Exhibit 4.5


 


MEZZANINE LOAN AND SECURITY AGREEMENT (THIRD
MEZZANINE)


 


 


Dated as of November 7, 2007


 


Among


 


 


FCP MEZZCO BORROWER III, 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

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  GENERAL TERMS

  	
  32

  
	
   

  	
  2.1

  	
  Loan; Disbursement to
  Mezzanine Borrower

  	
  32

  
	
   

  	
   

  	
  2.1.1

  	
  The Loan

  	
  32

  
	
   

  	
   

  	
  2.1.2

  	
  Disbursement to Mezzanine
  Borrower

  	
  32

  
	
   

  	
   

  	
  2.1.3

  	
  The Mezzanine Notes,
  Pledge and Mezzanine Loan Documents

  	
  32

  
	
   

  	
   

  	
  2.1.4

  	
  Use of Proceeds

  	
  32

  
	
   

  	
  2.2

  	
  Interest; Loan Payments;
  Late Payment Charge

  	
  32

  
	
   

  	
   

  	
  2.2.1

  	
  Payment of Principal and
  Interest

  	
  32

  
	
   

  	
   

  	
  2.2.2

  	
  Method and Place of
  Payment

  	
  33

  
	
   

  	
   

  	
  2.2.3

  	
  Late Payment Charge

  	
  33

  
	
   

  	
   

  	
  2.2.4

  	
  Usury Savings

  	
  33

  
	
   

  	
  2.3

  	
  Prepayments

  	
  34

  
	
   

  	
   

  	
  2.3.1

  	
  Mandatory Prepayments

  	
  34

  
	
   

  	
   

  	
  2.3.2

  	
  Prepayments After Event of
  Default; Application of Amounts Paid

  	
  34

  
	
   

  	
   

  	
  2.3.3

  	
  Release of Collateral upon
  Repayment of Loan in Full

  	
  34

  
	
   

  	
   

  	
  2.3.4

  	
  Release of Individual
  Properties

  	
  35

  
	
   

  	
   

  	
  2.3.5

  	
  Substitution of
  Properties.

  	
  37

  
	
   

  	
   

  	
  2.3.6

  	
  Provisions Relating to
  Individual Properties That Go Dark

  	
  44

  
	
   

  	
   

  	
  2.3.7

  	
  Excess Account Collateral

  	
  44

  
	
   

  	
   

  	
  2.3.8

  	
  Reserve Requirements

  	
  44

  
	
   

  	
   

  	
  2.3.9

  	
  Release of Unimproved
  Parcels

  	
  45

  
	
   

  	
  2.4

  	
  Regulatory Change; Taxes

  	
  46

  
	
   

  	
   

  	
  2.4.1

  	
  Increased Costs

  	
  46

  
	
   

  	
   

  	
  2.4.2

  	
  Special Taxes

  	
  47

  
	
   

  	
   

  	
  2.4.3

  	
  Other Taxes

  	
  47

  
	
   

  	
   

  	
  2.4.4

  	
  Indemnity

  	
  47

  
	
   

  	
   

  	
  2.4.5

  	
  Change of Office

  	
  47

  
	
   

  	
   

  	
  2.4.6

  	
  Survival

  	
  48

  
	
   

  	
  2.5

  	
  Conditions Precedent to
  Closing

  	
  48

  
	
   

  	
   

  	
  2.5.1

  	
  Representations and
  Warranties; Compliance with Conditions

  	
  48

  
	
   

  	
   

  	
  2.5.2

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

  	
  48

  
	
   

  	
   

  	
  2.5.3

  	
  Delivery of Organizational
  Documents

  	
  50

  
	
   

  	
   

  	
  2.5.4

  	
  Counsel Opinions

  	
  50

  
	
   

  	
   

  	
  2.5.5

  	
  Consummation of the Merger

  	
  51

  
	
   

  	
   

  	
  2.5.6

  	
  Payments

  	
  51

  
	
   

  	
   

  	
  2.5.7

  	
  Transaction Costs

  	
  51

  
	
   

  	
   

  	
  2.5.8

  	
  Material Adverse Effect

  	
  52

  



 

















 


	
   

  	
   

  	
  2.5.9

  	
  Control

  	
  52

  
	
   

  	
   

  	
  2.5.10

  	
  Insolvency

  	
  52

  
	
   

  	
   

  	
  2.5.11

  	
  Master Lease and
  Individual Property Subleases

  	
  52

  
	
   

  	
   

  	
  2.5.12

  	
  Equity Contribution

  	
  52

  
	
   

  	
   

  	
  2.5.13

  	
  Existing Indebtedness

  	
  52

  
	
   

  	
   

  	
  2.5.14

  	
  Ground Lease and Fee
  Mortgagee Estoppels

  	
  53

  
	
   

  	
   

  	
  2.5.15

  	
  Equity and Real Property
  Transfer Documents

  	
  53

  
	
   

  	
   

  	
  2.5.16

  	
  No Competing Financing

  	
  53

  
	
   

  	
   

  	
  2.5.17

  	
  Approvals

  	
  54

  
	
   

  	
   

  	
  2.5.18

  	
  Searches

  	
  54

  
	
   

  	
  2.6

  	
  [Reserved]

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  CASH MANAGEMENT

  	
  54

  
	
   

  	
  3.1

  	
  Cash Management

  	
  54

  
	
   

  	
   

  	
  3.1.1

  	
  Establishment of Accounts

  	
  54

  
	
   

  	
   

  	
  3.1.2

  	
  Pledge of Account
  Collateral (Third Mezzanine)

  	
  55

  
	
   

  	
   

  	
  3.1.3

  	
  Maintenance of Collateral
  Accounts

  	
  55

  
	
   

  	
   

  	
  3.1.4

  	
  Eligible Accounts

  	
  56

  
	
   

  	
   

  	
  3.1.5

  	
  Deposits into Sub-Accounts

  	
  56

  
	
   

  	
   

  	
  3.1.6

  	
  Monthly Funding

  	
  56

  
	
   

  	
   

  	
  3.1.7

  	
  Cash Management Bank
  (Third Mezzanine)

  	
  57

  
	
   

  	
   

  	
  3.1.8

  	
  Mezzanine Borrower’s
  Account Representations, Warranties and Covenants

  	
  58

  
	
   

  	
   

  	
  3.1.9

  	
  Account Collateral (Third
  Mezzanine) and Remedies

  	
  59

  
	
   

  	
   

  	
  3.1.10

  	
  Transfers and Other Liens

  	
  59

  
	
   

  	
   

  	
  3.1.11

  	
  Reasonable Care

  	
  59

  
	
   

  	
   

  	
  3.1.12

  	
  Mezzanine Lender’s
  Liability

  	
  60

  
	
   

  	
   

  	
  3.1.13

  	
  Continuing Security
  Interest

  	
  60

  
	
   

  	
   

  	
  3.1.14

  	
  Distributions

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  61

  
	
   

  	
  4.1

  	
  Mezzanine Borrower Representations

  	
  61

  
	
   

  	
   

  	
  4.1.1

  	
  Organization

  	
  61

  
	
   

  	
   

  	
  4.1.2

  	
  Proceedings

  	
  62

  
	
   

  	
   

  	
  4.1.3

  	
  No Conflicts

  	
  62

  
	
   

  	
   

  	
  4.1.4

  	
  Litigation

  	
  62

  
	
   

  	
   

  	
  4.1.5

  	
  Agreements

  	
  63

  
	
   

  	
   

  	
  4.1.6

  	
  Title to Property and
  Assets

  	
  63

  
	
   

  	
   

  	
  FCP Mezzco Borrower IV, LLC owns all of the Mezzco III Ownership
  Interests, subject to no rights of others, including any liens or other
  encumbrances, except for the Mezzco IV Pledge.

  	
  64

  
	
   

  	
   

  	
  4.1.7

  	
  No Bankruptcy Filing

  	
  64

  
	
   

  	
   

  	
  4.1.8

  	
  Full and Accurate
  Disclosure

  	
  64

  
	
   

  	
   

  	
  4.1.9

  	
  Ownership Interests

  	
  64

  
	
   

  	
   

  	
  4.1.10

  	
  No Plan Assets

  	
  64

  
	
   

  	
   

  	
  4.1.11

  	
  Compliance

  	
  65

  
	
   

  	
   

  	
  4.1.12

  	
  Financial Information

  	
  65

  



 


ii

















 


	
   

  	
   

  	
  4.1.13

  	
  Condemnation

  	
  66

  
	
   

  	
   

  	
  4.1.14

  	
  Federal Reserve
  Regulations

  	
  66

  
	
   

  	
   

  	
  4.1.15

  	
  Utilities and Public
  Access

  	
  66

  
	
   

  	
   

  	
  4.1.16

  	
  Not a Foreign Person

  	
  66

  
	
   

  	
   

  	
  4.1.17

  	
  Setoff, Etc

  	
  66

  
	
   

  	
   

  	
  4.1.18

  	
  Representations and
  Warranties in the Loan Documents (Mortgage)

  	
  66

  
	
   

  	
   

  	
  4.1.19

  	
  Representations and
  Warranties in the Senior Mezzanine Loan Documents

  	
  67

  
	
   

  	
   

  	
  4.1.20

  	
  Enforceability

  	
  67

  
	
   

  	
   

  	
  4.1.21

  	
  Reserved.

  	
  67

  
	
   

  	
   

  	
  4.1.22

  	
  Insurance

  	
  67

  
	
   

  	
   

  	
  4.1.23

  	
  Use of Property

  	
  67

  
	
   

  	
   

  	
  4.1.24

  	
  Certificate of Occupancy;
  Licenses

  	
  67

  
	
   

  	
   

  	
  4.1.25

  	
  Flood Zone

  	
  67

  
	
   

  	
   

  	
  4.1.26

  	
  Physical Condition

  	
  68

  
	
   

  	
   

  	
  4.1.27

  	
  Boundaries

  	
  68

  
	
   

  	
   

  	
  4.1.28

  	
  Subleases

  	
  68

  
	
   

  	
   

  	
  4.1.29

  	
  Filing and Recording Taxes

  	
  68

  
	
   

  	
   

  	
  4.1.30

  	
  Single Purpose
  Entity/Separateness

  	
  69

  
	
   

  	
   

  	
  4.1.31

  	
  Reserved.

  	
  69

  
	
   

  	
   

  	
  4.1.32

  	
  Illegal Activity

  	
  69

  
	
   

  	
   

  	
  4.1.33

  	
  No Change in Facts or
  Circumstances; Disclosure

  	
  69

  
	
   

  	
   

  	
  4.1.34

  	
  Reserved

  	
  69

  
	
   

  	
   

  	
  4.1.35

  	
  Tax Filings

  	
  70

  
	
   

  	
   

  	
  4.1.36

  	
  Solvency/Fraudulent
  Conveyance

  	
  70

  
	
   

  	
   

  	
  4.1.37

  	
  Investment Company Act

  	
  70

  
	
   

  	
   

  	
  4.1.38

  	
  Interest Rate Cap
  Agreement (Third Mezzanine)

  	
  70

  
	
   

  	
   

  	
  4.1.39

  	
  Labor

  	
  70

  
	
   

  	
   

  	
  4.1.40

  	
  Brokers

  	
  70

  
	
   

  	
   

  	
  4.1.41

  	
  No Other Debt

  	
  71

  
	
   

  	
   

  	
  4.1.42

  	
  Taxpayer Identification
  Number

  	
  71

  
	
   

  	
   

  	
  4.1.43

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

  	
  71

  
	
   

  	
   

  	
  4.1.44

  	
  Merger Agreement

  	
  71

  
	
   

  	
   

  	
  4.1.45

  	
  Rights of First Refusal or
  First Offer to Lease or Purchase

  	
  71

  
	
   

  	
  4.2

  	
  Survival of
  Representations

  	
  71

  
	
   

  	
  4.3

  	
  Mezzanine Borrower’s
  Knowledge

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  MEZZANINE BORROWER
  COVENANTS

  	
  72

  
	
   

  	
  5.1

  	
  Affirmative Covenants

  	
  72

  
	
   

  	
   

  	
  5.1.1

  	
  Performance by Mezzanine
  Borrower

  	
  72

  
	
   

  	
   

  	
  5.1.2

  	
  Existence; Compliance with
  Legal Requirements; Insurance

  	
  72

  
	
   

  	
   

  	
  5.1.3

  	
  Litigation

  	
  73

  
	
   

  	
   

  	
  5.1.4

  	
  Single Purpose Entity

  	
  73

  
	
   

  	
   

  	
  5.1.5

  	
  Consents

  	
  74

  
	
   

  	
   

  	
  5.1.6

  	
  Access to Property

  	
  75

  



 


iii

















 


	
   

  	
   

  	
  5.1.7

  	
  Notice of Default

  	
  75

  
	
   

  	
   

  	
  5.1.8

  	
  Cooperate in Legal
  Proceedings

  	
  75

  
	
   

  	
   

  	
  5.1.9

  	
  Reserved.

  	
  75

  
	
   

  	
   

  	
  5.1.10

  	
  Insurance

  	
  75

  
	
   

  	
   

  	
  5.1.11

  	
  Further Assurances;
  Separate Notes; Loan Resizing

  	
  75

  
	
   

  	
   

  	
  5.1.12

  	
  Mortgage Taxes

  	
  76

  
	
   

  	
   

  	
  5.1.13

  	
  Operation

  	
  77

  
	
   

  	
   

  	
  5.1.14

  	
  Business and Operations

  	
  77

  
	
   

  	
   

  	
  5.1.15

  	
  Title to the Collateral

  	
  77

  
	
   

  	
   

  	
  5.1.16

  	
  Costs of Enforcement

  	
  77

  
	
   

  	
   

  	
  5.1.17

  	
  Estoppel Statements

  	
  78

  
	
   

  	
   

  	
  5.1.18

  	
  Loan Proceeds

  	
  78

  
	
   

  	
   

  	
  5.1.19

  	
  No Joint Assessment

  	
  78

  
	
   

  	
   

  	
  5.1.20

  	
  No Further Encumbrances

  	
  78

  
	
   

  	
   

  	
  5.1.21

  	
  Loan (Mortgage) Covenants

  	
  79

  
	
   

  	
   

  	
  5.1.22

  	
  Master Lease

  	
  80

  
	
   

  	
   

  	
  5.1.23

  	
  Senior Mezzanine Loan
  Covenants

  	
  81

  
	
   

  	
  5.2

  	
  Negative Covenants

  	
  82

  
	
   

  	
   

  	
  5.2.1

  	
  Incur Debt

  	
  83

  
	
   

  	
   

  	
  5.2.2

  	
  Encumbrances

  	
  83

  
	
   

  	
   

  	
  5.2.3

  	
  Engage in Different
  Business

  	
  83

  
	
   

  	
   

  	
  5.2.4

  	
  Make Advances

  	
  83

  
	
   

  	
   

  	
  5.2.5

  	
  Subdivision

  	
  83

  
	
   

  	
   

  	
  5.2.6

  	
  Commingle

  	
  83

  
	
   

  	
   

  	
  5.2.7

  	
  Guarantee Obligations

  	
  83

  
	
   

  	
   

  	
  5.2.8

  	
  Transfer Assets

  	
  83

  
	
   

  	
   

  	
  5.2.9

  	
  Amend Organizational
  Documents

  	
  83

  
	
   

  	
   

  	
  5.2.10

  	
  Dissolve

  	
  84

  
	
   

  	
   

  	
  5.2.11

  	
  Bankruptcy

  	
  84

  
	
   

  	
   

  	
  5.2.12

  	
  ERISA

  	
  84

  
	
   

  	
   

  	
  5.2.13

  	
  Distributions

  	
  84

  
	
   

  	
   

  	
  5.2.14

  	
  Modify Mezzanine Account
  Agreement

  	
  84

  
	
   

  	
   

  	
  5.2.15

  	
  Zoning Reclassification

  	
  84

  
	
   

  	
   

  	
  5.2.16

  	
  Change of Principal Place
  of Business

  	
  84

  
	
   

  	
   

  	
  5.2.17

  	
  Debt Cancellation

  	
  85

  
	
   

  	
   

  	
  5.2.18

  	
  Misapplication of Funds

  	
  85

  
	
   

  	
   

  	
  5.2.19

  	
  Single-Purpose Entity

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  INSURANCE; CASUALTY;
  CONDEMNATION; RESTORATION

  	
  85

  
	
   

  	
  6.1

  	
  Insurance Coverage
  Requirements

  	
  85

  
	
   

  	
   

  	
  6.1.1

  	
  Insurance Proceeds

  	
  85

  
	
   

  	
   

  	
  6.1.2

  	
  Restoration of Property

  	
  86

  
	
   

  	
   

  	
  6.1.3

  	
  Compliance

  	
  86

  
	
   

  	
  6.2

  	
  Condemnation

  	
  86

  
	
   

  	
  6.3

  	
  Certificates

  	
  87

  



 


iv

















 


	
  VII.

  	
  IMPOSITIONS, OTHER
  CHARGES, LIENS AND OTHER ITEMS

  	
  87

  
	
   

  	
  7.1

  	
  Mortgage Borrower and
  Senior Mezzanine Borrowers to Pay Impositions and Other Charges

  	
  87

  
	
   

  	
  7.2

  	
  No Liens

  	
  88

  
	
   

  	
  7.3

  	
  Contest

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  TRANSFERS, INDEBTEDNESS
  AND SUBORDINATE LIENS

  	
  89

  
	
   

  	
  8.1

  	
  General Restriction on
  Transfers

  	
  89

  
	
   

  	
  8.2

  	
  Sale of Building Equipment

  	
  90

  
	
   

  	
  8.3

  	
  Immaterial Transfers and
  Easements, etc.

  	
  90

  
	
   

  	
  8.4

  	
  Reserved.

  	
  90

  
	
   

  	
  8.5

  	
  Permitted Equity Transfers

  	
  90

  
	
   

  	
  8.6

  	
  Deliveries to Mezzanine
  Lender

  	
  92

  
	
   

  	
  8.7

  	
  Loan Assumption

  	
  92

  
	
   

  	
  8.8

  	
  Subleases

  	
  92

  
	
   

  	
   

  	
  8.8.1

  	
  Master Lease and Existing
  Subleases

  	
  92

  
	
   

  	
   

  	
  8.8.2

  	
  Leasing Conditions

  	
  93

  
	
   

  	
   

  	
  8.8.3

  	
  Delivery of New Sublease
  or Sublease Modification

  	
  93

  
	
   

  	
   

  	
  8.8.4

  	
  Sublease Amendments

  	
  93

  
	
   

  	
   

  	
  8.8.5

  	
  Security Deposits

  	
  93

  
	
   

  	
   

  	
  8.8.6

  	
  No Default Under Subleases

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  INTEREST RATE CAP
  AGREEMENT (THIRD MEZZANINE)

  	
  94

  
	
   

  	
  9.1

  	
  Interest Rate Cap
  Agreement (Third Mezzanine)

  	
  94

  
	
   

  	
  9.2

  	
  Pledge and Collateral
  Assignment

  	
  94

  
	
   

  	
  9.3

  	
  Covenants

  	
  95

  
	
   

  	
  9.4

  	
  Powers of Mezzanine
  Borrower Prior to an Event of Default

  	
  96

  
	
   

  	
  9.5

  	
  Representations and
  Warranties

  	
  96

  
	
   

  	
  9.6

  	
  Payments

  	
  97

  
	
   

  	
  9.7

  	
  Remedies

  	
  97

  
	
   

  	
  9.8

  	
  Sales of Rate Cap
  Collateral (Third Mezzanine)

  	
  99

  
	
   

  	
  9.9

  	
  Public Sales Not Possible

  	
  100

  
	
   

  	
  9.10

  	
  Receipt of Sale Proceeds

  	
  100

  
	
   

  	
  9.11

  	
  Replacement Interest Rate
  Cap Agreement (Third Mezzanine)

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  MAINTENANCE OF PROPERTY;
  ALTERATIONS

  	
  100

  
	
   

  	
  10.1

  	
  Maintenance of Property

  	
  100

  
	
   

  	
  10.2

  	
  Conditions to Alteration

  	
  101

  
	
   

  	
  10.3

  	
  Costs of Alteration

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  BOOKS AND RECORDS,
  FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION

  	
  102

  
	
   

  	
  11.1

  	
  Books and Records

  	
  102

  
	
   

  	
  11.2

  	
  Financial Statements

  	
  103

  
	
   

  	
   

  	
  11.2.1

  	
  Monthly Reports

  	
  103

  
	
   

  	
   

  	
  11.2.2

  	
  Quarterly Reports

  	
  103

  
	
   

  	
   

  	
  11.2.3

  	
  Annual Reports

  	
  104

  



 


v

















 


	
   

  	
   

  	
  11.2.4

  	
  Disclosure Restrictions.

  	
  105

  
	
   

  	
   

  	
  11.2.5

  	
  Capital Expenditures
  Summaries

  	
  105

  
	
   

  	
   

  	
  11.2.6

  	
  Master Lease

  	
  105

  
	
   

  	
   

  	
  11.2.7

  	
  Annual Budget; Operating
  Agreement Annual Budgets

  	
  105

  
	
   

  	
   

  	
  11.2.8

  	
  Other Information

  	
  105

  
	
   

  	
   

  	
  11.2.9

  	
  Proprietary Information

  	
  106

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  ENVIRONMENTAL MATTERS

  	
  106

  
	
   

  	
  12.1

  	
  Representations

  	
  106

  
	
   

  	
  12.2

  	
  Covenants

  	
  107

  
	
   

  	
   

  	
  12.2.1

  	
  Compliance with
  Environmental Laws

  	
  107

  
	
   

  	
   

  	
  12.2.2

  	
  Notices Regarding
  Environmental Events

  	
  107

  
	
   

  	
   

  	
  12.2.3

  	
  Other Notices

  	
  107

  
	
   

  	
  12.3

  	
  Environmental Reports

  	
  107

  
	
   

  	
  12.4

  	
  Environmental
  Indemnification

  	
  108

  
	
   

  	
  12.5

  	
  Recourse Nature of Certain
  Indemnifications

  	
  109

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  THE OPERATING AGREEMENTS

  	
  110

  
	
   

  	
  13.1

  	
  Operating Agreement
  Representations, Warranties

  	
  110

  
	
   

  	
  13.2

  	
  Cure by Mezzanine Lender

  	
  111

  
	
   

  	
  13.3

  	
  Option to Renew or Extend
  the Ground Lease

  	
  111

  
	
   

  	
  13.4

  	
  Operating Agreement
  Covenants

  	
  111

  
	
   

  	
   

  	
  13.4.1

  	
  Waiver of Interest In New
  Ground Lease

  	
  111

  
	
   

  	
   

  	
  13.4.2

  	
  No Election to Terminate

  	
  112

  
	
   

  	
   

  	
  13.4.3

  	
  Notice Prior to Rejection

  	
  112

  
	
   

  	
   

  	
  13.4.4

  	
  Mezzanine Lender Right to
  Perform

  	
  112

  
	
   

  	
   

  	
  13.4.5

  	
  Mezzanine Lender Attorney
  in Fact

  	
  113

  
	
   

  	
   

  	
  13.4.6

  	
  Payment of Sums Due Under
  Operating Agreements

  	
  113

  
	
   

  	
   

  	
  13.4.7

  	
  Performance of Covenants

  	
  113

  
	
   

  	
   

  	
  13.4.8

  	
  [Reserved

  	
  113

  
	
   

  	
   

  	
  13.4.9

  	
  No Modification or
  Termination

  	
  113

  
	
   

  	
   

  	
  13.4.10

  	
  Notices of Default

  	
  114

  
	
   

  	
   

  	
  13.4.11

  	
  Delivery of Information

  	
  114

  
	
   

  	
   

  	
  13.4.12

  	
  No Subordination

  	
  114

  
	
   

  	
   

  	
  13.4.13

  	
  Further Assurances

  	
  114

  
	
   

  	
   

  	
  13.4.14

  	
  Estoppel Certificates

  	
  114

  
	
   

  	
   

  	
  13.4.15

  	
  Common Area/Common
  Elements Insurance

  	
  114

  
	
   

  	
  13.5

  	
  Mezzanine Lender Right to
  Participate

  	
  115

  
	
   

  	
  13.6

  	
  No Liability

  	
  115

  
	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
  RESERVED

  	
  115

  
	
   

  	
   

  	
   

  
	
  XV.

  	
  ASSIGNMENTS AND
  PARTICIPATIONS

  	
  115

  
	
   

  	
  15.1

  	
  Assignment and Acceptance

  	
  115

  
	
   

  	
  15.2

  	
  Effect of Assignment and
  Acceptance

  	
  115

  
	
   

  	
  15.3

  	
  Content

  	
  116

  
	
   

  	
  15.4

  	
  Register

  	
  116

  



 


vi

















 


	
   

  	
  15.5

  	
  Substitute Mezzanine Notes

  	
  116

  
	
   

  	
  15.6

  	
  Participations

  	
  117

  
	
   

  	
  15.7

  	
  Disclosure of Information

  	
  117

  
	
   

  	
  15.8

  	
  Security Interest in Favor
  of Federal Reserve Bank

  	
  118

  
	
   

  	
   

  	
   

  	
   

  
	
  XVI.

  	
  RESERVED

  	
   

  	
  118

  
	
   

  	
   

  	
   

  	
   

  
	
  XVII.

  	
  DEFAULTS

  	
   

  	
  118

  
	
   

  	
  17.1

  	
  Event of Default

  	
  118

  
	
   

  	
  17.2

  	
  Remedies

  	
  124

  
	
   

  	
  17.3

  	
  Remedies Cumulative;
  Waivers

  	
  125

  
	
   

  	
  17.4

  	
  Costs of Collection

  	
  126

  
	
   

  	
   

  	
   

  	
   

  
	
  XVIII.

  	
  SPECIAL PROVISIONS

  	
  126

  
	
   

  	
  18.1

  	
  Exculpation

  	
  126

  
	
   

  	
   

  	
  18.1.1

  	
  Exculpated Parties

  	
  126

  
	
   

  	
   

  	
  18.1.2

  	
  Carveouts From
  Non-Recourse Limitations

  	
  127

  
	
   

  	
  18.2

  	
  Pro Rata Share

  	
  129

  
	
   

  	
   

  	
   

  	
   

  
	
  XIX.

  	
  MISCELLANEOUS

  	
  129

  
	
   

  	
  19.1

  	
  Survival

  	
  129

  
	
   

  	
  19.2

  	
  Mezzanine Lender’s
  Discretion

  	
  130

  
	
   

  	
  19.3

  	
  Governing Law

  	
  130

  
	
   

  	
  19.4

  	
  Modification; Waiver in
  Writing

  	
  131

  
	
   

  	
  19.5

  	
  Delay Not a Waiver

  	
  131

  
	
   

  	
  19.6

  	
  Notices

  	
  131

  
	
   

  	
  19.7

  	
  Trial By Jury

  	
  134

  
	
   

  	
  19.8

  	
  Headings

  	
  134

  
	
   

  	
  19.9

  	
  Severability

  	
  134

  
	
   

  	
  19.10

  	
  Preferences

  	
  134

  
	
   

  	
  19.11

  	
  Waiver of Notice

  	
  134

  
	
   

  	
  19.12

  	
  Expenses; Indemnity

  	
  135

  
	
   

  	
  19.13

  	
  Exhibits and Schedules
  Incorporated

  	
  137

  
	
   

  	
  19.14

  	
  Offsets, Counterclaims and
  Defenses

  	
  137

  
	
   

  	
  19.15

  	
  Liability of Assignees of
  Mezzanine Lender

  	
  137

  
	
   

  	
  19.16

  	
  No Joint Venture or
  Partnership; No Third Party Beneficiaries

  	
  138

  
	
   

  	
  19.17

  	
  Publicity

  	
  138

  
	
   

  	
  19.18

  	
  Waiver of Marshalling of
  Assets

  	
  138

  
	
   

  	
  19.19

  	
  Waiver of Counterclaim and
  other Actions

  	
  138

  
	
   

  	
  19.20

  	
  Conflict; Construction of
  Documents; Reliance

  	
  139

  
	
   

  	
  19.21

  	
  Prior Agreements

  	
  139

  
	
   

  	
  19.22

  	
  Counterparts

  	
  139

  
	
   

  	
  19.23

  	
  Direction of Mortgage
  Borrower with Respect to the Property

  	
  139

  



 


vii

















 


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 (THIRD 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

  



 


viii

















 


MEZZANINE LOAN AND SECURITY AGREEMENT (THIRD
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 III, 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 (Third 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.


 


2

















 


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


 


“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, Senior Mezzanine Borrowers, Junior Mezzanine Borrowers and Guarantors.


 


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


 


3

















 


“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 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 (Third 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 (Third 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 and
the Mezzco IV Pledge, as applicable.


 


“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


 


4

















 


(ii) above,
(iv) the Rate Cap Collateral, (Third Mezzanine), (v) the Account
Collateral (Third Mezzanine) and (vi) all other rights appurtenant to the
property described in clauses (i) through (v) above.


 


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


 


“Collateral Agent” means 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, the Senior Mezzanine
Loans, 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), the Senior Mezzanine Loan Agreements,
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 Senior Mezzanine Loan Documents, the Mezzanine
Loan Documents, and Junior Mezzanine Loan Documents, 


 


5

















 


Mortgage
Borrower’s, Senior Mezzanine 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 Mezzco IV Pledge, and the exercise of any remedies by Mortgage Lender,
any Senior Mezzanine 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.


 


“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 (Third Mezzanine), JPMorgan Chase Bank, N.A., and with respect to any
Replacement Interest Rate Cap Agreement (Third 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 (Third 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.


 


6

















 


“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.


 


“Distributions” shall mean “Distributions” under the Pledge and “Distributions”
under the Mezzco IV 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.


 


7

















 


“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.


 


“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.


 


8

















 


“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.


 


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


 


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


 


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


 


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


 


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


 


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


 


“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,
the Mortgage Loan, the Senior Mezzanine Loans 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 


 


9

















 


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 (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.


 


10

















 


“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.


 


“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, any Senior Mezzanine Borrower, or Mortgage Borrower (including all
income, franchise, single business or other taxes 


 


11

















 


imposed on
Mezzanine Borrower, any Senior 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, any Senior Mezzanine Lender, or Mezzanine Lender in
connection with the Mortgage Loan, any Senior Mezzanine 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, any Senior
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, any Senior Mezzanine 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 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, any Senior Mezzanine 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, any Senior Mezzanine
Borrower, or any Junior Mezzanine Borrower), (ii) a 


 


12

















 


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, officer, director, employee, 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, Senior Mezzanine
Lenders, 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 (Third 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
(Third Mezzanine) to Mezzanine Lender, the term “Interest Rate Cap Agreement
(Third Mezzanine)” shall be deemed to mean such Replacement Interest Rate Cap
Agreement (Third Mezzanine). The Interest Rate Cap Agreement (Third 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 (Third
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 (Third
Mezzanine) shall at all times extend through the end of the Interest Period in
which the


 


13

















 


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 (Third 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 (Third
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 (Third 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 (Third Mezzanine) shall
execute and deliver the Acknowledgment; and


 


(f)                                    Other.
The Interest Rate Cap Agreement (Third 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, such
mezzanine borrowers party to the Junior Mezzanine Loans, as the context may require.


 


“Junior Mezzanine Lender” shall mean, collectively, such
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.


 


“Junior Mezzanine Loan Documents” shall mean, collectively, such
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, such
mezzanine loans junior to this Loan as may be created pursuant to Section 5.1.11(b).


 


“Junior Mezzanine Notes” shall mean, collectively, 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 


 


14

















 


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).


 


“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.


 


15

















 


 “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, Senior Mezzanine Borrowers, 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 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.


 


16

















 


“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 or
any Senior Mezzanine Borrower to repay principal and interest of the Loan (Mortgage)
or any Senior Mezzanine Loan as it becomes due or satisfy any of Mortgage
Borrower’s obligations under the Loan Documents (Mortgage) or any Senior
Mezzanine Borrower’s obligations under its respective Senior Mezzanine Loan, 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.


 


“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 the member/stock power executed by FCP Mezzco Borrower
IV, LLC, each in substantially 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.


 


17

















 


“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 (Third 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 (Third 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), the Pledge, the Mezzco IV Pledge, 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
$78,125,000 and (b) that certain Mezzanine Note A-2, dated 


 


18

















 


the date
hereof, made by Mezzanine Borrower, as maker, in favor of Mezzanine Lender, as
payee, in the principal amount of $46,875,000, as the same may be amended,
restated, replaced, substituted, severed, supplemented 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.


 


“Mezzco III Ownership Interests” means all of the equity
interests in Mezzanine Borrower.


 


“Mezzco IV Pledge” means the Pledge and Security Agreement,
dated as of the date hereof, made by FCP Mezzco Borrower IV, LLC to Collateral
Agent.


 


“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.


 


“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 


 


19

















 


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 First Mezzanine Borrower to First Mezzanine
Lender, under the First Mezzanine Loan Agreement or any of the other First
Mezzanine Loan Documents or in respect of the First Mezzanine Loan or the First
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
defined in the applicable Junior Mezzanine Loan Agreement.


 


“Obligations (Second Mezzanine)” shall mean all indebtedness,
obligations and liabilities of Second Mezzanine Borrower to Second Mezzanine
Lender, under the Second Mezzanine Loan Agreement or any of the other Second
Mezzanine Loan Documents or in respect of the Second Mezzanine 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 (Senior Mezzanine)” shall mean the Obligations
(First Mezzanine) and Obligations (Second Mezzanine).


 


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


 


“Obligations (Third 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.


 


“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 


 


20

















 


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 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.


 


“Ownership Interests” shall mean all of the equity interests in
Second Mezzanine 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 each Senior
Mezzanine Borrower, the applicable Senior Mezzanine Notes executed by such
Senior Mezzanine Borrower and the other obligations, indebtedness and
liabilities specifically permitted in the Senior Mezzanine Loan Documents
executed by such Senior Mezzanine Borrower, (iii) 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, the Mezzco IV Pledge, or the other Mezzanine
Loan Documents; and (iv) 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,
any Senior Mezzanine 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, the Senior Mezzanine Notes and the other Senior
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 


 


21

















 


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 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 (Senior Mezzanine)” means collectively,
the Liens and security interests created pursuant to the Senior Mezzanine Loan
Documents.


 


“Permitted Encumbrances (Third Mezzanine)” means, collectively,
the Liens and security interests created pursuant to this Agreement, the
Pledge, the Mezzco IV 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
(Third Mezzanine), dated as of the date hereof, from Mezzanine Borrower to
Collateral Agent.


 


“Pledge (Senior Mezzanine)” shall mean, with respect to any
Senior Mezzanine Loan Agreement, the “Pledge” as defined in such Senior
Mezzanine Loan Agreement.


 


22

















 


“Pledged Collateral” shall mean the “Pledged Collateral” under
the Pledge and the “Pledged Collateral” under the Mezzco IV 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.


 


“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 


 


23

















 


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.


 


“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 (Third 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


 


24

















 


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 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).


 


25

















 


“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 (Third 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 (Third 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 (Third 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 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.


 


26

















 


“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).


 


“Senior Mezzanine Borrowers” shall mean, collectively, First
Mezzanine Borrower and Second Mezzanine Borrower, as the context may require.


 


“Senior Mezzanine Collateral” shall mean, with respect to any
Senior Mezzanine Loan Agreement, the “Collateral” as defined in such Senior
Mezzanine Loan Agreement.


 


“Senior Mezzanine Default” shall mean, with respect to any
Senior Mezzanine Loan Agreement, “Default” as defined in such Senior Mezzanine
Loan Agreement.


 


“Senior Mezzanine Event of Default” shall mean, with respect to
any Senior Mezzanine Loan Agreement, “Event of Default” as defined in such
Senior Mezzanine Loan Agreement.


 


“Senior Mezzanine Lenders” shall mean, collectively, First
Mezzanine Lender and the Second Mezzanine Lender, as the context may require.


 


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


 


“Senior Mezzanine Loan Documents” shall mean, collectively, the
First Mezzanine Loan Documents and the Second Mezzanine Loan Documents, as the
context may require.


 


“Senior Mezzanine Loans” shall mean, collectively, the First
Mezzanine Loan and the Second Mezzanine Loan.


 


“Senior Mezzanine Notes” shall mean, collectively, the First
Mezzanine Notes and the Second Mezzanine Notes, as the context may require.


 


“Senior Mezzanine Ownership Interests” shall mean, with respect
to any Senior Mezzanine Loan Agreement, “Ownership Interests” as defined in
such Senior Mezzanine Loan Agreement.


 


“Senior Mezzanine Release Price” shall mean the product of (a) the
“Mezzanine Allocated Loan Amount” for each Senior 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 


 


27

















 


Proceeds
derived from a casualty, other damage or injury or Taking affecting such
Release Property.


 


“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, any Senior 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, any Senior 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 in the Property (or in the case
of Mezzanine Borrower, any Senior 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, any Senior Mezzanine 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; 


 


28

















 


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 organization,
certificate of formation and/or operating agreement, as applicable, shall
provide that until all of the Indebtedness and Obligations (Mortgage),
Obligations (Senior Mezzanine), Obligations (Third 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, Senior Mezzanine 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.


 


29

















 


“SPE Entity” shall mean the Mortgage Borrower, the Senior
Mezzanine Borrowers, 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 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, 


 


30

















 


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).


 


 “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 words of similar import when used in this Agreement
shall refer to this Agreement as a whole 


 


31

















 


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, the Mezzco IV
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
shall be secured by this Agreement, the Pledge and the Mezzco IV Pledge. This
paragraph shall 


 


32

















 


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, the Mezzco IV 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 


 


33

















 


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) and each of the Senior Mezzanine Loans are
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) and the Senior Mezzanine Loans pursuant to the terms of the Senior
Mezzanine Loan Documents, (“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 (Third Mezzanine)


 


34

















 


and the Rate
Cap Collateral (Third Mezzanine), (ii) the Pledge and (iii) the
Mezzco IV Pledge. In such event, Mezzanine 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,
any Senior 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 (Third 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), Senior
Mezzanine Loan Documents, 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 


 


35

















 


Date”) on
which Mezzanine Borrower desires that Mortgage Lender release its interest in
such Release Property.


 


(b)                                 Each
of the Mortgage Lender, each Senior Mezzanine 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), Senior Mezzanine Loan
Documents, 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, each Senior Mezzanine Lender has received the full
Senior Mezzanine Release Price, and each Junior Mezzanine Lender has received
its full applicable Junior Mezzanine Release Price. Interest payable under the
Mortgage Notes, Senior Mezzanine 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.


 


36

















 


(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 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, each Senior
Mezzanine Borrower, and each Junior Mezzanine Borrower shall have paid to
Mortgage Lender, each Senior Mezzanine Lender and each Junior Mezzanine Lender,
as applicable, the Mortgage Release Price, the applicable Senior Mezzanine
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), each Senior Mezzanine Loan Agreement, and each Junior Mezzanine
Loan Agreement. This Section 2.3.4(j) shall not create a
debtor-creditor relationship between Third 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 


 


37

















 


“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 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


 


38






 












 


(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 “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 


 


39

















 


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 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 


 


40

















 


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 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. Each Senior Mezzanine Borrower shall pay for
any and all reasonable out-of-pocket costs and expenses of its Senior Mezzanine
Lender incurred in connection with any proposed Substitution, including its
Senior 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;


 


41

















 


(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);


 


(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, Senior Mezzanine
Borrowers, 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”);


 


42

















 


(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 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)                         Senior
Mezzanine Loan Deliveries. The Senior Mezzanine Lenders shall have received
all deliveries required under Section 2.3.5 of the Senior Mezzanine
Loan Agreements, including, but not limited to, insurance certificates naming
Senior 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)                            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 


 


43

















 


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.


 


(xvi)                         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


 


(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 (Third
Mezzanine) in order to reasonably determine the amount of the Account Collateral
(Third 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 


 


44

















 


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
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.


 


45

















 


(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.


 


(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 


 


46

















 


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.


 


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.


 


47

















 


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.


 


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 and
the Mezzco IV 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, Mortgage Event of Default, Senior Mezzanine Default or Senior
Mezzanine 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, the Mezzco IV 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, the
Mezzco IV 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 (Third
Mezzanine).


 


(c)                                  Interest
Rate Cap Agreement (Third Mezzanine). Mezzanine Lender shall have received
the original Interest Rate Cap Agreement (Third Mezzanine) which shall be in form and



 


48

















 


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;


 


(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, the Mezzco IV 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 


 


49

















 


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;


 


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


 


(n)                                 Pledgor
Acknowledgments. Mezzanine Lender shall have received an original of the
Acknowledgment in the form of Exhibit D executed by each of First
Mezzanine 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, Senior
Mezzanine Borrowers, 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, Senior Mezzanine
Borrowers, 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 and the Mezzco IV Pledge to the
Title Company for recording) a true lease opinion with respect to the 


 


50

















 


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 and the Mezzco IV 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 and the Mezzco IV Pledge to the Title Company for recording) a
non-contravention 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 “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 and the Mezzco IV Pledge to the Title Company) (i) the Opinion of
Counsel in such form and substance reasonably satisfactory to the
Mezzanine Lender; (ii) a copy of the “Opinion of Counsel” delivered to
Senior Mezzanine Lenders pursuant to the Senior Mezzanine Loan Agreements, and (iii) 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 


 


51

















 


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 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, Senior Mezzanine Borrowers or 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, the Senior
Mezzanine Loans and the Junior Mezzanine Loans, and (D) the Loan; (ii) preferred
equity held 


 


52

















 


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 (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.


 


53

















 


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.


 


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 (Third 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 (Third Mezzanine) to disregard any and all
orders for withdrawal from the Collateral Accounts (Third 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 (Third Mezzanine) the Mezzanine Account shall be named
as follows: “FCP Mezzco Borrower III, LLC Holding Account in favor of German
American Capital Corporation, as Collateral Agent” (Account Number 048818666. Mezzanine
Borrower confirms that it has established with Cash Management Bank (Third
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 (Third Mezzanine)”), which (i) may be



 


54

















 


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 (Third Mezzanine) in
respect of Debt Service (Third Mezzanine) on the Loan with the account number
048818674 (the “Mezzanine Debt Service Reserve Account”).


 


3.1.2                        Pledge of Account Collateral (Third
Mezzanine). To secure the full and punctual payment and performance
of the Obligations (Third Mezzanine), Mezzanine Borrower hereby collaterally
assigns, grants a security interest in and pledges to Mezzanine Lender, to the
extent not prohibited by applicable law, a Third 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 (Third
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 (Third Mezzanine) and all cash, deposits and/or wire
transfers from time to time deposited or held in, credited to or made to
Collateral Accounts (Third 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 (Third 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 (Third 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 (Third 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 


 


55

















 


(iii) such
that no Person other than Mezzanine Lender shall have any right of withdrawal
from the Collateral Accounts (Third Mezzanine) and, except as provided herein,
no Account Collateral (Third Mezzanine) shall be released to the Mezzanine
Borrower or any Affiliate of Mezzanine Borrower from the Collateral Accounts
(Third 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 (Third Mezzanine) shall be Eligible Accounts. The
Collateral Accounts (Third Mezzanine) shall be subject to such applicable laws,
and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other banking or governmental authority, as may now
or hereafter be in effect. Income and interest accruing on the Collateral
Accounts (Third 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 (Third Mezzanine) for federal income tax purposes
and shall report all income on the Collateral Accounts (Third 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 (Third 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 Third 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 Third 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 (Third 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 (Third 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 


 


56

















 


calculate the
amount of the Debt Service (Third 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 (Third 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 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 Third
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 (Third 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 (Third
Mezzanine).


 


(a)                                  Mezzanine
Lender shall have the right at Mezzanine Borrower’s sole cost and expense to
replace the Cash Management Bank (Third Mezzanine) with a financial institution
reasonably satisfactory to Mezzanine Borrower in the event that (i) the
Cash Management Bank (Third Mezzanine) fails, in any material respect, to
comply with the Mezzanine Account Agreement or (ii) the Cash Management
Bank (Third 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 


 


57

















 


Management
Bank (Third 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 (Third Mezzanine) and the
execution by the Cash Management Bank (Third 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 (Third 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 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 “Third 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 (Third 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 Third 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 (Third
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 (Third 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 


 


58

















 


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 (Third Mezzanine).


 


3.1.9                        Account Collateral (Third 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 (Third Mezzanine) as Mezzanine Lender shall determine in
its sole and absolute discretion to pay any Obligations (Third Mezzanine),
operating expenses and/or capital expenditures for the Property in such order
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 (Third 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 (Third 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 (Third 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 (Third Mezzanine) or (ii) create or
permit to exist any Lien upon or with respect to all or any of the Account
Collateral (Third 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 (Third 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 


 


59

















 


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


 


60

















 


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 (Third 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.


 


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, Senior Mezzanine Borrowers, 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, Senior Mezzanine Borrowers, 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, Senior Mezzanine Borrowers, 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, Senior
Mezzanine Borrowers, 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, Senior Mezzanine Borrowers, Mezzanine Borrower,
each Guarantor and Master Lessee is accurately depicted by the schematic 


 


61

















 


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, Senior Mezzanine Borrowers, Mezzanine Borrowers, 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.


 


4.1.3                        No Conflicts. The
execution, delivery and performance of this Agreement, the other Mezzanine Loan
Documents, the Senior Mezzanine Loan Documents, and the Loan Documents
(Mortgage) by Mortgage Borrower, Senior Mezzanine Borrowers, 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, the Senior 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, Senior Mezzanine Borrowers, 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, Senior Mezzanine Borrowers, 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 


 


62

















 


Material
Adverse Effect if adversely determined). The actions, suits or proceedings
identified on Schedule II, if determined against Mortgage Borrower,
Senior Mezzanine Borrowers, 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 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 


 


63

















 


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.


 


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


 


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


 


FCP Mezzco Borrower IV, LLC owns all of the Mezzco III Ownership
Interests, subject to no rights of others, including any liens or other
encumbrances, except for the Mezzco IV Pledge.


 


4.1.7                        No Bankruptcy Filing. None
of Mortgage Borrower, any Senior Mezzanine 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 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 Senior Mezzanine 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 


 


64

















 


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)                                 None
of Mortgage Borrower, any Senior Mezzanine Borrower, or 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, any
Senior Mezzanine 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 none of Mortgage Borrower, any Senior Mezzanine Borrower, or the Mezzanine
Borrower is a governmental plan within the meaning of Section 3(32) of
ERISA and none of Mortgage Borrower, any Senior Mezzanine Borrower, or 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.


 


4.1.11                  Compliance. Subject to Schedule 4.1.11,
Mortgage Borrower, each Senior Mezzanine 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, none
of Mortgage Borrower, any Senior Mezzanine Borrower, or 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, any Senior Mezzanine
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. None of Mortgage Borrower, any Senior Mezzanine Borrower, or Mezzanine
Borrower has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from 


 


65

















 


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 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. None
of Mortgage Borrower, any Senior Mezzanine Borrower or 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 First Mezzanine Borrower under the terms and conditions set forth in the
Loan Agreement (Mortgage) and each Senior Mezzanine Lender’s right to restrict
distributions from its Senior Mezzanine Borrower to Mezzanine Borrower under
the terms of the applicable Senior Mezzanine Loan Agreement.


 


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.


 


66

















 


4.1.19                  Representations and Warranties in
the Senior Mezzanine Loan Documents. Each of the representations and
warranties contained in the Senior Mezzanine Loan Documents (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 Senior Mezzanine
Default or Senior Mezzanine Event of Default thereunder.


 


4.1.20                  Enforceability. The
Mezzanine Loan Documents to which each of Mortgage Borrower, Mezzanine
Borrower, Junior Mezzanine Borrowers, Senior 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,
Senior 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 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 


 


67

















 


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.


 


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 


 


68

















 


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, each Senior 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, each Senior Mezzanine 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, each Senior Mezzanine 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.


 


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


 


69






 












 


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 (Third
Mezzanine). A complete and correct copy of the Interest Rate Cap
Agreement (Third Mezzanine) is attached hereto as Exhibit L. The
Interest Rate Cap Agreement (Third 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 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 


 


70

















 


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 26-1259255.


 


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 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 


 


71

















 


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, each Senior Mezzanine Borrower, 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, each
Senior 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 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 any Senior Mezzanine Borrower
or 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 


 


72

















 


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, each Senior 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 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 


 


73

















 


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 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 


 


74

















 


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.


 


(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 


 


75

















 


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 (Third Mezzanine) (but not
including any breakage costs associated with or arising under the Interest Rate
Cap Agreement (Third 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, each Senior
Mezzanine Lender, and Mezzanine Lender in the resizing of the Mortgage Loan,
the Senior Mezzanine Loans, 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.


 


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.


 


76

















 


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 each Senior Mortgage Borrower and 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, the Senior Mezzanine Collateral and the Collateral. Mezzanine
Borrower shall and shall cause each Senior Mezzanine Borrower and 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, the Senior
Mezzanine Collateral 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 (Third
Mezzanine) and (b) the validity and priority of the Liens of this
Agreement, the Pledge, the Mezzco IV 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
(Third Mezzanine), is claimed by another Person.


 


5.1.16                  Costs of Enforcement. In
the event (a) that this Agreement, the Pledge or the Mezzco IV Pledge is
foreclosed upon in whole or in part or that by reason of Mezzanine
Borrower’s default hereunder this Agreement, the Pledge or the Mezzco IV 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 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 


 


77

















 


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 each Senior
Mezzanine Borrower and 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 Senior Mezzanine Loan Documents or 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 Senior Mezzanine Loan Documents or 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 Senior Mezzanine Notes or
Mortgage Notes) and containing such other information with respect to the
Mezzanine Borrower, each Senior Mezzanine Borrower, Mortgage Borrower, the
Property, the Mortgage Loan, the Senior Mezzanine Loans, 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, the Senior Mezzanine Collateral, and the
Collateral and all portions thereof unencumbered from any Liens, easements or
agreements granting rights in the Collateral, the Senior Mezzanine Collateral
or the Property or restricting the use or development of the Property, except
for (a) with respect to the Property, Permitted Encumbrances, (b) with
respect to the Senior Mezzanine Collateral, Permitted Encumbrances


 


78

















 


(Senior
Mezzanine), and (c) with respect to the Collateral, Permitted Encumbrances
(Third 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.


 


79

















 


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 


 


80

















 


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.


 


5.1.23                  Senior Mezzanine Loan Covenants.
Mezzanine Borrower shall cause each Senior Mezzanine 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 its respective Senior
Mezzanine Loan Agreement and its respective Pledge (Senior Mezzanine), 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 the applicable Senior Mezzanine Lender. Mezzanine Borrower
acknowledges that the obligation to comply with such covenants, terms and
provisions is separate from, and may be enforced independently from, each
obligations of the Senior Mezzanine Borrower under its respective Senior
Mezzanine Loan Documents.


 


81

















 


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


 


(b)                                 In
the event the Senior Mezzanine Loans shall at any time be repaid, and the Liens
securing the Senior Mezzanine Loans 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 Senior Mezzanine Borrowers to
comply with each of the terms and provisions of the Senior Mezzanine Loan
Documents (other than payment of Principal, interest and premium and the
obligation to maintain the Interest Rate Cap Agreement (if any)) and the Senior
Mezzanine Loan Documents 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 Senior Mezzanine Lenders 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 Senior Mezzanine Loan Documents and evidenced by the Senior Mezzanine
Notes) and Mezzanine Borrower shall nevertheless comply or cause the Senior
Mezzanine Borrowers to comply with each of the terms and provisions of the
Senior Mezzanine Loan Documents (or 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 Cap Agreement if
any)). Mezzanine Borrower shall, and shall cause Senior Mezzanine Borrowers 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 Senior Mezzanine
Loan Documents within five (5) Business Days after execution thereof.


 


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


 


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, the Pledge, or the Mezzco IV
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:


 


82

















 


5.2.1                        Incur Debt. Incur, create
or assume any Debt other than Permitted Debt of Mezzanine Borrower, Mortgage
Borrower, and Senior Mezzanine Borrowers, (as applicable) or Transfer or lease
all or any part of the Property, Senior Mezzanine Collateral, 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, Senior 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, Senior
Mezzanine Borrowers, 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; (ii) with respect to any Senior Mezzanine Borrower,
engage, directly or indirectly, in any business other than that of entering
into its Senior Mezzanine Loan Agreement and the other Senior Mezzanine Loan
Documents to which such Senior Mezzanine Borrower is a party and the use,
ownership, management and financing of its Senior Mezzanine Ownership Interests
and activities related thereto; and (iii) 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, the Senior Mezzanine Collateral 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, 


 


83

















 


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;


 


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, any Senior Mezzanine 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, any Senior Mezzanine 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 


 


84

















 


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 (Third Mezzanine) and the Rate Cap Collateral (Third
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
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), permit any
Senior Mezzanine Borrower to distribute any Receipts from its Senior Mezzanine
Ownership Interests in violation of the provisions of its Senior Mezzanine Loan
Agreement, 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 


 


85

















 


proceeds shall
be paid to Mezzanine Lender and applied to the payment of the Obligations
(Third 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 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 (Third 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


 


86

















 


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 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 and Senior Mezzanine Borrowers 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 cause each Senior
Mezzanine Borrower to pay (or cause to be paid) all Impositions now or
hereafter levied or assessed or imposed against its Senior Mezzanine Collateral
or any part thereof prior to the imposition of any interest, changes or
expenses for the non-payment thereof. 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 


 


87

















 


Impositions,
payable or estimated to be payable during such fiscal year attributable to or
affecting the Property, the Collateral, the Senior Mezzanine Collateral,
Mezzanine Borrower, Senior Mezzanine Borrowers, 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 Senior Mezzanine Loan Agreements, the Loan Agreement (Mortgage)
or any Security Instrument shall be construed to require Mezzanine Borrower,
the Senior Mezzanine Borrowers or Mortgage Borrower to pay any tax, assessment,
levy or charge imposed on Mortgage Lender, the Senior Mezzanine Borrowers 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



 


88

















 


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) 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, any Senior Mezzanine 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 


 


89

















 


connection
with the Loan, Senior Mezzanine Loans, Junior Mezzanine Loans or the Revolving/Term
Credit Facility, permit any Transfer (directly or indirectly) of any interest
in Mortgage Borrower, any Senior Mezzanine 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 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.(a)          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, any Senior Mezzanine 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, any Senior Mezzanine
Borrower, and Mezzanine Borrower and the Principal Investors collectively
continue to own, directly and/or 


 


90

















 


indirectly, at
least 51% of the ownership interests in Mortgage Borrower, any Senior Mezzanine
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:


 


(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.”


 


91

















 


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, any Senior Mezzanine 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.


 


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 


 


92

















 


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, none of Mezzanine
Borrower, any Senior Mezzanine Borrower or 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 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 none of Mezzanine Borrower, any Senior Mezzanine Borrower
or 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 


 


93

















 


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).


 


IX.                                INTEREST RATE CAP
AGREEMENT (THIRD MEZZANINE)


 


9.1                                 Interest
Rate Cap Agreement (Third Mezzanine). Prior to or contemporaneously with
the Closing Date, Mezzanine Borrower shall enter into (x) an Interest Rate Cap
Agreement (Third Mezzanine). The notional amount of the Interest Rate Cap
Agreement (Third Mezzanine) shall be at least equal to the Principal Amount. The
Interest Rate Cap Agreement (Third 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 (Third 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 (Third 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 (Third
Mezzanine)”): all of the right, title and interest of Mezzanine Borrower in
and to (i) the Interest Rate Cap Agreement (Third 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 (Third Mezzanine) or arising out of the Interest Rate Cap
Agreement (Third 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 (Third Mezzanine), in
each case including all accessions and additions to, substitutions for and
replacements, products and proceeds of any or all of the foregoing.


 


94

















 


9.3                                 Covenants.


 


(a)                                  Mezzanine
Borrower shall comply with all of its obligations under the terms and
provisions of the Interest Rate Cap Agreement (Third Mezzanine). All amounts
paid by the Counterparty under the Interest Rate Cap Agreement (Third
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 (Third Mezzanine) and
the other Rate Cap Collateral (Third Mezzanine). Mezzanine Borrower shall take
all actions reasonably requested by Mezzanine Lender to enforce Mezzanine
Borrower’s rights under the Interest Rate Cap Agreement (Third Mezzanine) in
the event of a default by the Counterparty thereunder and shall not waive,
amend or otherwise modify any of its rights thereunder.


 


(b)                                 Mezzanine
Borrower shall defend Mezzanine Lender’s right, title and interest in and to
the Rate Cap Collateral (Third 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 (Third Mezzanine), Mezzanine Borrower shall
replace the Interest Rate Cap Agreement (Third Mezzanine) with a Replacement
Interest Rate Cap Agreement (Third 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 (Third 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 (Third Mezzanine) as and when required
hereunder, Mezzanine Lender may upon written notice to Mezzanine Borrower
purchase the Interest Rate Cap Agreement (Third Mezzanine) and the actual cost
incurred by Mezzanine Lender in purchasing the Interest Rate Cap Agreement
(Third 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 (Third
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.


 


95

















 


(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
(Third Mezzanine), (ii) without the prior written consent of Mezzanine
Lender, except in accordance with the terms of the Interest Rate Cap Agreement
(Third Mezzanine), cause the termination of the Interest Rate Cap Agreement
(Third 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 (Third Mezzanine)) under the Interest
Rate Cap Agreement (Third 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 (Third Mezzanine)) which, without such consent or
agreement, would constitute a default under the Interest Rate Cap Agreement
(Third Mezzanine), (v) fail to exercise promptly and diligently each and
every material right which it may have under the Interest Rate Cap
Agreement (Third Mezzanine), (vi) take or intentionally omit to take any
action 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 (Third Mezzanine) or any defense
by the Counterparty (or any successor or substitute party to the Interest Rate
Cap Agreement (Third 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 (Third
Mezzanine), together with a complete copy of such notice.


 


(g)                                 In
connection with an Interest Rate Cap Agreement (Third 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
(Third Mezzanine) and the other Rate Cap Collateral (Third 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 (Third 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 (Third Mezzanine) is free and clear of all claims or
security interests of every nature whatsoever, except such as are created
pursuant to this 


 


96

















 


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 (Third 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 (Third 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
(Third 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 (Third Mezzanine);
provided that no representation or warranty is made with respect to the
perfected status of the security interest of Mezzanine Lender in the proceeds
of Rate Cap Collateral (Third 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 (Third Mezzanine) and Mezzanine Borrower shall
not, without the prior written consent of Mezzanine Lender, until payment in
full of all of the Obligations (Third Mezzanine), execute and file in any
public office, any enforceable financing statement or statements covering any
or all of the Rate Cap Collateral (Third 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 (Third 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 (Third 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 (Third 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 (Third 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 


 


97

















 


Collateral
(Third 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 (Third Mezzanine). It
is expressly agreed that Mezzanine Lender may exercise its rights with
respect to less than all of the Rate Cap Collateral (Third Mezzanine), leaving
unexercised its rights with respect to the remainder of the Rate Cap Collateral
(Third 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 (Third
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 (Third Mezzanine), hereunder and
under law.


 


(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 (Third
Mezzanine), including any power to subordinate or modify the Interest Rate Cap
Agreement (Third Mezzanine) (but not, unless an Event of Default exists and is
continuing, the right to terminate or cancel the Interest Rate Cap Agreement
(Third 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 (Third 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 (Third 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 (Third 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 (Third 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 (Third
Mezzanine); file 


 


98

















 


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 (Third 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 (Third 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 (Third 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
payable to Mezzanine Borrower representing: 
(i) any payment of obligations owed pursuant to the Interest Rate
Cap Agreement (Third Mezzanine), (ii) interest accruing on any of the Rate
Cap Collateral (Third Mezzanine) or (iii) any other payment or
distribution payable in respect of the Rate Cap Collateral (Third 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 (Third 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 (Third 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 (Third 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 (Third 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 (Third 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 (Third Mezzanine) if it shall determine not
to do so, 


 


99

















 


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 (Third 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 (Third 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 (Third Mezzanine) in
lieu of cash or any other obligations. In the case of all sales of the Rate Cap
Collateral (Third 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 (Third
Mezzanine) shall be available to cover such costs 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 (Third Mezzanine).


 


9.9                                 Public
Sales Not Possible. Mezzanine Borrower acknowledges that the terms of the
Interest Rate Cap Agreement (Third Mezzanine) may prohibit public sales,
that the Rate Cap Collateral (Third 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 (Third 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 (Third
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 (Third 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 (Third 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 (Third Mezzanine), all the provisions of this Article IX
applicable to the Interest Rate Cap Agreement (Third Mezzanine) delivered on
the Closing Date shall be applicable to the Replacement Interest Rate Cap
Agreement (Third 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 


 


100

















 


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 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 


 


101






 












 


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 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 


 


102

















 


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 prepared on
an accrual 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, (2) no Senior Mezzanine Event of Default exists under any Senior
Mezzanine Loan Agreement, the Senior Mezzanine Notes or any other Senior
Mezzanine Loan Document or, if so, specifying the nature and status of each
such Senior Mezzanine Event of Default and the action then being taken by the
applicable Senior Mezzanine Borrower or proposed to be taken to remedy such
Senior Mezzanine Event of Default, and (3) 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 


 


103

















 


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
Senior Mezzanine Event of Default exists under any Senior Mezzanine Loan
Agreement, the Senior Mezzanine Notes or any other Senior Mezzanine Loan
Document or, if so, specifying the nature and status of each such Senior
Mezzanine Event of Default and the action then being taken by the applicable
Senior Mezzanine Borrower or proposed to be taken to remedy such Senior
Mezzanine Event of Default, (3) 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 and (4) 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


 


104

















 


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, Senior 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.


 


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 


 


105

















 


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, any Senior 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, any Senior 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 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, any Senior Mezzanine 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) none of
Mezzanine Borrower, any Senior Mezzanine Borrower or 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 


 


106

















 


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, any Senior Mezzanine
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, any Senior
Mezzanine 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 (Third Mezzanine), a Governmental Authority having jurisdiction
over the Property requires, in writing, remedial action to correct the presence
of Hazardous Materials in, 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 Senior Mezzanine Borrower and 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, any Senior 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, any Senior Mezzanine 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 


 


107

















 


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, the Pledge and the Mezzco
IV 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, any Senior Mezzanine Borrower or the
handling of any environmental matter or hazardous wastes or substances of
Mortgage Borrower, any Senior Mezzanine 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 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 


 


108

















 


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 Mezzco IV 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 and the delivery by FCP
Mezzco Borrower IV, LLC to Mezzanine Lender or its designee of a
transfer-in-lieu of foreclosure with respect to the Mezzco III 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, 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  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, the Pledge and the Mezzco IV 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, the
Mezzco IV Pledge, or this Agreement, or transfer in lieu of foreclosure.


 


109

















 


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;


 


(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


 


110

















 


(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 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.


 


111

















 


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.


 


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.


 


112

















 


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.


 


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.


 


113

















 


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(a)                 . 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, 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.


 


114

















 


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, the Mezzco IV
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
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, the Pledge,
the Mezzco IV 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 


 


115

















 


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.


 


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, 


 


116

















 


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 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.


 


117

















 


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 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 


 


118

















 


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, any Senior Mezzanine 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, any Senior Mezzanine
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 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, any Senior Mezzanine 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, any
Senior Mezzanine Borrower, Mezzanine Borrower, any Junior Mezzanine Borrower,
any Master Lessee Party, any Guarantor or any SPE Entity or Mortgage Borrower,
any Senior Mezzanine 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 


 


119

















 


bankruptcy
law, or any similar federal or state law, shall be filed by or against,
consented to, or acquiesced in by, Mortgage Borrower, any Senior Mezzanine
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, any Senior Mezzanine 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, any Senior Mezzanine 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, any Senior Mezzanine 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 (Third 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;


 


(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 


 


120

















 


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 (Third
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)                          the
occurrence of a Senior Mezzanine Event of Default;


 


(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;


 


121

















 


(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 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,
the Mezzco IV Pledge, or any other Mezzanine Loan Document. Any payment
hereunder may be enforced and 


 


122

















 


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, the Pledge and the
Mezzco IV 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 (Third Mezzanine).


 


(d)                                 Upon
the occurrence of a Senior Mezzanine Default or a Senior Mezzanine Event of
Default, Mezzanine Borrower shall cause the applicable Senior Mezzanine
Borrower to deliver to Mezzanine Lender within five (5) Business Days
after the first to occur of (a) receipt by such Senior Mezzanine Borrower
of notice of such Senior Mezzanine Default or Senior Mezzanine Event of Default
from the applicable Senior Mezzanine Lender or (b) the date the applicable
Senior Mezzanine Borrower obtains actual knowledge of the occurrence of such
Senior Mezzanine Default or Senior Mezzanine Event of Default, a detailed
description of the actions to be taken by the applicable Senior Mezzanine
Borrower to cure such Senior Mezzanine Default or Senior Mezzanine 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
the applicable Senior Mezzanine Borrower to take all such actions as are
necessary to cure such Senior Mezzanine Default or Senior Mezzanine 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 the applicable Senior Mezzanine Borrower’s efforts to cure such
Senior Mezzanine Default of Senior Mezzanine Event of Default.


 


123

















 


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 Senior Mezzanine Loan Documents (whether
or not the applicable Senior Mezzanine 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, the Pledge and the Mezzco IV Pledge, and shall be
immediately due and payable by Mezzanine Borrower to Mezzanine Lender with
interest at the Default Rate until paid. Mezzanine Borrower hereby transfers
and assigns any excess proceeds arising from any foreclosure or sale under
power pursuant to the Senior Mezzanine Loan Documents or any instrument
evidencing the indebtedness secured thereby, and Mezzanine Borrower hereby
authorizes and directs the holder or holders of the Senior Mezzanine Loan
Documents to pay such excess proceeds directly to Mezzanine Lender up to the
amount of the Obligations (Third Mezzanine).


 


17.2                        Remedies Unless
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 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 and the Mezzco IV 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, the
Pledge, the Mezzco IV 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 (Third Mezzanine), the Mezzanine Lender may:


 


124

















 


(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 (Third Mezzanine), against the Obligations (Third
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 (Third 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 (Third Mezzanine), the
Rate Cap Collateral (Third 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, the Mezzco IV Pledge, or the other Mezzanine Loan
Documents, in its absolute discretion in respect of the Indebtedness. In
addition, Mezzanine Lender shall have the right from time to time to partially
foreclose or exercise remedies under this Agreement, the Pledge, the Mezzco IV
Pledge, and the other Mezzanine Loan Documents, in any manner and for any
amounts secured by this Agreement, the Pledge, the Mezzco IV 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, the Mezzco IV 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, the Mezzco IV 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, the Mezzco IV 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, the Mezzco IV Pledge, and the applicable Mezzanine Loan Documents to
secure payment of sums secured by this Agreement, the Pledge, the Mezzco IV
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, the Pledge and the Mezzco IV 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 


 


125

















 


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, Pledge or Mezzco IV
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.


 


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 (Third Mezzanine), this Agreement, the Pledge, Mezzco IV 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, the Pledge, and the Mezzco IV Pledge in
accordance with the terms and provisions set forth herein,  in the Pledge and in the Mezzco IV Pledge;


 


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


 


126

















 


(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, the
Pledge and the Mezzco IV 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, the Mezzco IV 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, any Senior Mezzanine
Borrower, Mortgage Borrower or any Affiliate of Mezzanine Borrower, any Senior
Mezzanine Borrower, or Mortgage Borrower;


 


(b)                                 Proceeds
which Mezzanine Borrower, any Senior Mezzanine Borrower, Mortgage Borrower or
any Affiliate of Mezzanine Borrower, any Senior Mezzanine Borrower or Mortgage
Borrower has received and to which Mezzanine Lender, any Senior Mezzanine
Lender, or Mortgage Lender (as applicable) is entitled pursuant to the terms of
this Agreement, the Loan Agreement (Mortgage), the Senior Mezzanine Loan
Agreements or any of the Mezzanine Loan Documents, Senior Mezzanine Loan
Documents or Loan Documents (Mortgage) to the extent the same have not been (i) applied
toward payment of the Indebtedness or the Mortgage Loan or Senior Mezzanine
Loans (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, any Senior 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, Mezzco III Ownership
Interests or Senior Mezzanine Ownership Interests by Master Lessee, Mortgage
Borrower, any Senior Mezzanine 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 (Third
Mezzanine) or the Rate Cap Collateral (Third Mezzanine) being encumbered by a
Lien or Transferred by reason of the acts of Mezzanine Borrower, Mortgage
Borrower, any Senior Mezzanine Borrower, or any Affiliate of Mezzanine
Borrower, any Senior Mezzanine Borrower, or Mortgage Borrower from 


 


127

















 


and after the
date hereof (other than as provided in this Agreement and the Pledge, the
Mezzco IV 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, any Senior Mezzanine Borrower, Mortgage Borrower or any Affiliate of
Mezzanine Borrower, any Senior 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), Obligations (Senior Mezzanine) or Obligations (Third
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, any Senior Mezzanine 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;


 


(k)                                 all
of the Indebtedness and the Obligations (Third 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;


 


128






 












 


(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 (Third Mezzanine) or the Rate Cap Collateral (Third
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 and any Receipts from the Mezz III 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 (Third 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) 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 


 


129

















 


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.


 


(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:


 


130

















 


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
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 


 


131

















 


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

  
	
   

  	
   

  
	
  If to
  Mezzanine Borrower:

  	
  FCP MEZZCO
  BORROWER II, 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

  



 


132

















 


	
  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.


 


133

















 


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 MEZZCO IV 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 MEZZCO IV 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 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 


 


134

















 


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) 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 


 


135

















 


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 or the Mezzco IV
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, 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, the Pledge and the Mezzco IV
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 


 


136

















 


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 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.


 


137

















 


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 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,
the Mezzco IV 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, the Mezzco IV
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.


 


138

















 


19.20                     Conflict;
Construction of Documents; Reliance 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 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.


 


19.23                     Direction
of Mortgage Borrower with Respect to the Property. Mezzanine Borrower and
Mezzanine Lender acknowledge and agree that, as to any clauses or provisions
contained in this Agreement or any of the other Mezzanine Loan Documents to the
effect that (i) Mezzanine Borrower shall cause Mortgage Borrower to act or
to refrain from acting in any manner, or (ii) Mezzanine Borrower shall
cause to occur or not to occur, or otherwise be obligated in any manner with
respect to, any matters pertaining to Mortgage Borrower or the Property, or (iii) other
similar effect, such clause or provisions, in each case, is intended to mean,
and shall be construed as meaning, that Mezzanine Borrower has undertaken to
act and is obligated to act in Mezzanine Borrower’s capacity as the indirect
sole member of Mortgage Borrower (which Mortgage Borrower, in turn, is the fee
owner of the Property) but not directly with respect to Mortgage Borrower or
the Property or in any other manner which would violate 


 


139

















 


any of the
covenants contained in Section 5.1.4 hereof or other similar
covenants contained in Mezzanine Borrower’s Organizational Documents.


 


[NO FURTHER TEXT ON THIS PAGE]


 


140

















 


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 III, 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