leasehold Mortgagee holds a Permitted Leasehold Mortgage) is
an intended third party beneficiary of this Article XVII entitled to enforce the
same as if a party to this Lease.

(o)    The fee title to the Leased Property and the Leasehold Estate of Tenant
therein created by this Lease shall not merge but shall remain separate and
distinct, notwithstanding the acquisition of said fee title and said Leasehold
Estate by Landlord or by Tenant or by a third party, by purchase or otherwise.

17.2    Landlord Cooperation with Permitted Leasehold Mortgage.    If, in
connection with granting any Permitted Leasehold Mortgage or entering into an
agreement relating thereto, Tenant shall request in writing (i) reasonable
cooperation from Landlord or (ii) reasonable amendments or modifications to this
Lease, in each case required to comply with any reasonable request made by
Permitted Leasehold Mortgagee, Landlord shall reasonably cooperate with such
request, so long as (a) no Tenant Event of Default is continuing, (b) all
reasonable documented out-of-pocket costs and expenses incurred by Landlord,
including, but not limited to, its reasonable documented attorneys’ fees, shall
be paid by Tenant, and (c) any requested action, including any amendments or
modification of this Lease, shall not (i) increase Landlord’s monetary
obligations under this Lease by more than a de minimis extent, or increase
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obligations under this Lease in any material respect or decrease Tenant’s
obligations in any material respect, (ii) diminish Landlord’s rights under this
Lease in any material respect, (iii) adversely impact the value of the Leased
Property by more than a de minimis extent or otherwise have a more than de
minimis adverse effect on the Leased Property, Tenant or Landlord,
(iv) adversely impact Landlord’s (or any Affiliate of Landlord’s) tax treatment
or position, (v) result in this Lease not constituting a “true lease”, or
(vi) result in a default under the Fee Mortgage Documents.

ARTICLE XVIII

TRANSFERS BY LANDLORD

18.1    Transfers Generally. Landlord may sell, assign, transfer or convey,
without Tenant’s consent, the Leased Property, in whole (subject to exclusions
for assets that may not be transferred and that, in the aggregate, are de
minimis) but not in part (unless in part due to a transaction in which multiple
Affiliates of a single Person (collectively, “Affiliated Persons”) will own the
Leased Property as tenants in common, but only if this Lease remains as a
single, indivisible Lease and all such Affiliated Persons execute a joinder to
this Lease as “Landlord”, on a joint and several basis, the form and substance
of which joinder shall be reasonably satisfactory to Tenant and Landlord) to a
single transferee (or multiple Affiliated Persons, as applicable) (such
transferee, such tenants in common or any other permitted transferee of this
Lease, in each case, an “Acquirer”) and, in connection with such transaction, if
the Acquirer is not an Affiliate of Landlord, (a) Landlord shall amend the
minimum capital expenditure requirements hereunder (such amendment to be limited
solely to the amount of such minimum capital expenditure requirements) such
that, in the aggregate such minimum capital expenditure requirements hereunder
(taken together with the Minimum Cap Ex Requirements under and as defined in the
Other Leases, after taking into consideration applicable reductions of the
Minimum Cap Ex Requirements under and as defined in the Other Leases in the
amount of the Minimum Cap Ex Reduction Amount), shall be no greater than the
Minimum Cap Ex Requirements under this Lease and the Other Leases prior to such
sale, assignment, transfer or conveyance; and (b) such minimum capital
expenditure requirements shall be calculated on an individual, standalone basis
under this Lease and under the Other Leases; except, however, the foregoing
clauses (a) and (b) shall not apply to any transaction described in clause
(iii) below. If Landlord (including any permitted successor Landlord) shall
convey the Leased Property in accordance with the terms of this Lease, other
than as security for a debt, and the applicable Acquirer expressly assumes all
obligations of Landlord arising after the date of the conveyance, Landlord shall
thereupon be released from all future liabilities and obligations of Landlord
under this Lease arising or accruing from and after the date of such conveyance
or other transfer and all such future liabilities and obligations shall
thereupon be binding upon such applicable Acquirer. Without limitation of the
preceding provisions of this Section 18.1, any or all of the following shall be
freely permitted to occur: (i) any transfer of the Leased Property, in whole but
not in part (subject to exclusions for assets that may not be transferred and
that, in the aggregate, are de minimis), to a Fee Mortgagee in accordance with
the terms of this Lease (including any transfer of the direct or indirect equity
interests in Landlord), which transfer may include, without limitation, a
transfer by foreclosure brought by the Fee Mortgagee or a transfer by a deed in
lieu of foreclosure, assignment in lieu of foreclosure or other transaction in
lieu of foreclosure; (ii) a merger transaction or other similar disposition
affecting Landlord REIT or a sale by Landlord REIT directly or indirectly
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the Leased Property (so long as (x) upon consummation of such transaction, all
of the Leased Property (subject to exclusions for assets that may not be
transferred and that, in the aggregate, are de minimis) is owned by a single
Person (or multiple Affiliated Persons as tenants in common) and (y) such
surviving Person(s) execute(s) an assumption of this Lease and all Lease Related
Agreements to which Landlord is a party, assuming all obligations of Landlord
hereunder and thereunder (if any) (in the case of multiple Affiliated Persons,
on a joint and several basis), the form and substance of which assumption shall
be reasonably satisfactory to Tenant and Landlord); (iii) a sale/leaseback
transaction by Landlord with respect to the entire Leased Property (subject to
exclusions for assets that may not be transferred and that, in the aggregate,
are de minimis) (provided (x) the overlandlord under the resulting overlease
agrees that, in the event of a termination of such overlease, this Lease shall
continue in effect as a direct lease between such overlandlord and Tenant and
(y) the overlease shall not impose any new, additional or more onerous
obligations on Tenant without Tenant’s prior written consent in Tenant’s sole
discretion (and without limiting the generality of the foregoing, the overlease
shall not impose any additional monetary obligations (whether for payment of
rents under such overlease or otherwise) on Tenant), subject to and in
accordance with all of the provisions, terms and conditions of this Lease;
(iv) any sale of any indirect interest in the Leased Property that does not
change the identity of Landlord hereunder, including without limitation a
participating interest in Landlord’s interest under this Lease or a sale of
Landlord’s reversionary interest in the Leased Property so long as Landlord
remains the only party with authority to bind Landlord under this Lease, or
(v) a sale or transfer to an Affiliate of Landlord or a joint venture entity in
which any Affiliate of Landlord is the managing member or partner, so long as
(x) upon consummation of such transaction, all of the Leased Property (subject
to exclusions for assets that may not be transferred and that, in the aggregate,
are de minimis) is owned by a single Person or multiple Affiliated Persons as
tenants in common and (y) such Person(s) execute(s) an assumption of this Lease
and all Lease Related Agreements to which Landlord is a party, assuming all
obligations of Landlord hereunder and thereunder (if any) (in the case of
multiple Affiliated Persons, on a joint and several basis), the form and
substance of which assumption shall be reasonably satisfactory to Tenant and
Landlord. Notwithstanding anything to the contrary herein, Landlord shall not
sell, assign, transfer or convey the Leased Property, or assign this Lease, to
(I) a Tenant Prohibited Person or (II) any Person that is associated with a
Person who has been found “unsuitable”, denied a Gaming License or otherwise
precluded from participation in the Gaming Industry by any Gaming Authority
where such association would reasonably be expected to adversely affect, any of
Tenant’s or its Affiliates’ Gaming Licenses or Tenant’s or its Affiliates’
then-current standing with any Gaming Authority. Any transfer by Landlord under
this Article XVIII shall be subject to all applicable Legal Requirements,
including any Gaming Regulations, and no such transfer shall be effective until
any applicable approvals with respect to Gaming Regulations, if applicable, are
obtained. Tenant shall attorn to and recognize any successor Landlord in
connection with any transfer(s) permitted under this Article XVIII as Tenant’s
“landlord” with respect to the Facility.

18.2    Intentionally Omitted.

18.3    Intentionally Omitted.

18.4    Transfers to Tenant Competitors. In the event that, and so long as,
Landlord is a Tenant Competitor, then, notwithstanding anything herein to the
contrary, the following shall apply:

 

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(a)    Without limitation of Section 23.1(c) of this Lease, Tenant shall not be
required (1) to deliver the information required to be delivered to such
Landlord pursuant to Section 23.1(b) hereof to the extent the same would give
such Landlord a “competitive” advantage with respect to markets in which such
Landlord and Tenant or ERI might be competing at any time (it being understood
that such Landlord shall retain audit rights with respect to such information to
the extent required to confirm Tenant’s compliance with the terms of this Lease
(and such Landlord shall be permitted to comply with Securities Exchange
Commission, Internal Revenue Service and other legal and regulatory requirements
with regard to such information) and provided that appropriate measures are in
place to ensure that only such Landlord’s auditors (which for this purpose shall
be a “big four” firm designated by such Landlord) and attorneys (as reasonably
approved by Tenant) (and not Landlord or any Affiliates of such Landlord or any
direct or indirect parent company of such Landlord or any Affiliate of such
Landlord) are provided access to such information) or (2) to provide information
that is subject to the quality assurance immunity or is subject to
attorney-client privilege or the attorney work product doctrine.

(b)    Certain of Landlord’s consent or approval rights set forth in this Lease
shall be eliminated or modified, as follows:

(i)    Clause (vi) of the definition of Primary Intended Use shall be deleted,
and clause (v) of the definition of Primary Intended Use shall be modified to
read as follows: “(v) such other ancillary uses (including convention center and
related uses), but in all events consistent with the current use of the Leased
Property or any portion thereof as of the Commencement Date or with
then-prevailing or innovative or state-of-the-art hotel, resort and gaming
industry use, and/or”.

(ii)    Without limitation of the other provisions of Section 10.1, the approval
of Landlord shall not be required under (1) Section 10.1 for Alterations and
Capital Improvements in excess of Seventy-Five Million and No/100 Dollars
($75,000,000.00), and (2) Section 10.2(b) for approval of the Architect
thereunder.

(c)    With respect to all consent, approval and decision-making rights granted
to such Landlord under the Lease relating to competitively sensitive matters
pertaining to the use and operation of the Leased Property and Tenant’s business
conducted thereat (other than any right of Landlord to grant waivers and amend
or modify any of the terms of this Lease), such Landlord shall establish an
independent committee to evaluate, negotiate and approve such matters,
independent from and without interference from such Landlord’s management or
Board of Directors. Any dispute over whether a particular decision should be
determined by such independent committee shall be submitted for resolution by an
Expert pursuant to Section 34.2 hereof.

Tenant acknowledges and agrees that (x) as of the Commencement Date, Joliet
Partner is a minority interest holder in Landlord and does not Control Landlord;
and (y) for so long as the circumstances in clause (x) continue and the Joliet
Partner continues to own no more than twenty percent (20%) of the interest in
Landlord, neither Landlord nor any of its Affiliates shall be deemed to be a
Tenant Competitor solely as a result of the circumstances in clause (x).

 

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ARTICLE XIX

HOLDING OVER

If Tenant shall for any reason remain in possession of all or any portion of the
Leased Property after the Expiration Date without the consent, or other than at
the request, of Landlord, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as Rent each month an amount equal to (a) two
hundred percent (200%) of the monthly installment of Rent applicable as of the
Expiration Date, and (b) all Additional Charges and all other sums payable by
Tenant pursuant to this Lease. During such period of month-to-month tenancy,
Tenant shall be obligated to perform and observe all of the terms, covenants and
conditions of this Lease, but shall have no rights hereunder other than the
right, to the extent given by law to month-to-month tenancies, to continue its
occupancy and use of the Leased Property. Nothing contained herein shall
constitute the consent, express or implied, of Landlord to the holding over of
Tenant after the Expiration Date. This Article XIX is subject to Tenant’s rights
and obligations under Article XXXVI below, and it is understood and agreed that
any possession of the Leased Property after the Expiration Date pursuant to such
Article XXXVI shall not constitute a hold over subject to this Article XIX.

ARTICLE XX

RISK OF LOSS

The risk of loss or of decrease in the enjoyment and beneficial use of the
Leased Property or any part thereof as a consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Landlord and Persons claiming from, through or under Landlord)
during the Term is assumed by Tenant, and except as otherwise expressly provided
herein no such event shall entitle Tenant to any abatement of Rent.

ARTICLE XXI

INDEMNIFICATION

21.1    General Indemnification.

(i)    In addition to the other indemnities contained herein, and
notwithstanding the existence of any insurance carried by or for the benefit of
Landlord or Tenant, and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify, save harmless and defend Landlord
and its principals, partners, officers, members, directors, shareholders,
employees, managers, agents and servants (collectively, the “Landlord
Indemnified Parties”; each individually, a “Landlord Indemnified Party”), from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses, including reasonable documented attorneys’,
consultants’ and experts’ fees and expenses, imposed upon or incurred by or
asserted against the Landlord Indemnified Parties (excluding any indirect,
special, punitive or consequential damages as provided in Section 41.3) by
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resulting from Landlord’s gross negligence or willful misconduct or default
hereunder or the violation by Landlord of any Legal Requirement imposed against
Landlord (including any Gaming Regulations, but excluding any Legal Requirement
which Tenant is required to satisfy pursuant to the terms hereof or otherwise)):
(i) any accident, injury to or death of Persons or loss of or damage to property
occurring on or about the Facility (or any part thereof) or adjoining sidewalks
under the control of Tenant or any Subtenant; (ii) any use, misuse, non-use,
condition, maintenance or repair by Tenant of the Facility (or any part
thereof); (iii) any failure on the part of Tenant to perform or comply with any
of the terms of this Lease; (iv) any claim for malpractice, negligence or
misconduct committed by Tenant or any Person on or from the Facility (or any
part thereof); (v) the violation by Tenant of any Legal Requirement (including
any Gaming Regulations) or Insurance Requirements; (vi) the non-performance of
any contractual obligation, express or implied, assumed or undertaken by Tenant
with respect to the Facility (or any part thereof) or any business or other
activity carried on in relation to the Facility (or any part thereof) by Tenant;
(vii) any lien or claim that may be asserted against the Facility (or any part
thereof) arising from any failure by Tenant to perform its obligations hereunder
or under any instrument or agreement affecting the Facility (or any part
thereof); (viii) any third-party claim asserted against Landlord as a result of
Landlord having been a party to the MLSA (as defined in the Amended Original
Lease), so long as such claim does not result from Landlord’s actions; and
(ix) any matter arising out of Tenant’s (or any Subtenant’s) management,
operation, use or possession of the Facility (or any part thereof) or any
business or other activity carried on, at, from or in relation to the Facility
(or any part thereof) (including any litigation, suit, proceeding or claim
asserted against Landlord). Any amounts which become payable by Tenant under
this Article XXI shall be paid within ten (10) days after liability therefor is
determined by a final non appealable judgment or settlement or other agreement
of the Parties, and if not timely paid shall bear interest at the Overdue Rate
from the date of such determination to the date of payment. Tenant, with its
counsel and at its sole cost and expense, shall contest, resist and defend any
such claim, action or proceeding asserted or instituted against the Landlord
Indemnified Parties. For purposes of this Article XXI, any acts or omissions of
Tenant or any Subtenant or any Subsidiary, as applicable, or by employees,
agents, assignees, contractors, subcontractors or others acting for or on behalf
of Tenant or any Subtenant or any Subsidiary, as applicable (whether or not they
are negligent, intentional, willful or unlawful), shall be strictly attributable
to Tenant.

(ii)    Notwithstanding the existence of any insurance carried by or for the
benefit of Landlord or Tenant, and without regard to the policy limits of any
such insurance, Landlord shall protect, indemnify, save harmless and defend
Tenant and its principals, partners, officers, members, directors, shareholders,
employees, managers, agents and servants (collectively, the “Tenant Indemnified
Parties”; each individually, a “Tenant Indemnified Party”) from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses, including reasonable documented attorneys’, consultants’ and
experts’ fees and expenses, imposed upon or incurred by or asserted against the
Tenant Indemnified Parties (excluding any indirect, special, punitive or
consequential damages as provided in Section 41.3) by reason of (A) Landlord’s
gross negligence or willful misconduct hereunder, other than to the extent
resulting from Tenant’s gross negligence or willful misconduct or default
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by Landlord of any Legal Requirement imposed against Landlord (including any
Gaming Regulations, but excluding any Legal Requirement which Tenant is required
to satisfy pursuant to the terms hereof or otherwise). Any amounts which become
payable by Landlord under this Section 21.1(ii) shall be paid within ten
(10) days after liability therefor is determined by a final non appealable
judgment or settlement or other agreement of the Parties, and if not timely paid
shall bear interest at the Overdue Rate from the date of such determination to
the date of payment. Landlord, with its counsel and at its sole cost and
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against the Tenant Indemnified Parties. For purposes of
this Article XXI, any acts or omissions of Landlord, or by employees, agents,
contractors, subcontractors or others acting for or on behalf of Landlord
(whether or not they are negligent, intentional, willful or unlawful), shall be
strictly attributable to Landlord.

21.2    Encroachments, Restrictions, Mineral Leases, etc. If any of the Leased
Improvements shall encroach upon any property, street or right-of-way, or shall
violate any restrictive covenant or other similar agreement affecting the Leased
Property, or any part thereof, or shall impair the rights of others under any
easement or right-of-way to which the Leased Property is subject, or the use of
the Leased Property or any portion thereof is impaired, limited or interfered
with by reason of the exercise of the right of surface entry or any other
provision of a lease or reservation of any oil, gas, water or other minerals,
then, promptly upon the request of Landlord or any Person affected by any such
encroachment, violation or impairment (collectively, a “Title Violation”),
Tenant, subject to its right to contest the existence of any such encroachment,
violation or impairment to the extent provided in this Lease, and without
limitation of any of Tenant’s obligations otherwise set forth in this Lease (to
the extent applicable), shall (i) in the case of any third party claims
(excluding, for the avoidance of doubt, those made by Affiliates of Landlord)
based on or resulting from such Title Violation, protect, indemnify, save
harmless and defend the Landlord Indemnified Parties from and against, with
respect to matters first arising from and after the Commencement Date, one
hundred percent (100%) of, and with respect to matters existing as of the
Commencement Date, fifty percent (50%) of, any and all losses, liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including reasonable documented attorneys’, consultants’ and experts’ fees and
expenses) based on or arising by reason of any such third party claim based on
or resulting from such Title Violation; provided, however, that Tenant shall be
required to so protect, indemnify, save harmless and defend the Landlord
Indemnified Parties only to the extent that the proceeds from Landlord’s title
insurance policies are not sufficient to cover such losses, liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(it being understood that if Tenant pays any such amounts that are contemplated
hereunder to be covered by Landlord’s title insurance policies, then Tenant
shall be subrogated to all or fifty percent (50%) of (as applicable) the rights
of Landlord against its title insurance carriers and shall be entitled to, with
respect to matters first arising from and after the Commencement Date, one
hundred percent (100%) of, and with respect to matters existing as of the
Commencement Date, fifty percent (50%) of, the proceeds (net of Landlord’s
out-of-pocket costs incurred in obtaining such proceeds) from such title
insurance policy related to such Title Violation; except, however, Tenant shall
not be entitled to receive proceeds from any such title insurance policies in
excess of amounts actually paid by Tenant in connection therewith) and (ii) to
the extent that no third party makes a claim with respect to such Title
Violation, Landlord shall not require Tenant to cure any of the foregoing
matters unless it would have a material adverse effect on the Leased Property
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of this Lease, and in the event Tenant so cures any such matters, (A) Tenant
shall bear with respect to matters first arising from and after the Commencement
Date, one hundred percent (100%) of, and with respect to matters existing as of
the Commencement Date, fifty percent (50%) of, the cost of such cure (after
giving effect to such title insurance proceeds), and (B) Tenant shall be
subrogated to all or fifty percent (50%) of (as applicable) the rights of
Landlord against its title insurance carriers and shall be entitled to, with
respect to matters first arising from and after the Commencement Date, one
hundred percent (100%) of, and with respect to matters existing as of the
Commencement Date, fifty percent (50%) of, the proceeds (net of Landlord’s
out-of-pocket costs incurred in obtaining such proceeds) from such title
insurance policy related to such Title Violation; except, however, Tenant shall
not be entitled to receive proceeds from any such title insurance policies in
excess of amounts actually paid by Tenant in connection therewith. In the event
of an adverse final determination with respect to any such encroachment,
violation or impairment, (a) either of Tenant or Landlord shall obtain valid and
effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation or impairment, or (b) Tenant
shall make such changes in the Leased Improvements, and take such other actions,
in each case reasonably acceptable to Landlord, as Tenant in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
applicable portion of the Leased Property for the Primary Intended Use
substantially in the manner and to the extent the applicable portion of the
Leased Property was operated prior to the assertion of such encroachment,
violation or impairment; provided that, (i) unless required under an adverse
final determination of a claim brought by a third party other than Landlord or
any Affiliate of Landlord, Tenant shall not be required to obtain any such
waivers or settlements, make any such changes or take any such other actions
unless such encroachment, violation or impairment otherwise would have a
material adverse effect on the Leased Property following expiration or
termination of this Lease, and (ii) Tenant shall bear with respect to matters
first arising from and after the Commencement Date, one hundred percent (100%)
of, and with respect to matters existing as of the Commencement Date, fifty
percent (50%) of, the cost of obtaining such waivers or settlements, making any
such changes or taking any such other actions. Tenant’s obligations under this
Section 21.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and,
to the extent of any recovery under any title insurance policy, Tenant shall be
entitled to, with respect to matters first arising from and after the
Commencement Date, one hundred percent (100%) of, and with respect to matters
existing as of the Commencement Date, fifty percent (50%) of any sums recovered
by Landlord under any such policy of title or other insurance (net of Landlord’s
out-of-pocket costs incurred in seeking such recovery) up to the maximum amount
paid by Tenant in accordance with this Section 21.2 and Landlord, upon request
by Tenant, shall pay over to Tenant the applicable portion of such sum paid to
Landlord in recovery on such claim. Landlord agrees to use reasonable efforts to
seek recovery under any policy of title or other insurance under which Landlord
is an insured party for all losses, liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable documented
attorneys’, consultants’ and experts’ fees and expenses) based on or arising by
reason of any such encroachment, violation or impairment as set forth in this
Section 21.2; provided, however, that in no event shall Landlord be obligated to
institute any litigation, arbitration or other legal proceedings in connection
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satisfied that Tenant has the financial resources needed to fund all or fifty
percent (50%) (as applicable) of the expenses of such litigation and Tenant and
Landlord have agreed upon the terms and conditions on which such funding will be
made available by Tenant, including, but not limited to, the mutual approval of
a litigation budget.

ARTICLE XXII

TRANSFERS BY TENANT

22.1    Subletting and Assignment. Other than as expressly provided herein
(including in respect of Permitted Leasehold Mortgages under Article XVII, and
the permitted Subleases and assignments described in this Article XXII), Tenant
shall not, without Landlord’s prior written consent (which, except as
specifically set forth herein, may be withheld in Landlord’s sole and absolute
discretion), (x) voluntarily, by operation of law or otherwise assign (which
term includes any transfer, sale, encumbering, pledge or other transfer or
hypothecation), in whole or in part, this Lease or Tenant’s Leasehold Estate,
(y) let or sublet (or sub-sublet, as applicable) all or any part of the
Facility, or (z) engage the services of any Person (other than a wholly owned
Subsidiary of ERI) for the management of the Facility, nor shall Tenant cause,
suffer or permit any of the foregoing to occur. Tenant acknowledges that
Landlord is relying upon the expertise of Tenant in the operation of the
Facility hereunder and that Landlord entered into this Lease with the
expectation that Tenant would remain in and operate the Facility during the
entire Term. Any Change of Control (including any Change of Control of
Guarantor) (or, subject to Section 22.2 below, any transfer of direct or
indirect interests in Tenant that results in a Change of Control, including any
Change of Control of Guarantor) shall constitute an assignment of Tenant’s
interest in this Lease within the meaning of this Article XXII and the
provisions requiring consent contained herein shall apply thereto.
Notwithstanding anything set forth herein, except as expressly provided in
Section 22.2(i) or Section 14 of the Guaranty, no assignment or direct or
indirect transfer (nor any Change of Control) of any nature (whether or not
permitted hereunder) shall result in the termination, release, reduction or
limitation of any of Guarantor’s obligations or liabilities under the Guaranty,
it being understood that, except as expressly provided in Section 14 of the
Guaranty, all of Guarantor’s obligations and liabilities in respect of the
Guaranty shall continue unabated and in full force and effect in accordance with
the terms of the Guaranty, notwithstanding any such transfer, and shall not
terminate or be released or reduced in any respect.

22.2    Permitted Assignments and Transfers. Subject to compliance with the
provisions of Section 22.4, as applicable, and Article XL, Tenant, without the
consent of Landlord, may:

(i)    (a) subject to and in accordance with Section 17.1, assign this Lease
(and/or permit the assignment of direct or indirect interests in Tenant), in
whole, but not in part, to a Permitted Leasehold Mortgagee for collateral
purposes pursuant to a Permitted Leasehold Mortgage, (b) assign this Lease
(and/or permit the assignment of direct or indirect interests in Tenant) to such
Permitted Leasehold Mortgagee, its Permitted Leasehold Mortgagee Designee or any
other purchaser following any foreclosure or transaction in lieu of foreclosure
of the Permitted Leasehold Mortgage, and (c) assign this Lease (and/or direct or
indirect interests in Tenant) to any subsequent purchaser thereafter (provided
such subsequent purchaser is not ERI, any Affiliate of ERI or any other
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Agent), in each case, solely in connection with or following a foreclosure of,
or transaction in lieu of foreclosure of, a Permitted Leasehold Mortgage;
provided, however, that immediately upon giving effect to any Lease Foreclosure
Transaction, (1) subject to the last sentence of this Section 22.2, the
following conditions (x), (y) and (z) shall be satisfied (the “Tenant Transferee
Requirement”): (x) a Qualified Transferee will be the replacement Tenant
hereunder or will Control, and own not less than fifty-one percent (51%) of all
of the direct and indirect economic and beneficial interests in, Tenant or such
replacement Tenant, (y) a replacement lease guarantor that is a Qualified
Replacement Guarantor will have provided a Replacement Guaranty of the Lease,
and (z) the Leased Property shall be managed pursuant to a Replacement
Management Agreement by a Qualified Replacement Manager or a manager that is
expressly approved in writing by Landlord; (2) the transferee and any of its
applicable Affiliates shall have obtained all necessary Gaming Licenses as
required under applicable Legal Requirements (including Gaming Regulations) and
all other licenses, approvals, and permits required for such transferee to be
Tenant under this Lease; (3) a single Person or multiple Affiliated Persons as
tenants in common (each of which satisfy the Tenant Transferee Requirement)
(provided such Affiliated Persons have executed a joinder to this Lease as the
“Tenant” on a joint and several basis, the form and substance of which joinder
shall be reasonably satisfactory to Landlord) shall own, directly, all of
Tenant’s Leasehold Estate and be Tenant under this Lease; and (4) the
Foreclosure Successor Tenant shall (i) provide written notice to Landlord (x) at
least thirty (30) days prior to the closing of the applicable Lease Foreclosure
Transaction, specifying in reasonable detail the nature of such Lease
Foreclosure Transaction and such additional information as Landlord may
reasonably request in order to determine that the requirements of this
Section 22.2(i) are satisfied, which notice shall be accompanied by proposed
forms of the Lease Assumption Agreement and the amendment to this Lease
contemplated by the third (3rd) paragraph prior to the end of this Section 22.2,
and the forms of proposed Replacement Guaranty and Replacement Management
Agreement, (y) at the time of execution of any definitive agreement with respect
to such Lease Foreclosure Transaction, and (z) at the time of consummation of
such Lease Foreclosure Transaction, (ii) assume (or, in the case of a
foreclosure on or transfer of direct or indirect interests in Tenant, cause
Tenant to reaffirm) in writing (in a form reasonably acceptable to Landlord) the
obligations of Tenant under this Lease (a “Lease Assumption Agreement”), (iii)
provide Landlord with a copy of any such Lease Assumption Agreement and all
other documents required under this Section 22.2(i), as executed at such closing
promptly following such closing, and (iv) provide Landlord with a customary
opinion of counsel reasonably satisfactory to Landlord with respect to the
execution, authorization, and enforceability and other customary matters;

(ii)    Subject to providing Landlord (i) written notice at least thirty
(30) days prior to the closing of the applicable assignment, specifying in
reasonable detail the nature of such transaction and such additional information
as Landlord may reasonably request in order to determine that the requirements
of this Section 22.2(ii) are satisfied in connection with such assignment, which
notice shall be accompanied by the proposed form of the assumption agreement
whereby such assignee assumes the obligations of Tenant under this Lease (the
form and substance of which is to be reasonably approved by Landlord prior to
the effectuation thereof), (ii) written notice at the time of execution of any
definitive agreement with respect to such assignment, and (iii) with a copy of
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agreement and all other documents effecting such assignment, as executed at such
closing within two (2) days following the closing of such assignment, assign
this Lease in its entirety to an Affiliate of Tenant, to ERI or to an Affiliate
of ERI, provided, that, the assignee, following the effectuation of such
assignment, shall directly or indirectly own or have at least the same rights to
all Tenant’s Property and other assets and properties (including, without
limitation, rights under licenses and with respect to Intellectual Property)
required to lease and operate the Facilities as held by Tenant immediately prior
to such assignment (other than Tenant’s Property and other assets and properties
which in the aggregate are de minimis) (it being understood, for the avoidance
of doubt, that none of the foregoing shall result in Tenant being released from
this Lease or any of the other Lease Related Agreements);

(iii)    transfer direct or indirect interests in Tenant or its direct or
indirect parent(s) on a nationally-recognized exchange; provided, however, that,
in the event of a Change of Control of ERI, then the qualifications, quality and
experience of the management of Tenant, and the quality of the management and
operation of the Facility (taken as a whole with the Regional Facilities) must
in each case be generally consistent with or superior to that which existed
prior to such Change of Control (it being agreed that Tenant shall give written
notice to Landlord (x) no less than thirty (30) days’ prior to any transaction
or series of related transactions which would result in a Change of Control of
ERI and Tenant shall furnish Landlord with such information and materials
relating to the proposed transaction as Landlord may reasonably request in
connection with making its determination under this clause (iii) (to the extent
in Tenant’s possession or reasonable control, and subject to customary and
reasonable confidentiality restrictions in connection therewith), and if
Landlord determines that the quality of the management and operation of the
Leased Property will not meet such requirement, then such determination shall be
resolved pursuant to Section 34.2 (except, however, for this purpose, the
fifteen (15) day good faith negotiating period contemplated by Section 34.2
shall not apply), and (y) at the time of execution of any definitive agreement
with respect to such Change of Control);

(iv)    transfer any direct or indirect interests in Tenant so long as a Change
of Control does not result, provided Landlord shall be given prior written
notice of any transfer of ten percent (10%) or more (in the aggregate) direct or
indirect ownership interest in Tenant of which transfer Tenant or ERI has actual
knowledge other than any such transfer on a nationally recognized exchange;

(v)    transfer direct or indirect interests in ERI or cause, suffer or permit a
Change of Control with respect to ERI; provided, however, that in the event of a
Change of Control of ERI, the qualifications, quality and experience of the
management of Tenant and Guarantor, and the quality of the management and
operation of the Facility (taken as a whole with the Regional Facilities) must
in each case be generally consistent with or superior to that which existed
prior to such Change of Control (it being agreed that Tenant shall (x) give no
less than thirty (30) days’ prior notice to Landlord of any transaction or
series of related transactions which would result in a Change of Control of ERI
and Tenant shall furnish Landlord with such information and materials relating
to the proposed transaction as Landlord may reasonably request in connection
with making its determination under this clause (v) (to the extent in Tenant’s
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control, subject to customary and reasonable confidentiality restrictions in
connection therewith), and if Landlord determines that the quality of the
management and operation of the Facility will not meet such requirement, then
such determination shall be resolved pursuant to Section 34.2 (except, however,
for this purpose, the fifteen (15) day good faith negotiating period
contemplated by Section 34.2 shall not apply) and, for the avoidance of doubt,
(1) in the case of a Change of Control of ERI, ERI shall remain Guarantor, and
(2) in all events, all of Guarantor’s obligations and liabilities in respect of
the Guaranty shall continue unabated and in full force and effect in accordance
with the terms thereof and shall not terminate or be released or reduced in any
respect, except solely as and to the extent provided in Section 14 of the
Guaranty, and (y) give notice to Landlord of the applicable transaction or
series of transactions at the time of execution of any definitive agreement with
respect to such Change of Control);

(vi)    transfer direct or indirect interests in Tenant or its direct or
indirect parent(s) in connection with a transfer of all of the assets (other
than assets which in the aggregate are de minimis) of ERI; provided, however,
that ERI shall not be released from its obligations under the Guaranty and the
applicable transferee shall assume, jointly and severally with ERI (in a form
reasonably satisfactory to Landlord), all of ERI’s obligations under the
Guaranty; and provided, further, that all of the following requirements shall
have been complied with in all respects:

(A) the Board of Directors of Guarantor shall have determined that the
qualifications, quality and experience of the management of Guarantor and the
quality of the management and operation of the Facility (taken as a whole with
the Regional Facilities) will, in each case, be generally consistent with or
superior to that which existed prior to the applicable transaction(s) giving
rise to such transfer (it being agreed that Guarantor shall give notice to
Landlord of such proposed transfer in accordance with clause (C) below, and if
Landlord determines that requirements in this clause (A) will not be satisfied,
then such determination shall be resolved pursuant to Section 34.2 hereof;
provided that, for purposes of this clause (A), the fifteen (15) day good faith
negotiating period contemplated by Section 34.2 hereof shall not apply);

(B) the Board of Directors of Guarantor shall have determined that, following
the occurrence of such transfer, the successor Guarantor shall be sufficiently
creditworthy, and shall have sufficient wherewithal and ability, so as to be
able to assume and satisfy all obligations of Guarantor in respect of the
Guaranty;

(C) Guarantor shall provide written notice to Landlord at least thirty (30) days
prior to the proposed transfer, specifying in reasonable detail the nature of
such transfer; and

(D) (i) the assignee or transferee shall be the owner, directly or indirectly,
of all of the direct and indirect assets of ERI (other than assets that are, in
the aggregate, de minimis) and (ii) the assignee or transferee shall assume the
obligations of Guarantor under the Guaranty and shall agree in an agreement in
form reasonably acceptable to Landlord to be bound by the Guaranty from and
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transfer (which agreement shall be furnished to Landlord for review and approval
no less than thirty (30) days prior to the proposed effectuation thereof), and
Guarantor shall provide Landlord with a copy of such agreement, together with
copies of all other documents effecting such assignment or transfer, within ten
(10) days following the date of such assignment or transfer;

(vii)     transfer and sell the entire Leasehold Estate with respect to the
Facility (inclusive of Tenant’s rights in any related Tenant Material Capital
Improvements) (any transfer in compliance with this Section 22.2(vii), an “L1
Transfer”); provided, however, that immediately upon giving effect to any L1
Transfer, the following conditions shall be satisfied, (1) subject to the last
paragraph of this Section 22.2, (x) an L1 Qualified Transferee shall be the L1
Successor Tenant with respect to the Facility and (y) if such L1 Successor
Tenant has a Parent Company, then the Parent Company of such L1 Successor Tenant
shall have provided a Replacement Guaranty (L1 Transfer) with respect to the
applicable L1/L2 Severance Lease; (2) such L1 Successor Tenant and the Landlord
shall have entered into a L1/L2 Severance Lease in accordance with Section 22.9;
(3) Tenant shall (i) have provided written notice to Landlord at least thirty
(30) days prior to the closing of the applicable L1 Transfer, specifying in
reasonable detail the nature of such L1 Transfer, which notice shall be
accompanied by proposed forms of the L1/L2 Severance Lease and Replacement
Guaranty (L1 Transfer) (if applicable), (ii) have furnished Landlord with the
applicable information listed on Exhibit K hereto with respect to such L1
Transfer, (iii) have furnished Landlord with such additional information as
Landlord may reasonably request in order to determine that the requirements of
this Section 22.2(vii) are satisfied, and (iv) provide Landlord with a copy of
all documents required under this Section 22.2(vii) as executed or delivered in
connection with such closing promptly following such closing; (4) the transferee
and any of its applicable Affiliates shall have obtained all necessary Gaming
Licenses as required under applicable Legal Requirements (including Gaming
Regulations) and all other licenses, approvals, and permits required for such
transferee to be the tenant under the applicable L1/L2 Severance Lease; (5) such
L1 Successor Tenant shall not be an Affiliate of Tenant; and (6) the applicable
2018 Facility EBITDAR of Tenant for the Facility, when taken together with the
applicable 2018 Facility EBITDAR of Regional Tenant for each Regional Facility
transferred by Regional Tenant in accordance with Section 22.2(vii) of the
Regional Lease, shall not exceed the L1 Transfer Cap Amount; and/or

(viii)    transfer and sell the entire Leasehold Estate with respect to the
Facility (inclusive of Tenant’s rights in any related Tenant Material Capital
Improvements) (any transfer in compliance with this Section 22.2(viii), an “L2
Transfer”); provided, however, that immediately upon giving effect to any L2
Transfer, the following conditions shall be satisfied, (1) subject to the last
paragraph of Section 22.2, (x) an L2 Qualified Transferee shall be the L2
Successor Tenant and (y) if such L2 Successor Tenant has a Parent Company, then
the Parent Company of such L2 Successor Tenant shall have provided a Replacement
Guaranty (L2 Transfer) or other credit support reasonably acceptable to Landlord
with respect to the applicable L1/L2 Severance Lease; (2) the applicable L2
Successor Tenant and the Landlord shall have entered into a L1/L2 Severance
Lease in accordance with Section 22.9; (3) Tenant shall (i) have provided
written notice to Landlord at least thirty (30) days prior to the closing of the
applicable L2 Transfer, specifying in

 

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reasonable detail the nature of such L2 Transfer, which notice shall be
accompanied by proposed forms of the L1/L2 Severance Lease, (ii) have furnished
Landlord with the applicable information listed on Exhibit K hereto with respect
to such L2 Transfer, (iii) have furnished Landlord with such additional
information as Landlord may reasonably request in order to determine that the
requirements of this Section 22.2(viii) are satisfied, and (iv) provide Landlord
with a copy of all documents required under this Section 22.2(viii) as executed
or delivered in connection with such closing promptly following such closing;
(4) the transferee and any of its applicable Affiliates shall have obtained all
necessary Gaming Licenses as required under applicable Legal Requirements
(including Gaming Regulations) and all other licenses, approvals, and permits
required for such transferee to be the tenant under the applicable L1/L2
Severance Lease; (5) such L2 Successor Tenant shall not be an Affiliate of
Tenant; and (6) the applicable 2018 Facility EBITDAR of Tenant for the Facility,
when taken together with the applicable 2018 Facility EBITDAR of Regional Tenant
for each Regional Facility transferred by Regional Tenant in accordance with
Section 22.2(viii) of the Regional Lease, shall not exceed the L2 Transfer Cap
Amount.

In connection with any transaction permitted pursuant to Section 22.2(i), the
applicable Foreclosure Successor Tenant and Landlord shall make such amendments
and other modifications to this Lease as are reasonably requested by either such
party as needed to give effect to such transaction and such technical amendments
as may be reasonably necessary or appropriate in connection with such
transaction including technical changes in the provisions of this Lease
regarding delivery of Financial Statements from Tenant, CEOC and ERI to reflect
the changed circumstances of Tenant, any interest holders in Tenant or Guarantor
(provided, that, in all events, any such amendments or modifications shall not
increase any Party’s monetary obligations under this Lease by more than a de
minimis extent or any Party’s non-monetary obligations under this Lease in any
material respect or diminish any Party’s rights under this Lease in any material
respect; provided, further, it is understood that delivery by any applicable
Qualified Replacement Guarantor or parent of a replacement Tenant of Financial
Statements and other reporting consistent with the requirements of Article XXIII
hereof shall not be deemed to increase Tenant’s obligations or decrease Tenant’s
rights under this Lease). After giving effect to any such transaction, unless
the context otherwise requires, references to Tenant shall be deemed to refer to
the Foreclosure Successor Tenant permitted under this Section 22.2.

Notwithstanding anything otherwise contained in this Lease, Landlord and Tenant
acknowledge that Landlord entered into this Lease with the expectation that,
subject to Section 7.2(g), the Leased Property would be operated under the
Brands and other Property Specific IP. Accordingly, absent Landlord’s express
written consent, no assignment or other transfer shall be permitted under
Section 22.2(i) (unless, upon giving effect to such assignment or other
transfer, the Leased Property continues to be operated under the Brands (subject
to Section 7.2(g)) and other Property Specific IP).

Notwithstanding anything to the contrary herein, any transfer of Tenant’s
interest in this Lease or the Leasehold Estate shall be subject to compliance
with all Gaming Regulations, including receipt of all applicable Gaming Licenses
by Tenant and/or the Qualified Transferee, the L1 Qualified Transferee or the L2
Qualified Transferee, as applicable (and their applicable Affiliates), and shall
not result in the loss or violation of any Gaming License for the Leased
Property.

 

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22.3    Permitted Sublease Agreements. Notwithstanding the provisions of
Section 22.1, but subject to compliance with the provisions of this Section 22.3
and of Section 22.4 and Article XL, provided that no Tenant Event of Default
shall have occurred and be continuing, Tenant may enter into any Sublease
(including sub-subleases, license agreements and other occupancy arrangements)
without the consent of Landlord, provided, that, (i) Tenant is not released from
any of its obligations under this Lease, (ii) such Sublease is made for bona
fide business purposes consistent with the Primary Intended Use, and is not
designed with the intent to avoid payment of Variable Rent or otherwise avoid
any of the requirements or provisions of this Lease, (iii) such transaction is
not designed with the intent to frustrate Landlord’s ability to enter into a new
Lease of the Leased Property with a third party following the Expiration Date,
(iv) such transaction shall not result in a violation of any Legal Requirements
(including Gaming Regulations) relating to the operation of the Facility,
including any Gaming Facilities, (v) any Sublease of all or substantially all of
the Leased Property with respect to the Facility shall be subject to the consent
of Landlord and the applicable Fee Mortgagee unless, subject to the further
requirements set forth in the final paragraph of this Section 22.3, the 2018
Facility EBITDAR of Tenant generated by the Facility when taken together with
the “2018 Facility EBITDAR” (as defined in the Regional Lease) of Regional
Tenant for all Regional Facilities then subleased by Regional Tenant pursuant to
Section 22.3(v) of the Regional Lease, in the aggregate, does not exceed the
Permitted Facility Sublease Cap Amount (a Sublease permitted under this
Section 22.3(v) without Landlord’s consent is referred to as a “Permitted
Facility Sublease”), and (vi) the Subtenant and any of its applicable Affiliates
shall have obtained all necessary Gaming Licenses as required under applicable
Legal Requirements (including Gaming Regulations) in connection with such
Sublease; provided, further, that, notwithstanding anything otherwise set forth
herein, the following are expressly permitted without such consent: (A) the
Specified Subleases and any renewals or extensions in accordance with their
terms, respectively, or non-material modifications thereto and (B) any Subleases
to Affiliates of Tenant that are necessary or appropriate for the operation of
the Facility, including any Gaming Facilities, in connection with licensing
requirements (e.g., gaming, liquor, etc.) (provided the same are expressly
subject and subordinate to this Lease); provided, further, however, that,
notwithstanding anything otherwise set forth herein, the portion(s) of the
Leased Property subject to any Subleases (other than the Specified Subleases,
Subleases to Affiliates of ERI, a Permitted Facility Sublease and any Permitted
Sportsbook Sublease) shall not be used for Gaming purposes or other core
functions or spaces at the Facility (e.g., hotel room areas) (and any such
Subleases to persons that are not Affiliates of ERI in respect of Leased
Property used or to be used in whole or in part for Gaming purposes or other
core functions or spaces (e.g., hotel room areas), other than Permitted Facility
Subleases and Permitted Sportsbook Subleases, shall be subject to Landlord’s
prior written consent not to be unreasonably withheld). If reasonably requested
by Tenant in respect of a Subtenant (including any sub-sublessee, as applicable)
permitted hereunder that is neither a Subsidiary nor an Affiliate of Tenant or
Guarantor, with respect to a Material Sublease, Landlord and any such Subtenant
(or sub-sublessee, as applicable) shall enter into a subordination,
non-disturbance and attornment agreement with respect to such Material Sublease
in a form reasonably satisfactory to Landlord, Tenant and the applicable
Subtenant (or sub-sublessee, as applicable), which subordination,
non-disturbance and attornment agreement shall, upon the request of Tenant,
provide that, following a termination of the Lease, any lender or provider of
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as applicable) that would be a Permitted Leasehold Mortgagee (disregarding for
this purpose, however, the requirement that the liens created by a Permitted
Leasehold Mortgage encumber the entirety of Tenant’s Leasehold Estate, so long
as the applicable subleasehold mortgage covers all of the applicable Subtenant’s
subleasehold estate (other than items that are not capable of being mortgaged
and that, in the aggregate, are de minimis)) if such financing was incurred by
Tenant shall be entitled to substantially similar rights and benefits (and be
subject to substantially similar obligations) with respect to such Material
Sublease as a Permitted Leasehold Mortgagee (disregarding for this purpose,
however, the requirement that the liens created by a Permitted Leasehold
Mortgage encumber the entirety of Tenant’s Leasehold Estate, so long as the
applicable subleasehold mortgage covers all of the applicable Subtenant’s
subleasehold estate (other than items that are not capable of being mortgaged
and that, in the aggregate, are de minimis)) is entitled (and subject) with
respect to this Lease under Article XVII (and if a Fee Mortgage is then in
effect, Landlord shall use reasonable efforts to seek to cause the Fee Mortgagee
to enter into a subordination, non-disturbance and attornment agreement
substantially in the form customarily entered into by such Fee Mortgagee at the
time of request with similar subtenants (subject to adjustments and
modifications arising out of the specific nature and terms of this Lease and/or
the applicable Sublease, including the provisions described above relating to
any lender or provider of financing to such Subtenant (or sub-sublessee, as
applicable))). After a Tenant Event of Default has occurred and while it is
continuing, Landlord may collect rents from any Subtenant and apply the net
amount collected to the Rent, but no such collection shall be deemed (A) a
waiver by Landlord of any of the provisions of this Lease, (B) the acceptance by
Landlord of such Subtenant as a tenant or (C) a release of Tenant from the
future performance of its obligations hereunder. Notwithstanding anything
otherwise set forth herein, Landlord shall have no obligation to enter into a
subordination, non-disturbance and attornment agreement (or seek to cause a Fee
Mortgagee to enter into a subordination, non-disturbance and attornment
agreement) with any Subtenant with respect to a Sublease (1) the term of which
extends beyond the then Stated Expiration Date of this Lease, unless the
applicable Sublease is on commercially reasonable terms at the time in question
taking into consideration, among other things, the identity of the Subtenant,
the extent of the Subtenant’s investment into the subleased space, the term of
such Sublease and Landlord’s interest in such space (including the resulting
impact on Landlord’s ability to lease the Leased Property on commercially
reasonable terms after the Term of this Lease), (2) that constitutes a
management agreement or similar arrangement to operate but not occupy as a
tenant any particular space (it being understood that a Permitted Facility
Sublease shall not constitute such a management arrangement) or (3) that
constitutes a Permitted Sportsbook Sublease. Tenant shall furnish Landlord with
a copy of each Material Sublease that Tenant enters into promptly following the
making thereof (irrespective of whether Landlord’s prior approval was required
therefor). In addition, promptly following Landlord’s request therefor, Tenant
shall furnish to Landlord (to the extent in Tenant’s possession or under
Tenant’s reasonable control) copies of all other Subleases with respect to the
Leased Property specified by Landlord. Without limitation of the foregoing,
Tenant acknowledges it has furnished to Landlord a subordination agreement dated
as of the Commencement Date that is binding on all Subtenants that are
Subsidiaries or Affiliates of Tenant or Guarantor, pursuant to which
subordination agreement, among other things, all such Subtenants have
subordinated their respective Subleases to this Lease and all of the provisions,
terms and conditions hereof. Further, Tenant hereby represents and warrants to
Landlord that as of the Commencement Date, there exists no Sublease other than
the Specified Subleases.

 

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Tenant shall give Landlord at least six (6) Business Days prior written notice
before entering into, amending or supplementing any Permitted Sportsbook
Sublease, which notice shall be accompanied by the proposed form of such
Permitted Sportsbook Sublease or amendment or supplement to any Permitted
Sportsbook Sublease, as applicable. In addition, Tenant shall furnish Landlord
reasonably promptly with such other materials as Landlord may reasonably request
in order to determine that the requirements of this Lease with respect to such
Permitted Sportsbook Sublease are satisfied. Reasonably promptly following entry
into any such Permitted Sportsbook Sublease, Tenant shall provide Landlord with
a copy of the executed Permitted Sportsbook Sublease. Additionally, Tenant shall
furnish Landlord with copies of any amendments of, or supplements to, any
Permitted Sportsbook Sublease with reasonable promptness after the execution
thereof (it being understood that no such amendment or supplement shall be
permitted unless, after giving effect thereto, the applicable Permitted
Sportsbook Sublease continues to comply with all applicable provisions, terms
and conditions of this Lease).

Tenant shall give Landlord at least thirty (30) days prior written notice before
entering into a Permitted Facility Sublease, which notice shall be accompanied
by the proposed form of such Permitted Facility Sublease. In addition, Tenant
shall furnish Landlord reasonably promptly with (x) the applicable information
listed on Exhibit K hereto with respect to such Permitted Facility Sublease
transaction and (y) such other materials as Landlord may reasonably request in
order to determine that the requirements of this Section 22.3 with respect to
such Permitted Facility Sublease are satisfied. Reasonably promptly following
entry into any such Permitted Facility Sublease, Tenant shall provide Landlord
with a copy of the executed Sublease. Additionally, to the extent not publicly
filed, Tenant shall furnish Landlord with copies of any amendments of, or
supplements to, any Permitted Facility Sublease with reasonable promptness after
the execution thereof. Neither the Sublessee under any Permitted Facility
Sublease nor any successor or assignee or sublessee of such Sublessee shall be
an Affiliate of Tenant, no Permitted Facility Sublease shall constitute a
management agreement or similar arrangement to operate but not occupy as a
tenant any particular space, and any Permitted Facility Sublease shall demise
all of the Leased Property pertaining to the Facility (other than de minimis
portions thereof that are not capable of being subleased).

22.4    Required Subletting and Assignment Provisions. Any Sublease permitted
hereunder and entered into after the Commencement Date must provide that:

(i)    the use of the Leased Property (or portion thereof) thereunder shall not
conflict with any Legal Requirement or any other provision of this Lease;

(ii)    in the event of cancellation or termination of this Lease for any reason
whatsoever or of the surrender of this Lease (whether voluntary, involuntary or
by operation of law) prior to the expiration date of such Sublease, including
extensions and renewals granted thereunder without replacement of this Lease by
a New Lease pursuant to Section 17.1(f), then, subject to Article XXXVI and
without affecting the provisions of any subordination, non-disturbance and
attornment agreement entered into between Landlord and such Subtenant, (a) upon
the request of Landlord (in Landlord’s discretion), the Subtenant shall make
full and complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance reasonably satisfactory to Landlord and which the Subtenant shall
execute and

 

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deliver within five (5) days after request by Landlord and the Subtenant shall
waive the provisions of any law now or hereafter in effect which may give the
Subtenant any right of election to terminate the Sublease or to surrender
possession in the event any proceeding is brought by Landlord to terminate this
Lease and (b) to the extent such Subtenant (and each subsequent subtenant
separately permitted hereunder) is required to attorn to Landlord pursuant to
subclause (a) above, the aforementioned attornment agreement shall recognize the
right of the subtenant (and such subsequent subtenant) under the applicable
Sublease and contain commercially reasonable, customary non-disturbance
provisions for the benefit of such subtenant, so long as such Subtenant is not
in default thereunder;

(iii)    in the event the Subtenant receives a written notice from Landlord
stating that this Lease has been cancelled, surrendered or terminated and not
replaced by a New Lease pursuant to Section 17.1(f) or by a replacement lease
pursuant to Article XXXVI, then the Subtenant shall thereafter be obligated to
pay all rentals accruing under said Sublease directly to Landlord (or as
Landlord shall so direct); all rentals received from the Subtenant by Landlord
shall be credited against the amounts owing by Tenant under this Lease;

(iv)    such Sublease (other than the Specified Subleases) shall be subject and
subordinate to all of the terms and conditions of this Lease (subject to the
terms of any applicable subordination, non-disturbance agreement made pursuant
to Section 22.3);

(v)    no Subtenant shall be permitted to further sublet all or any part of the
Leased Property or assign its Sublease except insofar as the same would be
permitted if it were a Sublease by Tenant under this Lease (it being understood
that any Subtenant under Section 22.3 may pledge and mortgage its subleasehold
estate (or allow the pledge of its equity interests) to its lenders or
noteholders); and

(vi)    the Subtenant thereunder will, upon request, furnish to Landlord and
each Fee Mortgagee an estoppel certificate of the same type and kind as is
required of Tenant pursuant to Section 23.1(a) hereof (as if such Sublease was
this Lease).

Any assignment of the Leased Property permitted hereunder and entered into after
the Commencement Date (it being understood that a Sublease shall not constitute
an assignment) other than any L1 Transfer or L2 Transfer must provide that all
of Tenant’s rights in, to and under Property Specific IP and Property Specific
Guest Data and, in the case of any assignment where the Leased Property
continues to be operated by any other Affiliate of ERI, System-wide IP shall
also be assigned to the applicable assignee, in each case, to the fullest extent
applicable.

Any assignment, transfer or Sublease under this Article XXII shall be subject to
all applicable Legal Requirements, including any Gaming Regulations, and no such
assignment, transfer or Sublease shall be effective until any applicable
approvals with respect to Gaming Regulations, if applicable, are obtained.

22.5    Costs. Tenant shall reimburse Landlord for Landlord’s reasonable
out-of-pocket costs and expenses actually incurred in conjunction with the
processing and documentation of any assignment, subletting or management
arrangement (including in connection with any

 

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request for a subordination, non-disturbance and attornment agreement),
including reasonable documented attorneys’, architects’, engineers’ or other
consultants’ fees whether or not such Sublease, assignment or management
agreement is actually consummated.

22.6    No Release of Tenant’s Obligations; Exception. No assignment, subletting
or management agreement shall relieve Tenant of its obligation to pay the Rent
and to perform all of the other obligations to be performed by Tenant hereunder.
The liability of Tenant and any immediate and remote successor in interest of
Tenant (by assignment or otherwise), and the due performance of the obligations
of this Lease on Tenant’s part to be performed or observed, shall not in any way
be discharged, released or impaired by any (i) stipulation which extends the
time within which an obligation under this Lease is to be performed, (ii) waiver
of the performance of an obligation required under this Lease that is not
entered into by Landlord in a writing executed by Landlord and expressly stated
to be for the benefit of Tenant or such successor, or (iii) failure to enforce
any of the obligations set forth in this Lease provided that Tenant shall not be
responsible for any additional obligations or liability arising as the result of
any modification or amendment of this Lease by Landlord and any assignee of
Tenant that is not an Affiliate of Tenant.

22.7    Bookings. Tenant may enter into any Bookings that do not cover periods
after the expiration of the term of this Lease without the consent of Landlord.
Tenant may enter into any Bookings that cover periods after the expiration of
the term of this Lease without the consent of Landlord, provided, that, (i) such
transaction is in each case made for bona fide business purposes in the normal
course of the Primary Intended Use; (ii) such transaction shall not result in a
violation of any Legal Requirements (including Gaming Regulations) relating to
the operation of the Facility, including any Gaming Facilities, (iii) such
Bookings are on commercially reasonable terms at the time entered into; and
(iv) such transaction is not designed with the intent to frustrate Landlord’s
ability to enter into a new lease of the Leased Property or any portion thereof
with a third party following the Expiration Date; provided, further, that,
notwithstanding anything otherwise set forth herein, any such Bookings in effect
as of the Commencement Date are expressly permitted without such consent.
Landlord hereby agrees that in the event of a termination or expiration of this
Lease, Landlord hereby recognizes and shall keep in effect such Booking on the
terms agreed to by Tenant with such Person and shall not disturb such Person’s
rights to occupy such portion of the Leased Property in accordance with the
terms of such Booking.

22.8    Merger of CEOC. The Parties acknowledge that, immediately following the
execution of this Lease on the Commencement Date, Caesars Entertainment
Operating Company, Inc., a Delaware corporation, merged into CEOC, LLC.
Notwithstanding anything herein to the contrary, Landlord consents to such
merger.

22.9    Permitted Transferee Lease. In the event Tenant desires to effectuate an
L1 Transfer or an L2 Transfer (individually or collectively, an “L1/L2
Transfer”), Tenant shall cause the applicable L1 Successor Tenant or L2
Successor Tenant, as applicable, to enter into an L1/L2 Severance Lease with the
Landlord (and cause to be delivered a Replacement Guaranty (L1 Transfer) or
Replacement Guaranty (L2 Transfer), if applicable), in accordance with the
following:

(a)    At the closing of the applicable L1/L2 Transfer, the Landlord shall enter
into such L1/L2 Severance Lease, as applicable, with the applicable L1 Successor
Tenant or L2

 

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Successor Tenant within the later of (x) thirty (30) days of being presented
with the applicable L1/L2 Severance Lease and (y) five (5) days after Landlord
and Tenant shall have agreed on the applicable terms and conditions of the
applicable L1/L2 Severance Lease as provided in the definition thereof and the
provisions of this Section 22.9. (The date of such closing and entry into such
Permitted Transferee Lease in accordance with this Section 22.9, the “L1/L2
Transfer Date”.)

(b)    The term of such L1/L2 Severance Lease shall be the applicable L1/L2
Severance Lease Term determined in accordance with the definition thereof. Such
L1/L2 Severance Lease shall contain (i) restrictions on transfer determined in
accordance with the provisions of the definition of L1/L2 Severance Lease,
provided, that, in all events, such restrictions shall contain the ability to
make further assignments on terms consistent with the provisions of
Section 22.2(vii) and Section 22.2(viii), as applicable, hereof,
(ii) restrictions on the tenant under the applicable L1/L2 Severance Lease
becoming an Affiliate of Tenant or Guarantor and (iii) reporting requirements
consistent with the reporting requirements in this Lease.

(c)    The rent initially payable under the applicable L1/L2 Severance Lease
(the “L1/L2 Transferee Lease Rent”) as of the L1/L2 Transfer Date will be equal
to the amount of Rent then payable under this Lease, and shall thereafter be
subject to escalation, bifurcation into fixed and variable components and
adjustment consistent with the provisions of this Lease (as if this Lease shall
have commenced on the applicable L1/L2 Transfer Date), modified to reflect that
the rent payable under such L1/L2 Severance Lease will be calculated on a
stand-alone basis with respect to the Facility only, without reference to the
financial performance of, or rent payable with respect to, any other facility
(i.e., upon the first (1st) day of the second (2nd) year of the applicable L1/L2
Severance Lease Term, the rent under such L1/L2 Severance Lease shall commence
to escalate annually in accordance with an escalator consistent with the
Escalator hereunder, such rent shall be split into a fixed component and a
variable component commencing on the first (1st) day of the eighth (8th) year of
the applicable L1/L2 Severance Lease Term, and such fixed and variable
components shall thereafter continue to escalate and be adjusted, all in a
manner consistent with the escalations and adjustments as provided hereunder,
modified to reflect that the rent payable under such L1/L2 Severance Lease will
be calculated on a stand-alone basis with respect to the Facility only, without
reference to the financial performance of, or rent payable with respect to, any
other facility) (as shall be more particularly provided in such L1/L2 Severance
Lease).

(d)    Upon the execution of such L1/L2 Severance Lease on the L1/L2 Transfer
Date, this Lease shall terminate as further set forth in clause (g) below, and
the Landlord and the Tenant shall be released from any and all liability and
obligations with respect to this Lease accruing from and after such execution of
such L1/L2 Severance Lease.

(e)    Such L1/L2 Severance Lease shall contain minimum Capital Expenditure
requirements consistent with the Minimum Cap Ex Requirements of this Lease,
modified to reflect that such minimum Capital Expenditure requirements will
apply to such L1/L2 Severance Lease on a stand-alone basis, and as further
modified as set forth in this Section 22.9(e). Each Minimum Cap Ex Requirement
and the Triennial Allocated Minimum Cap Ex Amount B Floor payable under such
L1/L2 Severance Lease at the time of the commencement of such L1/L2 Severance
Lease shall be equal to the amount of the applicable Minimum Cap Ex Reduction
Amount for the Facility.

 

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(f)    Each Party shall take such actions and execute and deliver such
documents, including, without limitation, amended Memorandum(s) of Lease, as are
reasonably necessary and appropriate to effectuate fully the provisions and
intent of this Section 22.9, including to evidence such termination of this
Lease.

(g)    Upon the execution and delivery of an L1/L2 Severance Lease in accordance
with this Section 22.9, and satisfaction of the requirements of
Section 22.2(vii) or Section 22.2(viii), as applicable, this Lease and the
Guaranty shall automatically terminate without further action by any Party and
Tenant and Landlord shall have no further obligations under this Lease from and
after the effective date of the applicable L1/L2 Severance Lease.

(h)    All reasonable, documented out-of-pocket costs and expenses relating to
an L1/L2 Severance Lease and/or otherwise in connection with any transfer or
proposed transfer pursuant to Section 22.2(vii) or Section 22.2(viii) (including
reasonable, documented attorneys’ fees and other reasonable, documented
out-of-pocket costs incurred by Landlord for outside counsel, if any) shall be
borne by Tenant and not Landlord.

(i)    Landlord and Tenant shall cooperate with all applicable Gaming
Authorities in all reasonable respects to facilitate and obtain all necessary
regulatory reviews, Gaming Licenses and/or authorizations with respect to the
applicable L1/L2 Severance Lease, in accordance with applicable Gaming
Regulations. The execution and implementation of any L1/L2 Severance Lease shall
be subject to obtaining all applicable Gaming Licenses from the applicable
Gaming Authorities by Tenant, the L1 Successor Tenant and/or the L2 Successor
Tenant (and each of their respective applicable Affiliates) in accordance with
applicable Gaming Regulations.

(j)    Unless otherwise agreed to in writing by Landlord, an L1/L2 Severance
Lease shall not include a rent allocation pursuant to Section 467 of the Code
and the Treasury Regulations promulgated thereunder.

22.10    Merger of CEC. The Parties acknowledge that: (i) on or before the
Second Amendment Date, CEC caused (a) in a series of steps, CEOC to be
transferred from CEC to CRC, a wholly owned indirect subsidiary of ERI, and
(b) the Las Vegas Restructuring to be completed; and (ii) contemporaneously with
the Second Amendment Date, (a) Colt Merger Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of ERI, merged with and into CEC, with CEC surviving
the merger as a wholly owned subsidiary of ERI, (b) ERI was renamed Caesars
Entertainment, Inc. and converted to a Delaware corporation and (c) CEC was
renamed Caesars Holdings, Inc. Notwithstanding anything herein to the contrary,
Landlord consents to, and waives all notice requirements with respect to, such
transfer, restructuring, renaming, conversion and merger.

ARTICLE XXIII

REPORTING

23.1    Estoppel Certificates and Financial Statements.

(a)    Estoppel Certificate. Each of Landlord and Tenant shall, at any time and
from time to time upon receipt of not less than ten (10) Business Days’ prior
written request from the

 

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other Party, furnish a certificate (an “Estoppel Certificate”) certifying
(i) that this Lease is unmodified and in full force and effect, or that this
Lease is in full force and effect and, if applicable, setting forth any
modifications; (ii) the Rent and Additional Charges payable hereunder and the
dates to which the Rent and Additional Charges payable have been paid;
(iii) that the address for notices to be sent to the Party furnishing such
Estoppel Certificate is as set forth in this Lease (or, if such address for
notices has changed, the correct address for notices to such party);
(iv) whether or not, to its actual knowledge, such Party or the other Party is
in default in the performance of any covenant, agreement or condition contained
in this Lease (together with back-up calculation and information reasonably
necessary to support such determination) and, if so, specifying each such
default of which such Party may have knowledge; (v) that Tenant is in possession
of the Leased Property; (vi) such matters as may be reasonably and customarily
requested by a reputable title insurer in connection with insuring fee title to
the Leased Property or any existing or prospective Fee Mortgagee; and (vii) such
other responses to questions of fact or such other statements of fact as such
other Party may reasonably request. Any such Estoppel Certificate may be relied
upon by the receiving Party and any current or prospective Fee Mortgagee (and
their successors and assigns), Permitted Leasehold Mortgagee, or purchaser of
the Leased Property, as applicable.

(b)    Statements. Tenant shall furnish or cause to be furnished the following
to Landlord:

(i)    On or before twenty-five (25) days after the end of each calendar month
the following items as they pertain to Tenant: (A) an occupancy report for the
subject month, including an average daily rate and revenue per available room
for the subject month, and (B) monthly and year-to-date operating statements
prepared for each calendar month, noting gross revenue, net revenue, operating
expenses and operating income, and other information reasonably necessary and
sufficient to fairly represent the financial position and results of operations
of Tenant during such calendar month, and containing a comparison of budgeted
income and expenses and the actual income and expenses.

(ii)    As to CEOC:

(a)    annual financial statements audited by CEOC’s Accountant in accordance
with GAAP covering such Fiscal Year and containing statement of profit and loss,
a balance sheet, and statement of cash flows for CEOC, together with (1) a
report thereon by such Accountant which report shall be unqualified as to scope
of audit of CEOC and its Subsidiaries and shall provide in substance that
(A) such Financial Statements present fairly the consolidated financial position
of CEOC and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in conformity with GAAP and
(B) that the audit by such Accountant in connection with such Financial
Statements has been made in accordance with GAAP and (2) a certificate, executed
by the chief financial officer or treasurer of CEOC certifying that no Tenant
Event of Default has occurred or, if a Tenant Event of Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto, all of which shall be provided within
ninety (90) days after the end of each Fiscal Year (commencing with the Fiscal
Year ending December 31, 2017) but if Guarantor is not a reporting company under
the Exchange Act, in no event later than five (5) Business Days before Landlord
REIT’s applicable Form 10-K filing deadline;

 

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(b)    quarterly unaudited financial statements, consisting of a statement of
profit and loss, a balance sheet, and statement of cash flows for CEOC, together
with a certificate, executed by the chief financial officer or treasurer of CEOC
(A) certifying that no Tenant Event of Default has occurred or, if a Tenant
Event of Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto, and
(B) certifying that such Financial Statements fairly present, in all material
respects, the financial position and results of operations of CEOC and its
Subsidiaries on a consolidated basis in accordance with GAAP (subject to normal
year-end audit adjustments and the absence of footnotes), all of which shall be
provided (x) within sixty (60) days after the end of each of the first three
(3) Fiscal Quarters of each Fiscal Year (commencing with the Fiscal Quarter
ending March 31, 2018) but if Guarantor is not a reporting company under the
Exchange Act, in no event later than five (5) Business Days before Landlord
REIT’s applicable Form 10-Q filing deadline; and

(c)    such additional information and unaudited quarterly financial information
concerning the Leased Property and Tenant, which information shall be limited to
balance sheets, income statements, and statements of cash flow, as Landlord,
PropCo 1, PropCo or Landlord REIT may require for any ongoing filings with or
reports to (i) the SEC under both the Securities Act and the Exchange Act,
including, but not limited to 10-Q Quarterly Reports, 10-K Annual Reports and
registration statements to be filed by Landlord, PropCo 1, PropCo or Landlord
REIT during the Term of this Lease, (ii) the Internal Revenue Service (including
in respect of Landlord REIT’s qualification as a REIT) and (iii) any other
federal, state or local regulatory agency with jurisdiction over Landlord,
PropCo 1, PropCo or Landlord REIT, in each case of clause (i), (ii) and (iii),
subject to Section 23.1(c) below.

(iii)    As to ERI:

(a)    annual financial statements audited by ERI’s Accountant in accordance
with GAAP covering such Fiscal Year and containing statement of profit and loss,
a balance sheet, and statement of cash flows for ERI, including the report
thereon by such Accountant which shall be unqualified as to scope of audit of
ERI and its Subsidiaries and shall provide in substance that (a) such
consolidated financial statements present fairly the consolidated financial
position of ERI and its Subsidiaries as at the dates indicated and the results
of their operations and cash flow for the periods indicated in conformity with
GAAP and (b) that the audit by ERI’s Accountant in connection with such
Financial Statements has been made in accordance with GAAP, which shall be
provided within ninety (90) days after the end of each Fiscal Year (commencing
with the Fiscal Year ending December 31, 2017) but if Guarantor is not a
reporting company under the Exchange Act, in no event later than five
(5) Business Days before Landlord REIT’s applicable Form 10-K filing deadline;

(b)    quarterly unaudited financial statements, consisting of a statement of
profit and loss, a balance sheet, and statement of cash flows for ERI, together
with a

 

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certificate, executed by the chief financial officer or treasurer of ERI
certifying that such Financial Statements fairly present, in all material
respects, the financial position and results of operations of ERI and its
Subsidiaries on a consolidated basis in accordance with GAAP (subject to normal
year-end audit adjustments and the absence of footnotes) which shall be provided
within sixty (60) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year (commencing with the Fiscal Quarter ending
September 30, 2017) but if Guarantor is not a reporting company under the
Exchange Act, in no event later than five (5) Business Days before Landlord
REIT’s applicable Form 10-Q filing deadline; and

(c)    such additional information and unaudited quarterly financial information
concerning the Leased Property and Tenant, which information shall be limited to
balance sheets, income statements, and statements of cash flow, as Landlord,
PropCo 1, PropCo or Landlord REIT may require for any ongoing filings with or
reports to (i) the SEC under both the Securities Act and the Exchange Act,
including, but not limited to 10-Q Quarterly Reports, 10-K Annual Reports and
registration statements to be filed by Landlord, PropCo 1, PropCo or Landlord
REIT during the Term of this Lease, (ii) the Internal Revenue Service (including
in respect of Landlord REIT’s qualification as a REIT) and (iii) any other
federal, state or local regulatory agency with jurisdiction over Landlord,
PropCo 1, PropCo or Landlord REIT subject to Section 23.1(c) below;

(iv)    As soon as it is prepared and in no event later than sixty (60) days
after the end of each Fiscal Year, a statement of Net Revenue with respect to
the Facility with respect to such Fiscal Year (subject to the additional
requirements as provided in Section 3.2 hereof in respect of the periodic
determination of the Variable Rent hereunder);

(v)    Prompt Notice to Landlord of any action, proposal or investigation by any
agency or entity, or complaint to such agency or entity (any of which is called
a “Proceeding”), known to Tenant, the result of which Proceeding would
reasonably be expected to be to revoke or suspend or terminate or modify in a
way adverse to Tenant, or fail to renew or fully continue in effect, (x) any
Gaming License, or (y) any other license or certificate or operating authority
pursuant to which Tenant carries on any part of the Primary Intended Use of all
or any portion of the Leased Property which, in any case under this clause (y)
(individually or collectively), would be reasonably expected to cause a material
adverse effect on Tenant or in respect of the Facility (and, without limitation,
Tenant shall (A) keep Landlord apprised of (1) the status of any annual or other
periodic Gaming License renewals, and (2) the status of non-routine matters
before any applicable gaming authorities, and (B) promptly deliver to Landlord
copies of any and all non-routine notices received (or sent) by Tenant from (or
to) any Gaming Authorities);

(vi)    Within ten (10) Business Days after the end of each calendar month, a
schedule containing any additions to or retirements of any fixed assets
constituting Leased Property, describing such assets in summary form, their
location, historical cost, the amount of depreciation and any improvements
thereto, substantially in the form attached hereto as Exhibit D, and such
additional customary and reasonable financial information with respect to such
fixed assets constituting Leased Property as is reasonably requested by
Landlord, it being understood that Tenant may classify any asset additions in
accordance with the fixed asset methodology for propco-opco separation used as
of the Commencement Date;

 

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(vii)    Within three (3) Business Days of obtaining actual knowledge of the
occurrence of a Tenant Event of Default (or of the occurrence of any facts or
circumstances which, with the giving of notice or the passage of time would
ripen into a Tenant Event of Default and that (individually or collectively
would be reasonably expected to result in a material adverse effect on Tenant or
in respect of the Facility), a written notice to Landlord regarding the same,
which notice shall include a detailed description of the Tenant Event of Default
(or such facts or circumstances) and the actions Tenant has taken or shall take,
if any, to remedy such Tenant Event of Default (or such facts or circumstances);

(viii)    Such additional customary and reasonable financial information related
to the Facility, Tenant, CEOC, ERI and their Affiliates which shall be limited
to balance sheets and income statements (and, without limitation, all
information concerning Tenant, CEOC, ERI and any of their Affiliates,
respectively, or the Facility or the business of Tenant conducted thereat
required pursuant to the Fee Mortgage Documents, within the applicable
timeframes required thereunder), in each case as may be required by any Fee
Mortgagee as an Additional Fee Mortgagee Requirement hereunder to the extent
required by Section 31.3;

(ix)    The compliance certificates, as and when required pursuant to
Section 4.3;

(x)    The Annual Capital Budget as and when required in Section 10.5;

(xi)    The monthly revenue and Capital Expenditure reporting required pursuant
to Section 10.5(b);

(xii)    Together with the monthly reporting required pursuant to the preceding
clause (xi), an updated rent roll and a summary of all leasing activity then
taking place at the Facility;

(xiii)    Operating budget for Tenant for each Fiscal Year, which shall be
delivered to Landlord no later than fifty-five (55) days following the
commencement of the Fiscal Year to which such operating budget relates;

(xiv)    Within five (5) Business Days after request (or as soon thereafter as
may be reasonably possible), such further detailed information reasonably
available to Tenant with respect to Tenant as may be reasonably requested by
Landlord;

(xv)    The quarterly reporting in respect of Bookings required pursuant to
Section 22.7 of this Lease;

(xvi)    The reporting/copies of Subleases made by Tenant in accordance with
Section 22.3;

(xvii)    Any notices or reporting required pursuant to Article XXXII hereof or
otherwise pursuant to any other provision of this Lease; and

 

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(xviii)    The monthly reporting required pursuant to Section 4.1 hereof;

(xix)    Semi-annual property-level betting & gaming revenue information
received pursuant to Section 10.2 of the MTSA by Tenant, ERI or any direct or
indirect subsidiary of ERI to the extent relevant to the calculation of Net
Revenues hereunder, in each case within fifteen (15) days of the receipt
thereof; and

(xx)    On an annual basis, a detailed reconciliation of the financial
information being provided to Landlord pursuant to clause (xix) above (the “WH
Net Revenue”) and the Net Revenue statements that Tenant is providing to
Landlord pursuant to clause (iv) above, which reconciliation shows how the Net
Revenue contained in the WH Net Revenue is being reflected in the Net Revenue
statements delivered pursuant to clause (iv) above.

The Financial Statements provided pursuant to Section 23.1(b)(iii) shall be
prepared in compliance with applicable federal securities laws, including
Regulation S-X (and for any prior periods required thereunder), if and to the
extent such compliance with federal securities laws, including Regulation S-X
(and for any prior periods required thereunder), is required to enable Landlord,
PropCo 1, PropCo or Landlord REIT to (x) file such Financial Statements with the
SEC if and to the extent that Landlord, PropCo 1, PropCo or Landlord REIT is
required to file such Financial Statements with the SEC pursuant to Legal
Requirements or (y) include such Financial Statements in an offering document if
and to the extent that Landlord, PropCo 1, PropCo or Landlord REIT is reasonably
requested or required to include such Financial Statements in any offering
document in connection with a financing contemplated by and to the extent
required by Section 23.2(b).

(c)    Notwithstanding the foregoing, Tenant shall not be obligated (1) to
provide information or assistance that would give Landlord or its Affiliates a
“competitive” advantage with respect to markets in which Landlord REIT and
Tenant or ERI might be competing at any time (it being understood that Landlord
shall retain audit rights with respect to such information to the extent
required to confirm Tenant’s compliance with the terms of this Lease (and
Landlord, PropCo 1, PropCo or Landlord REIT shall be permitted to comply with
Securities Exchange Commission, Internal Revenue Service and other legal and
regulatory requirements with regard to such information) and provided that
appropriate measures are in place to ensure that only Landlord’s auditors and
attorneys (and not Landlord or Landlord REIT or any other direct or indirect
parent company of Landlord) are provided access to such information) or (2) to
provide information that is subject to the quality assurance immunity or is
subject to attorney-client privilege or the attorney work product doctrine.

(d)    For purposes of this Section 23.1, the terms “ERI”, “CEOC”, “PropCo 1”,
“PropCo” and “Landlord REIT” shall mean, in each instance, each of such parties
and their respective successors and permitted assigns.

(e)    Tenant shall, or shall cause ERI or any direct or indirect subsidiary of
ERI to, exercise its inspection and audit rights under and pursuant to
Section 10.2 of the MTSA upon Landlord’s request. In connection therewith, an
independent auditor shall promptly deliver to Tenant and Landlord its detailed
calculation of property-level betting & gaming revenues for each applicable
property under this Lease. Landlord shall be responsible for all expenses
associated with any such exercise of audit rights and preparation of any such
calculations. Tenant agrees on

 

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behalf of itself and ERI not to permit the MTSA to be amended or modified in a
way that adversely affects Landlord’s rights under this clause (e) and clauses
(b)(xix) and (b)(xx) above in any material respect as determined in good faith
by Landlord.

23.2    SEC Filings; Offering Information.

(a)    Tenant specifically agrees that Landlord, PropCo 1, PropCo or Landlord
REIT may file with the SEC or incorporate by reference the Financial Statements
referred to in Section 23.1(b)(ii) and (iii) (and Financial Statements referred
to in Section 23.1(b)(ii) and (iii) for any prior annual or quarterly periods as
required by any Legal Requirements) in Landlord’s, PropCo 1’s PropCo’s or
Landlord REIT’s filings made under the Securities Act or the Exchange Act to the
extent it is required to do so pursuant to Legal Requirements. In addition,
Landlord, PropCo 1, PropCo or Landlord REIT may include, cross-reference or
incorporate by reference the Financial Statements (and for any prior annual or
quarterly periods as required by any Legal Requirements) and other financial
information and such information concerning the operation of the Leased Property
(1) which is publicly available or (2) the inclusion of which is approved by
Tenant in writing, which approval may not be unreasonably withheld, conditioned
or delayed, in offering memoranda or prospectuses or confidential information
memoranda, or similar publications or marketing materials, rating agency
presentations, investor presentations or disclosure documents in connection with
syndications, private placements or public offerings of Landlord’s, PropCo 1’s,
PropCo’s or Landlord REIT’s securities or loans. Unless otherwise agreed by
Tenant, neither Landlord, PropCo 1, PropCo nor Landlord REIT shall revise or
change the wording of information previously publicly disclosed by Tenant and
furnished to Landlord, PropCo 1, PropCo or Landlord REIT pursuant to Section 23
or this Section 23.2, and Landlord’s, PropCo 1’s PropCo’s or Landlord REIT’s
Form 10-Q or Form 10-K (or amendment or supplemental report filed in connection
therewith) shall not disclose the operational results of the Leased Property
prior to ERI’s, Tenant’s or its Affiliate’s public disclosure thereof so long as
ERI, Tenant or such Affiliate reports such information in a timely manner in
compliance with the reporting requirements of the Exchange Act, in any event, no
later than ninety (90) days after the end of each Fiscal Year. Landlord agrees
to use commercially reasonable efforts to provide a copy of the portion of any
public disclosure containing the Financial Statements, or any cross-reference
thereto or incorporation by reference thereof (other than cross-references to or
incorporation by reference of Financial Statements that were previously publicly
filed), or any other financial information or other information concerning the
operation of the Leased Property received by Landlord under this Lease, at least
two (2) Business Days in advance of any such public disclosure. Without
vitiating any other provision of this Lease, the preceding sentence is not
intended to restrict Landlord from disclosing such information to any Fee
Mortgagee pursuant to the express terms of the Fee Mortgage Documents or in
connection with other ordinary course reporting under the Fee Mortgage
Documents.

(b)    Tenant understands that, from time to time, Landlord, PropCo 1, PropCo or
Landlord REIT may conduct one or more financings, which financings may involve
the participation of placement agents, underwriters, initial purchasers or other
persons deemed underwriters under applicable securities law. In connection with
any such financings, Tenant shall, upon the request of Landlord, use
commercially reasonable efforts to furnish to Landlord, to the extent reasonably
requested or required in connection with any such financings, the information
referred to in Section 23.1(b), as applicable (subject to Section 23.1(c) as and
to the extent

 

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applicable) (it being understood that the disclosure of any such information to
any such Persons by Landlord shall be subject to Section 41.22 hereof as if such
Persons were Representatives hereunder) and in each case including for any prior
annual or quarterly periods as required by any Legal Requirements, as promptly
as reasonably practicable after the request therefor (taking into account, among
other things, the timing of any such request and any Legal Requirements
applicable to Tenant, CEOC or ERI at such time). In addition, Tenant shall, upon
the request of Landlord, use commercially reasonable efforts to provide Landlord
and its Representatives with such management representation letters, comfort
letters and consents of applicable certified independent auditors to the
inclusion of their reports in applicable financing disclosure documents as may
be reasonably requested or required in connection with the sale or registration
of securities by Landlord, PropCo 1, PropCo or Landlord REIT. Landlord shall
reimburse Tenant, CEOC and ERI, their respective Subsidiaries and their
respective Representatives as promptly as reasonably practicable after the
request therefor, for any reasonable and actual, documented expenses incurred in
connection with any cooperation provided pursuant to this Section 23.2(b) (and,
unless any non-compliance with this Lease to more than a de minimis extent is
revealed, any exercise by Landlord of audit rights pursuant to Section 23.1(c))
(including, without limitation, reasonable and documented fees and expenses of
accountants and attorneys, but excluding, for the avoidance of doubt, any such
fees and expenses incurred in the preparation of the Financial Statements). In
addition, Landlord shall indemnify and hold harmless Tenant, CEOC and ERI, their
respective Subsidiaries and their respective Representatives from and against
any and all liabilities, losses, damages, claims, costs, expenses, interest,
awards, judgments and penalties suffered or incurred by them (collectively,
“Losses”) in connection with any cooperation provided pursuant to this
Section 23.2(b), except to the extent (i) such Losses were suffered or incurred
as a result of the bad faith, gross negligence or willful misconduct of any such
indemnified person or (ii) such Losses were caused by any untrue statement or
alleged untrue statement of a material fact contained in any Financial
Statements delivered by Tenant to Landlord hereunder, or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading.

23.3    Landlord Obligations

(a)    Landlord agrees that, upon request of Tenant, it shall from time to time
provide such information as may be reasonably requested by Tenant with respect
to Landlord’s, PropCo 1’s, PropCo’s and Landlord REIT’s capital structure and/or
any financing secured by this Lease or the Leased Property in connection with
Tenant’s review of the treatment of this Lease under GAAP.

(b)    Landlord further understands and agrees that, from time to time, Tenant,
CEOC, ERI or their respective Affiliates may conduct one or more financings,
which financings may involve the participation of placement agents,
underwriters, initial purchasers or other persons deemed underwriters under
applicable securities law. In connection with any such financings, Landlord
shall, upon the request of Tenant, use commercially reasonable efforts to
furnish to Tenant, to the extent reasonably requested or required in connection
with any such financings, the Financial Statements (and for any prior annual or
quarterly periods as required by any Legal Requirements), other financial
information and cooperation as promptly as reasonably practicable after the
request therefor (taking into account, among other things, the timing of any
such request and any Legal Requirements applicable to Landlord, PropCo 1, PropCo
or Landlord REIT at such

 

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time) (it being understood that the disclosure of any such information to any
such Persons by Tenant shall be subject to Section 41.22 hereof as if said
Persons were Representatives of Tenant hereunder). In addition, Landlord shall,
upon the request of Tenant, use commercially reasonable efforts to provide
Tenant and its Representatives with such management representation letters,
comfort letters and consents of applicable certified independent auditors to the
inclusion of their reports in applicable financing disclosure documents as may
be reasonably requested or required in connection with the sale or registration
of securities by Tenant, CEOC, ERI or any of their respective Affiliates. Tenant
shall reimburse Landlord, PropCo 1, PropCo, Landlord REIT, their respective
Subsidiaries and their respective Representatives as promptly as reasonably
practicable after the request therefor, for any reasonable and actual,
documented expenses incurred in connection with any cooperation provided
pursuant to this Section 23.3(b) (including, in each case, without limitation,
reasonable and documented fees and expenses of accountants and attorneys and
allocated costs of internal employees but excluding, for the avoidance of doubt,
any such fees, expenses and allocated costs incurred in the preparation of the
Financial Statements). In addition, Tenant shall indemnify and hold harmless
Landlord, PropCo 1, PropCo, Landlord REIT, their respective Subsidiaries and
their respective Representatives from and against any and all Losses in
connection with any cooperation provided pursuant to this Section 23.3(b),
except to the extent (i) such Losses were suffered or incurred as a result of
the bad faith, gross negligence or willful misconduct of any such indemnified
person or (ii) such Losses were caused by any untrue statement or alleged untrue
statement of a material fact contained in any Financial Statements delivered by
Landlord to Tenant hereunder, or caused by any omission or alleged omission to
state therein a material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading.

(c)    The Financial Statements provided pursuant to Section 23.3(b) shall be
prepared in compliance with applicable federal securities laws, including
Regulation S-X (and for any prior periods required thereunder), if and to the
extent such compliance with federal securities laws, including Regulation S-X
(and for any prior periods required thereunder), is required to enable Tenant,
CEOC or ERI or their respective Affiliates to (x) file such Financial Statements
with the SEC if and to the extent that Tenant, CEOC or ERI is required to file
such Financial Statements with the SEC pursuant to Legal Requirements or
(y) include such Financial Statements in an offering document if and to the
extent that Tenant, CEOC or ERI or their respective affiliates is reasonably
requested or required to include such Financial Statements in any offering
document in connection with a financing contemplated by and to the extent
required by Section 23.3(b).

ARTICLE XXIV

LANDLORD’S RIGHT TO INSPECT

Upon reasonable advance written notice to Tenant, Tenant shall permit Landlord
and its authorized representatives (including any Fee Mortgagee and its
representatives) to inspect the Leased Property or any portion thereof during
reasonable times (or at such time and with such notice as shall be reasonable in
the case of an emergency) (and Tenant shall be permitted to have any such
representatives of Landlord accompanied by a representative of Tenant). Landlord
shall take reasonable care to minimize disturbance of the operations on the
applicable portion of the Leased Property.

 

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ARTICLE XXV

NO WAIVER

No delay, omission or failure by Landlord to insist upon the strict performance
of any term hereof or to exercise any right, power or remedy hereunder and no
acceptance of full or partial payment of Rent during the continuance of any
default or Tenant Event of Default shall impair any such right or constitute a
waiver of any such breach or of any such term. No waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.

ARTICLE XXVI

REMEDIES CUMULATIVE

To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord now or hereafter provided either in this Lease or
by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power and remedy and the exercise or beginning of
the exercise by Landlord of any one or more of such rights, powers and remedies
shall not preclude the simultaneous or subsequent exercise by Landlord of any or
all of such other rights, powers and remedies.

ARTICLE XXVII

ACCEPTANCE OF SURRENDER

No surrender to Landlord of this Lease or of the Leased Property or any part
thereof, or of any interest therein, shall be valid or effective unless agreed
to and accepted in writing by Landlord, and no act by Landlord or any
representative or agent of Landlord, other than such a written acceptance by
Landlord, shall constitute an acceptance of any such surrender.

ARTICLE XXVIII

NO MERGER

There shall be no merger of this Lease or of the Leasehold Estate created hereby
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly, (i) this Lease or the Leasehold Estate created hereby or any
interest in this Lease or such Leasehold Estate and (ii) the fee estate in the
Leased Property or any portion thereof. If Landlord or any Affiliate of Landlord
shall purchase any fee or other interest in the Leased Property or any portion
thereof that is superior to the interest of Landlord, then the estate of
Landlord and such superior interest shall not merge.

 

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ARTICLE XXIX

INTENTIONALLY OMITTED

ARTICLE XXX

QUIET ENJOYMENT

So long as no Tenant Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term, free of any claim or other action by Landlord or anyone claiming by,
through or under Landlord, but subject (i) to the provisions, terms and
conditions of this Lease, and (ii) to all liens and encumbrances existing as of
the Commencement Date, or thereafter as provided for in this Lease or consented
to by Tenant. No failure by Landlord to comply with the foregoing covenant shall
give Tenant any right to cancel or terminate this Lease or abate, reduce or make
a deduction from or offset against the Rent or any other sum payable under this
Lease, or to fail to perform any other obligation of Tenant hereunder.
Notwithstanding the foregoing, Tenant shall have the right, by separate and
independent action to pursue any claim it may have against Landlord as a result
of a breach by Landlord of the covenant of quiet enjoyment contained in this
Article XXX.

ARTICLE XXXI

LANDLORD FINANCING

31.1    Landlord’s Financing.

(a)    Without the consent of Tenant (but subject to the remainder of this
Section 31.1), Landlord may from time to time, directly or indirectly, create or
otherwise cause to exist any Fee Mortgage upon all of the Leased Property (other
than de minimis portions thereof that are not capable of being assigned or
transferred) (or upon interests in Landlord which are pledged pursuant to a
mezzanine loan or similar financing arrangement). This Lease is and at all times
shall be subordinate to any Existing Fee Mortgage and any other Fee Mortgage
which may hereafter affect the Leased Property or any portion thereof or
interest therein and in each case to all renewals, modifications,
consolidations, replacements, restatements and extensions thereof or any parts
or portions thereof; provided, however, that the subordination of this Lease and
Tenant’s leasehold interest hereunder to any new Fee Mortgage hereafter made,
shall be conditioned upon the execution and delivery to Tenant by the respective
Fee Mortgagee of a commercially reasonable subordination, nondisturbance and
attornment agreement, which will bind Tenant and such Fee Mortgagee and its
successors and assigns as well as any Person who acquires any portion of the
Leased Property in a foreclosure or similar proceeding or in a transfer in lieu
of any such foreclosure or a successor owner of the Leased Property (each, a
“Foreclosure Purchaser”) and which shall provide, among other things, that so
long as there is no outstanding and continuing Tenant Event of Default under
this Lease (or, if there is a continuing Tenant Event of Default, subject to the
rights granted to a Permitted Leasehold Mortgagee as expressly set forth in this
Lease), the holder of such Fee Mortgage, and any Foreclosure Purchaser shall not
disturb Tenant’s leasehold interest or possession of the Leased Property,
subject to and in accordance with the terms hereof, and shall give effect to
this Lease, including, but not limited to, the provisions of Article XVII

 

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which benefit any Permitted Leasehold Mortgagee (as if such Fee Mortgagee or
Foreclosure Purchaser were the landlord under this Lease (it being understood
that if a Tenant Event of Default has occurred and is continuing at such time,
such parties shall be subject to the terms and provisions hereof concerning the
exercise of rights and remedies upon such Tenant Event of Default including the
provisions of Articles XVI, XVII and XXVI)). In connection with the foregoing
and at the request of Landlord, Tenant shall promptly execute a subordination,
nondisturbance and attornment agreement that contains commercially reasonable
provisions, terms and conditions, in all events complying with this Section 31.1
(it being understood that a subordination, non-disturbance and attornment
agreement substantially in the form executed by Jazz Casino Company, L.L.C.,
Harrah’s New Orleans LLC and the “Fee Mortgagee” (as defined in the Regional
Lease) under the “Existing Fee Mortgage” (as defined in the Regional Lease) with
respect to the “Leased Property (HNO)” (as defined in the Regional Lease) as of
the Second Amendment Date (a copy of which is attached as Exhibit O hereto)
shall be deemed to satisfy this Section).

(b)    If, in connection with obtaining any Fee Mortgage or entering into any
agreement relating thereto, Landlord shall request in writing (i) reasonable
cooperation from Tenant or (ii) reasonable amendments or modifications to this
Lease, in each case required to comply with any reasonable request made by Fee
Mortgagee, Tenant shall reasonably cooperate with such request, so long as
(I) no default in any material respect by Landlord beyond applicable cure
periods is continuing, (II) all reasonable documented out-of-pocket costs and
expenses incurred by Tenant in connection with such cooperation, including, but
not limited to, its reasonable documented attorneys’ fees, shall be paid by
Landlord and (III) any requested action, including any amendments or
modification of this Lease, shall not (a) increase Tenant’s monetary obligations
under this Lease by more than a de minimis extent, or increase Tenant’s
non-monetary obligations under this Lease in any material respect or decrease
Landlord’s obligations in any material respect, (b) diminish Tenant’s rights
under this Lease in any material respect, (c) adversely impact the value of the
Leased Property by more than a de minimis extent or otherwise have a more than
de minimis adverse effect on the Leased Property, Tenant or Landlord, (d) result
in this Lease not constituting a “true lease”, or (e) result in a default under
any Permitted Leasehold Mortgage. The foregoing is not intended to vitiate or
supersede the provisions, terms and conditions of Section 31.1 hereof.

(c)    To secure Landlord’s obligations under any Fee Mortgage, including the
Existing Fee Mortgage, Landlord shall have the right to collaterally assign to
Fee Mortgagee, all rights title and interest of Landlord in and under this
Lease.

31.2    Attornment. If either (a) Landlord’s interest in the Leased Property or
any portion thereof or interest therein is sold, conveyed or terminated upon the
exercise of any remedy provided for in any Fee Mortgage Documents (or in lieu of
such exercise) or (b) equity interests in Landlord are sold or conveyed upon the
exercise of any remedy provided for in any Fee Mortgage Documents (or in lieu of
such exercise), or otherwise by operation of law, then, at the request and
option of the new owner or superior lessor, as the case may be, Tenant shall
attorn to and recognize the new owner or superior lessor as Tenant’s “landlord”
under, and on the terms and conditions set forth in, this Lease.

 

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31.3    Compliance with Fee Mortgage Documents.

(a)    Tenant acknowledges that any Fee Mortgage Documents executed by Landlord
or any Affiliate of Landlord may impose certain obligations on the “borrower” or
other counterparty thereunder to comply with, or cause the operator and/or
lessee of the Leased Property to comply with, certain reasonable covenants
contained therein, including, without limitation, covenants relating to (i) the
alteration, maintenance, repair and restoration of the Leased Property;
(ii) maintenance and submission of financial records and accounts of the
operation of the Leased Property and financial and other information regarding
the operator and/or lessee of the Leased Property and the Leased Property
itself; (iii) the procurement of insurance policies with respect to the Leased
Property; (iv) removal of liens and encumbrances; (v) subleasing, management and
related activities; and (vi) without limiting the foregoing, compliance with all
applicable Legal Requirements (including Gaming Regulations) relating to the
Leased Property and the operation of the business thereon or therein. From and
after the date any Fee Mortgage encumbers the Leased Property (or any portion
thereof or interest therein) and Landlord has provided Tenant with true and
complete copies thereof and, if Landlord elects, of any applicable Fee Mortgage
Documents (for informational purposes only, but not for Tenant’s approval),
accompanied by a written request for Tenant to comply with the Additional Fee
Mortgagee Requirements (hereinafter defined) (which request shall expressly
reference this Section 31.3 and expressly identify the Fee Mortgage Documents
and sections thereof containing the Additional Fee Mortgagee Requirements), and
continuing until the first to occur of (1) such Fee Mortgage Documents ceasing
to remain in full force and effect by reason of satisfaction in full of the
indebtedness thereunder or foreclosure or similar exercise of remedies or
otherwise, (2) the Expiration Date, (3) such time as Tenant’s compliance with
the Additional Fee Mortgagee Requirements would constitute or give rise to a
breach or violation of (x) this Lease, not waived by Landlord, (y) Legal
Requirements (including Gaming Regulations and Liquor Laws), or (z) any
Permitted Leasehold Mortgage (not waived by the applicable Permitted Leasehold
Mortgagee), provided, however, with respect to this clause (z), (I) Tenant shall
not be relieved of its obligation to comply with (A) the terms of the Additional
Fee Mortgagee Requirements in effect as of the Commencement Date (whether
embodied in the Existing Fee Mortgage or related Fee Mortgage Documents or in
any future Fee Mortgage or related Fee Mortgage Documents containing the
applicable corresponding terms), nor (B) unless the applicable terms of the
Permitted Leasehold Mortgage were customary at the time entered into, any
Additional Fee Mortgagee Requirements (other than any Additional Fee Mortgagee
Requirements covered under the preceding clause (A)) in effect as of the time
when the Permitted Leasehold Mortgage was obtained, and (II) such Permitted
Leasehold Mortgage shall have been entered into by Tenant without any intent to
vitiate or supersede the terms of any applicable Additional Fee Mortgagee
Requirements, and (4) Tenant receives written direction from Landlord, any Fee
Mortgagee or any governmental authority requesting or instructing Tenant to
cease complying with the Additional Fee Mortgagee Requirements, (provided, prior
to ceasing compliance with any Additional Fee Mortgagee Requirements under the
preceding clauses (3) and (4), Tenant shall first provide Landlord with prior
written notice together with, (x) if acting pursuant to clause (3), reasonably
detailed materials evidencing that such compliance constitutes such a breach,
and (y) if acting pursuant to clause (4), a copy of the applicable
communication(s) from such Fee Mortgagee or governmental authority, as
applicable, and Tenant shall in such event only cease compliance with the
specific Additional Fee Mortgagee Requirements in question under clause (3) or
that are covered by the written direction under clause (4), as applicable),
Tenant covenants and agrees, at its sole cost and expense and for the express
benefit of Landlord (and not,

 

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for the avoidance of doubt, any Fee Mortgagee, which shall not be construed to
be a third party beneficiary of this Lease, provided, however, this
parenthetical provision is not intended to vitiate Tenant’s obligation to
perform any or all of the Additional Fee Mortgagee Requirements directly for the
benefit of any Fee Mortgagee as and to the extent agreed to by Tenant in an
agreement entered into directly between Tenant and such Fee Mortgagee), to
operate the Leased Property (or cause the Leased Property to be operated) in
compliance with the Additional Fee Mortgagee Requirements of which it has
received written notice. For the avoidance of doubt, notwithstanding anything to
the contrary herein, Tenant shall not be required to comply with and shall not
have any other obligations with respect to any terms or conditions of, or
amendments or modifications to, any Fee Mortgage or other Fee Mortgage Documents
that do not constitute Additional Fee Mortgagee Requirements; provided, however,
that the foregoing shall not be deemed to release Tenant from its obligations
under this Lease that do not derive from the Fee Mortgage Documents, whether or
not such obligations are duplicative of those set forth in the Fee Mortgage
Documents.

(b)    As used herein, “Additional Fee Mortgagee Requirements” means those
customary requirements as to the operation of the Leased Property and the
business thereon or therein which the Fee Mortgage Documents impose (x) directly
upon, or require Landlord (or Landlord’s Affiliate borrower thereunder) to
impose upon, the tenant(s) and/or operator(s) of the Leased Property or
(y) directly upon Landlord, but which, by reason of the nature of the
obligation(s) imposed and the nature of Tenant’s occupancy and operation of the
Leased Property and the business conducted thereupon, are not reasonably
susceptible of being performed by Landlord and are reasonably susceptible of
being performed by Tenant (excluding, for the avoidance of doubt, payment of any
indebtedness or other obligations evidenced or secured thereby) and, except with
respect to the Existing Fee Mortgage (of which Tenant is deemed to have received
written notice (without giving effect to any amendments, modifications or
supplements after the Second Amendment Date)) of which Tenant has received
written notice; provided, however, that, notwithstanding the foregoing,
Additional Fee Mortgagee Requirements shall not include or impose on Tenant (and
Tenant will not be subject to) obligations which (i) are not customary for the
type of financing provided under the applicable Fee Mortgage Documents,
(ii) increase Tenant’s monetary obligations under this Lease to more than a de
minimis extent (it being agreed that making payments otherwise payable to
Landlord into a “lockbox” account designated by a Fee Mortgagee shall not be
deemed to increase Tenant’s monetary obligations under the Lease), (iii)
increase Tenant’s non-monetary obligations under this Lease in any material
respect (it being agreed that making payments otherwise payable to Landlord into
a “lockbox” account designated by a Fee Mortgagee shall not be deemed to
increase Tenant’s non-monetary obligations under the Lease), (iv) diminish
Tenant’s rights under this Lease in any material respect or (v) restrict
Tenant’s ability to assign, sell, sublet, sub-sublet or transfer this Lease,
Tenant’s Leasehold Estate, the Facility or Tenant’s Property, in each case, as
otherwise expressly permitted under this Lease, to more than a de minimis
extent, or restrict Tenant’s ability to effectuate an L1/L2 Transfer and/or a
Permitted Facility Sublease as otherwise expressly permitted under this Lease.

(c)    Any proposed implementation of any additional financial covenants (i.e.,
a requirement that Tenant must meet certain specified performance tests of a
financial nature, e.g., meeting a threshold EBITDAR, Net Revenue, financial
ratio or similar test) that are imposed on Tenant shall not constitute
Additional Fee Mortgagee Requirements (it being understood that Landlord may
agree to such financial covenants being imposed in any Fee Mortgage Documents so
long as such financial covenants will not impose additional obligations on
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therewith). For the avoidance of doubt, Additional Fee Mortgagee Requirements
may include (to the extent consistent with the foregoing definition of
Additional Fee Mortgagee Requirements) requirements of Tenant to:

(i)    make Rent payments into “lockbox accounts” maintained for the benefit of
Fee Mortgagee; and/or

(ii)    subject to this Section 31.3, perform other actions consistent with the
obligations described in the first sentence of this Section 31.3.

(d)    In the event Tenant breaches its obligations to comply with Additional
Fee Mortgagee Requirements as described herein (without regard to any notice or
cure period under the Fee Mortgage Documents and without regard to whether a
default or event of default has occurred as a result thereof under the Fee
Mortgage Documents), Landlord shall have the right, following the failure of
Tenant to cure such breach within twenty (20) days from receipt of written
notice to Tenant from Landlord of such breach (except to the extent the breach
is of a nature such that it is not practicable for Landlord to provide such
prior written notice, in which event Landlord shall provide written notice as
soon as practicable), to cure such breach, in which event Tenant shall reimburse
Landlord for Landlord’s reasonable costs and expenses incurred in connection
with curing such breach.

(e)    To the extent of any conflict between the terms and provisions of any
agreement to which Landlord, Tenant and Fee Mortgagee are parties and the terms
and provisions of this Section 31.3, the terms and provisions of such agreement
shall govern and control in accordance with its terms.

ARTICLE XXXII

ENVIRONMENTAL COMPLIANCE

32.1    Hazardous Substances. Tenant shall not allow any Hazardous Substance to
be located in, on, under or about the Leased Property or any portion thereof or
incorporated into the Facility; provided however that Hazardous Substances may
be (i) brought, kept, used or disposed of in, on or about the Leased Property in
quantities and for purposes similar to those brought, kept, used or disposed of
in, on or about similar facilities used for purposes similar to the Primary
Intended Use or in connection with the construction of facilities similar to the
Leased Property and (ii) disposed of in strict compliance with Legal
Requirements (other than Gaming Regulations). Tenant shall not allow the Leased
Property or any portion thereof to be used as a waste disposal site or for the
manufacturing, handling, storage, distribution or disposal of any Hazardous
Substance other than in the ordinary course of the business conducted at the
Leased Property and in compliance with applicable Legal Requirements (other than
Gaming Regulations).

32.2    Notices. Tenant or Landlord, as applicable, shall provide to the other
party, as soon as reasonably practicable but in no event later than fifteen
(15) days after Tenant’s or Landlord’s, as applicable, receipt thereof, a copy
of any notice, notification or request for information with respect to, (i) any
violation of a Legal Requirement (other than Gaming Regulations) relating to, or
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Property or any portion thereof or any adjacent property; (ii) any enforcement,
cleanup, removal, or other governmental or regulatory action instituted,
completed or threatened in writing with respect to the Leased Property or any
portion thereof; (iii) any material claim made or threatened in writing by any
Person against Tenant, Landlord or the Leased Property or any portion thereof
relating to damage, contribution, cost recovery, compensation, loss, or injury
resulting from or claimed to result from any Hazardous Substance; and (iv) any
reports made to any federal, state or local environmental agency arising out of
or in connection with any Hazardous Substance in, on, under or removed from the
Leased Property or any portion thereof, including any written complaints,
notices, warnings or assertions of violations in connection therewith.

32.3    Remediation. If either Landlord or Tenant becomes aware of a violation
of any Legal Requirement (other than Gaming Regulations) relating to any
Hazardous Substance in, on, under or about the Leased Property or any portion
thereof or any adjacent property, or if Tenant, Landlord or the Leased Property
or any portion thereof becomes subject to any order of any federal, state or
local agency to repair, close, detoxify, decontaminate or otherwise remediate
the Leased Property, Landlord or Tenant, as applicable, shall promptly notify
the other party of such event and, at Tenant’s sole cost and expense, Tenant
shall cure such violation or effect such repair, closure, detoxification,
decontamination or other remediation. If Tenant fails to diligently pursue,
implement and complete any such cure, repair, closure, detoxification,
decontamination or other remediation, which failure continues after notice and
expiration of applicable cure periods, Landlord shall have the right, but not
the obligation, to carry out such action and to recover from Tenant all of
Landlord’s costs and expenses incurred in connection therewith.

32.4    Indemnity. Each of the Persons comprising Tenant shall jointly and
severally indemnify, defend, protect, save, hold harmless, and reimburse
Landlord or any Affiliate of Landlord for, from and against any and all actual
out-of-pocket costs, losses (including, losses of use or economic benefit or
diminution in value), liabilities, damages, assessments, lawsuits, deficiencies,
demands, claims and expenses (collectively, “Environmental Costs”) (whether or
not arising out of third party claims and regardless of whether liability
without fault is imposed, or sought to be imposed, on Landlord) incurred in
connection with, arising out of, resulting from or incident to, directly or
indirectly, in each case before or during (but not if first occurring after) the
Term (i) the production, use, generation, storage, treatment, transporting,
disposal, discharge, Release or other handling or disposition of any Hazardous
Substances from, in, on or under the Leased Property or any portion thereof
(collectively, “Handling”), including the effects of such Handling of any
Hazardous Substances on any Person or property within or outside the boundaries
of the Leased Property, (ii) the presence of any Hazardous Substances in, on or
under the Leased Property and (iii) the violation of any Environmental Law.
“Environmental Costs” include interest, costs of response, removal, remedial
action, containment, cleanup, investigation, design, engineering and
construction, damages (including actual and consequential damages) for personal
injuries and for injury to, destruction of or loss of property or natural
resources, relocation or replacement costs, penalties, fines, charges or
expenses, reasonable attorney’s fees, reasonable expert fees, reasonable
consultation fees, and court costs, and all amounts paid in investigating,
defending or settling any of the foregoing, as applicable. Tenant’s indemnity
hereunder shall survive the termination of this Lease, but in no event shall
Tenant’s indemnity apply to Environmental Costs incurred in connection with,
arising out of, resulting from or incident to matters first occurring after the
later of (x) the end of the Term and (y) the date upon which Tenant shall have
vacated the Leased Property and surrendered the same to Landlord, in each case
to the extent such matters are not or were not caused by the acts or omissions
of Tenant in breach of this Lease.

 

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Without limiting the scope or generality of the foregoing, Tenant expressly
agrees that, in the event of a breach by Tenant in its obligations under
Sections 32.1 through 32.3 that is not cured within any applicable cure period,
Tenant shall reimburse Landlord for any and all reasonable costs and expenses
incurred by Landlord in connection with, arising out of, resulting from or
incident to (directly or indirectly, before or during (but not if first
occurring after) the Term) the following:

(a)    investigating any and all matters relating to the Handling of any
Hazardous Substances, in, on, from or under the Leased Property or any portion
thereof;

(b)    bringing the Leased Property into compliance with all Legal Requirements,
and

(c)    removing, treating, storing, transporting, cleaning-up and/or disposing
of any Hazardous Substances used, stored, generated, released or disposed of in,
on, from, under or about the Leased Property or off-site other than in the
ordinary course of the business conducted at the Leased Property and in
compliance with applicable Legal Requirements.

If any claim is made by Landlord for reimbursement for Environmental Costs
incurred by it hereunder, Tenant agrees to pay such claim promptly, and in any
event to pay such claim within sixty (60) calendar days after receipt by Tenant
of written notice thereof and any amount not so paid within such sixty
(60) calendar day period shall bear interest at the Overdue Rate from the date
due to the date paid in full.

32.5    Environmental Inspections. In the event Landlord has a reasonable basis
to believe that Tenant is in breach of its obligations under Sections 32.1
through 32.4, Landlord shall have the right, from time to time, during normal
business hours and upon not less than five (5) Business Days written notice to
Tenant (except in the case of an emergency that constitutes an imminent threat
to human health or safety or damage to property, in which event Landlord shall
undertake reasonable efforts to notify a representative of Tenant as soon as
practicable under the circumstances), to conduct an inspection of the Leased
Property or any portion thereof (and Tenant shall be permitted to have Landlord
or its representatives accompanied by a representative of Tenant) to determine
the existence or presence of Hazardous Substances on or about the Leased
Property or any portion thereof. In the event Landlord has a reasonable basis to
believe that Tenant is in breach of its obligations under Sections 32.1 through
32.4, Landlord shall have the right to enter and inspect the Leased Property or
any portion thereof, conduct any testing, sampling and analyses it reasonably
deems necessary and shall have the right to inspect materials brought into the
Leased Property or any portion thereof. Landlord may, in its discretion, retain
experts to conduct the inspection, perform the tests referred to herein, and to
prepare a written report in connection therewith if Landlord has a reasonable
basis to believe that Tenant is in breach of its obligations under Sections 32.1
through 32.4. All costs and expenses incurred by Landlord under this
Section 32.6 shall be the responsibility of Landlord, except solely to the
extent Tenant has breached its obligations under Sections 32.1 through 32.5, in
which event such reasonable costs and expenses shall be paid by Tenant to
Landlord as provided in Section 32.4. Failure to conduct an environmental
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shall in no fashion constitute a release of any liability for environmental
conditions subsequently determined to be associated with or to have occurred
during Tenant’s tenancy. Tenant shall remain liable for any environmental
condition related to or having occurred during its tenancy regardless of when
such conditions are discovered and regardless of whether or not Landlord
conducts an environmental inspection at the termination of this Lease. The
obligations set forth in this Article XXXII shall survive the expiration or
earlier termination of this Lease but in no event shall Article XXXII apply to
matters first occurring after the later of (x) the end of the Term and (y) the
date upon which Tenant shall have vacated the Leased Property and surrendered
the same to Landlord, in each case to the extent such matters are not or were
not caused by the acts or omissions of Tenant in breach of this Lease.

ARTICLE XXXIII

MEMORANDUM OF LEASE

Landlord and Tenant shall, promptly upon the request of either Party, enter into
a short form memoranda of this Lease, in form suitable for recording in the
county or other applicable location in which the Leased Property is located.
Each Party shall bear its own costs in negotiating and finalizing such
memoranda, but Tenant shall pay all costs and expenses of recording any such
memorandum and shall fully cooperate with Landlord in removing from record any
such memorandum upon the Expiration Date.

ARTICLE XXXIV

DISPUTE RESOLUTION

34.1    Expert Valuation Process. Whenever a determination of Fair Market
Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value or Fair
Market Property Value is required pursuant to any provision of this Lease, and
where Landlord and Tenant have not been able to reach agreement on such Fair
Market Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value
or Fair Market Property Value either (i) with respect to Fair Market Base Rental
Value applicable to a Renewal Term, within three hundred seventy (370) days
prior to the commencement date of a Renewal Term or (ii) for all other purposes,
after at least fifteen (15) days of good faith negotiations, then either Party
shall each have the right to seek, upon written notice to the other Party (the
“Expert Valuation Notice”), which notice clearly identifies that such Party
seeks, to have such Fair Market Ownership Value, Fair Market Base Rental Value,
Fair Market Rental Value or Fair Market Property Value determined in accordance
with the following Expert Valuation Process:

(a)    Within twenty (20) days of the receiving Party’s receipt of the Expert
Valuation Notice, Landlord and Tenant shall provide notice to the other Party of
the name, address and other pertinent contact information, and qualifications of
its selected appraiser (which appraiser must be an independent qualified MAI
appraiser (i.e., a Member of the Appraisal Institute)).

(b)    As soon as practicable following such notice, and in any event within
twenty (20) days following their selection, each appraiser shall prepare a
written appraisal of Fair Market Ownership Value, Fair Market Base Rental Value,
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Market Property Value (as the case may be) as of the relevant date of valuation,
and deliver the same to its respective client. Representatives of the Parties
shall then meet and simultaneously exchange copies of such appraisals. Following
such exchange, the appraisers shall promptly meet and endeavor to agree upon
Fair Market Ownership Value, Fair Market Base Rental Value, Fair Market Rental
Value or Fair Market Property Value (as the case may be) based on a written
appraisal made by each of them (and given to Landlord by Tenant). If such two
(2) appraisers shall agree upon a Fair Market Ownership Value or Fair Market
Base Rental Value or Fair Market Property Value, as applicable, such agreed
amount shall be binding and conclusive upon Landlord and Tenant.

(c)    If such two (2) appraisers are unable to agree upon a Fair Market
Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value or Fair
Market Property Value (as the case may be) within five (5) Business Days after
the exchange of appraisals as aforesaid, then such appraisers shall advise
Landlord and Tenant of the same and, within twenty (20) days of the exchange of
appraisals, select a third (3rd) appraiser (which third (3rd) appraiser, however
selected, must be an independent qualified MAI appraiser) to make the
determination of Fair Market Ownership Value, Fair Market Base Rental Value,
Fair Market Rental Value or Fair Market Property Value. The selection of the
third (3rd) appraiser shall be binding and conclusive upon Landlord and Tenant.

(d)    If such two (2) appraisers shall be unable to agree upon the designation
of a third (3rd) appraiser within the twenty (20) day period referred to in
clause (c) above, or if such third (3rd) appraiser does not make a determination
of Fair Market Ownership Value, Fair Market Base Rental Value, Fair Market
Rental Value or Fair Market Property Value (as the case may be) within thirty
(30) days after his or her selection, then such third (3rd) appraiser (or a
substituted third (3rd) appraiser, as applicable) shall, at the request of
either Party, be appointed by the Appointing Authority and such appointment
shall be final and binding on Landlord and Tenant. The determination of Fair
Market Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value
or Fair Market Property Value (as the case may be) made by the third (3rd)
appraiser appointed pursuant hereto shall be made within twenty (20) days after
such appointment.

(e)    If a third (3rd) appraiser is selected, Fair Market Ownership Value, Fair
Market Base Rental Value, Fair Market Rental Value or Fair Market Property Value
(as the case may be) shall be the average of (x) the determination of Fair
Market Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value
or Fair Market Property Value (as the case may be) made by the third (3rd)
appraiser and (y) the determination of Fair Market Ownership Value, Fair Market
Base Rental Value, Fair Market Rental Value or Fair Market Property Value (as
the case may be) made by the appraiser (selected pursuant to Section 34.1(b))
whose determination of Fair Market Ownership Value, Fair Market Base Rental
Value, Fair Market Rental Value or Fair Market Property Value (as the case may
be) is nearest to that of the third (3rd) appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant as being the Fair Market
Ownership Value, Fair Market Base Rental Value, Fair Market Rental Value or Fair
Market Property Value (as the case may be).

(f)    In determining Fair Market Ownership Value of the Leased Property or the
Facility, the appraisers shall (in addition to taking into account the criteria
set forth in the definition of “Fair Market Ownership Value”), add (i) the
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assuming the Term has been extended for all Renewal Terms provided herein (with
assumed increases in the CPI to be determined by the appraisers) using a
discount rate (which may be determined by an investment banker retained by each
appraiser) based on the credit worthiness of Tenant and any guarantor of
Tenant’s obligations hereunder and (ii) the present value of the Leased Property
or Facility as of the end of such Term (assuming the Term has been extended for
all Renewal Terms provided herein). The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will comply)
with all provisions of the Lease, and that no default exists under any guaranty
of Tenant’s obligations hereunder.

(g)    In determining Fair Market Base Rental Value, the appraisers shall (in
addition to the criteria set forth in the definition thereof and of Fair Market
Rental Value) take into account: (i) the age, quality and condition (as required
by the Lease) of the Improvements; (ii) that the Leased Property or Facility
will be leased as a whole or substantially as a whole to a single user;
(iii) when determining the Fair Market Base Rental Value for any Renewal Term, a
lease term of five (5) years together with such options to renew as then remains
hereunder; (iv) an absolute triple net lease; and (v) such other items that
professional real estate appraisers customarily consider.

(h)    [reserved].

(i)    If, by virtue of any delay, Fair Market Base Rental Value is not
determined by the first (1st) day of the applicable Renewal Term, then until
Fair Market Base Rental Value is determined, Tenant shall continue to pay Rent
during the succeeding Renewal Term in the same amount which Tenant was obligated
to pay prior to the commencement of the Renewal Term. Upon determination of Fair
Market Base Rental Value, Rent shall be calculated retroactive to the
commencement of the Renewal Term and Tenant shall either receive a refund from
Landlord (in the case of an overpayment) or shall pay any deficiency to Landlord
(in the case of an underpayment) within thirty (30) days of the date on which
the determination of Fair Market Base Rental Value becomes binding.

(j)    The cost of the procedure described in this Section 34.1 shall be borne
equally by the Parties and the Parties will reasonably coordinate payment;
provided, that, if Landlord pays such costs, fifty percent (50%) of such costs
shall be Additional Charges hereunder and if Tenant pays such costs, fifty
percent (50%) of such costs shall be a credit against the next Rent payment
hereunder.

34.2    Arbitration. In the event of a dispute with respect to this Lease
pursuant to an Arbitration Provision, or in any case when this Lease expressly
provides for the settlement or determination of a dispute or question by an
Expert pursuant to this Section 34.2 (in any such case, a “Section 34.2
Dispute”) such dispute shall be determined in accordance with an arbitration
proceeding as set forth in this Section 34.2.

(a)    Any Section 34.2 Dispute shall be determined by an arbitration panel
comprised of three members, each of whom shall be an Expert (the “Arbitration
Panel”). No more than one panel member may be with the same firm and no panel
member may have an economic interest in the outcome of the arbitration.

 

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The Arbitration Panel shall be selected as set forth in this Section 34.2(b). If
a Section 34.2 Dispute arises and if Landlord and Tenant are not able to resolve
such dispute after at least fifteen (15) days of good faith negotiations, then
either Party shall each have the right to submit the dispute to the Arbitration
Panel, upon written notice to the other Party (the “Arbitration Notice”). The
Arbitration Notice shall identify one member of the Arbitration Panel who meets
the criteria of the above paragraph. Within five (5) Business Days after the
receipt of the Arbitration Notice, the Party receiving such Arbitration Notice
shall respond in writing identifying one member of the Arbitration Panel who
meets the criteria of the above paragraph. Such notices shall include the name,
address and other pertinent contact information, and qualifications of its
member of the Arbitration Panel. If a Party fails to timely select its
respective panel member, the other Party may notify such Party in writing of
such failure, and if such Party fails to select its respective panel member
within three (3) Business Days after receipt of such notice, then such other
Party may select and identify to such Party such panel member on such Party’s
behalf. The third member of the Arbitration Panel will be selected by the two
(2) members of the Arbitration Panel who were selected by Landlord and Tenant;
provided, that, if, within five (5) Business Days after they are identified,
they fail to select a third member, or if they are unable to agree on such
selection, Landlord and Tenant shall cause the third member of the Arbitration
Panel to be appointed by the managing officer of the American Arbitration
Association.

(b)    Within ten (10) Business Days after the selection of the Arbitration
Panel, Landlord and Tenant each shall submit to the Arbitration Panel a written
statement identifying its summary of the issues. Landlord and Tenant may also
request an evidentiary hearing on the merits in addition to the submission of
written statements. The Arbitration Panel shall make its decision within twenty
(20) days after the later of (i) the submission of such written statements, and
(ii) the conclusion of any evidentiary hearing on the merits. The Arbitration
Panel shall reach its decision by majority vote and shall communicate its
decision by written notice to Landlord and Tenant.

(c)    The decision by the Arbitration Panel shall be final, binding and
conclusive and shall be non-appealable and enforceable in any court having
jurisdiction. All hearings and proceedings held by the Arbitration Panel shall
take place in New York, New York unless otherwise mutually agreed by the Parties
and the Arbitration Panel.

(d)    The resolution procedure described herein shall be governed by the
Commercial Rules of the American Arbitration Association and the Procedures for
Large, Complex, Commercial Disputes in effect as of the Commencement Date.

(e)    Landlord and Tenant shall bear equally the fees, costs and expenses of
the Arbitration Panel in conducting any arbitration described in this
Section 34.2.

ARTICLE XXXV

NOTICES

Any notice, request, demand, consent, approval or other communication required
or permitted to be given by either Party hereunder to the other Party shall be
in writing and shall be sent by registered or certified mail, postage prepaid
and return receipt requested, by hand delivery

 

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or express courier service, by email transmission or by an overnight express
service to the following address:

 

To Tenant:

 

c/o Caesars Entertainment, Inc.
100 West Liberty Street, Suite 1150

Reno, NV 89501
Attention: General Counsel
Email: equatmann@eldoradoresorts.com

  

To Landlord:

 

c/o VICI Properties Inc.
535 Madison Avenue, 20th Floor
New York, NY 10022
Attention: General Counsel
Email: corplaw@viciproperties.com

or to such other address as either Party may hereafter designate. Notice shall
be deemed to have been given on the date of delivery if such delivery is made on
a Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted. Notice sent by email shall be deemed given only upon an
independent, non-automated confirmation from the recipient acknowledging
receipt.

ARTICLE XXXVI

END OF TERM GAMING ASSETS TRANSFER

36.1    Transfer of Tenant’s Gaming Assets and Operational Control of the Leased
Property. Upon the written request (an “End of Term Gaming Assets Transfer
Notice”) of Landlord either immediately prior to or in connection with the
expiration or earlier termination of the Term (other than a termination
resulting from an L1/L2 Transfer), or of Tenant in connection with the
expiration or earlier termination of this Lease that occurs (i) either on the
last date of the Initial Term or the last date of any Renewal Term, or (ii) in
the event Landlord exercises its right to terminate this Lease or repossess the
Leased Property in accordance with the terms of this Lease and, provided in each
of the foregoing clauses (i) or (ii) that Tenant complies with the provisions of
Section 36.4, Tenant shall transfer (or cause to be transferred) upon the
expiration or termination of the Term, or as soon thereafter as Landlord shall
request, the business operations (including, for the avoidance of doubt, all
Tenant’s Property relating to the Facility) (such assets, collectively, the
“Gaming Assets”) to a successor lessee or operator (or lessees or operators) of
the Facility (collectively, the “Successor Tenant”) designated by Landlord or,
if applicable, pursuant to Section 36.3, for consideration to be received by
Tenant from the Successor Tenant in an amount negotiated and agreed to by Tenant
and the Successor Tenant or, if applicable, determined pursuant to Section 36.3
(the “Gaming Assets FMV”); provided, however, that in the event an End of Term
Gaming Assets Transfer Notice is delivered hereunder, then notwithstanding the
expiration or earlier termination of the Term, until such time that Tenant
transfers the Gaming Assets to a Successor Tenant, Tenant shall (or shall cause
its Subsidiaries to) continue to (and Landlord shall permit Tenant to maintain
possession of the Leased Property to the extent necessary to) possess and
operate the Facility in accordance with the applicable terms of this Lease and
the course and manner in which Tenant (or its Subsidiaries) has operated the
Facility prior to the end of the Term (including, but not limited to, the
payment of Rent hereunder, which shall be calculated as provided in this Lease,
except, that for any period following the last day of the calendar month in
which the thirty-fifth (35th) anniversary of the Second Amendment Date occurs,
the Rent shall be a per annum amount equal to the sum of (A) the amount of the
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which the Expiration Date occurs, multiplied by the Escalator, and increased on
each anniversary of the Expiration Date to be equal to the Base Rent payable for
the immediately preceding year, multiplied by the Escalator, plus (B) the amount
of the Variable Rent hereunder during the Lease Year in which the Expiration
Date occurs). If Tenant, Landlord and/or a Successor Tenant designated by
Landlord cannot agree on the Gaming Assets FMV within a reasonable time not to
exceed thirty (30) days after receipt of an End of Term Gaming Assets Transfer
Notice hereunder, then such Gaming Assets FMV shall be determined, and Tenant’s
transfer of the Gaming Assets to a Successor Tenant in consideration for a
payment in such amount shall be determined and transferred, in accordance with
the provisions of Section 36.3.

36.2    Transfer of Intellectual Property. The Gaming Assets shall include a two
(2) year transition license for Property Specific IP used, or held for use, at
or in connection with the Facility. Without limiting the foregoing, Tenant
shall, within thirty (30) days after the delivery of an End of Term Gaming
Assets Transfer Notice, deliver to Landlord a copy of all Property Specific
Guest Data; provided, however, that Tenant shall have the right to retain and
use copies of such data as required by Legal Requirements, including applicable
Gaming Regulations.

36.3    Determination of Gaming Assets FMV.

If not effected pursuant to Section 36.1, then the determination of the Gaming
Assets FMV and the transfer of the Gaming Assets to a Successor Tenant in
consideration for the Gaming Assets FMV shall be effected by (i) first,
determining in accordance with Section 36.3(a) the rent that Landlord would be
entitled to receive from Successor Tenant assuming a lease term of the greater
of (I) the remaining term of this Lease (assuming that this Lease will not have
terminated prior to its natural expiration at the end of the final Renewal Term)
and (II) the lesser of (x) ten (10) years and (y) eighty percent (80%) of the
then remaining useful life of the Leased Property for the highest and best use
of the Leased Property (the “Successor Tenant Rent”) pursuant to a lease
agreement containing substantially the same terms and conditions of this Lease
(other than, in the case of a new lease at the end of the final Renewal Term,
the terms of this Article XXXVI, which will not be included in such new lease),
(ii) second, identifying and designating in accordance with the terms of
Section 36.3(b), a pool of qualified potential Successor Tenants (each, a
“Qualified Successor Tenant”) prepared to lease the Facility at the Successor
Tenant Rent and to bid for the Gaming Assets, and (iii) third, in accordance
with the terms of Section 36.3(c), determining the highest price a Qualified
Successor Tenant would agree to pay for the Gaming Assets, and setting such
highest price as the Gaming Assets FMV in exchange for which Tenant shall be
required to transfer the Gaming Assets and Landlord will enter into a lease with
such Qualified Successor Tenant on substantially the same terms and conditions
of this Lease (other than, in the case of a new lease at the end of the final
Renewal Term, the terms of this Article XXXVI, which will not be included in
such new lease) through (I) the remaining term of this Lease (assuming that this
Lease will not have terminated prior to its natural expiration at the end of the
final Renewal Term) or (II) the lesser of (x) ten (10) years and (y) eighty
percent (80%) of the then remaining useful life of the Leased Property,
whichever of (I) or (II) is greater, for a rent calculated pursuant to
Section 36.3(a) hereof. Notwithstanding anything in the contrary in this Article
XXXVI, the transfer of the Gaming Assets will be conditioned upon the approval
of the applicable regulatory agencies of the transfer of the Gaming Licenses and
any other gaming assets to the Successor Tenant and/or the issuance of new
gaming licenses as required by applicable Gaming Regulations and the relevant
regulatory agencies both with respect to operating and suitability criterion, as
the case may be.

 

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(a)    Determining Successor Tenant Rent. Landlord and Tenant shall first
attempt to agree on the amount of Successor Tenant Rent that it will be assumed
Landlord will be entitled to receive for a term of the greater of (I) the
remaining term of this Lease (assuming that this Lease will not have terminated
prior to its natural expiration at the end of the final Renewal Term) and
(II) the lesser of (x) ten (10) years and (y) eighty percent (80%) of the then
remaining useful life of the Leased Property, and pursuant to a lease containing
substantially the same terms and conditions of this Lease (other than, in the
case of a new lease at the end of the final Renewal Term, the terms of this
Article XXXVI, which will not be included in such new lease). If Landlord and
Tenant cannot agree on the Successor Tenant Rent amount within a reasonable time
not to exceed sixty (60) days after receipt of an End of Term Gaming Assets
Transfer Notice hereunder, then the Successor Tenant Rent shall be set as
follows:

(i)    for the period preceding the last day of the calendar month in which the
thirty-fifth (35th) anniversary of the Second Amendment Date occurs, then the
annual Successor Tenant Rent shall be an amount equal to the annual Rent that
would have accrued under the terms of this Lease for such period (assuming the
Lease will have not been terminated prior to its natural expiration); and

(ii)    for the period following the last day of the calendar month in which the
thirty-fifth (35th) anniversary of the Second Amendment Date occurs, then the
Successor Tenant Rent shall be calculated in the same manner as Rent is
calculated under this Lease, provided that if Tenant or an Affiliate of Tenant
shall be the Successor Tenant, the Rent shall not be less than the Fair Market
Rental Value.

(b)    Designating Potential Successor Tenants. Landlord will select one and
Tenant will select three (3) (for a total of up to four (4)) potential Qualified
Successor Tenants prepared to lease the Facility for the Successor Tenant Rent,
each of whom must meet the criteria established for a L1 Qualified Transferee
(as if the lease of the Facility to the Qualified Successor Tenant was an L1
Transfer) (and none of whom may be Tenant or an Affiliate of Tenant (it being
understood and agreed that there shall be no restriction on Landlord or any
Affiliate of Landlord from being a potential Qualified Successor Tenant), except
in the case of expiration of the Lease on the last day of the calendar month in
which the thirty-fifth (35th) anniversary of the Second Amendment Date occurs).
Landlord and Tenant must designate their proposed Qualified Successor Tenants
within ninety (90) days after receipt of an End of Term Gaming Assets Transfer
Notice hereunder. In the event that Landlord or Tenant fails to designate such
Party’s allotted number of potential Qualified Successor Tenants, the other
Party may designate additional potential Qualified Successor Tenants such that
the total number of potential Qualified Successor Tenants does not exceed four;
provided that, in the event the total number of potential Qualified Successor
Tenants is less than four (4), the transfer process will still proceed as set
forth in Section 36.3(c) below.

(c)    Determining Gaming Assets FMV. Tenant will have a three (3) month period
to negotiate an acceptable sales price for the Gaming Assets, with one of the
Qualified Successor Tenants, which three (3) month period will commence
immediately upon the conclusion

 

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of the steps set forth above in Section 36.3(b). If Tenant does not reach an
agreement prior to the end of such three (3) month period, Landlord shall
conduct an auction for the Gaming Assets among the four potential successor
lessees, and Tenant will be required to transfer the Gaming Assets to the
highest bidder.

36.4    Operation Transfer. Upon designation of a Successor Tenant by Landlord
(pursuant to this Article XXXVI), Tenant shall reasonably cooperate and take all
actions reasonably necessary (including providing all reasonable assistance to
Successor Tenant) to effectuate the transfer of the Gaming Assets and
operational control of the Facility to Successor Tenant in an orderly manner so
as to minimize to the maximum extent feasible any disruption to the continued
orderly operation of the Facility for its Primary Intended Use. Concurrently
with the transfer of the Gaming Assets to Successor Tenant, (i) Tenant shall
assign to Successor Tenant (and Successor Tenant shall assume) any
then-effective Subleases or other agreements (to the extent such other
agreements are assignable) relating to the Leased Property (provided, that,
Tenant shall not assign, and neither Landlord nor any Successor Tenant shall
have any obligation to assume, any Permitted Sportsbook Sublease unless it
elects, in its sole and absolute discretion, to permit Tenant to assign any
Permitted Sportsbook Sublease to it), and (ii) Tenant shall vacate and surrender
the Leased Property to Landlord and/or Successor Tenant in the condition
required under this Lease. Notwithstanding the expiration or earlier termination
of the Term and anything to the contrary herein, to the extent that this Article
XXXVI applies, unless Landlord consents to the contrary, until such time that
Tenant transfers the Gaming Assets and operational control of the Facility to a
Successor Tenant in accordance with the provisions of this Article XXXVI, Tenant
shall (or shall cause its Subsidiaries to) continue to (and Landlord shall
permit Tenant to maintain possession of the Leased Property to the extent
necessary to) operate the Facility in accordance with the applicable terms of
this Lease and the course and manner in which Tenant (or its Subsidiaries) has
operated the Facility prior to the end of the Term (including, but not limited
to, the payment of Rent hereunder at the rate provided in Section 36.1 (and not
subject to Article XIX)); provided, however, that Tenant shall have no
obligation (unless specifically agreed to by Tenant) to operate the Facility (or
pay any such Rent) under such arrangement for more than two (2) years after the
Expiration Date. The period of time following the Expiration Date during which
Tenant continues to operate the Facility as described in the preceding sentence
is referred to in the Guaranty as a “Transition Period.”

ARTICLE XXXVII

ATTORNEYS’ FEES

If Landlord or Tenant brings an action or other proceeding against the other to
enforce or interpret any of the terms, covenants or conditions hereof or any
instrument executed pursuant to this Lease, or by reason of any breach or
default hereunder or thereunder, the Party substantially prevailing in any such
action or proceeding and any appeal thereupon shall be paid all of its costs and
reasonable documented outside attorneys’ fees incurred therein. In addition to
the foregoing and other provisions of this Lease that specifically require
Tenant to reimburse, pay or indemnify against Landlord’s attorneys’ fees, Tenant
shall pay, as Additional Charges, all of Landlord’s reasonable documented
outside attorneys’ fees incurred in connection with the enforcement of this
Lease (except to the extent provided above), including reasonable documented
attorneys’ fees incurred in connection with the review, negotiation or
documentation of any subletting, assignment, or management arrangement or any
consent requested in connection with such enforcement, and the collection of
past due Rent.

 

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ARTICLE XXXVIII

BROKERS

Tenant warrants that it has not had any contact or dealings with any Person or
real estate broker which would give rise to the payment of any fee or brokerage
commission in connection with this Lease, and Tenant shall indemnify, protect,
hold harmless and defend Landlord from and against any liability with respect to
any fee or brokerage commission arising out of any act or omission of Tenant.
Landlord warrants that it has not had any contact or dealings with any Person or
real estate broker which would give rise to the payment of any fee or brokerage
commission in connection with this Lease, and Landlord shall indemnify, protect,
hold harmless and defend Tenant from and against any liability with respect to
any fee or brokerage commission arising out of any act or omission of Landlord.

ARTICLE XXXIX

ANTI-TERRORISM REPRESENTATIONS

Each Party hereby represents and warrants to the other Party that neither such
representing Party nor, to its knowledge, any persons or entities holding any
Controlling legal or beneficial interest whatsoever in it are (i) the target of
any sanctions program that is established by Executive Order of the President or
published by the Office of Foreign Assets Control, U.S. Department of the
Treasury (“OFAC”); (ii) designated by the President or OFAC pursuant to the
Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56,
Executive Order 13224 (September 23, 2001) or any Executive Order of the
President issued pursuant to such statutes; or (iii) named on the following list
that is published by OFAC: “List of Specially Designated Nationals and Blocked
Persons” (collectively, “Prohibited Persons”). Each Party hereby represents and
warrants to the other Party that no funds tendered to such other Party by such
tendering Party under the terms of this Lease are or will be directly or
indirectly derived from activities that may contravene U.S. federal, state or
international laws and regulations, including anti-money laundering laws.
Neither Party will during the Term of this Lease knowingly engage in any
transactions or dealings, or knowingly be otherwise associated with, any
Prohibited Persons in connection with the Leased Property.

ARTICLE XL

LANDLORD REIT PROTECTIONS

(a)    The Parties intend that Rent and other amounts paid by Tenant hereunder
will qualify as “rents from real property” within the meaning of Section 856(d)
of the Code, or any similar or successor provision thereto and this Lease shall
be interpreted consistent with this intent. If any Rent hereunder fails to
qualify as “rent from real property” within the meaning of Section 856(d) of the
Code, the Parties will cooperate in good faith to amend this Lease such that no
Rent

 

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fails to so qualify, provided that (i) such amendment shall not (w) increase
Tenant’s monetary obligations under this Lease by more than a de minimis extent,
(x) increase Tenant’s non-monetary obligations under this Lease in any material
respect, (y) decrease Landlord’s obligations under this Lease in any material
respect or (z) diminish Tenant’s rights under this Lease in any material respect
and (ii) Landlord shall reimburse Tenant for all reasonable and actual
documented out-of-pocket costs and expenses (including, without limitation,
reasonable and actual documented out-of-pocket legal costs and expenses)
incurred by Tenant in connection with such amendment.

(b)    Anything contained in this Lease to the contrary notwithstanding, Tenant
shall not without Landlord’s advance written consent (i) sublet, assign or enter
into a management arrangement for the Leased Property on any basis such that
rent or other amounts to be paid by the subtenant, assignee or manager
thereunder would be based, in whole or in part, on either (x) the income or
profits derived by the business activities of the subtenant, assignee or manager
or (y) any other formula such that any portion of any amount received by
Landlord could reasonably be expected to cause any portion of the amounts to
fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto;
(ii) furnish or render any services to the subtenant, assignee or manager or
manage or operate the Leased Property so subleased, assigned or managed;
(iii) sublet, assign or enter into a management arrangement for the Leased
Property to any Person (other than a “taxable REIT subsidiary” (within the
meaning of Section 856(l) of the Code, or any similar or successor provision
thereto) of Landlord REIT) in which Landlord or PropCo owns an interest,
directly or indirectly (by applying constructive ownership rules set forth in
Section 856(d)(5) of the Code, or any similar or successor provision thereto);
or (iv) sublet, assign or enter into a management arrangement for the Leased
Property in any other manner which could reasonably be expected to cause any
portion of the amounts received by Landlord pursuant to this Lease or any
Sublease to fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto, or
which could reasonably be expected to cause any other income of Landlord to fail
to qualify as income described in Section 856(c)(2) of the Code, or any similar
or successor provision thereto; provided that the parties agree that by entering
into the Second Amendment, Landlord consents to a Permitted Sportsbook Sublease
if and only if (I) both (A) neither WH US Holdco nor any subsidiary of WH US
Holdco (including any partnership (within the meaning of the Code) in which any
one of the forgoing or Tenant, directly or indirectly, is a partner described in
Section 856(d)(5)(B) of the Code) owns (or in the aggregate own) any interest in
Landlord REIT’s stock taking into account both actual direct or indirect
ownership and constructive ownership determined by applying constructive
ownership rules set forth in Section 856(d)(5) of the Code, or any similar or
successor provision thereto (other than up to one percent (1%) constructive
ownership of Landlord REIT’s common stock), and (B) no amounts paid by Tenant
hereunder are excluded from “rents from real property” by reason of
Section 856(d)(2)(B) taking into account for purposes of this clause (B) stock
ownership solely attributable to the application of the constructive ownership
rules set forth in Section 856(d)(5) of the Code (or any similar or successor
provision thereto) and by not taking into account any stock ownership that
Landlord REIT or any of its subsidiaries actually owns (without taking into
account the constructive ownership rules of Section 856(d)(5) of the Code, or
any similar or successor provision thereto) or that Landlord REIT constructively
owns (taking into account the application of the constructive ownership rules
set forth in Section 856(d)(5) of the Code, or any similar or successor
provision thereto) solely as a result of granting after the Second Amendment
Date an exemption to its “ownership limits” as contemplated by Article 7 of the
Articles of Amendment and Restatement

 

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of Landlord REIT dated October 6, 2017 (as may be amended, restated or amended
and restated from time to time) (such exemption, an “Excepted Holder Limit”),
and (II) if any Permitted Sportsbook Sublease is not identical to the CPLV
Sportsbook Operating Agreement, such Permitted Sportsbook Sublease does not
violate the requirement of clause (iv) (ignoring for this purpose the consent
otherwise granted by this proviso). Landlord REIT and Tenant will cooperate in
good faith to permit Landlord REIT to notify each Excepted Holder that has an
Excepted Holder Limit on the Second Amendment Date of this transaction and
request that such Excepted Holder provide information regarding its ownership,
if any, of WH US Holdco or any subsidiary of WH US Holdco, taking into account
the constructive ownership rules set forth in Section 856(d)(5) of the Code (or
any similar or successor provision thereto). As of the end of each Fiscal
Quarter during the Term, Tenant shall deliver to Landlord a certification, in
the form attached hereto as Exhibit G, stating that Tenant has reviewed its
transactions during such Fiscal Quarter and certifying that Tenant is in
compliance with the provisions of this Article XL. The requirements of this
Article XL shall likewise apply to any further sublease, assignment or
management arrangement by any subtenant, assignee or manager.

(c)    Anything contained in this Lease to the contrary notwithstanding, the
Parties acknowledge and agree that Landlord, in its sole discretion, may assign
this Lease or any interest herein to another Person (including without
limitation, a direct or indirect subsidiary of Landlord REIT that, itself, is a
REIT, or a “taxable REIT subsidiary” (within the meaning of Section 856(l) of
the Code, or any similar or successor provision thereto)) in order to maintain
Landlord REIT’s status as a REIT; provided, however, that Landlord shall be
required to (i) comply with any applicable Legal Requirements related to such
transfer and (ii) give Tenant notice of any such assignment; and provided
further, that any such assignment shall be subject to all of the rights of
Tenant hereunder.

(d)    Anything contained in this Lease to the contrary notwithstanding, upon
request of Landlord, Tenant shall cooperate with Landlord in good faith and at
no cost or expense (other than de minimis cost) to Tenant, and provide such
documentation and/or information as may be in Tenant’s possession or under
Tenant’s control and otherwise readily available to Tenant as shall be
reasonably requested by Landlord in connection with verification of Landlord
REIT’s REIT compliance requirements. Anything contained in this Lease to the
contrary notwithstanding, Tenant shall take such action as may be requested by
Landlord from time to time in order to ensure compliance with the Internal
Revenue Service requirement that Rent allocable for purposes of Section 856 of
the Code to personal property, if any, at the beginning and end of a calendar
year does not exceed fifteen percent (15%) of the total Rent due hereunder as
long as such compliance does not (i) increase Tenant’s monetary obligations
under this Lease by more than a de minimis extent or (ii) materially increase
Tenant’s nonmonetary obligations under this Lease or (iii) materially diminish
Tenant’s rights under this Lease.

ARTICLE XLI

MISCELLANEOUS

41.1    Survival. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities, obligations and
indemnities of Tenant or Landlord arising or in respect of any period prior to
the Expiration Date shall survive the Expiration Date.

 

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41.2    Severability. Subject to Section 1.2, if any term or provision of this
Lease or any application thereof shall be held invalid or unenforceable, the
remainder of this Lease and any other application of such term or provision
shall not be affected thereby.

41.3    Non-Recourse. Tenant specifically agrees to look solely to the Leased
Property for recovery of any judgment from Landlord (and Landlord’s liability
hereunder shall be limited solely to its interest in the Leased Property, and no
recourse under or in respect of this Lease shall be had against any other assets
of Landlord whatsoever). The provision contained in the foregoing sentence is
not intended to, and shall not, limit any right that Tenant might otherwise have
to obtain injunctive relief against Landlord, or any action not involving the
personal liability of Landlord. In no event shall either Party ever be liable to
the other Party for any indirect, consequential, lost profits, punitive,
exemplary, statutory or treble damages suffered from whatever cause (other than,
as to all such forms of damages, (i) if Landlord has terminated this Lease, any
damages with respect to Rent or Additional Charges as provided under
Section 16.3(a) hereof, (ii) if Landlord has not terminated this Lease, any
damages with respect to Rent or Additional Charges as provided for herein,
(iii) any amount of any Required Capital Expenditures not made pursuant to
Section 10.5(a)(x) hereof, (iv) damages as provided under Section 16.3(c)
hereof, (v) a claim (including an indemnity claim) for recovery of any such
forms of damages that the claiming party is required by a court of competent
jurisdiction or the expert to pay to a third party (other than any damages under
or relating to any Fee Mortgage or Fee Mortgage Documents (excluding claims
under Section 32.4)) other than to the extent resulting from the claiming
party’s gross negligence, willful misconduct or default hereunder, and (vi) to
the extent expressly provided under Section 32.4), and the Parties acknowledge
and agree that the rights and remedies in this Lease, and all other rights and
remedies at law and in equity, will be adequate in all circumstances for any
claims the parties might have with respect to damages. For the avoidance of
doubt, (I) any damages of Landlord under or relating to any Fee Mortgage or Fee
Mortgage Documents shall be deemed to be consequential damages hereunder,
provided, however that, notwithstanding the foregoing clause (I), it is
expressly agreed that the following shall constitute direct damages hereunder:
(x) amounts payable by Tenant pursuant to Section 16.7 resulting from the breach
by Tenant of any Additional Fee Mortgagee Requirements and (y) out of pocket
costs and expenses (including reasonable legal fees) incurred by a Landlord
Indemnified Party (or, to the extent required to be reimbursed by a Landlord
Indemnified Party under a Fee Mortgage Document, incurred by or on behalf of any
other Person) to defend (but not settle or pay any judgment resulting from) any
investigative, administrative or judicial proceeding commenced or threatened as
a result of a breach by Tenant of any Additional Fee Mortgagee Requirement;
provided that, notwithstanding the foregoing, in no event shall Tenant be
required to pay any amounts to repay (or that are applied to reduce) the
principal amount of any loan or debt secured by or relating to a Fee Mortgage or
any interest or fees on any such loan or debt, and (II) any damages of Tenant
under or relating to any Permitted Leasehold Mortgage and any related agreements
or instruments shall be deemed to be consequential damages hereunder. It is
specifically agreed that no constituent member, partner, owner, director,
officer or employee of a Party shall ever be personally liable for any judgment
(in respect of obligations under or in connection with this Lease) against, or
for the payment of any monetary obligation under or in respect of this Lease,
such Party, to the other Party (provided, this sentence shall not limit the
obligations of Guarantor expressly set forth in the Guaranty).

 

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41.4    Successors and Assigns. This Lease shall be binding upon Landlord and
its permitted successors and assigns and, subject to the provisions of Article
XXII, upon Tenant and its successors and assigns.

41.5    Governing Law. (a) THIS LEASE WAS NEGOTIATED IN THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. ACCORDINGLY, IN ALL RESPECTS THIS
LEASE (AND ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OR CONFLICTS OF LAW) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT ALL PROVISIONS
HEREOF RELATING TO THE CREATION OF THE LEASEHOLD ESTATE AND ALL REMEDIES SET
FORTH IN ARTICLE XVI RELATING TO RECOVERY OF POSSESSION OF THE LEASED PROPERTY
(SUCH AS AN ACTION FOR UNLAWFUL DETAINER, IN REM ACTION OR OTHER SIMILAR ACTION)
SHALL BE CONSTRUED AND ENFORCED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE
STATE OF ILLINOIS.

(b)    EXCEPT FOR (x) DISPUTES SPECIFICALLY PROVIDED IN THIS LEASE TO BE
REFERRED TO AN EXPERT VALUATION PROCESS PURSUANT TO SECTION 34.1 OR ARBITRATION
PURSUANT TO SECTION 34.2 AND (y) PROCEEDINGS PERTAINING TO THE PROVISIONS HEREOF
RELATING TO THE CREATION OF THE LEASEHOLD ESTATE AND THE EXERCISE OF REMEDIES
SET FORTH IN ARTICLE XVI RELATING TO RECOVERY OF POSSESSION OF THE LEASED
PROPERTY (SUCH AS AN ACTION FOR UNLAWFUL DETAINER, IN REM ACTION OR OTHER
SIMILAR ACTION), ALL CLAIMS, DEMANDS, CONTROVERSIES, DISPUTES, ACTIONS OR CAUSES
OF ACTION OF ANY NATURE OR CHARACTER ARISING OUT OF OR IN CONNECTION WITH, OR
RELATED TO, THIS LEASE, WHETHER LEGAL OR EQUITABLE, KNOWN OR UNKNOWN, CONTINGENT
OR OTHERWISE SHALL BE RESOLVED IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURTS THERETO, OR IF FEDERAL
JURISDICTION IS LACKING, THEN IN NEW YORK STATE SUPREME COURT, NEW YORK COUNTY
(COMMERCIAL DIVISION) AND ANY APPELLATE COURTS THERETO.    THE PARTIES AGREE
THAT SERVICE OF PROCESS FOR PURPOSES OF ANY SUCH LITIGATION OR LEGAL PROCEEDING
NEED NOT BE PERSONALLY SERVED OR SERVED WITHIN THE STATE OF NEW YORK, BUT MAY BE
SERVED WITH THE SAME EFFECT AS IF THE PARTY IN QUESTION WERE SERVED WITHIN THE
STATE OF NEW YORK, BY GIVING NOTICE CONTAINING SUCH SERVICE TO THE INTENDED
RECIPIENT (WITH COPIES TO COUNSEL) IN THE MANNER PROVIDED IN ARTICLE XXXV. THIS
PROVISION SHALL SURVIVE AND BE BINDING UPON THE PARTIES AFTER THIS LEASE IS NO
LONGER IN EFFECT.

41.6    Waiver of Trial by Jury. EACH OF LANDLORD AND TENANT ACKNOWLEDGES THAT
IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO
TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES, THE STATE OF NEW YORK
AND THE STATE OF ILLINOIS.

 

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EACH OF LANDLORD AND TENANT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS LEASE (OR
ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY MANNER
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LANDLORD AND TENANT
WITH RESPECT TO THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS
HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH; OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; EACH OF LANDLORD AND TENANT HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT
TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A COPY OF THIS SECTION WITH
ANY COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER
OF ITS RIGHT TO TRIAL BY JURY.

41.7    Entire Agreement. This Lease (including the Exhibits and Schedules
hereto), together with the other Lease Related Agreements, collectively
constitute the entire and final agreement of the Parties with respect to the
subject matter hereof, and may not be changed or modified except by an agreement
in writing signed by the Parties. In addition to the foregoing, it is agreed to
by the Parties that no modification to this Lease shall be effective without the
written consent of (i) any applicable Fee Mortgagee, to the extent that such a
modification would adversely affect such Fee Mortgagee and (ii) any applicable
Permitted Leasehold Mortgagee, to the extent that such a modification would
adversely affect such Permitted Leasehold Mortgagee. Landlord and Tenant hereby
agree that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the leasing of the Leased Property (other than the
other Lease Related Agreements) are merged into and revoked by this Lease
(together with the Lease Related Agreements referenced above).

41.8    Headings. All captions, titles and headings to sections, subsections,
paragraphs, exhibits or other divisions of this Lease, and the table of
contents, are only for the convenience of the Parties and shall not be construed
to have any effect or meaning with respect to the other contents of such
sections, subsections, paragraphs, exhibits or other divisions, such other
content being controlling as to the agreement among the Parties.

41.9    Counterparts. This Lease may be executed in any number of counterparts,
each of which shall be a valid and binding original, but all of which together
shall constitute one and the same instrument. This Lease may be effectuated by
the exchange of electronic copies of signatures (e.g., .pdf), with electronic
copies of this executed Lease having the same force and effect as original
counterpart signatures hereto for all purposes.

41.10    Interpretation. Both Landlord and Tenant have been represented by
counsel and this Lease and every provision hereof has been freely and fairly
negotiated. Consequently, all provisions of this Lease shall be interpreted
according to their fair meaning and shall not be strictly construed against any
party.

 

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41.11    Deemed Consent. Each request for consent or approval under Sections
9.1, 10.2, 10.3(e), 13.1(a), 13.5, 14.1, 22.1, 22.2 and 22.3 and Article XI of
this Lease shall be made in writing to either Tenant or Landlord, as applicable,
and shall include all information necessary for Tenant or Landlord, as
applicable, to make an informed decision, and shall include the following in
capital, bold and block letters: “FIRST NOTICE – THIS IS A REQUEST FOR CONSENT
UNDER THAT CERTAIN LEASE (JOLIET). THE FOLLOWING REQUEST REQUIRES A RESPONSE
WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT.” If the party to whom such a
request is sent does not approve or reject the proposed matter within fifteen
(15) Business Days of receipt of such notice and all necessary information, the
requesting party may request a consent again by delivery of a notice including
the following in capital, bold and block letters: “SECOND NOTICE – THIS IS A
SECOND REQUEST FOR CONSENT UNDER THAT CERTAIN LEASE (JOLIET). THE FOLLOWING
REQUEST REQUIRES A RESPONSE WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT.” If the
party to whom such a request is sent does not approve or reject the proposed
matter within five (5) Business Days of receipt of such notice and all necessary
information, the requesting party may request a consent again by delivery of a
notice including the following in capital, bold and block letters: “FINAL
NOTICE—THIS IS A THIRD REQUEST FOR CONSENT UNDER THAT CERTAIN LEASE (JOLIET).
THE FOLLOWING REQUEST REQUIRES A RESPONSE WITHIN FIVE (5) BUSINESS DAYS OF
RECEIPT. FAILURE TO RESPOND WITHIN FIVE (5) BUSINESS DAYS HEREOF WILL BE DEEMED
AN APPROVAL OF THE REQUEST.” If the party to whom such a request is sent still
does not approve or reject the proposed matter within five (5) Business Days of
receipt of such final notice, such party shall be deemed to have approved the
proposed matter.

41.12    Further Assurances. The Parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease. In
addition, Landlord agrees to, at Tenant’s sole cost and expense, reasonably
cooperate with all applicable Gaming Authorities and Liquor Authorities in
connection with the administration of their regulatory jurisdiction over Tenant,
Tenant’s direct and indirect parent(s) and their respective Subsidiaries, if
any, including the provision of such documents and other information as may be
requested by such Gaming Authorities or Liquor Authorities relating to Tenant,
Tenant’s direct and indirect parent(s) or any of their respective Subsidiaries,
if any, or to this Lease and which are within Landlord’s reasonable control to
obtain and provide.

41.13    Gaming Regulations. Notwithstanding anything to the contrary in this
Lease, this Lease and any agreement formed pursuant to the terms hereof are
subject to all applicable Gaming Regulations and all applicable laws involving
the sale, distribution and possession of alcoholic beverages (the “Liquor
Laws”). Without limiting the foregoing, each of Tenant and Landlord acknowledges
that (i) it is subject to being called forward by any applicable Gaming
Authority or governmental authority enforcing the Liquor Laws (the “Liquor
Authority”) with jurisdiction over this Lease or the Facility, in each of their
discretion, for licensing or a finding of suitability or to file or provide
other information, and (ii) all rights, remedies and powers under this Lease and
any agreement formed pursuant to the terms hereof, including with respect to the
entry into and ownership and operation of a Gaming Facility, and the possession
or control of Gaming equipment, alcoholic beverages or a Gaming License or
liquor license, may be exercised only to the extent that the exercise thereof
does not violate any applicable provisions of the Gaming Regulations and Liquor
Laws and only to the extent that required approvals (including prior approvals)
are obtained from the requisite governmental authorities.

 

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Notwithstanding anything to the contrary in this Lease or any agreement formed
pursuant to the terms hereof, (subject to Section 41.12) each of Tenant,
Landlord, and each of Tenant’s or Landlord’s successors and assigns agree to
cooperate with each Gaming Authority and each Liquor Authority in connection
with the administration of their regulatory jurisdiction over the Parties,
including, without limitation, the provision of such documents or other
information as may be requested by any such Gaming Authorities and/or Liquor
Authorities relating to Tenant, Landlord, Tenant’s or Landlord’s successors and
assigns or to this Lease or any agreement formed pursuant to the terms hereof.

If there shall occur a Licensing Event, then the Party with respect to which
such Licensing Event occurs shall notify the other Party, as promptly as
practicable after becoming aware of such Licensing Event (but in no event later
than twenty (20) days after becoming aware of such Licensing Event). In such
event, the Party with respect to which such Licensing Event has occurred, shall
and shall cause any applicable Affiliates to use commercially reasonable efforts
to resolve such Licensing Event within the time period required by the
applicable Gaming Authorities by submitting to investigation by the relevant
Gaming Authorities and cooperating with any reasonable requests made by such
Gaming Authorities (including filing requested forms and delivering information
to the Gaming Authorities). If the Party with respect to which such Licensing
Event has occurred cannot otherwise resolve the Licensing Event within the time
period required by the applicable Gaming Authorities and any aspect of such
Licensing Event is attributable to any Person(s) other than such Party, then
such Party shall disassociate with the applicable Persons to resolve the
Licensing Event. It shall be a material breach of this Lease by Landlord if a
Licensing Event with respect to Landlord shall occur and is not resolved in
accordance with this Section 41.13 within the later of (i) thirty (30) days or
(ii) such additional time period as may be permitted by the applicable Gaming
Authorities.

41.14    Intentionally Omitted.

41.15    Intentionally Omitted.

41.16    Savings Clause. If for any reason this Lease is determined by a court
of competent jurisdiction to be invalid as to any space that would otherwise be
a part of the Leased Property and that is subject to a pre-existing lease as of
the Commencement Date (between Tenant’s predecessor in interest prior to the
Commencement Date, as landlord, and a third party as tenant), then Landlord
shall be deemed to be the landlord under such pre-existing lease, and the
Parties agree that Tenant shall be deemed to be the collection agent for
Landlord for purposes of collecting rent and other amounts payable by the tenant
under such pre-existing lease and shall remit the applicable collected amounts
to Landlord. In such event, the Rent payable hereunder shall be deemed to be
reduced by any amounts so collected by Tenant and remitted to Landlord with
respect to any such pre-existing lease.

41.17    Integration with Other Documents. Each of Tenant and Landlord
acknowledge and agree that certain operating efficiencies and value will be
achieved as a result of Tenant’s and Other Tenants’ lease of the Leased Property
and the Other Leased Property,

 

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respectively. Each of Tenant and Landlord acknowledge and agree that the Parties
would not enter into this Lease absent the understanding and agreement of the
Parties that the entire ownership, operation, management, lease and lease
guaranty relationship with respect to the Leased Property, including (without
limitation) the lease of the Leased Property pursuant to this Lease, the use of
Managed Facilities IP and the use of the Caesars Rewards Program, together with
the other related intellectual property arrangements contemplated herein and the
other covenants, obligations and agreements of the Parties hereunder, form part
of a single integrated transaction. Accordingly, it is the express intention and
agreement of each of Tenant and Landlord that the Parties would not be entering
into this Lease without entering into the Other Leases and in the event of any
bankruptcy, insolvency or dissolution proceedings in respect of any Party, no
Party will reject, move to reject, or join or support any other Party in
attempting to reject any one of this Lease or the Other Leases without rejecting
the other agreements as if each of this Lease and the Other Leases were one
integrated agreement and not separable.

41.18    Intentionally Omitted.

41.19    Intentionally Omitted.

41.20    Intentionally Omitted.

41.21    Intentionally Omitted.

41.22    Confidential Information. Each Party hereby agrees to, and to cause its
Representatives to, maintain the confidentiality of all non-public information
received pursuant to this Lease; provided that nothing herein shall prevent any
Party from disclosing any such non-public information (a) in the case of
Landlord, to PropCo 1, PropCo and Landlord REIT and any Affiliate thereof,
(b) in the case of Tenant, to CEOC, ERI and any Affiliate thereof, (c) in any
legal, judicial or administrative proceeding or other compulsory process or
otherwise as required by applicable Legal Requirements (in which case the
disclosing Party shall promptly notify the other Parties, in advance, to the
extent permitted by law), (d) upon the request or demand of any regulatory
authority having jurisdiction over a Party or its affiliates (in which case the
disclosing Party shall, other than with respect to routine, periodic inspections
by such regulatory authority, promptly notify the other Parties, in advance, to
the extent permitted by law), (e) to its Representatives who are informed of the
confidential nature of such information and have agreed to keep such information
confidential (and the disclosing Party shall be responsible for such
Representatives’ compliance therewith), (f) to the extent any such information
becomes publicly available other than by reason of disclosure by the disclosing
Party or any of its respective Representatives in breach of this Section 41.22,
(g) to the extent that such information is received by such Party from a third
party that is not, to such Party’s knowledge, subject to confidentiality
obligations owing to the other Parties or any of their respective affiliates or
related parties, (h) to the extent that such information is independently
developed by such Party or (i) as permitted under the first sentence of
Section 23.2(a). Each of the Parties acknowledges that it and its
Representatives may receive material non-public information with respect to the
other Party and its Affiliates and that each such Party is aware (and will so
advise its Representatives) that federal and state securities laws and other
applicable laws may impose restrictions on purchasing, selling, engaging in
transactions or otherwise trading in securities of the other Party and its
Affiliates with respect to which such Party or its Representatives has received
material non-public information so long as such information remains material
non-public information.

 

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41.23    Time of Essence. TIME IS OF THE ESSENCE OF THIS LEASE AND EACH
PROVISION HEREOF IN WHICH TIME OF PERFORMANCE IS ESTABLISHED.

41.24    Consents, Approvals and Notices.

(a)    All consents and approvals that may be given under this Lease shall, as a
condition of their effectiveness, be in writing. The granting of any consent or
approval by Landlord or Tenant to the performance of any act by Tenant or
Landlord requiring the consent or approval of Landlord or Tenant under any of
the terms or provisions of this Lease shall relate only to the specified act or
acts thereby consented to or approved and, unless otherwise specified, shall not
be deemed a waiver of the necessity for such consent or approval for the same or
any similar act in the future, and/or the failure on the part of Landlord or
Tenant to object to any such action taken by Tenant or Landlord without the
consent or approval of the other Party, shall not be deemed a waiver of their
right to require such consent or approval for any further similar act; and
Tenant hereby expressly covenants and agrees that as to all matters requiring
Landlord’s consent or approval under any of the terms of this Lease, Tenant
shall secure such consent or approval for each and every happening of the event
requiring such consent or approval, and shall not claim any waiver on the part
of Landlord of the requirement to secure such consent or approval.

(b)    Each Party acknowledges that in granting any consents, approvals or
authorizations under this Lease, and in providing any advice, assistance,
recommendation or direction under this Lease, neither such Party nor any
Affiliates thereof guarantee success or a satisfactory result from the subject
of such consent, approval, authorization, advice, assistance, recommendation or
direction. Accordingly, each Party agrees that neither such Party nor any of its
Affiliates shall have any liability whatsoever to any other Party or any third
party by reason of: (i) any consent, approval or authorization, or advice,
assistance, recommendation or direction, given or withheld; or (ii) any delay or
failure to provide any consent, approval or authorization, or advice,
assistance, recommendation or direction (except in the event of a breach of a
covenant herein not to unreasonably withhold or delay any consent or approval);
provided, however, each agrees to act in good faith when dealing with or
providing any advice, consent, assistance, recommendation or direction.

(c)    Any notice, report or information required to be delivered by Tenant
hereunder may be delivered collectively with any other notices, reports or
information required to be delivered by Tenant hereunder as part of a single
report, notice or communication. Any such notice, report or information may be
delivered to Landlord by Tenant providing a representative of Landlord with
access to Tenant’s or its Affiliate’s electronic databases or other information
systems containing the applicable information and notice that information has
been posted on such database or system.

41.25    No Release of Guarantor. Notwithstanding anything to the contrary set
forth in this Lease, Guarantor shall not be released from its obligations under
the Guaranty, except as and to the extent expressly provided in the Guaranty.

 

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41.26    Intentionally Omitted.

41.27    Notice of IP Infringement. Tenant shall promptly notify Landlord in
writing of any action filed with any governmental authority against Services Co
or Tenant alleging infringement, misappropriation, or other violation of any
alleged material Intellectual Property right of any third party relating to or
arising out of the use or registration of any material Managed Facilities IP
over which Landlord or any of its Affiliates have been granted a lien pursuant
to this Lease or otherwise.

41.28    Amendments. This Lease may not be amended except by a written agreement
executed by all Parties hereto.

 

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CEOC hereby joins in, and has executed this Lease (Joliet) for the purpose of
guaranteeing: (a) eighty percent (80%) of the payment obligations of Tenant
hereunder (including, without limitation, payment obligations with respect to
damages arising from Tenant’s failure to perform non-monetary obligations of
Tenant hereunder); and (b) the performance of the non-monetary obligations of
Tenant hereunder to the extent Tenant is ordered by a court of competent
jurisdiction to perform specific performance with respect to such non-monetary
obligations.

In connection with this joinder, CEOC hereby waives and agrees not to assert or
take advantage of the following defenses: (i) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any person
or entity, or revocation hereof by any person or entity, or the failure of
Tenant to file or enforce a claim against the estate (either in administration,
bankruptcy, or any other proceeding) of any other Person; (ii) diligence,
presentment, notice of acceptance, notice of dishonor, notice of presentment, or
demand for payment of or performance of the obligations guaranteed under this
joinder (other than as required with respect to Tenant under this Lease) and
other suretyship defenses generally; (iii) any defense that may arise by reason
of any action required by any statute to be taken against Tenant; (iv) the
dissolution or termination of the existence of Tenant; (v) any defense that may
arise by reason of the voluntary or involuntary liquidation, sale, or other
disposition of all or substantially all of the assets of Tenant; (vi) any
defense that may arise by reason of the voluntary or involuntary receivership,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
assignment, composition, or readjustment of, or any similar proceeding
affecting, Tenant or any of Tenant’s assets; (vii) any right of subrogation,
indemnity or reimbursement against Tenant or any right to enforce any remedy
which Landlord may have against Tenant at any time during which a Tenant Event
of Default under and as defined in this Lease has occurred and is continuing;
(viii) any and all rights and defenses arising out of an election of remedies by
Landlord, even though that election of remedies might impair or destroy any
right, if any, of CEOC of subrogation, indemnity or reimbursement; (ix) any
defense based upon Tenant’s failure to disclose to CEOC any information
concerning Tenant’s financial condition or any other circumstances bearing on
Tenant’s ability to pay all sums payable under or in respect of this Lease; and
(x) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal.

CEOC’s liability under this joinder is primary, direct and unconditional and may
be enforced in full or in part, from time to time, after nonpayment or
nonperformance by Tenant of any of the obligations guaranteed hereunder, in each
case without requiring Landlord to resort to any other person or entity,
including, without limitation, Tenant, or any other right, remedy or collateral.
This joinder constitutes a guaranty of payment and performance and not of
collection only. This joinder is a continuing, absolute and unconditional
guaranty of the obligations guaranteed hereunder, and liability hereunder shall
in no way be affected or diminished by any renewal, extension, amendment or
modification of this Lease or any waiver of any of the provisions hereof. CEOC
agrees that any act which tolls any statute of limitations applicable to this
Lease shall similarly operate to toll the statute of limitations applicable to
CEOC’s liability under this joinder.

CEOC’s obligations with respect to the payment and performance of the
obligations guaranteed under this joinder shall survive for so long as Tenant
has any obligations to Landlord under this Lease.

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THIS JOINDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PRINCIPLES REGARDING CONFLICT OF LAWS.

ANY LITIGATION OR OTHER COURT PROCEEDING WITH RESPECT TO ANY MATTER ARISING FROM
OR IN CONNECTION WITH THIS JOINDER SHALL BE CONDUCTED IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURTS
THERETO, OR IF FEDERAL JURISDICTION IS LACKING, THEN IN THE STATE COURTS OF NEW
YORK STATE LOCATED IN NEW YORK COUNTY. THE PARTIES AGREE THAT SERVICE OF PROCESS
FOR PURPOSES OF ANY SUCH LITIGATION OR LEGAL PROCEEDING NEED NOT BE PERSONALLY
SERVED WITHIN THE STATE OF NEW YORK, BUT MAY BE SERVED WITH THE SAME EFFECT AS
IF THE PARTY IN QUESTION WERE SERVED WITHIN THE STATE OF NEW YORK, BY GIVING
NOTICE CONTAINING SUCH SERVICE TO THE INTENDED RECIPIENT (WITH COPIES TO
COUNSEL) IN THE MANNER PROVIDED IN Article XXXV.

Signature Page to Lease (Joliet)

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EXHIBIT A

FACILITY

 

1.

Harrah’s Joliet, Joliet, Illinois

 

Exhibit A - 1

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EXHIBIT B

LEGAL DESCRIPTION OF LAND

PARCEL 1:

LOT 1 IN BLOCK 15, EXCEPT THE NORTH 20.00 FEET OF THE WEST 115.00 FEET THEREOF;
LOTS 2, 3, 4, 5, 6, 7 AND 8 IN SAID BLOCK 15;

THE NORTH 5 FEET OF LOT 1 IN BLOCK 18;

THAT PART OF LOT 8 IN SAID BLOCK 18 DESCRIBED AS FOLLOWS: BEGINNING AT THE
NORTHWEST CORNER OF SAID LOT 8; THENCE EAST 37.00 FEET ALONG THE NORTH LINE OF
SAID LOT 8; THENCE SOUTHWESTERLY TO A POINT ON THE WEST LINE OF SAID LOT 8 WHICH
IS 37.00 FEET SOUTH OF THE AFORESAID NORTHWEST CORNER OF LOT 8; THENCE NORTH
ALONG SAID WEST LINE 37.00 FEET TO THE POINT OF BEGINNING;

THE VACATED EAST-WEST ALLEY AND THE VACATED NORTH-SOUTH ALLEY IN AFORESAID BLOCK
15; THAT PART OF THE NORTH-SOUTH ALLEY IN AFORESAID BLOCK 18, LYING NORTH OF A
LINE PARALLEL WITH AND 5.00 FEET SOUTH OF THE SOUTH LINE OF CLINTON STREET;

THAT PART OF CLINTON STREET LYING WEST OF THE WEST LINE OF JOLIET STREET AND
LYING EAST OF A LINE PARALLEL WITH AND 20.00 FEET EAST OF THE EAST FACE OF THE
EAST WALL OF THE ILLINOIS WATERWAY (DES PLAINES RIVER);

AND THAT PART OF DES PLAINES STREET LYING SOUTH OF A LINE PARALLEL WITH AND
20.00 FEET SOUTH OF THE SOUTH LINE OF CASS STREET, LYING NORTH OF A LINE
PARALLEL WITH AND 5.00 FEET SOUTH OF THE SOUTH LINE OF CLINTON STREET, AND LYING
EAST OF A LINE PARALLEL WITH AND 20.00 FEET EAST OF THE EAST FACE OF THE EAST
WALL OF THE ILLINOIS WATERWAY;

ALL IN ORIGINAL TOWN OF JULIET (NOW JOLIET), A SUBDIVISION OF THE SOUTHEAST
FRACTIONAL 1/4 OF SECTION 9, TOWNSHIP 35 NORTH RANGE 10, EAST OF THE THIRD
PRINCIPAL MERIDIAN, WILL COUNTY, ILLINOIS.

PARCEL 2:

THE SOUTH 5.00 FEET OF LOT 4, EXCEPT THE EAST 23.50 FEET THEREOF, IN BLOCK 18;

LOTS 1, 2, 3, 4, 5, 6 AND 7 IN BLOCK 23, EXCEPTING THEREFROM THE WEST 19.50 FEET
OF THE SOUTH 37.00 FEET OF SAID LOT 2, ALSO EXCEPTING THE WEST 19.50 FEET OF
SAID LOTS 3 AND 4;

 

Exhibit B - 1

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THE NORTH-SOUTH ALLEY IN SAID BLOCK 23;

THAT PART OF THE EAST-WEST ALLEY IN SAID BLOCK 23, LYING EAST OF A LINE PARALLEL
WITH AND 19.50 FEET EAST OF THE EAST LINE OF DES PLAINES STREET;

THAT PART OF VAN BUREN STREET LYING EAST OF THE EAST LINE OF DES PLAINES STREET
AND LYING WEST OF THE NORTHERLY PROLONGATION OF THE WEST LINE OF LOT 8 IN
AFORESAID BLOCK 23, AND EXCEPTING THEREFROM THE NORTH 40.00 FEET OF SAID VAN
BUREN STREET LYING EAST OF A LINE PARALLEL WITH AND 23.50 FEET WEST OF THE
SOUTHERLY PROLONGATION OF THE EAST LINE OF AFORESAID LOT 4 IN BLOCK 18;

THAT PART OF DES PLAINES STREET LYING NORTH OF A LINE PARALLEL WITH AND 250.00
FEET NORTH OF THE NORTH LINE OF JEFFERSON STREET AND LYING SOUTH OF A LINE
DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE EAST LINE OF DES PLAINES STREET WHICH IS 5.00 FEET
NORTH OF THE NORTH LINE OF VAN BUREN STREET; THENCE WEST PARALLEL WITH SAID
NORTH LINE OF VAN BUREN STREET 23.00 FEET; THENCE SOUTHWESTERLY 32.58 FEET TO A
POINT ON THE WEST LINE OF DES PLAINES STREET WHICH IS 18.00 FEET SOUTH OF THE
AFORESAID NORTH LINE OF VAN BUREN STREET;

ALL IN THE ORIGINAL TOWN OF JULIET (NOW JOLIET), A SUBDIVISION OF THE SOUTHEAST
FRACTIONAL 1/4 OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD
PRINCIPAL MERIDIAN, WILL COUNTY, ILLINOIS.

PARCEL 3:

LOTS 1, 2, 3, 4, 7 AND 8 IN BLOCK 14;

THAT PART OF THE NORTH-SOUTH ALLEY IN SAID BLOCK 14, LYING NORTH OF THE WESTERLY
PROLONGATION OF THE SOUTH LINE OF SAID LOT 7;

THAT PART OF THE EAST-WEST ALLEY IN SAID BLOCK 14, LYING WEST OF THE NORTHERLY
PROLONGATION OF THE EAST LINE OF AFORESAID LOT 3;

ALL IN ORIGINAL TOWN OF JULIET (NOW JOLIET), A SUBDIVISION OF THE SOUTHEAST
FRACTIONAL 1/4 OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD
PRINCIPAL MERIDIAN, WILL COUNTY, ILLINOIS.

PARCEL 4:

LOT 8 IN BLOCK 23 IN THE ORIGINAL TOWN OF JULIET, NOW CITY OF JOLIET;

 

Exhibit B - 2

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

THE SOUTH 11 FEET OF THAT PART OF THE SOUTH 1/2 OF VACATED VAN BUREN STREET
LYING WEST OF THE WEST LINE OF JOLIET STREET AND LYING EAST OF THE NORTHERLY
PROLONGATION OF THE WEST LINE OF LOT 8 IN BLOCK 23

ALL IN THE ORIGINAL TOWN OF JULIET (NOW JOLIET), A SUBDIVISION OF THE SOUTHEAST
FRACTIONAL 1/4 OF SECTION 9, IN TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD
PRINCIPAL MERIDIAN, IN WILL COUNTY, ILLINOIS.

PARCEL 5:

EASEMENT FOR THE BENEFIT OF PARCELS 1 THROUGH 4 FOR CONSTRUCTION, UTILITY
FACILITIES, PEDESTRIAN ACCESS AND USE, MAINTENANCE, REPAIR AND REPLACEMENT OF
THE SKYWALK LOCATED IN THE SPACE ABOVE JOLIET STREET AS DESCRIBED BELOW AS
CREATED BY GRANT OF EASEMENT WITH SKYWALK AGREEMENT DATED OCTOBER 7, 1997 AND
RECORDED MARCH 19, 1998 AS DOCUMENT R98-28731.

PARCEL 6:

AN EXCLUSIVE EASEMENT CREATED BY GRANT CONTAINED IN AN EASEMENT AGREEMENT DATED
JANUARY 8, 2001 AND RECORDED JANUARY 18, 2001 AS DOCUMENT NUMBER R2001-6412 MADE
BY THE CITY OF JOLIET TO DES PLAINES DEVELOPMENT LIMITED PARTNERSHIP.

PARCEL 7:

LOTS 7 AND 8, IN BLOCK 18, OF THE ORIGINAL TOWN OF JOLIET, A SUBDIVISION OF PART
OF THE SOUTHEAST FRACTIONAL QUARTER OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10,
EAST OF THE THIRD PRINCIPAL MERIDIAN,

EXCEPTING THEREFROM THE SOUTH 36.00 FEET OF SAID LOT 7;

ALSO EXCEPTING THEREFROM THAT PART OF SAID LOT 8 DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 8; THENCE EAST 37.00 FEET ALONG
THE NORTH LINE OF SAID LOT 8; THENCE SOUTHWESTERLY TO A POINT ON THE WEST LINE
OF SAID LOT 8 WHICH IS 37.00 FEET SOUTH OF THE AFORESAID NORTHWEST CORNER OF LOT
8; THENCE NORTH ALONG SAID WEST LINE 37.00 FEET TO THE POINT OF BEGINNING;

PARCEL 8:

ALL OF LOTS 5 AND 6 AND THE SOUTH 36 FEET OF LOT 7, IN BLOCK 18, OF THE ORIGINAL
TOWN OF JOLIET, A SUBDIVISION OF PART OF THE SOUTH EAST 1/4 OF SECTION 9,
TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL

 

Exhibit B - 3

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

MERIDIAN, ALSO THAT PART OF THE VACATED EAST AND WEST ALLEY IN SAID BLOCK 18,
LYING AND BEING BETWEEN SAID LOTS 6 AND 7.

PARCEL 9:

THAT PART OF THE NORTH 1/2 OF VACATED VAN BUREN STREET VACATED BY ORDINANCE NO.
10033 RECORDED DECEMBER 4, 1992 AS DOCUMENT NO. R92-96470 AND BY NOTICE OF
EFFECTIVE DATE RECORDED DECEMBER 28, 1992 AS DOCUMENT NO. R92-104446 LYING WEST
OF THE WEST LINE OF JOLIET STREET AND LYING EAST OF THE SOUTHERLY PROLONGATION
OF THE WEST LINE OF LOT 5 IN BLOCK 18 IN THE ORIGINAL TOWN OF JULIET (NOW
JOLIET), A SUBDIVISION OF THE SOUTHEAST FRACTIONAL QUARTER OF SECTION 9,
TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN WILL
COUNTY, ILLINOIS.

PARCEL 10:

THE NORTH 22.00 FEET OF THAT PART OF THE SOUTH 1/2 VACATED VAN BUREN STREET
VACATED BY ORDINANCE NO. 10033 RECORDED DECEMBER 4, 1992 AS DOCUMENT NO.
R92-96470 AND BY NOTICE OF EFFECTIVE DATE RECORDED DECEMBER 28, 1992 AS DOCUMENT
NO. R92-104446 LYING WEST OF THE WEST LINE OF JOLIET STREET AND LYING EAST OF
THE NORTHERLY PROLONGATION OF THE WEST LINE OF LOT 8 IN BLOCK 23 IN THE ORIGINAL
TOWN OF JULIET (NOW JOLIET), A SUBDIVISION OF THE SOUTHEAST FRACTIONAL QUARTER
OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL MERIDIAN,
IN WILL COUNTY, ILLINOIS.

PARCEL 11:

LOTS 3 AND 4 IN BLOCK 19 AND THE VACATED EAST AND WEST ALLEY BETWEEN LOTS 2 AND
3 LYING EAST OF THE EAST LINE OF JOLIET STREET AND WEST OF THE WEST LINE OF THE
NORTH AND SOUTH ALLEY IN SAID BLOCK 19, AS VACATED BY DOCUMENT NO. 384201, IN
OLD TOWN OF JULIET, NOW JOLIET, IN SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST
OF THE THIRD PRINCIPAL MERIDIAN, IN WILL COUNTY, ILLINOIS.

PARCEL 12:

LOT 2 IN BLOCK 19, IN OLD TOWN OF JULIET, NOW JOLIET, IN SECTION 9, TOWNSHIP 35
NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN WILL COUNTY, ILLINOIS.

PARCEL 13:

LOT 1 IN BLOCK 19 IN THE ORIGINAL TOWN OF JULIET, NOW JOLIET, IN THE SOUTHEAST
QUARTER OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED

 

Exhibit B - 4

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

JUNE 10, 1834, IN BOOK 1 OF TRANSCRIBED RECORDS, PAGES 36 AND 37, IN WILL
COUNTY, ILLINOIS.

PARCEL 14: INTENTIONALLY DELETED.

PARCEL 15:

LOT 5 IN BLOCK 10 IN THE ORIGINAL TOWN OF JULIET, NOW JOLIET, A SUBDIVISION OF
THE EAST FRACTIONAL PART OF THE SOUTHEAST QUARTER OF SECTION 9, TOWNSHIP 35
NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL MERIDIAN,

TOGETHER WITH THE EAST HALF OF THE VACATED ALLEY, VACATED BY DOCUMENT NO.
R95-85653 LYING WEST OF AND ADJOINING LOT 5,

IN WILL COUNTY, ILLINOIS.

PARCEL 16:

SUB LOTS 4, 5 AND 6 IN THE WILLIAM ADAM ESTATES SUBDIVISION OF LOTS 3 AND 4 IN
BLOCK 10 IN THE ORIGINAL TOWN OF JULIET, NOW JOLIET, IN THE SOUTHEAST FRACTIONAL
QUARTER OF SECTION 9, TOWNSHIP 35 NORTH, RANGE 10, EAST OF THE THIRD PRINCIPAL
MERIDIAN, TOGETHER WITH THE WEST HALF OF THE VACATED ALLEY, VACATED BY DOCUMENT
NO. R95-85653, LYING EAST OF AND ADJOINING SAID SUB LOT 6, IN WILL COUNTY,
ILLINOIS.

 

Exhibit B - 5

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EXHIBIT C

CAPITAL EXPENDITURES REPORT

[SEE ATTACHED]

 

Exhibit C - 1

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

LOGO [g940333page1072.jpg]

 

Exhibit C - 2

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

LOGO [g940333page1073.jpg]

 

Exhibit C - 3

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EXHIBIT D

FORM OF SCHEDULE CONTAINING ANY ADDITIONS TO OR RETIREMENTS OF

ANY FIXED ASSETS CONSTITUTING LEASED PROPERTY

DISPOSAL REPORT

 

Company
Code

   System
Number    Ext    Asset
ID    Asset Description    Class    In Svc
Date    Disposal
Date    DM    Acquired
Value    Current
Accum    Net
Proceeds    Gain/Loss
Adjustment    Realized
Gain/Loss    GL                                                               
                                                              

ADDITIONS REPORT

 

Project/Job Number

   System
Number    GL
Asset
Account    Asset ID    Accounting
Location    Asset Description    PIS
Date    Enter
Date    Est
Life    Acq
Value    Current
Accum                                                                           
              

NOTES

 

Exhibit D - 1

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

EXHIBIT E

INTENTIONALLY OMITTED

 

Exhibit E - 1

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

EXHIBIT F

INTENTIONALLY OMITTED

 

Exhibit F - 1

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

EXHIBIT G

FORM OF REIT COMPLIANCE CERTIFICATE

REIT COMPLIANCE CERTIFICATE

Date:                 , 20        

This REIT Compliance Certificate (this “Certificate”) is given by Tenant (as
defined in that certain Lease (Joliet) (the “Lease”) dated as of
[                , 2017], by and between Harrah’s Joliet Landco LLC (together
with its successors and assigns, “Landlord”), and Des Plaines Development
Limited Partnership (together with its successors and assigns, “Tenant”),
pursuant to Article XL of the Lease. Capitalized terms used herein without
definition shall have the meanings set forth in the Lease.

By executing this Certificate, Tenant hereby certifies to Landlord that Tenant
has reviewed its transactions during the Fiscal Quarter ending
[                ] and for such Fiscal Quarter Tenant is in compliance with the
provisions of Article XL of the Lease. Without limiting the generality of the
foregoing, Tenant hereby certifies that for such Fiscal Quarter, Tenant has not,
without Landlord’s advance written consent:

 

  (i)

sublet, assigned or entered into a management arrangement for the Leased
Property on any basis such that the rental or other amounts to be paid by the
subtenant, assignee or manager thereunder would be based, in whole or in part,
on either (x) the income or profits derived by the business activities of the
subtenant, assignee or manager or (y) any other formula such that any portion of
any amount received by Landlord could reasonably be expected to cause any
portion of the amounts to fail to qualify as “rents from real property” within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto;

 

  (ii)

furnished or rendered any services to the subtenant, assignee or manager or
managed or operated the Leased Property so subleased, assigned or managed;

 

  (iii)

sublet or assigned to, or entered into a management arrangement for the Leased
Property with any Person (other than a “taxable REIT subsidiary” (within the
meaning of Section 856(l) of the Code, or any similar or successor provision
thereto) of Landlord REIT) in which Landlord or PropCo owns an interest,
directly or indirectly (by applying constructive ownership rules set forth in
Section 856(d)(5) of the Code, or any similar or successor provision thereto);
or

 

  (iv)

sublet, assigned or entered into a management arrangement for the Leased
Property in any other manner which could reasonably be expected to cause any
portion of the amounts received by Landlord pursuant to the Lease or any
Sublease to fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto, or
which could reasonably be expected to cause any other income of Landlord to fail
to qualify as income described in Section 856(c)(2) of the Code, or any similar
or successor provision thereto.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

Exhibit G - 1

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

IN WITNESS WHEREOF, this Certificate has been executed by Tenant on          day
of                 , 20        .

 

[                ] Name:     Title:    

 

Exhibit G - 2

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

EXHIBIT H

PROPERTY-SPECIFIC IP

 

Trademark

 

Jurisdiction

 

Brand

 

Specific/
Enterprise

 

Property

  App. No.     App. Date     Reg. No.     Reg. Date    

Status

Sheer

 

United

States of

America

 

Harrah’s

 

Specific

 

Harrah’s

Joliet

    78/957904       8/22/2006       3245005       5/22/2007    

Registered

The Reserve

 

United

States of

America

 

Harrah’s

 

Specific

 

Harrah’s

Joliet

    77/457119       4/24/2008       3801600       6/15/2010    

Registered

 

Exhibit H - 3

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

EXHIBIT I

DESCRIPTION OF TITLE POLICY

Title Policy Number 1401-8979703, in the amount of $420,000,000, with regard to
the property located at Harrah’s Joliet

 

Exhibit I - 1

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

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED BECAUSE SUCH INFORMATION (i) IS
NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
EXCLUDED INFORMATION HAS BEEN MARKED AT THE APPROPRIATE PLACES AS FOLLOWS:
[****]

EXHIBIT J

SPECIFIED ADDITIONAL L1 QUALIFIED TRANSFEREES

 

  1.

[****]

 

  2.

[****]

For the avoidance of doubt, except as set forth in the proviso below, only
[****] and [****] themselves, and not any successor and/or assign of either
(including, without limitation, any successor or assign by operation of law of,
or any surviving or continuing entity in any merger, consolidation or similar
event involving, [****] or [****], shall be the Person referenced in the last
sentence of the definition of “L1 Qualified Transferee” set forth in this Lease,
provided, however, that (i) if [****] or [****] survive any such merger, then
such surviving entity shall be deemed to constitute [****] or [****], as
applicable, and (ii) the survivor in any internal restructuring of [****] or
[****] shall be deemed to constitute [****] or [****], as applicable.

 

Exhibit J - 1

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

EXHIBIT K

L1/L2 TRANSFER AND PERMITTED FACILITY SUBLEASE ADDITIONAL INFORMATION

 

  •  

Financial Statements for the last three (3) most recent Fiscal Periods for any
proposed L1 Successor Tenant or L2 Successor Tenant, as the case may be, and its
Parent Company, if any.

 

  •  

List of all gaming, hotel and other entertainment facilities owned and/or
managed by the proposed L1 Successor Tenant or L2 Successor Tenant, as the case
may be, and its Affiliates during the preceding five (5) years.

 

  •  

EBITDAR for the last three (3) most recent Fiscal Periods for any proposed L1
Successor Tenant or L2 Successor Tenant, as the case may be, and its Parent
Company, if any.

 

  •  

List of all Gaming Licenses of the proposed L1 Successor Tenant or L2 Successor
Tenant, as the case may be, and its Affiliates substantially in the form of
Schedule 1 to this Lease

 

  •  

Names of principal owners/investors of the proposed L1 Successor Tenant or L2
Successor Tenant, as the case may be.

 

Exhibit K - 1

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

EXHIBIT L

BRANDS

Horseshoe

Harrah’s

Tunica Roadhouse

Caesars

Bally’s

Harveys

Bluegrass Downs

 

Exhibit L - 1

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

EXHIBIT M

FORM OF GUARANTY

[SEE ATTACHED]

 

Exhibit M - 1

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

Execution Version

GUARANTY

This GUARANTY OF LEASE (this “Guaranty”), is made and entered into as of the
20th day of July, 2020 by and between ELDORADO RESORTS, INC., a Nevada
corporation (to be renamed Caesars Entertainment, Inc. and converted to a
Delaware corporation on the date hereof, following the making by Guarantor of
this Guaranty) (together with its successors and permitted assigns,
“Guarantor”), and Harrah’s Joliet LandCo LLC, a Delaware limited liability
company (“Landlord”).

RECITALS

A. Landlord, as landlord, and Des Plaines Development Limited Partnership, as
tenant (“Tenant”; it being understood that, for purposes of this Guaranty,
“Tenant” shall include all entities which comprise Tenant from time to time
pursuant to and in accordance with the Lease (as defined below)), entered into
that certain Lease (Joliet) dated as of October 6, 2017, as amended by that
certain First Amendment to Lease (Joliet) between Landlord and Tenant dated as
of December 26, 2018, and as further amended by that certain Omnibus Amendment
to Leases among Landlord, Tenant, certain Affiliates of Landlord and certain
Affiliates of Tenant, dated as of June 1, 2020 (collectively, the “Prior Joliet
Lease”).

B. Concurrently herewith, Landlord, Tenant and, solely for the purposes of the
last paragraph of Section 1.1 of the Lease, Propco TRS LLC, a Delaware limited
liability company, are entering into that certain Second Amendment to Lease
(Joliet) (“Second Amendment”; the Prior Joliet Lease, as amended by the Second
Amendment, and as may be further amended, restated, supplemented, waived or
otherwise modified from time to time, collectively the “Lease”), whereby certain
modifications are being made thereto. All capitalized terms used, and not
otherwise defined, herein shall have the same meanings ascribed to such terms in
the Lease.

C. Guarantor owns eighty percent (80%) of the equity interests in Tenant, and
Guarantor acknowledges and agrees that it will derive substantial benefits from
the Lease, that this Guaranty is given in accordance with the requirements of
the Lease and that Landlord would not have been willing to enter into the Second
Amendment unless Guarantor was willing to execute and deliver this Guaranty.

AGREEMENTS

NOW, THEREFORE, in consideration of Landlord entering into the Lease with
Tenant, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor agrees as follows:

1. Guaranty. In consideration of the benefit derived or to be derived by it from
the Lease. Guarantor hereby unconditionally and irrevocably guarantees to
Landlord, as a primary obligor and not merely as a surety, the following (the
matters described in the following clause (a) and clause (b), collectively, the
“Obligations”), whenever incurred or accrued, including, without limitation,
before the date of execution of this Guaranty:

(a) the faithful, prompt and complete payment and performance in full in cash of
all monetary obligations of Tenant under the Lease when due (including, without
limitation,

 

Exhibit M - 2

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

during any Transition Period), including, without limitation, (i) all Rent and
Additional Charges of any nature and any and all other sums payable by Tenant
under the Lease, (ii) Tenant’s obligation to expend the Required Capital
Expenditures in accordance with the Lease (or to deposit sums into the Cap Ex
Reserve) and any other expenditures of any nature required of Tenant under the
Lease, and (iii) Tenant’s obligation to pay monetary damages in connection with
any breach of the Lease and to pay indemnification obligations, in each case as
provided in and subject to all applicable terms of the Lease; and

(b) the faithful, prompt and complete performance when due of (other than the
monetary obligations described in clause (a) above) each and every one of the
provisions, terms and conditions of the Lease and all covenants, agreements,
conditions and requirements to be kept, performed and satisfied by Tenant under
the Lease, including, without limitation, all obligations with respect to the
operation of the Facility, all indemnification and insurance obligations, and
all obligations to maintain, rebuild, restore or replace the Leased Property or
any portion thereof or any facilities or improvements now or hereafter located
thereat.

in each case under clause (a) and clause (b), including (x) amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code (as defined below) or similar laws, and (y) any late charges
and interest provided for under the Lease (including interest accruing dining
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, whether or not a claim for such interest is allowed or allowable in
such proceeding). In the event of the failure of Tenant to pay any Rent,
Additional Charges or any other sums under the Lease, or to render any other
performance required of Tenant under the Lease, when due or within any
applicable cure period, subject to the second (2nd) to last sentence of this
Section 1. Guarantor shall forthwith (i) pay and perform or cause to be paid and
performed any and all such Obligations, in each case to the full extent provided
under the Lease, and (ii) pay all reasonable costs of collection or enforcement
and other actual damages suffered or incurred by Landlord that result from the
non-performance thereof. As to the Obligations, Guarantor’s liability under this
Guaranty is without limit except solely as and to the extent provided in the
second (2nd) to last sentence of this Section 1 and in Section 13 hereof.
Guarantor agrees that its guarantee provided herein constitutes a guarantee of
payment and performance and not of collection. Subject to the second (2nd) to
last sentence of this Section 1, Guarantor shall be jointly and severally liable
with Tenant for the payment and performance of the Obligations.

Notwithstanding any provision herein to the contrary, (i) except as provided in
the succeeding clause (ii), in respect of any monetary Obligations that are owed
under this Guaranty, Guarantor shall be required to pay eighty percent (80%),
but not more than eighty percent (80%), of such Obligations; and (ii) the
preceding clause (i) shall not apply with respect to (x) any Obligations in
respect of Required Capital Expenditures under the Lease, (y) any Obligations
under Section 1(b) of this Guaranty or (z) any Obligations under clause (ii) of
the sixth (6th) to last sentence of this Section 1 comprising costs of
collection under, or enforcement of, this Guaranty. For avoidance of doubt,
clause (i) of the preceding sentence is not intended to, and shall not be deemed
to, change, modify or otherwise reduce the “Obligations’’ (as such term is
defined in the Guaranty in respect of the Regional Lease (the “Regional Lease
Guaranty”)) under the Regional Lease Guaranty or otherwise violate or supersede
any of the provisions, terms and conditions of the Regional Lease Guaranty,
including, without limitation, the

- 2 -

 

Exhibit M - 3

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

obligations of Guarantor (as defined in the Regional Lease Guaranty) in respect
of the Obligations (as defined in the Regional Lease Guaranty) in respect of the
Required Capital Expenditures (as defined in the Regional Lease) under the
Regional Lease.

2. Survival of Obligations. The obligations of Guarantor under this Guaranty
shall survive and continue in full force and effect, and shall not be released,
diminished, impaired, reduced or adversely affected by any of the following,
whether or not notice thereof is given to Guarantor:

(a) any amendment, modification, renewal or extension of the Lease pursuant to
its terms;

(b) any compromise, release, consent, extension, indulgence, forbearance or
other action or inaction in respect of any terms of the Lease or any other
instrument or agreement by Landlord or by any other Person;

(c) any substitution or release, in whole or in part, of any security for this
Guaranty which Landlord may hold at any time;

(d) any exercise or non-exercise by Landlord of any right, power or remedy under
or hi respect of the Lease or any security held by Landlord with respect
thereto, or any waiver of (or failure to enforce) any such right, power or
remedy;

(e) any change in the existence, structure or ownership of, or any bankruptcy,
insolvency, reorganization, arrangement, assignment for the benefit of
creditors, receivership or trusteeship affecting, Tenant, Landlord or Guarantor
or their respective successors or assigns or any of their respective Affiliates
or any of their respective assets, or any actual or attempted rejection,
assumption, assignment, separation, severance, or recharacterization of the
Lease or any portion thereof or any obligations thereunder, or any discharge of
liability thereunder, in connection with any such proceeding or otherwise;

(f) any limitation of Tenant’s liability under the Lease or any limitation of
Tenant’s liability thereunder which may now or hereafter be imposed by any
statute, regulation or rule of law. or any illegality, irregularity, invalidity
or unenforceability, in whole or in part, of the Lease or any term thereof;

(g) subject to Section 14 hereof, any sale, lease, or transfer of all or any
part of any interest in the Facility or any portion thereof or any or all of the
assets of Tenant to any other Person other than to Landlord;

(h) any act or omission by Landlord with respect to any of the security
instruments or any failure to file, record or otherwise perfect any of the same;

(i) any breach by (or any act or omission of any nature of) Landlord under or in
respect of the Lease;

(j) any extensions of time for performance under the Lease;

- 3 -

 

Exhibit M - 4

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

(k) the release of Tenant from performance or observation of any of the
agreements, covenants, terms or conditions contained in the Lease by operation
of law or otherwise;

(l) the fact that Tenant may or may not be personally liable, in whole or in
part, under the terms of the Lease to pay any money judgment;

(m) the failure to give Guarantor any notice of acceptance, default or
otherwise;

(n) any rights, powers or privileges Landlord may now or hereafter have against
any other Person or collateral;

(o) except as provided in Section 14 below, any assignment of the Lease, or any
subletting or subsubletting of, or any other occupancy arrangements in respect
of, all or any part of the Facility;

(p) any other defenses, other than a defense of payment or performance in full,
as the case may be, of the Obligations;

(q) the existence of any claim, setoff, counterclaim, defense or other rights
that may at any time be available to, or asserted by, Guarantor or Tenant
against Landlord, whether in connection with the Lease, the Obligations or
otherwise;

(r) any law or statute that may operate to cap, limit, or otherwise restrict the
claims of a lessor of real property, including, but not limited to.
Section 502(b)(6) of the Bankruptcy Code;

(s) the invalidity, illegality or unenforceability of all or any part of the
Obligations, or of any document or agreement (including the Lease) executed in
connection with the Obligations, for any reason whatsoever;

(t) the unenforceability (for any reason whatsoever) of this Guaranty,
including, without limitation, as a result of rejection in any bankruptcy,
insolvency, dissolution or other proceeding; or

(u) any other circumstances, whether or not Guarantor had notice or knowledge
thereof.

3. Primary Liability. The liability of Guarantor with respect to the Obligations
shall be a primary, direct, immediate, continuing and unconditional guaranty of
payment and performance and not of collection, may not be revoked by Guarantor
and shall continue to be effective with respect to all of the Obligations
notwithstanding any attempted revocation by Guarantor and shall not be
conditional or contingent upon the genuineness, validity, regularity or
enforceability of the Lease or any other documents or instruments relating to
the Obligations, including, without limitation, any Person’s lack of authority
or lawful right to enter into such document on such Person’s behalf, or the
pursuit by Landlord of any remedies Landlord may have. Without limitation of the
foregoing, Landlord may proceed against Guarantor: (a) prior to

- 4 -

 

Exhibit M - 5

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or in lieu of proceeding against Tenant, its assets, any security deposit, or
any other guarantor or any other Person; and (b) prior to or in lieu of pursuing
any other rights or remedies available to Landlord. All rights and remedies
afforded to Landlord by reason of this Guaranty or by law are separate,
independent and cumulative, and the exercise of any rights or remedies shall not
in any way limit, restrict or prejudice the exercise of any other rights or
remedies.

Following the occurrence of a Tenant Event of Default, a separate action or
actions may be brought and prosecuted against Guarantor whether or not Tenant is
joined therein or a separate action or actions are brought against Tenant.
Landlord may maintain successive actions for other defaults. Landlord’s rights
hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all indebtedness and Obligations, the payment and performance of which
are hereby guaranteed, have been paid and fully performed.

4. Obligations Not Affected. In such manner, upon such terms and at such times
as Landlord in its sole discretion deems necessary or expedient, and without
notice to Guarantor. Landlord may: (a) amend, alter, compromise, accelerate,
extend or change the time or manner for the payment or the performance of any
Obligation hereby guaranteed; (b) extend, amend or terminate the Lease; or
(c) release Tenant by consent to any assignment (or otherwise) as to all or any
portion of the Obligations hereby guaranteed, in each case pursuant to the terms
of the Lease. Any exercise or non-exercise by Landlord of any right hereby given
to Landlord, dealing by Landlord with Guarantor or any other guarantor. Tenant
or any other Person, or change, impairment, release or suspension of any right
or remedy of Landlord against any Person, including, without limitation. Tenant
and any other guarantor, will not affect any of the Obligations of Guarantor
hereunder or give Guarantor any recourse or offset against Landlord.

5. Waiver. With respect to the Lease. Guarantor hereby waives and relinquishes
all rights and remedies accorded by applicable law to sureties and/or guarantors
or any other accommodation parties, under any statutory provisions, common law
or any other provision of law. custom or practice, and agrees not to assert or
take advantage of any such rights or remedies including, but not limited to;

(a) any right to require Landlord to proceed against Tenant or any other Person
or to proceed against or exhaust any security held by Landlord at any time or to
pursue any other remedy in Landlord’s power before proceeding against Guarantor
or to require that Landlord cause a marshaling of Tenant’s assets or any assets
given as collateral for this Guaranty, or to proceed against Tenant and/or any
collateral held by Landlord at any time or in any particular order;

(b) any defense that may arise by reason of the incapacity or lack of authority
of any Person or Persons;

(c) notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action on the part of Tenant,
Landlord, any creditor of Tenant or Guarantor or on the part of any other Person
whomsoever under this or any other instrument in connection with any obligation
or evidence of indebtedness held by Landlord or in connection with any
obligation hereby guaranteed;

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Exhibit M - 6

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(d) any defense based upon an election of remedies by Landlord which destroys or
otherwise impairs the subrogation rights of Guarantor or the right of Guarantor
to proceed against Tenant for reimbursement, or both;

(e) any defense based upon any statute or role of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal;

(f) any duty on the part of Landlord to disclose to Guarantor any facts Landlord
may now or hereafter know about Tenant, regardless of whether Landlord has
reason to believe that any such facts materially increase the risk beyond that
which Guarantor intends to assume or has reason to believe that such facts are
unknown to Guarantor or has a reasonable opportunity to communicate such facts
to Guarantor, it being understood and agreed that Guarantor is hilly responsible
for being and keeping informed of the financial condition of Tenant and of all
circumstances bearing on the risk of non-payment or non-performance of any
Obligations or indebtedness hereby guaranteed;

(g) any defense arising because of Landlord’s election, in any proceeding
instituted under the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. § 101. et
seq.). as amended, reformed or modified from time to time and any rules or
regulations issued from time to time thereunder (the “Bankruptcy Code”) of the
application of Section 1111(b)(2) of the Bankruptcy Code;

(h) any defense based on any borrowing or grant of a security interest under
Section 364 of the Bankruptcy Code; and

(i) all rights and remedies accorded by applicable law to guarantors, including,
without limitation, any extension of time conferred by any law now or hereafter
in effect and any requirement or notice of acceptance of this Guaranty or any
other notice to which the undersigned may now or hereafter be entitled to the
extent such waiver of notice is permitted by applicable law.

6. Enforcement.

(a) The obligations of Guarantor hereunder are independent of the obligations of
Tenant under the Lease. This Guaranty may be enforced by Landlord without the
necessity at any time of resorting to or exhausting any other security (such as.
for example, any security deposit of Tenant held by Landlord) or collateral and
without the necessity at any time of having recourse to the remedy provisions of
the Lease (such as. for example, terminating the Lease) or otherwise, and
Guarantor hereby expressly waives the right to require Landlord to proceed
against Tenant or any other Person, to exercise its rights and remedies under
the Lease, or to pursue any other remedy whatsoever against any Person, security
or collateral or enforce any other right at law or in equity. Without limitation
of the generality of the foregoing, it shall not be necessary for Landlord (and
Guarantor hereby waives any rights which it may have to require Landlord), in
order to enforce any Obligation against Guarantor, first to institute suit or
exhaust its remedies against any other Person, security or collateral or resort
to any other means of obtaining payment of any Obligation. Nothing herein shall
prevent Landlord from suing any

- 6 -

 

Exhibit M - 7

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Person to enforce the terms of the Lease or from exercising any other rights
available to Landlord under the Lease or any other instrument or agreement, and
the exercise of any of the aforesaid rights shall not affect the obligations of
Guarantor hereunder. Guarantor understands that the exercise, or any forbearance
from exercising, by Landlord of certain rights and remedies contained in the
Lease may affect or eliminate Guarantor’s light of subrogation against Tenant
and that Guarantor may therefore incur liability hereunder that is not subject
to reimbursement; nevertheless Guarantor hereby authorizes and empowers Landlord
to exercise, in its sole discretion, any rights and remedies, or any combination
thereof, which may then be available, it being the purpose and intent of
Guarantor that its Obligations hereunder shall be absolute, independent and
unconditional, in each case in accordance with its terms hereunder.

(b) No failure or delay on the part of Landlord in exercising any right, power
or privilege under this Guaranty shall operate as a waiver of or otherwise
affect any such right, power or privilege, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

(c) It is understood that Landlord, without impairing this Guaranty, may,
subject to the terms of the Lease, apply payments from Tenant or any subtenant
of the Leased Property or from any reletting of the Leased Property upon a
Tenant Event of Default or from or in connection with any exercise of rights or
remedies, to any due and unpaid rent or other charges or to such other
Obligations owed by Tenant to Landlord pursuant to the Lease in such amounts and
in such order as Landlord, in its sole and absolute discretion, determines;
provided that any amount so paid and applied reduces the aggregate outstanding
liabilities of Tenant under the Lease by such amount as required under the
Lease.

7. Information. Guarantor (a) assumes all responsibility for being and keeping
itself informed of the financial condition and assets of Tenant and its
Affiliates and any other guarantor, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations and the nature, scope and extent of
the risks that Guarantor assumes and incurs hereunder, and (b) agrees that
Landlord will not have any duty to advise Guarantor of information regarding
such circumstances or risks.

8. No Subrogation. Until the Guaranty Termination Date (as defined in
Section 14), Guarantor shall have no right of subrogation and waives (a) any
right to enforce any remedy which Guarantor now has or may hereafter have
against Tenant or any of Tenant’s assets (including any such remedy of Landlord)
and any benefit of, and any right to participate in, any security now or
hereafter held by Landlord with respect to the Lease, (b) any rights of
reimbursement, indemnity or subrogation against Tenant arising from any payment
of Obligations by Guarantor, and (c) any right of contribution Guarantor may
have against any other Person that is liable under the Lease arising from such
payment or otherwise in connection with the Lease or this Guaranty.

9. Agreement to Comply with terms of Lease. Guarantor hereby agrees (a) to
comply with all terms of the Lease applicable to it, (b) that it shall take no
action, and that it shall not omit to take any action, which action or omission,
as applicable, would cause a breach of the terms of the Lease, and (c) that it
shall not commence an involuntary proceeding or file an involuntary petition in
any court of competent jurisdiction seeking (i) relief in respect of Tenant

- 7 -

 

Exhibit M - 8

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or any of its Subsidiaries, or of a substantial part of the property or assets
of Tenant or any of its Subsidiaries, under the Bankruptcy Code, or any other
federal, state or foreign bankruptcy, insolvency, receivership or similar law,
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Tenant or any of its Subsidiaries or for a
substantial part of the property or assets of Tenant or any of its Subsidiaries.

10. Agreement to Pay; Contribution; Subordination. Without limitation of any
other provision of this Guaranty, including, without limitation, Section 8
above, or any other right of Landlord at law or in equity, subject to the second
(2nd) to last sentence of Section 1 above, upon the failure of Tenant to pay any
Obligation when and as the same shall become due, Guarantor hereby
unconditionally and irrevocably promises to and will forthwith pay, or cause to
be paid, to Landlord in cash the amount of such unpaid Obligation. Upon payment
by Guarantor of any sums to Landlord as provided above, all rights of Guarantor
against Tenant arising as a result thereof by way of subrogation, contribution,
reimbursement, indemnity or otherwise shall be subject to the limitations set
forth in Section 8 above and this Section 10. Guarantor further agrees that any
rights of subrogation, contribution, reimbursement, indemnity or otherwise which
Guarantor may have against Tenant or against any collateral or security, and any
rights of contribution Guarantor may have against any other Person, in
connection with any payment of Obligations or otherwise under this Guaranty or
the Lease by Guarantor shall be junior and subordinate to any rights Landlord
may have against Tenant or any such other Person, to all right, title and
interest Landlord may have in any such collateral or security, and to any rights
Landlord may have against Tenant or any such other Person. If any amount shall
be paid to Guarantor on account of any such reimbursement, indemnity,
subrogation or contribution rights at any time prior to the Guaranty Termination
Date when a Tenant Event of Default shall have occurred and be continuing, such
amount shall be held in trust for Landlord and shall forthwith be paid over to
Landlord to be credited and applied against the Obligations, whether matured or
unmatured, in accordance with the terms of the Lease or any applicable security
agreement. If for any reason whatsoever Tenant now or hereafter becomes indebted
to Guarantor or any Affiliate of Guarantor, such indebtedness and all interest
thereon shall at all times be junior and subordinate to Tenant’s obligation to
Landlord to pay and perform as and when due in accordance with the terms of the
Lease the guaranteed Obligations, it being understood that Guarantor and each
Affiliate of Guarantor shall be permitted to receive payments from Tenant on
account of such indebtedness (but subject in all events to the preceding
provisions of this Section 10), except during any period that any Tenant Event
of Default shall have occurred and be continuing. During any such period,
Guarantor agrees to make no claim for such indebtedness that does not recite
that such claim is expressly junior and subordinate to Landlord’s rights and
remedies under the Lease. Furthermore, in the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving Tenant as debtor, Guarantor hereby assigns to Landlord any right it
may have to prove its claim in any such proceeding so as to establish its rights
hereunder and receive directly from receiver, trustee or other court custodian
dividends and payments which would otherwise be payable to Guarantor with
respect to debts and liability owing by Tenant to Guarantor up to the amounts
owed to Landlord hereunder.

11. Application of Payments. With respect to the Lease, and with or without
notice to Guarantor, Landlord, in Landlord’s sole discretion and at any time and
from time to time and in such manner and upon such terms as Landlord deems
appropriate, may (a) following the

- 8 -

 

Exhibit M - 9

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occurrence of a Tenant Event of Default, apply any or all payments or recoveries
from Tenant or from any other guarantor under any other instrument or realized
from any security, in such manner and order of priority as Landlord may
determine, to any indebtedness or other obligation of Tenant with respect to the
Lease and whether or not such indebtedness or other obligation is guaranteed
hereby or is otherwise secured, and (b) refund to Tenant any payment received by
Landlord under the Lease.

12. Guaranty Default. Upon the failure of Guarantor to pay the amounts required
to be paid hereunder when due following the occurrence of a Tenant Event of
Default under the Lease, Landlord shall have the right to bring such actions at
law or in equity, including, without limitation, appropriate injunctive relief,
as it deems appropriate to compel compliance, payment or deposit, and among
other remedies to recover its reasonable attorneys’ fees in any proceeding,
including any appeal therefrom and any post judgment proceedings.

13. Maximum Liability. Each of Guarantor and, by its acceptance of the
guarantees provided herein, Landlord, hereby confirms that it is the intention
of such Person that the guarantees provided herein and the obligations of
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of the United States Bankruptcy Code or any other federal, state or
foreign bankruptcy, insolvency, receivership or similar law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to the guarantees
provided herein and the obligations of Guarantor hereunder. To effectuate the
foregoing intention, Landlord hereby irrevocably agrees that the obligations of
Guarantor under this Guaranty shall be limited to the maximum amount as will
result in such obligations not constituting a fraudulent transfer or conveyance.

14. Release. Guarantor shall automatically be released from its obligations
hereunder upon the earlier to occur of either of the following: (x) (other than
with respect to amounts then due and payable by Guarantor) upon the consummation
of a Lease Foreclosure Transaction pursuant to clause (i) of Section 22.2 of the
Lease, and (y) upon the irrevocable satisfaction and discharge in full of all of
the Obligations (the date upon which such release occurs, the “Guaranty
Termination Date”); provided (in the case of clause (x)) that Landlord shall
have received a Replacement Guaranty from a Qualified Replacement Guarantor in
accordance with clause (i) of Section 22.2 of the Lease (and, in the case of
such a Replacement Guaranty delivered in connection with a New Lease obtained
pursuant to Section 17.1(f) of the Lease, such New Lease shall satisfy the
requirements for a New Lease contained in the last sentence of Section 17.1(f),
including that it be at the rent and additional rent, and upon the terms,
covenants and conditions of, the Lease; it being understood that (i) the
Obligations hereunder shall in no event include the obligations of the tenant
under a New Lease, and (ii) the preceding clause (i) shall in no event be deemed
to vitiate the Obligations hereunder in respect of the Lease).

15. Guarantor’s Representations and Warranties. Guarantor represents and
warrants that:

(i) Guarantor (a) is a corporation duly organized, validly existing, and in good
standing under the laws of the state of Nevada (it being understood that
Guarantor is to be renamed Caesars Entertainment, Inc. and converted to a
Delaware corporation on the date hereof following the making by Guarantor of
this Guaranty); (b) is duly qualified to do business and is

- 9 -

 

Exhibit M - 10

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in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification;
and (c) is in compliance with all applicable Legal Requirements where the
failure to comply Would reasonably be expected to have a materially adverse
effect on Guarantor’s ability to pay or perform the Obligations in accordance
with the terms hereof;

(ii) the execution, delivery, and performance of this Guaranty (a) are within
Guarantor’s corporate powers, (b) have been duly authorized by all necessary or
proper corporate action, (c) are not in contravention of any provision of
Guarantor’s articles or certificate of incorporation or by-laws, (d) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality, (e) will not conflict with or result in the breach
of, or constitute a default under, any indenture, mortgage, deed of trust,
lease, agreement, or other instrument to which Guarantor is a party or by which
Guarantor or any of its property is bound, (f) will not result in the creation
or imposition of any lien upon any of the property of Guarantor, and (g) do not
require the consent or approval of any governmental body, agency, authority, or
any other Person except those already obtained, except in the case of clauses
(e) and (g), where such conflict, breach or failure to obtain a consent or
approval, would not reasonably be expected to have a materially adverse effect
on Guarantor’s ability to pay or perform the Obligations in accordance with the
terms hereof; and

(iii) this Guaranty is duly executed and delivered on behalf of Guarantor and
constitutes a legal, valid, and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms.

16. Guarantor’s Covenants.

(a) Dividends. In addition to any other applicable restrictions hereunder, prior
to the Covenant Termination Date (as defined below), Guarantor shall not,
directly or indirectly, declare or pay any dividend or make any other
distribution with respect to its capital stock or other equity interests with
any assets other than cash unless such dividend or distribution would not
reasonably be expected to result in Guarantor’s inability to perform its
Guaranty obligations under this Guaranty.

(b) Restricted Payments. In addition to the foregoing, prior to the Covenant
Termination Date, Guarantor shall not directly or indirectly (i) declare or pay,
or cause to be declared or paid, any dividend, distribution or other direct or
indirect payment or transfer (in each case, in cash, stock, other property, a
combination thereof or otherwise) with respect to any of Guarantor’s capital
stock or other equity interests, (ii) purchase or otherwise acquire or retire
for value any of Guarantor’s capital stock or other equity interests, or
(iii) engage in any other transaction with any direct or indirect holder of
Guarantor’s capital stock or other equity interests which is similar in purpose
or effect to those described above (collectively, a “Restricted Payment”),
except that (x) Guarantor can execute any of the transactions outlined above if
Guarantor’s equity market capitalization exceeds $5.5 billion, or (y) if
Guarantor’s equity market capitalization is less than $5.5 billion, then the
Guarantor may declare or pay dividends or distributions or engage in any other
transactions described in Section 16(b)(i) above in the aggregate amount of less
than or equal to $200 million in any fiscal year and the Guarantor may purchase
or otherwise acquire or retire for value, as described in Section 16(b)(ii)
above, up to

- 10 -

 

Exhibit M - 11

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$500 million shares of Guarantor’s capital stock or other equity interests in
any fiscal year (it being understood that from and after such time that the
aggregate amount of all such transactions dining any fiscal year of Guarantor
exceeds $200 million or $500 million, as applicable, as provided in this clause
(y), no further such transactions shall be permitted dining such fiscal year of
Guarantor under this clause (y)).

(c) Survival of Covenants. As used herein, the term “Covenant Termination Date”
shall mean the earliest to occur of (1) the Guaranty Termination Date,
(2) October 6, 2023, and (3) the first day on which (x) the Total Net Leverage
Ratio of the Guarantor is less than or equal to 5.00:1.00 and (y) the EBITDAR to
Rent Ratio is equal to or greater than 3.00:1.00.

For the purpose of the foregoing:

(i) “EBITDAR to Rent Ratio” means the ratio of (a) the EBITDAR of Guarantor and
its Subsidiaries on a consolidated basis during the applicable Trailing Test
Period of Guarantor and its Subsidiaries (provided, that, to the extent any such
Subsidiary is not wholly owned (directly or indirectly) by Guarantor, the
EBITDAR of such Subsidiary shall be limited to Guarantor’s pro-rata ownership
interests in such Subsidiary) to (b) the sum of (w) the Rent under the Lease,
plus (x) the Rent (as defined in the Las Vegas Lease), plus (y) the Rent (as
defined in the Regional Lease), plus (z) actual rent (excluding additional rent
such as pass-throughs of expenses) payable by Guarantor and its Subsidiaries on
a consolidated basis under all other Gaming Leases, in each case during such
Trailing Test Period (the sum of clauses (w) through (z), tire “Gaming Lease
Rent”),

(ii) “Gaming Lease” means a lease entered into by Guarantor or any of its
Subsidiaries pursuant to which lease Guarantor or any of its Subsidiaries occupy
and use real property, vessels or similar assets for, or primarily in connection
with, the operation of one or more Gaming Facilities thereon or thereat,

(iii) “EBITDAR” means for any applicable twelve (12) month period, the
consolidated net income or loss of a Person on a consolidated basis for such
period, determined in accordance with GAAP, provided, however, that without
duplication and in each case to the extent included in calculating net income
(calculated in accordance with GAAP): (i) income tax expense shall be excluded;
(ii) interest expense shall be excluded: (iii) depreciation and amortization
expense shall be excluded: (iv) amortization of intangible assets shall be
excluded; (v) write-downs and reserves for non-recurring restructuring-related
items (net of recoveries) shall be excluded; (vi) reorganization items shall be
excluded; (vii) any impairment charges or asset write-offs, non-cash gains,
losses, income and expenses resulting from fair value accounting required by the
applicable standard under GAAP and related interpretations, and non-cash charges
for deferred tax asset valuation allowances, shall be excluded; (viii) any
effect of a change in accounting principles or policies shall be excluded;
(ix) any non-cash costs or expense incurred pursuant to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement or any stock subscription or shareholder agreement shall be excluded;
(x) any nonrecurring gains or losses (less all

- 11 -

 

Exhibit M - 12

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fees and expenses relating thereto) shall be excluded: (xi) rent expense shall
be excluded; and (xii) the impact of any deferred proceeds resulting from failed
sale accounting shall be excluded (it being understood, in connection with any
EBITDAR calculation made pursuant to this Guaranty (a) promptly following
request therefor. Guarantor shall provide Landlord with all supporting
documentation and backup information with respect thereto as may be reasonably
requested by Landlord, (b) such calculation shall be as reasonably agreed upon
between Landlord and Guarantor, and (c) if Landlord and Guarantor do not agree
within twenty (20) days of either party seeking to commence discussions, the
same may be determined by an Expert in accordance with and pursuant to the
process set forth in Section 34.2 of the Lease).

(iv) “EBITDA” means the same meaning as “EBITDAR” as defined herein but without
giving effect to clause (xi) in the definition thereof (it being understood that
to the extent any Gaming Lease Rent is accounted for as interest expense in
accordance with GAAP, such interest expense will be accounted for as rent and
thus included in clause (xi) of the definition of EBITDAR), and

(v) “Total Net Leverage Ratio” means, with respect to Guarantor and its
Subsidiaries on a consolidated basis, on any date, the ratio of (i) (a) the
aggregate principal amount of (without duplication) all indebtedness consisting
of indebtedness for borrowed money, unreimbursed obligations in respect of drawn
letters of credit (but excluding contingent obligations under outstanding
letters of credit) and other purchase money indebtedness and guarantees of any
of the foregoing obligations, of Guarantor and its Subsidiaries determined on a
consolidated basis on such date in accordance with GAAP (it being understood
that neither the Lease nor the Las Vegas Lease, nor the Regional Lease nor any
other Gaming Lease shall be treated as indebtedness regardless of how they are
treated under GAAP) less (b) the aggregate amount of all cash or cash
equivalents of Guarantor and its Subsidiaries that would not appear “restricted”
on a consolidated balance sheet of Guarantor and its Subsidiaries to
(ii) EBITDA.

17. Notices. Any notice, request or other communication to be given by any party
hereunder shall be in writing and shall be sent by registered or certified mail,
postage prepaid and return receipt requested, by hand delivery or express
cornier service or by an overnight express service to the following address:

 

To Guarantor:

   c/o Caesars Entertainment. Inc.    100 West Liberty Street. Suite 1150   
Reno. Nevada 89501    Attention: General Counsel    Email:
equatmann@eldoradoresorts.com

To Landlord:

   Harrah’s Joliet LandCo LLC    c/o VICI Properties Inc.    535 Madison Avenue.
20th Floor    New York. New York 10022    Attn: General Counsel    Email:
corplaw@viciproperties.com

- 12 -

 

Exhibit M - 13

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or to such other address as either party may hereafter designate. Notice shall
be deemed to have been given on the date of delivery if such delivery is made on
a Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted.

18. Miscellaneous.

(a) No term, condition or provision of this Guaranty may be amended, waived or
modified except by an express written instrument to that effect signed by
Landlord and Guarantor. No waiver of any term, condition or provision of this
Guaranty will be deemed a waiver of any other term, condition or provision,
irrespective of similarity, or constitute a continuing waiver of the same term,
condition or provision, unless otherwise expressly provided.

(b) If any one or more of the terms, conditions or provisions contained in this
Guaranty is found in a final award or judgment rendered by any court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining terms, conditions and
provisions of this Guaranty shall not in any way be affected or impaired
thereby, and this Guaranty shall be interpreted and construed as if the invalid,
illegal, or unenforceable term, condition or provision had never been contained
in this Guaranty.

(c) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, EXCEPT THAT THE LAWS OF THE STATE WHERE THE LEASED
PROPERTY IS LOCATED SHALL GOVERN THIS AGREEMENT TO THE EXTENT NECESSARY (I) TO
OBTAIN THE BENEFIT OF THE RIGHTS AND REMEDIES SET FORTH HEREIN WITH RESPECT TO
ANY OF THE LEASED PROPERTY AND (II) FOR PROCEDURAL REQUIREMENTS WHICH MUST BE
GOVERNED BY THE LAWS OF SUCH STATE. GUARANTOR CONSENTS TO IN PERSONAM
JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF NEW YORK AND AGREES THAT ALL
DISPUTES CONCERNING THIS GUARANTY SHALL BE HEARD IN THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF NEW YORK. GUARANTOR FURTHER CONSENTS TO IN PERSONAM
JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF EACH STATE WITH RESPECT TO
ANY ACTION COMMENCED BY LANDLORD SEEKING TO RETAKE POSSESSION OF ANY OR ALL OF
THE LEASED PROPERTY IN WHICH GUARANTOR IS REQUIRED TO BE NAMED AS A NECESSARY
PARTY. GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER
ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF NEW YORK AND IRREVOCABLY
WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS LOCATED IN THE
STATE OF NEW YORK.

(d) GUARANTOR, BY ITS EXECUTION OF THIS GUARANTY, AND LANDLORD, BY ITS
ACCEPTANCE OF THIS GUARANTY, HEREBY WAIVES TRIAL BY JURY AND THE RIGHT THERETO
IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING ON, UNDER OUT OF, BY REASON OF
OR RELATING IN ANY WAY TO THIS GUARANTY OR THE INTERPRETATION, BREACH OR
ENFORCEMENT THEREOF.

- 13 -

 

Exhibit M - 14

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

(e) ln the event of any suit, action, arbitration or other proceeding to
interpret this Guaranty, or to determine or enforce any right or obligation
created hereby, the prevailing party in the action shall recover such party’s
reasonable costs and expenses incurred in connection therewith, including, but
not limited to, reasonable attorneys’ fees and costs of appeal, post judgment
enforcement proceedings (if any) and bankruptcy proceedings (if any). Any court,
arbitrator or panel of arbitrators shall, in entering any judgment or making any
award in any such suit, action, arbitration or other proceeding, in addition to
any and all other relief awarded to such prevailing party, include in such
judgment or award such party’s reasonable costs and expenses as provided in this
Section 18(e).

(f) Guarantor (i) represents that it has been represented and advised by counsel
in connection with the execution of this Guaranty; (ii) acknowledges receipt of
a copy of the Lease; and (iii) further represents that Guarantor has been
advised by counsel with respect thereto. This Guaranty shall be construed and
interpreted in accordance with the plain meaning of its language, and not for or
against Guarantor or Landlord, and as a whole, giving effect to all of the
terms, conditions and provisions hereof.

(g) Except as provided in any other written agreement now or at any time
hereafter in force between Landlord and Guarantor, this Guaranty shall
constitute the entire agreement of Guarantor with Landlord with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof will be binding upon Landlord or
Guarantor unless expressed herein.

(h) All stipulations, obligations, liabilities and undertakings under this
Guaranty shall be binding upon Guarantor and its respective successors and
assigns and shall inure to the benefit of Landlord and to the benefit of
Landlord’s successors and permitted assigns.

(i) Whenever the singular shall be used hereunder, it shall be deemed to include
the plural (and vice-versa) and reference to one gender shall be construed to
include all other genders, including neuter, whenever the context of this
Guaranty so requires. Section captions or headings used in this Guaranty are for
convenience and reference only, and shall not affect the construction thereof.

(j) This Guaranty may be executed in any number of counterparts, each of which
shall be a valid and binding original, but all of which together shall
constitute one and the same instrument.

(k) For the avoidance of doubt, Guarantor consents to the collateral assignment
of this Guaranty to any Fee Mortgagee and agrees that any Person that is a
permitted successor to, and/or assignee of, Landlord’s interest under the Lease
in accordance with the terms thereof shall constitute a permitted successor
and/or assignee and intended beneficiary hereof (and shall become, be recognized
by Guarantor as, and have all of the rights of, “Landlord” hereunder).

- 14 -

[Signature Page to Follow]

 

Exhibit M - 15

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

EXECUTED as of the date first set forth above.

 

GUARANTOR: ELDORADO RESORTS, INC.,
a Nevada corporation By:     Name: Title:

 

LANDLORD:

HARRAH’S JOLIET LANDCO LLC,

a Delaware limited liability company

By:     Name: Title:

 

[Signature Page to Joliet Lease Guaranty]

 

Exhibit M - 16

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

EXHIBIT N

MANAGED FACILITIES IP TRADEMARKS

Any Trademarks included in System-wide IP that are necessary for the operation
or management of the Facility, including the Trademark listed below:

Harrah’s Joliet

 

Exhibit N - 1

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

EXHIBIT O

FORM OF FEE MORTGAGEE SNDA

[SEE ATTACHED]

 

Exhibit O - 1

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

APNs:

103100600, 103100601, 103100603, 103100604, 103100605, 103100606, 103100607,

103100608, 103100609, 103100202, 103100201, 103100101, 103100102, 105100404,
105100406

RECORDING REQUESTED BY,

AND WHEN RECORDED MAIL TO:

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention: Ari Blaut

SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

This SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT AGREEMENT (the “Agreement”)
effective as of                 , 2020 is made and entered into on
                , 2020. and is by and among Goldman Sachs Bank USA, as
collateral agent for those certain lenders pursuant to the Credit Agreement (as
defined below), a New York State-chartered bank, having an address at 200 West
Street, New York, New York 10282 (together with its successors and assigns in
such capacity. “Agent”), the entities listed on Schedule A attached hereto
(collectively, and together with their respective successors and assigns,
“Landlord”) (solely for purposes of Sections 4 and 5(b)(y)(B) hereof) and the
entities listed on Schedule B attached hereto (collectively, and together with
their respective successors and assigns. “Tenant”).

WHEREAS, by a certain Lease (Non-CPLV), dated as of October 6, 2017, between
Landlord and Tenant, as amended by (i) that certain First Amendment to Lease
(Non-CPLV). dated as of December 22, 2017, (ii) that certain Second Amendment to
Lease (Non-CPLV) and Ratification of SNDA, dated as of February 16, 2018, (iii)
that certain Third Amendment to Lease (Non-CPLV), dated as of April 2, 2018,
(iv) that certain Fourth Amendment to Lease (Non- CPLV), dated as of December
26, 2018, (v) that certain Omnibus Amendment to Leases, dated as of June 1,
2020, and (vi) that certain Fifth Amendment to Lease (Non-CPLV), dated as of
                , 2020 (as the same may be amended, modified or supplemented
from time to time, collectively, the “Lease”), Landlord leased to Tenant the
Leased Property (as such term is defined in the Lease), including the Property
(as defined below), as evidenced by that certain Memorandum of Lease, dated as
of                 , 2020, and recorded in the conveyance records of the Clerk
of Court for the Parish of Orleans, State of Louisiana (“Recorder’s Office”) as
Conveyance Instrument Number                 , Notarial Archives Number
                ;

WHEREAS, Agent and certain other lenders have made or intend to make a loan (the
“Loan”) to an affiliate of the Landlord pursuant to the terms of that certain
Credit Agreement, dated as of December 22. 2017, by and among VICI Properties 1
LLC, as the borrower (the

 

Exhibit O - 2

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

“Borrower”), the Agent, and the other financial institutions party thereto from
time to time, as amended by that certain Amendment No. 1 to Credit Agreement,
dated September 24, 2018, as amended by that certain Amendment No. 2 to Credit
Agreement, dated May 15, 2019, as amended by that certain Amendment No. 3 to
Credit Agreement, dated May 15. 2019 (as the same may be amended, modified,
restated, severed, consolidated, renewed, replaced, or supplemented from time to
time, the “Credit Agreement”). which Loan shall be secured by, among other
things, that certain First Lien Fee and Leasehold Multiple Indebtedness
Mortgage, Security Agreement, and Pledge of Leases and Rents, dated
                 2020 recorded in the mortgage records of the Recorder’s Office
as Mortgage Instrument Number                 , Notarial Archives Number
                , (as the same may be amended, restated, replaced, severed,
split, supplemented or otherwise modified from time to time, the “Mortgage”)
encumbering the immovable property more particularly described on Exhibit A
annexed hereto and made a part hereof (the “Property”); as well as that certain
UCC 1 Financing Statement maintained in the Central Registry of the Louisiana
Secretary of State (the “UCC Financing Statement”) encumbering the movable
property as more particularly described in the UCC Financing Statement:

WHEREAS, Tenant acknowledges that Agent will rely on this Agreement in making
the Loan to the Borrower;

WHEREAS, Agent and Tenant desire to evidence their understanding with respect to
the Mortgage and the Lease as hereinafter provided; and

WHEREAS, pursuant to Section 31.1 of the Lease, Tenant has agreed to deliver
this Agreement and will subordinate the Lease to the Mortgage and to the hen
thereof and, in consideration of Tenant’s delivery of this Agreement, Agent has
agreed not to disturb Tenant’s possessory rights in the Property under the Lease
on the terms and conditions hereinafter set forth.

NOW. THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the parties hereto hereby agree as follows:

1. Tenant covenants, stipulates and agrees that the Lease and all of Tenant’s
right, title and interest in and to the Property thereunder (including but not
limited to any option to purchase, right of first refusal to purchase or right
of first offer to purchase the Property or any portion thereof) is hereby, and
shall at all times continue to be, subordinated and made secondary and inferior
in each and every respect to the Mortgage and the lien thereof, to all of the
terms, conditions and provisions thereof and to any and all advances made or to
be made thereunder, so that at all times the Mortgage shall be and remain a lien
on the Property prior to and superior to the Lease for all purposes, subject to
the provisions set forth herein. Subordination is to have the same force and
effect as if the Mortgage and such renewals, modifications, consolidations,
replacements and extensions had been executed, acknowledged, delivered and
recorded prior to the Lease, any amendments or modifications thereof and any
notice thereof.

2. Agent agrees that if Agent exercises any of its rights under the Mortgage,
including entry or foreclosure of the Mortgage or exercise of a power of sale
under the Mortgage, Agent, or any person who acquires any portion of the
Property in a foreclosure or similar proceeding or in a transfer in lieu of any
such foreclosure, (a) will not terminate or disturb Tenant’s right to use.
occupy and possess the Property, nor any of Tenant’s rights, privileges and
options under the terms

 

Exhibit O - 3

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

of the Lease, so long as there is no continuing Tenant Event of Default (as
defined in the Lease) (or, if there is a continuing Tenant Event of Default,
this clause (a) shall be subject to the rights granted to a Permitted Leasehold
Mortgagee (as defined in the Lease) as expressly set forth in the Lease) and
(b) will be bound by the provisions of Article XVII of the Lease for the benefit
of each Permitted Leasehold Mortgagee (as defined in the Lease). In addition,
Agent or any person prosecuting such rights and remedies agrees that, so long as
the Lease has not been terminated on account of a Tenant Event of Default, Agent
or such other person, as the case may be, shall not name or join Tenant as a
defendant in any exercise of Agent’s or such person’s rights and remedies
arising upon a default under the Mortgage unless applicable law requires Tenant
to be made a party thereto as a condition to proceeding against Landlord. In the
latter case, Agent or any person prosecuting such rights and remedies may join
Tenant as a defendant in such action only for such purpose and not to terminate
the Lease or otherwise adversely affect Tenant’s rights under the Lease or this
Agreement in such action. Notwithstanding anything to the contrary contained
herein, if a Tenant Event of Default has occurred and is continuing at such time
that a Successor Landlord (defined below) takes ownership and leasehold title to
the Property, such Successor Landlord shall be subject to the terms and
provisions in the Lease concerning the exercise of rights and remedies upon such
Tenant Event of Default, including the provisions of Articles XVI, XVII and
XXXVI.

3. If, at any time Agent (or any person, or such person’s successors or assigns,
who acquires the interest of Landlord under the Lease through foreclosure of the
Mortgage, transfer in lieu of foreclosure or otherwise) shall succeed to the
rights of Landlord under the Lease as a result of a default or event of default
under the Mortgage, Tenant shall attorn to and recognize such person so
succeeding to the rights of Landlord under the Lease (herein sometimes called
“Successor Landlord”) as Tenant’s landlord under the Lease, said attornment to
be effective and self-operative without the execution of any further
instruments.

4. Landlord authorizes and directs Tenant to honor any written demand or notice
from Agent instructing Tenant to pay rent or other sums to Agent rather than
Landlord (a “Payment Demand”), regardless of any other or contrary notice or
instruction which Tenant may receive from Landlord before or after Tenant’s
receipt of such Payment Demand. Tenant may rely upon any notice, instruction,
Payment Demand, certificate, consent or other document from, and signed by,
Agent and shall have no duty to investigate the same or the circumstances under
which the same was given. Any payment made by Tenant to Agent or in response to
a Payment Demand shall be deemed proper payment by Tenant of such sum pursuant
to the Lease.

5. (a) If Agent shall become the owner of the Property or the Property shall be
sold by reason of foreclosure or other proceedings brought to enforce the
Mortgage or if the Property shall be transferred by deed in lieu of foreclosure,
Agent or any Successor Landlord shall be deemed to have assumed all terms and
covenants of the Lease to be observed or performed by Landlord from and after
the date on which such Agent or such Successor Landlord (as the case may be)
succeeds to Landlord’s interests under the Lease; provided, however, such Agent
or Successor Landlord (as the case may be) shall not be:

(i) liable for any act or omission of any prior landlord (including Landlord) or
bound by any obligation to make any payment to Tenant which was required to be
made prior to the time Agent or such Successor Landlord succeeded to any prior
landlord (including Landlord); or

 

Exhibit O - 4

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

(ii) obligated to cure any defaults of any prior landlord (including Landlord)
which occurred, or to make any payment to Tenant which was required to be paid
by any prior landlord (including Landlord), prior to the time that Agent or such
Successor Landlord succeeded to the interest of such landlord under the Lease;
or

(iii) obligated to perform any construction obligations of any prior landlord
(including Landlord) under the Lease or liable for any defects (latent, patent
or otherwise) in the design, workmanship, materials, construction or otherwise
with respect to improvements and buildings constructed on the Property; or

(iv) subject to any offsets, defenses or counterclaims which Tenant may be
entitled to assert against any prior landlord (including Landlord); or

(v) bound by any payment of rent or additional rent by Tenant to any prior
landlord (including Landlord) for more than one (1) month in advance; or

(vi) bound by any amendment, modification, termination or surrender of the Lease
made without the written consent of Agent (except for any amendment or
modification entered into pursuant to and in accordance with the Credit
Agreement which does not require the consent of Agent, so long as a copy of such
amendment or modification is promptly delivered to Agent).

(b) Notwithstanding the foregoing, (x) Tenant reserves any right it may have to
any and all claims or causes of action (i) against Landlord for prior losses or
damages arising prior to, and (ii) against the Successor Landlord for all losses
or damages arising from and after, the date that such Successor Landlord takes
title to the Property, and (y) if (i) at any time Agent (or any person, or such
person’s successors or assigns, who acquires the Property or the interest of
Landlord under the Lease through foreclosure of the Mortgage, transfer in lieu
of foreclosure or otherwise) shall acquire the Property or succeed to the rights
of Landlord under the Lease as a result of a default or event of default under
the Mortgage and (ii) the Successor Landlord or the successor patty that
acquires the Property acquires fewer than all of the other Facilities (as such
term is defined in the Lease) under the Lease, then (A) such party, on the one
hand, and Tenant, on the other hand, will enter into a Severance Lease (as
defined in the Lease) in accordance with Article XVIII of the Lease (a
“Severance Lease”), and references herein to the Lease shall refer to such
Severance Lease from and after the time such Severance Lease is executed, and
(B) such Severance Lease will constitute a Severance Lease for all purposes of
the Lease (including Section 18.2 of the Lease).

6. Tenant hereby represents, warrants, covenants and agrees to and with Agent:

(a) to use commercially reasonable efforts to deliver to Agent, by certified
mail, return receipt requested, a duplicate of each notice of default delivered
by Tenant to Landlord at the same time as such notice is given to Landlord and
no such notice of default shall be deemed given by Tenant under the Lease unless
and until a copy of such notice shall have been so delivered to Agent. Agent
shall have the right (but shall not be obligated) to cure such default. Tenant
shall

 

Exhibit O - 5

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

accept performance by Agent or its designee of any term, covenant, condition or
agreement to be performed by Landlord under the Lease with the same force and
effect as though performed by Landlord. Tenant further agrees to afford Agent or
the designee a period of thirty (30) days beyond any period afforded to Landlord
or its designee for the curing of such default during which period Agent or its
designee may elect (but shall not be obligated) to seek to cure such default,
or, if such default cannot be cured within that time, then such additional time
as may be necessary to cure such default (including but not limited to
commencement of foreclosure proceedings) but in no event more than ninety
(90) days, during which period Agent or its designee may elect (but shall not be
obligated) to seek to cure such default, prior to taking any action to terminate
the Lease;

(b) that Tenant is the sole owner of the leasehold estate created by the Lease;
and

(c) to promptly certify, to Tenant’s knowledge, in writing to Agent, in
connection with any proposed assignment of the Mortgage, whether or not any
default on the part of Landlord then exists under the Lease and to deliver to
Agent any tenant estoppel certificates required under the Lease.

7. Tenant acknowledges that the interest of Landlord under the Lease is assigned
to Agent solely as security for the obligations of the Borrower pursuant to the
Credit Agreement, and Agent shall have no duty, liability or obligation under
the Lease or any extension or renewal thereof, unless Agent shall specifically
undertake such liability in writing or Agent becomes and then only with respect
to periods in which Agent becomes, the owner and leasehold owner of the
Property.

8. This agreement was negotiated in the State of New York, which state the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects this
Agreement (and any agreement formed pursuant to the terms hereof) shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of New York (without regard to principles or conflicts of law) and any
applicable laws of the United States of America, except that all provisions
hereof relating to the creation of the leasehold estate and all remedies set
forth in Article XVI of the Lease relating to recovery of possession of the
Property (such as an action for unlawful detainer, in rem action or other
similar action) shall be construed and enforced according to, and governed by,
the laws of the State in which the Property is located.

9. This Agreement and each and every covenant, agreement and other provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns (including, without
limitation, any successor agent pursuant to the terms of the Credit Agreement)
and may be amended, supplemented, waived or modified only by an instrument in
writing executed by the party against which enforcement of the termination,
amendment, supplement, waiver or modification is sought. Each Permitted
Leasehold Mortgagee (as defined in the Lease) (for so long as such Permitted
Leasehold Mortgagee (as defined in the Lease) holds a Permitted Leasehold
Mortgage (as defined in the Lease)) is an intended third party beneficiary of
Section 2(b) entitled to enforce the same as if a party to this Agreement.

 

Exhibit O - 6

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

10. All notices to be given under this Agreement shall be in writing and shall
be deemed served upon receipt by the addressee if served personally or, if
mailed, upon the first to occur of receipt or the refusal of delivery as shown
on a return receipt, after deposit in the United States Postal Service certified
mail, postage prepaid, addressed to the address of Landlord, Tenant or Agent
appearing below. Such addresses may be changed by notice given in the same
manner. If any party consists of multiple individuals or entities, then notice
to any one of same shall be deemed notice to such party.

 

Agent’s Address:

  

Goldman Sachs Bank USA

200 West Street

New York, New York 10282

Attn: Joshua Desai

With a copy to:

  

Sullivan & Cromwell LLP

125 Broad Street,

New York, New York 10004

Attn: Ari B. Blaut, Esq.

Tenant’s Address:

  

Jazz Casino Company, L.L.C.

c/o Caesars Entertainment, Inc.

100, West Liberty Street, Suite 1150

Reno, NV 89501

Attention: General Counsel

Email: equatmann@eldoradoresorts.com

With a copy to:

  

Latham & Watkins

12670 High Bluff Drive

San Diego, CA 92130

Attn: Sony Ben-Moshe

Landlord’s Address:

  

Harrah’s New Orleans LLC

c/o VICI Properties Inc.

535 Madison Avenue, 20th Floor

New York, NY 10022

Attn: corplaw@viciproperties.com

With a copy to:

  

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attn: Tzvi Rokeach

11. If this Agreement conflicts with the Lease, then this Agreement shall govern
as between the parties and any Successor Landlord, including upon any attornment
pursuant to this Agreement. This Agreement supersedes, and constitutes full
compliance with, any provisions in the Lease that provide for subordination of
the Lease to, or for delivery of nondisturbance agreements by the holder of, the
Mortgage.

 

Exhibit O - 7

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

12. In the event Agent shall acquire Landlord’s interest in the Property, Tenant
shall look only to the estate and interest, if any, of Agent in the Property for
the satisfaction of Tenant’s remedies for the collection of a judgment (or other
judicial process) requiring the payment of money in the event of any default by
Agent as a Successor Landlord under the Lease or under this Agreement, and no
other property or assets of Agent shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant’s remedies under or with
respect to the Lease, the relationship of the landlord and tenant under the
Lease or Tenant’s use or occupancy of the Property or any claim arising under
this Agreement.

13. If any provision of this Agreement is held to be invalid or unenforceable by
a court of competent jurisdiction, such provision shall be deemed modified to
the extent necessary to be enforceable, or if such modification is not
practicable, such provision shall be deemed deleted from this Agreement, and the
other provisions of this Agreement shall remain in full force and effect, and
shall be liberally construed in favor of Agent.

14. This Agreement constitutes the entire agreement between Agent and Tenant
regarding the subordination of the Lease to the Mortgage and the rights and
obligations of Tenant and Agent as to the subject matter of this Agreement.

15. Except as expressly provided for in this Agreement, Agent shall have no
obligations to Tenant with respect to the Lease.

16. Tenant represents to Agent that it has full authority to enter into this
Agreement, Which has been duly authorized by all necessary actions. Agent
represents to Tenant that it has full authority to enter into this Agreement,
which has been duly authorized by all necessary actions.

17. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed to be effective as of the day and year first above written.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

Exhibit O - 8

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

AGENT:

    GOLDMAN SACHS BANK USA,

    a New York State-chartered bank

By:

     

Name:

 

Title:

ACKNOWLEDGMENT

STATE OF NEW YORK

COUNTY OF NEW YORK

On the                  day of                  in the year 2020, before me, the
undersigned, personally appeared                 , personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

 

 

 

     Notary Public

 

My Commission Expires:  

 

 

 

[Signature Page to SNDA – Harrah’s New Orleans]

 

Exhibit O - 9

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

LANDLORD (solely for purposes of Sections 4

and 5(b)(y)(B) hereof):

    Harrah’s New Orleans LLC,

    a Delaware limited liability company

    By:

 

 

  Name: David Kieske   Title: Treasurer

ACKNOWLEDGMENT

STATE OF NEW YORK

COUNTY OF NEW YORK

On the              day of                      in the year 2020, before me, the
undersigned, personally appeared David Kieske, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

 

 

Notary Public

 

My Commission Expires:  

 

 

[Signature Page to SNDA – Harrah’s New Orleans]

 

Exhibit O - 10

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

STATE OF NEVADA

COUNTY OF WASHOE

Thus done and passed by Jazz Casino Company, L.L.C. in the presence of the
undersigned notary public, duly commissioned and qualified in and for the County
of Washoe, State of Nevada, and the undersigned competent witnesses on the
             day of                         , 2020, who hereunto signed their
names together with the appearer and the undersigned notary public.

 

TENANT: JAZZ CASINO COMPANY, L.L.C., a Louisiana limited liability company By:  
  Name:   Edmund L. Quatmann, Jr. Title:   Secretary

 

WITNESSES:

By:    

Print Name:    

By:    

Print Name:    

 

 

Notary Public

Print Name:

   

Notary/Bar Roll No.

   

My commission expires:

   

[Signature Page to SNDA – Harrah’s New Orleans]

 

Exhibit O - 11

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

SCHEDULE 1

GAMING LICENSES

 

Unique ID

  

Legal Entity Name

  

License Category

  

Type of License

  

Issuing Agency

  

State

  

Description of
License

93-A-2103    Des Plaines Development Limited Partnership    Gaming    Gaming
License    Illinois Gaming Board    Illinois    Owner Licensee for Harrah’s
Joliet Casino Hotel

 

Schedule 1 - 1

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

SCHEDULE 2

GROUND LEASES

None.

 

Schedule 2 - 1

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

SCHEDULE 3

MAXIMUM FIXED RENT TERM

 

Property Name

  

City, State

  

Maximum Fixed Rent Term

Harrah’s Joliet    Joliet, Illinois    35

 

Schedule 3 - 1

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

SCHEDULE 4

SPECIFIED SUBLEASES

None.

 

Schedule 4 - 1

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

SCHEDULE 5

INTENTIONALLY OMITTED

 

Schedule 5 - 1

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

SCHEDULE 6

LONDON CLUBS

 

Property    Address Golden Nugget (01120)    22 Shaftesbury Avenue, London W1D
7EJ Sportsman (01110)    Old Quebec Street, London W1H 7AF The Playboy Club/10
Brick Street (01140)    14 Old Park Lane, London W1K 1ND Leicester Square
(01180)    5-6 Leicester Square, London WC2H 7NA Southend (01210)    Eastern
Esplanade, Southend on Sea, Essex SS1 2ZG Brighton (01220)    Brighton Marina
Village, Brighton, Sussex BN2 5UT Manchester (01240)    The Great Northern,
Watson Street, Manchester M3 4LP Nottingham (01270)    108 Upper Parliament
Street, Nottingham NG1 6LF Glasgow (01250)    Springfield Quay, Paisley Road,
Glasgow G5 8NP Leeds (01280)    4 The Boulevard, Clarence Dock, Leeds LS10 1PZ

 

Schedule 6 - 1

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

SCHEDULE 7

2018 FACILITY EBITDAR

[Intentionally Omitted]

 

Schedule 7 - 1