Exhibit
4.3


 


MEZZANINE LOAN AND SECURITY
AGREEMENT (FIRST MEZZANINE)


 


 


 


Dated as of November 7, 2007


 


Among


 


 


FCP
MEZZCO BORROWER I, LLC


as
Mezzanine Borrower


 


 


and


 


 


GERMAN AMERICAN CAPITAL
CORPORATION


 


and


 


JPMORGAN CHASE BANK, N.A.,


 


on behalf of the holders of the
Mezzanine Notes,


 


as
Mezzanine Lender


 

















 


TABLE OF CONTENTS


	
   

  	
   

  	
  Page

  
	
  I.

  	
  DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
  1

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Principles of Construction

  	
  29

  
	
   

  	
   

  	
   

  
	
  II.

  	
  GENERAL TERMS

  	
  30

  
	
   

  	
  2.1

  	
  Loan; Disbursement to Mezzanine Borrower

  	
  30

  
	
   

  	
   

  	
  2.1.1

  	
  The Loan

  	
  30

  
	
   

  	
   

  	
  2.1.2

  	
  Disbursement to Mezzanine Borrower

  	
  30

  
	
   

  	
   

  	
  2.1.3

  	
  The Mezzanine Notes, Pledge and Mezzanine Loan
  Documents

  	
  30

  
	
   

  	
   

  	
  2.1.4

  	
  Use of Proceeds

  	
  30

  
	
   

  	
  2.2

  	
  Interest; Loan Payments; Late Payment Charge

  	
  30

  
	
   

  	
   

  	
  2.2.1

  	
  Payment of Principal and Interest

  	
  30

  
	
   

  	
   

  	
  2.2.2

  	
  Method and Place of Payment

  	
  31

  
	
   

  	
   

  	
  2.2.3

  	
  Late Payment Charge

  	
  31

  
	
   

  	
   

  	
  2.2.4

  	
  Usury Savings

  	
  31

  
	
   

  	
  2.3

  	
  Prepayments

  	
  32

  
	
   

  	
   

  	
  2.3.1

  	
  Mandatory Prepayments

  	
  32

  
	
   

  	
   

  	
  2.3.2

  	
  Prepayments After Event of Default; Application of
  Amounts Paid

  	
  32

  
	
   

  	
   

  	
  2.3.3

  	
  Release of Collateral upon Repayment of Loan in Full

  	
  32

  
	
   

  	
   

  	
  2.3.4

  	
  Release of Individual Properties

  	
  33

  
	
   

  	
   

  	
  2.3.5

  	
  Substitution of Properties.

  	
  35

  
	
   

  	
   

  	
  2.3.6

  	
  Provisions Relating to Individual Properties That Go
  Dark

  	
  41

  
	
   

  	
   

  	
  2.3.7

  	
  Excess Account Collateral

  	
  42

  
	
   

  	
   

  	
  2.3.8

  	
  Reserve Requirements

  	
  42

  
	
   

  	
   

  	
  2.3.9

  	
  Release of Unimproved Parcels

  	
  42

  
	
   

  	
  2.4

  	
  Regulatory Change; Taxes

  	
  44

  
	
   

  	
   

  	
  2.4.1

  	
  Increased Costs

  	
  44

  
	
   

  	
   

  	
  2.4.2

  	
  Special Taxes

  	
  45

  
	
   

  	
   

  	
  2.4.3

  	
  Other Taxes

  	
  45

  
	
   

  	
   

  	
  2.4.4

  	
  Indemnity

  	
  45

  
	
   

  	
   

  	
  2.4.5

  	
  Change of Office

  	
  45

  
	
   

  	
   

  	
  2.4.6

  	
  Survival

  	
  45

  
	
   

  	
  2.5

  	
  Conditions Precedent to Closing

  	
  46

  
	
   

  	
   

  	
  2.5.1

  	
  Representations and Warranties; Compliance with
  Conditions

  	
  46

  
	
   

  	
   

  	
  2.5.2

  	
  Delivery of Mezzanine Loan Documents; Title
  Policies; Reports; Leases

  	
  46

  
	
   

  	
   

  	
  2.5.3

  	
  Delivery of Organizational Documents

  	
  48

  
	
   

  	
   

  	
  2.5.4

  	
  Counsel Opinions

  	
  48

  
	
   

  	
   

  	
  2.5.5

  	
  Consummation of the Merger

  	
  49

  
	
   

  	
   

  	
  2.5.6

  	
  Payments

  	
  49

  
	
   

  	
   

  	
  2.5.7

  	
  Transaction Costs

  	
  49

  
	
   

  	
   

  	
  2.5.8

  	
  Material Adverse Effect

  	
  49

  



 


 

















 


	
   

  	
   

  	
  2.5.9

  	
  Control

  	
  49

  
	
   

  	
   

  	
  2.5.10

  	
  Insolvency

  	
  50

  
	
   

  	
   

  	
  2.5.11

  	
  Master Lease and Individual Property Subleases

  	
  50

  
	
   

  	
   

  	
  2.5.12

  	
  Equity Contribution

  	
  50

  
	
   

  	
   

  	
  2.5.13

  	
  Existing Indebtedness

  	
  50

  
	
   

  	
   

  	
  2.5.14

  	
  Ground Lease and Fee Mortgagee Estoppels

  	
  51

  
	
   

  	
   

  	
  2.5.15

  	
  Equity and Real Property Transfer Documents

  	
  51

  
	
   

  	
   

  	
  2.5.16

  	
  No Competing Financing

  	
  51

  
	
   

  	
   

  	
  2.5.17

  	
  Approvals

  	
  51

  
	
   

  	
   

  	
  2.5.18

  	
  Searches

  	
  52

  
	
   

  	
  2.6

  	
  Additional Mezzanine Borrower Deliveries and
  Performance

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  CASH MANAGEMENT

  	
  52

  
	
   

  	
  3.1

  	
  Cash Management

  	
  52

  
	
   

  	
   

  	
  3.1.1

  	
  Establishment of Accounts

  	
  52

  
	
   

  	
   

  	
  3.1.2

  	
  Pledge of Account Collateral (First Mezzanine)

  	
  52

  
	
   

  	
   

  	
  3.1.3

  	
  Maintenance of Collateral Accounts

  	
  53

  
	
   

  	
   

  	
  3.1.4

  	
  Eligible Accounts

  	
  53

  
	
   

  	
   

  	
  3.1.5

  	
  Deposits into Sub-Accounts

  	
  54

  
	
   

  	
   

  	
  3.1.6

  	
  Monthly Funding

  	
  54

  
	
   

  	
   

  	
  3.1.7

  	
  Cash Management Bank (First Mezzanine)

  	
  55

  
	
   

  	
   

  	
  3.1.8

  	
  Mezzanine Borrower’s Account Representations,
  Warranties and Covenants

  	
  56

  
	
   

  	
   

  	
  3.1.9

  	
  Account Collateral (First Mezzanine) and Remedies

  	
  56

  
	
   

  	
   

  	
  3.1.10

  	
  Transfers and Other Liens

  	
  57

  
	
   

  	
   

  	
  3.1.11

  	
  Reasonable Care

  	
  57

  
	
   

  	
   

  	
  3.1.12

  	
  Mezzanine Lender’s Liability

  	
  58

  
	
   

  	
   

  	
  3.1.13

  	
  Continuing Security Interest

  	
  58

  
	
   

  	
   

  	
  3.1.14

  	
  Distributions

  	
  58

  
	
  IV.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  59

  
	
   

  	
  4.1

  	
  Mezzanine Borrower Representations

  	
  59

  
	
   

  	
   

  	
  4.1.1

  	
  Organization

  	
  59

  
	
   

  	
   

  	
  4.1.2

  	
  Proceedings

  	
  59

  
	
   

  	
   

  	
  4.1.3

  	
  No Conflicts

  	
  60

  
	
   

  	
   

  	
  4.1.4

  	
  Litigation

  	
  60

  
	
   

  	
   

  	
  4.1.5

  	
  Agreements

  	
  60

  
	
   

  	
   

  	
  4.1.6

  	
  Title to Property and Assets

  	
  61

  
	
   

  	
   

  	
  4.1.7

  	
  No Bankruptcy Filing

  	
  61

  
	
   

  	
   

  	
  4.1.8

  	
  Full and Accurate Disclosure

  	
  62

  
	
   

  	
   

  	
  4.1.9

  	
  Ownership Interests

  	
  62

  
	
   

  	
   

  	
  4.1.10

  	
  No Plan Assets

  	
  62

  
	
   

  	
   

  	
  4.1.11

  	
  Compliance

  	
  63

  
	
   

  	
   

  	
  4.1.12

  	
  Financial Information

  	
  63

  
	
   

  	
   

  	
  4.1.13

  	
  Condemnation

  	
  63

  
	
   

  	
   

  	
  4.1.14

  	
  Federal Reserve Regulations

  	
  63

  
	
   

  	
   

  	
  4.1.15

  	
  Utilities and Public Access

  	
  63

  



 


 


i

















 


	
   

  	
   

  	
  4.1.16

  	
  Not a Foreign Person

  	
  64

  
	
   

  	
   

  	
  4.1.17

  	
  Setoff, Etc

  	
  64

  
	
   

  	
   

  	
  4.1.18

  	
  Representations and Warranties in the Loan Documents
  (Mortgage)

  	
  64

  
	
   

  	
   

  	
  4.1.19

  	
  Reserved.

  	
  64

  
	
   

  	
   

  	
  4.1.20

  	
  Enforceability

  	
  64

  
	
   

  	
   

  	
  4.1.21

  	
  Reserved.

  	
  64

  
	
   

  	
   

  	
  4.1.22

  	
  Insurance

  	
  64

  
	
   

  	
   

  	
  4.1.23

  	
  Use of Property

  	
  64

  
	
   

  	
   

  	
  4.1.24

  	
  Certificate of Occupancy; Licenses

  	
  64

  
	
   

  	
   

  	
  4.1.25

  	
  Flood Zone

  	
  65

  
	
   

  	
   

  	
  4.1.26

  	
  Physical Condition

  	
  65

  
	
   

  	
   

  	
  4.1.27

  	
  Boundaries

  	
  65

  
	
   

  	
   

  	
  4.1.28

  	
  Subleases

  	
  65

  
	
   

  	
   

  	
  4.1.29

  	
  Filing and Recording Taxes

  	
  66

  
	
   

  	
   

  	
  4.1.30

  	
  Single Purpose Entity/Separateness

  	
  66

  
	
   

  	
   

  	
  4.1.31

  	
  Illegal Activity

  	
  66

  
	
   

  	
   

  	
  4.1.32

  	
  No Change in Facts or Circumstances; Disclosure

  	
  67

  
	
   

  	
   

  	
  4.1.33

  	
  [Reserved]

  	
  67

  
	
   

  	
   

  	
  4.1.34

  	
  Tax Filings

  	
  67

  
	
   

  	
   

  	
  4.1.35

  	
  Solvency/Fraudulent Conveyance

  	
  67

  
	
   

  	
   

  	
  4.1.36

  	
  Investment Company Act

  	
  67

  
	
   

  	
   

  	
  4.1.37

  	
  Interest Rate Cap Agreement (First Mezzanine)

  	
  67

  
	
   

  	
   

  	
  4.1.38

  	
  Labor

  	
  67

  
	
   

  	
   

  	
  4.1.39

  	
  Brokers

  	
  68

  
	
   

  	
   

  	
  4.1.40

  	
  No Other Debt

  	
  68

  
	
   

  	
   

  	
  4.1.41

  	
  Taxpayer Identification Number

  	
  68

  
	
   

  	
   

  	
  4.1.42

  	
  Compliance with Anti-Terrorism, Embargo and
  Anti-Money Laundering Laws

  	
  68

  
	
   

  	
   

  	
  4.1.43

  	
  Merger Agreement

  	
  68

  
	
   

  	
   

  	
  4.1.44

  	
  Rights of First Refusal or First Offer to Lease or
  Purchase

  	
  68

  
	
   

  	
  4.2

  	
  Survival of Representations

  	
  69

  
	
   

  	
  4.3

  	
  Mezzanine Borrower’s Knowledge

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  MEZZANINE BORROWER COVENANTS

  	
  69

  
	
   

  	
  5.1

  	
  Affirmative Covenants

  	
  69

  
	
   

  	
   

  	
  5.1.1

  	
  Performance by Mezzanine Borrower

  	
  69

  
	
   

  	
   

  	
  5.1.2

  	
  Existence; Compliance with Legal Requirements;
  Insurance

  	
  69

  
	
   

  	
   

  	
  5.1.3

  	
  Litigation

  	
  70

  
	
   

  	
   

  	
  5.1.4

  	
  Single Purpose Entity

  	
  70

  
	
   

  	
   

  	
  5.1.5

  	
  Consents

  	
  71

  
	
   

  	
   

  	
  5.1.6

  	
  Access to Property

  	
  72

  
	
   

  	
   

  	
  5.1.7

  	
  Notice of Default

  	
  72

  
	
   

  	
   

  	
  5.1.8

  	
  Cooperate in Legal Proceedings

  	
  72

  
	
   

  	
   

  	
  5.1.9

  	
  Reserved.

  	
  72

  
	
   

  	
   

  	
  5.1.10

  	
  Insurance

  	
  72

  
	
   

  	
   

  	
  5.1.11

  	
  Further Assurances; Separate Notes; Loan Resizing

  	
  72

  



 


 


ii

















 


	
   

  	
   

  	
  5.1.12

  	
  Mortgage Taxes

  	
  74

  
	
   

  	
   

  	
  5.1.13

  	
  Operation

  	
  74

  
	
   

  	
   

  	
  5.1.14

  	
  Business and Operations

  	
  74

  
	
   

  	
   

  	
  5.1.15

  	
  Title to the Collateral

  	
  74

  
	
   

  	
   

  	
  5.1.16

  	
  Costs of Enforcement

  	
  74

  
	
   

  	
   

  	
  5.1.17

  	
  Estoppel Statements

  	
  75

  
	
   

  	
   

  	
  5.1.18

  	
  Loan Proceeds

  	
  75

  
	
   

  	
   

  	
  5.1.19

  	
  No Joint Assessment

  	
  75

  
	
   

  	
   

  	
  5.1.20

  	
  No Further Encumbrances

  	
  75

  
	
   

  	
   

  	
  5.1.21

  	
  Loan (Mortgage) Covenants

  	
  76

  
	
   

  	
   

  	
  5.1.22

  	
  Master Lease

  	
  77

  
	
   

  	
  5.2

  	
  Negative Covenants

  	
  78

  
	
   

  	
   

  	
  5.2.1

  	
  Incur Debt

  	
  79

  
	
   

  	
   

  	
  5.2.2

  	
  Encumbrances

  	
  79

  
	
   

  	
   

  	
  5.2.3

  	
  Engage in Different Business

  	
  79

  
	
   

  	
   

  	
  5.2.4

  	
  Make Advances

  	
  79

  
	
   

  	
   

  	
  5.2.5

  	
  Subdivision

  	
  79

  
	
   

  	
   

  	
  5.2.6

  	
  Commingle

  	
  79

  
	
   

  	
   

  	
  5.2.7

  	
  Guarantee Obligations

  	
  79

  
	
   

  	
   

  	
  5.2.8

  	
  Transfer Assets

  	
  79

  
	
   

  	
   

  	
  5.2.9

  	
  Amend Organizational Documents

  	
  79

  
	
   

  	
   

  	
  5.2.10

  	
  Dissolve

  	
  79

  
	
   

  	
   

  	
  5.2.11

  	
  Bankruptcy

  	
  80

  
	
   

  	
   

  	
  5.2.12

  	
  ERISA

  	
  80

  
	
   

  	
   

  	
  5.2.13

  	
  Distributions

  	
  80

  
	
   

  	
   

  	
  5.2.14

  	
  Modify Mezzanine Account Agreement

  	
  80

  
	
   

  	
   

  	
  5.2.15

  	
  Zoning Reclassification

  	
  80

  
	
   

  	
   

  	
  5.2.16

  	
  Change of Principal Place of Business

  	
  80

  
	
   

  	
   

  	
  5.2.17

  	
  Debt Cancellation

  	
  80

  
	
   

  	
   

  	
  5.2.18

  	
  Misapplication of Funds

  	
  81

  
	
   

  	
   

  	
  5.2.19

  	
  Single-Purpose Entity

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

  	
  81

  
	
   

  	
  6.1

  	
  Insurance Coverage Requirements

  	
  81

  
	
   

  	
   

  	
  6.1.1

  	
  Insurance Proceeds

  	
  81

  
	
   

  	
   

  	
  6.1.2

  	
  Restoration of Property

  	
  81

  
	
   

  	
   

  	
  6.1.3

  	
  Compliance

  	
  82

  
	
   

  	
  6.2

  	
  Condemnation

  	
  82

  
	
   

  	
  6.3

  	
  Certificates

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS

  	
  83

  
	
   

  	
  7.1

  	
  Mortgage Borrower to Pay Impositions and Other
  Charges

  	
  83

  
	
   

  	
  7.2

  	
  No Liens

  	
  84

  
	
   

  	
  7.3

  	
  Contest

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS

  	
  85

  
	
   

  	
  8.1

  	
  General Restriction on Transfers

  	
  85

  



 


 


iii

















 


	
   

  	
  8.2

  	
  Sale of Building Equipment

  	
  85

  
	
   

  	
  8.3

  	
  Immaterial Transfers and Easements, etc.

  	
  86

  
	
   

  	
  8.4

  	
  [Reserved.]

  	
  86

  
	
   

  	
  8.5

  	
  Permitted Equity Transfers

  	
  86

  
	
   

  	
  8.6

  	
  Deliveries to Mezzanine Lender

  	
  87

  
	
   

  	
  8.7

  	
  Loan Assumption

  	
  88

  
	
   

  	
  8.8

  	
  Subleases

  	
  88

  
	
   

  	
   

  	
  8.8.1

  	
  Master Lease and Existing Subleases

  	
  88

  
	
   

  	
   

  	
  8.8.2

  	
  Leasing Conditions

  	
  88

  
	
   

  	
   

  	
  8.8.3

  	
  Delivery of New Sublease or Sublease Modification

  	
  89

  
	
   

  	
   

  	
  8.8.4

  	
  Sublease Amendments

  	
  89

  
	
   

  	
   

  	
  8.8.5

  	
  Security Deposits

  	
  89

  
	
   

  	
   

  	
  8.8.6

  	
  No Default Under Subleases

  	
  89

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE)

  	
  90

  
	
   

  	
  9.1

  	
  Interest Rate Cap Agreement (First Mezzanine)

  	
  90

  
	
   

  	
  9.2

  	
  Pledge and Collateral Assignment

  	
  90

  
	
   

  	
  9.3

  	
  Covenants

  	
  90

  
	
   

  	
  9.4

  	
  Powers of Mezzanine Borrower Prior to an Event of
  Default

  	
  92

  
	
   

  	
  9.5

  	
  Representations and Warranties

  	
  92

  
	
   

  	
  9.6

  	
  Payments

  	
  93

  
	
   

  	
  9.7

  	
  Remedies

  	
  93

  
	
   

  	
  9.8

  	
  Sales of Rate Cap Collateral (First Mezzanine)

  	
  95

  
	
   

  	
  9.9

  	
  Public Sales Not Possible

  	
  96

  
	
   

  	
  9.10

  	
  Receipt of Sale Proceeds

  	
  96

  
	
   

  	
  9.11

  	
  Replacement Interest Rate Cap Agreement (First
  Mezzanine)

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  MAINTENANCE OF PROPERTY; ALTERATIONS

  	
  96

  
	
   

  	
  10.1

  	
  Maintenance of Property

  	
  96

  
	
   

  	
  10.2

  	
  Conditions to Alteration

  	
  96

  
	
   

  	
  10.3

  	
  Costs of Alteration

  	
  97

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND
  OTHER INFORMATION

  	
  98

  
	
   

  	
  11.1

  	
  Books and Records

  	
  98

  
	
   

  	
  11.2

  	
  Financial Statements

  	
  98

  
	
   

  	
   

  	
  11.2.1

  	
  Monthly Reports

  	
  98

  
	
   

  	
   

  	
  11.2.2

  	
  Quarterly Reports

  	
  99

  
	
   

  	
   

  	
  11.2.3

  	
  Annual Reports

  	
  100

  
	
   

  	
   

  	
  11.2.4

  	
  Disclosure Restrictions.

  	
  100

  
	
   

  	
   

  	
  11.2.5

  	
  Capital Expenditures Summaries

  	
  100

  
	
   

  	
   

  	
  11.2.6

  	
  Master Lease

  	
  100

  
	
   

  	
   

  	
  11.2.7

  	
  Annual Budget; Operating Agreement Annual Budgets

  	
  100

  
	
   

  	
   

  	
  11.2.8

  	
  Other Information

  	
  101

  
	
   

  	
   

  	
  11.2.9

  	
  Proprietary Information

  	
  101

  



 


 


iv

















 


	
  XII.

  	
  ENVIRONMENTAL MATTERS

  	
  102

  
	
   

  	
  12.1

  	
  Representations

  	
  102

  
	
   

  	
  12.2

  	
  Covenants

  	
  102

  
	
   

  	
   

  	
  12.2.1

  	
  Compliance with Environmental Laws

  	
  102

  
	
   

  	
   

  	
  12.2.2

  	
  Notices Regarding Environmental Events

  	
  102

  
	
   

  	
   

  	
  12.2.3

  	
  Other Notices

  	
  103

  
	
   

  	
  12.3

  	
  Environmental Reports

  	
  103

  
	
   

  	
  12.4

  	
  Environmental Indemnification

  	
  103

  
	
   

  	
  12.5

  	
  Recourse Nature of Certain Indemnifications

  	
  105

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  THE OPERATING AGREEMENTS

  	
  105

  
	
   

  	
  13.1

  	
  Operating Agreement Representations, Warranties

  	
  105

  
	
   

  	
  13.2

  	
  Cure by Mezzanine Lender

  	
  106

  
	
   

  	
  13.3

  	
  Option to Renew or Extend the Ground Lease

  	
  106

  
	
   

  	
  13.4

  	
  Operating Agreement Covenants

  	
  107

  
	
   

  	
   

  	
  13.4.1

  	
  Waiver of Interest In New Ground Lease

  	
  107

  
	
   

  	
   

  	
  13.4.2

  	
  No Election to Terminate

  	
  107

  
	
   

  	
   

  	
  13.4.3

  	
  Notice Prior to Rejection

  	
  107

  
	
   

  	
   

  	
  13.4.4

  	
  Mezzanine Lender Right to Perform

  	
  108

  
	
   

  	
   

  	
  13.4.5

  	
  Mezzanine Lender Attorney in Fact

  	
  108

  
	
   

  	
   

  	
  13.4.6

  	
  Payment of Sums Due Under Operating Agreements

  	
  108

  
	
   

  	
   

  	
  13.4.7

  	
  Performance of Covenants

  	
  108

  
	
   

  	
   

  	
  13.4.8

  	
  [Reserved

  	
  109

  
	
   

  	
   

  	
  13.4.9

  	
  No Modification or Termination

  	
  109

  
	
   

  	
   

  	
  13.4.10

  	
  Notices of Default

  	
  109

  
	
   

  	
   

  	
  13.4.11

  	
  Delivery of Information

  	
  109

  
	
   

  	
   

  	
  13.4.12

  	
  No Subordination

  	
  109

  
	
   

  	
   

  	
  13.4.13

  	
  Further Assurances

  	
  109

  
	
   

  	
   

  	
  13.4.14

  	
  Estoppel Certificates

  	
  109

  
	
   

  	
   

  	
  13.4.15

  	
  Common Area/Common Elements Insurance

  	
  110

  
	
   

  	
  13.5

  	
  Mezzanine Lender Right to Participate

  	
  110

  
	
   

  	
  13.6

  	
  No Liability

  	
  110

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
  RESERVED

  	
  110

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
  ASSIGNMENTS AND PARTICIPATIONS

  	
  110

  
	
   

  	
  15.1

  	
  Assignment and Acceptance

  	
  110

  
	
   

  	
  15.2

  	
  Effect of Assignment and Acceptance

  	
  110

  
	
   

  	
  15.3

  	
  Content

  	
  111

  
	
   

  	
  15.4

  	
  Register

  	
  112

  
	
   

  	
  15.5

  	
  Substitute Mezzanine Notes

  	
  112

  
	
   

  	
  15.6

  	
  Participations

  	
  112

  
	
   

  	
  15.7

  	
  Disclosure of Information

  	
  113

  
	
   

  	
  15.8

  	
  Security Interest in Favor of Federal Reserve Bank

  	
  113

  



 


 


v

















 


	
  XVI.

  	
  RESERVED

  	
  113

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII.

  	
  DEFAULTS

  	
  113

  
	
   

  	
  17.1

  	
  Event of Default

  	
  113

  
	
   

  	
  17.2

  	
  Remedies

  	
  118

  
	
   

  	
  17.3

  	
  Remedies Cumulative; Waivers

  	
  120

  
	
   

  	
  17.4

  	
  Costs of Collection

  	
  120

  
	
   

  	
   

  	
   

  	
   

  
	
  XVIII.

  	
  SPECIAL PROVISIONS

  	
  120

  
	
   

  	
  18.1

  	
  Exculpation

  	
  120

  
	
   

  	
   

  	
  18.1.1

  	
  Exculpated Parties

  	
  121

  
	
   

  	
   

  	
  18.1.2

  	
  Carveouts From Non-Recourse Limitations

  	
  121

  
	
   

  	
  18.2

  	
  Pro Rata Share

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX.

  	
  MISCELLANEOUS

  	
  124

  
	
   

  	
  19.1

  	
  Survival

  	
  124

  
	
   

  	
  19.2

  	
  Mezzanine Lender’s Discretion

  	
  124

  
	
   

  	
  19.3

  	
  Governing Law

  	
  124

  
	
   

  	
  19.4

  	
  Modification; Waiver in Writing

  	
  125

  
	
   

  	
  19.5

  	
  Delay Not a Waiver

  	
  125

  
	
   

  	
  19.6

  	
  Notices

  	
  126

  
	
   

  	
  19.7

  	
  Trial By Jury

  	
  127

  
	
   

  	
  19.8

  	
  Headings

  	
  128

  
	
   

  	
  19.9

  	
  Severability

  	
  128

  
	
   

  	
  19.10

  	
  Preferences

  	
  128

  
	
   

  	
  19.11

  	
  Waiver of Notice

  	
  128

  
	
   

  	
  19.12

  	
  Expenses; Indemnity

  	
  128

  
	
   

  	
  19.13

  	
  Exhibits and Schedules Incorporated

  	
  131

  
	
   

  	
  19.14

  	
  Offsets, Counterclaims and Defenses

  	
  131

  
	
   

  	
  19.15

  	
  Liability of Assignees of Mezzanine Lender

  	
  131

  
	
   

  	
  19.16

  	
  No Joint Venture or Partnership; No Third Party
  Beneficiaries

  	
  131

  
	
   

  	
  19.17

  	
  Publicity

  	
  132

  
	
   

  	
  19.18

  	
  Waiver of Marshalling of Assets

  	
  132

  
	
   

  	
  19.19

  	
  Waiver of Counterclaim and other Actions

  	
  132

  
	
   

  	
  19.20

  	
  Conflict; Construction of Documents; Reliance

  	
  132

  
	
   

  	
  19.21

  	
  Prior Agreements

  	
  133

  
	
   

  	
  19.22

  	
  Counterparts

  	
  133

  



 


 


vi

















 


EXHIBITS AND SCHEDULES


 


	
  EXHIBIT A

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT B

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT C

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT D

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT E

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT F

  	
  FORM OF MASTER LEASE

  
	
  EXHIBIT G

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT H

  	
  FORM OF GROUND LESSOR ESTOPPEL CERTIFICATE

  
	
  EXHIBIT I

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT J

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT K

  	
  MEZZANINE BORROWER ORGANIZATIONAL STRUCTURE

  
	
  EXHIBIT L

  	
  INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE)

  
	
  EXHIBIT M

  	
  FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

  
	
  EXHIBIT N

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT O

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT P

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT Q

  	
  RATE CAP COUNTERPARTY ACKNOWLEDGMENT

  
	
  EXHIBIT R

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT S

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT T

  	
  INTENTIONALLY DELETED

  
	
  EXHIBIT U

  	
  FORM OF MEMBER POWER

  
	
  EXHIBIT V

  	
  PERMITTED SETTLEMENT AMOUNTS

  
	
   

  	
   

  
	
  SCHEDULE I

  	
  EXISTING SUBLEASES; MATERIAL SUBLEASES; DEFAULTS
  OR PREPAID RENT UNDER SUBLEASES; SUBLEASING STANDARDS

  
	
  SCHEDULE II

  	
  LITIGATION SCHEDULE

  
	
  SCHEDULE
  III

  	
  DEFERRED
  MAINTENANCE AND REMEDIATION

  
	
  SCHEDULE IV

  	
  UNIMPROVED PARCELS

  
	
  SCHEDULE
  VI

  	
  RIGHTS
  OF FIRST REFUSAL OR RIGHTS OF FIRST OFFER (OR OTHER RIGHTS OR OPTIONS) TO
  LEASE OR PURCHASE INDIVIDUAL PROPERTIES

  
	
  SCHEDULE
  VII

  	
  EXISTING
  MATTERS OF RECORD

  
	
  SCHEDULE
  VIII

  	
  RESERVED

  
	
  SCHEDULE
  IX

  	
  INTERIM
  SUCCESSOR PRINCIPAL CONTROL PERSONS

  



 


 


vii
















 


MEZZANINE LOAN AND SECURITY
AGREEMENT (FIRST MEZZANINE)


THIS
MEZZANINE LOAN AND SECURITY AGREEMENT dated as of November 7, 2007 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”),
among FCP MEZZCO BORROWER I, LLC, a Delaware limited liability company (“Mezzanine
Borrower”) having an office at 1505 South Pavilion Center Drive, Las Vegas,
Nevada 89135, GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation (“GACC”
and together with its successors and assigns, “Mezzanine Noteholder I”),
having an address at 60 Wall Street, New York, New York 10005, and JPMORGAN
CHASE BANK, N.A., a national banking association, having an address at 270 Park
Avenue, New York, New York 10017 (“JPMC” and together with its successors
and assigns, “Mezzanine Noteholder II”) (Mezzanine Noteholder I and
Mezzanine Noteholder II, individually or collectively as the context indicates,
“Mezzanine Lender”).


RECITALS:


WHEREAS, Mezzanine Borrower desires to obtain the
Loan (as hereinafter defined) from Mezzanine Lender;


WHEREAS, Mezzanine Lender is willing to make the
Loan to Mezzanine Borrower, subject to and in accordance with the terms of this
Agreement and the other Mezzanine Loan Documents (as hereinafter defined).


NOW, THEREFORE, in consideration of the making of
the Loan by Mezzanine Lender and the covenants, agreements, representations and
warranties set forth in this Agreement, the parties hereto hereby covenant,
agree, represent and warrant as follows:


I.              DEFINITIONS;
PRINCIPLES OF CONSTRUCTION


 


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


 


“80% Trigger Approval Period” shall
mean any period (a) commencing on the Payment Date following the conclusion of
any two (2) consecutive Fiscal Quarters for which the LCR is less than 80% of
Closing Date LCR and (b) ending on the day immediately preceding the Payment
Date following the conclusion of any two (2) consecutive Fiscal Quarters for
which the LCR exceeds 80% of Closing Date LCR, provided that no Noticed
Default or Event of Default is then continuing, and, for avoidance of doubt,
subject to resumption of the 80%
Trigger Approval Period upon any subsequent occurrence of the conditions
set forth in clause (a) above.


“90% Cash Sweep
Period” shall mean any period (a) commencing on the Payment Date following
the conclusion of any two (2) consecutive Fiscal Quarters for which the LCR is
less than 90% of Closing Date LCR and (b) ending on the day immediately
preceding the Payment Date following the conclusion of any two (2) consecutive
Fiscal Quarters for which the LCR 


 

















 


exceeds 90% of Closing Date LCR, provided that
no Noticed Default or Event of Default is then continuing, and, for avoidance
of doubt, subject to resumption of the 90% Cash Sweep Period upon any
subsequent occurrence of the conditions set forth in clause (a) above.


“Account Collateral (First Mezzanine)” shall
have the meaning set forth in Section 3.1.2.


“Acknowledgment” shall mean the
Acknowledgment, dated on or about the date hereof made by Counterparty, or as
applicable, Approved Counterparty in the form of Exhibit Q.


“Actually
Known by the Mezzanine Lender to the Contrary” shall mean the actual
receipt, prior to the Closing Date, by Todd Sammann and Michael Mesard of an
email, fax, memorandum, letter or other written statement from any of Mezzanine
Borrower, Sponsor, or Mezzanine Lender’s counsel expressly disclosing to
Mezzanine Lender a state of facts contrary to a representation made by
Mezzanine Borrower in Section 4.1.


“Additional Non-Consolidation Opinion” shall
have the meaning set forth in Section 4.1.30(b).


“Affiliate”
shall mean, with respect to any specified Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
control with, or any general partner or managing member in, such specified
Person.  An Affiliate of a Person
includes, without limitation, (i) any officer or director of such Person, (ii)
any record or beneficial owner of more than 20% of any class of ownership
interests of such Person and (iii) any Affiliate of the foregoing.


“Aggregate Appraised Value” shall have the
meaning set forth in the Loan Agreement (Mortgage).


“Agreement” shall have the meaning set forth
in the Preamble hereof.


“Aliante Financing” shall have the meaning
set forth in Section 2.5.13.


“Allocated Loan Amount” shall mean with
respect to each Individual Property, the designated “Mezzanine Allocated Loan
Amount” allocated to the Loan and applicable to such Individual Property as set
forth in the Loan Agreement (Mortgage).


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


“Alteration” shall have the meaning set forth
in the Loan Agreement (Mortgage).


“Annual Budget” shall have the meaning set
forth in the Loan Agreement (Mortgage).


“Appraisals” shall mean the FIRREA appraisals
conducted in 2007 by Cushman & Wakefield on or prior to the Closing Date
which establish the master leased fee or ground leasehold value of each
Individual Property.


“Appraised Value”
shall mean, for an Individual Property, the value of such Individual Property
as determined by the Appraisal for such Individual Property.


 


2

















 


“Approved Bank” shall mean a bank or other
financial institution which has a minimum long-term unsecured debt rating of at
least “A” and a minimum short-term unsecured debt rating of at least “A-1” by
each of the Rating Agencies, or if any such bank or other financial institution
is not rated by all the Rating Agencies, then a minimum long-term rating of at
least “A” and a minimum short-term unsecured debt rating of at least “A-1,” or
their respective equivalents, by two of the Rating Agencies, but in any event
one of the two Rating Agencies shall be S&P, it being understood that the A
and A-1 benchmark ratings and other benchmark ratings in this Agreement are
intended to be the ratings, or the equivalent of ratings, issued by S&P.


“Approved Counterparty” shall mean a bank or
other financial institution which has (a) either (i) a long-term unsecured debt
rating of “A+” or higher by S&P or (ii) if the long-term unsecured debt
rating is “A” or lower by S&P, a short-term rating of not less than “A-1”
from S&P; (b) a long-term unsecured debt rating of not less than “Aa3” by
Moody’s; and (c) if the counterparty is rated by Fitch, either a long-term
unsecured debt rating of not less than “A” from Fitch or a short-term unsecured
debt rating of not less than “F-1” from Fitch.


“Architect” shall mean an architect, engineer
or construction consultant selected by Mortgage Borrower (which can be an
employee of Mortgage Borrower or an Affiliate), licensed to practice in the
relevant State, if required by the laws of such State, and has at least five (5) years of
architectural or construction management experience and which is approved by
Mezzanine Lender, which approval shall not be unreasonably withheld,
delayed or conditioned.


“Asset-Specific Proprietary Information”
shall have the meaning set forth in Section 11.2.9(b).


“Assignment and Acceptance” shall mean an
assignment and acceptance entered into by Mezzanine Lender and an assignee, and
accepted by Mezzanine Lender in accordance with Article XV and in
substantially the form of Exhibit M or such other form customarily used
by Mezzanine Lender in connection with the participation or syndication of
mortgage loans at the time of such assignment.


“Assignment of Leases Counterpart” shall have
the meaning set forth in Section 2.3.5(d).


“Assigned Landlord Lien” shall have the
meaning set forth in the Loan Agreement (Mortgage).


“Bankruptcy Code” shall mean Title 11,
U.S.C.A., as amended from time to time and any successor statute thereto.


“Borrower Party” shall mean any of Mezzanine
Borrower, Mortgage Borrower, Junior Mezzanine Borrowers and Guarantors.


“Building Equipment” shall have the meaning
set forth in the Security Instruments, collectively.


“Business Day”
shall mean any day other than a Saturday, Sunday or any other day on which national
banks in New York or in the state in which Servicer is located are not open for
business.  When used with respect to an
Interest Determination Date, Business Day shall mean 


 


3

















 


any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.


“Cash” shall mean the legal tender of the
United States of America.


“Cash and Cash Equivalents” shall mean any
one or a combination of the following: (i) Cash, and (ii) U.S. Government
Obligations.


“Cash Equity Contribution” shall have the
meaning set forth in Section 2.5.12.


“Cash Management Bank (First Mezzanine)”
shall mean any Approved Bank acting as Cash Management Bank under the Mezzanine
Account Agreement or other financial institution approved by the Mezzanine
Lender.  The Cash Management Bank
(Mortgage) may serve as the Cash Management Bank (First Mezzanine) so long as
it is a party to the Mezzanine Account Agreement.


“Cash Management Bank (Mortgage)” shall mean
the “Cash Management Bank” as defined in the Loan Agreement (Mortgage).


“Certificate”
shall have the meaning set forth in the Pledge.


“Close
Affiliate” shall mean with respect to any Person (the “First Person”) any
other Person (each, a “Second Person”) which is an Affiliate of the First
Person and in respect of which any of the following are true: (a) the Second
Person owns, directly or indirectly, at least 75% of all of the legal,
beneficial and/or equitable interest in such First Person, (b) the First Person
owns, directly or indirectly, at least 75% of all of the legal, beneficial
and/or equitable interest in such Second Person, or (c) a third Person owns,
directly or indirectly, at least 75% of all of the legal, beneficial and/or
equitable interest in both the First Person and the Second Person.


“Closing Date” shall mean the date of this
Agreement set forth in the first paragraph hereof.


“Closing Date LCR” shall mean a ratio of 1.28:1.


“Closing Date LTV” shall mean 79.7%.


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


“Collateral”
shall mean collectively (i) all of the Pledged Collateral and all proceeds
thereof, (ii) all Receipts, (iii) any stock certificates or other certificates,
membership interest certificates or instruments evidencing any of the foregoing
property described in clauses (i) and (ii) above, (iv) the Rate Cap Collateral,
(First Mezzanine), (v) the Account Collateral (First Mezzanine) and (vi) all
other rights appurtenant to the property described in clauses (i) through (v)
above.


 


4

















 


“Collateral Accounts (First Mezzanine)” shall
have the meaning set forth in Section 3.1.1.


“Collateral Agent” shall mean German American
Capital Corporation in its capacity as collateral agent acting on behalf of
Mezzanine Lender.


“Combined
Allocated Loan Amount” shall mean with respect to each Individual Property,
the aggregate portions of the Loan,
the Mortgage Loan and the Junior Mezzanine Loans allocated to such
Individual Property that is set forth in the Loan Agreement (Mortgage).


“Combined Principal Amount” shall mean the
sum of each “Principal Amount” as defined in each of the Loan Agreement
(Mortgage), this Mezzanine Loan Agreement, and the Junior Mezzanine Loan
Agreements.


“Combined Release Price” shall mean the
product of (a) the Combined Allocated Loan Amount for the Release Property and
(b) the applicable Combined Release Price Percentage, minus, if applicable, the
principal amount of any prepayment of the Loan paid from Proceeds derived from
a casualty, other damage or injury or Taking affecting such Release Property.


“Combined Release Price Percentage” shall
mean, as of any Release Date, the percentage applicable to the range of the
aggregate of the Combined Allocated Loan Amounts of the Individual Properties
subject to a Security Instrument that would be outstanding immediately
following such Release, as set forth in the following table:


	
  Range of Outstanding Aggregate
  Combined Allocated Loan

  Amounts Following Release

  	
   

  	
  Combined Release

  Price Percentage

  	
   

  
	
  From $2,475,000,000 to and including $2,103,750,000

  	
   

  	
  100

  	
  %

  
	
  Less than $2,103,750,000 to and including $1,732,500,000

  	
   

  	
  110

  	
  %

  
	
  Less than $1,732,500,000 to $0.00

  	
   

  	
  120

  	
  %

  



 


“Contemplated
Transactions” shall mean, collectively, (i) the transactions consummated
pursuant to the Merger Agreement, including but not limited to the acquisition
of Station Casinos, Inc. by the Guarantors and the various equity transfers in
connection with the related restructuring, (ii) the merger of FCP MezzCo Parent
Merger Sub, LLC into FCP MezzCo Parent, LLC, (iii) Mortgage Borrower’s acquisition
of the Property from subsidiaries of Master Lessee and the various equity
transfers and merger related to such acquisition, (iv) the leasing or
subleasing of the Property from Mortgage Borrower to Master Lessee pursuant to
the Master Lease, (v) the execution and delivery of the Mortgage Loan
Documents, the Mezzanine Loan Documents, and Junior Mezzanine Loan Documents,
Mortgage Borrower’s, Mezzanine Borrower’s and Junior Mezzanine Borrower’s
performance thereunder, the recordation of the Security Instruments, the filing
of the UCC financing statements evidencing the Pledge, and the exercise of any
remedies by Mortgage Lender, Mezzanine Lender or any Junior Mezzanine Lender,
and (vi) following Mortgage Lender’s or its designee’s succession in title to
any Property, the transfer of any such Property by Mortgage Lender or such
designee.


 


5

















 


“Control” shall mean (i) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise (provided that the granting
of major decision veto rights including, without limitation, with respect to
decisions regarding the sale of material assets, the incurrence or refinancing
of debt, the institution of insolvency, bankruptcy or other proceedings with
respect to debtor protection, and the merger, consolidation, liquidation or
dissolution of such Person in favor of a Person shall not be deemed to
constitute “Control”), together with
(ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.


“Counterparty” shall mean, with respect to
the Interest Rate Cap Agreement (First Mezzanine), JPMorgan Chase Bank, N.A.,
and with respect to any Replacement Interest Rate Cap Agreement (First
Mezzanine), any substitute Approved Counterparty.


“Counterparty Opinion” shall have the meaning
set forth in Section 9.3(g).


“Debt” shall mean, with respect to any Person
at any time, (a) indebtedness or liability of such Person for borrowed
money whether or not evidenced by bonds, debentures, notes or other
instruments, or for the deferred purchase price of property or services;
(b) obligations of such Person as lessee under leases which should have
been or should be, in accordance with GAAP, recorded as capital leases;
(c) current liabilities of such Person in respect of unfunded vested benefits
under plans covered by Title IV of ERISA; (d) obligations or liabilities of
such Person arising under letters of credit, credit facilities or other
acceptance facilities; (e) obligations of such Person under any guarantees
or other agreement to become secondarily liable for any obligation of any other
Person, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds to invest in any Person or otherwise to
assure a creditor against loss; (f) obligations of such Person secured by
any Lien on any property of such Person, whether or not the obligations have
been assumed by such Person; or (g) obligations of such Person under any
interest rate or currency exchange agreement.


“Debt Service (First Mezzanine)” shall mean,
with respect to any particular period of time, scheduled interest payments
under the Mezzanine Notes.


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


“Default Rate” shall have the meaning set
forth in the Mezzanine Notes.


“Disqualified
Transferee” shall mean any proposed transferee that, (i) has been convicted
in a criminal proceeding for a felony or a crime involving moral turpitude or
that is an organized crime figure or is reputed (as determined by Mezzanine
Lender in its sole discretion) to have substantial business or other
affiliations with an organized crime figure, or (ii) has been found by a court
of competent jurisdiction or other Governmental Authority in a comparable
proceeding to have violated any federal or state securities laws or regulations
promulgated thereunder.


 


6

















 


“Distributions” shall have the meaning set
forth in the Pledge.


“Eligible Account” shall mean (i)
a segregated trust account or accounts maintained with the corporate trust
department of a federal depository institution or state-chartered depository
institution subject to regulations regarding fiduciary funds on deposit such as
or similar to Title 12 of the Code of Federal Regulations Section 9.10(b)
which, in either case, has corporate trust powers, acting in its fiduciary
capacity or (ii) a segregated account maintained at an Approved Bank. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.


“Environmental Certificate” shall have the
meaning set forth in Section 12.2.2.


“Environmental Claim” shall mean the meaning
set forth in the Loan Agreement (Mortgage).


“Environmental Event” shall have the meaning
set forth in Section 12.2.2.


“Environmental
Law” shall mean
any federal, state or local statute, regulation or ordinance or any judicial or
administrative decree or decision, whether now existing or hereinafter enacted,
promulgated or issued, with respect to the protection of human health from any
environmental hazards (as relating to exposure to such environmental hazards),
or the environment, or any Hazardous Materials, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste water,
storm water run-off, waste emissions or wells. 
Without limiting the generality of the foregoing, the term shall
encompass each of the following statutes, and regulations promulgated
thereunder, and amendments and successors to such statutes and regulations, as
may be enacted and promulgated from time to time:  (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified in scattered sections of 26
U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. §9601 et  seq.); (ii)
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et  seq.);
(iii) the Hazardous Materials Transportation Act (49 U.S.C. §1801 et  seq.);
(iv) the Toxic Substances Control Act (15 U.S.C. §2061 et  seq.);
(v) the Clean Water Act (33 U.S.C. §1251 et  seq.); (vi) the Clean
Air Act (42 U.S.C. §7401 et  seq.); (vii) the Safe Drinking Water
Act (21 U.S.C. §349; 42 U.S.C. §201 and §300f et  seq.); (viii)
the National Environmental Policy Act of 1969 (42 U.S.C. §4321); (ix) the
Superfund Amendment and Reauthorization Act of 1986 (codified in scattered
sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); and (x) Title III
of the Superfund Amendment and Reauthorization Act (40 U.S.C. §1101 et  seq.).


“Environmental Reports” shall have the
meaning set forth in Section 12.1.


“ERISA” shall mean the United States Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations promulgated and the rulings issued thereunder.


“Event of Default” shall have the meaning set
forth in Section 17.1(a).


“Excess Cash Flow” shall have the meaning set
forth in the Loan Agreement (Mortgage).


“Excess Proceeds”
shall have the meaning set forth in Section 2.3.1.


 


7

















 


“Excluded Personal Property” shall mean,
collectively, (a) all of the personal property of Master Lessee (including,
without limitation, all inventory and equipment, but excluding any items that
constitute fixtures), and (b) any personal property of Tenants under Subleases.
For purposes of this definition, the terms “inventory,” “equipment” and “fixtures”
shall have the meaning set forth in the Uniform Commercial Code in effect in
the State of New York, except that the term “fixtures” shall specifically
include, but not be limited to, and the terms “inventory” and “equipment” shall
specifically exclude, all HVAC equipment, elevators, escalators and lighting
together with all equipment, parts and supplies used to service, repair,
maintain and equip the foregoing.


“Exculpated Parties” shall have the meaning
set forth in Section 18.1.1.


“Excusable Delay” shall mean a delay due to strikes,
lockouts, inability to procure materials, power failure, acts of God,
governmental restrictions, enemy or terrorist action, civil commotion, fire,
unavoidable casualty or other causes beyond the control of the Borrower Party
responsible for performing an obligation hereunder, provided that lack of funds
shall not be deemed a cause beyond the control of any Borrower Party.


“Executive
Office Capital Lease” shall have the meaning provided in Section 2.5.13.


“Existing Indebtedness” shall have the
meaning provided in Section 2.5.13.


“Existing Matters of Record” shall mean the
Liens set forth on Schedule VII.


“Existing Notes” shall have the meaning
provided in Section 2.5.13.


“Family Trust” shall mean, with respect
to an individual, any trust or entity owned, controlled by or
established for the benefit of, or the estate of, such individual or that individual’s spouse or lineal descendants
(including adopted children and their lineal descendants).


“Fee Letter” shall mean that certain fee
letter dated October 15, 2007 among Sponsor, FP, GACC, JPMC, and Deutsche Bank
AG, New York Branch.


“Fee
Mortgagee Estoppel Certificate” shall mean an executed estoppel letter from
any mortgagee of, or beneficiary of a deed of trust granted by, a Fee Owner
encumbering the fee simple estate related to the applicable Ground Lease
Property, which estoppel letter shall be in the form attached as Exhibit H-1.


“Fee Owner” shall
mean, collectively, the owner of the fee simple estate relating to each Ground
Lease Property.


 


“Fertitta Brothers” shall mean Frank J. Fertitta III and Lorenzo J. Fertitta.


“FF&E” shall have the meaning set forth
in the Master Lease.


“Fiscal Quarter”
shall mean each quarter within a Fiscal Year.


 


8

















 


“Fiscal Year” shall mean the calendar year
during each year of the term of the Loan or the portion of any such 12-month
period falling within the term of the Loan in the event that such a 12-month
period occurs partially before or after, or partially during, the term of the
Loan, or such other 12-month fiscal accounting period as Mezzanine Borrower may
establish from time to time.


“Fitch” shall mean Fitch Ratings Inc.


“FP” shall mean Fertitta Partners LLC, a
Nevada limited liability company.


“Funding Letter Agreement” shall mean that
certain letter agreement, dated as of even date with this Agreement, between
Mortgage Borrower and Mortgage Lender with respect to conditions precedent to
funding the Loan, and Mortgage Loan and the Junior Mezzanine Loans.


“GAAP” shall mean the generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by
such entity as may be in general use by significant segments of the U.S.
accounting profession as of the Closing Date, to the extent such principles are
applicable to the facts and circumstances on the date of determination.


“Gaming
Authority” shall mean those federal, state and local governmental,
regulatory and administrative authorities, agencies, boards and officials responsible for or involved in the
regulation of gaming or gaming activities in any jurisdiction, including within
the State of Nevada, specifically, the Nevada Gaming Commission, the Nevada
State Gaming Control Board, and applicable local authorities.


“Gaming
Laws” shall mean those laws pursuant to which any Gaming Authority
possesses regulatory, licensing or permit authority over gaming within any
jurisdiction applicable to the Property and, within the State of Nevada,
specifically, the Nevada Gaming Control Act, as codified in the Chapter 463 of
the Nevada Revised Statutes, and
the regulations of the Nevada Gaming Commission and Nevada State Gaming Control
Board promulgated thereunder, as amended from time to time.


“Go Dark”
shall mean, with respect to any Individual Property, if such Individual
Property is not open for business to the public, unless such closure (i) is a
result of a Taking of or casualty or other damage or injury to such Individual
Property or some other Excusable Delay or (ii) is in connection with an
Alteration permitted hereunder (and provided that not more than one Individual
Property may be closed in connection with an Alteration at any one time unless
such concurrent closure is expressly pre-approved by Mezzanine Lender in writing
or is unavoidable in order for Mortgage Borrower, Master Lessee or Tenant, to
comply with Legal Requirements) and, in either such case, the period of closure
does not in any event exceed (A) solely with respect to a closure due to
casualty for which business interruption insurance proceeds are payable to
Master Lessee (or Mortgage
Borrower or Mortgage Lender) under the policy of business interruption
insurance maintained by Master Lessee pursuant to the terms of the Master
Lease, the period of time for which such business interruption insurance
proceeds are payable, or 


 


9

















 


(B) as to any other closure, thirty (30) consecutive days, provided
that if in connection with a Material Alteration, Mezzanine Borrower shall have caused Mortgage Borrower to disclose to Mezzanine Lender that the
Material Alteration will require the affected Individual Property to be closed
to the public for a specified period exceeding thirty (30) consecutive days and
Mezzanine Lender shall have approved such Material Alteration, the Individual
Property may be closed to the public for such specified period of closure
without being deemed to have “Gone Dark.”


“Governmental Authority” shall mean any
court, board, agency, commission, office or other authority of any nature
whatsoever for any governmental unit (federal, state, county, district,
municipal, city or otherwise) whether now or hereafter in existence.


“Ground Lease Property” shall mean,
collectively, each Individual Property of which Mortgage Borrower is a tenant under a Ground Lease.


“Ground
Leases” shall have the meaning provided in the Security Instruments,
collectively.


“Ground
Lessor Estoppel Certificate” shall mean an executed estoppel letter from a
Fee Owner in the form attached as Exhibit H.


“Ground
Rent” shall mean the aggregate amount of all rent and other amounts payable
by the Mortgage Borrower
pursuant to the Ground Leases.


“Guarantors” shall mean Holdco, FP and
VoteCo.


“Hazardous
Materials” shall mean each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance which is
defined, determined or identified as hazardous or toxic under any Environmental
Law.  Without limiting the generality of
the foregoing, the term shall mean and include:


(i)                    “hazardous
substances” as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, or Title III of the Superfund Amendment and
Reauthorization Act, each as amended, and regulations promulgated thereunder;
excluding, however, common maintenance and cleaning products regularly found at
properties with a standard of operation and maintenance comparable to the
Property;


(ii)                   “hazardous waste” and “regulated
substances” as defined in the Resource Conservation and Recovery Act of
1976, as amended, and regulations promulgated thereunder;


(iii)                  “hazardous materials” as defined in the
Hazardous Materials Transportation Act, as amended, and regulations promulgated
thereunder; and


(iv)                  “chemical substance or mixture” as defined
in the Toxic Substances Control Act, as amended, and regulations promulgated
thereunder.


“Holdco”
shall mean FCP Holding, Inc., a Nevada corporation.


 


10

















 


“Holding Account” shall mean the “Holding
Account” and various sub-accounts to the Holding Account established pursuant
to the Loan Agreement (Mortgage) as in effect on the date hereof.


“Impositions” shall mean all taxes (including
all ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction, privilege
or license or similar taxes), governmental assessments (including all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed
within the term of this Agreement), water, sewer or other rents and charges,
excises, levies, fees (including license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Property and/or any Rents (including all interest
and penalties thereon), which at any time prior to, during or in respect of the
term hereof may be assessed or imposed on or in respect of or be a Lien upon
(a) Mezzanine Borrower or Mortgage Borrower (including all income, franchise,
single business or other taxes imposed on Mezzanine Borrower or Mortgage
Borrower for the privilege of doing business in the jurisdiction in which the
Property is located), (b) the Property, or any other collateral delivered or
pledged to Mortgage Lender or Mezzanine Lender in connection with the Mortgage
Loan or Loan, or any part thereof, or any Rents or Receipts therefrom or any
estate, right, title or interest therein, or (c) any occupancy, operation, use
or possession of, or sales from, or activity conducted on, or in connection
with the Property or the leasing or use of all or any part thereof.  Nothing contained in this Agreement shall be
construed to require Mezzanine Borrower or Mortgage Borrower to pay any tax,
assessment, levy or charge imposed on (i) Master Lessee, (ii) any Tenant or
(iii) Mortgage Lender or Mezzanine Lender in the nature of a capital levy,
estate, inheritance, succession, income or net revenue tax.


“Improvements” shall have the meaning set
forth in the Security Instruments, collectively.


“Increased Costs” shall have the meaning set
forth in Section 2.4.1.


“Indebtedness” shall mean, at any given time,
the Principal Amount, together with all accrued and unpaid interest thereon and
all other obligations and liabilities due or to become due to Mezzanine Lender
pursuant hereto, under the Mezzanine Notes or in accordance with the other
Mezzanine Loan Documents and all other amounts, sums and expenses paid by or
payable to Mezzanine Lender hereunder or pursuant to the Mezzanine Notes or the
other Mezzanine Loan Documents.


“Indemnified Parties” shall have the meaning
set forth in Section 19.12(b).


“Independent”
shall mean, when used with respect to any Person, a Person who: (i) does not
have any direct financial interest or any material indirect financial interest
in any Borrower Party or in any Affiliate of any Borrower Party, (ii) is not
connected with any Borrower Party or any Affiliate of any Borrower Party as an
officer, employee, promoter, underwriter, trustee, partner, member, manager,
creditor, director, supplier, customer or person performing similar 


 


11

















 


functions and (iii) is not a member of the
immediate family of a Person defined in (i) or (ii) above.


“Independent Accountant” shall mean a firm of
nationally recognized, certified public accountants which is Independent and
which is selected by Mortgage Borrower or Mezzanine Borrower, as applicable,
and reasonably acceptable to Mezzanine Lender.


“Independent Director,” “Independent
Manager,” or “Independent Member” shall mean a Person who is not and
will not be while serving, and has not been in the five (5) years preceding the
date hereof, (i) a member (other than an Independent Member), manager (other
than an Independent Manager), director (other than an Independent Director),
officer, employee, attorney, or counsel of Mezzanine Borrower or its Affiliates
(provided that Mezzanine Borrower may have the same Independent Directors,
Independent Managers or Independent Members as Mortgage Borrower or any Junior
Mezzanine Borrower), (ii) a customer, supplier or other Person who derives more
than 1% of its purchases or revenues from its activities with Mezzanine
Borrower or its Affiliates, (iii) a direct or indirect legal or beneficial
owner in any entity referred to in (i) or (ii) above or any of its Affiliates,
(iv) a member of the immediate family of any member, manager, employee,
director, officer, attorney, customer, supplier or other Person referred to in
(i), (ii) or (iii) above, or (v) a person Controlling or under the common
Control of anyone listed in (i) through (iv) above.  A Person that otherwise satisfies the
foregoing shall not be disqualified from serving as an Independent Director or
Independent Manager or Independent Member if such individual is at the time of initial
appointment, or at any time while serving as such, is an Independent Director
or Independent Manager or Independent Member, as applicable, of a Single
Purpose Entity affiliated with Mezzanine Borrower.


“Individual Property” shall have the meaning
set forth in the Loan Agreement (Mortgage).


“Individual Property Sublease” shall mean the
Sublease of an Individual Property from Master Lessee to the subsidiary of
Master Lessee that operates the Individual Property (the “Individual
Property Sublessee”.  There shall be
an Individual Property Sublease for each Individual Property.


“Insurance Requirements” shall have the
meaning set forth in the Loan Agreement (Mortgage).


“Intercreditor Agreement” shall mean an
intercreditor, recognition and standstill agreement among Mezzanine Lender, the
Junior Mezzanine Lenders, and Mortgage Lender.


“Interest Determination Date” shall have the
meaning set forth in the Mezzanine Notes.


“Interest Period” shall have the meaning set
forth in the Mezzanine Notes.


“Interest Rate Cap
Agreement (First Mezzanine)” shall mean the Confirmation and Agreement
(together with the confirmation and schedules relating thereto) between the
Counterparty and Mezzanine Borrower, obtained by Mezzanine Borrower and
collaterally assigned to Mezzanine Lender pursuant to this Agreement.  After delivery of a Replacement Interest Rate
Cap Agreement (First Mezzanine) to Mezzanine Lender, the term “Interest Rate 


 


12

















 


Cap Agreement (First Mezzanine)” shall be
deemed to mean such Replacement Interest Rate Cap Agreement (First
Mezzanine).  The Interest Rate Cap
Agreement (First Mezzanine) shall be governed by the laws of the State of New
York and shall contain each of the following:


(a)               Notional
Amount.  The notional amount
of the Interest Rate Cap Agreement (First Mezzanine) shall be equal to the
Principal Amount, which may be reduced from time to time in amounts equal to
any prepayment of the principal of the Loan made in accordance with Section
5(b) of the Mezzanine Notes;


(b)               Remaining
Term.  The remaining term of
the Interest Rate Cap Agreement (First Mezzanine) shall at all times extend
through the end of the Interest Period in which the Maturity Date occurs as
extended from time to time pursuant to this Agreement and the Mezzanine Loan
Documents;


(c)               Parties.  The Interest Rate Cap Agreement (First
Mezzanine) shall be issued by the Counterparty to Mezzanine Borrower and shall
be pledged to Mezzanine Lender by Mezzanine Borrower in accordance with this
Agreement;


(d)               Payment
Stream.  The Counterparty
under the Interest Rate Cap Agreement (First Mezzanine) shall be obligated to
make a stream of payments, directly to the Mezzanine Account (whether or not an
Event of Default has occurred) from time to time equal to the product of (i)
the notional amount of such Interest Rate Cap Agreement (First Mezzanine)
multiplied by (ii) the excess, if any, of LIBOR (including any upward rounding
under the definition of LIBOR) over the Strike Price;


(e)               Acknowledgment.  The Counterparty under the Interest Rate Cap
Agreement (First Mezzanine) shall execute and deliver the Acknowledgment; and


(f)                Other.  The Interest Rate Cap Agreement (First
Mezzanine) shall impose no material obligation on the beneficiary thereof
(after payment of the acquisition cost) and shall be in all material respects
reasonably satisfactory in form and substance to Mezzanine Lender.


“Interest Rate Swap Agreement” shall have the
meaning set forth in the Loan Agreement (Mortgage).


“Junior Mezzanine Borrowers” shall mean,
collectively, Second Mezzanine Borrower, Third Mezzanine Borrower, and such
other mezzanine borrowers party to the Junior Mezzanine Loans, as the context
may require.


“Junior Mezzanine Lender” shall mean,
collectively, Second Mezzanine Lender, Third Mezzanine Lender, and such other
mezzanine lenders party to the Junior Mezzanine Loans.


“Junior Mezzanine
Loan Agreement” shall mean a Mezzanine
Loan and Security Agreement entered into between a Junior Mezzanine Borrower,
as borrower, and a Junior Mezzanine Lender, as lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.


 


13

















 


“Junior Mezzanine Loan Documents” shall mean,
collectively, the Second Mezzanine Loan Documents, the Third Mezzanine Loan
Documents, and such other mezzanine loan documents created and entered into
pursuant to Section 5.1.11(b), as the context may require.


“Junior Mezzanine Loans” shall mean,
collectively, the Second Mezzanine Loan, the Third Mezzanine Loan, and such
other mezzanine loans junior to this Loan as may be created pursuant to Section
5.1.11(b).


“Junior Mezzanine Notes” shall mean,
collectively, the Second Mezzanine Notes, Third Mezzanine Notes and such other
mezzanine notes created and entered into pursuant to Section 5.1.11(b), as the
context may require.


“Junior Mezzanine Release Price” shall mean
the product of (a) the “Mezzanine Allocated Loan Amount” for each Junior
Mezzanine Loan with respect to the Release Property as set forth in the Loan
Agreement (Mortgage); and (b) the applicable Combined Release Price Percentage,
minus, if applicable, the principal amount of any prepayment of the Loan paid
from Proceeds derived from a casualty, other damage or injury or Taking
affecting such Release Property.


“Land” shall have the meaning set forth in
the Security Instruments, collectively.


“Land Loan” shall mean indebtedness
incurred pursuant to a senior secured delayed-draw term loan in an aggregate
amount of $250 million that shall be entered into substantially concurrently
with the closing of the transaction contemplated hereunder.


“Late Payment Charge” shall have the meaning
set forth in Section 2.2.3.


“LCR” shall mean a ratio, as determined by
Mortgage Lender for the applicable period, in which:


(a)           the numerator
is Portfolio Four-Wall EBITDAR, applied consistently, as determined by Mortgage
Lender based on Master Lessee’s four most recent quarterly financial statements
with respect to the Property prepared and delivered to Mezzanine Lender in
accordance with Section 11.2.2, for the trailing twelve (12) month
period immediately prior to the applicable calculation date; and


(b)           the denominator
is the aggregate amount of Master Lease Base Rent payable under the Master Lease
for the twelve calendar months immediately prior to the applicable calculation
date, provided that for the twelve-month period following the Closing Date, LCR
shall be calculated based on the Master Lease Base Rent payable under the
Master Lease from the Closing Date through the full calendar month preceding
the calculation date, with such sum annualized to determine the Master Lease
Base Rent for a full twelve month period.


“Leasehold Estate” means the estate in the
Property created by each Ground Lease.


“Legal
Requirements” shall have the meaning set forth in the Loan Agreement
(Mortgage).


 


14

















 


“Letter of Credit” shall mean an irrevocable,
unconditional, transferable, clean sight draft letter of credit (either an
evergreen letter of credit or one which does not expire until at least sixty
(60) days after the Maturity Date (the LC Expiration Date)), in favor of
Mortgage Lender and entitling Mortgage Lender to draw thereon in New York, New
York, based solely on a statement executed by an officer or authorized
signatory of Mortgage Lender and issued by an Approved Bank.  If at any time (a) the institution issuing
any such Letter of Credit shall cease to be an Approved Bank or (b) the Letter
of Credit is due to expire prior to the LC Expiration Date, Mortgage Lender
shall have the right immediately to draw down the same in full and hold the
proceeds thereof in accordance with the provisions of this Agreement, unless
Mortgage Borrower shall deliver a replacement Letter of Credit from an Approved
Bank within (i) as to (a) above, twenty (20) days after Mortgage Lender
delivers written notice to Mezzanine Borrower that the institution issuing the
Letter of Credit has ceased to be an Approved Bank or (ii) as to (b) above, at
least twenty (20) days prior to the expiration date of said Letter of Credit.


“LIBOR” shall have the meaning set forth in
the Mezzanine Notes.


 “LIBOR
Margin” shall have the meaning set forth in the Mezzanine Notes.


“LIBOR Rate” shall have the meaning set forth
in the Mezzanine Notes.


“License” shall have the meaning set forth in
Section 4.1.24.


“License and Reservation Service Agreement”
shall mean the License and Reservation Service Agreement regarding
the branding rights, reservation system and primary customer data base, by and
between Mortgage Borrower and Master Lessee, dated as of the date hereof.


“Lien” shall mean any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance or charge on or affecting Mortgage Borrower, Mezzanine Borrower,
Junior Mezzanine Borrowers, the Collateral, the Property, any portion thereof
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and the filing of mechanic’s, materialmen’s and other similar liens
and encumbrances.


“Loan” shall mean the loan in the amount of
the Principal Amount made by Mezzanine Lender to Mezzanine Borrower pursuant to
this Agreement.


“Loan Agreement (Mortgage)” shall mean the
Loan and Security Agreement, dated as of the date hereof, between FCP PROPCO,
LLC, a Delaware limited liability company, as borrower, and , GERMAN AMERICAN CAPITAL CORPORATION, a
Maryland corporation and JPMORGAN CHASE BANK, N.A., a national banking
association, collectively as the
initial lenders.


“Loan Documents
(Mortgage)” or “Mortgage Loan Documents” shall mean, collectively,
the Loan Agreement (Mortgage), the Mortgage Notes, the Security Instruments,
the Assignment of Leases (as defined in the Loan Agreement (Mortgage)), the
Assignment of Licenses (as defined in the Loan Agreement (Mortgage), the Ground
Lessor Estoppel Certificate, the Master Lease, the Fee Mortgage Estoppel
Certificate, SNDA, the Account Agreement, the Recourse 


 


15

















 


Guaranty and all other documents executed
and/or delivered by Mortgage Borrower, Master Lessee or Guarantor to Mortgage
Lender in connection with the Loan (Mortgage), and in connection with any
Property Substitution, including any opinion certificates or other
certifications or representations delivered by or on behalf of Mortgage
Borrower, or any Affiliate of Borrower, to Mortgage Lender.


“Loan (Mortgage)” or “Mortgage Loan”
shall mean the loan in the amount of $2,050,000,000 made by Mortgage Lender to
Mortgage Borrower pursuant to the Loan Agreement (Mortgage).


“LTV
Ratio” shall mean the ratio, expressed as a percentage, of the Combined
Principal Amount as of the date of determination, to the Aggregate Appraised Value as of the
date of determination.


“Master Lease” shall mean that certain Master Lease
Agreement for the Property by and between
Mortgage Borrower, as lessor, and Master Lessee, as lessee, dated as of the
date hereof, as more particularly described in Section 5.1.22.


“Master Lessee” shall mean Station
Casinos, Inc., a Nevada corporation and “Master
Lessee Parties” shall mean the Master Lessee and each Individual Property
Sublessee.


 “Material
Adverse Effect” shall mean any event or condition that has a material
adverse effect on (i) the Property taken as a whole, (ii) the use, operation,
or value of any Individual Property, (iii) the business, profits, operations or
financial condition of Mortgage Borrower or Mezzanine Borrower, or (iv) the
ability of Mezzanine Borrower to repay the principal and/or interest of the
Loan as it becomes due or to satisfy any of Mezzanine Borrower’s material
obligations under the Mezzanine Loan Documents (v) the ability of Mortgage
Borrower to repay principal and interest of the Loan (Mortgage) as it becomes
due or satisfy any of Mortgage Borrower’s obligations under the Loan Documents
(Mortgage) or (vi) the Collateral taken as a whole.


“Material Alteration” shall mean any
Alteration which, when aggregated with all related Alterations, involves costs estimated by
Master Lessee (which costs shall be reasonably acceptable to Mezzanine Borrower
and Mezzanine Lender) to be incurred in implementing the Alterations exceeding
$50 million.


“Material Alteration Collateralization Threshold”
shall mean $100 million.


“Material Sublease” shall mean: (i) each
Individual Property Sublease; (ii) any Sublease to a single Tenant covering
10,000 square feet or more of rentable area of any Individual Property; and
(iii) the Material Subleases (including all amendments and supplements thereto)
designated as such on Schedule I attached hereto and made a part hereof.


“Maturity Date” shall have the meaning set
forth in the Mezzanine Notes.


“Maturity Date
Payment” shall have the meaning set forth in the Mezzanine Notes.


 


16
















 


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


“Member
Power” shall mean the member/stock power executed by Mezzanine Borrower and
substantially in the form of Exhibit U.


“Merger
Agreement” shall mean that certain Agreement and Plan of Merger by and
among Station Casinos, Inc., Fertitta Colony Partners LLC and FCP Acquisition
Sub, dated as of February 23, 2007, as amended.


“Merger Representations and Warranties” shall
mean the representations and warranties made by Master Lessee in the Merger
Agreement that are material to the interests of Mezzanine Lender and that, if
breached (but for the application of clause (z) in the lead-in to Article IV of
the Merger Agreement), would allow Sponsor to terminate its obligations under
the Merger Agreement.


“Mezzanine Account” shall have the meaning
set forth in Section 3.1.1.


“Mezzanine Account Agreement” shall mean the
Account and Control Agreement (First Mezzanine), dated as of the date hereof,
among Collateral Agent, Mezzanine Borrower and Cash Management Bank.


“Mezzanine Borrower” shall have the meaning
set forth in the first paragraph of this Agreement.


“Mezzanine Debt Service Reserve Account”
shall have the meaning set forth in Section 3.1.1(a).


“Mezzanine Lender” shall have the meaning set
forth in the first paragraph of this Agreement.


“Mezzanine Loan Agreement” shall mean that
certain Mezzanine Loan and Security Agreement (First Mezzanine), dated as of
the date hereof, between Mezzanine Borrower, as borrower, and Mezzanine Lender,
as lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.


“Mezzanine Loan Default Revocation Notice”
shall mean a notice from Mezzanine Lender that an Event of Default which has
occurred under the Mezzanine Loan Documents is no longer continuing.


“Mezzanine Loan Default Notice” shall mean a
notice from Mezzanine Lender that an Event of Default has occurred and is
continuing under the Mezzanine Loan Documents.


“Mezzanine Loan Documents” shall mean,
collectively, this Agreement, the Mezzanine Notes, the Mezzanine Account
Agreement, the Recourse Guaranty (Mezzanine) and the Pledge 


 


17

















 


and any and all other agreements, instruments
or documents executed by Mezzanine Borrower (or any of its Affiliates)
evidencing, securing or delivered in connection with the Loan and the
transactions contemplated thereby, including, without limitation, any
certificates or representations delivered by or on behalf of Mezzanine Borrower
or any Affiliate of Mezzanine Borrower.


“Mezzanine Noteholder I” is defined in the
first paragraph of this Agreement.


“Mezzanine Noteholder II” is defined in the
first paragraph of this Agreement.


“Mezzanine Notes” shall mean, collectively,
(a) that certain Mezzanine Note A-1, dated the date hereof, made by Mezzanine
Borrower, as maker, in favor of Mezzanine Lender, as payee, in the principal
amount of $93,750,000 and (b) that certain Mezzanine Note A-2, dated the date
hereof, made by Mezzanine Borrower, as maker, in favor of Mezzanine Lender, as
payee, in the principal amount of $56,250,000, as the same may be amended,
restated, replaced, supplemented, substituted, severed, or otherwise modified
from time to time.


“Mezzanine Release Price” shall mean the
product of (a) the Allocated Loan Amount with respect to the Release Property;
and (b) the applicable Combined Release Price Percentage, minus, if applicable,
the principal amount of any prepayment of the Loan paid from Proceeds derived
from a casualty, other damage or injury or Taking affecting such Release
Property.


“Mortgage Borrower” shall have the meaning
ascribed to the term “Borrower” in the Loan Agreement (Mortgage).


“Mortgage Default” shall have the meaning
ascribed to the term “Default” in the Loan Agreement (Mortgage).


“Mortgage Event of Default” shall have the
meaning ascribed to the term “Event of Default” in the Loan Agreement
(Mortgage).


“Mortgage Lender” shall have the meaning
ascribed to the term “Lender” in the Loan Agreement (Mortgage).


“Mortgage Loan” shall mean the loan in the
amount of $2,050,000,000 made by Mortgage Lender to Mortgage Borrower pursuant
to the Loan Agreement (Mortgage).


“Mortgage Notes” shall have the meaning
ascribed to “Notes” in the Loan Agreement (Mortgage).


“Mortgage Release Price” shall mean the
product of (a) the “Allocated Loan Amount” of the Mortgage Loan with respect to
the Release Property as set forth in the Loan Agreement (Mortgage); and (b) the
applicable Combined Release Price Percentage, minus, if applicable, the
principal amount of any prepayment of the Loan paid from Proceeds derived from
a casualty, other damage or injury or Taking affecting such Release Property.


“New Sublease” shall have the meaning set
forth in Section 8.8.2.


 


18

















 


“Non-Consolidation Opinion” shall have the
meaning provided in Section 2.5.4(a).


“Non-Contravention Opinion” shall have the
meaning provided in Section 2.5.4(d).


“Non-Disqualification Opinion”  shall mean an opinion of outside tax counsel
reasonably acceptable to the Mortgage Lender or the Rating Agencies to whom
such opinion is addressed that a contemplated action will neither cause any
trust formed as a Real Estate Mortgage Investment Conduit (a “REMIC”)
pursuant to a Securitization to fail to qualify as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code at any time
that any “regular interests” in the REMIC are outstanding nor cause a “prohibited
transaction” tax (within the meaning of Section 860F(a)(2) of the Code) or “prohibited
contribution” tax (within the meaning of Section 860G(d) of the Code) to be
imposed on any such REMIC.


“Obligations (First Mezzanine)” shall mean
all indebtedness, obligations and liabilities of Mezzanine Borrower to
Mezzanine Lender, under this Agreement or any of the other Mezzanine Loan
Documents or in respect of the Loan or the Mezzanine Notes, or other
instruments at any time evidencing any of the foregoing, whether existing on
the date of this Agreement or arising or incurred hereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise.


“Obligations (Junior Mezzanine)” shall mean
the “Obligations” as set forth in the 
applicable Junior Mezzanine Loan Agreement.


“Obligations (Mortgage)” shall have meaning
set forth in the recitals of the Security Instruments.


“OFAC List” means the list of specially
designated nationals and blocked persons subject to financial sanctions that is
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.


“Officer’s Certificate” shall mean a
certificate executed by an authorized signatory of Mezzanine Borrower that is
familiar with the financial condition of Mortgage Borrower and Mezzanine Borrower
and the operation of the Property, or, in the case of Officer’s Certificates
required under Section 11, the principal officer of Mezzanine Borrower
(as designated in its organizational documents).


“Operating Agreements” shall mean,
collectively, the Master Lease, the Material Subleases, and the Ground Leases.


“Opinion of Counsel” shall mean an opinion of
counsel of a law firm selected by Mezzanine Borrower and reasonably acceptable
to Mezzanine Lender, which opinion of counsel shall include (without
limitation) opinions re due formation, due authorization, due execution,
enforceability and 10b-5 negative assurances.


“Other Charges” shall mean, collectively,
maintenance charges, impositions other than Impositions, and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Property, now or hereafter
levied or 


 


19

















 


assessed or imposed against the Property or
any part thereof by any Governmental Authority, other than those required to be
paid by a Tenant pursuant to its respective Sublease.


“Other Taxes” shall have the meaning set
forth in Section 2.4.3.


“Owner’s
Title Policy Loss Payment Direction Letter” shall mean that certain letter
of even date herewith from Mortgage Borrower to the Mezzanine Lender and Junior
Mezzanine Lenders and countersigned by the Title Companies, directing the Title
Company to make certain loss payments under certain of Mortgage Borrower’s owner’s
title insurance policies to Mezzanine Lender and Junior Mezzanine Lenders as
more particularly set forth therein.


“Ownership
Interests” shall mean all of the equity interests in Mortgage Borrower.


“Payment Date” shall have the meaning set
forth in the Mezzanine Notes.


“Permitted
Debt” shall mean, (i) in the case of the Mortgage Borrower, the Mortgage
Notes and the other obligations, indebtedness and liabilities specifically
provided for in any Mortgage Loan Document and secured by the Loan Agreement
(Mortgage), the Security Instruments and the other
Loan Documents (Mortgage) and any Interest Rate Protection Agreements (as
defined in the Loan Agreement (Mortgage) including any obligations under the
Interest Rate Protection Agreements); (ii) in the case of the Mezzanine
Borrower, the Mezzanine Notes and the other obligations, indebtedness and
liabilities specifically provided for in any Mezzanine Loan Document and
secured by this Agreement, the Pledge or the other Mezzanine Loan Documents;
and (iii) in the case of each Junior Mezzanine Borrower, the applicable Junior
Mezzanine Notes executed by such Junior Mezzanine Borrower and the other
obligations, indebtedness and liabilities specifically permitted in the Junior
Mezzanine Loan Documents executed by such Junior Mezzanine Borrower.  In no event shall Mezzanine Borrower,
Mortgage Borrower, or any Junior Mezzanine Borrower be permitted under this
provision to enter into a note (other than the Mortgage Notes and the other
Loan Documents (Mortgage), the Mezzanine Notes and the other Mezzanine Loan
Documents, or the Junior Mezzanine Notes and the other Junior Mezzanine Loan
Documents, as applicable) or other instrument for borrowed money.


“Permitted Encumbrances” shall mean
collectively, (a) the Liens and security interests created or permitted by the
Loan Documents (Mortgage), (b) all Liens, encumbrances and other matters
disclosed in the Title Policies, (c) Liens, if any, for Impositions imposed by
any Governmental Authority not yet due or delinquent (d) Liens arising
after the date hereof which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted in accordance with Article
VII hereof; (e) in the case of Liens arising after the date hereof,
statutory Liens of carriers, warehousemen, mechanics, materialmen and other
similar Liens arising by operation of law, which are incurred in the ordinary
course of business  or in
connection with any Alteration permitted hereunder for sums which are not
delinquent or are being contested in good faith in accordance with Article
VII hereof; (f) easements, rights-of-way, restrictions and other
similar charges or non-monetary encumbrances against real property which would
not individually or in the aggregate be reasonably likely to have a Material
Adverse Effect; (g) any judgment Lien provided that the judgment it secures
shall have been discharged of record or the execution thereof stayed pending
appeal within 30 days after the entry thereof or within 30 days after the
expiration of any stay, as applicable; (h) any matters that would be 


 


20

















 


disclosed by an accurate survey of an Individual Property other than
the Surveys, provided that in the case of Substitute Properties, the survey-related
coverage under the Title Policies is provided with respect to such Substitute
Properties; (i) any of the Existing Matters of Record, provided that (1)
the amounts secured by such Liens have been paid in full, or, in the case of an
existing contested lien is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted in accordance with Article
VII hereof and (2) such Liens are insured over in the Title Policies in a
manner satisfactory to Mezzanine Lender, whether such insurance is made
available in consideration of payment, bonding or indemnity by Mortgage
Borrower (but without limiting Mezzanine Borrower’s obligations under Article
VII with respect to the existing contested lien and provided that any such
indemnity or other consideration shall be in a form reasonably satisfactory to
Mezzanine Lender); (j) the Owner’s Title Policy Loss Payment Direction Letter;
(k) any Sublease permitted under Section 8.8.2 below; and (l) such other Liens
as Mezzanine Lender may approve in writing in Mezzanine Lender’s sole
discretion.


“Permitted Encumbrances (First Mezzanine)”
means, collectively, the Liens and security interests created pursuant to this
Agreement, the Pledge, and the other Mezzanine Loan Documents.


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


“Plan” shall have the meaning set forth in Section
4.1.10(a).


“Pledge” shall mean that certain Pledge and
Security Agreement (First Mezzanine), dated as of the date hereof, from
Mezzanine Borrower to Collateral Agent.


“Pledged Collateral” shall have the meaning
set forth in the Pledge.


“PML” shall mean probable maximum loss.


“Portfolio Four-Wall EBITDAR” shall mean
earnings from hotel and casino operations at the Property before interest
expense/income, taxes, depreciation and amortization, any rental expense on
real property (other than ground rent), distribution expense, direct and
allocated corporate overhead expense, regional office allocation, royalty
charges from affiliates and restructuring expense plus any non-cash
charges/less any non-cash income, including but not limited to losses on sales
of assets and non cash compensation expense.


“Portfolio
MAE” shall mean a material adverse effect on the Property taken as a whole,
or the operations, business or condition (financial or otherwise) of Mortgage
Borrower, taken as a whole.


“Prepayment Fee” shall have the meaning set
forth in the Mezzanine Notes.


“Principal Amount” shall mean, collectively,
the aggregate “Principal Amount” under each of the Mezzanine Notes, as
such term is defined in each of the Mezzanine Notes.


 


21

















 


“Principal Control Persons” shall mean (a) one or more affiliates of Colony Capital, LLC (or, subject to such
Persons being licensed as and when required in accordance with applicable
Gaming Laws, its five most senior executive officers, including, without
limitation, Thomas J. Barrack, Jr.’s successor as Chief Executive Officer of
Colony Capital, LLC), (b) Frank J. Fertitta III, (c) Lorenzo J. Fertitta, (d)
Thomas J. Barrack, Jr., (e) any other Person expressly agreed to in writing by
Mezzanine Lender, in Mezzanine Lender’s reasonable discretion, to be a
Principal Control Person, and (f) in the event that both Fertitta Brothers are
deceased or incapacitated, one of the Persons identified on Schedule IX
designated by Mezzanine Borrower (subject to compliance with applicable Gaming
Laws and provided that the Person so designated shall not be a Disqualified
Transferee) as a Principal Control Person in lieu of the Fertitta Brothers.


“Principal
Investors” shall mean (a) one or more Affiliates of Colony Capital, LLC,
(b) Frank J. Fertitta III, his Affiliates, personal investment vehicles,
spouse, lineal descendants (including adopted children and their lineal
descendants) and any trust or entity owned, controlled by or established for
the benefit of, or the estate of, any of the foregoing, (c) Lorenzo J.
Fertitta, his Affiliates, personal investment vehicles, spouse, lineal
descendants (including adopted children and their lineal descendants) and any
trust or entity owned, controlled by or established for the benefit of, or the
estate of, any of the foregoing, (d) Blake and Delise Sartini, their
Affiliates, personal investment vehicles, lineal descendants (including adopted
children and their lineal descendants) and any trust or entity owned,
controlled by or established for the benefit of, or the estate of, any of the
foregoing, and (e) Thomas J. Barrack, Jr., his Affiliates, personal investment
vehicles, spouse, lineal descendants (including adopted children and their
lineal descendants) and any trust or entity owned, controlled by or established
for the benefit of, or the estate of, any of the foregoing.  For purposes of this definition, the term “Affiliate”
shall mean, with respect to any specified Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or
indirect Common Control with, or any general partner or managing member in,
such specified Person.


“Pro Rata Share”
shall mean, with respect to each Mezzanine Lender, the ratio of such Mezzanine
Lender’s interest in the amount of the Loan to the aggregate amount of the
Loan.  As of the date hereof, the Pro
Rata Share applicable to Mezzanine
Noteholder I is sixty-two and one-half percent (62.5%) and the Pro Rata Share
applicable to Mezzanine
Noteholder II is thirty-seven and one-half percent (37.5%).


“Proceeds” shall have the meaning set forth
in the Loan Agreement (Mortgage).


“Prohibited Person” means any Person identified
on the OFAC List or any other Person with whom a U.S. Person may not conduct
business or transactions by prohibition of Federal law or Executive Order of
the President of the United States or America.


“Property” shall have the meaning set forth in
the Loan Agreement (Mortgage).


“Property
Specific Representations” shall mean the representations and warranties of
Mezzanine Borrower set forth in Sections 4.1.4 (with respect to the
Property only), 4.1.6, 4.1.11, 4.1.13, 4.1.15, 4.1.23,
4.1.24, 4.1.25, 4.1.26, 4.1.27, 4.1.29, 4.1.39,
4.1.45, and 12.1 with respect to the Property.


 


22

















 


“Proprietary Information” shall have the
meaning set forth in Section 11.2.9(a).


“Proscribed Assignee” shall mean Highland
Capital Partners.


“Protective Advances” shall mean sums
advanced by Mezzanine Lender for the purposes of payment of items reasonably
necessary to protect the Collateral or the Property.


“Purchase
and Sale Agreement” shall mean that certain Amended and Restated Purchase
and Sale Agreement, dated as of October 31, 2007, by and among Charleston
Station LLC, Boulder Station, Inc., Palace Station Hotel & Casino, Inc.,
and Sunset Station, Inc., collectively as sellers, FCP Newco, LLC, and the
other parties thereto, as assigned by FCP NewCo, LLC to Mortgage Borrower on or
approximately on the date hereof.


“PZR” shall mean The Planning Zoning Resource
Corporation.


“Qualified
Transferee” shall mean any entity that, together with its Close Affiliates,
(i) is experienced in owning and/or operating properties similar to the
Property, (ii) (a) has a net worth, as of a date no more than six (6) months
prior to the date of the transfer of at least $500 Million and (b) immediately
prior to such transfer, controls real estate equity assets of at least $2
Billion, and (iii) is not a Disqualified Transferee.


“Rate Cap Collateral (First Mezzanine)” shall
have the meaning set forth in Section 9.2.


“Rating Agencies” shall mean (a) prior to a
Securitization, each of S&P, Moody’s and Fitch and any other
nationally-recognized statistical rating agency which has been approved by
Mortgage Lender and (b) after a Securitization has occurred, each such Rating
Agency which has rated the Securities in the Securitization.


“Rating Agency Confirmation” shall mean,
collectively, a written affirmation from each of the Rating Agencies that the
credit rating of the Securities given by such Rating Agency immediately prior
to the occurrence of the event with respect to which such Rating Agency Confirmation
is sought will not be qualified, downgraded or withdrawn as a result of the
occurrence of such event, which affirmation may be granted or withheld in such
Rating Agency’s sole and absolute discretion which may be satisfied by a Rating
Agency declining to review the matter in question without adverse impact on the
Securities.  In the event that, at any
given time, no such Securities shall have been issued and are then outstanding,
then the term Rating Agency Confirmation shall be deemed instead to require the
written approval of Mezzanine Lender
based on its good faith determination of whether the Rating Agencies would
issue a Rating Agency Confirmation if any such Securities were outstanding.


“Real Property” shall mean, collectively, the
Land, the Improvements and the Appurtenances (as defined in the Security
Instruments, collectively).


“Receipts” shall mean with respect to any
Person, the declaration or payment of any cash, cash flow, dividend or
distribution on or in respect of any member’s or partner’s interest, shares of
any class of capital stock or other beneficial interest of such Person; the
purchase, redemption, exchange or other retirement of any member’s or partner’s
interest, shares of any class of capital stock or other beneficial interest of
such Person, directly or indirectly; the return of capital by 


 


23

















 


such Person to its members, shareholders or
partners as such; or any other distribution of any nature whatsoever on or in
respect of any member’s or partner’s interest, shares of any class of capital
stock or other beneficial interest of such Person.


“Recourse Guaranty (Mezzanine)” shall mean
that certain Guaranty of Recourse Obligations of Mezzanine Borrower, dated as
of the date hereof, by Guarantor in favor of Mezzanine Lender, as the same may
be amended, supplemented, restated or otherwise modified from time to time.


“Register” shall have the meaning set forth
in Section 15.4.


“Regulatory Change” shall mean any change
after the date of this Agreement in federal, state or foreign laws or
regulations or the adoption or the making, after such date, of any
interpretations, directives or requests applying to Mezzanine Lender, or any
Person Controlling Mezzanine Lender or to a class of banks or companies
Controlling banks of or under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or Governmental Authority
or monetary authority charged with the interpretation or administration
thereof.


“Release” shall have the meaning provided in Section
2.3.4.


“Release Date” shall have the meaning
provided in Section 2.3.4(a).


“Release Instruments” shall have the meaning
provided in Section 2.3.4(c).


“Release Property” shall have the meaning
provided in Section 2.3.4.


“Rents” shall have the meaning set forth in
the Loan Agreement (Mortgage).


“Replaced Property” shall have the meaning
provided in Section 2.3.5(a).


“Replacement Interest Rate Cap Agreement (First
Mezzanine)” shall mean collectively, one or more interest rate
cap agreements from an Approved Counterparty with terms that are the same in
all material respects as the terms of the Interest Rate Cap Agreement (First
Mezzanine), except that (i) the same shall be effective as of (A) in connection
with a replacement following a downgrade, withdrawal or qualification of
Counterparty, the date required in Section 9.3(c) or (B) in connection
with a replacement related to an extension of the Maturity Date, the date
required in Section 5(a)(ii) of the Mezzanine Notes, and (ii) the notional
amount shall be the Principal Amount then outstanding; provided that to the
extent any such interest rate cap agreement does not meet the foregoing
requirements, a Replacement Interest Rate Cap Agreement (First Mezzanine) shall
be such interest rate cap agreement approved in writing by Mezzanine Lender.


“Requesting Parties” shall have the meaning
set forth in Section 11.2.9(b).


“Revolving/Term Credit
Facility” shall mean that certain Credit Agreement, dated as of even date
herewith, among Station Casinos, Inc., as borrower, Deutsche Bank Trust Company
Americas, as administrative agent, Deutsche Bank Securities Inc. and J. P.
Morgan Securities 


 


24

















 


Inc., as joint lead arrangers and joint
bookrunners, JPMorgan Chase Bank, N.A., as syndication agent, and the other
lenders party thereto, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time, and any refinancing thereof.


 


“Revolving/Term Credit Facility Lien” shall
have the meaning provided in Section 8.5(b)(iv).


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


“Second Mezzanine Borrower” shall mean FCP
MezzCo Borrower II, LLC, a Delaware limited liability company.


“Second Mezzanine Lender” shall mean
Mezzanine Noteholder I and Mezzanine Noteholder II, and their respective
successors and/or assigns, as the holder of the Second Mezzanine Loan.


“Second Mezzanine Loan” shall mean that
certain $150,000,000 mezzanine loan, made as of the date hereof, from Second
Mezzanine Lender to Second Mezzanine Borrower.


“Second Mezzanine Loan Documents” shall mean
the documents evidencing and securing the Second Mezzanine Loan, as may be
modified, amended, extended, supplemented, restated or replaced from time to
time.


“Second Mezzanine Notes” shall mean that
certain Second Mezzanine Note A-1 in the principal amount of $93,750,000 dated
as of the date hereof, from Second Mezzanine Borrower to Second Mezzanine Lender,
and that certain Second Mezzanine Note A-2 in the principal amount of
$56,250,000 dated as of the date hereof, from Second Mezzanine Borrower to
Second Mezzanine Lender.


“Securitization” shall have the meaning set
forth in the Loan Agreement (Mortgage).


“Security Instrument” shall have the meaning
set forth in the Loan Agreement (Mortgage).


“Servicer” shall mean such Person designated
in writing with an address for such Person by Mezzanine Lender, in its sole
discretion, to act as Mezzanine Lender’s agent hereunder with such powers as
are specifically delegated to the Servicer by Mezzanine Lender, whether
pursuant to the terms of this Agreement, the Mezzanine Account Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.


“Single Purpose Entity” shall mean a Person,
other than an individual, which (i) is formed or organized solely for the
purpose of acquiring, owning, holding, developing, using, operating and
financing, directly, or, in the case of Mezzanine Borrower or any Junior
Mezzanine Borrower, indirectly, an ownership interest in the Property, (ii)
does not engage in any business unrelated to the Property (or in the case of
Mezzanine Borrower or any Junior Mezzanine Borrower, its subsidiary) and the
ownership, development, use, operation and financing thereof, (iii) has not and
will not have any assets other than those related to its interest 


 


25

















 


in the Property (or in the case of Mezzanine
Borrower or any Junior Mezzanine Borrower, its subsidiary) or the operation,
management and financing thereof or any indebtedness other than the Permitted
Debt (as applicable), (iv) maintains its own separate books and records and its
own accounts, in each case which are separate and apart from the books and
records and accounts of any other Person, (v) holds itself out as being a
Person, separate and apart from any other Person, (vi) does not and will not
commingle its funds or assets with those of any other Person, (vii) conducts
its own business in its own name; (viii) maintains separate financial
statements, (ix) pays its own liabilities out of its own funds, (x) observes
all partnership, corporate or limited liability company formalities, as
applicable, (xi) pays the salaries of its own employees, if any, and maintains
a sufficient number of employees, if any, in light of its contemplated business
operations, (xii) does not guarantee or otherwise obligate itself with respect
to the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person, (xiii) does not acquire
obligations or securities of its partners, members or shareholders, (xiv)
allocates fairly and reasonably shared expenses, including, without limitation,
any overhead for shared office space, if any, (xv) uses separate stationery,
invoices, and checks, (xvi) maintains an arms-length relationship with its
Affiliates, (xvii) does not and will not pledge its assets for the benefit of
any other Person (except as permitted pursuant to the Mortgage Loan, the Loan
or any Junior Mezzanine Loan, as applicable) or make any loans or advances to
any other Person, (xviii) does and will continue to use commercially reasonable
efforts to correct any known misunderstanding regarding its separate identity,
(xix) maintains adequate capital in light of its contemplated business
operations, and (xx) files its own tax returns, if any, as may be required
under applicable law, to the extent (1) not part of a consolidated group filing
a consolidated return or returns or (2) not treated as a division for tax
purposes of another taxpayer, and pays any taxes so required to be paid under
applicable law, and (xx) has not and will not engage in, seek, or consent to
the dissolution, winding up, liquidation, consolidation or merger and except as
otherwise permitted in this Agreement, has not and will not engage in, seek or
consent to any asset sale, transfer of partnership, membership or shareholder
interests, or amendments of its partnership or operating agreement, certificate
of incorporation, articles of organization or other organizational
document.  In addition, if such Person is
a partnership, (1) all general partners of such Person shall be Single Purpose
Entities; and (2) if such Person has more than one general partner, then the
organizational documents shall provide that such Person shall continue (and not
dissolve) for so long as a solvent general partner exists.  In addition, if such Person is a corporation,
then, at all times: (a) such Person shall have at least two (2) Independent
Directors and (b) the board of directors of such Person may not take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
directors unless all of the directors, including the Independent Directors,
shall have participated in such vote.  In
addition, if such Person is a limited liability company, (a) such Person shall
have at least two (2) Independent Managers, Independent Directors or Independent
Members, (b) if such Person is managed by a board of managers or directors, the
board of managers or directors of such Person may not take any action requiring
the unanimous affirmative vote of 100% of the members of the board of managers
or directors unless all of the managers or directors, including the Independent
Managers or Independent Directors, shall have participated in such vote, (c) if
such Person is not managed by a board of managers or directors, the members of
such Person may not take any action requiring the affirmative vote of 100% of
the members of such Person unless all of the members, including the Independent
Members, shall have participated in such vote, (d) each managing member shall
be a Single Purpose Entity and (e) its articles of 


 


26

















 


organization, certificate of formation and/or
operating agreement, as applicable, shall provide that until all of the
Indebtedness and Obligations (Mortgage), Obligations (First Mezzanine) or
Obligations (Junior Mezzanine), as applicable, are paid in full such entity
will not dissolve.  In addition, the
organizational documents of such Person shall provide that such Person (1)
without the unanimous consent of all of the partners, directors or members, as
applicable, shall not with respect to itself or to any other Person in which it
has a direct or indirect legal or beneficial interest (a) seek or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or other similar official for the benefit of the creditors of such
Person or all or any portion of such Person’s properties, or (b) petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors generally,
(2) has and will maintain its books, records, resolutions and agreements as
official records, (3) has held and will hold its assets in its own name, (4)
has not and will not identify its partners, members or shareholders, or any
affiliates of any of them as a division or part of it, and (5) except as
provided in the Mortgage Loan Documents, Mezzanine Loan Documents or Junior
Mezzanine Loan Documents, as applicable, has not and will not enter into or be
a party to any transaction with its partners, members, shareholders, or its
Affiliates except in the ordinary course of business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arms-length transaction with a third party.


“Special Taxes” shall mean any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
or any liabilities with respect thereto, including those arising after the date
hereof as result of the adoption of or any change in law, treaty, rule, regulation,
guideline or determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority but
excluding, in the case of Mezzanine Lender, such taxes (including income taxes,
franchise taxes and branch profit taxes) as are imposed on or measured by
Mezzanine Lender’s net income by the United States of America or any
Governmental Authority of the jurisdiction under the laws under which Mezzanine
Lender is organized or maintains a lending office.


“SPE Entity” shall mean the Mortgage
Borrower, the Mezzanine Borrower and any other Person which is required by this
Agreement to be, as long as the Loan is outstanding, a Single Purpose Entity.


“Sponsor” shall mean Fertitta Colony
Partners LLC, a Nevada limited liability company.


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


“Strike Price” shall mean
5.77%.


“Sub-Account(s)” shall have the meaning set
forth in Section 3.1.1.


“Sublease” shall mean any lease (other than
the Ground Leases or the Master Lease), sublease or sub-sublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect), pursuant to which any Person is granted by the
Mortgage Borrower or the Master Lessee a possessory interest in, or right to
use or occupy all or any portion of any space in the Property, and every
modification, amendment or other agreement 


 


27

















 


relating to such lease, sublease,
sub-sublease, or other agreement entered into in connection with such lease,
sublease, sub-sublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.


“Sublease Modification” shall have the
meaning set forth in Section 8.8.2.


“Subleasing Standards” shall mean the
standards set forth on Schedule I attached hereto and made a part
hereof.


“Substitute Property” shall have the meaning
provided in Section 2.3.5(a).


“Substitute Property Mortgage Spreader Agreement”
shall have the meaning provided in Section 2.3.5(a).


“Substitution” shall have the meaning
provided in Section 2.3.5(a).


“Substitution Date” shall have the meaning
provided in Section 2.3.5(c).


“Substitution
Due Diligence Package” shall have
the meaning provided in Section 2.3.5(c).


“Substitution
Notice” shall have the meaning
provided in Section 2.3.5(c).


“Survey” shall have the meaning set forth in
the Loan Agreement (Mortgage).


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


“Tenant” shall have the meaning set forth in
the Loan Agreement (Mortgage).


“Third Mezzanine Borrower” shall mean FCP
Mezzco Borrower III, LLC, a Delaware limited liability Company.


“Third Mezzanine Lender” shall mean Mezzanine
Noteholder 1 and Mezzanine Noteholder 2, and their respective successors and/or
assigns, as the holder of the Third Mezzanine Loan.


“Third Mezzanine Loan” shall mean that
certain $125,000,000 mezzanine loan, made as of the date hereof, from Third
Mezzanine Lender to Third Mezzanine Borrower.


“Third Mezzanine Loan Documents” shall mean
the documents evidencing and securing the Third Mezzanine Loan, as may be
modified, amended, extended, supplemented, restated or replaced from time to
time.


 


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“Third Mezzanine Notes” shall mean that
certain Third Mezzanine Note A-1 in the principal amount of $78,125,000 dated
as of the date hereof, from Third Mezzanine Borrower to Third Mezzanine Lender
and that certain Third Mezzanine Note A-2 in the principal amount of
$46,875,000 dated as of the date hereof, from Third Mezzanine Borrower to Third
Mezzanine Lender.


“Title Company” shall have the meaning set
forth in the Loan Agreement (Mortgage).


“Title Policies” shall have the meaning set
forth in the Loan Agreement (Mortgage).


“Transfer” shall mean to, directly or
indirectly, sell, assign, convey, mortgage, transfer, pledge, hypothecate,
encumber, grant a security interest in, exchange or otherwise dispose of any
beneficial interest or grant any option or warrant with respect to, or where
used as a noun, a direct or indirect sale, assignment, conveyance, transfer,
pledge or other disposition of any beneficial interest by any means whatsoever
whether voluntary, involuntary, by operation of law or otherwise.


“True Lease Opinion” shall have the meaning
provided in Section 2.5.4(b).


“True Sale Opinion” shall have the meaning
provided in Section 2.5.4(c).


“UCC” or “Uniform Commercial Code”
shall mean the Uniform Commercial Code as in effect in the State.


“UCC
Financing Statement” shall have the meaning provided in Section
2.3.5(d)(xiii)(3).


“Unimproved Parcels” shall mean (a) those
portions of the Property identified on Schedule IV attached hereto and
made a part hereof and (b) any other undeveloped portion of an Individual
Property as to which Mezzanine
Lender has reasonably determined that such portion is not is not required for
the primary intended use of such Individual Property and that the release of
such portion will not adversely affect either the “as leased” appraised value
or the net operating income of the remaining portion of such Individual
Property.


“U.S. Government Obligations” shall have the
meaning set forth in the Loan Agreement (Mortgage).


“VoteCo” shall mean FCP VoteCo, LLC, a Nevada
limited liability company.


1.2           Principles of Construction.  All references to sections and schedules are
to sections and schedules in or to this Agreement unless otherwise
specified.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.  When used herein, the term “financial
statements” shall include the notes and schedules thereto.  Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the definitions given them in
this Agreement when used in any other Mezzanine Loan Document or in any
certificate or other document made or delivered pursuant thereto.  Any capitalized term used herein but not
otherwise defined shall have the meaning ascribed to it in the Loan Agreement
(Mortgage).  All uses of the word “including”
shall mean including, without limitation unless the context shall indicate
otherwise.  Unless otherwise specified,
the words hereof, herein and hereunder and 


 


29

















 


words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement.  Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so defined.


 


II.                                     GENERAL TERMS


2.1                                 Loan; Disbursement to Mezzanine Borrower. 


2.1.1                        The Loan.   Subject to
and upon the terms and conditions set forth herein, each Mezzanine Lender
hereby agrees, on a several (but not joint) basis, to make its Pro Rata Share
of the Loan, and Mezzanine Borrower hereby agrees to accept the Loan, on the
Closing Date.


2.1.2                        Disbursement to Mezzanine Borrower.   Mezzanine Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.  Mezzanine Borrower acknowledges and agrees
that the full proceeds of the Loan will have been disbursed by Mezzanine Lender
to Mezzanine Borrower on the Closing Date.


2.1.3                        The Mezzanine
Notes, Pledge and Mezzanine Loan Documents.  The Loan shall
be evidenced by the Mezzanine Notes
and secured by this Agreement, the Pledge and the other Mezzanine Loan Documents.


2.1.4                        Use of Proceeds.   Mezzanine Borrower shall use the proceeds of
the Loan to make a contribution to Mortgage Borrower and cause Mortgage
Borrower to (a) acquire the Property, (b) pay all past-due operating expenses,
if any, in respect of the Property, (c) fund any working capital requirements
of the Property, (d) make deposits into the Sub-Accounts as required under the
Loan Agreement (Mortgage), (e) pay costs and expenses incurred in connection
with the closing of the Loan, (f) distribute to its parent entities and (g)
retain and/or distribute the balance, if any.


2.2                                 Interest; Loan Payments; Late Payment Charge. 


2.2.1                        Payment of Principal and Interest. 


(i)            Except
as set forth in Section 2.2.1(ii), interest shall accrue on the
Principal Amount as set forth in the Mezzanine Notes.


(ii)           Upon the occurrence and during the
continuance of an Event of Default and from and after the Maturity Date if the
entire Principal Amount is not repaid on the Maturity Date, interest on the
outstanding principal balance of the Loan and, to the extent permitted by law,
overdue interest and other amounts due in respect of the Loan shall accrue at
the Default Rate calculated from the date such payment was due without regard
to any grace or cure periods contained herein. 
Interest at the Default Rate shall be computed from the occurrence of
the Event of Default until the actual receipt and collection of the
Indebtedness (or that portion thereof that is then due).  To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Indebtedness, shall itself
accrue interest at the same rate as the Loan and 


 


30

















 


shall be secured by this Agreement and the
Pledge.  This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Indebtedness, nor as a waiver of any other right or remedy accruing to
Mezzanine Lender by reason of the occurrence of any Event of Default, and
Mezzanine Lender retains its rights under the Mezzanine Notes to accelerate and
to continue to demand payment of the Indebtedness upon the happening of any
Event of Default.


2.2.2        Method and Place
of Payment.



(a)               On
each Payment Date, Mezzanine Borrower shall pay to Mezzanine Lender interest
accruing pursuant to the Mezzanine Notes for the entire Interest Period during
which said Payment Date shall occur.


(b)               All
amounts advanced by Mezzanine Lender pursuant to the applicable provisions of
the Mezzanine Loan Documents, other than the Principal Amount, together with
any interest at the Default Rate or other charges as provided therein, shall be
due and payable hereunder as provided in the Mezzanine Loan Documents.  In the event any such advance or charge is
not so repaid by Mezzanine Borrower, Mezzanine Lender may, at its option, first
apply any payments received under the Mezzanine Notes to repay such advances,
together with any interest thereon, or other charges as provided in the
Mezzanine Loan Documents, and the balance, if any, shall be applied in payment
of any installment of interest or principal then due and payable.


(c)               The
Maturity Date Payment shall be due and payable in full on the Maturity Date.


2.2.3        Late Payment Charge.   If any principal, interest or any other sums
due under the Mezzanine Loan Documents (other than the outstanding Principal
Amount due and payable on the Maturity Date) is not paid by Mezzanine Borrower
on or prior to the date on which it is due, Mezzanine Borrower shall pay to
Mezzanine Lender upon demand an amount equal to the lesser of three percent
(3%) of such unpaid sum or the Maximum Legal Rate (the “Late Payment Charge”)
in order to defray the expense incurred by Mezzanine Lender in handling and
processing such delinquent payment and to compensate Mezzanine Lender for the
loss of the use of such delinquent payment. 
Any such amount shall be secured by this Agreement, the Pledge and the
other Mezzanine Loan Documents to the extent permitted by applicable law.


2.2.4        Usury Savings.   This Agreement and the Notes are subject to
the express condition that at no time shall Mezzanine Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject Mezzanine Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the
other Mezzanine Loan Documents, Mezzanine Borrower is at any time required or
obligated to pay interest on the principal balance due under the Mezzanine Notes at a rate in excess of
the Maximum Legal Rate, then the LIBOR Rate or the Default Rate, as the case
may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and
all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due under the Mezzanine
Notes.  All sums paid or agreed to be
paid to Mezzanine Lender for the use, forbearance, or detention of the 


 


31

















 


sums
due under the Loan, shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Legal Rate of interest from
time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.


2.3           Prepayments.   No prepayments of the Indebtedness shall be
permitted except as set forth in this Section 2.3 and Section 4
of the Mezzanine Notes.  If Mezzanine Borrower tenders payment of any
part of the Indebtedness other than in accordance with Sections 2.3.2, 2.3.3 or
2.3.4, (a) such payment may be made only on the next occurring Payment Date
together with all unpaid interest thereon as calculated through the end of the
Interest Period during which such Payment Date occurs (even if such period
extends beyond such Payment Date and calculated as if such payment had not been
made on such Payment Date), and (b) Mezzanine Borrower shall pay, in addition
to the Indebtedness, an amount equal to the Prepayment Fee and all other fees
and sums payable hereunder or under the Mezzanine Loan Documents.


2.3.1        Mandatory Prepayments. 


(a)           If there shall occur
a casualty or Taking in respect of the Property and as a result thereof the
Loan (Mortgage) is prepaid in whole or in part, then, to the extent that there
shall be excess proceeds or
awards available following the application of the proceeds or awards to
reconstruct or repair the Property or to the payment of all or any portion of
the Loan (Mortgage) pursuant to the terms of the Loan Documents (Mortgage) (“Excess
Proceeds”), Mezzanine Borrower shall repay the Mezzanine Notes, or a
portion thereof, in the amount of such available Excess Proceeds (excluding
that portion used to pay any Prepayment Fee) in accordance with Section 4(b) of
the Mezzanine Notes.  All Excess Proceeds
shall be deposited directly into the Mezzanine Account.


2.3.2        Prepayments After Event of Default;
Application of Amounts Paid.   If,
following an Event of Default, Mezzanine Lender shall accelerate the
Indebtedness and Mezzanine Borrower thereafter tenders payment of all or any
part of the Indebtedness, or if all or any portion of the Indebtedness is
recovered by Mezzanine Lender after such Event of Default, (a) such payment may
be made only on the next occurring Payment Date together with all unpaid
interest thereon as calculated through the end of the Interest Period during
which such Payment Date occurs (even if such period extends beyond such Payment
Date and calculated as if such payment had not been made on such Payment Date),
and all other fees and sums payable hereunder or under the Mezzanine Loan
Documents, including without limitation, interest that has accrued at the
Default Rate, and any Late Payment Charges), (b) such payment shall be deemed a
voluntary prepayment by Mezzanine Borrower, and (c) Mezzanine Borrower shall
pay, in addition to the Indebtedness, an amount equal to the Prepayment Fee.


2.3.3.       Release of Collateral upon Repayment
of Loan in Full.  Mezzanine Lender shall, upon the written
request of Mezzanine Borrower, upon payment in full of the Principal Amount and
interest on the Loan and all other amounts due and payable under the Mezzanine
Loan Documents in accordance with the terms and provisions of the Mezzanine Notes and this Agreement,
release the Lien of (i) this Agreement upon the Account Collateral (First Mezzanine )and the Rate Cap Collateral
(First Mezzanine) and (ii) the Pledge. 
In such event, Mezzanine 


 


32

















 


Borrower shall
submit to Mezzanine Lender, not less than ten (10) Business Days prior to the
date of such release or assignment, a release of lien, for such property for
execution by Mezzanine Lender.  Such
release or assignment, as applicable, shall be in a form appropriate in each
jurisdiction in which the Collateral is located and satisfactory to Mezzanine
Lender in its reasonable discretion.  In
addition, Mezzanine Borrower shall provide all other documentation Mezzanine
Lender reasonably requires to be delivered by Mezzanine Borrower in connection
with such release or assignment, as applicable.


2.3.4        Release of Individual Properties.  In the event Mortgage Borrower requests the
release of any Individual Property or Properties from the Lien under the Loan
Documents (Mortgage) or to otherwise convey such Individual Property or
Properties to another Person, subject to satisfaction of each of the conditions
set forth below, Mezzanine Lender shall consent to such release and conveyance
and authorize (i) Mortgage Borrower to effect the release of such Individual
Property or Individual Properties (a “Release” and each Individual
Property subject to a Release, a “Release Property”) from the Lien of
the applicable Security Instrument and related Loan Documents (Mortgage) (or to
the extent so requested by Mezzanine Borrower, assign the Lien of the
applicable Security Instrument to a new lender without representation, warranty
or recourse) and to concurrently therewith convey the Release Property to a
Person other than Mortgage Borrower, Mezzanine Borrower, or any SPE Entity (each
release and conveyance under this Section 2.3.4 or Section 2.3.5,
a “Property Release”), (ii) a reduction in the notional amounts of the
Interest Rate Protection Agreement, the Interest Rate Cap Agreement (First
Mezzanine), and/or the interest rate cap agreements required pursuant to the
Junior Mezzanine Loan Documents, all in proportion to the reduction of the
principal amounts thereof as required under the Loan Documents (Mortgage),
Mezzanine Loan Documents, and Junior Mezzanine Loan Documents, as applicable,
(iii) the Cash Management Bank (Mortgage) to return to Mortgage Borrower any
Excess Account Collateral subject to and in accordance with Section 2.3.7
of the Loan Agreement (Mortgage) except to the extent otherwise provided in
such Section, (iv) Mortgage Borrower to comply with Section 2.3.8 of the
Loan Agreement (Mortgage) with regard to adjusting the ongoing reserve
requirements thereunder, and (v) a reduction in the Master Lease Base Rent in
an amount, which shall equal the product of (x) the initial Master Lease Base
Rent multiplied by (y) a fraction, the numerator of which is the Combined
Allocated Loan Amount for the Release Property, and the denominator of which is
the original Combined Principal Amount, and (vi) Mezzanine Borrower to cause Mortgage
Borrower to enter into an amendment to the Master Lease with Master Lessee (A)
to effect such authorized reduction in the Master Lease Base Rent, (B) to cause
such Release Property to be released from the Master Lease, (C) to terminate
the Master Lease with respect to such Release Property as of the date that such
Release Property is released from the Lien of the applicable Security
Instrument and related Loan Documents (Mortgage), (D) to amend the legal
description of the “Leased Property” (as defined in the Master Lease) to delete
the Release Property, and (E) make such other amendments consistent with the
release of the Release Property from the Leased Property.:


(a)               Mezzanine
Borrower delivers a written notice (a “Property Release Notice”) to Mezzanine
Lender of its desire to effect such Property Release no later than thirty (30)
days prior to the date of such desired Property Release, and setting forth the
Business Day (the “Release Date”) on which Mezzanine Borrower desires that
Mortgage Lender release its interest in such Release Property.


 


33
















 


(b)               Each
of the Mortgage Lender, Mezzanine Lender and each Junior Mezzanine Lender shall
have received all prepayment fees required to be paid to them under the Loan
Documents (Mortgage), Mezzanine Loan Documents, and Junior Mezzanine Loan
Documents, as applicable, and the Mezzanine Lender shall have received the full
Mezzanine Release Price and evidence that the Mortgage Lender has received the
full Mortgage Release Price and each Junior Mezzanine Lender has received its
full applicable Junior Mezzanine Release Price. 
Interest payable under the Mortgage Notes, Mezzanine Notes and Junior
Mezzanine Notes shall be calculated through the end of the Interest Period in
which such payment is made on the applicable principal amount (even if such
period extends beyond such Payment Date and calculated as if such payment had
not been made on such Payment Date (i.e. without a deduction for the portion of
the Principal Amount included in the Release Price)).


(c)               Mortgage
Borrower shall submit to Mortgage Lender (with a copy to Mezzanine Lender),
concurrently with the Property Release Notice (except that Mortgage Borrower
may deliver the release of Liens hereinafter described to Mortgage Lender and
Mezzanine Lender after delivery of the Property Release Notice so long as such
delivery is made prior to the tenth (10th ) Business Day preceding the
applicable Release Date), a release of Liens (and related Loan Documents
(Mortgage) for each applicable Release Property (for execution by Mortgage
Lender) in a form appropriate in the State and otherwise satisfactory to
Mortgage Lender in its reasonable discretion and all other documentation
Mezzanine Lender reasonably require to be delivered by Mortgage Borrower or
Mezzanine Borrower in connection with such Property Release (collectively, “Release
Instruments”) for each applicable Release Property together with an Officer’s
Certificate certifying that (i) the Release Instruments are, or will be when
delivered, in compliance with all Legal Requirements, (ii) the release to be
effected will not violate the terms of this Agreement, (iii) the release to be
effected will not impair or otherwise adversely affect the Liens, security
interests and other rights of Mortgage Lender under the Loan Documents
(Mortgage) not being released (or as to the Individual Properties subject to
the Mezzanine Loan Documents not being released) or the Mezzanine Lender’s Lien
on the Collateral; and (iv) the requirement described in paragraph (d) below is
satisfied in connection with such Property Release (together with calculations
and supporting documentation demonstrating the same in reasonable detail).


(d)               With
respect to any Property Release, after giving effect to such Property Release,
the LCR as of the Release Date for all of the Individual Properties then
remaining subject to the Liens of the Security Instruments shall not be less
than the greater of (A) the Closing Date LCR and (B) 65% of the LCR for the
Individual Properties subject to the Liens of the Security Instruments
immediately prior to the Release Date.


(e)               No
Default or Event of Default shall have occurred and then be continuing on the
date on which Mezzanine Borrower delivers the Property Release Notice and on
the Release Date.


(f)                The
Release Property is simultaneously transferred to a party other than Mezzanine
Borrower or any SPE Entity.


(g)               Mezzanine Borrower causes
Mortgage Borrower to execute and deliver such other instruments, certificates,
opinions of counsel and documentation as Mezzanine Lender and


 


34

















 


the Rating Agencies shall reasonably request in order to preserve,
confirm or secure the Liens and security granted to Mortgage Lender by the Loan
Documents (Mortgage), including any amendments, modifications or supplements to
any of the Loan Documents (Mortgage) and partial release endorsements to the
existing Title Policies, as applicable.


(h)               Mezzanine
Borrower shall pay (or cause Mortgage Borrower to pay) for any and all
reasonable out-of-pocket costs and expenses incurred in connection with any
proposed Property Release, including (with respect to Mezzanine Borrower)
Mezzanine Lender’s reasonable attorneys’ fees and disbursements and (with
respect to Mortgage Borrower) all title insurance premiums for any endorsements
to any existing Title Policies reasonably required by Mortgage Lender in
connection with such proposed release.


(i)                Prior
to the Release Date, Mezzanine Borrower shall deliver to Mezzanine Lender
evidence reasonably satisfactory to Mezzanine Lender that all amounts owing to
any parties in connection with the transaction relating to the proposed
Property Release have been paid in full, or will simultaneously be paid in full
on the Release Date or adequate reserves therefor are established by Mezzanine
Borrower (or, as applicable Mortgage Borrower) in cash with respect to
contingent or other liabilities that may arise out of such transaction and for
which Mortgage Borrower and Mezzanine Borrower are not adequately indemnified
or insured against as reasonably determined by Mezzanine Lender.


(j)                As
a condition precedent to a Release but not as a direct covenant of the
Mezzanine Borrower, on the Release Date, Mortgage Borrower and each Junior
Mezzanine Borrower shall have paid to Mortgage Lender and each Junior Mezzanine
Lender, as applicable, the Mortgage Release Price and the applicable Junior
Mezzanine Release Price and any other sums required to be paid under Section
2.3.4 of the Loan Agreement (Mortgage) and each Junior Mezzanine Loan
Agreement.  This Section 2.3.4(j)
shall not create a debtor-creditor relationship between Mezzanine Borrower and
any Junior Mezzanine Lender.


(k)               In
the event Mezzanine Lender has approved in writing a right of first refusal or
purchase option with respect to the subject Release Property, the transfer of
the Release Property in connection with the Property Release shall comply in
all respects with the terms and conditions of any such rights of first refusal
or purchase options, as such terms and conditions have been approved by
Mezzanine Lender.


2.3.5            Substitution
of Properties.


(a)               Generally.  Mezzanine Borrower may cause Mortgage
Borrower, subject to the conditions in this Section 2.3.5, substitute
one or more properties (each a “Substitute Property”) for an existing
Individual Property (each a “Replaced Property”) (each release and
substitution a “Substitution”); provided, however, such right of
Substitution shall be limited to Individual Properties whose aggregate
Allocated Loan Amounts in respect of the Mortgage Loan as set forth in the Loan
Agreement (Mortgage) represent not greater than twenty percent (20%) of the
Loan Amount (as defined in the Loan Agreement (Mortgage)).  From and after the Substitution of a
Substitute Property in accordance herewith, such Substitute Property shall
thereafter be deemed a Property, and shall have the Allocated Loan Amount and
Combined Allocated Loan Amount applicable to the Replaced Property.  Concurrently with the completion of all steps


 


35

















 


necessary to effect a Substitution as provided in this Section 2.3.5,
Mezzanine Lender shall permit Mortgage Lender to release such Replaced Property
from the Lien of the applicable Security Instrument and related Loan Documents
(Mortgage) and convey the Replaced Property to a Person other than Mortgage
Borrower or another SPE Entity.  In the
event of a Substitution, the Mortgage Notes shall remain in full force and
effect, and the Lien of the applicable Security Instrument shall be spread to
encumber the Substitute Property (each a “Substitute Property Mortgage
Spreader Agreement”).


(b)               Certain
Requirements.  All Substitute
Properties shall comply with this Section 2.3.5.  To qualify as a Substitute Property, a
property must, as of the Substitution Date (in addition to the other criteria
set forth in this Section 2.3.5):


(i)            be
subject to the Master Lease;


(ii)           be
a property as to which Mortgage Borrower will hold insurable fee title or a
valid and subsisting leasehold interest free and clear of any Lien or other
encumbrance except for Permitted Encumbrances (excluding those described in
clauses (b), (d), (e) and (i) of the definition of Permitted Encumbrances) and
exceptions not materially impairing the value of such property, and have an
appraised value at least equal to the Appraised Value of the Replaced Property;


(iii)          be
free and clear, as evidenced by the environmental report referred to in
paragraph (c) below, of Hazardous Substances requiring  remediation or other action under any
Environmental Law the presence of which violates Environmental Laws (with the
exception of any immaterial remediation, as determined by Mezzanine Lender in
its sole discretion) and be in material compliance with all Environmental Laws;


(iv)          be
of a similar use and quality to the other Individual Properties (as reasonably
determined by Mezzanine Lender applying the standards of a prudent commercial
mezzanine loan lender);


(v)           be
in good repair and condition, as evidenced by the engineering report referred
to in clause (c) below;


(vi)          if
the Substitute Property is ground leased (such that Mortgage Borrower will hold
a leasehold interest rather than fee title), the ground lease shall be
financeable and otherwise in form and substance reasonably acceptable to
Mezzanine Lender, including, without limitation, rent payment and other
material financial obligations and providing for the recordation of a
memorandum of lease in the applicable real property records; and


(vii)         be
in compliance, in all material respects, with Legal Requirements and Insurance Requirements,
as evidenced by diligence items required to be provided in paragraph (c) below.


(c)               Diligence Process. The
Mezzanine Borrower shall submit to the Mezzanine Lender written notice (a “Substitution
Notice”) setting forth the Business Day no earlier than thirty (30) days
after the date of such Substitution Notice on which Mezzanine Borrower desires
to effect such Substitution (the “Substitution Date”), together with the
following materials (the


 


36

















 


“Substitution Due Diligence Package”)
relating to the proposed Substitute Property: (i) a description of the
proposed Substitute Property sufficient to obtain a Title Policy for such
proposed Substitute Property, (ii) three years of historical cash flow operating
statements, if available, (iii) true, complete and correct copies of any
Material Subleases affecting the proposed Substitute Property, (iv) a map and
site plan, including an existing Survey of the proposed Substitute Property
dated not more than six (6) months prior to such submission, (v) a copy of
the proposed amendment to the Master Lease and Master Lease SNDA and the
License and Reservation Service Agreement to include the proposed Substitute
Property, (vi) copies of all permits, licenses and approvals required with
respect to operation of the proposed Substitute Property, (vii) a Phase I environmental assessment
report, conducted under the ASTM International Standard
Practice for Environmental Site Assessments: Phase I Environmental Site Assessment
Process E1527-05, issued by a recognized environmental consultant,
(viii) copies of all condominium documents and ground leases, if any, (ix)
an engineer’s inspection report, (x) ground lessor, fee mortgagee, condominium
association and tenant (under Material Subleases) estoppel certificates and
tenant (under Material Subleases) Non-Disturbance Agreements, in each case in
the forms attached hereto and including such variations that are either
immaterial or are reasonably acceptable to Mezzanine Lender, as applicable,
together with any consents required with respect to the Contemplated
Transactions, (xi) a commitment from the Title Company with respect to the
issuance of a Title Policy, together with copies of all exceptions referenced
therein and a copy of the recorded memorandum of ground lease if such
Substitute Property will be a Ground Lease Property, (xii) upon the
reasonable request of the Mezzanine Lender, a PML study, (xiii) a FIRREA
appraisal conducted by Cushman & Wakefield (or another Independent
appraiser reasonably acceptable to Mezzanine Lender), (xiv) if such
proposed Substitute Property is not then owned by the Mortgage Borrower or its
Affiliate, a duly executed copy of the purchase and sale agreement for such
proposed Substitute Property and copies of all proposed documentation
transferring title to the proposed Substitute Property to Mortgage Borrower
including any interim transfers to its Affiliates, (xv) a copy of the
flood certification, (xvi) either (A) a letter or other evidence with respect
to the proposed Substitute Property from the appropriate Governmental
Authorities concerning compliance with applicable zoning and building laws, (B)
an ALTA 3.1 zoning endorsement for the Title Policy or (C) a zoning report
prepared by PZR indicating that the proposed Substitute Property is in material
compliance with applicable zoning and building laws, (xvii) a copy of the
valid permanent certificate of occupancy (if required by applicable law),
(xviii) calculations of the LTV Ratio and LCR both before and after the
proposed Substitution, (xix) evidence reasonably satisfactory to Mezzanine
Lender and its insurance consultant of insurance policies covering the proposed
Substitute Property satisfying all of the requirements of Article VI, and (xx) UCC,
bankruptcy, state and federal tax lien, litigation and judgment searches
conducted by a search firm reasonably acceptable to the Mezzanine Lender with
respect to the title holder of such proposed Substitute Property on the date
immediately prior to acquisition thereof by Mortgage Borrower, in each of the
locations reasonably specified by the Mezzanine Lender and not revealing any
Liens other than Permitted Encumbrances. 
In addition, Mezzanine Borrower shall permit the Mezzanine Lender at all
reasonable times and upon reasonable prior notice to make an inspection of such
proposed Substitute Property.  Mezzanine
Lender shall confirm Mezzanine Borrower’s compliance with this paragraph (c)
with respect to each proposed Substitute Property within thirty (30) days after
Mezzanine Lender’s receipt of the complete applicable Substitution Due
Diligence Package and Mezzanine Lender’s failure to so confirm or deny
Mezzanine


 


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Borrower’s compliance within such thirty (30) day period shall be
deemed compliance by Mezzanine Borrower with this paragraph (c), provided that
this sentence appears in bold capital letters in the Substitution Notice
accompanying the Substitution Due Diligence Package.


(d)               Additional
Conditions Precedent.  In addition to
the conditions in paragraphs (a), (b) and (c) above, each Substitution shall be
subject to the satisfaction of the following conditions precedent:


(i)            Rating
Agency Confirmation; Rating Agency Requirements.  For any Substitution made after a
Securitization, Mortgage Lender’s receipt (with a copy to Mezzanine Lender) of
a Rating Agency Confirmation and Mortgage Borrower’s satisfaction of such other
conditions as may be required by the Rating Agencies, including any such
conditions as may relate to any applicable Ground Lease;


(ii)           Release
Conditions.  Mezzanine Borrower’s
compliance with the condition set forth in Section 2.3.4(c), (e), (f), (g)
and (k) with respect to the release of the Replaced Property;


(iii)          Financial
and Other Tests.


(1)           LCR.  After giving effect to such Substitution, as
of the Substitution Date the LCR for all of the Individual Properties then
remaining subject to the Liens of the Security Instruments (i.e., including the
Substitute Property and excluding the Replaced Property), shall not be less
than the greater of (A) the Closing Date LCR and (B) the LCR for the Individual
Properties subject to the Liens of the Security Instruments immediately prior
to the Substitution Date;


(2)           LTV Ratio.  After giving effect to such Substitution, as
of the Substitution Date the LTV Ratio for all of the Properties then remaining
subject to the Liens of the Security Instruments (i.e. including the Substitute
Property and excluding the Replaced Property), shall not be more than the
Closing Date LTV.


(3)           EBITDAR.  The earnings from hotel and casino operations at the Property before interest
expense/income, taxes, depreciation and amortization, any rental expense on
real property (other than ground rent), distribution expense, direct and
allocated corporate overhead expense, regional office allocation, royalty
charges from affiliates and restructuring expense plus any non-cash
charges/less any non-cash income, including but not limited to losses on sales
of assets and non cash compensation expense (as evidenced by the financial
statements and information provided to Mezzanine Lender by Mezzanine Borrower
pursuant to clause (c) of this Section 2.3.5), during each of the
three 12-month periods prior to the Substitution Date shall not have materially
declined or during the prior 12-month period, evidence a material downward
trend (as reasonably determined by Mezzanine Lender, applying the
standards of a prudent commercial mezzanine loan lender) over such three (3)
year period.


(4)           Geographic Diversity.  The proposed Substitution does not cause (A)
more than two Individual Properties to be within a three (3) mile radius of
each other or (B) any two Individual Properties to be within a three (3) mile
radius of each other having aggregate


 


38

















 


Combined
Allocated Loan Amounts in excess of forty percent (40%) of the Combined
Principal Amount.


(iv)          Lender’s
Costs and Expenses.  Mezzanine
Borrower shall pay for any and all reasonable out-of-pocket costs and expenses
of Mezzanine Lender incurred in connection with any proposed Substitution,
including Mezzanine Lender’s reasonable attorneys’ fees and disbursements.  Mortgage Borrower shall pay for any and all
reasonable out-of-pocket costs and expenses of Mortgage Lender incurred in
connection with any proposed Substitution, including all title insurance
premiums for any endorsements to any existing Title Policies reasonably
required by Mortgage Lender in connection with such proposed Substitution, title
premiums, mortgage recording taxes, transfer taxes and recording fees;


(v)           Transaction
Costs.  Mezzanine Borrower shall
deliver to Mezzanine Lender evidence reasonably satisfactory to Mezzanine
Lender that all amounts owing to any parties in connection with the
transactions relating to the proposed Substitution have been paid in full, or
will simultaneously be paid in full on the Substitution Date or adequate
reserves therefor are established by Mezzanine Borrower (or Mortgage Borrower)
in cash with respect to contingent or other liabilities that may arise out of
such transaction and for which Mezzanine Borrower (or Mortgage Borrower) is not
adequately indemnified or insured against as reasonably determined by Mezzanine
Lender;


(vi)          Opinions
of Counsel.  Delivery to Mezzanine
Lender of the following favorable original Opinions of Counsel or updates
thereto in connection with the Substitute Property similar in form and
substance to the opinions which were delivered on the Closing Date in
connection with the Replaced Property, reasonably satisfactory to Mezzanine
Lender and addressed to the Mezzanine Lender on behalf of the holders of the
Mezzanine Notes: (a) if requested by the Rating Agencies, a True Lease Opinion
and a Non-Consolidation Opinion, (b) a local counsel enforceability opinion as
to matters governed by local law, (c) an enforceability opinion under New York
law, (d) an opinion to the effect that each of Mortgage Borrower, Master Lessee
and Guarantor is duly organized and validly existing under the laws of the
state of its formation and is qualified or licensed to do business in each
jurisdiction where the nature of its business in which it is engaged makes such
qualification or licensing necessary and (e) an opinion to the effect that the
Loan Documents (Mortgage) or amendments thereto have been duly authorized,
executed and delivered by Mortgage Borrower, Master Lessee and Guarantor and
are the valid and binding obligations and agreements of such party, enforceable
in accordance with their terms, in each case with the same exceptions as made
on Closing Date;


(vii)         No
Event of Default.  No Event of
Default shall have occurred and then be continuing on the date on which
Mezzanine Borrower delivers the Substitution Notice and on the Substitution Date;


(viii)        Accuracy of Representations and
Warranties.  The representations and
warranties set forth in the Mezzanine Loan Documents shall be true and correct
as to the Substitute Property on the Substitution Date in all material respects
(subject to any additional items set forth on updated exhibits and schedules
hereto provided by Mezzanine Borrower which do not violate the provisions of
the Mezzanine Loan Documents and are not reasonably likely to have a Material
Adverse Effect with respect to such Substitute Property);


 


39

















 


(ix)           Officer’s
Certificate.  Delivery to Mezzanine
Lender of an Officer’s Certificate certifying to the truth and accuracy of the
statements in clauses (vii) and (viii);


(x)            Non-Disqualification
Opinion.  Delivery of a
Non-Disqualification Opinion;


(xi)           Organizational
Documents.  If required by the Rating
Agencies, delivery of original updated organizational documents of each of the
Mortgage Borrower, Mezzanine Borrower, Junior Mezzanine Borrowers, Master
Lessee, Guarantors and Sponsor, including, but not limited to a current
certificate of good standing.  If the
Substitute Property is located in a State not previously covered by the
Security Instruments, evidence of Mortgage Borrower’s and Master Lessee’s
qualification to do business in the State where the Substitute Property is
located.  Delivery of appropriate
evidence of the authorization of the Mortgage Borrower, Master Lessee and
Guarantors approving the execution, delivery and performance of the Mortgage
Loan Documents or amendments thereto being executed and delivered in connection
with the Substitution, duly adopted by the Mortgage Borrower, Master Lessee and
Guarantors as applicable and accompanied by an Officer’s Certificate stating
that such authorizations have not been altered or repealed and are in full
force and effect, and certifying as to the names of the Persons authorized to
sign on behalf of such parties, together with the true signatures of each such
Person;


(xii)          Insurance
Certificates.  Delivery of the
insurance certificates with respect to the Substitute Property required under
the Loan Agreement (Mortgage); and


(xiii)         Loan
Documents.  Delivery of originals of
the following Mortgage Loan Documents or amendments thereto:


(1)           a Substitute Property Mortgage
Spreader Agreement, duly executed and acknowledged by Mortgage Borrower;


(2)           a first priority Assignment of Master Lease, Subleases, Rents and
Security Deposits, from Borrower, as assignor, to Mortgage Lender, as assignee, assigning to Mortgage
Lender all of Mortgage Borrower’s interest in and to the Master
Lease, the Subleases, Rents and Security Deposits as security for the Mortgage
Loan with respect to the
Substitute Property, or a counterpart original of the Assignment of Leases,
modified as necessary, duly executed and acknowledged by Mortgage Borrower (the
“Assignment of Leases Counterpart”);


(3)           UCC financing statements (Form UCC-1)
(or other forms required in any jurisdiction), covering all fixtures, Building
Equipment and other personal property (other than the Excluded Personal
Property), and all proceeds thereof, naming Mortgage Borrower as debtor and
Mortgage Lender as secured party (collectively, the “UCC Financing
Statements”; together with the Assignment of Leases Counterpart and the
Substitute Property Mortgage Spreader Agreement, the “Security Documents”);


(4)           the Title Policy or endorsements to the Title Policies, as
applicable, issued by the Title Company in an amount equal to 125% of the
Allocated Loan Amount for the Substitute Property (or, if the Title Company
issues a tie-in endorsement between the Title Policy for the Substitute
Property and the Title Policies for the other Individual Properties in


 


40

















 


form
and substance reasonably acceptable to Mezzanine Lender, in an amount equal to
100% of the Allocated Loan Amount for the Substitute Property), reflecting the
addition of each such Substitute Property and containing such affirmative
coverage similar in form and substance to the affirmative coverage provided in
connection with the Replaced Property, insuring that the Substitute Property
Mortgage Spreader Agreement creates a valid first lien on Borrower’s fee or
leasehold title in the Substitute Property subject to the Permitted
Encumbrances, and insuring the perfected first priority interest of Mortgage
Lender pursuant to the Substitute Property Mortgage Spreader Agreement,
together with any title insurance premiums, fees or charges due in connection
therewith, and the Mezzanine Borrower shall cause Mortgage Borrower to
cooperate with the Mortgage Lender and execute such further instruments and
documents and perform such further acts as the Mezzanine Lender or the Title
Company shall reasonably request to carry out the creation and perfection of
the liens and security interests contemplated by the Security Documents and the
release, discharge and removal of any encumbrances required for the issuance of
the Title Policy;


(5)           an amendment to the Master Lease and
to the Master Lease SNDA incorporating the Substitute Property and eliminating
the Replaced Property;


(6)           updates to any Exhibits and Schedules
to the Mortgage Loan Documents as applicable without disclosing matters
inconsistent with the requirements of this Section 2.3.5; and


(7)           a Confirmation of Guaranty in
customary form duly executed and delivered by Guarantors, adding the Substitute
Property to and affirming their obligations under the Recourse Guaranty.


(xiv)        Junior
Mezzanine Loan Deliveries.  The Junior
Mezzanine Lenders shall have received all deliveries required under Section
2.3.5 of the Junior Mezzanine Loan Agreements, including, but not limited
to, insurance certificates naming Junior Mezzanine Lenders with respect to the
Substitute Property, a copy of the owner’s title insurance policy and related
mezzanine endorsement (if available in such State) and copies of the
Substitution Due Diligence Package and all final deliveries to Mortgage Lender
under this Section 2.3.5.


(xv)         Additional
Deliveries.  Mezzanine Lender shall
have received such other deliveries reasonably requested by Mezzanine Lender,
provided such requests are customary and are consistent with the deliveries
required with respect to the Individual Properties on the Closing Date.


2.3.6            Provisions
Relating to Individual Properties That Go Dark.


(a)               Mezzanine
Borrower shall not permit Mortgage Borrower to allow, permit or suffer any
Individual Property to Go Dark.  If an
Individual Property shall Go Dark, it shall be an Event of Default hereunder
unless, within 30 days of such Individual Property Going Dark, Mezzanine
Borrower shall cause Mortgage Borrower to:


(i)             cause such Individual Property to
reopen for business to the public; or


 


41

















 


(ii)          
cause such Individual Property to be released from the lien of the applicable
Security Instrument in accordance with Section 2.3.4 hereof; or


(iii)          provide
a Substitute Property, to be subject to the lien of the Security Instrument, in
accordance with Section 2.3.5 hereof to the extent permitted under such
Section, to replace such Individual Property.


(b)           If any Individual Property
shall Go Dark, Mezzanine Borrower will cause Mortgage Borrower to promptly send
written notice thereof to Mezzanine Lender. 
If an Individual Property shall Go Dark, the Master Lessee shall
nonetheless be required to make into the Holding Account without reduction the
full Master Lease Rent payment as and when required under the Master Lease and
the Master Lease Rent Payment Direction Letter with respect to all Individual
Properties.


2.3.7        Excess Account Collateral.  Upon the occurrence of any Property Release,
provided no 90% Cash Sweep Period
exists and no Event of Default has occurred and is continuing, Mezzanine Lender
shall promptly perform an analysis of the Account Collateral (First Mezzanine)
in order to reasonably determine the amount of the Account Collateral (First
Mezzanine) (including, but not limited to, Proceeds) attributable to the
Release Property (the “Excess Account Collateral”), and shall promptly
instruct Cash Management Bank to return to Mezzanine Borrower the Excess
Account Collateral, if any, except to the extent that Mezzanine Lender
reasonably determines that a shortfall exists in any Sub-Account with respect
to the Property other than the Release Property.


2.3.8        Reserve Requirements.  Upon the occurrence of a Property Release,
provided no Event of Default has occurred and is continuing, Mezzanine Borrower
shall cause Mortgage Borrower to promptly prepare a revised estimate of
Impositions and Other Charges, insurance premiums, Ground Rent and Master Lease
Rent with respect to the remaining Properties in accordance with Sections
16.1, 16.2 and 16.3, as applicable of the Loan Agreement
(Mortgage), and shall promptly provide Mezzanine Lender and Cash Management
Bank (Mortgage) with notice of the revised Monthly Tax Reserve Amount, Monthly
Insurance Reserve Amount and Monthly Ground Rent Amount.


2.3.9        Release of Unimproved Parcels.  . 
Subject to satisfaction of each of the conditions set forth below with
respect to any Unimproved Parcel, at the request of Mezzanine Borrower,
Mezzanine Lender shall consent to the release such Unimproved Parcel from the
Lien of the applicable Security Instrument and related Loan Documents
(Mortgage) and concurrent conveyance of such Unimproved Parcel to a Person
other than Mortgage Borrower or another SPE Entity, without the payment of any
Release Price:


(a)               Mezzanine Borrower delivers a
written notice to Mezzanine Lender (i) identifying the Unimproved Parcel to be
released and the date on which Mezzanine Borrower desires the release to be
effective, which date shall not be less than thirty (30) days from the date of
Mezzanine Borrower’s delivery of notice, and (ii) specifying the intended use
of the Unimproved Parcel, which shall not be inconsistent with the use of the
portion of the related Individual Property that shall remain subject to the
Lien of the applicable Security Instrument. 
For the avoidance of doubt, the erecting, maintaining and operating of
residential apartment or


 


42

















 


condominium complexes on Unimproved Parcels after their release shall
not be deemed to be inconsistent with the use of the related Individual Property.


(b)               No
Noticed Default or Event of Default shall exist and be continuing on the date
Mezzanine Borrower delivers its notice to Lender or on the date on which the
release of the Unimproved Parcel is to become effective.


(c)               Each
of the Unimproved Parcel and the remainder of the related Individual Property
shall constitute separate tax lots and comply with all applicable Legal
Requirements, including all zoning and subdivision laws.


(d)               The
release of the Unimproved Parcel shall not impair, other than to a de minimis
extent, any access to or use of the remaining portion of the related Individual
Property.


(e)               Mezzanine
Borrower shall cause Mortgage Borrower to submit to Mortgage Lender (with a
copy to Mezzanine Lender), concurrently with its request for release, Release
Instruments for the Unimproved Parcel together with an Officer’s Certificate
certifying that (i) the Release Instruments are in compliance with all Legal
Requirements, (ii) the release and conveyance to be effected will not violate
the terms of this Agreement, (iii) the release to be effected will not impair
or otherwise adversely affect the Liens, security interests and other rights of
Mortgage Lender under the Loan Documents (Mortgage) not being released (or as
to the Property subject to the Loan Documents (Mortgage) not being released)
nor adversely affect Mezzanine Lender’s Lien on the Collateral and (iv) the
requirement described in the other clauses of this Section 2.3.9 have been
satisfied in connection with the release and conveyance of the Unimproved
Parcel (together with calculations and supporting documentation demonstrating
the same in reasonable detail).


(f)                On
the date of release of the Unimproved Parcel, the Unimproved Parcel is
simultaneously transferred to a party other than Mortgage Borrower or any SPE
Entity.


(g)               Mortgage
Borrower executes and delivers such other instruments, certificates, opinions
of counsel and documentation as Mezzanine Lender and the Rating Agencies shall
reasonably request in order to preserve, confirm or secure the Liens and
security granted to Mortgage Lender by the Loan Documents (Mortgage), including
any amendments, modifications or supplements to any of the Loan Documents
(Mortgage) and partial release endorsements to the existing Title Policies.


(h)               Mezzanine Borrower shall pay for
any and all reasonable out-of-pocket costs and expenses incurred by Mezzanine
Lender, and cause Mortgage Borrower to pay for any and all reasonable
out-of-pocket costs and expenses incurred by Mortgage Lender in connection with
any proposed release and conveyance of an Unimproved Parcel, including, with
respect to Mezzanine Borrower, Mezzanine Lender’s reasonable attorneys’ fees
and disbursements and with respect to Mortgage Borrower, all title insurance
premiums for any endorsements to any existing Title Policies reasonably
required by Mezzanine Lender in connection with such proposed release.


 


43

















 


(i)                Mezzanine
Borrower shall cause a Non-Disqualification Opinion with respect to such
release to be delivered to Mortgage Lender (with a copy to Mezzanine Lender)
and the Rating Agencies.


2.4           Regulatory Change; Taxes.


2.4.1        Increased Costs.  If
as a result of any Regulatory Change or compliance of Mezzanine Lender
therewith, the basis of taxation of payments to Mezzanine Lender or any company
Controlling Mezzanine Lender of the principal of or interest on the Loan is
changed or Mezzanine Lender or the company Controlling Mezzanine Lender shall
be subject to (i) any tax, duty, charge or withholding of any kind with respect
to this Agreement (excluding federal taxation of the overall net income of
Mezzanine Lender or the company Controlling Mezzanine Lender); or (ii) any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities, of
Mezzanine Lender or any company Controlling Mezzanine Lender is imposed,
modified or deemed applicable; or (iii) any other condition affecting loans to
Mezzanine Borrowers subject to LIBOR-based interest rates is imposed on
Mezzanine Lender or any company Controlling Mezzanine Lender and Mezzanine
Lender determines that, by reason thereof, the cost to Mezzanine Lender or any
company Controlling Mezzanine Lender of making, maintaining or extending the
Loan to Mezzanine Borrower is increased, or any amount receivable by Mezzanine
Lender or any company Controlling Mezzanine Lender hereunder in respect of any
portion of the Loan to Mezzanine Borrower is reduced, in each case by an amount
deemed by Mezzanine Lender in good faith to be material (such increases in cost
and reductions in amounts receivable being herein called “Increased Costs”),
then Mezzanine Lender shall provide notice thereof to Mezzanine Borrower and
Mezzanine Borrower agrees that it will pay to Mezzanine Lender upon Mezzanine
Lender’s written request such additional amount or amounts as will compensate
Mezzanine Lender or any company Controlling Mezzanine Lender for such Increased
Costs to the extent Mezzanine Lender determines that such Increased Costs are
allocable to the Loan.  If Mezzanine
Lender requests compensation under this Section 2.4.1, Mezzanine
Borrower may, by notice to Mezzanine Lender, require that Mezzanine Lender
furnish to Mezzanine Borrower a statement setting forth the basis for
requesting such compensation and the method for determining the amount
thereof.  In the event that Mezzanine
Borrower is required to pay any Increased Costs in accordance with the terms
hereof, Mezzanine Borrower shall have the right to prepay the Principal Amount
(together with all accrued but unpaid interest thereon calculated through the
end of the then current Interest Period) without the imposition of any
Prepayment Fee.  Mezzanine Borrower shall
have up to ninety (90) days following the later to occur of (1) Mezzanine
Lender furnishing a statement setting forth the basis for requesting
compensation for Increased Costs if requested by Mezzanine Borrower and (2)
receipt from Mezzanine Lender of notice of the Increased Costs to make such
prepayment, provided until such prepayment is paid in full (including all
accrued but unpaid interest thereon calculated through the end of the then
current Interest Period), Mezzanine Borrower shall pay to Mezzanine Lender upon
Mezzanine Lender’s written request such additional amount or amounts as will
compensate Mezzanine Lender or any company Controlling Mezzanine Lender for
Increased Costs incurred in the interim to the extent Mezzanine Lender
determines that such Increased Costs are allocable to the Loan.


 


44

















 


2.4.2        Special Taxes.  Mezzanine Borrower shall make
all payments hereunder free and clear of and without deduction for Special
Taxes.  If Mezzanine Borrower shall be
required by law to deduct any Special Taxes from or in respect of any sum
payable hereunder or under any other Mezzanine Loan Document to Mezzanine
Lender, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.4.2) Mezzanine Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Mezzanine Borrower shall make such deductions, and
(iii) Mezzanine Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law. Notwithstanding
anything to the contrary contained in this Section 2.4, Mezzanine
Borrower shall not be liable for any amounts as a result of withholding for
Special Taxes or additional costs incurred as a result of the assignment of all
or any portion of the Loan by Mezzanine Lender.


2.4.3        Other Taxes.  In addition, Mezzanine Borrower agrees to pay
(or cause Mortgage Borrower to pay) any present or future stamp or documentary
taxes or other excise or property taxes, charges, or similar levies which arise
from any payment made hereunder, or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the other
Mezzanine Loan Documents, or the Loan (hereinafter referred to as “Other
Taxes”).


 


2.4.4        Indemnity. Mezzanine Borrower
shall indemnify Mezzanine Lender for the full amount of Special Taxes (unless
Mezzanine Borrower shall not be liable therefore as provided in Section
2.4.2) and Other Taxes (including any Special Taxes or Other Taxes imposed
by any Governmental Authority on amounts payable under this Section 2.4.4)
paid by Mezzanine Lender and any liability (including penalties, interest, and
reasonable out-of-pocket expenses) arising therefrom or with respect thereto,
whether or not such Special Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days after the
date Mezzanine Lender makes written demand therefor.


 


2.4.5        Change of Office. To the extent
that changing the jurisdiction of Mezzanine Lender’s applicable office would
have the effect of minimizing Special Taxes, Other Taxes or Increased Costs,
Mezzanine Lender shall use reasonable efforts to make such a change, provided
that same would not otherwise be disadvantageous to Mezzanine Lender.


 


2.4.6        Survival. Without prejudice to
the survival of any other agreement of Mezzanine Borrower hereunder, the
agreements and obligations of Mezzanine Borrower contained in this Section
2.4 shall survive the payment in full of principal and interest hereunder,
and the termination of this Agreement.


 


45

















 


2.5           Conditions Precedent to Closing.
The obligation of Mezzanine Lender to make the Loan hereunder is subject to the
fulfillment by, or on behalf of, Mezzanine Borrower or waiver by Mezzanine
Lender of the following conditions precedent no later than the Closing Date;
provided, however, that unless a condition precedent shall expressly survive
the Closing Date pursuant to a separate agreement, by funding the Loan and
filing UCC financing statements relating to the Pledge, Mezzanine Lender shall
be deemed to have waived any such conditions not theretofore fulfilled or
satisfied; and provided that the funding of the Loan shall be further subject
to the terms and conditions set forth in the Funding Letter Agreement:


 


2.5.1        Representations and Warranties;
Compliance with Conditions. The representations and warranties of Mezzanine
Borrower contained in this Agreement and the other Mezzanine Loan Documents,
and the Merger Representations and Warranties, shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if made
on and as of such date, and no Default, Event of Default, Mortgage Default or
Mortgage Event of Default shall have occurred and be continuing; and Mezzanine
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Mezzanine Loan
Document on its part to be observed or performed. Notwithstanding the
foregoing, (i) the breach or failure of a Property Specific Representation
shall not constitute the failure to satisfy the condition precedent set forth
in this Section 2.5.1 unless such breach or failure would result in a “Material
Adverse Effect on the Company” (as such phrase is defined in the Merger
Agreement), (ii) in the event of the breach or failure of a Property Specific
Representation that results in a Portfolio MAE, Mezzanine Lender may require
Mezzanine Borrower to effect a Mezzanine Lender-Initiated Substitution.


 


2.5.2        Delivery of Mezzanine Loan Documents;
Title Policies; Reports; Leases.


 


(a)               Mezzanine Loan Documents.  Mezzanine Lender shall have received an
original copy of this Agreement, the Mezzanine Notes, the Pledge, and all of
the other Mezzanine Loan Documents, in each case, duly executed (and to the
extent required, acknowledged) and delivered on behalf of Mezzanine Borrower
and any other parties thereto.


(b)               Certificates; Perfection of
Lien.  Mezzanine Lender shall have
received originals of the Certificates together with a Member Power endorsed in
blank.  The Pledge and the other
Mezzanine Loan Documents shall constitute valid, perfected, and enforceable first priority Liens upon the
Collateral, in favor of Mezzanine Lender, subject only to the Permitted
Encumbrances (First Mezzanine).


(c)               Interest
Rate Cap Agreement (First Mezzanine). 
Mezzanine Lender shall have received the original Interest Rate Cap
Agreement (First Mezzanine) which shall be in form and substance satisfactory
to Mezzanine Lender and a counterpart of the Acknowledgment executed and
delivered by the Counterparty;


(d)               Mezzanine Account Agreement.  Mezzanine Lender shall have received the original of the
Mezzanine Account Agreement executed by each of Cash Management Bank and
Mezzanine Borrower;


 


46

















 


(e)               Intercreditor Agreements.  Mezzanine Lender shall have received
the Intercreditor Agreement 


(f)                UCC Financing Statements.  Mezzanine Lender shall have received evidence
that the UCC financing statements relating to the Pledge and this Agreement
have been delivered to the Mezzanine Lender for filing in the applicable
jurisdictions.


(g)               Title
Insurance.


(i)            Mezzanine
Lender shall have received a copy of the Title Policies or a marked-up and
signed commitment having the force and effect of a title policy, marked “paid”
by an authorized representatives of the Title Company) issued by the Title
Company with respect to the Loan (Mortgage) and dated as of the Closing Date,
with a mezzanine loan endorsement in favor of Mezzanine Lender, it successors
and assigns, dated as of the Closing Date and reinsurance and direct access
agreements in form and substance acceptable to Mezzanine Lender. Mezzanine
Lender shall also have received evidence that all premiums in respect of the
Title Policies have been paid; and


(ii)           Mezzanine
Lender shall have received evidence of
Mortgage Borrower’s ownership of the Property in the form of owner’s title
policies insuring Mortgage Borrower’s title to the Property, which title
policies shall be in form and substance, and issued by a title insurance
company (with appropriate reinsurance or coinsurance), reasonably satisfactory
to Mortgage Lender.  Mezzanine Lender
shall also have received a letter from Mortgage Borrower to the Mezzanine
Lender and countersigned by the Title Companies, directing the Title Company to
make certain loss payments under certain of Mortgage Borrower’s owner’s title
insurance policies to Mezzanine Lender as more particularly set forth therein.


(iii)          Mezzanine
Lender shall have received a “UCC 9” title policy in favor of Mezzanine Lender,
its successors and assigns, dated as of the Closing Date with such mezzanine
endorsements in favor of Lender as Mezzanine Lender reasonably requires, in
form and substance acceptable to Mezzanine Lender.  Mezzanine Lender also shall have received
evidence that all premiums in respect of the “UCC Plus” title policy have been
paid.


(h)               Survey.  Mezzanine Lender shall have received a
current Survey for the Property, containing the survey certification required
by the Loan Agreement (Mortgage);


(i)                Insurance.  Mezzanine Lender shall have received valid
certificates of insurance for the policies of insurance required by the Loan
Agreement (Mortgage) naming Mezzanine Lender as an additional insured (as
applicable) and containing a cross liability/severability endorsement,
satisfactory to Mezzanine Lender in its sole discretion, and evidence of the
payment of all insurance premiums currently due and payable for the existing
policy period;


(j)                Environmental
Reports.  Mezzanine Lender shall have
received an Environmental Report in respect of the Property from a firm, and in
form and substance, reasonably satisfactory to Mezzanine Lender;


 


47

















 


(k)               Encumbrances.  Mezzanine Borrower shall have taken or caused
to be taken such actions in such a manner so that Mezzanine Lender has a valid
and perfected first Lien as of the Closing Date on the Collateral.


(l)                Loan Documents (Mortgage).  Mezzanine Lender shall have received true and
correct copies of all Loan Documents (Mortgage), each of which shall be reasonably
satisfactory to Mezzanine Lender.


(m)              Pledgor Acknowledgments.  Mezzanine Lender shall have received an
original of the Acknowledgment in the form of Exhibit D executed by each of
Mortgage Borrower and Mezzanine Borrower and dated as of the Closing Date, and
Mezzanine Lender shall have received satisfactory evidence thereof.


2.5.3        Delivery of Organizational Documents.
On or before the Closing Date, Mezzanine Borrower shall deliver, or cause to be
delivered, to Mezzanine Lender copies, certified by an Officer’s Certificate,
of all organizational documentation related to Mezzanine Borrower, Sponsor,
each SPE Entity, each Guarantor, Master Lessee Mortgage Borrower and the Junior
Mezzanine Borrowers as have been requested by Mezzanine Lender and/or the formation,
structure, existence, good standing and/or qualification to do business of
Mezzanine Borrower, Sponsor, each SPE Entity, each Guarantor, Master Lessee,
Mortgage Borrower and the Junior Mezzanine Borrowers as Mezzanine Lender may
request in its sole discretion, including, without limitation, good standing
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates as may be requested by Mezzanine Lender. Each of the
organizational documents of any SPE Entity shall contain single purpose entity
provisions reasonably approved by Mezzanine Lender prior to the date hereof.


 


2.5.4        Counsel Opinions.


 


(a)               Mezzanine Lender shall have
received or Mezzanine Borrower shall have delivered into escrow (for release to
Mezzanine Lender concurrently with the delivery of the Security Instruments to
the Title Company for recording) a non-consolidation opinion in a form
reasonably satisfactory to the Mezzanine Lender (the “Non-Consolidation
Opinion”).


 


(b)               Mezzanine Lender shall have
received or Mezzanine Borrower shall have delivered into escrow (for release to
Lender concurrently with the delivery of the Pledge to the Title Company for
recording) a true lease opinion with respect to the Master Lease in form and
substance reasonably satisfactory to the Mezzanine Lender (the “True Lease
Opinion”).


 


(c)               Mezzanine Lender shall have
received or Mezzanine Borrower shall have delivered into escrow (for release to
Mezzanine Lender concurrently with the delivery of the Pledge to the Title
Company for recording) a true sale opinion with respect to the Transfer of the
entities owning the Property to Mortgage Borrower in form and substance
reasonably satisfactory to the Lender (the “True Sale Opinion”).


(d)               Mezzanine
Lender shall have received or Mezzanine Borrower shall have delivered into
escrow (for release to Mezzanine Lender concurrently with the delivery of the
Pledge to the Title Company for recording) a non-contravention opinion with
respect to the


 


48

















 


Transfer of the entities
owning the Property to Mortgage Borrower in form and substance reasonably
satisfactory to the Lender (the “Non-Contravention Opinion”).


(e)           [Reserved]


(f)            Mezzanine Lender shall have received
or Mezzanine Borrower shall have delivered into escrow (for release to
Mezzanine Lender concurrently with the delivery of the Pledge to the Title
Company) (i) the Opinion of Counsel in such form and substance reasonably satisfactory
to the Mezzanine Lender; and (ii) a copy of the “Opinion of Counsel” delivered
to Mortgage Lender pursuant to the Loan Agreement (Mortgage).


 


(g)           Mezzanine Lender shall have received
from Counterparty the Counterparty Opinion in such form approved by the
Mezzanine Lender.


2.5.5        Consummation of the Merger. Mezzanine
Borrower shall have delivered to Mezzanine Lender a true, correct and complete
copy of the Merger Agreement. The merger transactions contemplated by the
Merger Agreement shall have been consummated in accordance with the Merger
Agreement, and all conditions precedent to such consummation, as set forth in
the Merger Agreement, shall, as of the consummation of the merger transactions,
have been satisfied (and would have been satisfied, without taking into
consideration the application of the last paragraph of Section 6.1 of the
Merger Agreement) or (subject to the following clause) waived, provided that no
item requiring the consent of the Parent (as defined in the Merger Agreement),
including pursuant to Section 6.1 of the Merger Agreement, that is material to
the interest of Mezzanine Lender shall have been given and no condition
material to the interests of the Mezzanine Lender shall have been waived
except, in ease such case, with the prior written consent of Mezzanine Lender
(which Mezzanine Lender shall not unreasonably withhold or delay).


2.5.6        Payments. All payments, deposits
or escrows, if any, required to be made or established by Mezzanine Borrower
under this Agreement, the Mezzanine Notes and the other Mezzanine Loan
Documents on or before the Closing Date shall have been paid.


2.5.7        Transaction Costs. Mezzanine
Borrower shall have paid or reimbursed Mezzanine Lender for all title insurance
premiums, recording and filing fees, costs of Environmental Reports, seismic
reports, zoning reports, searches, flood certifications, appraisals and other
reports, the reasonable fees and costs of Mezzanine Lender’s counsel and all
other reasonable third party out-of-pocket expenses incurred in connection with
the origination of the Loan; and Mezzanine Borrower shall have paid the fees
due to Mezzanine Lender pursuant to the Fee Letter.


2.5.8        Material Adverse Effect. Subject
to the qualification contained in the preamble to Article IV of the Merger
Agreement, other than clause (z) thereof, since December 31, 2005, there not
having occurred a “Material Adverse Effect on the Company” (as defined in the
Merger Agreement).


 


2.5.9        Control.
After giving effect to the consummation of the transactions contemplated by the
Merger Agreement, the Principal Investors, collectively, shall beneficially own
and control, with unrestricted voting power, at least seventy percent (70%) of
the voting


 


49

















 


equity of each Person constituting a Guarantor pursuant to arrangements
consistent with the arrangements previously disclosed to Mezzanine Lender.


2.5.10      Insolvency. None of Mezzanine
Borrower nor, Mortgage Borrower or any of their constituent Persons shall be
the subject of any bankruptcy, reorganization, or insolvency proceeding.


 


2.5.11      Master Lease and Individual Property
Subleases. Mezzanine Lender shall have received a copy of the duly executed
Master Lease and each Individual Property Sublease, each in form consistent
with the forms attached hereto (with respect to the Master Lease) or to the
Purchase and Sale Agreement (with respect to the Individual Property Subleases)
and otherwise reasonably acceptable to Mezzanine Lender and acceptable to the
Rating Agencies and acceptable to the Title Company.


 


2.5.12      Equity Contribution. Holdco and FP
collectively shall have received as equity contributions an aggregate amount
equal to at least 32.5% of the total consideration payable under the Merger
Agreement (a portion of which may be in the form of rollover equity provided by
Frank Fertitta III, Lorenzo Fertitta and certain others) (plus such additional
amount as the Principal Investors and their co-investors shall elect to
contribute in their sole discretion), and (x) Holdco shall have contributed (or
cause to be contributed) as a common equity contribution proceeds of such
equity contribution received to Mortgage Borrower in an amount not less than
$550 million (the “Cash Equity Contribution”) and (y) Holdco and FP
shall have applied, or caused to be applied, all proceeds of such equity
contributions other than the Cash Equity Contribution to finance the
consummation of the Contemplated Transactions.


 


2.5.13      Existing Indebtedness. After giving
effect to the consummation of the Contemplated Transactions, (a) Master Lessee
and its subsidiaries shall have no outstanding preferred equity or
indebtedness, except for (i) indebtedness incurred pursuant to (A) the 6 1/2%
Senior Subordinated Notes due 2014, the 6 7/8% Senior Subordinated Notes due
2016, the 6% Senior Notes due 2012, the 6 5/8% Senior Subordinated Notes due
2018 and the 7.75% Senior Notes due 2016 (the “Existing Notes”), in an
aggregate principal amount of approximately $2,300 million, (B) the
Revolving/Term Credit Facility, (C) the Mortgage Loan and the Junior Mezzanine
Loans, and (D) the Loan; (ii) preferred equity held by Holdco in its
subsidiaries and preferred equity held by one Borrower Party in another
Borrower Party, so long as such preferred equity does constitute “disqualified
stock,” is not otherwise entitled to any mandatory dividends or redemptions,
and contains terms that are otherwise reasonably satisfactory to Mezzanine
Lender (provided that Mezzanine Lender shall approve such terms so long as they
are not adverse to the interests of Mezzanine Lender); (iii) indebtedness
evidenced by a note in the principal amount of $100 million dated February 16,
2007 issued by GV Ranch Station Capital Holdings, LLC and indebtedness
evidenced by a series of notes in an aggregate principal amount of $9.2 million
issued by a subsidiary of Master Lessee having a weighted average interest rate
of 7.1% and maturity dates ranging from 2009 to 2026; (iv) a capital lease of
the office building in which Master Lessee’s executive offices are located
adjacent to the Red Rock Resort (the “Executive Office Capital Lease”);
(v) indebtedness evidenced by that certain Credit Agreement dated as of
October 4, 2007 providing to Aliante Gaming, LLC, a Nevada limited liability
company, construction loans in the aggregate amount of $410 million and
revolving loans in the aggregate amount of $20 million, and a completion
guaranty by Master Lessee in respect thereof


 


50

















 


(the “Aliante Financing”) and (vi) such other existing
indebtedness and preferred equity, if any, as shall be agreed by Mezzanine
Lender (together with the Existing Notes, and the indebtedness described in
clauses (iii), (iv) and (v), the “Existing Indebtedness”), and (b) all
stock of the Master Lessee shall be owned by Guarantors free and clear of Liens
(other than those securing the Revolving/Term Credit Facility)


2.5.14      Ground Lease and Fee Mortgagee
Estoppels. Landlord shall have received a Ground Lessor Estoppel
Certificate and, if applicable, a Fee Mortgagee Estoppel Certificate, for each
Ground Lease Property.


 


2.5.15      Equity and Real Property Transfer
Documents. Mezzanine Borrower shall have delivered to Mezzanine Lender
true, correct and complete copies of all documentation pursuant to which the
transactions contemplated by the Merger Agreement are consummated, including,
but not limited to, all documents evidencing all stages of the acquisition of
Station Casinos, Inc. by the Guarantors and all documents evidencing (i) all
preliminary transfers of equity interests that resulted in the Mezzanine
Borrower structure set forth on Exhibit K, (ii) any preliminary
transfers of the Property into Affiliates of Mortgage Borrower and (iii) the
acquisition of such Affiliates by and the merger of such Affiliates into
Mortgage Borrower. In addition, Mezzanine Borrower shall have delivered to
Mezzanine Lender a copy of the ALTA owner’s title insurance policy(ies) issued
by the Title Company with respect to the Property and insuring Mortgage Borrower’s
fee and/or leasehold title thereto, in form and substance reasonably acceptable
to Mezzanine Lender.


 


2.5.16      No Competing Financing. Mezzanine
Lender shall be reasonably satisfied that prior to and during the 135-day
period after the Closing Date (or such shorter period necessary to complete the
Securitization) there shall be no competing offering, placement, or arrangement
of any debt securities or bank financing (including refinancings and renewals
of debt) by or on behalf of any Guarantor or any of its subsidiaries (including
Mezzanine Borrower) other than (a) the Revolving/Term Credit Facility, (b) the
Mezzanine Loan, (c) the Executive Office Capital Lease, (d) the Aliante
Financing, (e) the Land Loan, (f) to the extent permitted to be incurred
under the Merger Agreement, refinancings of existing indebtedness of
subsidiaries of Master Lessee, and (g) to the extent permitted to be
incurred under the Merger Agreement, construction and other single asset
financings by subsidiaries of Master Lessee.


 


2.5.17      Approvals. All material
governmental and third party approvals necessary in connection with the
Contemplated Transactions (including all necessary regulatory and gaming
approvals) and the continuing operations of Master Lessee, Mezzanine Borrower
and their respective subsidiaries (including shareholder or member approvals,
if any) shall have been obtained on terms reasonably satisfactory to Mezzanine
Lender and shall be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Contemplated Transactions. There shall not exist any action,
suit, investigation, litigation or proceeding pending or threatened in any
court or before any arbitrator or governmental authority that would permit
Sponsor under the Merger Agreement not to consummate the merger transaction.


 


51
















 


2.5.18      Searches.  Mezzanine Lender shall have received current
judgment, bankruptcy, UCC, litigation and tax lien searches showing no material
monetary encumbrances with respect to the Property or material liabilities of
Mezzanine Borrower or the SPE Entities other than as contemplated by the
Mezzanine Loan Documents; provided that, for the avoidance of doubt, the
disclosure, in any such searches or otherwise, or existence of any pending or
threatened action, suit, litigation or proceeding relating to the Contemplated
Transactions which does not constitute at such time a contractual basis for
termination of the Merger Agreement shall not constitute a basis of the failure
or non-satisfaction of this condition.


2.6           [Reserved]


III.                                 CASH MANAGEMENT


3.1           Cash Management.


3.1.1        Establishment of Accounts. 
Mezzanine Borrower hereby acknowledges that, simultaneously with the
execution of this Agreement, pursuant to the Mezzanine Account Agreement,
Mezzanine Borrower has established with Cash Management Bank (First Mezzanine)
a holding account (the “Mezzanine Account”), which has been established
as a non-interest bearing deposit account with interest-bearing
sub-accounts.  The Mezzanine Account and
each sub-account of such account and the funds deposited therein shall serve as
additional security for the Loan. 
Pursuant to the Mezzanine Account Agreement, Mezzanine Borrower shall
irrevocably instruct and authorize Cash Management Bank (First Mezzanine) to
disregard any and all orders for withdrawal from the Collateral Accounts (First
Mezzanine) made by, or at the direction of, Mezzanine Borrower.  Mezzanine Borrower agrees that, prior to the
payment in full of the Indebtedness, the terms and conditions of the Mezzanine
Account Agreement shall not be amended or modified in any material respect
without the prior written consent of Mezzanine Lender (which consent Mezzanine
Lender may grant or withhold in its sole discretion).  In recognition of Mezzanine Lender’s security
interest in the funds deposited into the Collateral Accounts (First Mezzanine)
the Mezzanine Account shall be named as follows: “FCP Mezzco Borrower I, LLC
Holding Account in favor of German American Capital Corporation, as Collateral
Agent” (Account Number 048818623. 
Mezzanine Borrower confirms that it has established with Cash Management
Bank (First Mezzanine) the following sub-accounts of the Mezzanine Account
(each, a “Sub-Account” and, collectively, the “Sub-Accounts” and
together with the Mezzanine Account, the “Collateral Accounts (First
Mezzanine)”), which (i) may be ledger or book entry sub-accounts and need not
be actual sub-accounts, (ii) shall each be linked to the Mezzanine Account,
(iii) shall each be a “deposit account” (as
such term is defined in Section 9-102(a)(29) of the UCC) and (iv) shall
each be an Eligible Account to which certain funds shall be allocated and from
which disbursements shall be made pursuant to the terms of this Agreement:


(a)               A sub-account for the retention
of Account Collateral (First Mezzanine) in respect of Debt Service (First
Mezzanine) on the Loan with the account number 048818631 (the “Mezzanine Debt
Service Reserve Account”).


3.1.2        Pledge of Account Collateral (First
Mezzanine).  To secure the
full and punctual payment and performance of the Obligations (First Mezzanine),
Mezzanine Borrower hereby 


 


52

















 


collaterally assigns, grants a security
interest in and pledges to Mezzanine Lender, to the extent not prohibited by
applicable law, a first priority continuing security interest in and to the
following property of Mezzanine Borrower, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all of the same,
collectively, the “Account Collateral (First Mezzanine)”):


(a)               any and all Excess Cash Flow from
time to time available in the Holding Account and required, by the terms of the
Loan Agreement (Mortgage) as now in effect or amended with the consent of
Mezzanine Lender, to be deposited by the Mortgage Lender or the Cash Management
Bank (Mortgage) into the Mezzanine Account;


(b)               the Collateral Accounts (First
Mezzanine) and all cash, deposits and/or wire transfers from time to time
deposited or held in, credited to or made to Collateral Accounts (First
Mezzanine);


(c)               all interest and cash from time
to time received, receivable or otherwise payable in respect of, or in exchange
for, any or all of the foregoing or purchased with funds from the Collateral
Accounts (First Mezzanine); and


(d)               to the extent not covered by
clauses (a) or (b) above, all proceeds (as defined under the UCC) of any or all
of the foregoing.


In addition to the rights and remedies herein set
forth, Mezzanine Lender shall have all of the rights and remedies with respect
to the Account Collateral (First Mezzanine) available to a secured party at law
or in equity, including, without limitation, the rights of a secured party
under the UCC, as if such rights and remedies were fully set forth herein.


This Agreement shall constitute a security agreement
for purposes of the Uniform Commercial Code and other applicable law.


3.1.3        Maintenance of Collateral Accounts.


(a)               Mezzanine Borrower agrees that
each of the Collateral Accounts (First Mezzanine) is and shall be maintained
(i) as a “deposit account” (as such term is defined in Section 9-102(a)(29) of
the UCC), (ii) in such a manner that Mezzanine Lender shall have control
(within the meaning of Section 9-104(a)(2) of the UCC) over the Mezzanine
Account and (iii) such that no Person other than Mezzanine Lender shall have any
right of withdrawal from the Collateral Accounts (First Mezzanine) and, except
as provided herein, no Account Collateral 
(First Mezzanine) shall be released to the Mezzanine Borrower or any
Affiliate of Mezzanine Borrower from the Collateral Accounts (First
Mezzanine).  Without limiting the
Mezzanine Borrower’s obligations under the immediately preceding sentence,
Mezzanine Borrower shall only establish and maintain the Mezzanine Account with
a financial institution that has executed an agreement substantially in the
form of the Mezzanine Account Agreement or in such other form acceptable to
Mezzanine Lender in its sole discretion.


3.1.4        Eligible Accounts.  The Collateral Accounts (First Mezzanine)
shall be Eligible Accounts.  The
Collateral Accounts (First Mezzanine) shall be subject to such applicable laws,
and such applicable regulations of the Board of Governors of the Federal
Reserve System and of 


 


53

















 


any other banking or governmental authority,
as may now or hereafter be in effect. 
Income and interest accruing on the Collateral Accounts  (First Mezzanine) or any investments held in
such accounts shall be periodically added to the principal amount of such
account and shall be held, disbursed and applied in accordance with the
provisions of this Agreement and the Mezzanine Account Agreement.  Mezzanine Borrower shall be the beneficial
owner of the Collateral Accounts (First Mezzanine) for federal income tax
purposes and shall report all income on the Collateral Accounts (First
Mezzanine).


3.1.5        Deposits into Sub-Accounts. 
On the date hereof, Mezzanine Borrower has deposited the following
amounts into the Sub-Accounts:


(i)            $0.00 into the Mezzanine Debt Service Reserve Account;


3.1.6        Monthly Funding.


(a)               Mezzanine
Borrower hereby irrevocably authorizes Mezzanine Lender to transfer (and,
pursuant to the Mezzanine Account Agreement shall irrevocably authorize Cash
Management Bank (First Mezzanine) to execute any corresponding instructions of
Mezzanine Lender), and Mezzanine Lender shall transfer, from the Mezzanine
Account by 11:00 a.m. New York time on the date on which each payment of funds
on deposit in the First Mezzanine Debt Service Reserve Account under the Loan
Agreement (Mortgage) is made to the Mezzanine Account, or as soon thereafter as
sufficient funds are in the Mezzanine Account to make the applicable transfers,
commencing on the date of the first transfer of funds from the First Mezzanine
Debt Service Reserve Account under the Loan Agreement (Mortgage) to the
Mezzanine Account, funds in an amount equal to the sum of any Protective
Advances which may have been advanced by (and not previously reimbursed to) the
Mezzanine Lender pursuant to the terms of the Mezzanine Loan Documents to cure
any Default or Event of Default, any Mortgage Default or Mortgage Event of
Default, or to protect the Collateral together with any interest payable on
such amounts pursuant to the Mezzanine Loan Documents, plus (x) the unpaid Debt
Service (First Mezzanine) for the next occurring Payment Date, plus (y) an
amount equal to such payments for any prior month(s), to the extent not
previously paid, plus (z) an amount equal to the amount, if any, deducted from
the Mezzanine Account in any preceding month to pay any other amounts then due
under the Mezzanine Loan Documents (other than any Debt Service (First
Mezzanine)).  Mezzanine Borrower
acknowledges that Mezzanine Lender shall not be required to make such
withdrawal and deposit until such time as Mezzanine Lender is able to calculate
the amount of the Debt Service (First Mezzanine) for the next occurring Payment
Date.


(b)               If for any reason there will be
insufficient amounts in the Mezzanine Debt Service Reserve Account on any
Payment Date to pay the Debt Service (First Mezzanine) due on such Payment
Date, Mezzanine Borrower shall immediately deposit into the Mezzanine Account
an amount equal to the shortfall of available funds in the Mezzanine Debt
Service Reserve Account.  Any failure by
Mezzanine Borrower to deposit the full amount required by the preceding
sentence shall constitute an Event of Default hereunder.  If Mezzanine Lender shall reasonably
determine that there will be insufficient amounts in the Mezzanine Account to
pay any Protective Advances as and when the same are due and payable, Mezzanine
Lender shall provide written notice of same to Mezzanine Borrower setting forth
the basis for such determination.  Within
ten (10) Business Days of receipt of said notice, Mezzanine Borrower 


 


54

















 


shall deposit into the Mezzanine Account an amount equal to the
shortfall of available funds in the Mezzanine Account.  Any failure by Mezzanine Borrower to deposit
the full amount required by the preceding sentence within said ten (10)
Business Day period shall constitute an Event of Default hereunder.


(c)               Mezzanine
Lender (so long as Mezzanine Lender is not the same entity as Mortgage Lender)
agrees to deliver to Mortgage Lender a monthly notice letter (the First
Mezzanine Lender Monthly Debt Service Notice as described in the Loan Agreement
(Mortgage)) at least five (5) Business Days prior to each Payment Date setting
forth the Debt Service (First Mezzanine) payable by Mezzanine Borrower on the
first Payment Date occurring after the date such notice is delivered.


(d)               Mezzanine
Borrower hereby acknowledges that, pursuant to Section 3.1.6 of the Loan
Agreement (Mortgage), to the extent Mortgage Lender has received a Mezzanine
Loan Default Notice and until such time as Mortgage Lender receives a Mezzanine
Loan Default Revocation Notice, the Mortgage Borrower has irrevocably directed
that Excess Cash Flow and any other payments to be made to Mezzanine Borrower,
any Junior Mezzanine Borrower, Mezzanine Lender, or any Junior Mezzanine Lender
are to be deposited directly into the Mezzanine Account for application as
provided in this Agreement (in lieu of transferring such funds to such accounts
of the Mezzanine Lender, any Junior Mezzanine Lender or Mortgage Borrower as
the Mortgage Borrower may have so directed if the Mortgage Lender had not
received such notice from Mezzanine Lender). 
Mezzanine Lender shall promptly provide Mortgage Lender with a Mezzanine
Loan Default Revocation Notice if an Event of Default which has occurred under
the Mezzanine Loan Documents is no longer continuing.


3.1.7        Cash Management Bank (First
Mezzanine).


(a)               Mezzanine Lender shall have the
right at Mezzanine Borrower’s sole cost and expense to replace the Cash
Management Bank (First Mezzanine) with a financial institution reasonably
satisfactory to Mezzanine Borrower in the event that (i) the Cash Management
Bank (First Mezzanine) fails, in any material respect, to comply with the
Mezzanine Account Agreement or (ii) the Cash Management Bank (First Mezzanine)
is no longer an Approved Bank.  Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Lender
shall have the right at Mezzanine Borrower’s sole cost and expense to replace
Cash Management Bank (First Mezzanine) at any time, without notice to Mezzanine
Borrower.  Mezzanine Borrower shall
cooperate with Mezzanine Lender in connection with the appointment of any
replacement Cash Management Bank (First Mezzanine) and the execution by the
Cash Management Bank (First Mezzanine) and the Mezzanine Borrower of a
Mezzanine Account Agreement and delivery of same to Mezzanine Lender (with a
copy to the Mezzanine Lender).


(b)               So
long as no Event of Default shall have occurred and be continuing, Mezzanine
Borrower shall have the right at its sole cost and expense to replace the Cash
Management Bank (First Mezzanine) with a financial institution that is an
Approved Bank provided that such financial institution and Mezzanine Borrower
shall execute and deliver to Mezzanine Lender (with a copy to Mezzanine Lender)
a Mezzanine Account Agreement substantially similar to the Mezzanine Account
Agreement executed as of the Closing Date, or in 


 


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such other form reasonably required by
Mezzanine Lender or required by the Rating Agencies, with such changes therein
as shall be reasonably acceptable to Mezzanine Lender.


3.1.8        Mezzanine Borrower’s Account
Representations, Warranties and Covenants.


(a)           Mezzanine
Borrower represents, warrants and covenants that: (i) as of the date hereof,
Mortgage Borrower has irrevocably directed the Master Lessee pursuant to a
letter substantially in the form of the Master Lease Rent Payment Direction
Letter to make all payments of Master Lease Scheduled Rent directly to the
Holding Account at all times during the term of the Mortgage Loan and Mezzanine
Borrower shall cause Mortgage Borrower to deposit all such sums in such Holding
Account; and (ii) Mezzanine Borrower shall cause Mortgage Borrower to comply
with, and use commercially reasonable efforts to enforce Mortgage Lender’s
compliance with, all of the terms and conditions of Section 3.1 of the Loan
Agreement (Mortgage), including, without limitation: (1) the timely funding of
all Sub-Accounts under the Mortgage Loan, including any Sub-Account
deficiencies in accordance with Section 3.1.6(c) of the Loan Agreement
(Mortgage); (2) the distribution of funds to Mezzanine Lender in accordance
with the “First Mezzanine Lender Monthly Debt Service Notice” as described in
the Loan Agreement (Mortgage); and (3) the timely payment of Impositions and
Other Charges, insurance premiums, Ground Rent, Debt Service in respect of the
Mortgage Loan, Debt Service (First Mezzanine), and debt service in respect of
the Junior Mezzanine Loans.


(b)               Mezzanine Borrower represents,
warrants and covenants that (i) pursuant to the Loan Agreement (Mortgage),
provided no Mortgage Event of Default has occurred and is continuing, Mortgage
Lender has agreed to make or direct the Cash Management Bank (Mortgage) to transfer
all funds on deposit in the First Mezzanine Debt Service Reserve Account under
the Loan Agreement (Mortgage) to the Mezzanine Account, (iii) Mezzanine
Borrower shall pay or cause to be paid all Receipts, Cash and Cash Equivalents
or other items of operating income not covered by the preceding subsection (a)
within one Business Day after receipt thereof by Mezzanine Borrower or its
Affiliates directly into the Mezzanine Account and, until so deposited, any
such amounts held by Mezzanine Borrower or its Affiliates shall be deemed to be
Account Collateral (First Mezzanine) and shall be held in trust by it for the
benefit, and as the property, of Mezzanine Lender and shall not be commingled
with any other funds or property of Mezzanine Borrower or its Affiliates, (iv)
there are no accounts other than the Collateral Accounts (First Mezzanine)
maintained by Mezzanine Borrower or any other Person with respect to the
Collateral or the collection of Receipts, and (v) so long as the Loan shall be
outstanding, neither Mezzanine Borrower nor any other Person shall open any
other operating accounts with respect to the Collateral or the collection of
Receipts, except for the Collateral Accounts (First Mezzanine).


3.1.9        Account Collateral (First Mezzanine)
and Remedies.


(a)               Upon
the occurrence and during the continuance of an Event of Default, without
additional notice from Mezzanine Lender to Mezzanine Borrower, (i) Mezzanine
Lender may, in addition to and not in limitation of Mezzanine Lender’s other
rights, make any and all withdrawals from, and transfers between and among, the
Collateral Accounts (First Mezzanine) as Mezzanine Lender shall determine in
its sole and absolute discretion to pay any Obligations (First Mezzanine),
operating expenses and/or capital expenditures for the Property in such order 


 


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and priority as Mezzanine Lender shall determine in its sole and
absolute discretion; and (ii) all
payments to the Mezzanine Lender pursuant to Section 3.1.6 shall immediately
cease.


(b)               Upon the occurrence and during
the continuance of an Event of Default, Mezzanine Borrower hereby irrevocably
constitutes and appoints Mezzanine Lender as Mezzanine Borrower’s true and
lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and to exercise and enforce every
right, power, remedy, option and privilege of Mezzanine Borrower with respect
to the Account Collateral (First Mezzanine), and do in the name, place and
stead of Mezzanine Borrower, all such acts, things and deeds for and on behalf
of and in the name of Mezzanine Borrower, which Mezzanine Borrower could or
might do or which Mezzanine Lender may deem necessary or desirable to more
fully vest in Mezzanine Lender the rights and remedies provided for herein and
to accomplish the purposes of this Agreement. 
The foregoing powers of attorney are irrevocable and coupled with an
interest.  Upon the occurrence and during
the continuance of an Event of Default, Mezzanine Lender may perform or cause
performance of any such agreement, and any reasonable out-of-pocket expenses of
Mezzanine Lender incurred in connection therewith shall be paid by Mezzanine
Borrower as provided in Section 5.1.12.


(c)               Mezzanine Borrower hereby
expressly waives, to the fullest extent permitted by law, presentment, demand,
protest or any notice of any kind in connection with this Agreement or the
Account Collateral (First Mezzanine). 
Mezzanine Borrower acknowledges and agrees that ten (10) days’ prior written
notice of the time and place of any public sale of the Account Collateral
(First Mezzanine) or any other intended disposition thereof shall be reasonable
and sufficient notice to Mezzanine Borrower within the meaning of the UCC.


3.1.10      Transfers
and Other Liens.  Mezzanine
Borrower agrees that it will not (i) sell or otherwise dispose of any of the
Account Collateral (First Mezzanine) or (ii) create or permit to exist any Lien
upon or with respect to all or any of the Account Collateral (First Mezzanine),
except for the Lien granted to Mezzanine Lender under this Agreement.


3.1.11      Reasonable Care.  Beyond the exercise of reasonable care in the
custody thereof, Mezzanine Lender shall have no duty as to any Account
Collateral (First Mezzanine) in its possession or control as agent therefor or
bailee thereof or any income thereon or the preservation of rights against any
person or otherwise with respect thereto. 
Mezzanine Lender shall be deemed to have exercised reasonable care in
the custody of the Account Collateral (First Mezzanine) in its possession if
the Account Collateral (First Mezzanine) is accorded treatment substantially
equal to that which Mezzanine Lender accords its own property, it being
understood that Mezzanine Lender shall not be liable or responsible for any
loss or damage to any of the Account Collateral (First Mezzanine), or for any
diminution in value thereof, by reason of the act or omission of Mezzanine
Lender, its Affiliates, agents, employees or bailees, except to the extent that
such loss or damage results from the Mezzanine Lender’s gross negligence or
willful misconduct.  In no event shall
Mezzanine Lender be liable either directly or indirectly for losses or delays
resulting from any event which may be the basis of an Excusable Delay, computer
malfunctions, interruption of communication facilities, labor difficulties or
other causes beyond Mezzanine Lender’s reasonable control or for indirect,
special or consequential damages except to the extent of Mezzanine Lender’s
gross negligence or willful misconduct. 
Notwithstanding the foregoing, Mezzanine Borrower acknowledges and
agrees that (i) Mezzanine Lender does 


 


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not have custody of the Account Collateral
(First Mezzanine), (ii) Cash Management Bank (First Mezzanine) has custody of
the Account Collateral (First Mezzanine), (iii) the initial Cash Management
Bank (First Mezzanine) was chosen by Mezzanine Borrower and (iv) Mezzanine
Lender has no obligation or duty to supervise Cash Management Bank (First
Mezzanine) or to see to the safe custody of the Account Collateral (First
Mezzanine).


3.1.12      Mezzanine Lender’s Liability.


(a)               Mezzanine Lender shall be
responsible for the performance only of such duties with respect to the Account
Collateral (First Mezzanine) as are specifically set forth in this Section
3.1 or elsewhere in the Mezzanine Loan Documents, and no other duty shall
be implied from any provision hereof. 
Mezzanine Lender shall not be under any obligation or duty to perform
any act with respect to the Account Collateral (First Mezzanine) which would
cause it to incur any expense or liability or to institute or defend any suit
in respect hereof, or to advance any of its own monies.  Mezzanine Borrower shall indemnify and hold
Mezzanine Lender, its employees and officers harmless from and against any
loss, cost or damage (including, without limitation, reasonable attorneys’ fees
and disbursements) incurred by Mezzanine Lender in connection with the
transactions contemplated hereby with respect to the Account Collateral (First
Mezzanine) except as such may be caused by the gross negligence or willful
misconduct of Mezzanine Lender, its employees, officers or agents.


(b)               Mezzanine Lender shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, opinion, bond or other paper, document or signature
believed by it in good faith to be genuine, and, in so acting, it may be
assumed that any person purporting to give any of the foregoing in connection
with the provisions hereof has been duly authorized to do so.  Mezzanine Lender may consult with counsel,
and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder and in
good faith in accordance therewith.


3.1.13      Continuing
Security Interest.  This
Agreement shall create a continuing security interest in the Account Collateral
(First Mezzanine) and shall remain in full force and effect until payment in
full of the Indebtedness.  Upon payment
in full of the Indebtedness, this security interest shall automatically
terminate without further notice from any party and Mezzanine Borrower shall be
entitled to the return, upon its request, of such of the Account Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof and
Mezzanine Lender shall execute such instruments and documents as may be
reasonably requested by Mezzanine Borrower to evidence such termination and the
release of the Account Collateral (First Mezzanine).


3.1.14      Distributions.  Notwithstanding anything to the contrary
contained herein, there shall be no restriction or limitation on Mezzanine
Borrower’s ability to make distributions to its members or its or their
Affiliates other than as set forth in Section 5.2.13.


 


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IV.                                 REPRESENTATIONS AND WARRANTIES


4.1           Mezzanine
Borrower Representations.  Except as
Actually Known by the Mezzanine Lender to the Contrary, Mezzanine Borrower
represents and warrants as of the Closing Date that:


4.1.1        Organization.  Each of
Mortgage Borrower and Mezzanine Borrower is a limited liability company and has
been duly organized and is validly existing and in good standing pursuant to
the laws of the State of Delaware with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged.  Master Lessee is a corporation and has been
duly organized and is validly existing and in good standing pursuant to the
laws of the State of Nevada with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged.  Holdco is a corporation and has been duly
organized and is validly existing and in good standing pursuant to the laws of
the State of Delaware with requisite power and authority to own its properties
and to transact the businesses in which it is now engaged.  FP is a
limited liability company and has been duly organized and is validly existing
and in good standing pursuant to the laws of the State of Nevada with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged.  VoteCo is a
limited liability company and has been duly organized and is validly existing
and in good standing pursuant to the laws of the State of Nevada with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged.  Each of
Mortgage Borrower, Mezzanine Borrower, Guarantors and Master Lessee has duly
qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, businesses
and operations, or, in the case of qualifications in the various States (a) an
application for such qualification has been duly filed with the applicable
Governmental Authority and all fees required in order to obtain such
qualification have been paid in full, (b) all conditions to obtaining such
qualification have been satisfied under applicable law and the issuance of such
qualification is a ministerial act of the applicable Governmental Authority,
(c) each of Mortgage Borrower and Mezzanine Borrower has agreed to so qualify
in accordance with a post-closing side letter entered into on the date hereof,
and (d) no such failure to qualify would be reasonably likely to have a
Material Adverse Effect.  Each of
Mortgage Borrower, Mezzanine Borrower, Master Lessee and Guarantor possesses
all material rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged, and the sole business of Mezzanine
Borrower is the ownership of the Ownership Interests.  The organizational structure of Mortgage Borrower,
Mezzanine Borrower, each Guarantor and Master Lessee is accurately depicted by
the schematic diagrams attached hereto as Exhibit K.  Mezzanine Borrower shall not change its name,
identity, limited liability company form or jurisdiction of organization unless
it shall have given Mezzanine Lender thirty (30) days prior written notice of
any such change and shall have taken all steps reasonably requested by
Mezzanine Lender to grant, perfect, protect and/or preserve the liens and
security interest granted to Mezzanine Lender under the Mezzanine Loan
Documents.


4.1.2        Proceedings.  Each of Mortgage Borrower, Mezzanine
Borrower, Junior Mezzanine Borrowers, Guarantors and Master Lessee has full
power to and has taken all necessary action to authorize the execution,
delivery and performance of the Mezzanine Loan Documents to which it is a
party.


 


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4.1.3        No Conflicts.  The
execution, delivery and performance of this Agreement, the other Mezzanine Loan
Documents, and the Loan Documents (Mortgage) by Mortgage Borrower, Mezzanine
Borrower, Junior Mezzanine Borrowers, Guarantors and Master Lessee, as
applicable, will not conflict with or result in a material breach of any of the
terms or provisions of, or constitute a material default under, or result in
the creation or imposition of any Lien (other than pursuant to the Mezzanine
Loan Documents and Loan Documents (Mortgage)) upon any of the property or
assets of any such Person pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement, partnership agreement or other agreement or
instrument to which any such Person is a party or by which any of such Person’s
property or assets is subject (unless consents from all applicable parties
thereto have been obtained), except for any conflict that would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect, nor will such action result in any violation of the provisions
of any statute or any order, rule or regulation of any Governmental Authority,
and any material consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution,
delivery and performance by Mortgage Borrower, Mezzanine Borrower, Junior
Mezzanine Borrowers, Guarantors and Master Lessee of this Agreement, the other
Mezzanine Loan Documents, and the Loan Documents (Mortgage) except for any
violation that would not individually or in the aggregate reasonably be
expected to result in a Material Adverse Effect, or any other Mezzanine Loan
Documents has been obtained and is in full force and effect.


4.1.4        Litigation.  Except as
set forth on Schedule II attached hereto, there are no arbitration
proceedings, governmental investigations, actions, suits or proceedings at law
or in equity by or before any Governmental Authority now pending or, to the
best of Mezzanine Borrower’s knowledge, threatened against or affecting
Mortgage Borrower, Mezzanine Borrower, Junior Mezzanine Borrowers, any Guarantor,
Master Lessee or any Individual Property (other than claims (A) (i) which are
being covered by insurance, (ii) which are being defended by the relevant
insurance company and (iii) as to which Mortgage Borrower has not received a
notice from such insurance company that the claim exceeds the total amount of
insurance coverage with respect to such claim; (B) which are covered by the
self insurance limit permitted pursuant to the Mortgage Loan Documents and are
being diligently defended by Mortgage Borrower, Guarantors, Master Lessee or
their respective Affiliates; or (C) which relate to employment claims for which
liability in the event any such matter is adversely determined could not
reasonably be expected to exceed $1,000,000 or provided that none of such
unscheduled claims could reasonably be expected to individually or in the
aggregate to have a Material Adverse Effect if adversely determined).  The actions, suits or proceedings identified
on Schedule II, if determined against Mortgage Borrower, Mezzanine
Borrower, Junior Mezzanine Borrowers, any Guarantor, Master Lessee or the
Property, would not have a Material Adverse Effect.


4.1.5        Agreements.  The Operating Agreements constitute all of
the agreements to which Mortgage Borrower or any of its Affiliates are party or
are bound which are material to the ownership and operation of any Individual
Property.  Mezzanine Borrower is not a
party to any agreement or instrument or subject to any restriction which is reasonably
likely to materially and adversely affect Mezzanine Borrower or Mezzanine
Borrower’s business, properties or assets, operations or condition, financial
or otherwise.  Mezzanine Borrower is not
in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material agreement or instrument to which it is a party 


 


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or by which Mezzanine Borrower or the
Collateral is bound.  Mezzanine Borrower
has no material financial obligation (contingent or otherwise) under any
indenture, mortgage, deed of trust, loan agreement or other similar agreement
or instrument to which Mezzanine Borrower is a party or by which Mezzanine
Borrower or the Collateral is otherwise bound, other than (a) obligations
constituting the Permitted Debt of Mezzanine Borrower which are incurred in the
ordinary course of the ownership and operation of the Collateral and (b)
obligations under the Mezzanine Loan Documents.


4.1.6        Title to Property and Assets.


Mortgage
Borrower has good, marketable and insurable (i) leasehold title to the Land and
the Improvements relating to the Ground Lease Properties, and enjoys the quiet
and peaceful possession of the Leasehold Estate related thereto, and (ii) fee
simple title to the Land and the Improvements relating to the Fee Properties,
in each case free and clear of all Liens whatsoever except the Permitted
Encumbrances.  Mortgage Borrower has good
and marketable title to the remainder of the Property (excluding the Excluded
Personal Property), free and clear of all Liens whatsoever except the Permitted
Encumbrances.  The Security Instruments,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first mortgage lien on the Land
and the Improvements or the leasehold estate therein, as applicable, subject
only to Permitted Encumbrances and (ii) perfected security interests in and to,
and perfected collateral assignments of, all personalty other than the Excluded
Personal Property (including the Subleases) or any leases of equipment from
third parties, all in accordance with the terms thereof, in each case subject
only to any applicable Permitted Encumbrances. 
For avoidance of doubt, those portions of the Excluded Personal Property
owned by Master Lessee constituting “FF&E” as defined in the Master Lease,
are subject to a Lien in favor of the Mortgage Borrower, as landlord, under the
Master Lease, and such landlord Lien has been assigned to Mortgage Lender,
along with Mortgage Borrower’s other rights as landlord under the Master Lease,
pursuant to the Security Instruments and the Assignment of Leases (such
landlord Lien, as assigned to Lender, the “Assigned Landlord Lien”).  There are no claims for payment for work,
labor or materials affecting the Property which are or may become a lien prior
to, or of equal priority with, the Liens created by the Loan Documents
(Mortgage) other than the Permitted Encumbrances.  None of the Permitted Encumbrances would
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect as of the Closing Date and thereafter.  Mezzanine Borrower shall cause Mortgage Borrower
to preserve its right, title and interest in and to the Property for so long as
the Mezzanine Notes remain outstanding and will cause Mortgage Borrower to
warrant and defend same and the validity and priority of the Lien hereof from
and against any and all claims whatsoever other than the Permitted
Encumbrances.


Mezzanine
Borrower owns all of the Collateral, including without limitation, the
Ownership Interests, subject to no rights of others, including any liens or
other encumbrances, except for the Permitted Encumbrances (First Mezzanine).


4.1.7        No Bankruptcy Filing.  None of Mortgage Borrower, Mezzanine
Borrower, any Junior Mezzanine Borrower, any Guarantor or Master Lessee is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of all 


 


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or a major portion of such entity’s assets or
property, and Mezzanine Borrower has no knowledge of any Person contemplating
the filing of any such petition against it, Mortgage Borrower, any Junior
Mezzanine Borrower, any Guarantor or Master Lessee.


4.1.8        Full and Accurate Disclosure. 
To the best of Mezzanine Borrower’s knowledge no statement of material
fact made by Mezzanine Borrower in this Agreement or in any of the other
Mezzanine Loan Documents contains any untrue statement of a material fact or
omits to state any material fact necessary to make such statements contained
herein or therein not materially misleading as of the date made which in any
such case could reasonably be expected to have a Material Adverse Effect.  There is no fact presently known to Mezzanine
Borrower which has not been disclosed which could reasonably be expected to
have a Material Adverse Effect.


4.1.9        Ownership Interests. 
The Ownership Interests constitute all of the property currently owned
by Mezzanine Borrower.


4.1.10      No Plan Assets.


(a)               Mezzanine Borrower does not
maintain an employee benefit plan as defined by Section 3(3) of ERISA, which is
subject to Title IV of ERISA, and Mezzanine Borrower (i) has no knowledge of
any material liability which has been incurred or is expected to be incurred by
Mezzanine Borrower which is or remains unsatisfied for any taxes or penalties
with respect to any “employee benefit plan,” within the meaning of Section 3(3)
of ERISA, or any “plan,” within the meaning of Section 4975(e)(1) of the Code
or any other benefit plan (other than a multiemployer plan) maintained,
contributed to, or required to be contributed to by Mezzanine Borrower or by
any entity that is under common control with Mezzanine Borrower within the
meaning of ERISA Section 4001(a)(14) (a “Plan”) or any plan that would
be a Plan but for the fact that it is a multiemployer plan within the meaning
of ERISA Section 3(37); and (ii) has made and shall continue to make when due
all required contributions to all such Plans, if any.  Each such Plan has been and will be
administered in compliance with its terms and the applicable provisions of
ERISA, the Code, and any other applicable federal or state law other than such actions or failures to act that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
and no action shall be taken or fail to be taken that would result in the
disqualification or loss of tax-exempt status of any such Plan intended to be
qualified and/or tax exempt other than such actions or failures to act that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect; and


(b)               Neither
the Mortgage Borrower nor the Mezzanine Borrower is an employee benefit plan,
as defined in Section 3(3) of ERISA, subject to Title I of ERISA, none of the
assets of Mortgage Borrower or Mezzanine Borrower constitutes or will
constitute plan assets of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101 and neither the Mortgage Borrower nor the Mezzanine
Borrower is a governmental plan within the meaning of Section 3(32) of ERISA
and neither the Mortgage Borrower nor the Mezzanine Borrower is subject to
state statutes regulating investment of, and fiduciary obligations with respect
to, governmental plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Agreement.


 


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4.1.11      Compliance.  Subject to Schedule 4.1.11, Mortgage
Borrower, Mezzanine Borrower, the Collateral and the Property and the use
thereof comply in all material respects with all applicable Legal Requirements,
including, without limitation, building and zoning ordinances and codes (except
for any non-compliance that individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect).  To the best of Mezzanine Borrower’s
knowledge, neither Mortgage Borrower
nor Mezzanine Borrower is in default or in violation of any order, writ,
injunction, decree or demand of any Governmental Authority.  To the best of Mezzanine Borrower’s
knowledge, there has not been committed by Mortgage Borrower or Mezzanine
Borrower any act or omission affording the federal government or any other
Governmental Authority the right of forfeiture as against the Property or the
Collateral or any part thereof or any monies paid in performance of Mezzanine
Borrower’s obligations under any of the Mezzanine Loan Documents.


4.1.12      Financial
Information.  The information
set forth in the certificate of Mortgage Borrower regarding financial information
dated of even date herewith (i) is true, complete and correct in all material
respects and (ii) fairly represents the financial condition of the Master
Lessee and the Property as of the Closing Date. 
Neither Mortgage Borrower nor Mezzanine
Borrower has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Mezzanine Borrower and could
reasonably be expected to have a Material Adverse Effect.


4.1.13      Condemnation.  Except as set forth on Schedule II, no
Taking is pending or, to the best of Mezzanine Borrower’s knowledge, is
contemplated with respect to all or any portion of the Property.  No Taking is pending or, to the best of
Mezzanine Borrower’s knowledge, is contemplated for the relocation of roadways
providing access to the Property.  None
of the Taking matters listed on Schedule II is reasonably likely to
result in (a) a material reduction in the vehicular or pedestrian access to any
Individual Property, (b) a material reduction in the parking rights located on
or appurtenant to any Individual Property or (c) a Material Adverse Effect.


4.1.14      Federal Reserve Regulations.  None of the proceeds of the Loan will be used
for the purpose of purchasing or carrying any “margin stock”“ as defined in
Regulation U, Regulation X or Regulation T or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry “margin”
stock or for any other purpose which might constitute this transaction a “purpose
credit” within the meaning of Regulation U or Regulation X, which in any such
case would cause the Loan, the Mezzanine Borrower or the Mezzanine Lender to be
in violation of Regulation U.  As of the
Closing Date, Mezzanine Borrower does not own any “margin stock.”


4.1.15      Utilities and Public Access.  Each Individual Property has rights of access
to one or more public ways, either directly or through a recorded easement set
forth in and insured under the Title Policies. 
Each Individual Property is served by water, sewer, sanitary sewer and
storm drain facilities adequate to service the Property for its intended uses
(except to the extent any such failure individually or in the aggregate would
not reasonably be expected to result in a Material Adverse Effect).  All utilities necessary to the existing use
of the Property are located 


 


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either in the public right-of-way abutting
the Property or in recorded easements serving the Property and such easements
are set forth in and insured by the Title Policies.


4.1.16      Not
a Foreign Person.  Neither
Mortgage Borrower nor Mezzanine Borrower is a foreign person within the meaning
of § 1445(f)(3) of the Code.


4.1.17      Setoff,
Etc.  The Collateral and the
rights of Mezzanine Lender with respect to the Collateral are not subject to
any setoff, claims, withholdings or other defenses, other than Mortgage Lender’s
right to restrict distributions from Mortgage Borrower to Mezzanine Borrower
under the terms and conditions set forth in the Loan Agreement (Mortgage).


4.1.18      Representations and Warranties in the
Loan Documents (Mortgage).  Each of
the representations and warranties contained in the Loan Documents (Mortgage)
(which are hereby incorporated by reference as if fully set forth herein) is
true and correct in all material respects, as of the Closing Date and there is
no Mortgage Default or Mortgage Event of Default thereunder.


4.1.19      Reserved.


4.1.20      Enforceability.  The Mezzanine Loan Documents to which each of
Mortgage Borrower, Mezzanine Borrower, Junior Mezzanine Borrowers, Guarantors
and Master Lessee is a party have been duly executed and delivered by, or on
behalf of, Mortgage Borrower, Mezzanine Borrower, Junior Mezzanine Borrowers,
Guarantors and Master Lessee, as applicable, and constitute legal, valid and
binding obligations of such Persons, as applicable, enforceable against such
Persons, as applicable, in accordance with their respective terms, subject only
to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).


4.1.21      Reserved.


4.1.22      Insurance.  Mezzanine Borrower has obtained and has
delivered or caused Mortgage Borrower to obtain and deliver to Mezzanine Lender
certified copies or originals of all insurance policies required under this
Agreement, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement.  Mezzanine
Borrower has not, and to the best of Mezzanine Borrower’s knowledge no Person
has, done by act or omission anything which would impair the coverage of any
such policy.


4.1.23      Use
of Property.  Each Individual
Property is used exclusively for casino and hotel operations and other
appurtenant and related uses.


4.1.24      Certificate of Occupancy; Licenses.  All material certifications, permits,
licenses and approvals, including without limitation, certificates of
completion and occupancy permits required of Mortgage Borrower for the legal
use, occupancy and operation of each Individual Property for its current use as
a hotel and casino (collectively, the “Licenses”), have been obtained
and are in full force and effect (except to the extent any such failure would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect).  Mezzanine
Borrower shall cause Mortgage Borrower to keep and maintain all Licenses 


 


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necessary for the operation of each
Individual Property in accordance with its current use as a hotel and
casino.  The use being made of each
Individual Property is in conformity with the certificate of occupancy issued
for such Individual Property (except to the extent any such failure would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect).


4.1.25      Flood
Zone.  None of the Improvements
on the Property are located in an area as identified by the Federal Emergency
Management Agency as an area having special flood hazards except as identified
on the flood certifications delivered to Lender prior to the date hereof, and
Mezzanine Borrower has caused Mortgage Borrower to obtain the insurance
required under Article VI of the Loan Agreement (Mortgage) with respect to any
Improvements located in any such special flood hazards.


4.1.26      Physical
Condition.  To the best of
Mezzanine Borrower’s knowledge, the Property, including, without limitation,
all buildings, Improvements, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to the best of Mezzanine
Borrower’s knowledge, there exists no structural or other material defects or
damages in or to the Property, whether latent or otherwise, and Mortgage
Borrower has not received any written notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination
or threatened termination of any policy of insurance or bond.


4.1.27      Boundaries.  Except as set forth in and insured pursuant
to the Title Policies, to the best of Mezzanine Borrower’s knowledge and, where
applicable, in reliance on the Surveys (a) all of the Improvements lie wholly
within the boundaries and building restriction lines of the Real Property
relating to the applicable Individual Property, (b) no improvements on
adjoining properties encroach upon the Real Property, and (c) no easements or
other encumbrances upon the Real Property encroach upon any of the
Improvements, so as to have a Material Adverse Effect.


4.1.28      Subleases.  The Property is not subject to any leases
other than the Master Lease, the Individual Property Subleases, and the other
Subleases set forth on Schedule I attached hereto.  No Person has any possessory interest in the
Property or right to occupy the same except under and pursuant to the
provisions of the Master Lease, the Individual Property Subleases and the other
Subleases.  The current Material
Subleases are in full force and effect and to the best of Mezzanine Borrower’s
knowledge, there are no material defaults thereunder by either party (other
than as expressly disclosed on Schedule I).  No Rent under any Material Sublease has been
paid more than one (1) month in advance of its due date, except as disclosed on
Schedule I.  There has been no
prior sale, transfer or assignment, hypothecation or pledge by Mortgage
Borrower or Master Lessee of the Master Lease, the Individual Property
Subleases or any Sublease or of the Rents received therein, which will be
outstanding following the funding of the Loan, other than those being assigned
to Lender concurrently herewith.


 


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4.1.29      Filing
and Recording Taxes.  All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the transfer of the
Property to Mortgage Borrower and the granting and recording of the Security
Instruments and the UCC financing statements required to be filed in connection
with the Mortgage Loan have been paid. 
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Mortgage Loan Documents,
including, without limitation, the Security Instruments, have been paid, and,
under current Legal Requirements, the Security Instruments are enforceable
against Mortgage Borrower in accordance with its terms by Mortgage Lender (or
any subsequent holder thereof) subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject as to enforceability, to general principles of  equity (regardless of whether enforcement
is  sought  in  a
proceeding in equity or at law.


4.1.30      Single
Purpose Entity/Separateness.


(a)               Until the Indebtedness has been
paid in full, Mezzanine Borrower hereby represents, warrants and covenants that
Mezzanine Borrower, Mortgage Borrower, each Junior Mezzanine Borrower and each
other SPE Entity is, shall be, and shall continue to be, a Single Purpose
Entity.


(b)               All of the assumptions made in
the Non-Consolidation Opinion, including, but not limited to, any exhibits
attached thereto, are true and correct in all material respects and any
assumptions made in any subsequent non-consolidation opinion delivered in
connection with the Mezzanine Loan Documents (an “Additional Non-Consolidation
Opinion”), including, but not limited to, any exhibits attached thereto,
will have been and shall be true and correct in all material respects.  Mortgage Borrower, Mezzanine Borrower and
each SPE Entity have complied and will comply in all material respects with all
of the assumptions made with respect to it in the Non-Consolidation Opinion in
all material respects.  Mortgage
Borrower, Mezzanine Borrower and each SPE Entity will have complied and will
comply with all of the assumptions made with respect to it in any Additional
Non-Consolidation Opinion.  Each entity
other than Mortgage Borrower with respect to which an assumption shall be made
in any Additional Non-Consolidation Opinion will have complied and will comply
in all material respects with all of the assumptions made with respect to it in
any Additional Non-Consolidation Opinion.


(c)               All of the assumptions made in
the True Lease Opinion, including, but not limited to, any exhibits attached
thereto, are true and correct in all material respects.


(d)               All of the assumptions made in
the True Sale Opinion, including, but not limited to, any exhibits attached
thereto, are true and correct in all material respects.


4.1.31      Reserved.


4.1.32      Illegal Activity.  No portion of the Property has been or will
be purchased with proceeds of any illegal activity.


 


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4.1.33      No Change in Facts or Circumstances;
Disclosure.  All material
information submitted by Mezzanine Borrower to Mezzanine Lender in writing in
connection with the Loan or in satisfaction of the terms hereof and all
material statements of fact made by any Mezzanine Borrower in this Agreement or
in any other Mezzanine Loan Document, are to the best of Mezzanine Borrower’s
knowledge, accurate and correct in all material respects except as would not
have a Material Adverse Effect.


4.1.34      Reserved


4.1.35      Tax Filings.  Mezzanine Borrower has filed (or has obtained
effective extensions for filing) all federal, state and local tax returns
required to be filed and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments payable by
Mezzanine Borrower.


4.1.36      Solvency/Fraudulent Conveyance.  Mezzanine Borrower has not entered into the
transaction contemplated by this Agreement or any Mezzanine Loan Document with
the actual intent to hinder, delay, or defraud any creditor.  Mezzanine Borrower’s assets do not and,
immediately following the making of the Loan will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted.  Mezzanine Borrower does not
intend to, and does not believe that it will, incur Debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debt and liabilities as they mature (taking into account the timing
and amounts of cash to be received by Mezzanine Borrower and the amounts to be
payable on or in respect of obligations of Mezzanine Borrower).


4.1.37      Investment Company Act.  Mezzanine Borrower is not (a) an investment
company or a company Controlled by an investment company, within the meaning of
the Investment Company Act of 1940, as amended, or (b) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.


4.1.38      Interest Rate Cap Agreement (First
Mezzanine).  A complete and
correct copy of the Interest Rate Cap Agreement (First Mezzanine) is attached hereto as Exhibit L.  The Interest Rate Cap Agreement (First Mezzanine) is in full force
and effect and enforceable against Mezzanine Borrower in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws generally
affecting the enforcement of creditors’ rights and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).


4.1.39      Labor.  Except as set forth on Schedule II, no
organized work stoppage or labor strike is pending or threatened by employees
and other laborers at the Property. 
Except as set forth in Schedule II or to the extent any such
failure would not reasonably be expected to result in a Material Adverse
Effect, none of Mortgage Borrower or Master Lessee, (i) is involved in or, to
the best knowledge of Mezzanine Borrower, threatened with any labor dispute,
grievance or litigation relating to labor matters involving any employees and
other laborers at the Property, including, without limitation, violation of any
federal, state or local labor, safety or employment laws (domestic or foreign)
and/or charges of unfair labor practices or discrimination complaints, (ii) to
the best knowledge of Mezzanine Borrower, has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act or the Railway
Labor Act or (iii) is a 


 


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party to, or bound by, any collective
bargaining agreement or union contract with respect to employees and other
laborers at the Property and no such agreement or contract is currently being
negotiated by the Mortgage Borrower or Master Lessee.


4.1.40      Brokers.  Neither Mezzanine Borrower nor Mezzanine
Lender has dealt with any broker or finder with respect to the transactions
contemplated by the Mezzanine Loan Documents, and neither party has done any
acts, had any negotiations or conversations, or made any agreements or promises
which will in any way create or give rise to any obligation or liability for
the payment by either party of any brokerage fee, charge, commission or other
compensation to any Person with respect to the transactions contemplated by the
Mezzanine Loan Documents.  Mezzanine
Borrower and Mezzanine Lender shall each indemnify and hold harmless the other
from and against any loss, liability, cost or expense, including any judgments,
attorneys’ fees, or costs of appeal, incurred by the other party and arising
out of or relating to any breach or default by the indemnifying party of its
representations, warranties and/or agreements set forth in this Section
4.1.40.  The provisions of this Section
4.1.40 shall survive the expiration and termination of this Agreement and
the payment of the Indebtedness.


4.1.41      No Other Debt.  Mezzanine Borrower has not borrowed or
received debt financing that has not been heretofore repaid in full, other than
the Permitted Debt of Mezzanine Borrower.


4.1.42      Taxpayer Identification Number.  Mezzanine Borrower’s Federal taxpayer
identification number is 26-1259332.


4.1.43      Compliance with Anti-Terrorism, Embargo and
Anti-Money Laundering Laws. 
(i) None of Mezzanine Borrower, any Guarantor or any Person who Controls
Mezzanine Borrower or any Guarantor currently is identified on the OFAC List or
otherwise qualifies as a Prohibited Person, and (ii) none of Mezzanine Borrower
or any Guarantor is in violation of any Legal Requirements relating to
anti-money laundering or anti-terrorism, including, without limitation, Legal
Requirements related to transacting business with Prohibited Persons or the
requirements of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law
107-56, and the related regulations issued thereunder, including temporary
regulations, all as amended from time to time. 
To the best of Mezzanine Borrower’s knowledge, no Tenant at the Premises
currently is identified on the OFAC List or otherwise qualifies as a Prohibited
Person, and no Tenant at the Premises is owned or Controlled by a Prohibited
Person.


4.1.44      Merger Agreement.  Mezzanine Borrower has caused Mortgage
Borrower to deliver to Mezzanine Lender true complete and correct copies of the
Merger Agreement and all deliveries made by any party thereto or any of their
respective Affiliates as Mezzanine Lender shall have requested, to the extent
that such deliveries are within the possession or control of Mezzanine Borrower
or Mortgage Borrower or any of the Guarantors.


4.1.45      Rights of First Refusal or First Offer to
Lease or Purchase.  No Person,
whether pursuant to an Operating Agreement or otherwise has a right of first
refusal, right of first offer or other right or option pursuant to such
Operating Agreement or otherwise to lease or purchase or to restrict or impose
requirements upon the lease or purchase of all or any part of any Individual 


 


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Property, except as set forth on Schedule
VI.  None of the matters set forth on
Schedule VI has been or will be triggered by any of the Contemplated
Transactions and Mortgage Borrower and its Affiliates are not in default of any
of the provisions referenced in Schedule VI.  None of the matters set forth on Schedule
VI has or will have a Material Adverse Effect.  .


4.2                                 Survival of Representations. 
Mezzanine Borrower agrees that all of the representations and warranties
of Mezzanine Borrower set forth in Section 4.1 and elsewhere in this
Agreement and in the other Mezzanine Loan Documents shall be deemed given and
made as of the date hereof and survive for so long as any amount remains owing
to Mezzanine Lender under this Agreement or any of the other Mezzanine Loan
Documents by Mezzanine Borrower or Guarantor unless a longer survival period is
expressly stated in a Mezzanine Loan Document with respect to a specific
representation or warranty, in which case, for such longer period.  All representations, warranties, covenants
and agreements made in this Agreement or in the other Mezzanine Loan Documents
by Mezzanine Borrower shall be deemed to have been relied upon by Mezzanine
Lender notwithstanding any investigation heretofore or hereafter made by
Mezzanine Lender or on its behalf.


 


4.3                                 Mezzanine
Borrower’s Knowledge.  Whenever a
representation or warranty is made “to Mezzanine Borrower’s knowledge,” “to
Mezzanine Borrower’s best knowledge,” “to Master Lessee’s knowledge,” “to
Master Lessee’s best knowledge,” or a term of similar import, such term shall
mean the current actual knowledge of each of Thomas Friel and Matthew Heinhold, in each case after reasonable diligence, and of
Mezzanine Borrower’s or Master Lessee’s, as applicable, respective executive
officers (other than Thomas Friel) and directors who have actual knowledge of
the relevant subject matter.


 


V.            MEZZANINE
BORROWER COVENANTS


 


5.1                                 Affirmative
Covenants.  From the Closing Date and
until payment and performance in full of all obligations of Mezzanine Borrower
under the Mezzanine Loan Documents, Mezzanine Borrower (as to itself, Mortgage
Borrower and the Property) hereby covenants and agrees with Mezzanine Lender
that:


 


5.1.1                        Performance by Mezzanine Borrower.  Mezzanine Borrower shall in a timely manner
observe, perform and fulfill in all material respects each and every covenant,
term and provision of each Mezzanine Loan Document executed and delivered by,
or applicable to, Mezzanine Borrower, and shall not enter into or otherwise
suffer or permit any amendment, waiver, supplement, termination or other
modification of any Mezzanine Loan Document executed and delivered by, or
applicable to, Mezzanine Borrower, as applicable, without the prior written
consent of Mezzanine Lender.


5.1.2                        Existence; Compliance with Legal Requirements;
Insurance.  Subject to Section
7.3 and Mortgage Borrower’s right of contest pursuant to Section 7.3 of
the Loan Agreement (Mortgage), Mezzanine Borrower shall at all times comply and
cause the Mortgage Borrower and the Property to be in compliance in all
material respects with all Legal Requirements applicable to the Mezzanine
Borrower, Mortgage Borrower, any SPE Entity and the Property and the uses
permitted upon the Property.  Mezzanine
Borrower shall cause Mortgage Borrower to do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its 


 


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existence, rights, licenses, permits and
franchises necessary to comply with all material Legal Requirements applicable
to it and the Property.  There shall
never be committed by Mezzanine Borrower, and Mezzanine Borrower shall not
permit Mortgage Borrower or knowingly permit any other Person in occupancy of
or involved with the operation or use of the Property to commit, any act or
omission affording the federal government or any state or local government the
right of forfeiture as against the Property or any part thereof or any monies
paid in performance of Mezzanine Borrower’s obligations under any of the
Mezzanine Loan Documents.  Mezzanine
Borrower hereby covenants and agrees not to commit, knowingly permit or suffer
to exist any act or omission affording such right of forfeiture.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to at all times maintain, preserve and protect all franchises
and trade names where the failure to so preserve and protect would be
reasonably likely to have a Material Adverse Effect, and preserve all the
remainder of its property used in and necessary for the conduct of its business
and shall and shall cause Mortgage Borrower to keep the Property in good
working order and repair (reasonable wear and tear excepted, and subject to
Excusable Delays, casualty and Taking, as to the latter two of which Section
6.2 shall apply), and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto as more fully set forth in the Security Instruments.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to keep the Property insured at all times to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully set forth in this Agreement and the Loan Agreement (Mortgage).


5.1.3        Litigation.  Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender of any litigation or governmental proceedings
pending or threatened in writing against Mezzanine Borrower, Mortgage Borrower,
the Collateral or the Property which, if determined adversely to Mezzanine
Borrower, Mortgage Borrower, the Collateral or the Property would reasonably be
expected to have a Material Adverse Effect.


5.1.4        Single Purpose Entity.


(a)               Each of Mezzanine Borrower and
each SPE Entity has been since the date of its formation and shall remain a
Single Purpose Entity.


(b)               Each of Mezzanine Borrower and
each SPE Entity shall continue to maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions.  None of the funds of
Mezzanine Borrower or any SPE Entity will be diverted to any other Person for
anything other than business uses of Mezzanine Borrower or any SPE Entity, as
applicable, nor will such funds be commingled with the funds of any other
Affiliate.


(c)               To the extent that Mezzanine
Borrower or any SPE Entity shares the same officers or other employees as any
of Mezzanine Borrower, any SPE Entity or their Affiliates, the salaries of and
the expenses related to providing benefits to such officers and other employees
shall be fairly allocated among such entities, and each such entity shall bear
its fair share of the salary and benefit costs associated with all such common
officers and employees.


(d)               To the extent that Mezzanine
Borrower or any SPE Entity jointly contracts with any of Mezzanine Borrower, any
SPE Entity or either of their Affiliates, as applicable, to do 


 


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business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing shall
be allocated fairly among such entities, and each such entity shall bear its
fair share of such costs.  To the extent
that either Mezzanine Borrower or any SPE Entity contracts or does business
with vendors or service providers where the goods and services provided are
partially for the benefit of any other Person, the costs incurred in so doing
shall be fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair share of
such costs.  All material transactions
between (or among) Mezzanine Borrower or each SPE Entity and any of their
respective Affiliates shall be conducted on substantially the same terms (or on
more favorable terms for Mezzanine Borrower or any SPE Entity, as applicable)
as would be conducted with third parties.


(e)               To the extent that Mezzanine
Borrower, any SPE Entity or any of their Affiliates have offices in the same
location, there shall be a fair and appropriate allocation of overhead costs
among them, and each such entity shall bear its fair share of such expenses.


(f)                Mezzanine Borrower and each SPE
Entity shall conduct its affairs strictly in accordance with its organizational
documents, and observe all necessary, appropriate and customary corporate,
limited liability company or partnership formalities, as applicable, including,
but not limited to, obtaining any and all members’ consents necessary to
authorize actions taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, without limitation, payroll and
intercompany transaction accounts.


(g)               In addition, Mezzanine Borrower
and each SPE Entity shall each: (i) maintain books and records separate from
those of any other Person; (ii) maintain its assets in such a manner that it is
not more costly or difficult to segregate, identify or ascertain such assets;
(iii) hold regular meetings of its board of directors, shareholders, partners
or members, as the case may be; (iv) hold itself out to creditors and the
public as a legal entity separate and distinct from any other entity; (v)
prepare separate tax returns (unless part of a consolidated group) and
financial statements (unless part of a consolidated group), or if part of
consolidated group it will be shown as a separate member of such group or such
consolidated tax returns or financial statements will contain a note indicating
that it and its Affiliate are separate legal entities and maintain records,
books of account and accounts separate and apart from any other Person; (vi)
transact all business with its Affiliates on an arm’s-length basis and pursuant
to enforceable agreements; (vii) conduct business in its name and use separate
stationery, invoices and checks; (viii) not commingle its assets or funds with
those of any other Person; and (ix) not assume, guarantee or pay the debts or
obligations of any other Person.


5.1.5        Consents.  If Mezzanine Borrower or any SPE Entity is a
corporation, the board of directors of such Person may not take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
directors unless all of the directors, including the Independent Directors,
shall have participated in such vote.  If
Mezzanine Borrower or any SPE Entity is a limited liability company, (a) if
such Person is managed by a board of managers or directors, the board of
managers or directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of managers or
directors unless all of the managers or directors, including the Independent
Managers or Independent Directors, shall have participated in such vote, (b) if
such Person is not managed by a board of managers or directors, the members of
such Person may not take any action requiring the 


 


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affirmative vote of 100% of the members of
such Person unless all of the members, including the Independent Members, shall
have participated in such vote.  An
affirmative vote of 100% of the directors, managers or members, as applicable,
of Mezzanine Borrower and any SPE Entity shall be required to (i) file a
bankruptcy or insolvency petition or otherwise institute insolvency proceedings
or to authorize Mezzanine Borrower or any SPE Entity to do so or (ii) file an
involuntary bankruptcy petition against any Affiliate, Manager, or any
Affiliate of Manager.  Furthermore,
Mezzanine Borrower’s and each SPE Entity’s formation documents shall expressly
state that for so long as the Loan is outstanding, neither Mezzanine Borrower
nor any SPE Entity shall be permitted to (i) dissolve, liquidate, consolidate,
merge or sell all or substantially all of Mezzanine Borrower’s or any SPE
Entity’s assets other than in connection with the repayment of the Loan or (ii)
engage in any other business activity and such restrictions shall not be
modified or violated for so long as the Loan is outstanding.


5.1.6        Access to Property.  Subject to applicable Gaming Laws, Mezzanine
Borrower shall cause Mortgage Borrower to permit agents, representatives and
employees of Mezzanine Lender and the Rating Agencies to inspect the Property
or any part thereof during normal business hours on Business Days upon
reasonable advance notice.


5.1.7        Notice of Default.  Mezzanine Borrower shall promptly advise
Mezzanine Lender (a) of any event or condition of which Mezzanine Borrower has
knowledge that has a Material Adverse Effect and (b) of the occurrence of any
Default or Event of Default of which Mezzanine Borrower has knowledge.


5.1.8        Cooperate in Legal Proceedings.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to, cooperate fully with Mezzanine Lender with respect to any
proceedings before any court, board or other Governmental Authority which would
reasonably be expected to affect in any material adverse way the rights of
Mezzanine Lender hereunder or under any of the other Mezzanine Loan Documents
and, in connection therewith, permit Mezzanine Lender, at its election, to
participate in any such proceedings which may have a Material Adverse Effect.


5.1.9        Reserved.


5.1.10      Insurance.


(a)           Mezzanine Borrower shall cause Mortgage Borrower to
cooperate with Mortgage Lender in obtaining for Mortgage Lender the benefits of
any Proceeds lawfully or equitably payable in connection with the Property and
distributing any excess Proceeds to Mezzanine Lender as otherwise provided in
this Agreement.


(b)           Mezzanine Borrower shall comply and shall cause Mortgage
Borrower to comply with all applicable Insurance Requirements and shall not
permit Mortgage Borrower to bring or keep or permit to be brought or kept any
article upon any of the Property or cause or permit any condition to exist
thereon which would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required hereunder or under the Loan Agreement
(Mortgage) to be maintained by Mortgage Borrower on or with respect to any part
of the Property pursuant to this Agreement or the Loan Agreement (Mortgage).


5.1.11      Further Assurances; Separate Notes; Loan
Resizing.


 


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(a)               Mezzanine Borrower shall execute
and acknowledge (or cause to be executed and acknowledged) and deliver to
Mezzanine Lender all documents, and take all actions, reasonably required by
Mezzanine Lender from time to time to confirm the rights created or now or
hereafter intended to be created under this Agreement and the other Mezzanine
Loan Documents and any security interest created or purported to be created
thereunder, to protect and further the validity, priority and enforceability of
this Agreement and the other Mezzanine Loan Documents, to subject to the
Mezzanine Loan Documents any property of Mezzanine Borrower intended by the
terms of any one or more of the Mezzanine Loan Documents to be encumbered by
the Mezzanine Loan Documents, or otherwise carry out the purposes of the
Mezzanine Loan Documents and the transactions contemplated thereunder.  Mezzanine Borrower agrees that it shall, upon
request and at Mezzanine Lender’s cost (including, without limitation, any
costs related to the modification or replacement of the Interest Rate Cap
Agreement (First Mezzanine) (but not including any breakage costs associated
with or arising under the Interest Rate Cap Agreement (First Mezzanine)),
reasonably cooperate with Mezzanine Lender in connection with any request by
Mezzanine Lender to sever one or more of the Mezzanine Notes into two (2) or
more separate substitute notes in an aggregate principal amount equal to the
Principal Amount and to reapportion the Loan among such separate substitute notes,
including, without limitation, by executing and delivering to Mezzanine Lender
new substitute notes to replace the applicable Mezzanine Note or Mezzanine
Notes, amendments to or replacements of existing Mezzanine Loan Documents to
reflect such severance and/or Opinions of Counsel with respect to such
substitute notes, amendments and/or replacements, provided that Mezzanine
Borrower shall bear no costs or expenses in connection therewith (other than
internal administrative costs and expenses of Mezzanine Borrower).  Any such substitute notes may have varying
principal amounts and economic terms, provided, however, that (i) the maturity
date of any such substitute note shall be the same as the scheduled Maturity Date
of the Mezzanine Notes immediately prior to the issuance of such substitute
notes, (ii) the initial weighted average LIBOR Margin for the term of the
substitute notes shall not exceed the LIBOR Margin under the Mezzanine Note
being substituted immediately prior to the issuance of such substitute notes;
and (iii) the economics of the Loan shall not change in a manner which is
adverse to Mezzanine Borrower.  Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Lender
may apply payment of all sums due under such substitute notes in such order and
priority as Mezzanine Lender shall elect in its sole and absolute
discretion.  For avoidance of doubt,
Mezzanine Borrower agrees and acknowledges that such application may result in
the weighted average LIBOR Margin for the term of the applicable notes
exceeding the initial weighted average LIBOR Margin under the Mezzanine Note,
and such result shall not in any way restrict Lender’s right, in its
discretion, to make such application.


(b)               Mezzanine Borrower further agrees
to cooperate with Mortgage Lender and Mezzanine Lender in the resizing of the
Mortgage Loan, the Loan, and any Junior Mezzanine Loan, all as provided in and
in accordance with Section 5.1.11(b) of the Loan Agreement (Mortgage).


(c)               Any amounts
recovered from Collateral, or any part
thereof, after an Event of Default may be applied by Lender toward the
payment of any interest and/or principal of the Loan and/or any other amounts
due under the Loan Documents in such order, priority, or proportions as Lender
in its sole discretion shall determine.


 


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5.1.12      Mortgage Taxes.  Mezzanine Borrower shall cause Mortgage
Borrower to pay all taxes, charges, filing, registration and recording fees,
excises and levies payable with respect to the Mortgage Notes or the Liens
created or secured by the Mortgage Loan Documents, other than income, franchise
and doing business taxes imposed on Lender.


5.1.13      Operation.


Mezzanine Borrower shall cause
Mortgage Borrower to, and cause Master Lessee to, (i) promptly perform and/or
observe in all material respects all of the covenants and agreements required
to be performed and observed by it under the Master Lease and do all things
necessary to preserve and to keep unimpaired its material rights thereunder;
(ii) promptly notify Mezzanine Lender of any Master Lease Default of which it
is aware; and (iii) promptly deliver to Lender a copy of each financial
statement, capital expenditures plan, property improvement plan and any other
notice, report and estimate received by it under the Master Lease; and
Mezzanine Borrower shall cause Mortgage Borrower to enforce in a commercially
reasonable manner the performance and observance of all of the covenants and
agreements required to be performed and/or observed by the Master Lessee under
the Master Lease.  Whenever in this
Agreement or in any other Loan Document Mezzanine Borrower is obligated to
cause Mortgage Borrower to cause the Master Lessee to take or refrain from
taking a certain action, and whenever this Agreement or any Mezzanine Loan
Document shall set forth an obligation of Master Lessee, then such provisions
shall be construed to mean that Mezzanine Borrower shall cause Mortgage
Borrower to exercise its best efforts to cause Master Lessee to take or refrain
from taking such action, or performing such action, including exercising such
legal rights and remedies as shall be available to Mortgage Borrower under the
Master Lease and applicable law.


5.1.14      Business and Operations.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to continue to engage in the businesses presently conducted
by it as and to the extent the same are necessary for the ownership,
maintenance, management and operation of the Property and the Collateral.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to qualify to do business and shall remain in good standing
under the laws of all applicable jurisdictions as and to the extent required
for the ownership, maintenance, management and operation of the Property and
the Collateral.


5.1.15      Title to the Collateral.  Mezzanine Borrower shall warrant and defend
(a) its title to the Collateral and every part thereof, subject only to
Permitted Encumbrances (First Mezzanine) and (b) the validity and priority of
the Liens of this Agreement and the Pledge on the Collateral,, in each case
against the claims of all Persons whomsoever. 
Mezzanine Borrower shall reimburse Mezzanine Lender for any losses,
costs, damages or expenses (including reasonable attorneys’ fees and court
costs) incurred by Mezzanine Lender if an interest in the Collateral, other
than Permitted Encumbrance (First Mezzanine), is claimed by another Person.


5.1.16      Costs of Enforcement.  In the event (a) that this Agreement or the
Pledge is foreclosed upon in whole or in part or that by reason of Mezzanine
Borrower’s default hereunder this Agreement or the Pledge is put into the hands
of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any security agreement prior to or subsequent to this Agreement
in which proceeding Mezzanine Lender is made a party, or (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Mezzanine
Borrower or any 


 


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of its constituent Persons or an assignment
by Mezzanine Borrower or any of its constituent Persons for the benefit of its
creditors, Mezzanine Borrower, its successors or assigns, shall be chargeable
with and agrees to pay all reasonable out-of-pocket costs of collection and
defense, including reasonable attorneys’ fees and costs, incurred by Mezzanine
Lender or Mezzanine Borrower in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, together with all
required service or use taxes.


5.1.17      Estoppel Statements.  Mezzanine Borrower shall, from time to time
but no more often than once in any calendar quarter so long as no Event of
Default shall exist, upon thirty (30) days’ prior written request from Mezzanine
Lender and shall cause Mortgage Borrower to 
execute, acknowledge and deliver to the Mezzanine Lender, an Officer’s
Certificate, stating that this Agreement and the other Mezzanine Loan Documents
(or as applicable, the Loan Documents (Mortgage)) are unmodified and in full
force and effect (or, if there have been modifications, that this Agreement and
the other Mezzanine Loan Documents or as applicable the Loan Documents
(Mortgage) are in full force and effect as modified and setting forth such modifications),
stating the amount of accrued and unpaid interest and the outstanding principal
amount of the Mezzanine Notes (or as applicable Mortgage Notes) and containing
such other information with respect to the Mezzanine Borrower, Mortgage
Borrower, the Property, the Mortgage Loan and the Loan as Mezzanine Lender
shall reasonably request.  Mezzanine
Lender shall, from time to time, but no more often than once in any calendar
quarter, upon thirty (30) days’ prior written request from Mezzanine Borrower,
execute, acknowledge and deliver to Mezzanine Borrower, a certificate signed by
an officer of Mezzanine Lender, stating that this Agreement and the other
Mezzanine Loan Documents are unmodified and in full force and effect (or, if
there have been modifications, that this Agreement and the other Mezzanine Loan
Documents are in full force and effect as modified and setting forth such
modifications).  The estoppel certificate
from Mezzanine Borrower shall also state either that, to the best of Mezzanine
Borrower knowledge, no Default exists hereunder or, if any Default shall exist
hereunder, specify such Default and the steps being taken to cure such Default
and the estoppel certificate from Mezzanine Lender shall state whether
Mezzanine Lender has delivered notice of a Default or an Event of Default.


5.1.18      Loan Proceeds.  Mezzanine Borrower shall use the proceeds of
the Loan received by it on the Closing Date only for the purposes set forth in Section
2.1.4.


5.1.19      No Joint Assessment.  Mezzanine Borrower shall not and shall not
permit Mortgage Borrower to suffer, permit or initiate the joint assessment of
the Property, (a) with any other real property constituting a tax lot separate
from the Property and (b) which constitutes real property with any portion of the
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such real property
portion of the Property.


5.1.20      No Further Encumbrances.  Subject to Section 7.3 of the Loan
Agreement (Mortgage) and Section 7.3 hereof, Mezzanine Borrower shall do,
or cause to be done, all things necessary to keep and protect the Property and
the Collateral and all portions thereof unencumbered from any Liens, easements
or agreements granting rights in the Collateral or the Property or restricting
the use or development of the Property, except for (a) with respect to the 


 


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Property, Permitted Encumbrances, and (b)
with respect to the Collateral, Permitted Encumbrances (First Mezzanine).


5.1.21      Loan (Mortgage) Covenants.  Mezzanine Borrower shall cause Mortgage
Borrower, to fully keep, perform and comply with (or cause to be kept, performed
and complied with) each of the covenants, terms and provisions set forth in the
Loan Agreement (Mortgage) and the Security Instruments, which are hereby
incorporated by reference as if fully set forth herein, notwithstanding any
waiver or future amendment of such covenants, terms and provisions by Mortgage
Lender.  Mezzanine Borrower acknowledges
that the obligation to comply with such covenants, terms and provisions is
separate from, and may be enforced independently from, the obligations of the Mortgage
Borrower under the Loan Documents (Mortgage).


(a)               Without Mezzanine Lender’s prior written consent,
Mezzanine Borrower shall not, and shall cause Mortgage Borrower not to, (i)
amend or modify (by agreement on the part of the Mortgage Borrower or Mezzanine
Borrower) or (ii) affirmatively permit the modification or amendment of (by
operation of law or otherwise) the Loan Documents (Mortgage) in effect as of
the Closing Date.


(b)               In the event the Loan (Mortgage) shall at any time be
repaid, and the Liens securing the Loan (Mortgage) at any time be released in
full, then unless and until the Mezzanine Note shall have been repaid in full
and all obligations of Mezzanine Borrower to Mezzanine Lender hereunder and
under the other Mezzanine Loan Documents shall have been satisfied, then
Mezzanine Borrower shall nevertheless comply or cause the Mortgage Borrower to
comply with each of the terms and provisions of the Loan Documents (Mortgage)
(other than payment of principal, interest and premium and the obligation to
maintain the Interest Rate Swap Agreement (if any)) and the Loan Documents
(Mortgage) shall nevertheless be deemed to remain in full force and effect as
between Mezzanine Borrower and Mezzanine Lender with Mezzanine Lender being
deemed in such context to possess exclusively all of the rights and remedies of
the Mortgage Lender thereunder including without limitation, all rights of
consent and approval, rights to receive and control the disposition of casualty
insurance proceeds and condemnation awards, and the right to collect rents and
make waterfall distributions (but expressly excluding any rights and remedies
relating to payment of the indebtedness under the Loan Documents (Mortgage) and
evidenced by the Mortgage Notes) and Mezzanine Borrower shall nevertheless
comply or cause the Mortgage Borrower to comply with each of the terms and
provisions of the Loan Documents (Mortgage) (and any amendment or modification
consented to in writing by Mezzanine Lender) (other than the payment of
principal, interest and premium and the obligation to maintain the Interest
Rate Swap Agreement if any)).  Mezzanine
Borrower shall, and shall cause Mortgage Borrower to, execute any and all
documents reasonably requested by Mezzanine Lender for the implementation or furtherance
of the foregoing provided that the same shall be at Mezzanine Lender’s sole
cost and expense.  Mezzanine Borrower
shall deliver to Mezzanine Lender copies of any and all modifications to the
Loan Documents (Mortgage) within five (5) Business Days after execution
thereof.


(c)               Mezzanine Borrower covenants and agrees to cause
Mortgage Borrower to deliver any and all financial information delivered or
required to be delivered to Mortgage Lender pursuant to the terms of the Loan
Documents (Mortgage) to be delivered simultaneously to Mezzanine Lender.


 


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5.1.22      Master Lease.


(a)           Each
Individual Property shall at all times be leased directly and exclusively by
the Mortgage Borrower to the Master Lessee under the Master Lease (and not to
any other Person under the Master Lease or any replacement Master Lease).  Master Lessee shall be permitted to enter
into Subleases subject to and in accordance with Section 8.8.2.


(b)           The
Master Lease shall have an initial term of fifteen (15) years with renewal
rights.


(c)           The
Master Lease shall require Master Lessee to make payments of Master Lease
Rent.  Pursuant to the Master Lease and
the Master Lease Rent Payment Direction Letter all Master Lease Scheduled Rent
shall at all times during the term of the Loan be made directly to the Holding
Account, and none of the foregoing payments of Master Lease Rent shall be
deemed made until such payment has been deposited into the Holding Account.


(d)           The
Master Lease shall require the Master Lessee to prepare the expenses and
revenue in accordance with Article XI and to submit copies to Mezzanine
Lender for its reference, not for its approval.


(e)           Neither
Mortgage Borrower nor Master Lessee shall terminate the Master Lease or consent
to the termination of the Master Lease without the prior written consent of
Mezzanine Lender.  Except as provided in
the Master Lease with respect to casualties or condemnations, the Master Lease
shall not provide for the release of an Individual Property.  The Master Lease may be amended to provide,
inter alia, for a release of an Individual Property and the reduction of Master
Lease Rent as provided in Section 2.3.4(v) and (vi).


(f)            Except
for the Assignment of Leases and the Permitted Encumbrances, neither the
Mortgage Borrower nor the Master Lessee shall Transfer or sublease, or allow to
be Transferred, its interest in the Master Lease or any interest therein
without the prior written consent of the Mezzanine Lender.  The Mezzanine Borrower shall not permit
Mortgage Borrower to permit (except as expressly permitted under the Master
Lease) and shall not consent to (except as expressly required under the Master
Lease) any assignment by the Master Lessee of its interest in the Master Lease
or its rights and interests thereunder except to Master Lessee’s successor by
merger or acquisition of all or substantially all of Master Lessee’s
assets.  Notwithstanding the foregoing,
Master Lessee shall pledge to Mortgage Borrower its interest in the “FF&E”
as defined in the Master Lease, subject to the Assigned Landlord Lien.


(g)           Neither
the Mortgage Borrower nor the Master Lessee shall, without the prior written
consent of Mezzanine Lender which consent, solely with respect to clauses (ii)
and (iii) of this Section 5.1.22(g), will not be unreasonably withheld,
(i) renew (other than pursuant to renewal rights expressly set forth in the
Master Lease), extend, release any Individual Property from (except in
connection with a Property Release, Substitution or release of an Unimproved
Parcel, in compliance with Sections 2.3.4, 2.3.5 and 2.3.9
hereof) terminate, reduce rents (except as expressly authorized pursuant to Section
2.3.4) or other sums payable under, accept a surrender of, or shorten the
term of, the Master Lease, (ii) appoint any appraiser, (iii) make any
determination of Fair Market Rental or Fair Market Value (as such terms are
defined in the 


 


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Master Lease), (iv) waive any provisions of the Master Lease, provided
that subject to clause (i) Mortgage Borrower and Master Lessee shall have the
right to waive provisions of the Master Lease so long as the same would not
have the effect of (1) waiving or reducing the monetary obligations of Master
Lessee under the Master Lease or (2) either permitting Master Lessee to take an
action that Mortgage Borrower or Master Lessee is prohibited from taking under
this Agreement or any other Loan Document, or preventing Mortgage Borrower
and/or Master Lessee from complying with an obligation on the part of Mortgage
Borrower or Master Lessee under this Agreement or any other Loan Document, (v)
amend or modify in any respect in a manner adverse to Mezzanine Lender or that
would decrease Master Lessee’s obligations or increase Mortgage Borrower’s
obligations thereunder, any provision of the Master Lease contained in Article
I (leased property, term, etc.), Article III (rent), Article IV (termination
and abatement), Article V (Ownership of Leased Property), Section 6.1(b) (Taxes
and Other Charges; Contest for Taxes and Other
Charges, Legal Requirements and Liens), Article VIII (Alterations;
Leasing), Article X (Casualty and Condemnation), Article XI (Accounts and
Reserves), Article XII (defaults and remedies), Article XV (Subordination) and
related definitions in Article II (definitions) or (vi) materially amend or
modify any provision of the Master Lease not listed in clause (v) in a manner
adverse to Mezzanine Lender or that would decrease Master Lessee’s obligations
or increase Mortgage Borrower’s obligations thereunder, provided that nothing in this Section 5.1.22(d) shall prohibit or
restrict Master Lessee from exercising its rights under Section 1.2 of the
Master Lease subject to the requirements of Sections 2.3.4 and 2.3.9
hereof.


(h)           The
Master Lease shall be subject and subordinate to the Loan pursuant to the
Master Lease SNDA.


(i)            Mortgage
Lender shall have the right to declare a Master Lease Tenant Default under the
Master Lease and to exercise the rights and remedies of the Mortgage Borrower,
as landlord under the Master Lease (including without limitation, exercising it
rights and remedies with respect to the Assigned Landlord Lien), pursuant to
the assignment of such rights in the Assignment of Leases.


(j)            The form of the Master Lease is attached hereto as
Exhibit F.  Mezzanine Lender hereby
approves of the form of the Master Lease.  Notwithstanding the foregoing, or anything
else in Mezzanine Loan Documents to the contrary, except as expressly set forth
in this Agreement if any conflict,
contradiction or inconsistency exists between the Master Lease and this
Agreement, the terms and provisions of this Agreement shall, as among the
parties hereto, control and govern


5.2           Negative
Covenants.


From the Closing Date until payment and
performance in full of all obligations of Mezzanine Borrower under the
Mezzanine Loan Documents or the earlier release of the Lien of this Agreement
or the Pledge in accordance with the terms of this Agreement and the other
Mezzanine Loan Documents, Mezzanine Borrower covenants and agrees with
Mezzanine Lender that it will not do, or cause, permit, or suffer Mortgage
Borrower to do, directly or indirectly, any of the following:


 


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5.2.1        Incur Debt.  Incur, create or assume any Debt other than
Permitted Debt of Mezzanine Borrower and Mortgage Borrower (as applicable) or
Transfer or lease all or any part of the Property or Collateral or any interest
therein, except as permitted in the Mezzanine Loan Documents (for the avoidance
of doubt, Mezzanine Borrower shall not have any obligations under or with
respect to the Junior Mezzanine Loans);


5.2.2        Encumbrances.  Other than in connection with the Mezzanine
Loan and the Junior Mezzanine Loans, incur, create or assume or permit the
incurrence, creation or assumption of any Debt secured by an interest in
Mortgage Borrower, Mezzanine Borrower, Junior Mezzanine Borrowers or any SPE
Entity;


5.2.3        Engage in Different Business.  With respect to (i) Mezzanine Borrower, engage,
directly or indirectly, in any business other than that of entering into this
Agreement and the other Mezzanine Loan Documents to which Mezzanine Borrower is
a party and the use, ownership, management, and financing of the Ownership
Interests and activities related thereto; and (ii) with respect to Mortgage
Borrower, engage, directly or indirectly, in any business other than that of
entering into the Loan Agreement (Mortgage) and the other Loan Documents
(Mortgage) to which Mortgage Borrower is a party and the use, ownership,
management, leasing, renovation, financing, development, operation and
maintenance of the Property and activities related thereto.


5.2.4        Make Advances.  Make advances or make loans to any Person, or
hold any investments, except as expressly permitted pursuant to the terms of
this Agreement or any other Mezzanine Loan Document;


5.2.5        Subdivision.  Permit Mortgage Borrower to subdivide any
Individual Property other than with respect to Unimproved Parcels in accordance
with the terms of this Agreement or otherwise with the prior consent of
Mezzanine Lender which consent shall not be unreasonably withheld, conditioned
or delayed.


5.2.6        Commingle.  Commingle its assets with the assets of any
of its Affiliates;


5.2.7        Guarantee Obligations.  Guarantee any obligations of any Person;


5.2.8        Transfer Assets.  Transfer any asset other than in the ordinary
course of business or Transfer any interest in the Property or Collateral
except in each case (including in connection with a Release or Substitution) as
may be permitted hereby or in the other Mezzanine Loan Documents;


5.2.9        Amend Organizational Documents.  Amend or modify any of its organizational
documents without Mezzanine Lender’s consent, other than in connection with any
Transfer permitted pursuant to Article VIII or to reflect any change in
capital accounts, contributions, distributions, allocations or other provisions
that do not and could not reasonably be expected to have a Material Adverse
Effect and provided that Mezzanine Borrower remains and each SPE Entity remains
a Single Purpose Entity;


5.2.10      Dissolve.  Dissolve, wind-up, terminate, liquidate,
merge with or consolidate into another Person, except as expressly permitted
pursuant to this Agreement;


 


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5.2.11      Bankruptcy.  (i) File a bankruptcy or insolvency petition
or otherwise institute insolvency proceedings, (ii) dissolve, liquidate,
consolidate, merge or sell all or substantially all of its assets other than in
connection with the repayment of the Loan, or (iii) file or solicit the filing
of an involuntary bankruptcy petition against Mortgage Borrower, Mezzanine
Borrower, any Junior Mezzanine Borrower, a Master Lessee Party, any Guarantor
or any SPE Entity of any such Person, without obtaining the prior consent of
all of the directors, members or managers, as applicable, of such Person;


5.2.12      ERISA.  Engage in any activity that would subject
Mortgage Borrower or Mezzanine Borrower to material liability under ERISA or
qualify it as an “employee benefit plan” (within the meaning of Section
3(3) of ERISA) to which ERISA applies and Mezzanine Borrower’s assets do not
and will not constitute plan assets within the meaning of 29 C.F.R. Section
2510.3-101;


5.2.13      Distributions.  From and after the occurrence and during the
continuance of an Event of Default or an event of default (a “Junior
Mezzanine Event of Default”) under any of the Junior Mezzanine Loan
Documents, make any distributions to or for the benefit of any of its partners
or members or its or their Affiliates; provided that so long as an Event of
Default shall not have occurred and be outstanding, distributions from
Mezzanine Borrower solely for the purpose of enabling a Junior Mezzanine
Borrower to cure a Junior Mezzanine Event of Default, and which distributions
are in fact sufficient to completely cure such Junior Mezzanine Event of
Default and are used for their intended purpose, shall be permitted.


5.2.14      Modify
Mezzanine Account Agreement.  Without the prior consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or conditioned,
execute any modification to the Mezzanine Account Agreement;


5.2.15      Zoning
Reclassification.  Without the
prior written consent of Mezzanine Lender (which in the case of clause (a)
shall not be unreasonably withheld), directly or through the Mortgage Borrower,
(a) initiate or consent to any zoning reclassification of any portion of the
Property, (b) seek any variance under any existing zoning ordinance that could
result in the use of the Property becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation, or
(c) allow any portion of the Property to be used in any manner that could
result in the use of the Property becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation;


5.2.16      Change
of Principal Place of Business.  Change Mezzanine Borrower’s principal place
of business and chief executive office set forth on the first page of this Agreement
without first giving Mezzanine Lender thirty (30) days’ prior written notice
(but in any event, within the period required pursuant to the UCC) and there
shall have been taken such action, reasonably satisfactory to Mezzanine Lender,
as may be necessary to maintain fully the effect, perfection and priority of
the security interest of Mezzanine Lender hereunder in the Account Collateral
(First Mezzanine) and the Rate Cap Collateral (First Mezzanine) at all times;


5.2.17      Debt
Cancellation.  Cancel or
otherwise forgive or release any material claim or debt owed to it, directly or
indirectly, by any Person, except for adequate consideration or in the


 


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ordinary course of its business and except for termination of a
Sublease as permitted by Section 8.8 of the Loan Agreement (Mortgage);


5.2.18      Misapplication
of Funds.  Permit
Mortgage Borrower to distribute any revenue from the Property or any Proceeds
in violation of the provisions of the Loan Agreement (Mortgage), distribute any
Receipts from the Ownership Interests in violation of the provisions of this
Agreement, fail to remit amounts to the Mezzanine Account, as applicable, as
required by Section 3.1, permit Mortgage Borrower to misappropriate any
security deposit or portion thereof or apply the proceeds of the Loan in
violation of Section 2.1.4; or


5.2.19      Single-Purpose
Entity.  Fail to be a Single Purpose
Entity or take or suffer any action or inaction the result of which would be to
cause it or any SPE Entity to cease to be a Single Purpose Entity.


VI.                                 INSURANCE; CASUALTY; CONDEMNATION;
RESTORATION


6.1           Insurance Coverage Requirements.  Mezzanine Borrower will cause Mortgage
Borrower, at its expense, to procure and maintain the insurance policies required
by the Loan Documents (Mortgage).  Each
commercial general liability or umbrella liability policy with respect to the
Property shall, to the extent permitted in the Loan Documents (Mortgage), name
Mezzanine Lender as an additional insured and shall, to the extent permitted in
the Loan Documents (Mortgage), contain a cross liability/severability
endorsement in form and substance acceptable to Mezzanine Lender.


6.1.1        Insurance Proceeds.  In the event of any loss or damage to the
Property, Mezzanine Borrower shall give prompt written notice to the insurance
carrier and Mezzanine Lender.  Mezzanine
Lender acknowledges that Mortgage Borrower’s rights to any insurance proceeds
are subject to the terms of the Loan Agreement (Mortgage).  Mezzanine Borrower may not and shall not
permit Mortgage Borrower to settle, adjust or compromise any claim under such
insurance policies without the prior written consent of Mezzanine Lender which
shall not be unreasonably withheld, delayed or denied; provided, further, that Mortgage
Borrower may make proof of loss and adjust and compromise any claim under
casualty insurance policies which is of an amount less than the amount set
forth on Exhibit V for the applicable Individual Property so long as no Event
of Default has occurred and is continuing. 
Any proceeds of such claim which are not used to reconstruct or repair
the Property or applied to Mortgage Borrower’s costs in connection therewith,
or applied to the balance of the loan evidenced by the Loan Documents
(Mortgage), shall be deposited into the accounts established pursuant to the
Loan Agreement (Mortgage) to the extent required thereby, or if such deposit is
not required thereunder, then such proceeds shall be paid to Mezzanine Lender
and applied to the payment of the Obligations (First Mezzanine) whether or not
then due.


6.1.2        Restoration of Property.  In the event that Mortgage Borrower is
permitted pursuant to the terms of the Loan Agreement (Mortgage) to
reconstruct, restore or repair the Property following a casualty to any portion
of the Property, Mezzanine Borrower shall cause Mortgage Borrower to promptly
and diligently repair and restore the Property in the manner and within the
time periods required by the Loan Agreement (Mortgage), the Operating
Agreements and any other agreements affecting the Property.  In the event that Mortgage Borrower is


 


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permitted pursuant
to terms of the Loan Agreement (Mortgage) to elect to not reconstruct, restore
or repair the Property following a casualty to any portion of the Property,
Mezzanine Borrower shall not permit Mortgage Borrower to elect not to
reconstruct, restore or repair the Property without the prior written consent
of Mezzanine Lender, provided that the prior written consent of Mezzanine
Lender shall not be required during the period when the Mortgage Borrower shall
be complying with the last sentence of Section 6.2.4(a) of the Loan Agreement
(Mortgage) or where the full Mezzanine Release Price with respect to such Property
has been paid to Mezzanine Lender and the conditions to the release of such
Property as set forth in Section  2.3.4
have been satisfied.


6.1.3        Compliance.  Mezzanine Borrower shall and shall cause
Mortgage Borrower to comply with all Insurance Requirements and shall not bring
or keep or permit to be brought or kept any article upon any of the Properties
or cause or permit any condition to exist thereon which would be prohibited by
any Insurance Requirement, or would invalidate insurance coverage required to
be maintained by Mortgage Borrower on or with respect to any part of the
Property pursuant to Section 6.1 of the Loan Agreement (Mortgage).


6.2           Condemnation.  In the event that all or any portion of the
Property shall be damaged or taken through condemnation (which term shall
include any damage or taking by any governmental authority, quasi governmental
authority, any party having the power of condemnation, or any transfer by
private sale in lieu thereof), or any such condemnation shall be threatened,
Mezzanine Borrower shall give prompt written notice to Mezzanine Lender.  Mezzanine Lender acknowledges that Mortgage
Borrower’s rights to any condemnation award is subject to the terms of the Loan
Agreement (Mortgage).  Notwithstanding
the foregoing, Mezzanine Borrower may not and shall not permit Mortgage
Borrower to settle or compromise any claim, action or proceeding relating to
such damage or condemnation without the prior written consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or denied; provided,
further, that Mortgage Borrower may settle, adjust and compromise any such
claim, action or proceeding which is of an amount less than the amount set
forth on Exhibit V for the applicable Individual Property so long as no Default
or Event of Default has occurred and is continuing.  Any Excess Proceeds shall be paid to
Mezzanine Lender and applied to the payment of the Obligations (First
Mezzanine) whether or not then due pursuant to Section 2.3.1(b).  In the event that Mortgage Borrower is
permitted pursuant to the terms of the Loan Agreement (Mortgage) to
reconstruct, restore or repair the Property following a condemnation of any
portion of the Property, Mezzanine Borrower shall cause Mortgage Borrower to
promptly and diligently repair and restore the Property in the manner and
within the time periods required by the Loan Agreement (Mortgage), the
Operating Agreements and any other agreements affecting the Property.  In the event that Mortgage Borrower is
permitted pursuant to the terms of the Loan Agreement (Mortgage) to elect not
to reconstruct, restore or repair the Property following a condemnation of any
portion of the Property, Mezzanine Borrower shall not permit Mortgage Borrower
to elect not to reconstruct, restore or repair the Property without the prior
written consent of Mezzanine Lender.


6.3           Certificates.  Mezzanine Borrower shall deliver (or cause
Mortgage Borrower to deliver) to Mezzanine Lender annually, concurrently with
the renewal of the insurance policies required hereunder, a certificate from
Mezzanine Borrower’s and Mortgage Borrower’s insurance agent stating that the
insurance policies required to be delivered to Mezzanine Lender


 


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pursuant to
Section 6.1 and Section 2.5.2(g) are maintained with insurers who comply
with the terms of Section 6.1.11 of the Loan Agreement (Mortgage), setting
forth a schedule describing all premiums required to be paid by Mezzanine
Borrower or Mortgage Borrower, as applicable, to maintain the policies of
insurance required under Section 6.1 and Section 2.5.2(g), and stating
that either Mezzanine Borrower or Mortgage Borrower, as applicable, has paid
such premiums.  Certificates of insurance
with respect to all replacement policies shall be delivered to Mezzanine Lender
not less than ten (10) Business Days prior to the expiration date of any of the
insurance policies required to be maintained hereunder which certificates shall
bear notations evidencing payment of applicable premiums.  Mezzanine Borrower shall deliver to Mezzanine
Lender originals (or certified copies) of such replacement insurance policies
on or before the earlier to occur of (i) thirty (30) days after the effective
date thereof (including the insurance certificates delivered pursuant to
Section 2.5.2(g)) and (ii) five (5) Business Days after Mezzanine Borrower’s
receipt thereof.  If Mezzanine Borrower
fails to (i) maintain and deliver to Mezzanine Lender the certificates of
insurance and certified copies or originals required by this Agreement upon
five (5) Business Days’ prior notice to Mezzanine Borrower, Mezzanine Lender
may procure such insurance, and all costs thereof (and interest thereon at the
Default Rate) shall be added to the Indebtedness.  Mezzanine Lender shall not, by the fact of
approving, disapproving, accepting, preventing, obtaining or failing to obtain
any insurance, incur any liability for or with respect to the amount of
insurance carried, the form or legal sufficiency of insurance contracts, solvency
of insurance companies, or payment or defense of lawsuits, and Mezzanine
Borrower hereby expressly assumes full responsibility therefor and all
liability, if any, with respect such matters.


VII.                             IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER
ITEMS


7.1           Mortgage Borrower
to Pay Impositions and Other Charges. 
Mezzanine Borrower shall cause Mortgage Borrower to pay (or cause to be
paid) all Impositions now or hereafter levied or assessed or imposed against
the Property or any part thereof prior to the imposition of any interest,
charges or expenses for the non-payment thereof and to pay all Other Charges on
or before the date they are due. 
Mezzanine Borrower shall pay all Impositions now or hereafter levied or
assessed or imposed against the Collateral or any part thereof prior to the
imposition of any interest, charges or expenses for the non-payment
thereof.  Mezzanine Borrower shall
deliver or cause to be delivered to Mezzanine Lender annually, no later than
thirty (30) calendar days after the first day of each fiscal year of Mezzanine
Borrower, and shall update as new information is received, a schedule
describing all Impositions, payable or estimated to be payable during such
fiscal year attributable to or affecting the Property, the Collateral,
Mezzanine Borrower or Mortgage Borrower. 
Subject to Mortgage Borrower’s right of contest set forth in Section
7.3 of the Loan Agreement (Mortgage), as set forth in the next two
sentences and provided that there are sufficient funds available in the Tax
Reserve Account under the Loan Agreement (Mortgage), Mortgage Lender, on behalf
of Mortgage Borrower, shall pay all Impositions and Other Charges which are
attributable to or affect the Property or Mortgage Borrower, prior to the date
such Impositions or Other Charges shall become delinquent or late charges may
be imposed thereon, directly to the applicable taxing authority with respect
thereto.  Mortgage Lender shall, or
Mortgage Lender shall direct the Cash Management Bank to, pay to the taxing
authority such amounts to the extent funds in the Tax Reserve Account are
sufficient to pay such Impositions. 
Nothing contained in this Agreement, the Loan Agreement (Mortgage) or
any Security Instrument shall be construed to require Mezzanine Borrower or
Mortgage


 


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Borrower to pay any tax, assessment, levy or charge imposed on Mortgage
Lender or Mezzanine Lender in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.


7.2           No Liens.  Subject to Section 7.3 and Mortgage Borrower’s
right of contest set forth in Section 7.3 of the Loan Agreement
(Mortgage) and to Permitted Encumbrances, Mezzanine Borrower shall cause
Mortgage Borrower to at all times keep, or cause to be kept, the Property free
from all Liens (other than Permitted Encumbrances) and shall pay when due and
payable (or bond over) all claims and demands of mechanics, materialmen,
laborers and others which, if unpaid, might result in or permit the creation of
a Lien on the Property or any portion thereof and shall in any event cause the
prompt, full and unconditional discharge of all Liens imposed on or against the
Property or any portion thereof within forty-five (45) days after receiving
written notice of the filing (whether from Mortgage Lender or Mezzanine Lender,
the lienor or any other Person) thereof. 
Mezzanine Borrower shall cause Mortgage Borrower to do or cause to be
done, at the sole cost of Mortgage Borrower, everything reasonably necessary to
fully preserve the first priority of the Lien of the Security Instruments
against the Property, subject to the Permitted Encumbrances.  Upon the occurrence and during the
continuance of a Mortgage Event of Default with respect to the Obligations
(Mortgage), each of Mortgage Lender and Mezzanine Lender may (but shall not be
obligated to) make any such payment or discharge any such Lien (other than
Permitted Encumbrances excluding therefrom any Liens described in clauses (d)
and (e) of the definition of “Permitted Encumbrances” which are the subject of
such Mortgage Event of Default), and Mezzanine Borrower shall reimburse
Mezzanine Lender and Mortgage Borrower on demand for all such advances pursuant
to Section 19.12 of this Agreement and the Loan Agreement (Mortgage)
(together with interest thereon at the Default Rate).


7.3           Contest. 
Nothing contained herein shall be deemed to require Mezzanine Borrower
to pay, or cause to be paid, any Imposition or to satisfy any Lien, or to
comply with any Legal Requirement or Insurance Requirement, so long as
Mezzanine Borrower is (or has caused Mortgage Borrower to be) in good faith,
and by proper legal proceedings, where appropriate, diligently contesting the
validity, amount or application thereof, provided that in each case, at the
time of the commencement of any such action or proceeding, and during the
pendency of such action or proceeding (i) no Event of Default shall exist and
be continuing hereunder, (ii) Mezzanine Borrower shall keep Mezzanine Lender
informed of the status of such contest at reasonable intervals, (iii) if
Mezzanine Borrower is not providing (or has not caused Mortgage Borrower to
provide) security as provided in clause (vi) below, adequate reserves with
respect thereto are maintained on Mezzanine Borrower’s (or Mortgage Borrower’s
as applicable) books in accordance with GAAP (or, in the case of Mortgage
Borrower, such reserves are maintained in the Tax Reserve Account or Insurance
Reserve Account, as applicable, or in the Proceeds Reserve Account pursuant to Article
VI of the Loan Agreement (Mortgage), as applicable), (iv) either such
contest operates to suspend collection or enforcement as the case may be, of
the contested Imposition, Lien or Legal Requirement and such contest is
maintained and prosecuted continuously and with diligence or the Imposition or
Lien is bonded, (v) in the case of any Insurance Requirement, the failure to
comply therewith shall not impair the validity of any insurance required to be
maintained under this Agreement or the right to full payment of any claims
thereunder, and (vi) in the case of Impositions and Liens which are not bonded
in excess of Two Million Dollars ($2,000,000) individually, or Ten Million
Dollars ($10,000,000)


 


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in the aggregate, during such contest,
Mezzanine Borrower shall (or shall cause Mortgage Borrower to) deposit with or
deliver to Mezzanine Lender (or, if required under the Loan Agreement
(Mortgage), Mortgage Lender) either Cash and Cash Equivalents or a Letter or
Letters of Credit in an amount equal to 110% of (A) the amount of the
obligations being contested plus (B) any additional interest, charge, or
penalty arising from such contest. 
Notwithstanding the foregoing, the creation of any such reserves or the
furnishing of any bond or other security, Mezzanine Borrower shall (or shall
cause Mortgage Borrower to) promptly comply with any contested Legal
Requirement or Insurance Requirement or shall pay any contested Imposition or
Lien, and compliance therewith or payment thereof shall not be deferred, if, at
any time the Property, the Collateral, or any portion thereof shall be, in
Mezzanine Lender’s reasonable judgment, in imminent danger of being forfeited
or lost or Mezzanine Lender is likely to be subject to criminal damages as a
result thereof.  If such action or
proceeding is terminated or discontinued adversely to Mezzanine Borrower or
Mortgage Borrower, as applicable (a) provided no Event of Default has occurred
and is continuing hereunder, Mezzanine Lender shall (or, as applicable,
Mortgage Lender may) disburse to the Person entitled to such sums, the security
provided therefore under this Section 7.3 and (b) Mezzanine Borrower
shall deliver to Mezzanine Lender reasonable evidence of compliance with such
contested Imposition, Lien, Legal Requirements or Insurance Requirements, as
the case may be. Notwithstanding the foregoing, any contest conducted by the
Master Lessee in accordance with the Master Lease will be deemed to satisfy the
requirements of this Section 7.3 provided that any security deposited by
Master Lessee pursuant to the provisions of the Master Lease in connection with
such contest is delivered to Mezzanine Lender (or, if required under the Loan
Agreement (Mortgage), the Mortgage Lender).


 


VIII.                         TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS


8.1           General
Restriction on Transfers.  Unless
such action is permitted by the provisions of this Article VIII,
Mezzanine Borrower shall not, and shall not permit Mortgage Borrower or any
other Person holding any direct or indirect ownership interest in Mortgage
Borrower, Mezzanine Borrower, any Junior Mezzanine Borrower, any Guarantor,
Master Lessee, any SPE Entity or the Property to, except with the prior written
consent of Mezzanine Lender and, if a Securitization has occurred, delivery of
a Rating Agency Confirmation, (i) Transfer all or any part of the Property, or
(ii) except in connection with the Loan, Junior Mezzanine Loans or the
Revolving/Term Credit Facility, permit any Transfer (directly or indirectly) of
any interest in Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower, any Guarantor, Master Lessee or any SPE Entity.  For avoidance of doubt, the foregoing shall
not prohibit (i) the Master Lessee from granting a Lien to Mortgage Borrower on
portions of the Excluded Personal Property, subject to the Assigned Landlord
Lien, or (ii) the Mortgage Borrower, Master Lessee or any Tenant under any
Individual Property Sublease or Sublease permitted under Section 8.8.2
from entering into any Permitted Encumbrance.


8.2           Sale of Building
Equipment.  Mezzanine Borrower may
cause Mortgage Borrower to Transfer or dispose of Building Equipment which is
being replaced or which is no longer necessary in connection with the operation
of an Individual Property free from the Lien of the applicable Security
Instrument provided that such Transfer or disposal will not have a Material
Adverse Effect on the value of such Individual Property, will not materially
impair the utility of such Individual Property, and will not result in a
reduction or abatement of, or right of


 


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offset against, the Rents payable under the Master Lease or any
Sublease, in either case as a result thereof, and provided further that any new
Building Equipment acquired by Mortgage Borrower (and not so disposed of) shall
be subject to the Lien of the applicable Security Instrument.


8.3           Immaterial
Transfers and Easements, etc. 
Mezzanine Borrower may cause Mortgage Borrower, without the consent of
Mezzanine Lender to, (i) make immaterial Transfers of portions of the Property
to Governmental Authorities for dedication or public use (subject to the
provisions of Section 6.2) or, portions of the Property to third parties
for the purpose of erecting and operating additional structures whose use is
integrated with the use of the Property, and (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, telephone and telegraph lines,
electric lines or other utilities or for other similar purposes, provided that
no such Transfer, conveyance or encumbrance set forth in the foregoing clauses
(i) and (ii) shall materially impair the utility and operation of the Property
or have a Material Adverse Effect on the value of the Property taken as a
whole.


8.4           Reserved.


8.5           Permitted Equity
Transfers.


(a)               A
Transfer of a direct or indirect ownership interest in Mezzanine Borrower,
Mortgage Borrower or the SPE Entities that is otherwise prohibited hereunder
shall nevertheless be permitted without Mezzanine Lender’s prior written
consent or a Rating Agency Confirmation if (i) Mezzanine Lender receives
fifteen (15) days prior written notice thereof, (ii) immediately prior to such
Transfer, no Event of Default shall have occurred and be continuing, (iii) no
more than forty-nine percent (49%) of the direct or indirect ownership
interests in Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower or any other SPE Entity is being Transferred (in the aggregate of all
such Transfers), (iv) the transferee is not a Disqualified Transferee, and (v)
the Principal Control Persons collectively retain Control of Mortgage Borrower
and Mezzanine Borrower and the Principal Investors collectively continue to
own, directly and/or indirectly, at least 51% of the ownership interests in
Mortgage Borrower, Mezzanine Borrower and the SPE Entities.


(b)               Notwithstanding anything herein to the contrary, the
following Transfers shall not require the prior written consent of or, except
as otherwise required in clause (y) below, notice to Mezzanine Lender or a
Rating Agency Confirmation so long as (x) (except with respect to Section
8.5(b)(ii) and (iv) below) Section 8.5(a)(v) above is
complied with and (y) with respect to (1) any Transfer of interests in any
Guarantor or Sponsor that alters the ratio of ownership interests in Master
Lessee between that owned by Colony Capital, LLC and its Affiliates, on the one
hand, and that owned by the Fertitta Brothers and their Affiliates and Family
Trusts, on the other hand, and (2) any Transfer of interests in the Fertitta
Brothers and their Affiliates and Family Trusts to Persons other than Principal
Investors, Mezzanine Lender shall receive prior written notice:


 


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(i)            a
Transfer of (A) interests in any Guarantor or Sponsor between or among its
existing owners and any Principal Investors, and (B) any interests in the
parent entities of such owners;


(ii)           a
Transfer of equity interests in any Guarantor, Sponsor or Master Lessee in
conjunction with or after an initial public offering of shares, provided that
from and after the consummation of such initial public offering, no Person or
group other than the Principal Control Persons and Principal Investors (A)
shall have acquired beneficial ownership, directly or indirectly, of equity
interests in Master Lessee representing more than twenty-five percent (25%) of
the voting power and economic interest in Master Lessee where such ownership
represents a greater amount of the voting power or economic interest in Master
Lessee than that which is then owned by the Principal Control Persons and
Principal Investors in aggregate, or (B) shall have obtained the power (whether
or not exercised) to elect a majority of the members of the board of directors
(or similar governing body) of Master Lessee;


(iii)          Transfers
of direct or indirect interests in the Guarantors (including, without
limitation, any combination of one or more Guarantors or a Guarantor with
Sponsor), and the pledge or grant of security interests, as permitted under the
terms of the organizational documents for each of the Guarantors; and


(iv)          the
pledge, hypothecation, encumbrance or granting of a security interest in or
lien on the direct interest in Master Lessee to an Approved Bank as security
for the Revolving/Term Credit Facility (the “Revolving/Term Credit Facility
Lien”), provided that the Revolving/Term Credit Facility Lien shall not be
foreclosed upon unless (A) the ownership of such direct interest in Master
Lessee following such foreclosure shall be held by an Approved Bank or a
Qualified Transferee and comply with all Gaming Laws and (B) such foreclosure
shall not create or cause a Default or Event of Default hereunder (provided
that the occurrence of such foreclosure, so long as clause (A) is complied
with, shall not of itself constitute a Default or Event of Default).  For purposes solely of this Section
8.5(b)(iv), the term “Qualified Transferee” shall have the meaning set
forth in Section 1.1 except that the “$2 Billion” figure in clause (b)
of the definition in Section 1.1 is replaced with “$1 Billion.”


Notwithstanding
the foregoing, Mezzanine Borrower shall not, and shall not permit or suffer any
person to, pledge, hypothecate, encumber or grant a security interest in or
lien on any direct or, except as set forth in this Section 8.5, indirect
interest in Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower or any SPE Entities, any Guarantor or Sponsor.


8.6           Deliveries to
Mezzanine Lender.  Not less than
thirty (30) days prior to (or, in the case of the transactions described in Section
8.5, promptly following) the closing of any transaction that requires
consent of Mezzanine Lender under the provisions of Sections 8.1, 8.3
and 8.5, Mezzanine Borrower shall deliver or cause Mortgage Borrower to
deliver to Mezzanine Lender an Officer’s Certificate describing the proposed
transaction and stating that such transaction is permitted by this Article
VIII, together with any appraisal or other documents upon which such
Officer’s Certificate is based.  In
addition, Mezzanine Borrower shall provide or cause Mortgage Borrower to
provide Mezzanine Lender with copies of executed deeds or other similar closing
documents within ten (10) Business Days after such closing.


 


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8.7           Loan Assumption.  Provided no Event of Default is then
continuing, Mezzanine Borrower shall have the right, with the prior written
consent of Mezzanine Lender, to cause Mortgage Borrower to sell, assign, convey
or transfer (but not mortgage, hypothecate or otherwise encumber or grant a
security interest in) legal or equitable title to all (but not less than all)
of the Property only if after giving effect to the proposed transaction the
Property will be owned by a Single Purpose Entity wholly owned by a Qualified
Transferee which shall have executed and delivered to Mezzanine Lender an
assumption agreement in form and substance acceptable to Mezzanine Lender.  Any such assumption of the Loan shall be
conditioned upon, among other things, (i) the delivery of financial
information, including, without limitation, audited financial statements, for
such purchaser and the direct and indirect owners of such purchaser, (ii) the
delivery of evidence that the purchaser is a Single Purpose Entity and is not a
Disqualified Transferee, (iii) the execution and delivery of all documentation
reasonably requested by Mezzanine Lender, (iv) the delivery of Opinions of Counsel
requested by Mezzanine Lender, including, without limitation, a
Non-Consolidation Opinion with respect to the purchaser and other entities
identified by Mezzanine Lender or requested by the Rating Agencies and opinions
with respect to the valid formation, due authority and good standing of the
purchaser and any additional pledgors and the continued enforceability of the
Mezzanine Loan Documents and any other matters requested by Mezzanine Lender,
(v) the delivery of an endorsement to each of the Title Policies in form and
substance acceptable to Mortgage Lender, insuring the lien of the Security
Instruments, as assumed, subject only to the Permitted Encumbrances and (vi)
the payment of all of Mezzanine Lender’s reasonable out-of-pocket fees, costs
and expenses, including, without limitation, reasonable attorneys’ fees and
costs, actually incurred by Mezzanine Lender in connection with such
assumption.


8.8           Subleases.


8.8.1        Master
Lease and Existing Subleases.  Mezzanine Borrower represents, warrants, and
covenants that each Individual Property shall be leased by Mortgage Borrower to
Master Lessee pursuant to the Master Lease, and substantially occupied by a
wholly-owned subsidiary of Master Lessee under an Individual Property Sublease,
and with respect to the retail components of the Individual Properties,
occupied in part by other Tenants under the applicable Subleases.


8.8.2        Leasing Conditions. 
Except as otherwise provided in this Section 8.8.2, neither
Mezzanine Borrower nor Mortgage Borrower shall, and Mezzanine Borrower shall
cause Mortgage Borrower not to permit Master Lessee to (i) enter into any
Material Sublease (a “New Sublease”) or (ii) modify any Material
Sublease (including, without limitation, accept a surrender of any portion of
the Property subject to a Material Sublease (unless otherwise permitted or
required by law), allow a reduction in the term of any Material Sublease or a
reduction in the Rent payable under any Material Sublease, change any renewal
provisions of any Material Sublease, materially increase the obligations of the
landlord or materially decrease the obligations of any Tenant under a Material
Sublease) or terminate any Material Sublease unless the Tenant under such Lease
is in default (any such action referred to in clause (ii) being referred to
herein as a “Sublease Modification”) without the prior written consent
of Mezzanine Lender. Any New Sublease or Sublease Modification that requires
Mezzanine Lender’s consent shall be delivered to Mezzanine Lender for approval
not less than five (5) Business Days prior to the effective date of such New
Sublease or Sublease Modification.  If
Mezzanine Lender fails to


 


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respond to a request for Mezzanine Lender’s consent pursuant to this Section
8.8.2 within five (5) Business Days of Mezzanine Lender’s receipt of
Mezzanine Borrower’s request therefor, Mezzanine Borrower may deliver to
Mezzanine Lender a second request in an envelope or under cover of a letter
marked “URGENT” and including a legend in bold typeface that Mezzanine Lender’s
failure to grant or deny the requested consent within ten (10) Business Days of
the receipt thereof will result in the requested consent being deemed to have
been granted.  If Mezzanine Lender fails
to respond to such second request within ten (10) Business Days of its receipt
thereof, Mezzanine Lender’s consent shall be deemed granted.  Notwithstanding the foregoing, but subject to
terms of Sections 8.8.7 and 8.8.8, provided no Event of Default
shall have occurred and be continuing, Mezzanine Borrower may cause Mortgage
Borrower to permit Master Lessee to enter into a New Sublease or Sublease
Modification in accordance with the Subleasing Standards.


8.8.3        Delivery
of New Sublease or Sublease Modification.  Upon the execution of any New Sublease or
Sublease Modification, as applicable, Mezzanine Borrower shall cause Mortgage
Borrower to deliver to Mezzanine Lender an executed copy of the Sublease.


8.8.4        Sublease
Amendments.  Mezzanine
Borrower agrees that neither it nor Mortgage Borrower shall have the right or
power, as against Mezzanine Lender without its consent (which consent shall not
be unreasonably withheld or delayed as provided herein), to cancel, abridge,
amend or otherwise modify any Sublease unless such modification complies with
this Section 8.8.


8.8.5        Security
Deposits.  All
security or other deposits of Tenants of the Property shall be treated as trust
funds and shall not be commingled with any other funds of Mortgage Borrower,
Master Lessee or Tenant under an Individual Property Sublease, as appropriate,
and such deposits shall be deposited, upon receipt of the same in a separate
trust account maintained by Mortgage Borrower, Master Lessee or Tenant under an
Individual Property Sublease, as appropriate, expressly for such purpose.  Within ten (10) Business Days after written
request by Mezzanine Lender, Mezzanine Borrower shall cause Mortgage Borrower
to furnish to Mezzanine Lender reasonably satisfactory evidence of compliance
with this Section 8.8.5, together with a statement of all lease
securities deposited by the Tenants and the location and account number of the
account in which such security deposits are held.


8.8.6        No
Default Under Subleases. 
Mezzanine Borrower shall and shall cause Mortgage Borrower or Master
Lessee to (i) promptly perform and observe all of the material terms,
covenants and conditions required to be performed and observed by Mortgage
Borrower under the Subleases, if the failure to perform or observe the same
would have a Material Adverse Effect; (ii) exercise, within ten (10) Business
Days after a written request by Mezzanine Lender, any right to request from the
Tenant under any Material Sublease a certificate with respect to the status
thereof and (iii) not collect any of the Rents under any Sublease, more than
one (1) month in advance (except that Mortgage Borrower may collect such
security deposits and last month’s Rents as are permitted by Legal Requirements
and are commercially reasonable in the prevailing market and collect other
charges in accordance with the terms of each Sublease).


 


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IX.                                INTEREST RATE CAP AGREEMENT (FIRST MEZZANINE)


9.1           Interest Rate Cap Agreement (First
Mezzanine).  Prior to or
contemporaneously with the Closing Date, Mezzanine Borrower shall enter into
(x) an Interest Rate Cap Agreement (First Mezzanine).  The notional amount of the Interest Rate Cap
Agreement (First Mezzanine) shall be at least equal to the Principal
Amount.  The Interest Rate Cap Agreement
(First Mezzanine) shall (i) at all times be in a form and substance reasonably
acceptable to Mezzanine Lender, (ii) at all times be with an Approved
Counterparty, (iii) direct such Approved Counterparty to deposit directly into
the Mezzanine Account any payments due to Borrower under such Interest Rate Cap
Agreement (First Mezzanine) so long as any portion of the Loan is outstanding,
provided that the Loan shall be deemed to be outstanding if the Properties are
transferred by judicial or non-judicial foreclosure or deed-in-lieu thereof,
and (iv) have a strike rate no greater than the Strike Price.


9.2           Pledge and Collateral Assignment.  As security for the full and punctual payment
and performance of the Obligations (First Mezzanine) when due (whether upon
stated maturity, by acceleration, early termination or otherwise), Mezzanine
Borrower, as pledgor, hereby pledges, assigns, hypothecates, transfers and
delivers to Mezzanine Lender as collateral and hereby grants to Mezzanine
Lender a continuing first priority lien on and security interest in, to and
under all of the following whether now owned or hereafter acquired and whether
now existing or hereafter arising (the “Rate Cap Collateral (First
Mezzanine)”): all of the right, title and interest of Mezzanine Borrower in
and to (i) the Interest Rate Cap Agreement (First Mezzanine); (ii) all
payments, distributions, disbursements or proceeds due, owing, payable or
required to be delivered to Mezzanine Borrower in respect of the Interest Rate
Cap Agreement (First Mezzanine) or arising out of the Interest Rate Cap
Agreement (First Mezzanine), whether as contractual obligations, damages or
otherwise; and (iii) all of Mezzanine Borrower’s claims, rights, powers,
privileges, authority, options, security interests, liens and remedies, if any,
under or arising out of the Interest Rate Cap Agreement (First Mezzanine), in
each case including all accessions and additions to, substitutions for and
replacements, products and proceeds of any or all of the foregoing.


9.3           Covenants.


(a)               Mezzanine Borrower shall comply
with all of its obligations under the terms and provisions of the Interest Rate
Cap Agreement (First Mezzanine).  All
amounts paid by the Counterparty under the Interest Rate Cap Agreement (First
Mezzanine) to Mezzanine Borrower or Mezzanine Lender shall be deposited
immediately into the Mezzanine Account pursuant to Section 3.1.  Subject to terms hereof, provided no Event of
Default has occurred and is continuing, Mezzanine Borrower shall be entitled to
exercise all rights, powers and privileges of Mezzanine Borrower under, and to
control the prosecution of all claims with respect to, the Interest Rate Cap
Agreement (First Mezzanine) and the other Rate Cap Collateral (First
Mezzanine).  Mezzanine Borrower shall
take all actions reasonably requested by Mezzanine Lender to enforce Mezzanine
Borrower’s rights under the Interest Rate Cap Agreement (First Mezzanine) in
the event of a default by the Counterparty thereunder and shall not waive,
amend or otherwise modify any of its rights thereunder.


 


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(b)               Mezzanine Borrower shall defend
Mezzanine Lender’s right, title and interest in and to the Rate Cap Collateral
(First Mezzanine) pledged by Mezzanine Borrower pursuant hereto or in which it
has granted a security interest pursuant hereto against the claims and demands
of all other Persons.


(c)               In the event of any downgrade,
withdrawal or qualification of the rating of the Counterparty such that it
ceases to qualify as an “Approved Counterparty,” unless the Counterparty shall
have posted collateral on terms acceptable to each Rating Agency, or in the event
of any default by any Counterparty under the Interest Rate Cap Agreement (First
Mezzanine), Mezzanine Borrower shall
replace the Interest Rate Cap Agreement (First Mezzanine) with a Replacement
Interest Rate Cap Agreement (First Mezzanine) from an Approved Counterparty not
later than ten (10) Business Days following receipt of notice from Mezzanine
Lender, Servicer or any other Person of such downgrade, withdrawal or
qualification. In the event that the Counterparty is downgraded to A2 or lower
by Moody’s, a Replacement Interest Rate Cap Agreement (First Mezzanine) shall
be required regardless of the posting of collateral.


(d)               In the event that Mezzanine
Borrower fails to purchase and deliver to Mezzanine Lender the Interest Rate
Cap Agreement (First Mezzanine) as and when required hereunder, Mezzanine
Lender may upon written notice to Mezzanine Borrower purchase the Interest Rate
Cap Agreement (First Mezzanine) and the actual cost incurred by Mezzanine
Lender in purchasing the Interest Rate Cap Agreement (First Mezzanine) shall
upon written demand be paid by Mezzanine Borrower to Mezzanine Lender with
interest thereon at the Default Rate from the date such cost was incurred by
Mezzanine Lender and demand made until such cost is paid by Mezzanine Borrower
to Mezzanine Lender.


(e)               Mezzanine Borrower shall not
sell, assign, or otherwise dispose of, or mortgage, pledge or grant a security
interest in, any of the Rate Cap Collateral (First Mezzanine) or any interest
therein, and any sale, assignment, mortgage, pledge or security interest
whatsoever made in violation of this covenant shall be a nullity and of no
force and effect, and upon demand of Mezzanine Lender, shall forthwith be
cancelled or satisfied by an appropriate instrument in writing.


(f)                Mezzanine Borrower shall not (i)
without the prior written consent of Mezzanine Lender modify, amend or
supplement the terms of the Interest Rate Cap Agreement (First Mezzanine), (ii)
without the prior written consent of Mezzanine Lender, except in accordance
with the terms of the Interest Rate Cap Agreement (First Mezzanine), cause the
termination of the Interest Rate Cap Agreement (First Mezzanine) prior to its
stated maturity date, (iii) without the prior written consent of Mezzanine
Lender, except as aforesaid, waive or release any obligation of the
Counterparty (or any successor or substitute party to the Interest Rate Cap Agreement
(First Mezzanine)) under the Interest Rate Cap Agreement (First Mezzanine),
(iv) without the prior written consent of Mezzanine Lender, consent or agree to
any act or omission to act on the part of the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (First Mezzanine)) which,
without such consent or agreement, would constitute a default under the
Interest Rate Cap Agreement (First Mezzanine), (v) fail to exercise promptly
and diligently each and every material right which it may have under the
Interest Rate Cap Agreement (First Mezzanine), (vi) take or intentionally omit
to take any action


 


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or intentionally suffer or permit any action
to be omitted or taken, the taking or omission of which would result in any
right of offset against sums payable under the Interest Rate Cap Agreement
(First Mezzanine) or any defense by the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (First Mezzanine)) to
payment or (vii) fail to give prompt notice to Mezzanine Lender of any notice
of default given by or to Mezzanine Borrower under or with respect to the
Interest Rate Cap Agreement (First Mezzanine), together with a complete copy of
such notice.


(g)               In connection with an Interest
Rate Cap Agreement (First Mezzanine), Mezzanine Borrower shall obtain and
deliver to Mezzanine Lender an Opinion of Counsel from counsel (which counsel
may be in-house counsel for the Counterparty) for the Counterparty upon which
Mezzanine Lender and its successors and assigns may rely (the “Counterparty
Opinion”), under New York law and, if the Counterparty is a non-U.S.
entity, the applicable foreign law, in a form approved by the Mezzanine Lender.


9.4           Powers of Mezzanine Borrower Prior
to an Event of Default.  Subject to
the provisions of Section 9.3(a), provided no Event of Default has
occurred and is continuing, Mezzanine Borrower shall be entitled to exercise
all rights, powers and privileges of Mezzanine Borrower under, and to control
the prosecution of all claims with respect to, the Interest Rate Cap Agreement (First Mezzanine) and the other Rate
Cap Collateral (First Mezzanine).


9.5           Representations and Warranties.  Mezzanine Borrower hereby covenants with, and
represents and warrants to, Mezzanine Lender as follows:


(a)               The Interest Rate Cap Agreement
(First Mezzanine) constitutes the legal, valid and binding obligation of
Mezzanine Borrower, enforceable against Mezzanine Borrower in accordance with
its terms, subject only to applicable bankruptcy, insolvency and similar laws
generally affecting the enforcement of creditors’ rights and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).


(b)               The Rate Cap Collateral (First
Mezzanine) is free and clear of all claims or security interests of every
nature whatsoever, except such as are created pursuant to this Agreement and
the other Mezzanine Loan Documents, and Mezzanine Borrower has the right to
pledge and grant a security interest in the same as herein provided without the
consent of any other Person other than any such consent that has been obtained
and is in full force and effect.


(c)               The Rate Cap Collateral (First
Mezzanine) has been duly and validly pledged hereunder.  All consents and approvals required to be
obtained by Mezzanine Borrower for the consummation of the transactions
contemplated by the Interest Rate Cap Agreement (First Mezzanine) and this Article
IX have been obtained.


(d)               Giving effect to the aforesaid
grant and assignment to Mezzanine Lender, Mezzanine Lender has, as of the date
of this Agreement, and as to Rate Cap Collateral (First Mezzanine) acquired
from time to time after such date, shall have, a valid, and upon proper filing,
perfected and continuing first priority lien upon and security interest in the
Rate Cap Collateral (First Mezzanine); provided that no representation or
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the perfected status of the security interest
of Mezzanine Lender in the proceeds of Rate Cap Collateral (First Mezzanine)
consisting of “cash proceeds” or “non-cash proceeds” as defined in the UCC
except if, and to the extent, the provisions of Section 9-306 of the UCC shall
be complied with.


(e)               Except for financing statements
filed or to be filed in favor of Mezzanine Lender as secured party, there are
no financing statements under the UCC covering any or all of the Rate Cap
Collateral (First Mezzanine) and Mezzanine Borrower shall not, without the
prior written consent of Mezzanine Lender, until payment in full of all of the
Obligations (First Mezzanine), execute and file in any public office, any
enforceable financing statement or statements covering any or all of the Rate
Cap Collateral (First Mezzanine), except financing statements filed or to be
filed in favor of Mezzanine Lender as secured party.


9.6           Payments.  If Mezzanine Borrower at any time shall be
entitled to receive any payments with respect to the Interest Rate Cap
Agreement (First Mezzanine),
such amounts shall, immediately upon becoming payable to Mezzanine Borrower, be
deposited by Counterparty into the Mezzanine Account.


9.7           Remedies.  Subject to the provisions of the Interest Rate
Cap Agreement (First Mezzanine),
if an Event of Default shall occur and then be continuing:


(a)               Mezzanine Lender, without
obligation to resort to any other security, right or remedy granted under any
other agreement or instrument, shall have the right to, in addition to all
rights, powers and remedies of a secured party pursuant to the UCC (all of
which Mezzanine Lender may exercise), at any time and from time to time, sell,
resell, assign and deliver, in its sole discretion, any or all of the Rate Cap
Collateral (First Mezzanine) (in one or more parcels and at the same or
different times) and all right, title and interest, claim and demand therein
and right of redemption thereof, at public or private sale, for cash, upon
credit or for future delivery, and in connection therewith Mezzanine Lender may
grant options and may impose reasonable conditions such as requiring any
purchaser to represent that any “securities” constituting any part of the Rate
Cap Collateral (First Mezzanine) are being purchased for investment only,
Mezzanine Borrower hereby waiving and releasing any and all equity or right of
redemption to the fullest extent permitted by the UCC or applicable law.  If all or any of the Rate Cap Collateral
(First Mezzanine) is sold by Mezzanine Lender upon credit or for future
delivery, Mezzanine Lender shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure,
Mezzanine Lender may resell such Rate Cap Collateral (First Mezzanine).  It is expressly agreed that Mezzanine Lender
may exercise its rights with respect to less than all of the Rate Cap
Collateral (First Mezzanine), leaving unexercised its rights with respect to
the remainder of the Rate Cap Collateral (First Mezzanine), provided, however,
that such partial exercise shall in no way restrict or jeopardize Mezzanine
Lender’s right to exercise its rights with respect to all or any other portion
of the Rate Cap Collateral (First Mezzanine) at a later time or times.


(b)               Mezzanine Lender may exercise,
either by itself or by its nominee or designee, in the name of Mezzanine
Borrower, all of Mezzanine Lender’s rights, powers and remedies in respect of
the Rate Cap Collateral (First Mezzanine), hereunder and under law.


 


 


 


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(c)           Mezzanine Borrower hereby
irrevocably, in the name of Mezzanine Borrower or otherwise, authorizes and
empowers Mezzanine Lender and assigns and transfers unto Mezzanine Lender, and
constitutes and appoints Mezzanine Lender its true and lawful attorney-in-fact,
and as its agent, irrevocably, with full power of substitution for Mezzanine
Borrower and in the name of Mezzanine Borrower, (i) to exercise and enforce
every right, power, remedy, authority, option and privilege of Mezzanine
Borrower under the Interest Rate Cap Agreement (First Mezzanine), including any
power to subordinate or modify the Interest Rate Cap Agreement (First
Mezzanine) (but not, unless an Event of Default exists and is continuing, the
right to terminate or cancel the Interest Rate Cap Agreement (First
Mezzanine)), or to give any notices, or to take any action resulting in such
subordination, termination, cancellation or modification and (ii) in order to
more fully vest in Mezzanine Lender the rights and remedies provided for herein,
to exercise all of the rights, remedies and powers granted to Mezzanine Lender
in this Agreement, and Mezzanine Borrower further authorizes and empowers
Mezzanine Lender, as Mezzanine Borrower’s attorney-in-fact, and as its agent,
irrevocably, with full power of substitution for Mezzanine Borrower and in the
name of Mezzanine Borrower, to give any authorization, to furnish any
information, to make any demands, to execute any instruments and to take any
and all other action on behalf of and in the name of Mezzanine Borrower which
in the opinion of Mezzanine Lender may be necessary or appropriate to be given,
furnished, made, exercised or taken under the Interest Rate Cap Agreement
(First Mezzanine), in order to comply therewith, to perform the conditions thereof
or to prevent or remedy any default by Mezzanine Borrower thereunder or to
enforce any of the rights of Mezzanine Borrower thereunder. These
powers-of-attorney are irrevocable and coupled with an interest, and any
similar or dissimilar powers heretofore given by Mezzanine Borrower in respect
of the Rate Cap Collateral (First Mezzanine) to any other Person are hereby
revoked.


(d)           Mezzanine Lender may, without notice
to, or assent by, Mezzanine Borrower or any other Person (to the extent
permitted by law), but without affecting any of the Obligations (First
Mezzanine), in the name of Mezzanine Borrower or in the name of Mezzanine
Lender, notify the Counterparty, or if applicable, any other counterparty to
the Interest Rate Cap Agreement (First Mezzanine), to make payment and
performance directly to Mezzanine Lender; extend the time of payment and
performance of, compromise or settle for cash, credit or otherwise, and upon
any terms and conditions, any obligations owing to Mezzanine Borrower, or
claims of Mezzanine Borrower, under the Interest Rate Cap Agreement (First
Mezzanine); file any claims, commence, maintain or discontinue any actions,
suits or other proceedings deemed by Mezzanine Lender necessary or advisable
for the purpose of collecting upon or enforcing the Interest Rate Cap Agreement
(First Mezzanine); and execute any instrument and do all other things deemed
necessary and proper by Mezzanine Lender to protect and preserve and realize
upon the Rate Cap Collateral (First Mezzanine) and the other rights
contemplated hereby.


(e)           Pursuant
to the powers-of-attorney provided for above, Mezzanine Lender may take any
action and exercise and execute any instrument which it may deem necessary or
advisable to accomplish the purposes hereof; provided, however, that Mezzanine
Lender shall not be permitted to take any action pursuant to said
power-of-attorney that would conflict with any limitation on Mezzanine Lender’s
rights with respect to the Rate Cap Collateral (First Mezzanine). Without
limiting the generality of the foregoing, Mezzanine Lender, after the
occurrence of an Event of Default, shall have the right and power to receive,
endorse and collect all checks and other orders for the payment of money made
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representing: (i) any
payment of obligations owed pursuant to the Interest Rate Cap Agreement (First
Mezzanine), (ii) interest accruing on any of the Rate Cap Collateral (First
Mezzanine) or (iii) any other payment or distribution payable in respect of the
Rate Cap Collateral (First Mezzanine) or any part thereof, and for and in the
name, place and stead of Mezzanine Borrower, to execute endorsements,
assignments or other instruments of conveyance or transfer in respect of any
property which is or may become a part of the Rate Cap Collateral (First
Mezzanine) hereunder.


(f)            Without limiting any other provision
of this Agreement or any of Mezzanine Borrower’s rights hereunder, and without
waiving or releasing Mezzanine Borrower from any obligation or default
hereunder, Mezzanine Lender shall have the right, but not the obligation, to
perform any act or take any appropriate action, as it, in its reasonable
judgment, may deem necessary to protect Mezzanine Lender’s security interest in
the Rate Cap Collateral (First Mezzanine) created pursuant to this Agreement,
to cure such Event of Default or to cause any term, covenant, condition or
obligation required under this Agreement or the Interest Rate Cap Agreement
(First Mezzanine) to be performed or observed by Mezzanine Borrower to be
promptly performed or observed on behalf of Mezzanine Borrower. All amounts
advanced by, or on behalf of, Mezzanine Lender in exercising its rights under
this Section 9.7(f) (including, but not limited to, reasonable legal
expenses and disbursements incurred in connection therewith), together with
interest thereon at the Default Rate from the date of each such advance, shall
be payable by Mezzanine Borrower to Mezzanine Lender upon demand and shall be
secured by this Agreement.


9.8           Sales
of Rate Cap Collateral (First Mezzanine). No demand, advertisement or
notice, all of which are, to the fullest extent permitted by law, hereby
expressly waived by Mezzanine Borrower, shall be required in connection with
any sale or other disposition of all or any part of the Rate Cap Collateral
(First Mezzanine) following and during the continuance of an Event of Default,
except that Mezzanine Lender shall give Mezzanine Borrower at least thirty (30)
Business Days’ prior written notice of the time and place of any public sale or
of the time when and the place where any private sale or other disposition is
to be made, which notice Mezzanine Borrower hereby agrees is reasonable, all
other demands, advertisements and notices being hereby waived. To the extent
permitted by law, Mezzanine Lender shall not be obligated to make any sale of
the Rate Cap Collateral (First Mezzanine) if it shall determine not to do so,
regardless of the fact that notice of sale may have been given, and Mezzanine
Lender may without notice or publication adjourn any public or private sale,
and such sale may, without further notice, be made at the time and place to
which the same was so adjourned. Upon each private sale of the Rate Cap
Collateral (First Mezzanine) of a type customarily sold in a recognized market
and upon each public sale, unless prohibited by any applicable statute which
cannot be waived, Mezzanine Lender (or its nominee or designee) may purchase
any or all of the Rate Cap Collateral (First Mezzanine) being sold, free and
discharged from any trusts, claims, equity or right of redemption of Mezzanine
Borrower, all of which are hereby waived and released to the extent permitted
by law, and may make payment therefor by credit against any of the Obligations
(First Mezzanine) in lieu of cash or any other obligations. In the case of all
sales of the Rate Cap Collateral (First Mezzanine), public or private,
Mezzanine Borrower shall pay all reasonable out-of-pocket costs and expenses of
every kind for sale or delivery, including brokers’ and attorneys’ fees and
disbursements and any tax imposed thereon. However, the proceeds of sale of
Rate Cap Collateral (First Mezzanine) shall be available to cover such costs


 


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and expenses, and, after
deducting such costs and expenses from the proceeds of sale, Mezzanine Lender
shall apply any residue to the payment of the Obligations (First Mezzanine).


9.9           Public Sales Not Possible. Mezzanine
Borrower acknowledges that the terms of the Interest Rate Cap Agreement (First
Mezzanine) may prohibit public sales, that the Rate Cap Collateral (First
Mezzanine) may not be of the type appropriately sold at public sales, and that
such sales may be prohibited by law. As a result, Mezzanine Borrower agrees
that private sales of the Rate Cap Collateral (First Mezzanine) shall not be
deemed to have been made in a commercially unreasonably manner by mere virtue
of having been made privately.


9.10         Receipt of Sale Proceeds. Upon
any sale of the Rate Cap Collateral (First Mezzanine) by Mezzanine Lender
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt by Mezzanine Lender or the officer
making the sale or the proceeds of such sale shall be a sufficient discharge to
the purchaser or purchasers of the Rate Cap Collateral (First Mezzanine) so
sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Mezzanine Lender or
such officer or be answerable in any way for the misapplication or
non-application thereof.


9.11         Replacement Interest Rate Cap
Agreement (First Mezzanine). If, in connection with Mezzanine Borrower’s
exercise of any extension option pursuant to Section 5 of the Mezzanine
Notes, Mezzanine Borrower delivers a Replacement Interest Rate Cap Agreement
(First Mezzanine), all the provisions of this Article IX applicable to
the Interest Rate Cap Agreement (First Mezzanine) delivered on the Closing Date
shall be applicable to the Replacement Interest Rate Cap Agreement (First
Mezzanine).


                X.            MAINTENANCE
OF PROPERTY; ALTERATIONS


10.1         Maintenance of Property. Mezzanine
Borrower shall cause Mortgage Borrower to keep and maintain, or cause to be
kept and maintained, the Property and every part thereof in good condition and
repair, subject to ordinary wear and tear, and, subject to Excusable Delays and
the provisions of this Agreement with respect to damage or destruction caused
by casualty events or Takings, shall not permit or commit any waste of any
portion of the Property in any material respect. Mezzanine Borrower shall not
permit Mortgage Borrower to remove or demolish any Improvement on the Property
except as the same may be necessary in connection with an Alteration or a
restoration in connection with a Taking or casualty, or as otherwise permitted
herein, in each case in accordance with the terms and conditions hereof. Without
limiting the foregoing, within one (1) year of the Closing Date, Mezzanine
Borrower shall cause Mortgage Borrower, or shall cause Mortgage Borrower to
cause Master Lessee, to complete the items of deferred maintenance and
environmental remediation identified on Schedule III attached hereto.


10.2         Conditions
to Alteration. Provided that no Noticed Default or Event of Default shall
have occurred and be continuing hereunder, Mortgage Borrower and Master Lessee
shall have the right, without Mezzanine Lender’s consent, to undertake any
alteration, improvement, demolition or removal of the Property or any portion
thereof (any such alteration, improvement, demolition or removal, an “Alteration”)
so long as (i) Mezzanine Borrower causes Mortgage


 


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Borrower to provide Mezzanine
Lender with not less than ten (10) Business Days prior written notice of any
Material Alteration, and (ii) such Alteration is undertaken in accordance with
the applicable provisions of the Master Lease, this Agreement and the other
Mezzanine Loan Documents and in compliance with all applicable Legal
Requirements, is not prohibited by any relevant Operating Agreements and shall
not, upon completion (giving credit to rent and other charges attributable to
Subleases executed upon such completion), have a Material Adverse Effect on the
value, use or operation of the Property taken as a whole or otherwise. Any
Material Alteration shall be conducted under the supervision of an Architect
and, in connection with any Material Alteration, Mezzanine Borrower shall cause
Mortgage Borrower to deliver to Mezzanine Lender concurrently with the notice
of such Material Alteration, for information purposes only and not for approval
by Mezzanine Lender, detailed plans and specifications, cost estimates therefor
as set forth in an Officer’s Certificate, and an estimated date of completion
therefore, which date shall be not later than the date which is six (6) months
prior to the Maturity Date (unless otherwise consented to in writing by
Mezzanine Lender, which consent shall not be unreasonably withheld, conditioned
or delayed), all prepared and approved by such Architect. Such plans and
specifications may be revised at any time and from time to time by such
Architect provided that material revisions of such plans and specifications are
filed with Mezzanine Lender, for information purposes only. All work done in
connection with any Alteration shall be performed with due diligence in a good
and workmanlike manner, all materials used in connection with any Alteration
shall not be less than the standard of quality of the materials currently used
at the applicable Individual Property and all materials used shall be in
accordance with all applicable Legal Requirements and Insurance Requirements. The
cost of any Alteration shall be promptly and fully paid for, subject to a five
percent (5%) retainage, provided that such retainage shall not be required if
such Alteration is being performed by Master Lessee, an Affiliate of Mortgage
Borrower, or an Affiliate of Master Lessee. Notwithstanding anything to the
contrary contained in this Section 10.2, Mezzanine Borrower shall cause
Mortgage Borrower to obtain Mezzanine Lender’s prior written approval (which
approval shall not be unreasonably withheld, conditioned or delayed so long as
no Noticed Default or Event of Default shall then exist, and shall be deemed
given unless Mezzanine Lender shall give notice of its disapproval with the
reasons therefor within ten (10) Business Days after Mezzanine Lender’s receipt
of the notice of Material Alteration described in clause (i) of this Section
10.2 above) for any Material Alteration if (x) an 80% Trigger Approval Period
shall then be in effect or existence, or (y) such proposed Material Alteration
is reasonably likely to result in more than a ten percent (10%) reduction in
the pro forma LCR during the twelve (12) months following the commencement of
such proposed Material Alteration.


10.3         Costs
of Alteration. Notwithstanding anything to the contrary contained in this Article
X, no Alteration which when aggregated with all other Alterations then
being undertaken by Mortgage Borrower involves costs estimated in writing by
Master Lessee (which costs shall be reasonably acceptable to Mezzanine Borrower
and Mezzanine Lender) to be incurred in implementing the Alterations exceeds
the Material Alteration Collateralization Threshold, shall be performed by or
on behalf of Mortgage Borrower unless Mezzanine Borrower shall have caused
Mortgage Borrower to deliver to Mortgage Lender Cash and Cash Equivalents and/or
a Letter of Credit as security in an amount not less than the estimated cost of
the Alterations minus the Material Alteration Collateralization Threshold (as
set forth in the written estimate referred to above). Mezzanine Borrower shall
cause Mortgage Borrower to deliver to Mortgage Lender any security deposited by
the Master Lessee for any Alteration under the Master Lease. Costs


 


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which are subject to
retainage (which in no event shall be less than 5% in the aggregate with
respect to each trade contract) shall be treated as due and payable and unpaid
from the date they would be due and payable but for their characterization as
subject to retainage. In the event that any Material Alteration or Alteration shall
be made in conjunction with any restoration with respect to which Mortgage
Borrower shall be entitled to withdraw Proceeds pursuant to Section 6.2,
the amount of the Cash and Cash Equivalents and/or Letter of Credit to be
furnished pursuant hereto need not exceed the aggregate cost of such
restoration and such Material Alteration or Alteration (as estimated by the
Architect), less the sum of the amount of any Proceeds which Mortgage Borrower
may be entitled to withdraw pursuant to Section 6.2 and which are held
by Mortgage Lender in accordance with Section 6.2. Payment or
reimbursement of Mortgage Borrower’s expenses incurred with respect to any
Material Alteration or any such Alteration shall be accomplished upon the terms
and conditions specified in Section 6.2.


Any Cash and Cash
Equivalents and/or Letter of Credit deposited pursuant hereto shall be returned
to Mortgage Borrower (or if a Letter of Credit originally shall have been
deposited, returned to Mortgage Borrower upon the substitution of a Letter of
Credit in a lesser amount) as Mortgage Borrower shall provide written evidence,
in form reasonably satisfactory to Mortgage Lender of (a) the payment of
the costs of such Alteration in such amount, free and clear of Liens (i.e.,
assuming that the first costs paid are those in excess of the Material
Alteration Collateralization Threshold) or (b) a reduction in the written
estimate of the cost to complete the Material Alteration or the Alterations
(including any retainages) approved by the Architect and reasonably approved by
Mortgage Lender, free and clear of Liens, other than Permitted Encumbrances.


                XI.                                BOOKS AND RECORDS, FINANCIAL STATEMENTS,
REPORTS AND OTHER INFORMATION


11.1         Books and Records. Mezzanine
Borrower shall cause Mortgage Borrower to keep and maintain on a fiscal year
basis proper books and records separate from any other Person, in which
accurate and complete entries shall be made of all dealings or transactions of
or in relation to the Mortgage Notes, the Property and the business and affairs
of Mortgage Borrower relating to the Property which shall reflect all items of
income and expense in connection with the operation of the Property and in
connection with any services, equipment or furnishings provided in connection
with the operation of the Property, in accordance with GAAP. Mezzanine Lender
and its authorized representatives shall have the right at reasonable times and
upon reasonable notice to examine the books and records of Mortgage Borrower
and Mezzanine Borrower and to make such copies or extracts thereof as Mezzanine
Lender may reasonably require.


11.2         Financial Statements.


11.2.1      Monthly
Reports. Commencing in November 2007, not later than thirty (30) days
following the end of each calendar month (or, with respect to calendar months
that end on the last day of a Fiscal Quarter, concurrently with the delivery of
the applicable quarterly reports pursuant to Section 11.2.2), Mezzanine
Borrower shall cause Mortgage Borrower to cause Master Lessee, pursuant to the
Master Lease, to deliver to Mezzanine Lender monthly revenue reports in respect
of the Property for such month, for the corresponding month of the previous
Fiscal Year and for the year to date, and financial statements, internally
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basis for such month,
reporting Portfolio Four-Wall EBITDAR as of the end of such month, for the
corresponding month of the previous Fiscal Year and for the year to date, and a
comparison of the year to date results with (i) the results for the same period
of the previous year and (ii) the Annual Budget for such period and the Fiscal
Year, and a calculation of the LCR, LTV Ratio, Master Lease Variable Additional
Rent and Master Lease Recurrent Additional Rent for such period. Such
statements for each month shall: (A) fairly represent the financial condition
and results of operations of Master Lessee and (B) be accompanied by a
Master Lessee Officer’s Certificate certifying to the best of the signer’s
knowledge, that the requirements in clauses (A) and (B) above have been
satisfied. Such statements shall also be accompanied by an Officer’s
Certificate certifying to the best of the signer’s knowledge that as of the
date of such Officer’s Certificate, (1) no Mortgage Event of Default exists
under the Loan Agreement (Mortgage), the Mortgage Notes or any other (Mortgage)
Loan Document or, if so, specifying the nature and status of each such Mortgage
Event of Default and the action then being taken by Mortgage Borrower or
proposed to be taken to remedy such Mortgage Event of Default and (2) no Event
of Default exists under this Agreement, the Mezzanine Notes or any other
Mezzanine Loan Document or, if so, specifying the nature and status of each
such Event of Default and the action then being taken by Mezzanine Borrower or
proposed to be taken to remedy such Event of Default. Such financial statements
shall contain such other information as shall be reasonably requested by
Mezzanine Lender for purposes of calculations to be made by Mezzanine Lender
pursuant to the terms hereof. Notwithstanding the foregoing, Mezzanine Borrower
shall cause Mortgage Borrower to deliver promptly to Mezzanine Lender reports
detailing any non recurring charges of Mortgage Borrower or Master Lessee
including, among other things, any charges assessed under any Operating
Agreement. Subject to Section 11.2.9(b), revenue reports and Portfolio
Four-Wall EBITDAR shall each be prepared on an aggregate basis for all of the
Individual Properties.


11.2.2      Quarterly
Reports. Commencing not later than forty-five (45) days following the end
of each Fiscal Quarter (commencing with the Fiscal Quarter ending in
December 31, 2007), Mezzanine Borrower shall cause Mortgage Borrower to
cause Master Lessee, pursuant to the Master Lease, to deliver to Mezzanine
Lender quarterly revenue reports in respect of the Property and unaudited
financial statements, internally prepared on an accrual basis, reporting
Portfolio Four-Wall EBITDAR as of the end of such Fiscal Quarter and for the corresponding
Fiscal Quarter of the previous year, including a statement of net income (in
respect of the Property) for the year to date and a statement of revenues and
expenses for such Fiscal Quarter, and a comparison of the year to date results
with (i) the results for the same period of the previous year and (ii) the
Annual Budget for such period and the Fiscal Year, and a calculation of the
LCR, LTV Ratio, Master Lease Variable Additional Rent and Master Lease
Recurrent Additional Rent for such period. Such statements for each Fiscal
Quarter shall: (A) fairly represent the financial condition and results of
operations of Master Lessee and (B) be accompanied by a Master Lessee
Officer’s Certificate certifying to the best of the signer’s knowledge, that
the requirements in clauses (A) and (B) above have been satisfied. Such
statements shall also be accompanied by an Officer’s Certificate certifying to
the best of the signer’s knowledge that as of the date of such Officer’s
Certificate, (1) no Mortgage Event of Default exists under the Loan Agreement
(Mortgage), the Mortgage Notes or any other Loan Document (Mortgage), or, if
so, specifying the nature and status of each such Mortgage Event of Default and
the action then being taken by Mortgage Borrower or proposed to be taken to
remedy such Mortgage Event of Default, (2) no Event of Default exists under
this Agreement,


 


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the Mezzanine Notes or
any other Mezzanine Loan Document or, if so, specifying the nature and status
of each such Event of Default and the action then being taken by Mezzanine
Borrower or proposed to be taken to remedy such Event of Default and (3) that
as of the date of each Officer’s Certificate, no litigation exists involving
Mortgage Borrower, Master Lessee or the Property in which the amount involved
is $5,000,000 (in the aggregate) or more or in which all or substantially all
of the potential liability is not covered by insurance, or, if so, specifying
such litigation and the actions being taken in relation thereto. Such financial
statements shall contain such other information as shall be reasonably
requested by Mezzanine Lender for purposes of calculations to be made by
Mezzanine Lender pursuant to the terms hereof.


11.2.3      Annual Reports. Not later than
one-hundred twenty (120) days after the end of each Fiscal Year of Mortgage
Borrower’s operations (commencing with the Fiscal Year ending in
December 31, 2007), Mezzanine Borrower shall cause Mortgage Borrower to
cause Master Lessee, pursuant to the Master Lease, to deliver to Mezzanine
Lender annual revenue reports in respect of the Property, audited financial
statements for Master Lessee certified by an Independent Accountant in
accordance with GAAP which shall contain unaudited schedules as follows: a
statement of Master Lessee’s net income for the Fiscal Year and for the fourth
Fiscal Quarter thereof and a statement of Master Lessee’s revenues and expenses
for such year, and stating in comparative form the figures for the previous
fiscal year, and a calculation of the LCR, LTV Ratio, Master Lease Variable
Additional Rent and Master Lease Recurrent Additional Rent for such period. Such
annual financial statements shall: (A) fairly represent the financial condition
and results of operations of Master Lessee and (B) be accompanied by a Master
Lessee Officer’s Certificate in the form required pursuant to Section 11.2.1
and a schedule which reflects the amount by which actual operating expenses
were greater than or less than operating expenses anticipated in the applicable
Annual Budget.


11.2.4      Disclosure Restrictions. Notwithstanding
anything to the contrary contained in this Article XI, unless such
information is otherwise disclosed publicly by Mezzanine Borrower or Mortgage
Borrower, Mezzanine Borrower shall not be required to deliver or cause to be
delivered financial information hereunder to Mezzanine Lender to the limited
extent and only during any such period that any applicable federal or state
securities laws or regulations promulgated thereunder (a) expressly prohibit
such delivery or (b) permit such delivery to be made to Mezzanine Lender only
when also disclosed publicly.


11.2.5      Capital Expenditures Summaries. Mezzanine
Borrower shall cause Mortgage Borrower, or shall cause Mortgage Borrower to
cause Master Lessee to, within ninety (90) days after the end of each calendar
year during the term of the Mezzanine Notes, deliver to Mezzanine Lender an
annual summary of any and all capital expenditures made at the Property during
the prior twelve (12) month period.


11.2.6      Master
Lease. Without duplication of any other provision of this Agreement or any
other Mezzanine Loan Documents, Mezzanine Borrower shall cause Mortgage
Borrower to deliver to Mezzanine Lender, within ten (10) Business Days of the
receipt thereof by Mortgage Borrower, a copy of all reports prepared by Master
Lessee pursuant to the Master Lease, including, without limitation, the Annual
Budget and any inspection reports.


 


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11.2.7      Annual Budget; Operating Agreement
Annual Budgets.


(a)           Mezzanine Borrower shall cause
Mortgage Borrower, or shall cause Mortgage Borrower to cause Master Lessee to
deliver to Mezzanine Lender the Annual Budget for Mezzanine Lender’s review,
but not approval, prior to the expiration of each Fiscal Year. Any proposed
modifications to such Annual Budget shall be delivered to Mezzanine Lender for
its review, but not approval. Notwithstanding the foregoing, while an 80%
Trigger Approval Period shall exist, Mezzanine Lender shall have the right to
approve all aspects of the Annual Budget relating to expenditures for FF&E,
which approval shall not be unreasonably withheld, delayed or conditioned.


(b)           Mezzanine Borrower shall cause
Mortgage Borrower, or shall cause Mortgage Borrower to cause Master Lessee to
deliver to Mezzanine Lender the annual budget and any modifications thereto
under any Operating Agreement for Mezzanine Lender’s review, but not approval,
prior to Mortgage Borrower’s or Master Lessee’s approval of any such annual
budget or modification. Notwithstanding the foregoing, upon the occurrence and
during the continuation of an Event of Default and if there is a Master Lease
Tenant Default, Mezzanine Lender shall have the right to exercise any right of
approval that Mezzanine Borrower, on behalf of Mortgage Borrower, may have to
approve the annual budgets and any amendments thereto under any Operating
Agreements subject to any constraints in the Operating Agreement in question,
in its sole and absolute discretion.


11.2.8      Other Information. Mezzanine
Borrower shall cause Mortgage Borrower to, promptly after written request by
Mezzanine Lender, furnish or cause to be furnished to Mezzanine Lender, in such
manner and in such detail as may be reasonably requested by Mezzanine Lender,
such reasonable additional information as may be reasonably requested with
respect to the Property, Mortgage Borrower, Mezzanine Borrower, Master Lessee
or any Guarantor.


11.2.9      Proprietary Information.


(a)           The Mezzanine Lender shall keep
confidential all revenue reports and any other proprietary information
delivered to Mezzanine Lender pursuant to this Agreement, (provided any such
other proprietary information is clearly marked by Mezzanine Borrower or
Mortgage Borrower as confidential) (collectively, “Proprietary Information”),
including specifically, but not limited to, any financial information provided
pursuant to this Article XI. Notwithstanding the foregoing, Mezzanine
Lender shall be permitted to freely deliver Proprietary Information to Rating
Agencies, and Servicer, to prospective participants and purchasers of the Loan
and interests therein other than the Proscribed Assignee, and to its and their
respective agents and representatives provided that Mezzanine Lender shall
inform such parties of the confidential nature of such information.


(b)           Notwithstanding
anything to the contrary contained herein, Mezzanine Borrower shall not
identify any specific property to which any Proprietary Information relates (“Asset-Specific
Proprietary Information”) (and shall not be required to permit inspection
of Property-specific information contained in its or Mortgage Borrower’s books
and records) unless requested by holders or prospective holders of (a) the Loan
or any interest therein or (b) the unrated or lower-rated securities backed by
the Mortgage Loan (collectively, “Requesting Parties”). Mezzanine Lender
shall be permitted to deliver Asset-Specific Proprietary


 


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Information to Requesting
Parties that request such information (and such Requesting Parties shall be
permitted to inspect Property-specific information contained in its or Mortgage
Borrower’s books and records), provided that each such Person (i) executes
a commercially reasonable confidentiality agreement with respect to such
information for the benefit of Mortgage Borrower, Mezzanine Borrower and Master
Lessee and (ii) is not the Proscribed Assignee.


                XII.         ENVIRONMENTAL
MATTERS


12.1         Representations. Mezzanine
Borrower hereby represents and warrants that except as set forth in the
environmental reports and studies delivered to Mezzanine Lender prior to the
Closing Date (the “Environmental Reports”) or as would not reasonably be
expected to have a Material Adverse Effect, (i) neither Mezzanine Borrower nor
Mortgage Borrower has engaged in or, to the Mezzanine Borrower’s knowledge,
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any way involving
the handling, manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous Materials on, under,
in or about the Property, or transported any Hazardous Materials to, from or
across the Property, except in all cases in compliance with Environmental Laws;
(ii) to Mezzanine Borrower’s knowledge, no tenant, occupant or user of the
Property, or any other Person, has engaged in or permitted any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in compliance with Environmental Laws; (iii) to the Mezzanine
Borrower’s knowledge, no Hazardous Materials are presently constructed,
deposited, stored, or otherwise located on, under, in or about the Property
except in compliance with Environmental Laws; (iv) to the best of Mezzanine
Borrower’s knowledge, no Hazardous Materials have migrated from the Property
upon or beneath other properties which would reasonably be expected to result
in material liability for Mortgage Borrower or Mezzanine Borrower; and (v) to
the Mezzanine Borrower’s knowledge, no Hazardous Materials have migrated or
threaten to migrate from other properties upon, about or beneath the Property
which would reasonably be expected to result in material liability for Mortgage
Borrower or Mezzanine Borrower.


12.2         Covenants.


12.2.1      Compliance with Environmental Laws.
Subject to Section 7.3 and Mortgage Borrower’s right to contest under Section
7.3 of the Loan Agreement (Mortgage), Mezzanine Borrower covenants and
agrees with Mezzanine Lender that it shall, and shall cause the Mortgage
Borrower and the Property to, comply with all Environmental Laws, except for
any such non-compliance that would not reasonably be expected to have a
Material Adverse Effect. If the Pledge is foreclosed, Mezzanine Borrower shall
cause Mortgage Borrower to deliver the Property in compliance with all
applicable Environmental Laws.


12.2.2      Notices
Regarding Environmental Events. If at any time prior to the repayment in
full of the Obligations (First Mezzanine), a Governmental Authority having
jurisdiction over the Property requires, in writing, remedial action to correct
the presence of Hazardous Materials in,


 


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around, or under the
Property (an “Environmental Event”), Mezzanine Borrower shall or shall
cause Mortgage Borrower to deliver prompt notice of the occurrence of such
Environmental Event to Mezzanine Lender. Within thirty (30) days after
Mezzanine Borrower or Mortgage Borrower has knowledge of the occurrence of an
Environmental Event, Mezzanine Borrower shall or shall cause Mortgage Borrower
to deliver to Mezzanine Lender an Officer’s Certificate (an “Environmental
Certificate”) explaining the Environmental Event in reasonable detail and
setting forth the proposed remedial action, if any.


12.2.3      Other Notices. Mezzanine Borrower
shall or shall cause Mortgage Borrower to promptly provide Mezzanine Lender
with copies of all written notices which allege or identify any actual or
potential violation or noncompliance received by or prepared by or for
Mezzanine Borrower or Mortgage Borrower in connection with any Environmental
Law. For purposes of this paragraph, the term “notice” shall mean any
summons, citation, directive, order, claim, pleading, letter, application,
filing, report, findings, declarations or other written materials pertinent to
compliance of the Property, Mortgage Borrower or Mezzanine Borrower with such
Environmental Laws.


12.3         Environmental Reports. Upon the
occurrence and during the continuance of an Environmental Event with respect to
the Property or any Event of Default, Mezzanine Lender shall have the right to
have its consultants perform an environmental audit of the Property. Such audit
shall be conducted by an environmental consultant chosen by Mezzanine Lender
and may include a visual survey, a non-privileged record review, an area
reconnaissance assessing the presence of hazardous or toxic waste or substances,
PCBs or storage tanks at the Property, an asbestos survey of the Property,
which may include random sampling of the Improvements and air quality testing,
and such further site assessments as Mezzanine Lender may reasonably require
due to the results obtained from the foregoing, provided that if such audit
shall be undertaken with respect to an Environmental Event, such audit shall be
limited to a scope reasonably necessary to assess the subject matter of the
Environmental Event. Subject to applicable Gaming Laws, Mezzanine Borrower
grants (and shall cause Mortgage Borrower to grant to) Mezzanine Lender, its
agents, consultants and contractors the right to enter the Property as
reasonable or appropriate for the circumstances, during normal business hours
on Business Days upon reasonable advance written notice, for the purposes of
performing such studies and the reasonable cost of such studies shall be due
and payable by Mezzanine Borrower to Mezzanine Lender upon demand and shall be
secured by the Lien of this Agreement and the Pledge. Mezzanine Lender shall
not unreasonably interfere with, and Mezzanine Lender shall direct the
environmental consultant to use its commercially reasonable efforts not to
hinder, Mortgage Borrower’s, Master Lessee’s or any Tenant’s or other occupant’s
operations upon the Property when conducting such audit, sampling or
inspections. By undertaking any of the measures identified in and pursuant to
this Section 12.3, Mezzanine Lender shall not be deemed to be exercising
any control over the operations of Mortgage Borrower or Mezzanine Borrower or
the handling of any environmental matter or hazardous wastes or substances of
Mortgage Borrower or Mezzanine Borrower for purposes of incurring or being
subject to liability therefor.


12.4         Environmental
Indemnification. Mezzanine Borrower, at its sole cost and expense, shall
protect, indemnify, save, defend (at trial and at appellate levels and with
attorneys, consultants and experts selected by Mezzanine Borrower and
reasonably acceptable to Indemnified Parties), and hold harmless the
Indemnified Parties from and against any and all


 


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liability, loss, lien, damage, obligations, settlement payments,
penalties, assessments, citations, directives, litigation, actions, demands,
defenses, proceedings, causes of action, costs, disbursements, or expenses of
any kind or of any nature whatsoever (including, without limitation, but
subject to the provisions hereof, reasonable attorneys’, consultants’ and
experts’ fees and disbursements reasonably incurred in investigating, defending
against, settling or prosecuting any claim, litigation or proceeding) and any
and all claims, suits and judgments which may at any time be imposed upon,
incurred by or asserted or awarded against any Indemnified Party or any
Individual Property, as a result of or with respect to or arising from or out
of: (a) any Environmental Claim relating to or arising from the Property; (b)
the violation of any Environmental Law in connection with the Property; (c) any
actual or threatened release, spill, or the presence of any Hazardous Materials
affecting the Property; (d) the presence at, in, on or under, or the release,
escape, seepage, leakage, discharge or migration at or from, the Property of
any Hazardous Materials, whether or not such condition was known or unknown to
Mezzanine Borrower; (e) the actual or threatened presence, release, seepage,
leakage, discharge or migration of Hazardous Materials at any other location if
the Hazardous Materials were generated, treated, stored, transported or
disposed of by or on behalf of the Mortgage Borrower or Mezzanine Borrower; (f)
the failure of Mezzanine Borrower to comply fully with the terms and conditions
of this Article XII; or (g) the enforcement of this Article XII, including,
without limitation, (i) the reasonable costs of assessment, containment and/or
removal of any and all Hazardous Materials from all or any portion of any
Individual Property, any adjacent areas, (ii) the costs of any actions taken in
response to an actual or threatened release, escape, seepage, leakage,
discharge, migration or presence of any Hazardous Materials on, in, under or
affecting all or any portion of any Individual Property, any adjacent areas, or
any other areas to prevent or minimize such actual or threatened release,
escape, seepage, leakage, discharge, migration or presence of any Hazardous
Materials so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and (iii)
costs incurred to comply with the Environmental Laws in connection with all or
any portion of any Individual Property, any adjacent areas, or any other areas
for violations; provided that, in each case, Mezzanine Borrower shall be
relieved of its obligation under this subsection if any of the matters referred
to in clauses (a) through (g) above did not occur (but need not have been
discovered) prior to (1) the foreclosure of the Pledge or (2) the delivery by
Mezzanine Borrower to Mezzanine Lender or its designee of a transfer-in-lieu of
foreclosure with respect to the Ownership Interests. If any such action or
other proceeding shall be brought against Mezzanine Lender, upon written notice
from Mezzanine Borrower to Mezzanine Lender (given reasonably promptly
following Mezzanine Lender’s notice to Mezzanine Borrower of such action or
proceeding), Mezzanine Borrower shall be entitled to assume the defense
thereof, at Mezzanine Borrower’s expense, with counsel reasonably acceptable to
Mezzanine Lender; provided, however, Mezzanine Lender may, at its own expense,
retain separate counsel to participate in such defense, but such participation
shall not be deemed to give Mezzanine Lender a right to control such defense,
which right Mezzanine Borrower expressly retains. Notwithstanding the
foregoing, each Indemnified Party shall have the right to employ separate
counsel at Mezzanine Borrower’s expense if, in the reasonable opinion of legal
counsel, a conflict or potential conflict exists between the Indemnified Party
and Mezzanine Borrower that would make such separate representation advisable. Mezzanine
Borrower shall have no obligation under this Section 12.4 to indemnify
an Indemnified Party for any liability, loss, lien, damage, obligations,
settlement payments, penalties, assessments, citations, directives, litigation,
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proceedings, causes of
action, costs, disbursements, or expenses of any kind or of any nature
whatsoever (including, without limitation, but subject to the provisions
hereof, reasonable attorneys’, consultants’ and experts’ fees and disbursements
reasonably incurred in investigating, defending against, settling or prosecuting
any claim, litigation or proceeding) and any and all claims, suits and
judgments resulting from any Indemnified Party’s gross negligence or willful
misconduct.


12.5         Recourse Nature of Certain
Indemnifications. Notwithstanding anything to the contrary provided in this
Agreement or in any other Mezzanine Loan Document, the indemnification provided
in Section 12.4 shall be fully recourse to Mezzanine Borrower and shall
be independent of, and shall survive, the discharge of the Indebtedness, the
release of the Liens created by this Agreement and the Pledge, and/or the
conveyance of title to the Collateral to Mezzanine Lender or any purchaser or
designee in connection with a foreclosure of the Collateral pursuant to the
Pledge or this Agreement, or transfer in lieu of foreclosure.


                XIII.        THE
OPERATING AGREEMENTS


13.1         Operating Agreement Representations,
Warranties. Mezzanine Borrower hereby represents and warrants as follows:


(a)           the Operating Agreements to which
Mortgage Borrower or any Borrower Party or Master Lessee is a party or is bound
are, or will be as of the Closing Date, in full force and effect, and have not
been amended, restated, modified, supplemented, replaced or assigned except as
indicated on the applicable schedule attached hereto or the Security
Instruments and Mezzanine Borrower has not caused Mortgage Borrower to waive,
cancel or surrender any of its rights thereunder;


(b)           none of the Contemplated Transactions
in any case: (1) requires the consent or approval of or notice to any party to
any Operating Agreement, other than consents obtained prior to the date hereof
and notices delivered prior to or on the date hereof or (2) will constitute a
default under any Operating Agreement that would have a Material Adverse
Effect;


(c)           none of the Operating Agreements
requires the continued use of any Individual Property (i) under any designated
trade name or (ii) for any single designated required use (other than use
categories such as hotel and casino operations or similarly broad categories
that would not have a Material Adverse Effect);


(d)           all
sums, charges, fees, costs, expenses, rent, additional rent, common charges,
common area maintenance charges and other charges or assessments reserved in or
payable under the Operating Agreements, including without limitation, all sums,
charges, fees, assessments, costs, and expenses in connection with any taxes,
site preparation and construction, non-shareholder contributions, and common
area and other property management activities, are current (except for any of
the same which are being contested in accordance with Section 7.3), and
no Lien (other than the Existing Matters of Record) with respect thereto has
attached on any Individual Property (or threat thereof been made in writing)
for failure to pay any of the foregoing;


 


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(e)           Mortgage Borrower has not delivered
or received any notices of default under any of the Operating Agreements and is
not in default under any material terms of any of the Operating Agreements,
except as to the extent that such default would not reasonably be expected to
result in a Material Adverse Effect;


(f)            To the best of Mezzanine Borrower’s
knowledge, no Fee Owner or other party to any Operating Agreement is in default
under any of the terms of any of the Operating Agreements and there are no
circumstances which, with the passage of time or the giving of notice, or both,
would constitute a default under any terms of any of the Operating Agreements
by any such Fee Owner or other party that would have a Material Adverse Effect;


(g)           Mezzanine Borrower has caused
Mortgage Borrower to deliver to Mezzanine Lender a true, accurate and complete
copy of each of the Operating Agreements;


(h)           All construction obligations of
Mortgage Borrower under all Operating Agreements have been satisfied in all
material respects; and


(i)            To the best of Mezzanine Borrower’s
knowledge, all easements granted pursuant to any Operating Agreement which were
to have survived the site preparation and completion of construction, remain in
full force and effect and have not been released, terminated, extinguished or
discharged by agreement or otherwise, except to the extent it would not be
expected to result in a Material Adverse Effect.


13.2         Cure by Mezzanine Lender. In the
event of a default by Mortgage Borrower in the performance of any of its
obligations under any Operating Agreement beyond any applicable notice and cure
periods therein, including, without limitation, any default in the payment of
any sums payable thereunder, then, in each and every such case, Mezzanine
Lender may, at its option, cause the default or defaults to be remedied and
otherwise exercise any and all rights of Mortgage Borrower thereunder in the
name of and on behalf of Mortgage Borrower. Mezzanine Borrower shall cause
Mortgage Borrower, on demand, reimburse Mezzanine Lender for all advances made
and reasonable out-of-pocket expenses incurred by Mezzanine Lender in curing
any such default (including, without limitation, reasonable attorneys’ fees and
disbursements), together with interest thereon computed at the Default Rate
from the date that such advance is made to and including the date the same is
paid to Mezzanine Lender.


13.3         Option
to Renew or Extend the Ground Lease. Mezzanine Borrower shall cause
Mortgage Borrower to give Mezzanine Lender written notice of its intention to
exercise each and every option, if any, to renew or extend the term of any of
the Ground Leases, at least thirty (30) days prior to the expiration of the
time to exercise such option under the terms thereof. If required by Mezzanine
Lender, Mezzanine Borrower shall cause Mortgage Borrower to duly exercise any
renewal or extension option with respect to any of the Ground Leases if
Mezzanine Lender reasonably determines that the exercise of such option is
necessary to protect Mezzanine Lender’s security for the Loan. If Mezzanine
Borrower intends to cause Mortgage Borrower to renew or extend the term of any
of the Ground Leases, it shall deliver to cause to be delivered to Mezzanine
Lender, with the notice of such decision, a copy of the notice of renewal or
extension delivered to the applicable Fee Owner, together with the terms and
conditions of such renewal or extension. If Mezzanine Borrower does not cause
Mortgage Borrower to renew or extend the


 


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term of a Ground Lease,
Mezzanine Lender may, at its option if Mezzanine Lender reasonably determines
that the exercise of such option is necessary to protect Mezzanine Lender’s
security for the Loan, exercise the option to renew or extend in the name of
and on behalf of Mortgage Borrower. Mezzanine Borrower, on behalf of Mortgage
Borrower, hereby irrevocably appoints Mezzanine Lender as its attorney-in-fact,
coupled with an interest, to execute and deliver, for and in the name of
Mortgage Borrower, all instruments and agreements necessary under the Ground
Leases or otherwise to cause any renewal or extension of the Ground Leases in
accordance with this Section 13.3.


13.4         Operating Agreement Covenants.


13.4.1      Waiver of Interest In New Ground Lease.
In the event any of the Ground Leases shall be terminated by reason of a
default thereunder by Mortgage Borrower and Mezzanine Lender shall require that
the related Fee Owner enter into a new ground lease, Mezzanine Borrower, on
behalf of Mortgage Borrower, hereby waives any right, title and interest in and
to such new ground lease or the leasehold estate created thereby, waiving all
rights of redemption now or hereafter operable under any law.


13.4.2      No Election to Terminate. Mezzanine
Borrower shall not permit Mortgage Borrower to elect to treat any of the
Operating Agreements as terminated, canceled or surrendered pursuant to the
applicable provisions of the Bankruptcy Code (including, without limitation, Section
365(h)(1) thereof) without Mezzanine Lender’s prior written consent in the
event a bankruptcy of a Fee Owner or any other party to an Operating Agreement.
In addition, to the extent not prohibited by applicable law, Mezzanine Borrower
shall cause Mortgage Borrower, in the event of a bankruptcy of Fee Owner or any
other party to an Operating Agreement, to reaffirm and ratify the legality,
validity, binding effect and enforceability of such Operating Agreement and
shall remain in possession of the Property, the Leasehold Estate and the other
rights granted pursuant to the Operating Agreements, notwithstanding any
rejection thereof by Fee Owner, any other party to any Operating Agreement, or
any trustee, custodian or receiver.


13.4.3      Notice
Prior to Rejection. Mezzanine Borrower shall cause Mortgage Borrower to
give Mezzanine Lender not less than thirty (30) days prior written notice of
the date on which Mortgage Borrower shall apply to any court or other
Governmental Authority for authority and permission to reject an Operating
Agreement in the event that there shall be filed by or against Mortgage
Borrower any petition, action or proceeding under the Bankruptcy Code or under
any other similar federal or state law now or hereafter in effect and if
Mortgage Borrower determines to reject an Operating Agreement. Mezzanine Lender
shall have the right, but not the obligation, to serve upon Mezzanine Borrower
within such thirty (30) day period a notice stating that Mezzanine Lender demands
that Mezzanine Borrower cause Mortgage Borrower to assume such Operating
Agreement and assign same to Mortgage Lender subject to and in accordance with
the Loan Agreement (Mortgage) and the Bankruptcy Code. If Mezzanine Lender
serves upon Mezzanine Borrower the notice described above, Mezzanine Borrower
shall not permit Mortgage Borrower to seek to reject such Operating Agreement
and shall comply with the demand provided for in the preceding sentence within
fifteen (15) days after the notice shall have been given by Mezzanine Lender.


 


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13.4.4      Mezzanine Lender Right to Perform. During
the continuance of an Event of Default, Mezzanine Lender shall have the right,
but not the obligation, (i) to perform and comply with all obligations of
Mortgage Borrower under the Operating Agreements without relying on any grace
period provided therein, (ii) to do and take, without any obligation to do so,
such actions as Mezzanine Lender deems necessary or desirable to prevent or
cure any default by Mortgage Borrower under the Operating Agreements,
including, without limitation, any act, deed, matter or thing whatsoever that
Mortgage Borrower may do in order to cure a default under the Operating
Agreements and (iii) subject to the terms of the Operating Agreements, to enter
in and upon the Property or any part thereof to such extent and as often as
Mezzanine Lender deems necessary or desirable in order to prevent or cure any
default of Mortgage Borrower under the Operating Agreements. Mezzanine Borrower
shall within five (5) Business Days after written request is made therefor by
Mezzanine Lender, to execute and deliver to Mezzanine Lender or to any party
designated by Mezzanine Lender (including Mortgage Lender), such further
instruments, agreements, powers, assignments, conveyances or the like as may be
reasonably necessary to complete or perfect the interest, rights or powers of
Mezzanine Lender pursuant to this Section or as may otherwise be required by
Mezzanine Lender.


13.4.5      Mezzanine Lender Attorney in Fact. In
the event of any arbitration under or pursuant to any Operating Agreement in
which Mezzanine Lender elects to participate, Mezzanine Borrower (acting on
behalf of Mortgage Borrower) hereby irrevocably appoints Mezzanine Lender as
its true and lawful attorney-in-fact (which appointment shall be deemed coupled
with an interest) to exercise, during the continuance of an Event of Default,
all right, title and interest of Mezzanine Borrower in connection with such arbitration,
including, without limitation, the right to appoint arbitrators and to conduct
arbitration proceedings on behalf of Mezzanine Borrower and Mezzanine Lender. All
reasonable out-of-pocket costs and expenses incurred by Mezzanine Lender in
connection with such arbitration and the settlement thereof shall be borne
solely by Mezzanine Borrower, including, without limitation, reasonable
attorneys’ fees and disbursements. Nothing contained in this Section shall
obligate Mezzanine Lender to participate in any such arbitration.


13.4.6      Payment of Sums Due Under Operating
Agreements. Subject to Section 7.3, Mezzanine Borrower shall cause
Mortgage Borrower to pay all rent, additional rent, common charges, common area
maintenance charges and other charges or assessments reserved in or payable
under the Operating Agreements on or prior to the due date thereof.


13.4.7      Performance
of Covenants. Mezzanine Borrower shall cause Mortgage Borrower promptly to
perform and observe in all material respects all of the terms, covenants and
conditions required to be performed and observed by Mortgage Borrower under the
Operating Agreements, the breach of which could permit any party to an
Operating Agreement validly to terminate such Operating Agreement (including,
without limitation, all payment obligations) except in the case of a Material
Sublease where such termination would not have a Material Adverse Effect, shall
do all things commercially reasonable to preserve and to keep unimpaired its
rights under the Operating Agreements, shall not waive, excuse or discharge any
of the material obligations of Fee Owner or any other party to the Operating
Agreements without Mezzanine Lender’s prior written consent in each instance,
and shall diligently and continuously enforce the material obligations of the
Fee Owner and the other parties to the Operating Agreements except in any such
case where same would not have a Material Adverse Effect.


 


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13.4.8      [Reserved.]


13.4.9      No Modification or Termination.


(a)           Mezzanine Borrower shall not permit
Mortgage Borrower, except as permitted hereunder or with the prior written
consent of Mezzanine Lender, not to be unreasonably withheld, (i)to
 institute any action or proceeding to subdivide or partition any
Individual Property other than with respect to Unimproved Parcels in accordance
with the terms of this Agreement, or (ii) materially modify or amend or vote
for or consent to any material modification of or amendment to any Operating
Agreement.


(b)           Mezzanine Borrower shall not permit
Mortgage Borrower to vote for, agree to or acquiesce in any cancellation,
termination or surrender of any Operating Agreement without the prior written
consent of Mezzanine Lender. Any agreement to which Mortgage Borrower or its
Affiliates is a party whereby any of the Operating Agreements is terminated or
the Property is withdrawn therefrom in violation of the immediately preceding
sentence shall constitute a Transfer prohibited under this Agreement.


13.4.10    Notices of Default. Mezzanine
Borrower shall cause Mortgage Borrower to deliver to Mezzanine Lender copies of
any written notice of default by any party under the Operating Agreements, or
of any written notice from Fee Owner or any other party to any of the Operating
Agreements of its intention to terminate such Operating Agreement or to
re-enter and take possession of any portion of the Property, immediately upon
delivery or receipt of such notice, as the case may be.


13.4.11    Delivery of Information. Mezzanine
Borrower shall cause Mortgage Borrower promptly to furnish to Mezzanine Lender
copies of such information and evidence as Mezzanine Lender may reasonably
request concerning Mortgage Borrower’s due observance, performance and
compliance with the terms, covenants and conditions of the Operating
Agreements.


13.4.12    No Subordination. Mezzanine Borrower
shall not permit Mortgage Borrower to consent to the subordination of the
Operating Agreements to any mortgage or other lease of the fee interest in any
portion of the Property, other than the Security Instruments and as permitted
hereunder pursuant to Section 8.8.10.


13.4.13    Further Assurances. Mezzanine
Borrower shall cause Mortgage Borrower, at its sole cost and expense, to
execute and deliver to Mezzanine Lender, within five (5) Business Days after
request, such documents, instruments or agreements as may be reasonably
required to permit Mezzanine Lender to cure any default under the Operating
Agreements.


13.4.14    Estoppel
Certificates. In addition to and without limitation of any obligations of
Mezzanine Borrower under Section 2.3.9 and under any post-closing side
letter delivered on the Closing Date, Mezzanine Borrower shall use commercially
reasonable efforts to obtain and deliver to Mezzanine Lender within thirty (30)
days after written demand by Mezzanine Lender, an estoppel certificate in the
applicable form attached hereto from each Fee Owner and other parties to the
Operating Agreements designated by Mezzanine Lender setting forth, among other
things, (i) the name of the parties thereunder, (ii) that the Operating
Agreement is in full force and effect and has not been modified or, if it has
been modified, the date of each modification (together with copies of each such
modification), (iii) the date to which all rent, additional rent,


 


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common charges, common
area maintenance charges and other charges or assessments reserved in or
payable under the Operating Agreements have been paid thereunder, (iv) whether
there are any alleged defaults of the lessee under the Operating Agreements
and, if there are, setting forth the nature thereof in reasonable detail, (v)
if any party under the Operating Agreements shall be in default, the default,
and (vi) such other matters as Mezzanine Lender shall reasonably request.


13.4.15    Common Area/Common Elements Insurance.
Mezzanine Borrower shall cause Mortgage Borrower to use commercially reasonable
efforts to cause the parties to the Operating Agreements to maintain the
insurance required to be maintained by such parties thereunder and to deliver
any insurance proceeds payable to Mortgage Borrower under such Operating
Agreements to be delivered to Mezzanine Lender. Without limitation of Mezzanine
Borrower’s obligations under Section 6.1, in the event any party to any
Operating Agreement fails to maintain any insurance coverage required in any
Operating Agreement and the failure would reasonably be expected to have a
Material Adverse Effect, Borrower shall obtain such insurance coverage to
satisfy such requirement.


13.5         Mezzanine Lender Right to
Participate. Mezzanine Lender shall have the right, but not the obligation,
to proceed in respect of any claim, suit, action or proceeding relating to the
rejection of the Operating Agreements by Fee Owner or any other party to any
Operating Agreement as a result of a bankruptcy of Fee Owner or any other party
to any Operating Agreement, including, without limitation, the right to file
and prosecute any and all proofs of claims, complaints, notices and other
documents in any case in respect of Fee Owner or any other party to any
Operating Agreement under and pursuant to the Bankruptcy Code.


13.6         No Liability. Mezzanine Lender
shall have no liability or obligation under the Operating Agreements by reason
of its acceptance of the Pledge, this Agreement and the other Mezzanine Loan
Documents.


                XIV.        RESERVED


                XV.         ASSIGNMENTS
AND PARTICIPATIONS


15.1         Assignment and Acceptance. Each
Mezzanine Lender may assign to one or more Persons, other than any Proscribed
Assignee, all or a portion of its rights and obligations under this Agreement
and the other Mezzanine Loan Documents (including, without limitation, all or a
portion of one or more of the Mezzanine Notes); provided that the parties to
each such assignment shall execute and deliver to Mezzanine Lender, for its
acceptance and recording in the Register (as hereinafter defined), an
Assignment and Acceptance and deliver to Mezzanine Borrower a copy of same. In
addition, each Mezzanine Lender may participate to one or more Persons, other
than any Proscribed Assignee, all or any portion of its rights and obligations
under this Agreement and the other Mezzanine Loan Documents (including without
limitation, all or a portion of one or more of the Mezzanine Notes) utilizing
such documentation to evidence such participation and the parties’ respective
rights thereunder as such Mezzanine Lender, in its sole discretion, shall
elect.


15.2         Effect
of Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and


 


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Acceptance, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Mezzanine Lender, as the case
may be, hereunder and such assignee shall be deemed to have assumed such rights
and obligations, and (ii) Mezzanine Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement and the other Mezzanine Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of a Mezzanine
Lender’s rights and obligations under this Agreement and the other Mezzanine
Loan Documents, such Mezzanine Lender shall cease to be a party hereto) accruing
from and after the effective date of the Assignment and Acceptance, except with
respect to (A) any payments made by Mezzanine Borrower to such Mezzanine Lender
pursuant to the terms of the Mezzanine Loan Documents after the effective date
of the Assignment and Acceptance and (B) any letter of credit, cash deposit or
other deposits or security (other than the Lien of this Agreement and the
Pledge and the other Mezzanine Loan Documents) delivered to or for the benefit
of or deposited with GACC or JPMC, on behalf of the holders of the Mezzanine
Notes, as Mezzanine Lender, for which GACC or JPMC, as applicable, on behalf of
the holders of the Mezzanine Notes, shall remain responsible for the proper
disposition thereof until such items are delivered to a party who is qualified
as an Approved Bank and agrees to hold the same in accordance with the terms
and provisions of the agreement pursuant to which such items were deposited.


15.3         Content.
By executing and delivering an Assignment and Acceptance, Mezzanine Lender and
the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, Mezzanine Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other Mezzanine Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other Mezzanine Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) Mezzanine Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Mezzanine Borrower or the performance or observance by
Mezzanine Borrower of any of its obligations under any Mezzanine Loan Documents
or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon
Mezzanine Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Mezzanine Loan Documents;
(v) such assignee appoints and authorizes Mezzanine Lender to take such action
as agent on its behalf and to exercise such powers and discretion under the Mezzanine
Loan Documents as are delegated to Mezzanine Lender by the terms hereof
together with such powers and discretion as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform, in accordance with their
terms, all of the obligations which by the terms of this Agreement and the
other Mezzanine Loan Documents are required to be performed by Mezzanine
Lender.


 


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15.4        Register.  Each
Mezzanine Lender shall maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of Mezzanine Lender and each assignee pursuant to this Article XV
and the principal amount of the Loan owing to each such assignee from time to
time (the “Register”).  The
entries in the Register shall, with respect to such assignees, be conclusive
and binding for all purposes, absent manifest error.  The Register shall be available for
inspection by Mezzanine Borrower or any assignee pursuant to this Article XV
at any reasonable time and from time to time upon reasonable prior written
notice.


15.5        Substitute Mezzanine
Notes.  Upon its receipt of an
Assignment and Acceptance executed by an assignee, together with any Mezzanine
Note or Mezzanine Notes subject to such assignment, Mezzanine Lender shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit M hereto, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and (iii) give
prompt written notice thereof to Mezzanine Borrower.  Within five (5) Business Days after its
receipt of such notice, Mezzanine Borrower, at Mezzanine Lender’s expense,
shall execute and deliver to Mezzanine Lender in exchange and substitution for
the surrendered Mezzanine Note or Mezzanine Notes a new Mezzanine Note to the
order of such assignee in an amount equal to the portion of the Loan assigned
to it and a new Mezzanine Note to the order of Mezzanine Lender in an amount
equal to the portion of the Loan retained by it hereunder.  Such new Mezzanine Note or Mezzanine Notes
shall be in an aggregate principal amount equal to the aggregate then
outstanding principal amount of such surrendered Mezzanine Note or Mezzanine
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the Mezzanine Notes (modified,
however, to the extent necessary so as not to impose duplicative or increased
obligations on Mezzanine Borrower and to delete obligations previously
satisfied by Mezzanine Borrower). 
Notwithstanding the provisions of this Article XV, Mezzanine
Borrower shall not be responsible or liable for any additional taxes, reserves,
adjustments or other costs and expenses that are related to, or arise as a
result of, any transfer of the Loan or any interest or participation therein
that arise solely and exclusively from the transfer of the Loan or any interest
or participation therein or from the execution of the new Mezzanine Note
contemplated by this Section 15.5, including, without limitation,
any mortgage tax.  Mezzanine Lender
and/or the assignees, as the case may be, shall from time to time designate one
agent through which Mezzanine Borrower shall request all approvals and consents
required or contemplated by this Agreement and the other Mezzanine Loan
Documents and on whose statements Mezzanine Borrower may rely.  Mezzanine Lender hereby initially designates
Mezzanine Noteholder I as such agent.


15.6        Participations. 
Each assignee pursuant to this Article XV may sell
participations to one or more Persons (other than Mezzanine Borrower or any of
its Affiliates) in or to all or a portion of its rights and obligations under
this Agreement and the other Mezzanine Loan Documents (including, without
limitation, all or a portion of the Mezzanine Note held by it); provided,
however, that (i) such assignee’s obligations under this Agreement and the other
Mezzanine Loan Documents shall remain unchanged, (ii) such assignee shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such assignee shall remain the holder of any such
Mezzanine Note for all purposes of this Agreement and the other Mezzanine Loan
Documents, and (iv) Mezzanine Borrower, Mezzanine Lender and the assignees
pursuant to this Article XIV shall continue to deal solely and directly
with such 


 


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assignee in connection with such assignee’s
rights and obligations under this Agreement and the other Mezzanine Loan
Documents.  In the event that more than
one (1) party comprises Mezzanine Lender, Mezzanine Lender shall designate one
party to act on the behalf of all parties comprising Mezzanine Lender in
providing approvals and all other necessary consents under the Mezzanine Loan
Documents and on whose statements Mezzanine Borrower may rely.


15.7        Disclosure of Information.  Any assignee pursuant to this Article XIV
may, in connection with any subsequent assignment or participation or
subsequent proposed assignment or participation pursuant to this Article XIV,
disclose to the subsequent assignee or participant or subsequent proposed
assignee or participant, any information relating to Mezzanine Borrower
furnished to such assignee by or on behalf of Mezzanine Borrower; provided,
however, that, with respect to any Asset Specific Proprietary Information, the
terms of Section 11.2.9 shall be complied with.


15.8        Security Interest in Favor of Federal Reserve Bank.  Notwithstanding any other provision set forth
in this Agreement or any other Mezzanine Loan Document, any assignee pursuant
to this Article XIV may at any time create a security interest in all or
any portion of its rights under this Agreement or the other Mezzanine Loan
Documents (including, without limitation, the amounts owing to it and the
Mezzanine Note or Mezzanine Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.


XVI.                       RESERVED  


XVII.                      DEFAULTS


17.1        Event of Default.


(a)               Each of the following events shall constitute an event
of default hereunder (an “Event of Default”):


(i)            if (A) the Indebtedness is not paid in full on the Maturity Date, (B)
any regularly scheduled monthly payment of interest due under the Mezzanine
Notes is not paid in full on the applicable Payment Date, (C) any prepayment of
principal due under this Agreement or the Mezzanine Notes is not paid when due,
(D) the Prepayment Fee is not paid when due, (E) any deposit to the Mezzanine
Account is not made on the required deposit date therefor; or (F) except as to
any amount included in (A), (B), (C), (D), and/or (E) of this clause (i) or in
clause (ii), any other amount payable pursuant to this Agreement, the Mezzanine
Notes or any other Mezzanine Loan Document is not paid in full when due and
payable in accordance with the provisions of the applicable Mezzanine Loan
Document, with the failure under this clause (F) continuing for ten (10)
Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower;


(ii)           subject to Section 7.3 and Mortgage Borrower’s right to contest as set
forth in Section 7.3 of the Loan Agreement (Mortgage), if any of the
Impositions or Other Charges are not paid prior to the imposition of any
interest, penalty, charge or expense for the non-payment thereof, provided, that
Mezzanine Borrower shall not be deemed to be in default hereunder in the event
(x) funds sufficient for a required payment of such Imposition or Other 


 


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Charge under Section 3.1.7(i) of the Loan Agreement
(Mortgage) are held in the Tax Reserve Account, (y)
Mortgage Lender or Cash Management Bank (Mortgage) fails to timely make payment
from such Sub-Account as contemplated by the Loan Agreement (Mortgage) unless
due to the negligence or willful misconduct of Mezzanine Borrower and (z)
Mezzanine Borrower causes Mortgage Borrower to use best efforts to cause
Mortgage Lender and Cash Management Bank (Mortgage) to make such payment from
such Sub-Account;


(iii)          if
the insurance policies required by Section 6.1 are not kept in full
force and effect or if Mezzanine Borrower fails to deliver to Mezzanine Lender
evidence of the insurance required by Section 6.1 at the times required
in such Section with such failure continuing for five (5) Business Days after
the Mezzanine Lender delivers written notice thereof to Mezzanine Borrower,provided, that Mezzanine Borrower shall not be deemed to be in default
hereunder in the event (x) funds sufficient for a required payment under Section
3.1.7(ii) of the Loan Agreement (Mortgage) of the premiums required to keep
the insurance policies in full force and effect are
held in the Insurance Reserve Account, (y) Mortgage Lender or Cash Management
Bank fails to timely make payment from such Sub-Account as contemplated by the
Loan Agreement (Mortgage) unless due to the negligence or willful misconduct of
Mezzanine Borrower and (z) Mezzanine Borrower causes Mortgage Borrower to use
best efforts to cause Mortgage Lender and Cash Management Bank (Mortgage) to
make such payment from such Sub-Account;


(iv)          if, except as expressly permitted pursuant to Article VIII or
the other provisions hereof, any of the following shall occur: (a) any Transfer
of any direct or indirect legal, beneficial or equitable interest in all or any
portion of the Property, (b) any Transfer of any direct or indirect interest in
Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine Borrower, Master
Lessee, any Guarantor or any SPE Entity, (c) any Lien or encumbrance is granted
against all or any portion of the Property or the Collateral, (d) any pledge,
hypothecation, creation of a security interest in or other encumbrance of any
direct or indirect interests in Borrower, Mortgage Borrower, Junior Mezzanine
Borrower, Master Lessee, any Guarantor or any SPE Entity or (e) Mortgage
Borrower’s filing of a declaration of condominium with respect to the Property;


(v)           if
(i) any representation or warranty made by Mezzanine Borrower in Section
4.1.24 shall have been false or misleading in any material respect as of
the date the representation or warranty was made which incorrect, false or
misleading statement is not cured within thirty (30) days after receipt by
Mezzanine Borrower of notice from Mezzanine Lender in writing of such breach or
a longer period of time not to exceed thirty (30) additional days if Mezzanine
Borrower has commenced to cure but cannot cure within the initial thirty (30)
day period or (ii) if any other representation or warranty made by Mezzanine
Borrower herein or by Mezzanine Borrower or any Affiliate of Mezzanine Borrower
in any other Mezzanine Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Mezzanine
Lender shall have been false or misleading in any material respect as of the
date the representation or warranty was made; provided,
however, that if such representation or warranty which was false or
misleading in any material respect is, by its nature, curable and is not
reasonably likely to have a Material Adverse Effect, and such representation or
warranty was not, to the best of Mezzanine Borrower’s knowledge, false or
misleading in any material respect when made, then same shall not constitute an
Event of Default unless 


 


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Mezzanine Borrower has not cured same within thirty (30) days after
receipt by Mezzanine Borrower of notice from Mezzanine Lender in writing of
such breach;


(vi)          if Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower, any Master Lessee Party, any Guarantor or any SPE Entity shall make
an assignment for the benefit of creditors;


(vii)         if a receiver, liquidator or trustee shall be appointed for Mortgage
Borrower, Mezzanine Borrower, any Junior Mezzanine Borrower, any Master Lessee
Party, any Guarantor or any SPE Entity or Mortgage Borrower, Mezzanine Borrower,
any Junior Mezzanine Borrower, any Master Lessee Party, any Guarantor or any
SPE Entity shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, shall be filed by or against, consented
to, or acquiesced in by, Mortgage Borrower, Mezzanine Borrower, any Junior
Mezzanine Borrower, any Master Lessee Party, any Guarantor or any SPE Entity,
or if any proceeding for the dissolution or liquidation of Mortgage Borrower,
Mezzanine Borrower, any Junior Mezzanine Borrower, any Master Lessee Party, any
Guarantor or any SPE Entity shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower, any Master Lessee Party, any Guarantor or any SPE Entity upon the
same not being discharged, stayed or dismissed within ninety (90) days;


(viii)        if Mortgage Borrower, Mezzanine Borrower, any Junior Mezzanine
Borrower, Master Lessee, Guarantor or any SPE Entity, as applicable, attempts
to assign its rights under this Agreement or any of the other Mezzanine Loan
Documents or any interest herein or therein in contravention of the Mezzanine
Loan Documents;


(ix)          if any of the assumptions contained in the True Sale Opinion is untrue
in any material respect;


(x)           if any of the assumptions contained in the Non-Consolidation Opinion,
in any Additional Non-Consolidation Opinion or in any other non-consolidation
opinion delivered to Mezzanine Lender in connection with the Loan, or in any
other non-consolidation opinion delivered subsequent to the closing of the
Loan, is untrue in any material respect;


(xi)          if any of the assumptions contained in the True Lease Opinion is untrue
in any material respect;


(xii)         if Mezzanine Borrower, having notified Mezzanine Lender of its election
to extend the Maturity Date as set forth in Section 5 of the Mezzanine
Notes, fails to deliver the Replacement Interest Rate Cap Agreement (First
Mezzanine) to Mezzanine Lender not later than one (1) Business Day prior to the
first day of the extended term of the Loan and Mezzanine Borrower has not
prepaid the Loan pursuant to the terms of the Mezzanine Notes prior to such
first day of the extended term;


(xiii)        if Mezzanine Borrower shall fail to comply in any material respect with
any covenants set forth in Section 5.1.4, Section 5.2.9 and 5.2.22;


 


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(xiv)        except as provided clause (xiii) above, if Mezzanine Borrower shall
fail to comply with any covenants set forth in Article V or Section
XI with such failure continuing for ten (10) Business Days after Mezzanine
Lender delivers written notice thereof to Mezzanine Borrower;


(xv)         Mezzanine Borrower shall fail to deposit any sums required to be
deposited in the Mezzanine Account when due;


(xvi)        if this Agreement or any other Mezzanine Loan Document or any Lien
granted hereunder or thereunder, in whole or in part, shall terminate or shall
cease to be effective or shall cease to be a legally valid, binding and
enforceable obligation of Mezzanine Borrower or any Guarantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be a perfected first
priority Lien, subject to the Permitted Encumbrances (First Mezzanine) (except
in any of the foregoing cases in accordance with the terms hereof or under any
other Mezzanine Loan Document or by reason of any affirmative act of Mezzanine
Lender);


(xvii)       except as expressly permitted pursuant to the Mortgage Loan Documents,
if Mortgage Borrower grants any easement, covenant or restriction (other than
the Permitted Encumbrances) over the Property;


(xviii)      the occurrence of a Mortgage Event of Default;


(xix)        if
there shall occur any default by Mortgage Borrower, as lessee under any Ground
Lease, in the observance or performance of any term, covenant or condition of
such Ground Lease on the part of Mortgage Borrower to be observed or performed,
and said default is not cured prior to the expiration of any applicable grace
or cure period therein provided, or if any one or more of the events referred
to in a Ground Lease shall occur which would cause such Ground Lease to
terminate without notice or action by the related Fee Owner under such Ground
Lease or if any Leasehold Estate shall be surrendered or any Ground Lease shall
be lawfully terminated or cancelled for any reason or under any circumstances
whatsoever, or if any of the terms, covenants or conditions of any Ground Lease
shall in any manner be modified, changed, supplemented, altered or amended in
contradiction of the provisions of Article XIII without the prior written
consent of Mortgage Lender, which consent shall not be unreasonably withheld,
conditioned or delayed, or if Mortgage Borrower or Master Lessee shall fail to
exercise any option to renew the Ground Lease or shall fail to or neglect to
pursue diligently all actions necessary to exercise such renewal rights
pursuant to the terms of the Ground Lease, provided, that if a default by
Mortgage Borrower under a Ground Lease is a Ground Rent payment default, the
occurrence or failure to cure such default  shall not be
deemed to be in default hereunder in the event (x) funds sufficient for a
required transfer under Section 3.1.6(a)(iii) of the Loan Agreement
(Mortgage) are held in the Ground Rent Reserve
Account, (y) Mortgage Lender or Cash Management Bank (Mortgage) fails to timely
make any transfer from such Sub-Account as contemplated by this Agreement
unless due to the negligence or willful misconduct of Mortgage Borrower and (z)
Mezzanine Borrower causes Mortgage Borrower to use best efforts to cause
Mortgage Lender and Cash Management Bank (Mortgage) to make such payment from
such subaccount;


(xx)                 Reserved;


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(xxi)                Reserved;


(xxii)               Reserved;


(xxiii)      if,
without the prior written consent of Mortgage Lender, any of the material terms
or provisions of any Operating Agreement are modified or amended (in a manner
prohibited by Article XIII;


(xxiv)             Reserved;


(xxv)      if
the Master Lease shall be materially modified without the prior written consent
of Mezzanine Lender, except as expressly permitted hereunder or any other
Mezzanine Loan Document;


(xxvi)     if
Mortgage Borrower shall be in default in any material obligation on the part of
Mortgage Borrower beyond any applicable notice periods and cure periods
pursuant to the terms of the Master Lease;


(xxvii)    if
an Individual Property shall Go Dark and Mortgage Borrower shall not have
caused such Individual Property to reopen for business to the public, obtained
a release of such Individual Property or provided a substitute therefor in
accordance with Section 2.3.6 of the Loan Agreement (Mortgage) within
the time period specified for each of the foregoing in such Section; or if an
Individual Property shall Go Dark during any period when any other Individual
Property shall have “Gone Dark”;


(xxviii)   if Mezzanine Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or of any Mezzanine Loan
Document not specified in subsections (i) to (xxvii) above, for thirty (30) days after notice from Mezzanine Lender; provided,
however, that if such Default is susceptible of cure but cannot
reasonably be cured within such thirty (30) day period and provided further
that Mezzanine Borrower shall have commenced to cure such Default 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 Mezzanine Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed ninety (90) days.


(b)           Unless waived in writing by Mezzanine
Lender, upon the occurrence and during the continuance of an Event of Default
(other than an Event of Default described in subsections (a)(vi), (vii) or
(viii) above in respect of Mezzanine Borrower) Mezzanine Lender may, without
notice or demand, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Mezzanine Loan Documents or at law or
in equity, take such action that Mezzanine Lender deems advisable to protect
and enforce its rights against Mezzanine Borrower and in the Collateral,
including, without limitation, (i) declaring immediately due and payable the
entire Principal Amount together with interest thereon and all other sums due
by Mezzanine Borrower under the Mezzanine Loan Documents, (ii) collecting interest
on the Principal Amount at the Default Rate whether or not Mezzanine Lender
elects to accelerate the Mezzanine Notes and (iii) enforcing or availing itself
of any or all rights or remedies set forth in the Mezzanine Loan Documents
against Mezzanine Borrower and the Collateral, including, without limitation,
all rights or remedies available at law or in equity; and upon any Event of
Default described in 


 


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subsections (a)(vi) or (a)(vii) above in respect of Mezzanine Borrower, the Indebtedness and all other
obligations of Mezzanine Borrower hereunder and under the other Mezzanine Loan
Documents shall immediately and automatically become due and payable, without
notice or demand, and Mezzanine Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Mezzanine Loan
Document to the contrary notwithstanding. 
The foregoing provisions shall not be construed as a waiver by Mezzanine
Lender of its right to pursue any other remedies available to it under this
Agreement, the Pledge or any other Mezzanine Loan Document.  Any payment hereunder may be enforced and
recovered in whole or in part at such time by one or more of the remedies
provided to Mezzanine Lender in the Mezzanine Loan Documents.


(c)           Upon the occurrence of a
Mortgage Default or a Mortgage Event of Default, Mezzanine Borrower shall cause
Mortgage Borrower to deliver to Mezzanine Lender within five (5) Business Days
after the first to occur of (a) receipt by Mortgage Borrower of notice of such
Mortgage Default or Mortgage Event of Default from Mortgage Lender or (b) the
date Mortgage Borrower obtains actual knowledge of the occurrence of such
Mortgage Default or Mortgage Event of Default, a detailed description of the
actions to be taken by Mortgage Borrower to cure such Mortgage Default or
Mortgage Event of Default and the dates by which each such action shall
occur.  Such schedule shall be subject to
the approval of Mezzanine Lender. 
Mezzanine Borrower shall cause Mortgage Borrower to take all such
actions as are necessary to cure such Mortgage Default or Mortgage Event of
Default by the date approved by Mezzanine Lender and shall deliver to Mezzanine
Lender not less frequently than weekly thereafter written updates concerning
the status of Mortgage Borrower’s efforts to cure such Mortgage Default or
Mortgage Event of Default.  Mezzanine
Lender shall have the right, but not the obligation, to pay any sums or to take
any action which Mezzanine Lender deems necessary or advisable to cure any
default or alleged default under the Loan Documents (Mortgage) (whether or not
Mortgage Borrower is undertaking efforts to cure such default), and such
payment or such action is hereby authorized by Mezzanine Borrower, and any sum
so paid and any expense incurred by Mezzanine Lender in taking any such action
shall be evidenced by this Agreement and secured by this Agreement and the
Pledge and shall be immediately due and payable by Mezzanine Borrower to
Mezzanine Lender with interest at the Default Rate until paid. Mezzanine
Borrower shall cause Mortgage Borrower to permit Mezzanine Lender to enter upon
the Property for the purpose of curing any default or alleged default under the
Loan Documents (Mortgage) or hereunder. 
Mezzanine Borrower hereby transfers and assigns any excess proceeds
arising from any foreclosure or sale under power pursuant to the Loan Documents
(Mortgage) or any instrument evidencing the indebtedness secured thereby, and
Mezzanine Borrower hereby authorizes and directs the holder or holders of the
Loan Documents (Mortgage) to pay such excess proceeds directly to Mezzanine
Lender up to the amount of the Obligations (First Mezzanine).


17.2        RemediesUnless
waived in writing by Mezzanine Lender, upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Mezzanine Lender against
Mezzanine Borrower under this Agreement or any of the other Mezzanine Loan
Documents executed and delivered by, or applicable to, Mezzanine Borrower or at
law or in equity may be exercised by Mezzanine Lender at any time and from time
to time, whether or not all or any of the Indebtedness shall be declared due
and payable, and whether or not Mezzanine Lender shall have commenced any
foreclosure 


 


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proceeding or other action for the
enforcement of its rights and remedies under any of the Mezzanine Loan
Documents with respect to the Collateral. 
Any such actions taken by Mezzanine Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Mezzanine Lender may determine in
its sole discretion, to the fullest extent permitted by law, without impairing
or otherwise affecting the other rights and remedies of Mezzanine Lender
permitted by law, equity or contract or as set forth herein or in the other
Mezzanine Loan Documents.  Without
limiting the generality of the foregoing, Mezzanine Borrower agrees that if an
Event of Default is continuing (i) Mezzanine Lender shall not be subject to any
one action or election of remedies law or rule and (ii) all liens and other
rights, remedies or privileges provided to Mezzanine Lender shall remain in
full force and effect until Mezzanine Lender has exhausted all of its remedies
against the Collateral and this Agreement and the Pledge have been foreclosed,
sold and/or otherwise realized upon in satisfaction of the Indebtedness or the
Indebtedness has been paid in full.


(b)               Upon
the occurrence of any Event of Default, Mezzanine Lender may, but without any
obligation to do so and without notice to or demand on Mezzanine Borrower and
without releasing Mezzanine Borrower from any obligation hereunder, take any
action to cure such Event of Default. 
Mezzanine Lender may appear in, defend, or bring any action or
proceeding to protect its interests in the Collateral or to foreclose its security
interest under this Agreement and the Pledge or under any of the other
Mezzanine Loan Documents or collect the Indebtedness.


(c)               Upon the occurrence and during
the continuance of an Event of Default, with respect to the Account Collateral
(First Mezzanine), the Mezzanine Lender may:


(i)            without notice to Mezzanine Borrower, except as required by law, and at
any time or from time to time, charge, set-off and otherwise apply all or any
part of the Account Collateral (First Mezzanine), against the Obligations
(First Mezzanine), operating expenses and/or capital expenditures for the
Property or any part thereof;


(ii)           in Mezzanine Lender’s sole discretion, at any time and from time to
time, exercise any and all rights and remedies available to it under this
Agreement, and/or as a secured party under the UCC;


(iii)          demand, collect, take possession of or receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon the Account Collateral (First
Mezzanine), (or any portion thereof) as Mezzanine Lender may determine in its
sole discretion; and


(iv)          take all other actions provided in, or contemplated by, this Agreement.


(d)               With respect to Mezzanine
Borrower, the Account Collateral (First Mezzanine), the Rate Cap Collateral (First Mezzanine)
and the Collateral, nothing contained herein or in any other Mezzanine Loan
Document shall be construed as requiring Mezzanine Lender to resort to the
Collateral for the satisfaction of any of the Indebtedness, and Mezzanine
Lender may seek satisfaction out of the Collateral or any part thereof, or exercise
its rights under this Agreement, the Pledge or the other Mezzanine Loan
Documents, in its absolute discretion in respect of the 


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Indebtedness. 
In addition, Mezzanine Lender shall have the right from time to time to
partially foreclose or exercise remedies under this Agreement, the Pledge and
the other Mezzanine Loan Documents, in any manner and for any amounts secured
by this Agreement, the Pledge or the other applicable Mezzanine Loan Documents then
due and payable as determined by Mezzanine Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Mezzanine Borrower defaults beyond any applicable grace period in the payment
of one or more scheduled payments of principal or interest, Mezzanine Lender
may foreclose under this Agreement, the Pledge and the applicable Mezzanine
Loan Documents to recover such delinquent payments, or (ii) in the event
Mezzanine Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Mezzanine Lender may foreclose under this
Agreement, the Pledge and the other applicable Mezzanine Loan Documents to
recover so much of the principal balance of the Loan as Mezzanine Lender may
accelerate and such other sums secured by this Agreement, the Pledge and the
other applicable Mezzanine Loan Documents as Mezzanine Lender may elect.  Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement, the Pledge
and the applicable Mezzanine Loan Documents to secure payment of sums secured
by this Agreement, the Pledge and the applicable Mezzanine Loan Documents and
not previously recovered.


17.3        Remedies Cumulative; Waivers.  The rights, powers and remedies of Mezzanine
Lender under this Agreement and the Pledge shall be cumulative and not
exclusive of any other right, power or remedy which Mezzanine Lender may have
against Mezzanine Borrower pursuant to this Agreement or the other Mezzanine
Loan Documents, or existing at law or in equity or otherwise.  Mezzanine Lender’s rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Mezzanine Lender may determine in Mezzanine Lender’s sole
discretion.  No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. 
A waiver of one Default or Event of Default with respect to Mezzanine
Borrower or any Guarantor shall not be construed to be a waiver of any
subsequent Default or Event of Default by Mezzanine Borrower or any Guarantor
or to impair any remedy, right or power consequent thereon.


17.4        Costs of Collection. 
In the event that after an Event of Default:  (i) the Mezzanine Notes or any of the
Mezzanine Loan Documents is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding; (ii)
an attorney is retained to represent Mezzanine Lender in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors’ rights
and involving a claim under this Agreement the Mezzanine Notes or any of the
Mezzanine Loan Documents; or (iii) an attorney is retained to protect or
enforce the lien or any of the terms of this Agreement, any Pledge or any of
the Mezzanine Loan Documents; then Mezzanine Borrower shall pay to Mezzanine Lender
all reasonable attorney’s fees, costs and expenses actually incurred in
connection therewith, including costs of appeal, together with interest on any
judgment obtained by Mezzanine Lender at the Default Rate (collectively, “Enforcement
Costs”).


XVIII.            SPECIAL PROVISIONS


18.1        Exculpation.


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18.1.1     Exculpated
Parties.  Except as set forth
in this Section 18.1 and the Recourse Guaranty, no personal liability
shall be asserted, sought or obtained by Mezzanine Lender or enforceable
against (i) Mezzanine Borrower, (ii) any Affiliate of Mezzanine Borrower, (iii)
any Person owning, directly or indirectly, any legal or beneficial interest in
Mezzanine Borrower or any Affiliate of Mezzanine Borrower or (iv) any direct or
indirect partner, member, principal, officer, Controlling Person, beneficiary,
trustee, advisor, shareholder, employee, agent, Affiliate or director of any
Persons described in clauses (i) through (iii) above (collectively, the “Exculpated
Parties”) and none of the Exculpated Parties shall have any personal
liability (whether by suit deficiency judgment or otherwise) in respect of the
Obligations (First Mezzanine), this Agreement, the Pledge, the Mezzanine Notes,
the Collateral or any other Mezzanine Loan Document, or the making, issuance or
transfer thereof, all such liability, if any, being expressly waived by
Mezzanine Lender.  The foregoing
limitation shall not in any way limit or affect Mezzanine Lender’s right to any
of the following and Mezzanine Lender shall not be deemed to have waived any of
the following:


(a)               Foreclosure of the lien of this
Agreement and the Pledge in accordance with the terms and provisions set forth
herein and in the Pledge;


(b)               Action against any other security
at any time given to secure the payment of the Mezzanine Notes and the other
Obligations (First Mezzanine);


(c)               Exercise of any other remedy set
forth in this Agreement or in any other Mezzanine Loan Document which is not
inconsistent with the terms of this Section 18.1;


(d)               Any right which Mezzanine Lender
may have under Sections 506(a), 506(b), 1111(b) or any
other provisions of the Bankruptcy Code to file a claim for the full amount of
the Indebtedness secured by this Agreement and the Pledge or to require that
all collateral shall continue to secure all of the Indebtedness owing to
Mezzanine Lender in accordance with the Mezzanine Loan Documents; or


(e)               The liability of any given
Exculpated Party with respect to any separate written guaranty or agreement
given by any such Exculpated Party in connection with the Loan (including,
without limitation, the Recourse Guaranty).


18.1.2     Carveouts
From Non-Recourse Limitations. 
Notwithstanding the foregoing or anything in this Agreement or any of
the Mezzanine Loan Documents to the contrary, there shall at no time be any
limitation on Mezzanine Borrower’s or any Guarantor’s liability for the
payment, in accordance with the terms of this Agreement, the Mezzanine Notes,
the Pledge and the other Mezzanine Loan Documents, to Mezzanine Lender of:


(a)               any loss, damage, cost or expense
incurred by or on behalf of Mezzanine Lender by reason of the fraudulent acts
of Mezzanine Borrower, Mortgage Borrower or any Affiliate of Mezzanine Borrower
or Mortgage Borrower;


(b)               Proceeds which Mezzanine
Borrower, Mortgage Borrower or any Affiliate of Mezzanine Borrower or Mortgage
Borrower has received and to which Mezzanine Lender or Mortgage Lender (as
applicable) is entitled pursuant to the terms of this Agreement, the Loan
Agreement (Mortgage) or any of the Mezzanine Loan Documents or Loan Documents 


 


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(Mortgage) to the extent the same have not
been (i) applied toward payment of the Indebtedness or the Mortgage Loan (as
applicable), or (ii) used for the repair or replacement of the Property, all in
accordance with the provisions of this Agreement;


(c)               all loss, damage, cost or expense
as incurred by Mezzanine Lender and arising from any intentional
misrepresentation of Mezzanine Borrower, Mortgage Borrower or any Affiliate of
Mezzanine Borrower or Mortgage Borrower;


(d)               any misappropriation of Rents or
security deposits or other funds relating to the Properties or Receipts
relating to Ownership Interests by Master Lessee, Mortgage Borrower, Mezzanine
Borrower or any of their respective Affiliates;


(e)               any loss, damage, cost or expense
incurred by or on behalf of Mezzanine Lender by reason of all or any part of
the Property, the Account Collateral (First Mezzanine) or the Rate Cap
Collateral (First Mezzanine) being encumbered by a Lien or Transferred by
reason of the acts of Mezzanine Borrower, Mortgage Borrower or any Affiliate of
Mezzanine Borrower or Mortgage Borrower from and after the date hereof (other
than as provided in this Agreement and the Pledge and any other Mezzanine
Document) in violation of the Mezzanine Loan Documents;


(f)                after the occurrence and during
the continuance of an Event of Default, any Rents, issues, profits and/or
income from the Property collected by Mezzanine Borrower, Mortgage Borrower or
any Affiliate of Mezzanine Borrower or Mortgage Borrower (other than Rent sent
to the Holding Account pursuant to the Loan Agreement (Mortgage) and not paid
directly to Mortgage Lender pursuant to any notice of direction delivered to
tenants of the Property) and not applied to payment of the Obligations
(Mortgage) or Obligations (First Mezzanine), as applicable, or used to pay
normal and verifiable operating expenses of the Property or otherwise are not
applied in a manner permitted under the Mezzanine Loan Documents;


(g)               any loss, damage, cost or expense
incurred by or on behalf of Mezzanine Lender by reason of any physical damage
to the Property from intentional waste or other willful destruction (other than
in connection with a permitted alteration) committed by Mortgage Borrower,
Mezzanine Borrower or any Affiliate of Mezzanine Borrower;


(h)               any loss, damage, cost or expense
incurred by or on behalf of Mezzanine Lender by reason of the failure of
Mezzanine Borrower to comply with any of the provisions of Article XII;


(i)                any loss, damage, cost or
expense incurred by or on behalf of Mezzanine Lender by reason of any breach of
a representation set forth in Section 4.1.30 or any covenant set forth
in Section 5.1.4;


(j)                any loss, damage, cost or
expense incurred by or on behalf of Mezzanine Lender by reason of the failure
of Mezzanine Borrower to deliver to Mezzanine Lender the net sales
proceeds of a Transfer of an Individual Property described in Section 2.3.4
together with any shortfall necessary to pay in full the Combined Release Price
for such Individual Property, in
accordance with the provisions of Section 2.3.4;


 


122
















 


(k)               all of the Indebtedness and the
Obligations (First Mezzanine) in the event of: (i) any
Borrower Party or any Master Lessee Party filing a voluntary petition under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (ii) any Borrower Party ,
any Master Lessee Party, filing
an answer consenting to or otherwise acquiescing in or joining in any
involuntary petition filed against it, by any other Person under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or soliciting
or causing to be solicited, or colluding with (or any of such Borrower Party’s,
any Master Lessee Party’s Affiliates
colluding with) petitioning creditors to file any such involuntary petition
from any Person; (iii) any Borrower Party or Master Lessee Party consenting to or acquiescing in or
joining in an application for the appointment of a custodian, receiver,
trustee, or examiner for any Borrower Party or Master Lessee, or any portion of the Property; (iv)
any Borrower Party or Master Lessee Party making an assignment for the benefit
of creditors, or admitting, in writing or in any legal proceeding, that it is
insolvent;


(l)                any and all liabilities,
obligations, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys’ fees, causes of action, suits, claims,
demands and adjustments of any nature or description whatsoever) which may at
any time be imposed upon, incurred by or awarded against Mezzanine Lender, in
the event (and arising out of such circumstances) that Mezzanine Borrower
should raise any defense, counterclaim and/or allegation in any foreclosure
action by Mezzanine Lender relative to the Collateral, the Account Collateral
(First Mezzanine) or the Rate Cap Collateral (First Mezzanine) or any part
thereof which is found by a court to have been raised by Mezzanine Borrower in
bad faith or to be without basis in fact or law;


(m)              reasonable attorney’s fees and
expenses actually incurred by Mezzanine Lender in connection with any
successful suit filed on account of any of the foregoing clauses (a) through
(l); or


(n)               after the occurrence and during
the continuance of an Event of Default, any Receipts from the Ownership
Interests collected by Mezzanine Borrower or any Affiliate of Mezzanine
Borrower (other than Receipts sent to the Mezzanine Account and not paid
directly to Mezzanine Lender) and not paid to Mezzanine Lender or applied to
the payment of the Obligations (First Mezzanine).


18.2         Pro Rata Share.  The obligations of each Mezzanine Lender hereunder
and under any of the other Mezzanine Loan Documents are several (but not
joint).  Subject to the terms hereof,
each Mezzanine Lender shall be obligated to fund on a pari passu basis only its
respective Pro Rata Share of the Loan. 
Each Mezzanine Lender hereby agrees that if either of them shall,
whether by voluntary payment (other than a voluntary prepayment of the Loan
made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker’s lien, by counterclaim or cross action or by the enforcement of any
right under the Mezzanine Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code or
other applicable insolvency law, receive payment or reduction of a proportion
of the aggregate amount of principal, interest, fees and other amounts then due
and owing to that Mezzanine Lender hereunder or under the other Mezzanine Loan
Documents which is greater than its Pro Rata Share, then such Mezzanine Lender
receiving such proportionately greater payment shall (i) 


 


123

















 


notify the other Mezzanine Lender of the receipt of
such payment, and (ii) appropriate payments or other adjustments shall be made
by each Mezzanine Lender to ensure each Mezzanine Lender receives its
respective Pro Rata Share of such aggregate amount due.


 


XIX.        MISCELLANEOUS


19.1         Survival.  This Agreement and all covenants,
indemnifications, agreements, representations and warranties made herein and
in the certificates delivered pursuant hereto shall survive the making by
Mezzanine Lender of the Loan and the execution and delivery to Mezzanine Lender
of the Mezzanine Notes, and shall continue in full force and effect so long as
all or any of the Indebtedness is outstanding and unpaid unless a longer period
is expressly set forth herein or in the other Mezzanine Loan Documents.  Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party.  All
covenants, promises and agreements in this Agreement, by or on behalf of
Mezzanine Borrower, shall inure to the benefit of the successors and assigns of
Mezzanine Lender.  If Mezzanine Borrower
consists of more than one person, the obligations and liabilities of each such
person hereunder and under the other Mezzanine Loan Documents shall be joint
and several.


 


19.2         Mezzanine Lender’s Discretion.  Whenever pursuant to this Agreement,
Mezzanine Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Mezzanine
Lender, the decision of Mezzanine Lender to approve or disapprove or to decide
whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Mezzanine Lender and shall be final and conclusive.


 


19.3         Governing Law.


 


(A)          THIS AGREEMENT WAS NEGOTIATED IN THE
STATE OF NEW YORK, THE LOAN WAS MADE BY MEZZANINE LENDER AND ACCEPTED BY
MEZZANINE BORROWER 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, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW,
MEZZANINE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
MEZZANINE NOTES AND THE OTHER MEZZANINE LOAN DOCUMENTS AND THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.


 


124





















 


(B)           ANY LEGAL SUIT, ACTION OR PROCEEDING
AGAINST MEZZANINE LENDER OR MEZZANINE BORROWER ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY AT MEZZANINE LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND MEZZANINE BORROWER WAIVES
ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM
NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND MEZZANINE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING.  MEZZANINE BORROWER
DOES HEREBY DESIGNATE AND APPOINT:


                                                CORPORATION
SERVICE COMPANY


                                                80
STATE STREET


                                                ALBANY,
NEW YORK  12207-2543


 


AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON
ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND
AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO MEZZANINE BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON MEZZANINE BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK.  MEZZANINE BORROWER (I) SHALL
GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.


19.4         Modification; Waiver in Writing.  No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of the
Mezzanine Notes, or of any other Mezzanine Loan Document, or consent to any
departure therefrom, shall in any event be effective unless the same shall be
in a writing signed by the party against whom enforcement is sought, and then
such waiver or consent shall be effective only in the specific instance, and
for the purpose, for which given.  Except
as otherwise expressly provided herein, no notice to or demand on Mezzanine
Borrower shall entitle Mezzanine Borrower to any other or future notice or
demand in the same, similar or other circumstances.


 


19.5         Delay Not a Waiver.  Neither any failure nor any delay on the part
of Mezzanine Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Mezzanine Notes or under any other Mezzanine
Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof 


 


125

















 


preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. 
In particular, and not by way of limitation, by accepting payment after
the due date of any amount payable under this Agreement, the Mezzanine Notes or
any other Mezzanine Loan Document, Mezzanine Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement, the Mezzanine Notes or the other Mezzanine Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.


 


19.6         Notices.  All notices, consents, approvals and requests
required or permitted hereunder or under any other Mezzanine Loan Document
shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage
prepaid, return receipt requested, (b) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery or (c) telecopier (with answer back acknowledged), addressed as
follows (or at such other address and Person as shall be designated from time
to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section):


 


	
  If to Mezzanine Lender:

  	
  German
  American Capital Corporation, on behalf of the holders
  of the Mezzanine Notes

  
	
   

  	
  60
  Wall Street, 10th floor

  
	
   

  	
  New
  York, NY 10005

  
	
   

  	
  Attention:
  Todd Sammann and General Counsel

  
	
   

  	
  Telecopy
  No.:  (212) 797-4489

  
	
   

  	
   

  
	
   

  	
  and
  to JPMorgan Chase Bank, N.A., on behalf of the holders of the Mezzanine Notes
 270 Park Avenue

  New York, New York 10017

  Attention: Michael Mesard

  Telecopy No.:  (212) 834-6592

  
	
   

  	
   

  
	
  With a copy to:

  	
  Midland
  Loan Services, as Servicer, at such notice address as shall be designated by
  notice delivered in accordance with this Section.

  
	
   

  	
   

  
	
  With a copy to:

  	
  Centerline
  Servicing Inc.

  
	
   

  	
  5221
  N. O’Connor Boulevard, Suite 600

  
	
   

  	
  Irving,
  Texas  75039

  
	
   

  	
  Attention:  Wesley Wolf, SVP, Asset Management

  
	
   

  	
  Telecopy
  No.:  (972) 868-5493

  
	
   

  	
   

  
	
  With a copy to:

  	
  Latham
  & Watkins LLP

  
	
   

  	
  633
  West Fifth Street, Suite 4000

  
	
   

  	
  Los
  Angeles, California  90071

  
	
   

  	
  Attention:  Donald I. Berger, Esq.

  
	
   

  	
  Telecopy
  No.:  (213) 891-8763

  



 


 


126

















 


	
  If to Mezzanine Borrower:

  	
  FCP
  MEZZCO BORROWER I, LLC

  1505 South Pavilion Center Drive

  Las Vegas, Nevada 89135

  Attention:  General Counsel

  Telecopy No.:  (702) 495-4260

  
	
   

  	
   

  
	
  With a copy to:

  	
  Milbank, Tweed, Hadley
  & McCloy LLP

  601 S. Figueroa Street, 30th Floor

  Los Angeles, California 90017

  Attention:  Kenneth J. Baronsky

  Telecopy No.:  (213) 892-4733

  
	
   

  	
   

  
	
  With a copy to:

  	
  Colony Capital
  Acquisitions, LLC

  1999 Avenue of the Stars, Suite 1200

  Los Angeles, California 90067

  Attention: Jonathan H. Grunzweig

  Telecopy No.: (310) 407-7407

  
	
   

  	
   

  
	
  With a copy to:

  	
  Willkie Farr &
  Gallagher LLP

  787 Seventh Avenue

  New York, New York 10019

  Attention: Thomas Cerabino

  Telecopy No.:  (212) 728-9208

  
	
   

  	
   

  



 


All notices, elections, requests and demands
under this Agreement shall be effective and deemed received upon the earliest
of (i) the actual receipt of the same by personal delivery or otherwise, (ii)
one (1) Business Day after being deposited with a nationally recognized
overnight courier service as required above, (iii) three (3) Business Days
after being deposited in the United States mail as required above or (iv) on
the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New
York time on any Business Day or on the next Business Day if so delivered after
5:00 p.m. New York time or on any day other than a Business Day.  Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given as
herein required shall be deemed to be receipt of the notice, election, request,
or demand sent.


19.7         Trial By Jury.  MEZZANINE BORROWER AND ALL PERSONS CLAIMING
BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (I) ARISING UNDER THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTES OR ANY
OTHER MEZZANINE LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR
FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT, THE PLEDGE, THE MEZZANINE NOTES OR ANY OTHER MEZZANINE LOAN
DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED 


 


127

















 


HERETO OR THERETO,
IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND MEZZANINE BORROWER HEREBY AGREES AND CONSENTS THAT AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
JURY.  MEZZANINE BORROWER ACKNOWLEDGES
THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER
AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF
THE LOAN.  THIS WAIVER SHALL SURVIVE THE
REPAYMENT OF THE LOAN.


19.8         Headings.  The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.


 


19.9         Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.


 


19.10       Preferences.  To the extent Mezzanine Borrower makes a
payment or payments to Mezzanine Lender, which payment or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by Mezzanine Lender.


 


19.11       Waiver of Notice.  Mezzanine Borrower shall not be entitled to
any notices of any nature whatsoever from Mezzanine Lender except with respect
to matters for which this Agreement or the other Mezzanine Loan Documents
specifically and expressly provide for the giving of notice by Mezzanine Lender
to Mezzanine Borrower and except with respect to matters for which Mezzanine
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice.  Mezzanine Borrower
hereby expressly waives the right to receive any notice from Mezzanine Lender
with respect to any matter for which this Agreement or the other Mezzanine Loan
Documents do not specifically and expressly provide for the giving of notice by
Mezzanine Lender to Mezzanine Borrower.


 


19.12       Expenses;
Indemnity


 


(a)               Mezzanine Borrower covenants and
agrees to pay or, if Mezzanine Borrower fails to pay, to reimburse, Mezzanine
Lender upon receipt of written notice from Mezzanine Lender for all reasonable
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements), except as may be otherwise expressly provided elsewhere in this
Agreement or the Mezzanine Loan Documents, incurred by Mezzanine Lender in
connection with (i) 


 


128

















 


the preparation, negotiation, execution and
delivery of this Agreement and the other Mezzanine Loan Documents and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Mezzanine Borrower (including
without limitation any opinions requested by Mezzanine Lender pursuant to this
Agreement); (ii) Mezzanine Lender’s ongoing performance of and compliance with
all agreements and conditions contained in this Agreement and the other
Mezzanine Loan Documents on its part to be performed or complied with after the
Closing Date; (iii) the negotiation, preparation, execution, delivery and administration
of any consents, amendments, waivers or other modifications to this Agreement
and the other Mezzanine Loan Documents and any other documents or matters as
required herein or under the other Mezzanine Loan Documents; (iv) securing
Mezzanine Borrower’s compliance with any requests made pursuant to the
provisions of this Agreement; (v) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to
Mezzanine Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Mezzanine Lender
pursuant to this Agreement and the other Mezzanine Loan Documents; (vi)
enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Mezzanine Borrower, this Agreement, the
other Mezzanine Loan Documents, the Collateral or the Property, or any other
security given for the Loan; (vii) enforcing any obligations of or collecting
any payments due from Mezzanine Borrower under this Agreement, the other
Mezzanine Loan Documents or with respect to the Collateral or the Property or
in connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a work-out or of any insolvency
or bankruptcy proceedings and (viii) procuring insurance policies pursuant to Section
6.1.1; provided, however, that Mezzanine Borrower shall not
be liable for the payment of any such costs and expenses to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Mezzanine Lender. Any cost and expenses due and payable to
Mezzanine Lender may be paid from any amounts in the Mezzanine Account.


(b)               Subject to the non-recourse
provisions of Section 18.1, Mezzanine Borrower shall protect, indemnify
and save harmless Mezzanine Lender, and all officers, directors, stockholders,
members, partners, employees, agents, successors and assigns thereof
(collectively, the “Indemnified Parties”) from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including all reasonable attorneys’ fees and expenses actually
incurred) imposed upon or incurred by or asserted against the Indemnified
Parties, the Collateral or the Property or any part of its interest therein, by
reason of the occurrence or existence of any of the following (to the extent
Proceeds payable on account of the following shall be inadequate; it being
understood that in no event will the Indemnified Parties be required to
actually pay or incur any costs or expenses as a condition to the effectiveness
of the foregoing indemnity) prior to (i) the acceptance by Mezzanine Lender or
its designee of a transfer-in-lieu of foreclosure with respect to the
Collateral, or (ii) an Indemnified Party or its designee or a receiver taking
possession or control of the Collateral or (iii) the foreclosure of the Pledge,
except to the extent caused by the actual willful misconduct or gross
negligence of the Indemnified Parties (other than such willful misconduct or
gross negligence imputed to the Indemnified Parties because of their interest
in the Collateral):  (1) ownership of
Mezzanine Borrower’s interest in the Mortgage Borrower, or any interest
therein, or receipt of any Receipts or other sum therefrom, (2) any accident,
injury to or death of any persons or loss of or damage to property occurring on
or about the Property or any Appurtenances thereto, (3) any design, 


 


129

















 


construction, operation, repair, maintenance,
use, non-use or condition of the Property or Appurtenances thereto, including
claims or penalties arising from violation of any Legal Requirement or
Insurance Requirement, as well as any claim based on any patent or latent
defect, whether or not discoverable by Mezzanine Lender and any claim the
insurance as to which is inadequate, (4) any Default under this Agreement or any
of the other Mezzanine Loan Documents or any Mortgage Default or any failure on
the part of Mezzanine Borrower to cause the Mortgage Borrower to perform or
comply with any of the terms of any Operating Agreement within the applicable
notice or grace periods, (5) any performance of any labor or services or the
furnishing of any materials or other property in respect of the Property or any
part thereof, (6) any negligence or tortious act or omission on the part
of Mezzanine Borrower or Mortgage Borrower or any of their agents, contractors,
servants, employees, sublessees, licensees or invitees, (7) any contest
referred to in Section 7.3 hereof, or (8) any obligation or undertaking
relating to the performance or discharge of any of the terms, covenants and conditions
of the landlord contained in the Subleases or the Master Lease.  Any amounts the Indemnified Parties are
legally entitled to receive under this Section which are not paid within
fifteen (15) Business Days after written demand therefor by the Indemnified
Parties or Mezzanine Lender, setting forth in reasonable detail the amount of
such demand and the basis therefor, shall bear interest from the date of demand
at the Default Rate, and shall, together with such interest, be part of the
Indebtedness and secured by this Agreement and the Pledge.  In case any action, suit or proceeding is
brought against the Indemnified Parties by reason of any such occurrence,
Mezzanine Borrower shall at Mezzanine Borrower’s expense resist and defend such
action, suit or proceeding or will cause the same to be resisted and defended
by counsel at Mezzanine Borrower’s reasonable expense for the insurer of the
liability or by counsel designated by Mezzanine Borrower (unless reasonably
disapproved by Mezzanine Lender promptly after Mezzanine Lender has been
notified of such counsel); provided, however, that nothing herein
shall compromise the right of Mezzanine Lender (or any Indemnified Party) to
appoint its own counsel at Mezzanine Borrower’s expense for its defense with
respect to any action which in its reasonable opinion presents a conflict or
potential conflict between Mezzanine Lender and Mezzanine Borrower that would
make such separate representation advisable; provided further that if Mezzanine
Lender shall have appointed separate counsel pursuant to the foregoing,
Mezzanine Borrower shall not be responsible for the expense of additional
separate counsel of any Indemnified Party unless in the reasonable opinion of
Mezzanine Lender a conflict or potential conflict exists between such
Indemnified Party and Mezzanine Lender. 
So long as Mezzanine Borrower is resisting and defending such action,
suit or proceeding as provided above in a prudent and commercially reasonable
manner, Mezzanine Lender and the Indemnified Parties shall not be entitled to
settle such action, suit or proceeding without Mezzanine Borrower’s consent
which shall not be unreasonably withheld or delayed, and claim the benefit of
this Section 19.12 with respect to such action, suit or proceeding and
Mezzanine Lender agrees that it will not settle any such action, suit or
proceeding without the consent of Mezzanine Borrower; provided, however,
that if Mezzanine Borrower is not diligently defending such action, suit or
proceeding in a prudent and commercially reasonable manner as provided above,
and Mezzanine Lender has provided Mezzanine Borrower with thirty (30) days’
prior written notice, or shorter period if mandated by the requirements of
applicable law, and opportunity to correct such determination, Mezzanine Lender
may settle such action, suit or proceeding and claim the benefit of this Section
19.12 with respect to settlement of such action, suit or proceeding.  Any Indemnified Party will give Mezzanine
Borrower prompt notice after such 


 


130

















 


Indemnified Party obtains actual knowledge of
any potential claim by such Indemnified Party for indemnification
hereunder.  The Indemnified Parties shall
not settle or compromise any action, proceeding or claim as to which it is
indemnified under this Section 19.12 without prior notice to and
reasonable consent of Mezzanine Borrower.


19.13       Exhibits and Schedules Incorporated.  The Exhibits and Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.


 


19.14       Offsets, Counterclaims and Defenses.  Any assignee of Mezzanine Lender’s interest
in and to this Agreement, the Mezzanine Notes and the other Mezzanine Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Mezzanine Borrower may
otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Mezzanine Borrower
in any action or proceeding brought by any such assignee upon such documents
and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Mezzanine Borrower.


 


19.15       Liability of Assignees of Mezzanine
Lender.  No assignee of Mezzanine
Lender shall have any personal liability, directly or indirectly, under or in
connection with this Agreement or any other Mezzanine Loan Document or any amendment
or amendments hereto made at any time or times, heretofore or hereafter, any
different than the liability of Mezzanine Lender hereunder.  In addition, no assignee shall have at any
time or times hereafter any personal liability, directly or indirectly, under
or in connection with or secured by any agreement, lease, instrument,
encumbrance, claim or right affecting or relating to the Property or to which
the Property is now or hereafter subject any different than the liability of
Mezzanine Lender hereunder.  The
limitation of liability provided in this Section 19.15 is (i) in addition to,
and not in limitation of, any limitation of liability applicable to the
assignee provided by law or by any other contract, agreement or instrument, and
(ii) shall not apply to any assignee’s gross negligence or willful misconduct.


 


19.16       No Joint Venture or Partnership; No Third Party Beneficiaries.


 


(a)               Mezzanine Borrower and Mezzanine
Lender intend that the relationships created hereunder and under the other
Mezzanine Loan Documents be solely that of borrower and lender.  Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Mezzanine Borrower and Mezzanine Lender nor to grant
Mezzanine Lender any interest in the Collateral other than that of secured
party, beneficiary or lender.


(b)               This Agreement and the other
Mezzanine Loan Documents are solely for the benefit of Mezzanine Lender and
Mezzanine Borrower and nothing contained in this Agreement or the other
Mezzanine Loan Documents shall be deemed to confer upon anyone other than
Mezzanine Lender and Mezzanine Borrower any right to insist upon or to enforce
the performance or observance of any of the obligations contained herein or
therein.  All conditions to the
obligations of Mezzanine Lender to make the Loan hereunder are imposed solely
and 


 


131

















 


exclusively for the benefit of Mezzanine
Lender and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that
Mezzanine Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Mezzanine Lender if, in
Mezzanine Lender’s sole discretion, Mezzanine Lender deems it advisable or
desirable to do so.


19.17       Publicity.  Each party shall endeavor to permit the other
to review the initial press release relating to the Loan in order to provide
the other with a reasonable opportunity to comment thereon.


 


19.18       Waiver of Marshalling of Assets.  To the fullest extent permitted by law, Mezzanine
Borrower, for itself and its successors and assigns, waives all rights to a
marshalling of the assets of Mezzanine Borrower, Mezzanine Borrower’s members
and others with interests in Mezzanine Borrower and of the Collateral, and
agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Mezzanine Lender under the Mezzanine Loan
Documents to a sale of the Collateral for the collection of the Indebtedness
without any prior or different resort for collection or of the right of
Mezzanine Lender to the payment of the Indebtedness out of the net proceeds of
the Collateral in preference to every other claimant whatsoever.


 


19.19       Waiver of Counterclaim and other
Actions.  Mezzanine Borrower hereby
expressly and unconditionally waives, in connection with any suit, action or
proceeding brought by Mezzanine Lender on this Agreement, the Mezzanine Notes,
the Pledge or any Mezzanine Loan Document, any and every right it may have to
(i) interpose any counterclaim therein (other than a counterclaim which can
only be asserted in the suit, action or proceeding brought by Mezzanine Lender
on this Agreement, the Mezzanine Notes, the Pledge or any Mezzanine Loan
Document and cannot be maintained in a separate action) and (ii) have any such
suit, action or proceeding consolidated with any other or separate suit, action
or proceeding.


 


19.20       Conflict; Construction of Documents;
Reliance


 


(a)               In the event of any conflict
between the provisions of this Agreement and any of the other Mezzanine Loan
Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Mezzanine Loan Documents and that such Mezzanine Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. 
Mezzanine Borrower acknowledges that, with respect to the Loan,
Mezzanine Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements, representations
or recommendations of Mezzanine Lender or any parent, subsidiary or Affiliate
of Mezzanine Lender.  Mezzanine Lender
shall not be subject to any limitation whatsoever in the exercise of any rights
or remedies available to it under any of the Mezzanine Loan Documents or any
other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or Affiliate of Mezzanine Lender of
any equity interest any of them may acquire in Mezzanine Borrower, and Mezzanine
Borrower hereby irrevocably waives the right to raise any defense or take any
action on the basis of the foregoing with respect 


 


132

















 


to Mezzanine Lender’s exercise of any such rights or remedies.  Mezzanine Borrower acknowledges that
Mezzanine Lender engages in the business of real estate financings and other
real estate transactions and investments which may be viewed as adverse to or
competitive with the business of Mezzanine Borrower or its Affiliates.


(b)               Notwithstanding anything to
the contrary set forth in this Agreement, any right of Mezzanine Lender or
obligation of Mezzanine Borrower with respect to the Operating Agreements shall
be subject to the rights of Mortgage Lender and obligations of Mortgage
Borrower under the Loan Documents (Mortgage).


19.21       Prior Agreements.  This Agreement and the other Mezzanine Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Mezzanine Loan
Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of any and all such prior
agreements do not survive execution of this Agreement.


 


19.22       Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which
shall constitute one document.


 


[NO FURTHER TEXT ON THIS PAGE]


 


133

















 


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


	
   

  	
  MEZZANINE BORROWER:

  
	
   

  	
   

  
	
   

  	
  FCP MEZZCO BORROWER I, LLC, a Delaware limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Thomas M. Friel

  
	
   

  	
  Name: Thomas
  M. Friel

  
	
   

  	
  Title:   Authorized
  Signatory

  



 


 


 


[Mezzanine
Lender’s signature appears on following page]


 


 


 


 


 


 


 


Mezzanine
Borrower’s Execution Page


 

















 


	
   

  	
  MEZZANINE LENDER:

  
	
   

  	
   

  
	
   

  	
  GERMAN AMERICAN CAPITAL

  
	
   

  	
  CORPORATION, a Maryland corporation, on

  
	
   

  	
  behalf
  of the holders of the Mezzanine Notes

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd O. Sammann

  	
   

  
	
   

  	
   

  	
    Name: Todd
  O. Sammann

  
	
   

  	
   

  	
    Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John K. Beacham

  	
   

  
	
   

  	
   

  	
    Name: John
  K. Beacham

  
	
   

  	
   

  	
    Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., a national

  
	
   

  	
  banking association, on behalf of the holders
  of the

  
	
   

  	
  Mezzanine Notes

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kunal K. Singh

  	
   

  
	
   

  	
   

  	
    Name: Kunal
  K. Singh

  
	
   

  	
   

  	
    Title:   Vice
  President