toparticipate in such meetings). The Board Observer shall, subject to the last sentence ofthis subsection and any restrictions of The Nasdaq Global Market or applicable law, beafforded to the same rights and privileges as the other members of the Company’s board ofdirectors, other than the right to vote on matters brought before the members, including,without limitation, rights to indemnification, insurance, notice, information and the promptreimbursement of expenses (but not the payment of directors fees). Notwithstanding anythingto the contrary set forth in this subsection or elsewhere in this Agreement, the Company’sboard of directors and each committee thereof shall have the absolute and unfettered right,exercisable at its sole and absolute discretion, to exclude such Board Observer from anymeeting thereof.”3. Amendment to Section 4.4 of the Investment Agreement. Section 4.4 of the InvestmentAgreement is hereby amended to read in its entirety as follows:     “(b) As long as the Investors continue to own more than fifteen percent (15%) of theInvestor Shares, the Designated Investor shall be entitled at its option to (but shall notbe obligated to) designate, by written notice to the Company, a Board Observer. The BoardObserver shall, subject to the last sentence of this subsection and any restrictions of TheNasdaq Global Market or applicable law, be entitled to attend all meetings of the Company’sboard of directors and any committees thereof, to be given advance notice of all meetingsnot later than the time notice is given to any member of the board of directors and toreceive upon issuance to the members of the board of directors or any committees thereof anymaterials prepared for the members of the board of directors or committees thereof (butshall have no right to participate in such meetings). The Board Observer shall, subject tothe last sentence of this subsection and any restrictions of The Nasdaq Global Market orapplicable law, be afforded to the same rights and privileges as the other members of theCompany’s board of directors, other than the right to vote on matters brought before themembers, including, without limitation, rights to indemnification, insurance, notice,information and the prompt reimbursement of expenses (but not the payment of directorsfees). Notwithstanding anything to the contrary set forth in this subsection or elsewhere inthis Agreement, the Company’s board of directors and each committee thereof shall have theabsolute and unfettered right, exercisable at its sole and absolute discretion, to excludesuch Board Observer from any meeting thereof.”4. Amendment to Section 5.2 of the Investment Agreement. Section 5.2(b) of the InvestmentAgreement is hereby amended to read in its entirety as follows:     (b) Certificate. The Investors shall have delivered to the Company acertificate dated as of the date of the closing certifying that (i) the Investors areauthorized to enter into the Investment Agreement and to consummate the transactionscontemplated thereby and that the person signing the Investment Agreement and the documentscontemplated thereby on behalf of the Investors is authorized to do so; and (ii) thecondition set forth in Section 5.2(a) hereof has been satisfied.
2

 
5. Amendment to Section 8 of the Investment Agreement. Section 8 of the InvestmentAgreement is hereby amended by deleting the definition of “Board Observer” appearingtherein in its entirety and inserting the following new definition in lieu thereof:     “Board Observer” has the meaning assigned to it in Section 4.3(c)(v)hereof.”6. Effect of Amendment. The Company hereby represents and warrants to the Investors thateach of the Company’s representations and warranties set forth in the Investment Agreement is trueand correct in all respects as of the date hereof as though made on as of the date hereof, exceptfor each of the Company’s representations and warranties set forth in Sections 2.5, 2.12 and 2.15of the Agreement to the extent so specifically reported in the Company’s Annual Report on Form10-K, as amended, for the year ended December 31, 2007. Except as expressly set forth in thisAmendment, the Investment Agreement shall remain in full force and effect as originally written,and shall constitute the legal, valid, binding and enforceable obligation of the parties thereto.7. Governing Law; Jurisdiction; Venue; Process. This Amendment shall be governed by andconstrued in accordance with the laws of the State of New York without regard to any choice of lawor conflict of law provision or rule that would cause the application of the laws of anyjurisdiction other than the State of New York. Each party hereby irrevocably submits, for itselfand its property, to the exclusive jurisdiction of the Supreme Court of the State of New Yorklocated in New York, New York or the United States District Court for the Southern District of NewYork, and any appellate court from any such court (as applicable, a “New York Court”), inany suit, action or proceeding arising out of or relating to this Amendment, or for recognition orenforcement of any judgment resulting from any such suit, action or proceeding, and each partyhereby irrevocably and unconditionally agrees that all claims in respect of any such suit, actionor proceeding may be heard and determined in the New York Court. Each party hereby irrevocably andunconditionally waives, to the fullest extent it may legally and effectively do so, (i) anyobjection which it may now or hereafter have to the laying of venue of any suit, action orproceeding arising out of or relating to this Amendment in the New York Court, (ii) the defense ofan inconvenient forum to the maintenance of such suit, action or proceeding in any such court, and(iii) the right to object, with respect to such suit, action or proceeding, that such court doesnot have jurisdiction over such party. Each party irrevocably consents to service of process in anymanner permitted by law. The foregoing consents to jurisdiction and service of process shall notconstitute general consents to service of process in the State of New York for any purpose exceptas relates to this Amendment, and shall not be deemed to confer rights on any Person other than therespective parties to this Amendment.8. Execution in Counterparts. This Amendment may be executed in two or more counterparts,each of which shall be considered an original instrument, but all of which shall be considered oneand the same agreement, and shall become binding when one or more counterparts have been signed byeach of the parties hereto and delivered to the parties. Copies of executed counterpartstransmitted by facsimile or other electronic transmission shall be considered original executedcounterparts for the purposes of this Amendment, provided that receipt of copies of suchcounterparts is confirmed. Originals of any counterparts transmitted by facsimile or otherelectronic transmission shall be promptly provided to the other parties hereto.
3

 
7. Headings. The headings in this Amendment are for reference purposes only and shall notin any way affect the meaning or interpretation of this Amendment.***[Remainder of Page Intentionally Left Blank; Signature Page Follows]***
4

 
     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their authorizedrepresentatives on the date first above written.           FX REAL ESTATE AND ENTERTAINMENT INC.   By:                                 /s/ Mitchell J. Nelson    Name:  Mitchell J. Nelson    Title:  Executive Vice President    THE HUFF ALTERNATIVE FUND, L.P.  By:WRH Partners II, LLC,