**Exhibit4.46**

 

 

LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

 

BY

 

JALOU OF JEFFERSON, LLC,

 

Mortgagor,

 

TO

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Trustee,

 

Mortgagee

 

Securing Principal Indebtedness of **$148,000,000,**

 

Dated as of March 2, 2005

 

 

Relating to Leasehold Premises located in:

 

Jefferson Parish, Louisiana

 

 

After recording, please return to:

 

Milbank, Tweed, Hadley & McCloy, LLP

601 South Figueroa Street, 30th Floor

Los Angeles, California 90017

Attn:  Matthew S. Meza, Esq.

 

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TABLE OF CONTENTS

 
| PREAMBLE                                     |                                |   |
|----------------------------------------------|-------------------------------------|--------|
|                                         |                                |   |
| RECITALS                                     |                                |   |
|                                         |                                |   |
| AGREEMENT                                    |                                |   |
|                                         |                                |   |
| ARTICLE I                               |                                |
|                                         |                                |   |
| DEFINITIONS AND INTERPRETATION               |                                |
|                                         |                                |   |
| SECTION 1.1                             | Definitions                         |   |
| SECTION 1.2                             | Interpretation                      |   |
| SECTION 1.3                             | Resolution  of Drafting Ambiguities |   |
|                                         |                                |   |
| ARTICLE II                              |                                |
|                                         |                                |   |
| GRANTS AND SECURED  OBLIGATIONS              |                                |
|                                         |                                |   |
| SECTION 2.1                             | Grant of  Mortgaged Property        |   |
| SECTION 2.2                             | Assignment  of Leases and Rents     |   |
| SECTION 2.3                             | Secured  Obligations                |   |
| SECTION 2.4                             | Future  Advances                    |   |
| SECTION 2.5                             | No Release                          |   |
|                                         |                                |   |
| ARTICLE III                             |                                |
|                                         |                                |   |
| REPRESENTATIONS  AND WARRANTIES OF MORTGAGOR |                                |
|                                         |                                |   |
| SECTION 3.1                             | Authority and  Validity             |   |
| SECTION 3.2                             | Warranty of Title                   |   |
| SECTION 3.3                             | Condition  of Mortgaged Property    |   |
| SECTION 3.4                             | Leases                              |   |
| SECTION 3.5                             | Insurance                           |   |
| SECTION 3.6                             | Charges                             |   |
| SECTION 3.7                             | Environmental                       |   |
| SECTION 3.8                             | No  Conflicts, Consents, etc        |   |
| [SECTION 3.9                            | Benefit to  the Mortgagor]          |   |

 

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| ARTICLE IV                            |                                                                |
|--------------------------------------------|---------------------------------------------------------------------|
|                                       |                                                                |   |
| CERTAIN COVENANTS OF  MORTGAGOR            |                                                                |
|                                       |                                                                |   |
| SECTION 4.1                           | Preservation  of Corporate Existence                                |   |
| SECTION 4.2                           | Title                                                               |   |
| SECTION 4.3                           | Maintenance  and Use of Mortgaged Property; Alterations             |   |
| SECTION 4.4                           | Notices  Regarding Certain Defaults                                 |   |
| SECTION 4.5                           | Access  to Mortgaged Property, Books and Records; Other Information |   |
| SECTION 4.6                           | Limitation  on Liens; Transfer Restrictions                         |   |
| SECTION 4.7                           | Environmental                                                       |   |
| SECTION 4.8                           | Estoppel  Certificates                                              |   |
|                                       |                                                                |   |
| ARTICLE V                             |                                                                |
|                                       |                                                                |   |
| LEASES                                     |                                                                |
|                                       |                                                                |   |
| SECTION 5.1                           | Mortgagor’s  Affirmative Covenants with Respect to Leases      |   |
| SECTION 5.2                           | Mortgagor’s  Negative Covenants with Respect to Leases         |   |
| SECTION 5.3                           | Additional  Requirements with Respect to New Leases                 |   |
|                                       |                                                                |   |
| ARTICLE VI                            |                                                                |
|                                       |                                                                |   |
| CONCERNING  ASSIGNMENT OF LEASES AND RENTS |                                                                |
|                                       |                                                                |   |
| SECTION 6.1                           | Present  Assignment; License to the Mortgagor                       |   |
| SECTION 6.2                           | Collection  of Rents by the Mortgagee                               |   |
| SECTION 6.3                           | No  Release                                                         |   |
| SECTION 6.4                           | Irrevocable  Interest                                               |   |
| SECTION 6.5                           | Amendment  to Leases                                                |   |
|                                       |                                                                |   |
| ARTICLE VII                           |                                                                |
|                                       |                                                                |   |
| TAXES AND CERTAIN  STATUTORY LIENS         |                                                                |
|                                       |                                                                |   |
| SECTION 7.1                           | Payment  of Charges                                                 |   |
| SECTION 7.2                           | Escrow  of Taxes                                                    |   |
| SECTION 7.3                           | Certain  Statutory Liens                                            |   |
| SECTION 7.4                           | Stamp  and Other Taxes                                              |   |
| SECTION 7.5                           | Certain  Tax Law Changes                                            |   |
| SECTION 7.6                           | Proceeds  of Tax Claim                                              |   |

 

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| ARTICLE VIII                          |                                                                     |
|--------------------------------------------|--------------------------------------------------------------------------|
|                                       |                                                                     |   |
| INSURANCE                                  |                                                                     |
|                                       |                                                                     |   |
| SECTION 8.1                           | Required  Insurance Policies and Coverages                               |   |
| SECTION 8.2                           | Delivery  After Foreclosure                                              |   |
|                                       |                                                                     |   |
| ARTICLE IX                            |                                                                     |
|                                       |                                                                     |   |
| CONTESTING OF PAYMENTS                     |                                                                     |
|                                       |                                                                     |   |
| SECTION 9.1                           | Contesting  of Taxes and Certain Statutory Liens                         |   |
| SECTION 9.2                           | Contesting  of Insurance                                                 |   |
|                                       |                                                                     |   |
| ARTICLE X                             |                                                                     |
|                                       |                                                                     |   |
| DESTRUCTION,  CONDEMNATION AND RESTORATION |                                                                     |
|                                       |                                                                     |   |
| SECTION 10.1                          | Destruction                                                              |   |
| SECTION 10.2                          | Condemnation                                                             |   |
|                                       |                                                                     |   |
| ARTICLE XI                            |                                                                     |
|                                       |                                                                     |   |
| EVENTS OF DEFAULT AND  REMEDIES            |                                                                     |
|                                       |                                                                     |   |
| SECTION 11.1                          | Events  of Default                                                       |   |
| SECTION 11.2                          | Remedies  in Case of an Event of Default                                 |   |
| SECTION 11.3                          | Sale  of Mortgaged Property if Event of Default Occurs; Proceeds of Sale |   |
| SECTION 11.4                          | Additional  Remedies in Case of an Event of Default                      |   |
| SECTION 11.5                          | Legal  Proceedings After an Event of Default                             |   |
| SECTION 11.6                          | Remedies  Not Exclusive                                                  |   |
| SECTION 11.7                          | Sale  of Mortgaged Lease                                                 |   |
| SECTION 11.8                          | Special  Louisiana Provisions                                            |   |
|                                       |                                                                     |   |
| ARTICLE XII                           |                                                                     |
|                                       |                                                                     |   |
| SECURITY  AGREEMENT AND FIXTURE FILING     |                                                                     |
|                                       |                                                                     |   |
| SECTION 12.1                          | Security  Agreement                                                      |   |

 

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| ARTICLE XIII  |                                                         |
|--------------------|--------------------------------------------------------------|
|               |                                                         |   |
| FURTHER ASSURANCES |                                                         |
|               |                                                         |   |
| SECTION 13.1  | Recording  Documentation To Assure Security                  |   |
| SECTION 13.2  | Further  Acts                                                |   |
| SECTION 13.3  | Additional  Security                                         |   |
|               |                                                         |   |
| ARTICLE XIV   |                                                         |
|               |                                                         |   |
| MISCELLANEOUS      |                                                         |
|               |                                                         |   |
| SECTION 14.1  | Covenants  To Run with the Leased Premises                   |   |
| SECTION 14.2  | No  Merger                                                   |   |
| SECTION 14.3  | Concerning  Mortgagee                                        |   |
| SECTION 14.4  | Mortgagee  May Perform; Mortgagee Appointed Attorney-in-Fact |   |
| SECTION 14.5  | Expenses                                                     |   |
| SECTION 14.6  | Indemnity                                                    |   |
| SECTION 14.7  | Continuing  Security Interest; Assignment                    |   |
| SECTION 14.8  | Termination;  Release                                        |   |
| SECTION 14.9  | Modification  in Writing                                     |   |
| SECTION 14.10 | Notices                                                      |   |
| SECTION 14.11 | GOVERNING LAW; SERVICE OF PROCESS; WAIVER  OF JURY TRIAL     |   |
| SECTION 14.12 | Severability of Provisions                                   |   |
| SECTION 14.13 | Limitation on Interest Payable                               |   |
| SECTION 14.14 | Business Days                                                |   |
| SECTION 14.15 | Relationship                                                 |   |
| SECTION 14.16 | Waiver of Stay                                               |   |
| SECTION 14.17 | No Credit for Payment of Taxes or  Impositions               |   |
| SECTION 14.18 | No Claims Against the Mortgagee                              |   |
| SECTION 14.19 | Obligations Absolute                                         |   |
| SECTION 14.20 | Last Dollars Secured                                         |   |
| SECTION 14.21 | Mortgaged Lease                                              |   |
|               |                                                         |   |
| SIGNATURE          |                                                         |   |
|               |                                                         |   |
| ACKNOWLEDGMENTS    |                                                         |
|               |                                                         |   |
| SCHEDULE A    | Legal  Description                                           |   |
| SCHEDULE B    | Prior  Liens                                                 |   |
| SCHEDULE C    | Leases  Affecting the Mortgaged Property                     |   |

 

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LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

 

LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,SECURITY AGREEMENT AND FIXTURE FILING (as amended, amended and restated,supplemented or otherwise modified from time to time, the “Mortgage”),dated as of March       , 2005, made byJALOU OF JEFFERSON, LLC, a Louisiana limited liability company having an officeat 7340 Westbank Expressway, Suite 200, Marrero, Louisiana 70072, as mortgagor,assignor and debtor (in such capacities and together with any successors insuch capacities, the “Mortgagor”), in favor of WELLS FARGO BANK,NATIONAL ASSOCIATION, a national banking association having an office at 213Court Street, Suite 703, Middletown, CT 06457, in its capacity as trusteepursuant to the Indenture (as hereinafter defined), as mortgagee, assignee andsecured party (in such capacities and together with any successors in suchcapacities, the “Mortgagee”).

 

RECITALS :

 

###### A.  Gameco, Inc.n/k/a Jacobs Entertainment, Inc. (the “Issuer”), certain of itsSubsidiaries (as hereinafter defined), the Mortgagor and the Mortgagee have, inconnection with the execution and delivery of this Mortgage, entered into thatcertain Indenture, dated as of February 8, 2002, supplemented by the FirstSupplemental Indenture, dated as of February 22, 2002, the SecondSupplemental Indenture, dated as of June 14, 2002, the Third SupplementalIndenture, dated as of June 4, 2003, the Fourth Supplemental Indenturedated as of the date hereof and the Fifth Supplemental Indenture dated as ofthe date hereof (collectively, as amended, amended and restated, supplemented,or otherwise modified from time to time, the “Indenture”), pursuant towhich the Issuer has issued, from time to time, its 117/8%Senior Secured Notes due 2009 (the “Senior Secured Notes”) in theaggregate principal amount of $148,000,000. It is contemplated that the Issuer may, after the date hereof, issueAdditional Notes (as defined in the Indenture) and Exchange Notes (as definedin the Indenture); the Exchange Notes, together with the Additional Notes andthe Senior Secured Notes, the “Notes”), in each case, pursuant to theprovisions of the Indenture.

######  

###### B.  The Issuerowns, directly or through its Subsidiaries, all of the issued and outstandingshares of the Mortgagor.

######  

###### C.  TheMortgagor has, pursuant to the Indenture, among other things, unconditionallyguaranteed (the “Guarantee”) the obligations of the Issuer under theIndenture and the Notes.

######  

###### D.  TheMortgagor will receive substantial benefits from the execution and delivery of,and the performance of the obligations under, the Indenture and the Notes, andis therefore willing to enter into this Mortgage.

######  

###### E.  TheMortgagor is the legal owner and holder of the tenant’s interest under thatcertain Property Lease Agreement, dated as of September 21, 2000  (as amended on November 27, 2002, November 18,2003 and December 29, 2004, and as subsequently amended from time to time,the “Mortgaged Lease”) between Al-Huda, Inc. and Al-Batool, Inc.,collectively as landlords (together with

 

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###### their successorsand assigns, collectively, the “Lessor”), and the Mortgagor, as tenantby assignment, which affects the property described on Schedule Aannexed hereto.  A Memorandum of Leasewas recorded in the official records of Jefferson Parish, Louisiana asInstrument Number 10438338, CB Book 3126, Page 209.  Mortgagor is the successor by assignment toJackpot Truck Stop, L.L.C. (“Jackpot”), by that certain Assignment of LeaseAgreement, dated June 23, 2004, by and between Jackpot, as Assignor, andMortgagor, as Assignee, recorded in the official records of Jefferson Parish,Louisiana as Instrument Number 10438339, CB Book 3126, Page 210 (the “Assignment”).

######  

F.   Mortgagor isfurther a party to that certain Development Agreement, dated September 26,2003, by and between Mortgagor and Jackpot (“Development Agreement”),which grants to Jackpot certain rights in and to the Mortgaged Property.

 

###### G.  This Mortgage is given by the Mortgagor infavor of the Mortgagee for its benefit and for the benefit of the Holders ofthe Notes (collectively, the “Secured Parties”) to secure the paymentand performance of all of the Secured Obligations (as hereinafter defined).

######  

AGREEMENT:

 

NOW THEREFORE, in consideration of the foregoingpremises and other good and valuable consideration, the receipt and sufficiencyof which are hereby acknowledged, the Mortgagor hereby covenants and agreeswith the Mortgagee as follows:

 

# ARTICLE I

 

# DEFINITIONS ANDINTERPRETATION

 

## SECTION 1.1  Definitions.  Capitalized terms used but not otherwisedefined herein shall have the meanings assigned to such terms in theIndenture.  The following terms used inthis Mortgage shall have the following meanings:

 

“ACM” shall have the meaning assigned to suchterm in Section 4.7(ii) hereof.

 

“Affiliate” shall have the meaning assigned tosuch term in the Indenture.

 

“Alteration” shall mean any and allalterations, installations, improvements, additions, modifications or changesof a structural nature of or to the Leasehold Premises.

 

“Assignment” shall have the meaning assigned tosuch term in Recital E hereof.

 

“Business Day” shall have the meaning assignedto such term in the Indenture.

 

“Charges” shall mean any and all real estate,property and other taxes, assessments and special assessments, levies, fees,all water and sewer rents and charges and all other governmental charges orLiens imposed upon or assessed against, and all claims (including, withoutlimitation, landlords’,

 

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carriers’, mechanics’, workmen’s, repairmen’s,laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arisingby operation of law) against, all or any portion of the Mortgaged Property.

 

“Collateral Account” shall have the meaningassigned to such term in the Indenture.

 

“Collateral Documents” shall have the meaningassigned to such term in the Indenture.

 

“Contested Liens” shall mean, collectively, anyLiens incurred in respect of any Charges to the extent that the amounts owingin respect thereof are not yet delinquent or are being contested and otherwisecomply with the provisions of Section 9.1 hereof.

 

“Contracts” shall mean, collectively, any andall right, title and interest of the Mortgagor in and to any and all contracts,instruments, documents and other general intangibles, whether now existing orhereafter arising or entered into, relating to the Mortgaged Property(including, without limitation, all reciprocal easements and/or operatingagreements, covenants, conditions and restrictions and similar agreementsaffecting all or any portion of the Mortgaged Property and any and all presentor future options to sell or lease the Mortgaged Property or any interest therein)and all reserves, deferred payments, deposits or other security or advancepayments (including, without limitation, those made by or on behalf of theMortgagor to others with respect to (i) utility service regarding the MortgagedProperty, (ii) cleaning, maintenance, repair or similar services regarding theMortgaged Property, (iii) refuse removal or sewage service regarding theMortgaged Property, (iv) rentals of equipment, if any, used in the operation byor on behalf of Mortgagor regarding the Mortgaged Property, and/or (v) parkingor similar services or rights regarding the Mortgaged Property), refunds,liens, security interests, guarantees, remedies and claims of every kind,nature or character relating thereto.

 

“Default Rate” shall mean the rate per annumequal to the highest rate then payable under the Indenture.

 

“Destruction” shall mean any and all damage to,or loss or destruction of, the Leasehold Premises or any part thereof.

 

“Development Agreement” shall have the meaningassigned to such term in Recital E hereof.

 

“Environmental Law” shall mean any applicablefederal, state, local or municipal statute, law, rule, regulation, ordinance,code, policy or rule of common law and any judicial or administrativeinterpretation thereof, including any judicial or administrative order, consentdecree or judgment binding on the Mortgagor relating to pollution or protectionof the environment, or health or safety including, without limitation, anyrelating to the release or threatened release of any Hazardous Materials.

 

“Event of Default” shall have the meaningassigned to such term in the Indenture.

 

“Fixture” shall mean all machinery, apparatus,equipment, fittings, fixtures, improvements and articles of personal propertyof every kind, description and nature whatsoever now or hereafter attached oraffixed to the Land or any other Improvement or used in connection with the useand

 

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enjoyment of the Land or any other Improvement or themaintenance or preservation thereof, which by the nature of their locationthereon or attachment thereto are fixtures under the UCC or any otherapplicable law including, without limitation, all utility systems, firesprinkler and security systems, drainage facilities, lighting facilities, allwater, sanitary and storm sewer, drainage, electricity, steam, gas, telephoneand other utility equipment and facilities, pipes, fittings and other items ofevery kind and description now or hereafter attached to or located on the Landwhich by the nature of their location thereon or attachment thereto are realproperty under applicable law, HVAC equipment, boilers, electronic dataprocessing, telecommunications or computer equipment, refrigeration, electronicmonitoring, water or lighting systems, power, sanitation, waste removal,elevators, maintenance or other systems or equipment and all additions theretoand betterments, renewals, substitutions and replacements thereof.

 

“Governmental Authority” shall mean anyfederal, state, local, foreign or other governmental, quasi-governmental oradministrative (including self-regulatory) body, instrumentality, department,agency, authority, board, bureau, commission, office of any nature whatsoeveror other subdivision thereof, or any court, tribunal, administrative hearingbody, arbitration panel or other similar dispute-resolving body, whether now orhereafter in existence, or any officer or official thereof, having jurisdictionover the Mortgagor or the Mortgaged Property or any portion thereof.

 

“Guarantee” shall have the meaning assigned tosuch term in Recital C hereof.

 

“Guarantors” shall have the meaning assigned tosuch term in the Indenture.

 

“Hazardous Materials” shall mean any substance,chemical, material, pollutant, waste, contaminant or constituent which issubject to regulation under or could give rise to liability under anyEnvironmental Law.

 

“Holder” shall have the meaning assigned tosuch term in the Indenture.

 

“Improvements” shall mean all buildings,structures and other improvements of every kind or description and any and allAlterations now or hereafter located, attached or erected on the Landincluding, without limitation, (i) all Fixtures, (ii) allattachments, railroad tracks, foundations, sidewalks, drives, roads, curbs,streets, ways, alleys, passages, passageways, sewer rights, parking areas,driveways, fences and walls and (iii) all materials now or hereafterlocated on the Land intended for the construction, reconstruction, repair,replacement, alteration, addition or improvement of or to such buildings,Fixtures, structures and improvements, all of which materials shall be deemedto be part of the Improvements immediately upon delivery thereof on the Landand to be part of the Improvements immediately upon their incorporationtherein.

 

“Indemnified Liabilities” shall have themeaning assigned to such term in Section 14.6(i) hereof.

 

“Indemnitees” shall have the meaning assignedto such term in Section 14.6(i) hereof.

 

“Indenture” shall have the meaning assigned tosuch term in Recital A hereof.

 

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“Insurance Policies” means the insurancepolicies and coverages required to be maintained by the Mortgagor with respectto the Mortgaged Property pursuant to Section 4.19(b) of the Indenture andall renewals and extensions thereof.

 

“Insurance Requirements” means, collectively,all provisions of the Insurance Policies, all requirements of the issuer of anyof the Insurance Policies and all orders, rules, regulations and any otherrequirements of the National Board of Fire Underwriters (or any other bodyexercising similar functions) binding upon the Mortgagor and applicable to theMortgaged Property or any use or condition thereof.

 

“Issuer” shall have the meaning assigned to suchterm in Recital A hereof.

 

“Jackpot” shall have the meaning assigned tosuch term in Recital E hereof.

 

“Land” shall mean those certain tracts orparcels of land described in Schedule A annexed to this Mortgageand all easements, rights-of-way, strips and gores of land, drives, roads,curbs, streets, ways, alleys, passages, passage ways, sewer rights, waters,water courses, water rights, mineral, gas and oil rights, and all power, air,light and other rights, estates, titles, interests, privileges, liberties,servitudes, licenses, tenements, hereditaments and appurtenances whatsoever, inany way belonging, relating or appertaining thereto, or any part thereof, orwhich hereafter shall in any way belong, relate or be appurtenant thereto.

 

“Landlord” shall mean any landlord,sublandlord, lessor, sublessor, franchisor, licensor or grantor, as applicable.

 

“Leasehold Premises” shall mean, collectively,the Mortgagor’s estate, right, title and interest in the Land and theImprovements (subject in each case to the rights under the DevelopmentAgreement).

 

“Leases” shall mean, collectively, any and allright, title and interests of the Mortgagor, as Landlord, in all leases andsubleases of space, tenancies, franchise agreements, licenses, occupancy,rental, access or concession agreements and any other agreements pursuant towhich any Person is granted a possessory interest in or right to use or occupyall or any portion of the Mortgaged Property (including, without limitation,all of the Mortgagor’s rights to enforce all such leases, subleases, tenanciesor other agreements and to receive and enforce any rights that the Mortgagormay have to collect Rents thereunder), in each case whether now existing orhereafter entered into, whether or not of record, relating in any manner to theLeasehold Premises or the use or occupancy thereof and any and all amendments,modifications, supplements, replacements, extensions, renewals and/orguarantees, if any thereof, whether now in effect or hereafter coming intoeffect.

 

“Lessor” shall have the meaning assigned tosuch term in Recital E hereof.

 

“Lien” shall have the meaning assigned to suchterm in the Indenture.

 

“Mortgage” shall have the meaning assigned tosuch term in the Preamble hereof.

 

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“Mortgaged Lease” shall have the meaningassigned to such term in Recital E hereof.

 

“Mortgaged Property” shall have the meaningassigned to such term in Section 2.1 hereof.

 

“Mortgagee” shall have the meaning assigned tosuch term in the Preamble hereof.

 

“Mortgagor” shall have the meaning assigned tosuch term in the Preamble hereof.

 

“Mortgagor’s Interest” shall have the meaningassigned to such term in Section 2.2 hereof.

 

“Net Loss Proceeds” shall have the meaningassigned to such term in the Indenture.

 

“Notes” shall have the meaning assigned to suchterm in Recital A hereof.

 

“Officers’ Certificate” shall have the meaningassigned to such term in the Indenture.

 

“Permit” shall mean any and all permits,certificates, approvals, authorizations, consents, licenses, variances,franchises or other instruments, however characterized, of any GovernmentalAuthority (or any Person acting on behalf of a Governmental Authority) now orhereafter acquired or held, together with all amendments, modifications,extensions, renewals and replacements of any thereof issued or in any wayfurnished in connection with the Mortgaged Property including, withoutlimitation, building permits, certificates of occupancy, environmentalcertificates, industrial permits or licenses and certificates of operation.

 

“Permitted Collateral Liens” shall have themeaning assigned to such term in Section 4.6 hereof.

 

“Permitted Liens” shall have the meaningassigned to such term in the Indenture.

 

“Person” shall have the meaning assigned tosuch term in the Indenture.

 

“Prior Liens” shall mean, collectively, theLiens identified in Schedule B annexed to this Mortgage.

 

“Proceeds” shall mean, collectively, any andall cash proceeds and noncash proceeds derived or to be derived from theMortgaged Property and shall include, without limitation, all (i) proceedsof the sale, transfer or conveyance of the Mortgaged Property or theconversion, voluntary or involuntary, of any of the Mortgaged Property or anyportion thereof into cash or liquidated claims, (ii) proceeds of anyinsurance (except payments made to a Person, other than the Issuer or anySubsidiary thereof, that is not a party to this Mortgage), indemnity, warranty,guaranty or claim payable to the Mortgagee or to the Mortgagor from time totime with respect to any of the Mortgaged Property including, withoutlimitation, all Net Loss Proceeds relating thereto, (iii) payments (in anyform whatsoever) made or due and payable to the Mortgagor from time to time inconnection with any requisition, confiscation, condemnation, seizure orforfeiture of all or any portion of the Mortgaged Property by any GovernmentalAuthority (or any

 

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Person acting on behalf of a Governmental Authority)including, without limitation, all Net Loss Awards relating thereto,(iv) products of the Mortgaged Property, (v) other amounts from timeto time paid or payable under or in connection with any of the MortgagedProperty including, without limitation, refunds of real estate taxes andassessments, including interest thereon and any unearned insurance premiumsrelating thereto and (vi) the right to enforce any and all rights that theMortgagor has or may have to collect all such proceeds, including, withoutlimitation, the Mortgagor’s rights to commence any and all appropriatecollection or enforcement actions incident thereto.

 

“Property Material Adverse Effect” shall mean,as of any date of determination and whether individually or in the aggregate,(a) any event, circumstance, occurrence or condition which has caused orresulted in (or would reasonably be expected to cause or result in) a materialadverse effect on the business or operations as presently conducted at theMortgaged Property; (b) any event, circumstance, occurrence or condition whichhas caused or resulted in (or would reasonably be expected to cause or resultin) a material adverse effect on the value or utility of the MortgagedProperty; and (c) any event, circumstance, occurrence or condition whichhas caused or resulted in (or would reasonably be expected to cause or resultin) a material adverse effect on the legality, priority or enforceability ofthe Lien created by this Mortgage or the rights and remedies of the Mortgageehereunder.

 

“Prudent Operator” shall mean the standard ofcare taken by a prudent operator of property similar in use and configurationto the Leasehold Premises and located in the locality where the LeaseholdPremises are located.

 

“Records” shall mean, collectively, any and allright, title and interest of the Mortgagor in and to any and all drawings,plans, specifications, file materials, operating and maintenance records,catalogues, tenant lists, correspondence, advertising materials, operatingmanuals, warranties, guarantees, appraisals, studies and data relating to theMortgaged Property or the construction of any Alteration or the maintenance ofany Permit.

 

“Rents” shall mean, collectively, any and allrents, additional rents, royalties, issues, cash, guaranties, letters ofcredit, bonds, sureties or security deposited under any Lease to secureperformance of the Tenant’s obligations thereunder, revenues, earnings,profits, bonuses and income, advance rental payments, payments incident toassignment, sublease or surrender of a Lease, claims for forfeited deposits andclaims for damages, now due or hereafter to become due, with respect to anyLease, any indemnification against, or reimbursement for, sums paid and costsand expenses incurred by the Mortgagor under any Lease or otherwise, and anyaward in the event of the bankruptcy of any Tenant under or guarantor of aLease.

 

“Requirements of Law” shall mean, collectively,any and all requirements of any Governmental Authority including, withoutlimitation, any and all orders, decrees, determinations, laws, treaties,ordinances, rules, regulations or similar statutes or case law.

 

“Secured Obligations” shall mean allobligations (whether or not constituting future advances, obligatory orotherwise) of the Issuer and any and all of the Guarantors from time to timearising under or in respect of this Mortgage, the Indenture, the Notes and theother Collateral Documents (including, without limitation, the obligations topay principal, interest and all other charges, fees,

 

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expenses, commissions, reimbursements, premiums,indemnities and other payments related to or in respect of the obligations containedin this Mortgage, the Indenture, the Notes and the other Collateral Documents),in each case whether (i) such obligations are direct or indirect, secured orunsecured, joint or several, absolute or contingent, due or to become duewhether at stated maturity, by acceleration or otherwise, (ii) arising in theregular course of business or otherwise, (iii) for payment or performanceand/or (iv) now existing or hereafter arising (including, without limitation,interest and other obligations arising or accruing after the commencement ofany bankruptcy, insolvency, reorganization or similar proceeding with respectto the Issuer, any Guarantor or any other Person, or which would have arisen oraccrued but for the commencement of such proceeding, even if such obligation orthe claim therefor is not enforceable or allowable in such proceeding).

 

“Secured Parties” shall have the meaningassigned to such term in Recital G hereof.

 

“Senior Secured Notes” shall have the meaningassigned to such term in Recital A hereof.

 

“Subordination Agreement” shall mean asubordination, nondisturbance and attornment agreement in a form reasonablyacceptable to the Mortgagee.

 

“Subsidiaries” shall have the meaning assignedto such term in the Indenture.

 

“Taking” shall mean any taking of the MortgagedProperty or any part thereof, in or by condemnation or other eminent domainproceedings pursuant to any law, general or special, or by reason of thetemporary requisition of the use or occupancy of the Mortgaged Property or anypart thereof, by any Governmental Authority, civil or military.

 

“Tax Escrow Fund” shall have the meaningassigned to such term in Section 7.2 hereof.

 

“Tenant” shall mean any tenant, subtenant,lessee, sublessee, franchisee, licensee, grantee or obligee, as applicable.

 

“UCC” shall mean the Uniform Commercial Code asin effect on the date hereof in the jurisdiction in which the LeaseholdPremises are located; provided, however, that if by reason ofmandatory provisions of law, the perfection or the effect of perfection ornon-perfection of the security interest in any item or portion of the MortgagedProperty is governed by the Uniform Commercial Code as in effect in ajurisdiction other than the jurisdiction in which the Leasehold Premises arelocated, “UCC” shall mean the Uniform Commercial Code as in effect in suchother jurisdiction for purposes of the provisions hereof relating to suchperfection or effect of perfection or non-perfection.

 

## SECTION 1.2  Interpretation.   In this Mortgage, unless otherwisespecified, (i) singular words include the plural and plural words include thesingular, (ii) words importing any gender include the other gender, (iii)references to any Person include such Person’s successors and assigns and inthe case of an individual, the word “successors” includes such Person’s heirs,devisees, legatees, executors, administrators and personal representatives,(iv) references to any statute or other law include all applicable rules,regulations and orders adopted or made thereunder and all statutes or otherlaws

 

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## amending,consolidating or replacing the statute or law referred to, (v) the words “consent,”“approve” and “agree,” and derivations thereof or words of similar import, meanthe prior written consent, approval or agreement of the Person in question notto be unreasonably withheld, (vi) the words “include” and “including,” andwords of similar import, shall be deemed to be followed by the words “withoutlimitation,” (vii) the words “hereto,” “herein,” “hereof” and “hereunder,” andwords of similar import, refer to this Mortgage in its entirety, (viii)references to Articles, Sections, Schedules, Exhibits, subsections, paragraphsand clauses are to the Articles, Sections, Schedules, Exhibits, subsections,paragraphs and clauses hereof, (ix) the Schedules and Exhibits to thisMortgage, in each case as amended, amended and restated, supplemented orotherwise modified from time to time in accordance with the provisions hereof,are incorporated herein by reference, (x) the titles and headings of Articles,Sections, Schedules, Exhibits, subsections, paragraphs and clauses are insertedas a matter of convenience only and shall not affect the constructions of anyprovisions hereof and (xi) all obligations of the Mortgagor hereunder shall besatisfied by the Mortgagor at the Mortgagor’s sole cost and expense.

##  

## SECTION 1.3  Resolution of Drafting Ambiguities.  The Mortgagor acknowledges and agrees that itwas represented by counsel in connection with the execution and deliveryhereof, that it and its counsel reviewed and participated in the preparationand negotiation hereof and that any rule of construction to the effect thatambiguities are to be resolved against the drafting party (i.e.,Mortgagee) shall not be employed in the interpretation hereof.

##  

# ARTICLE II

 

# GRANTS AND SECUREDOBLIGATIONS

 

## SECTION 2.1  Grant of Mortgaged Property.  The Mortgagor hereby grants, mortgages,bargains, sells, assigns and conveys to the Mortgagee (for its benefit and forthe benefit of the other Secured Parties), and hereby grants to the Mortgagee(for its benefit and for the benefit of the other Secured Parties), a securityinterest in and upon all of the Mortgagor’s estate, right, title and interestin, to and under the following property, whether now owned or held or hereafteracquired from time to time (collectively, the “Mortgaged Property”):

 

##### (i)            Mortgaged Lease;

#####  

##### (ii)           Leasehold Premises;

#####  

##### (iii)          Leases;

#####  

##### (iiiv)        Rents;

#####  

##### (v)           Permits;

#####  

##### (ivi)         Contracts;

 

(vii)         Development Agreement;

 

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##### (vii)         Records; and

 

##### (ix)           Proceeds.

 

Notwithstanding the foregoing provisions of this Section 2.1,Mortgaged Property shall not include a grant of any of the Mortgagor’s right,title or interest in (i) any Contract to which the Mortgagor is a party or anyof its rights or interests thereunder (other than (x) the right to receive anypayment of money (including without limitation accounts, general intangiblesand payment intangibles (each as defined in the UCC) or any other rightsreferred to in Sections 9-406(f), 9-407(a) or 9-408(a) of the UCC and (y) anyproceeds, substitutions or replacements thereof) to the extent, but only to theextent, that such a grant would, under the terms of such Contract, result in abreach or termination of the terms of, or constitute a default under ortermination of, such Contract and (ii) any Permit to the extent, but only tothe extent, that such grant shall constitute or result in abandonment,invalidation or rendering unenforceable any right, title or interest of the Mortgagortherein; provided, however, that at such time as any Contract orPermit described in clauses (i) and (ii) of this sentence is no longer subjectto such restriction, such applicable Contract or Permit shall (without any actor delivery by any Person) constitute Mortgaged Property hereunder.

 

TO HAVE AND TO HOLD the Mortgaged Property, togetherwith all estate, right, title and interest of the Mortgagor and anyone claimingby, through or under the Mortgagor in and to the Mortgaged Property and allrights and appurtenances relating thereto, unto the Mortgagee, its successorsand assigns, for the purpose of securing the payment and performance in full ofall the Secured Obligations.

 

SECTION 2.2  Collateral Assignment and Pledge ofMortgagor’s Interest as Additional Security.  As additional collateral security for theprompt and punctual payment and satisfaction of the Secured Obligations, andall additional advances that the Mortgagee may make on the Mortgagor’s behalfpursuant to this Mortgage, together with interest thereon as provided herein,the Mortgagor hereby assigns, pledges and grants to the Mortgagee (for itsbenefit and for the benefit of the other Secured Parties), a continuingsecurity interest in and to all of the Mortgagor’s estate, right, title,interest, claim and demand, as Landlord, under any and all of the Leasesincluding, without limitation, the following (such assigned rights, the “Mortgagor’sInterest”):

 

##### (i)            theimmediate and continuing right to receive and collect Rents payable by theTenants pursuant to the Leases;

#####  

##### (ii)           allclaims, rights, powers, privileges and remedies of the Mortgagor, whetherprovided for in the Leases or arising by statute or at law or in equity orotherwise, consequent on any failure on the part of the Tenants to perform orcomply with any term of the Leases including damages or other amounts payableto the Mortgagor as a result of such failure;

#####  

##### (iii)          allrights to take all actions upon the happening of a default under the Leases asshall be permitted by the Leases or by law including, without limitation, thecommencement, conduct and consummation of proceeding at law or in equity; and

 

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##### (iv)          thefull power and authority, in the name of the Mortgagor or otherwise, toenforce, collect, receive and receipt for any and all of the foregoing and totake all other actions whatsoever which the Mortgagor, as Landlord, is or maybe entitled to take under the Leases.

#####  

## SECTION 2.3  Secured Obligations.  This Mortgage secures, and the MortgagedProperty is collateral security for, the payment and performance in full whendue of the Secured Obligations.

##  

SECTION 2.4  Mortgage Securing Future Indebtedness.  This Mortgage has been executed by Mortgagorpursuant to Article 3298 of the Louisiana Civil Code for the purpose ofsecuring the Mortgagor’s indebtedness (including, without limitation, theSecured Obligations) that may now be existing or that may arise in the futureas provided herein and in the Indenture, with the preferences and prioritiesprovided under applicable Louisiana law. This Mortgage shall be further entitled to the preferences andpriorities as provided under the Louisiana Private Works Act (La. R.S. 9:4801,et seq.).  However, nothing under thisMortgage shall be construed as limiting the duration of this Mortgage or thepurpose or purposes for which the Mortgagor’s indebtedness (including, withoutlimitation, the Secured Obligations) may be requested or extended.  The Mortgagor’s additional indebtedness will automaticallybe secured by this Mortgage without the necessity that the Mortgagor agrees orconsents to such a result at the time additional indebtedness is made and thatthe note or notes evidencing such additional indebtedness reference the factthat such notes are secured by this Mortgage. The Mortgagor understands that the Mortgagor may not subsequently have achange of mind and insist that the Mortgagor’s additional indebtedness not besecured by this Mortgage unless the Mortgagee specifically agrees to such arequest in writing.

 

## SECTION 2.5  No Release.  Nothing set forth in this Mortgage shallrelieve the Mortgagor from the performance of any term, covenant, condition oragreement on the Mortgagor’s part to be performed or observed under or in respectof any of the Mortgaged Property or from any liability to any Person under orin respect of any of the Mortgaged Property or shall impose any obligation onthe Mortgagee or any other Secured Party to perform or observe any such term,covenant, condition or agreement on the Mortgagor’s part to be so performed orobserved or shall impose any liability on the Mortgagee or any other SecuredParty for any act or omission on the part of the Mortgagor relating thereto orfor any breach of any representation or warranty on the part of the Mortgagorcontained in this Mortgage, the Indenture, the Notes or the CollateralDocuments, or under or in respect of the Mortgaged Property or made inconnection herewith or therewith.  Theobligations of the Mortgagor contained in this Section 2.5 shallsurvive the termination hereof and the discharge of the Mortgagor’s otherobligations under this Mortgage and the Indenture, the Notes and the CollateralDocuments.

 

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# ARTICLE III

 

# REPRESENTATIONS ANDWARRANTIES OF MORTGAGOR

 

## SECTION 3.1  Authority and Validity.

 

## The Mortgagor represents and warrants that as of the date hereof:

 

##### (i)            itis duly organized or formed, validly existing and, if applicable, in goodstanding under the laws of the jurisdiction of its organization;

#####  

##### (ii)           itis duly qualified to transact business and is in good standing in the state inwhich the Mortgaged Property is located;

#####  

##### (iii)          ithas full corporate or other organizational power and lawful authority to executeand deliver this Mortgage and to mortgage and grant a Lien on and securityinterest in the Mortgaged Property and otherwise assign the Mortgagor’sInterest and otherwise perform its obligations as contemplated herein, and allcorporate and governmental actions, consents, authorizations and approvalsnecessary or required therefor have been duly and effectively taken orobtained; and

#####  

##### (iv)          thisMortgage is a legal, valid and binding obligation of the Mortgagor, enforceableagainst the Mortgagor in accordance with its terms, except as enforceabilitymay be limited by applicable bankruptcy, insolvency or similar laws affectingthe enforcement of creditors’ rights generally or by equitable principlesrelating to enforceability.

#####  

## SECTION 3.2  Warranty of Title.  The Mortgagor represents and warrants that:

##  

##### (i)            itowns the tenant’s interest in the Mortgaged Lease and has a valid leaseholdinterest in the Leasehold Premises and the Landlord’s interest and estate underor in respect of the Leases and good title to the interest it purports to ownor hold in and to each of the Permits, the Contracts and the Records, in eachcase subject to no Liens, except for Permitted Collateral Liens;

#####  

##### (ii)           theMortgaged Lease (a) is a valid and subsisting lease, superior and paramount toall other leases respecting the Leasehold Premises, (b) is in full force andeffect and no default (nor any event which, with notice or lapse of time orboth, would constitute such a default) has occurred or is continuing under theMortgaged Lease and (c) is not subject to any defenses, offsets orcounterclaims;

#####  

##### (iii)          therehave been no renewals or extensions of or supplements, modifications oramendments to the Mortgaged Lease not previously disclosed to the Mortgagee

#####  

##### (iiiv)        itis in actual possession of the Leasehold Premises, subject to the rights of (i)the Tenants under the Leases identified on Exhibit C and (ii) Jackpot under theDevelopment Agreement and the Assignment Agreement;

 

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##### (v)           it hasgood title to the interest it purports to own or hold in and to all rights andappurtenances to or that constitute a portion of the Mortgaged Property, exceptfor Permitted Collateral Liens;

#####  

##### (ivi)         itis in compliance with each term, condition and provision of any obligation ofthe Mortgagor which is secured by the Mortgaged Property or the noncompliancewith which would result in a Property Material Adverse Effect;

#####  

##### (vi)          thisMortgage creates and constitutes a valid and enforceable first priority Lien onthe Mortgaged Property subject to Permitted Collateral Liens, and, to theextent any of the Mortgaged Property shall consist of Fixtures, a firstpriority security interest in the Fixtures, which first priority Lien and firstpriority security interest are subject only to Permitted Collateral Liens; and

#####  

(viii)        theAssignment grants to Jackpot certain rights of reversion in the event of adefault under the Assignment, the Mortgaged Lease or the Development Agreement.

 

## SECTION 3.3  Condition of Mortgaged Property.  The Mortgagor represents and warrants that:

##  

##### (i)            therehas been issued and there remains in full force and effect subject to norevocation, suspension, forfeiture or modification, each and every Permitnecessary for the present use, operation and occupancy of the LeaseholdPremises by the Mortgagor and its Tenants and the conduct of their respectivebusinesses and all required zoning, building code, land use, environmental andother similar Permits, except where the failure to be so issued and to be infull force and effect would not result in a Property Material Adverse Effect;

#####  

##### (ii)           theLeasehold Premises and the present and contemplated use and occupancy thereofcomply with all applicable zoning ordinances, building codes, land use laws, setbackor other development and/or use requirements of Governmental Authorities exceptwhere such noncompliance would not result in a Property Material AdverseEffect;

#####  

##### (iii)          theLeasehold Premises are served by all utilities (including, without limitation,water and sewer systems) necessary for the present use thereof, and all utilityservices are provided by public or private utilities and the Leasehold Premiseshave accepted or are equipped to accept such utility services and the Mortgagorhas not received notice of termination of such utility service, except wherethe failure to be so served would not result in a Property Material AdverseEffect;

#####  

##### (iv)          theMortgagor has access to the Leasehold Premises from roads sufficient to allowthe Mortgagor and its Tenants and invitees to conduct their respectivebusinesses at the Leasehold Premises in accordance with sound commercialpractices and the Mortgagor has not received notice of termination of suchaccess, except where the failure to have such access would not result in aProperty Material Adverse Effect;

 

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##### (v)           theMortgagor has not received notice of any Taking or the commencement or pendencyof any action or proceeding therefor, other than such Takings as would notresult in a Property Material Adverse Effect;

#####  

##### (vi)          therehas not occurred any Destruction of the Leasehold Premises or any portionthereof as a result of any fire or other casualty that, as of the date hereof,has not been repaired in all material respects, other than such Destruction aswould not have a Property Material Adverse Effect;

#####  

##### (vii)         thereare no disputes regarding boundary lines, location, encroachments or possessionof any portions of the Mortgaged Property and no state of facts exists whichcould give rise to any such claim other than such disputes as would not resultin a Property Material Adverse Effect;

#####  

##### (viii)        allliquid and solid waste disposal, septic and sewer systems located on theLeasehold Premises are in a good and safe condition and repair and incompliance with all Requirements of Law, except where the failure to so complywould not result in a Property Material Adverse Effect;

#####  

##### (ix)           noportion of the Leasehold Premises is located in an area identified by theFederal Emergency Management Agency or any successor thereto as an area havingspecial flood hazards pursuant to the Flood Insurance Acts or, if any portionof the Leasehold Premises is located within such area, the Mortgagor hasobtained the insurance prescribed in Article VIII hereof;

#####  

##### (x)            thereare no options or rights of first refusal to purchase or acquire all or anyportion of the Mortgaged Property, other than such options or rights of firstrefusal as would not result in a Property Material Adverse Effect.

#####  

## SECTION 3.4  Leases.  The Mortgagor represents and warrants that asof the date hereof:

##  

##### (i)            theLeases identified in Schedule C attached hereto are the only Leasesin existence on the date hereof relating to the Leasehold Premises;

#####  

##### (ii)           truecopies of such Leases have been previously delivered to the Mortgagee and thereare no agreements with any Tenant under such Leases other than those agreementsexpressly set forth therein;

#####  

##### (iii)          theMortgagor is the sole owner of all of the Mortgagor’s Interest in such Leases;

#####  

##### (iv)          eachof such Leases is in full force and effect, constitutes a legal, valid andbinding obligation of the Mortgagor and the applicable Tenant thereunder, andis enforceable against the Mortgagor and such Tenant in accordance with itsterms, except as enforceability may be limited by applicable bankruptcy,insolvency or similar laws affecting the enforcement of creditors’ rightsgenerally or by equitable principles relating to enforceability;

 

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##### (v)           thereis no default under any of such Leases and there is existing no condition whichwith the giving of notice or passage of time or both would cause a defaultthereunder;

#####  

##### (vi)          allRents due under such Leases have been paid in full;

#####  

##### (vii)         noneof the Rents reserved under such Leases have been assigned or otherwise pledgedor hypothecated except in favor of the Mortgagee pursuant to the provisionshereof;

#####  

##### (viii)        noneof the Rents (other than any security deposit collected in accordance with theprovisions of the applicable Lease) have been collected for more than one (1)month in advance;

#####  

##### (ix)           thereexist no offsets or defenses to the payment of any portion of the Rents and theMortgagor owes no monetary obligation to any Tenant under any such Lease,excepting only obligations for the payment of utilities used by the Mortgagorin any of the premises subject to the Leases identified in Exhibit C;

#####  

##### (x)            theMortgagor has received no notice from any Tenant challenging the validity orenforceability of any such Lease;

#####  

##### (xi)           nosuch Lease contains any option to purchase, right of first refusal to purchase,right of first refusal to relet, or any other similar provision; and

#####  

##### (xii)          eachsuch Lease is subordinate to this Mortgage either by law,  pursuant to its terms or pursuant to arecordable Subordination Agreement.

#####  

## SECTION 3.5  Insurance.  The Mortgagor represents and warrants that,except where the failure of clauses (i), (ii) or (iii) hereof to be true wouldnot have a Property Material Adverse Effect, (i) the Leasehold Premises and theuse, occupancy and operation thereof comply with all Insurance Requirements andthere exists no default under any Insurance Requirement, (ii) all premiums dueand payable with respect to the Insurance Policies have been paid,(iii) all Insurance Policies are in full force and effect and theMortgagor has not received notice of violation or cancellation thereof and(iv) all insurance certificates required pursuant to the Indenture havebeen delivered to the Mortgagee.

##  

SECTION 3.6  Charges.  The Mortgagor represents and warrants thatall Charges imposed upon or assessed against the Mortgagor’s interest in theMortgaged Property in accordance with the terms of the Mortgaged Lease havebeen paid and discharged by the Mortgagor except to the extent such Chargesconstitute a Lien not yet due and payable or to the extent such Charges arebeing contested in accordance with Section 9.1 hereof.

 

SECTION 3.7  Environmental.  The Mortgagor represents and warrants that:

 

##### (i)            ithas obtained all Permits which are necessary with respect to the ownership andoperation of its business and the Mortgaged Property under any and allapplicable Environmental Laws and is in compliance with all terms andconditions thereof, except where the failure so to obtain or to be incompliance would not result in a Property Material Adverse Effect;

 

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##### (ii)           itis in compliance with any and all applicable Environmental Laws including,without limitation, all other limitations, restrictions, conditions, standards,prohibitions, requirements, obligations, schedules and timetables contained inthe Environmental Laws, except where the failure so to be in compliance wouldnot result in a Property Material Adverse Effect;

#####  

##### (iii)          thereis no civil, criminal or administrative action, suit, demand, claim, hearing,notice of violation, investigation, proceeding, notice of demand letter pendingor threatened against it or any Affiliate under the Environmental Laws whichwould result in a fine, penalty or other cost or expense other than suchinstances that would not result in a Property Material Adverse Effect; and

#####  

##### (iv)          thereare no past or present events, conditions, circumstances, activities,practices, incidents, actions or plans which may interfere with or preventcompliance with the Environmental Laws, or which may give rise to any commonlaw or legal liability including, without limitation, liability under theComprehensive Environmental Response, Compensation and Liability Act of 1980,as amended, or any other Environmental Law or related common law theory orotherwise form the basis of any claim, action, demand, suit, proceeding,hearing or notice of violation, study or investigation, based on or related tothe manufacture, processing, distribution, use, generation, treatment, storage,disposal, transport or handling, or the emission, discharge, release orthreatened release into the environment, of any Hazardous Materials which wouldresult in a fine, penalty or other cost or expense other than such instancesthat would not result in a Property Material Adverse Effect .

#####  

## SECTION 3.8  No Conflicts, Consents, etc.  Neither the execution and delivery hereof bythe Mortgagor nor the consummation of the transactions herein contemplated northe fulfillment of the terms hereof (i) violates the terms of any agreement,indenture, mortgage, deed of trust, equipment lease, instrument or otherdocument to which the Mortgagor is a party, or by which it may be bound or towhich any of its properties or assets may be subject, (ii) conflicts with anyRequirement of Law applicable to the Mortgagor or its property or (iii) resultsin or requires the creation or imposition of any Lien (other than the Liencontemplated hereby) upon or with respect to any of the Mortgaged Property,except where such violation, conflict, creation or imposition would not have aProperty Material Adverse Effect.  Noconsent of any party (including, without limitation, equityholders or creditorsof the Mortgagor) and no consent, authorization, approval, license or otheraction by, and no notice to or filing with, any Governmental Authority orregulatory body or other Person (other than with respect to any requiredPermits) is required for (i) the granting of a mortgage Lien on andsecurity interest in the Mortgaged Property by the Mortgagor granted by itpursuant to this Mortgage or for the execution, delivery or performance hereofby the Mortgagor except for the filing of this Mortgage and the other filingscontemplated hereby or (ii) the exercise by the Mortgagee of the remediesin respect of the Mortgaged Property pursuant to this Mortgage other than thoserequired by law in connection with the exercise of the applicable remedy.

##  

SECTION 3.9  Benefit to the Mortgagor.  The Mortgagor represents and warrants that itwill receive substantial benefit as a result of the execution, delivery andperformance of the Indenture, the Notes and the Collateral Documents.

 

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# ARTICLE IV

#  

# CERTAIN COVENANTS OFMORTGAGOR

#  

## SECTION 4.1  Preservation of Corporate Existence.  The Mortgagor shall:

##  

##### (i)            preserveand maintain in full force and effect its existence and good standing under thelaws of the jurisdiction of its organization;

#####  

##### (ii)           preserveand maintain in full force and effect its qualification to transact businessand good standing in the state in which the Mortgaged Property is located; and

#####  

##### (iii)          preserveand maintain in full force and effect all consents, authorizations and approvalsnecessary or required of any Governmental Authority or any other Personrelating to the execution, delivery and performance hereof, except where thefailure to do so would not result in a Property Material Adverse Effect.

#####  

## SECTION 4.2  Title.  The Mortgagor shall:

##  

##### (i)            (A)keep in effect all material rights and appurtenances to or that constitute apart of the Mortgaged Property and (B) protect, preserve and defend itsinterest in the Mortgaged Property and title thereto, except against PermittedCollateral Liens (other than the Lien created by this Mortgage);

#####  

##### (ii)           (A)comply, in all material respects, with each of the terms, conditions andprovisions of any obligation of the Mortgagor which is secured by the MortgagedProperty, except where the failure to so comply would not result in a PropertyMaterial Adverse Effect, or the noncompliance with which may result in theimposition of a Lien on the Mortgaged Property, (B) forever warrant anddefend to the Mortgagee the Lien and security interests created and evidencedhereby and the validity and priority hereof in any action or proceeding againstthe claims of any and all Persons whomsoever affecting or purporting to affectthe Mortgaged Property or any of the rights of the Mortgagee hereunder, exceptagainst Permitted Collateral Liens (other than the Lien of this Mortgage), and(C) maintain a valid and enforceable first priority Lien, except forPermitted Collateral Liens (other than the Lien of this Mortgage) on theMortgaged Property and, to the extent any of the Mortgaged Property shallconsist of Fixtures, a first priority security interest in the MortgagedProperty, which first priority Lien and security interest shall be subject onlyto Permitted Collateral Liens; and

#####  

##### (iii)          immediatelyupon obtaining knowledge of the pendency of any proceedings for the eviction ofthe Mortgagor from the Mortgaged Property or any part thereof by paramounttitle or otherwise questioning the Mortgagor’s right, title and interest in, toand under the Mortgaged Property as warranted in this Mortgage, or of anycondition that could give rise to any such proceedings, notify the Mortgageethereof.  The Mortgagee may participatein such proceedings and the Mortgagor will deliver or cause to be delivered tothe Mortgagee all instruments requested by the Mortgagee to permit suchparticipation.  In any such proceedings,the Mortgagee

 

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##### may be represented by counsel reasonably satisfactoryto the Mortgagee at the reasonable expense of the Mortgagor.  If, upon the resolution of such proceedings,the Mortgagor shall suffer a loss of the Mortgaged Property or any part thereofor interest therein and title insurance proceeds shall be payable in connectiontherewith, such proceeds are hereby assigned to and shall be paid to theMortgagee for deposit into the Collateral Account and shall be applied in themanner applicable to Net Loss Proceeds in accordance with the provisions ofSections 4.16, 10.05(c) and 11.02 of the Indenture.

#####  

## SECTION 4.3  Maintenance and Use of Mortgaged Property;Alterations.

##  

##### (i)            Maintenance.  The Mortgagor shall cause the representationsand warranties set forth in Section 3.3 hereof to continue to betrue in each and every respect and shall pay or cause to be paid when due allCharges imposed upon or assessed against the Mortgagor’s interest in theMortgaged Property in accordance with the terms of the Mortgaged Lease, costsand expenses relating thereto, other than such Charges being contested inaccordance with Section 9.1 hereof.

#####  

##### (ii)           Maintenanceof Leasehold Premises.  The Mortgagorshall not commit or suffer any waste on the Leasehold Premises.  To the extent that the Mortgagor is permittedto do so under the Mortgaged Lease, the Mortgagor shall, at all times, maintainthe Leasehold Premises in good working order, condition and repair, reasonablewear and tear excepted, and shall use commercially reasonable efforts to makeor cause to be made all repairs, structural (to the extent permitted under theMortgaged Lease) or nonstructural, which are necessary or appropriate in theconduct of the Mortgagor’s business.  TheMortgagor shall not, except as permitted in Section 4.3(iii)hereof, alter the occupancy or use of all or any portion of the LeaseholdPremises without the prior written consent of the Mortgagee, which consentshall not be unreasonably withheld. Except to the extent permitted pursuant to the provisions of Section 4.3(iii)hereof, the Mortgagor shall not remove, demolish or alter the structural characterof any Improvement now or hereafter erected upon all or any portion of theLeasehold Premises, or permit any such removal, demolition or alteration,without the prior written consent of the Mortgagee, which consent shall not beunreasonably withheld.

#####  

##### (iii)          Alterations.  The Mortgagor shall not, without the priorwritten consent of the Mortgagee (which consent shall not be unreasonablywithheld) and the Lessor (if required under the Mortgaged Lease) make anyAlteration to the Leasehold Premises except as permitted by Sections 10.04 and10.06 of the Indenture.  Whether or notthe making of any Alteration shall require the consent of the Mortgageepursuant to the immediately preceding sentence, the Mortgagor shall(A) complete each Alteration promptly, in a good and workmanlike mannerand in compliance, in all material respects, with all applicable local laws,ordinances and requirements and (B) pay when due all claims for laborperformed and materials furnished in connection with such Alteration, unlesscontested in accordance with the provisions of Article IX hereof.

#####  

##### (iv)          Permits.  To the extent that the Mortgagor is permittedto do so under the Mortgaged Lease, the Mortgagor shall maintain, or cause tobe maintained, in full force and effect all Permits contemplated by and subjectto Section 3.3(i) hereof. Unless and to the extent contested by the Mortgagor in accordance withthe provisions of Article IX hereof, the Mortgagor shall comply, inall material respects, with all requirements set forth in the Permits and allRequirements of Law applicable to

 

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##### all or any portionof the Mortgaged Property or the condition, use or occupancy of all or anyportion thereof or any recorded deed of restriction, declaration, covenantrunning with the land or otherwise, now or hereafter in force, subject to theprovisions of Section 3.3 hereof.

#####  

##### (v)           Zoning.  The Mortgagor shall not initiate, join in orconsent to any change in the zoning or any other permitted use classificationof the Leasehold Premises without the prior written consent of the Mortgagee,which consent shall not be unreasonably withheld.

#####  

## SECTION 4.4  Notices Regarding Certain Defaults.  The Mortgagor shall, promptly upon receipt ofany written notice regarding (i) any default by the Mortgagor relating tothe Mortgaged Property or any portion thereof or (ii) the failure todischarge any of Mortgagor’s obligations with respect to the Mortgaged Propertyor any portion thereof described herein, furnish a copy of such notice to theMortgagee.

##  

## SECTION 4.5  Access to Mortgaged Property, Books andRecords; Other Information.  Upon request to the Mortgagor, the Mortgagee,its agents, accountants and attorneys shall have full and free access to visitand inspect, as applicable, during normal business hours and such otherreasonable time as may be requested by the Mortgagee, all of the MortgagedProperty including, without limitation, all of the books, correspondence andrecords of the Mortgagor relating thereto.  The Mortgagee and its representatives mayexamine the same, take extracts therefrom and make photocopies thereof.  The Mortgagor shall, at any and all times,within a reasonable time after written request by the Mortgagee, furnish orcause to be furnished to the Mortgagee, in such manner and in such detail asmay be reasonably requested by the Mortgagee, additional information withrespect to the Mortgaged Property.

##  

## SECTION 4.6  Limitation on Liens; Transfer Restrictions.  The Mortgagor may not, without the priorwritten consent of the Mortgagee, further mortgage, encumber, hypothecate,sell, convey or assign all or any part of the Mortgaged Property or suffer orallow any of the foregoing to occur by operation of law or otherwise; provided,however, that the Mortgagor shall have the right to (1) sell, convey orassign all or any portion of the Mortgaged Property in accordance with theprovisions of the Indenture and (2) suffer to exist the following Liens inrespect of the Mortgaged Property: (i) Prior Liens (but not extensions,amendments, supplements or replacements of Prior Liens unless (A) extended,amended, supplemented or replaced in a manner permitted by the Indenture or (B)consented to by the Mortgagee, which consent shall not be unreasonably withheld),(ii) the Lien and security interest created by this Mortgage or any otherCollateral Document, (iii) Contested Liens, (iv) Liens described in clause(9) of the definition of Permitted Liens (provided, however, thatsuch Liens shall not extend to or cover any Mortgaged Property other thanequipment subject to Capital Leases, Obligations or Purchase Money Obligationsincurred in accordance with the provisions of the Indenture) or clause (4) ofthe definition of Permitted Liens, (v) Leases to the extent permitted pursuantto the provisions of Article V hereof and (vi) rights, titleand interest of the Lessor under the Mortgaged Lease and any Liens against theLessor’s interest in the Land and the Leasehold Premises (the Liens describedin clauses (i) through (vi) of this sentence, collectively, “PermittedCollateral Liens”).

 

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## SECTION 4.7  Environmental.

 

##### (i)            HazardousMaterials.  Except where the failureto do so would not result in a Property Material Adverse Effect, the Mortgagorshall (A) comply with any and all present and future Environmental Lawsapplicable to the Mortgaged Property, (B) not release, store, treat,handle, generate, discharge or dispose of any Hazardous Materials at, on, underor from the Mortgaged Property in violation of or in a manner that could resultin any material liability under any present and future Environmental Law and(C) take all necessary steps to initiate and expeditiously complete allremedial, corrective and other action to eliminate any such effect.  In the event the Mortgagor fails to complywith the covenants in the preceding sentence, the Mortgagee may, in addition toany other remedies set forth herein, as agent for the Mortgagor and at theMortgagor’s sole cost and expense, cause any remediation, removal or responseaction relating to Hazardous Materials required by applicable EnvironmentalLaws to be taken and the Mortgagor shall provide to the Mortgagee and itsagents and employees access to the Mortgaged Property for such purpose.  Any reasonable costs or expenses incurred bythe Mortgagee for such purpose shall be immediately due and payable by theMortgagor and shall bear interest at the Default Rate. The Mortgagee shall havethe right at any time when an Event of Default shall have occurred and becontinuing and at such other times when a potential violation of any present orfuture Environmental Law exists which in the Mortgagee’s reasonable judgmentcould result in any material liability or obligation under such EnvironmentalLaw, at the sole cost and expense of the Mortgagor, upon the prior writtenconsent of the Lessor to the extent required under the Mortgaged Lease, toconduct an environmental audit of the Mortgaged Property by such persons orfirms appointed by the Mortgagee, and the Mortgagor shall cooperate in allrespects in the conduct of such environmental audit, including, withoutlimitation, by providing access to the Mortgaged Property and to all records inthe Mortgagor’s or any of its agents’ possession relating thereto.  To the extent that any such environmentalaudit identifies conditions which in the Mortgagee’s reasonable judgment wouldresult in any material liability or obligation under any present or futureEnvironmental Law, the Mortgagor agrees (to the extent caused by the Mortgagor)to expeditiously correct, or cause the correction of, any such violation orrespond to conditions giving rise to such liability or obligations in a mannerwhich complies in all material respects with the Environmental Laws andmitigates associated health and environmental risks.  The Mortgagor shall indemnify and hold theMortgagee and each of the other Secured Parties harmless from and against allloss, cost, damage or reasonable expense (including, without limitation,reasonable attorneys’ and consultants’ fees and disbursements) that theMortgagee or any other Secured Party may sustain by reason of the assertionagainst the Mortgagee or any Secured Party by any party of any claim relatingto such Hazardous Materials on, under or from the Mortgaged Property or actionstaken with respect thereto as authorized hereunder, except to the extentarising from the gross negligence or willful misconduct of the Mortgagee or anyother Secured Party.  The foregoingindemnification shall survive repayment of all Secured Obligations and anyrelease or assignment hereof.

#####  

##### (ii)           Asbestos.The Mortgagor shall not install nor permit to be installed in or removed fromthe Mortgaged Property, asbestos or any asbestos-containing material(collectively, “ACM”) except in compliance, in all material respects,with all applicable Environmental Laws, and with respect to any ACM currentlypresent in the Mortgaged Property, the Mortgagor shall promptly either(A) to the extent permitted by the Mortgaged Lease, remove any ACM whichsuch Environmental Laws require to be removed or (B) otherwise comply, inall material respects, with such Environmental Laws with respect to such ACM,all at the Mortgagor’s sole cost and expense. If the Mortgagor shall fail so to remove any

 

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##### ACM or otherwisecomply, in all material respects, with such laws or regulations, the Mortgageemay, in addition to any other remedies set forth herein, take reasonable or necessarysteps to eliminate any ACM from the Mortgaged Property or otherwise comply, inall material respects, with applicable law, regulations or orders and theMortgagor shall provide to the Mortgagee and its agents and employees access tothe Mortgaged Property for such purpose. Any reasonable costs or expenses incurred by the Mortgagee for suchpurpose shall be immediately due and payable by the Mortgagor and bear interestat the Default Rate.  The Mortgagor shallindemnify and hold the Mortgagee and the other Secured Parties harmless fromand against all loss, cost, damage and expense (including, without limitation,reasonable attorneys’ and consultants’ fees and disbursements) that theMortgagee or the other Secured Parties may sustain, as a result of the presenceof any ACM and any removal thereof from the Leasehold Premises by the Mortgageeor compliance with all applicable Environmental Laws, except to the extentarising from the gross negligence or willful misconduct of the Mortgagee or anyother Secured Party.  The foregoingindemnification shall survive repayment of all Secured Obligations and anyrelease or assignment hereof.

#####  

## SECTION 4.8  Estoppel Certificates.  The Mortgagor shall, from time to time, uponthirty (30) days’ prior written reasonable request of the Mortgagee, execute,acknowledge and deliver to the Mortgagee an Officers’ Certificate stating thatthis Mortgage, the Indenture, the Notes and the Collateral Documents areunmodified and in full force and effect (or, if there have been modifications,that this Mortgage, the Indenture, the Notes and the Collateral Documents, asapplicable, is or are in full force and effect as modified and setting forthsuch modifications) and stating the date to which principal and interest havebeen paid on the Notes.

 

# ARTICLE V

 

# LEASES

 

## SECTION 5.1  Mortgagor’s Affirmative Covenants withRespect to Leases.  With respect toeach Lease, the Mortgagor shall:

##  

##### (i)            observeand perform, in all material respects, all the obligations imposed upon theLandlord under such Lease;

#####  

##### (ii)           promptlysend copies to the Mortgagee of all notices of default which the Mortgagorshall send or receive thereunder; and

#####  

##### (iii)          enforceall of the terms, covenants and conditions contained in such Lease upon thepart of the Tenant thereunder to be observed or performed to the extent itwould be commercially reasonable to do so.

#####  

## SECTION 5.2  Mortgagor’s Negative Covenants withRespect to Leases.  With respect toeach Lease, the Mortgagor shall not, without the prior written consent of theMortgagee, which consent shall not be unreasonably withheld:

 

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##### (i)            receiveor collect, or permit the receipt or collection of, any Rent under such Leasemore than one (1) month in advance of the respective period in respect of whichsuch Rent is to accrue, except:

#####  

###### (A)                              in connection with theexecution and delivery of such Lease (or of any amendment to such Lease), Rentthereunder may be collected and received in advance in an amount not in excessof one (1) month’s Rent;

######  

###### (B)                                the amount held byLandlord as a reasonable security deposit thereunder; and

######  

###### (C)                                any amount received andcollected for escalation and other charges in accordance with the terms of suchLease;

######  

##### (ii)           assign,transfer or hypothecate (other than to the Mortgagee hereunder) any Rent undersuch Lease whether then due or to accrue in the future or the interest of theMortgagor as Landlord under such Lease;

#####  

##### (iii)          enterinto any amendment or modification of such Lease which would materiallydecrease the unexpired term thereof or decrease the amount of the Rents payablethereunder or materially impair the value or utility of the Mortgaged Propertyor the security provided by this Mortgage;

#####  

##### (iv)          terminate(whether by exercising any contractual right of the Mortgagor to recaptureleased space or otherwise) or permit the termination of such Lease or acceptsurrender of all or any portion of the space demised under such Lease prior tothe end of the term thereof or accept assignment of such Lease to the Mortgagorunless:

#####  

###### (A)                              the Tenant under suchLease has not paid the equivalent of two (2) months’ Rent and the Mortgagor hasmade reasonable efforts to collect such Rent; and

######  

###### (B)                                it would becommercially reasonable to terminate such Lease; or

######  

##### (v)           waive,excuse, condone or in any manner discharge or release any Tenants of or fromthe material obligations of such Tenants under their respective Leases orguarantors of Tenants from any material obligations under any guarantees of theLeases except as the same would be done by a Prudent Operator with due regardfor the security afforded the Mortgagee thereby.

#####  

## SECTION 5.3  Additional Requirements with Respect toNew Leases.  In addition to therequirements of Sections 5.1 and 5.2 hereof, the Mortgagor shallnot enter into any Lease after the date hereof unless the Tenant under suchLease has entered into a Subordination Agreement and has otherwise compliedwith the provisions of Section 10.06 of the Indenture.

 

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# ARTICLE VI

#  

# CONCERNING ASSIGNMENT OFLEASES AND RENTS

#  

## SECTION 6.1  Present Assignment; License to theMortgagor.  Section2.2 of this Mortgage constitutes a present, absolute, effective,irrevocable and complete assignment by the Mortgagor to the Mortgagee of theLeases and Rents and the right, subject to applicable law, to collect all sumspayable to the Mortgagor thereunder and apply the same as the Mortgagee may, inits sole discretion, determine to be appropriate (including the payment ofreasonable costs and expenses in connection with the maintenance, operation,improvement, insurance, taxes and upkeep of the Mortgaged Property), which isnot conditioned upon the Mortgagee being in possession of the LeaseholdPremises.  The Mortgagee hereby grants tothe Mortgagor, however, a license to collect and apply the Rents and to enforcethe obligations of Tenants under the Leases. Immediately upon the occurrence of and during the continuance of anyEvent of Default or a Default, the license granted in the immediately precedingsentence shall cease and terminate, with or without any notice, action orproceeding or the intervention of a receiver appointed by a court.

##  

## SECTION 6.2  Collection of Rents by the Mortgagee.

##  

##### (i)            Fromand after the occurrence and during the continuance of an Event of Default or aDefault, any Rents receivable by the Mortgagee hereunder, after payment of allproper costs and expenses as Mortgagee may, in its sole discretion, determineto be appropriate (including the payment of reasonable costs and expenses inconnection with the maintenance, operation, improvement, insurance, taxes andupkeep of the Mortgaged Property), shall be applied to the Secured Obligationsor, at the option of the Mortgagee, shall be held by the Mortgagee as additionalcollateral to secure the performance by the Mortgagor of the SecuredObligations.  The Mortgagee shall beaccountable to the Mortgagor only for Rents actually received by the Mortgagee.  The collection of such Rents and theapplication thereof shall not cure or waive any Event of Default or a Defaultor waive, modify or affect notice of Event of Default or a Default orinvalidate any act done pursuant to such notice.

#####  

##### (ii)           TheMortgagor hereby irrevocably authorizes and directs Tenant under each Lease torely upon and comply with any and all notices or demands from the Mortgagee forpayment of Rents to the Mortgagee and the Mortgagor shall have no claim againstTenant for Rents paid by Tenant to the Mortgagee pursuant to such notice ordemand.

#####  

## SECTION 6.3  No Release.  Neither this Mortgage nor any action orinaction on the part of the Mortgagee shall release any Tenant under any Lease,any guarantor of any Lease or the Mortgagor from any of their respectiveobligations under such Leases or constitute an assumption of any suchobligation on the part of the Mortgagee. No action or failure to act on the part of the Mortgagor shall adverselyaffect or limit the rights of the Mortgagee under this Mortgage or, throughthis Mortgage, under such Leases.  Nothingcontained herein shall operate or be construed to (i) obligate theMortgagee to perform any of the terms, covenants or conditions contained in anyLease or otherwise to impose any obligation upon the Mortgagee with respect tosuch Lease (including, without limitation, any obligation arising out of anycovenant of quiet enjoyment contained in such Lease in the event that Tenantunder such Lease shall have been joined as a party defendant in any action bywhich the estate of such Tenant

 

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## shallbe terminated) or (ii) place upon the Mortgagee any obligation for theoperation, control, care, management or repair of the Leasehold Premises.

##  

## SECTION 6.4  Irrevocable Interest.  All rights, powers and privileges of theMortgagee herein set forth are coupled with an interest and are irrevocable,subject to the terms and conditions hereof, and the Mortgagor shall not takeany action under the Leases or otherwise which is inconsistent with thisMortgage or any of the terms hereof and any such action inconsistent herewithor therewith shall be void.

##  

## SECTION 6.5  Amendment to Leases.  Each Lease, including, without limitation,all amendments, modifications, supplements, replacements, extensions andrenewals thereof, shall continue to be subject to the provisions hereof withoutthe necessity of any further act by any of the parties hereto.

 

# ARTICLE VII

 

# TAXES AND CERTAINSTATUTORY LIENS

 

## SECTION 7.1  Payment of Charges.  Unless and to the extent contested by the Mortgagorin accordance with the provisions of Article IX hereof, theMortgagor shall pay and discharge, or cause to be paid and discharged, fromtime to time when the same shall become due (or within any applicable graceperiod), to the extent such payment and discharge shall be due from theMortgagor pursuant to the terms of the Mortgaged Lease, all Charges subject tothis Article VII.  TheMortgagor shall, upon the Mortgagee’s request, deliver to the Mortgageeevidence of the payment under the Mortgaged Lease of all such Charges.

##  

## SECTION 7.2  Escrow of Taxes.  From and after the occurrence and during thecontinuance of an Event of Default or a Default, at the option and upon therequest of the Mortgagee, the Mortgagor shall deposit with the Mortgagee in anaccount maintained by the Mortgagee (the “Tax Escrow Fund”), on thefirst day of each month, an amount estimated by the Mortgagee to be equal toone-twelfth of the annual real property taxes and other annual Charges requiredto be discharged by the Mortgagor under Section 7.1 hereof.  Such amounts shall be held by the Mortgageewithout interest to the Mortgagor and applied to the payment of the obligationsin respect of which such amounts were deposited, in such priority as theMortgagee shall determine, on or before the respective dates on which suchobligations or any part thereof would become delinquent.  Nothing contained in this Article VIIshall (i) affect any right or remedy of the Mortgagee under any provisionhereof or of any statute or rule of law to pay any such amount as providedabove from its own funds and to add the amount so paid, together with interestat the Default Rate during such time that any amount remains outstanding, tothe Secured Obligations or (ii) relieve the Mortgagor of its obligationsto make or provide for the payment of the annual real property taxes and otherannual Charges required to be discharged by the Mortgagor under Section 7.1hereof.  Notwithstanding the provisionsof this Section 7.2,  no depositwith the Mortgagee in respect of any Charge shall be required if and for solong as deposits in respect of such Charge are made by the Mortgagor to theLessor (or by the Lessor itself) under the Mortgaged Leased; provided, however,at the time of such payment, Mortgagor shall give written notice of the same tothe Mortgagee and; further provided, that such payment shall not be inviolation of any previous written instructions received by the Mortgagor fromthe Mortgagee.

 

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## SECTION 7.3  Certain Statutory Liens.  Unless and to the extent contested by theMortgagor in accordance with the provisions of Article IX hereof,the Mortgagor shall timely pay, or cause to be paid, all lawful claims anddemands of mechanics, materialmen, laborers, government agencies administeringworker’s compensation insurance, old age pensions and social security benefitsand all other claims, judgments, demands or amounts of any nature which relateto the Mortgagor’s (or its successors’ or assigns’) actions at or affecting theMortgaged Property and, if unpaid, would result in, or permit the creation of,a Lien on the Mortgaged Property or any part thereof, or which would result inforfeiture of all or any part of the Mortgaged Property.

##  

## SECTION 7.4  Stamp and Other Taxes.  Unless and to the extent contested by theMortgagor in accordance with the provisions of Article IX hereof,the Mortgagor shall pay any United States documentary stamp taxes, withinterest and fines and penalties, and any mortgage recording taxes, withinterest and fines and penalties, that may hereafter be levied, imposed orassessed under or upon or by reason hereof or the Secured Obligations or anyinstrument or transaction affecting or relating to either thereof and indefault thereof the Mortgagee may advance the same and the amount so advancedshall be payable by the Mortgagor to the Mortgagee in accordance with theprovisions of Section 14.5 hereof.

##  

## SECTION 7.5  Certain Tax Law Changes.  In the event of the passage after the datehereof of any law deducting from the value of real property, for the purpose oftaxation, amounts in respect of any Lien thereon or changing in any way thelaws for the taxation of mortgages or debts secured by mortgages for state orlocal purposes or the manner of the collection of any Charges, and imposing anyCharges, either directly or indirectly, on this Mortgage, the Indenture or anyother Collateral Document, the Mortgagor shall promptly pay to the Mortgageesuch amount or amounts as may be necessary from time to time to pay any suchCharges.

##  

SECTION 7.6  Proceeds of Tax Claim.  In the event that the proceeds of any taxclaim to which Mortgagor is entitled pursuant to the provisions of theMortgaged Lease are paid after the Mortgagee has exercised its right toforeclose the Lien hereof, such proceeds shall be paid to the Mortgagee tosatisfy any deficiency remaining after such foreclosure.  The Mortgagee shall retain its interest inthe proceeds of any tax claim during any redemption period.  Subject to the terms of the Mortgaged Leased,the amount of any such proceeds in excess of any deficiency claim of theMortgagee shall in a prompt manner be released to the Mortgagor.

 

# ARTICLE VIII

#  

# INSURANCE

#  

## SECTION 8.1  Required Insurance Policies and Coverages.  The Mortgagor shall maintain in respect ofthe Leasehold Premises the insurance policies and coverages required underSection 4.19(b) of the Indenture.

##  

## SECTION 8.2  Delivery After Foreclosure.  In the event that the proceeds of anyinsurance claim to which the Mortgagor is entitled pursuant to the provisionsof the Mortgaged Lease are paid after the Mortgagee has exercised its right toforeclose the Lien hereof, such proceeds shall be paid to

 

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the Mortgagee to satisfyany deficiency remaining after such foreclosure.  Mortgagee shall retain its interest in theInsurance Policies required to be maintained pursuant to this Mortgage duringany redemption period. The amount of any such proceeds in excess of anydeficiency claim of the Mortgagee shall be released to the Mortgagor.

 

# ARTICLE IX

#  

# CONTESTING OF PAYMENTS

#  

## SECTION 9.1  Contesting of Taxes and Certain StatutoryLiens.  The Mortgagor may at its ownexpense contest the validity, amount or applicability of any Charges as long asthe contest thereof shall be conducted in accordance with, and permittedpursuant to the provisions of, the Indenture. Notwithstanding the foregoing provisions of this Section 9.1,(i) no contest of any such obligations may be pursued by the Mortgagor (A)if such contest would expose the Mortgagee or any Holder to any possiblecriminal liability or (B) unless the Mortgagor shall have furnished a bondor other security therefor reasonably satisfactory to the Mortgagee or such Holder,as the case may be, including for any additional civil liability for failure tocomply with such obligations and (ii) if at any time payment orperformance of any obligation contested by the Mortgagor pursuant to this Section9.1 shall become necessary to prevent the imminent imposition of remediesbecause of non-payment, the Mortgagor shall pay or perform the same insufficient time to prevent the imposition of remedies in respect of suchdefault or prospective default.

##  

## SECTION 9.2  Contesting of Insurance.  The Mortgagor shall not take any action thatwould reasonably be expected to cause the termination, revocation or denial ofany insurance coverage required to be maintained under this Mortgage or thatwould be the basis for a defense to any claim under any Insurance Policymaintained in respect of the Leasehold Premises and the Mortgagor shallotherwise comply in all respects with all Insurance Requirements in respect ofthe Leasehold Premises; provided, however, that the Mortgagormay, at its own expense and after written notice to the Mortgagee,(i) contest the applicability or enforceability of any such InsuranceRequirements by appropriate legal proceedings, prosecution of which does notconstitute a basis for cancellation or revocation of any insurance coveragerequired under Article VIII hereof or (ii) cause the InsurancePolicy containing any such Insurance Requirement to be replaced by a new policycomplying with the provisions of Article VIII hereof.

##  

# ARTICLE X

#  

# DESTRUCTION, CONDEMNATIONAND RESTORATION

#  

## SECTION 10.1  Destruction.  If there shall occur any Destruction,individually or in the aggregate, in excess of $100,000, the Mortgagor shallpromptly send to the Mortgagee a written notice setting forth the nature andextent of such Destruction.  To theextent permitted under the Mortgaged Lease, the proceeds of any insurancepayable in respect of such Destruction are hereby assigned and shall be paid tothe Mortgagee.  The Net Loss Proceedsarising out of such Destruction, shall be applied in accordance with theprovisions of Sections 4.16, 10.05(c) and 11.02 of the Indenture.

 

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## SECTION 10.2  Condemnation.  If there shall occur any Taking or thecommencement of any proceeding thereof, the Mortgagor shall immediately notifythe Mortgagee upon receiving notice of such Taking or commencement ofproceedings therefor.  The Mortgagee may,at its option, participate in any proceedings or negotiations which mightresult in any Taking, and the Mortgagor shall deliver or cause to be deliveredto the Mortgagee all instruments requested by it to permit suchparticipation.  The Mortgagee may berepresented by counsel reasonably satisfactory to it at the reasonable expenseof the Mortgagor in connection with any such participation.  The Mortgagor shall pay all reasonable fees,costs and expenses incurred by the Mortgagee in connection with any Taking andin seeking and obtaining any award or payment on account thereof.  To the extent permitted under the MortgagedLease, any proceeds, award or payment in respect of any Taking are herebyassigned and shall be paid to the Mortgagee. The Mortgagor shall take all steps necessary to notify the condemningauthority of such assignment.  The NetLoss Proceeds arising out of such Taking, shall be applied in accordance withthe provisions of Sections 4.16, 10.05(c) and 11.02 of the Indenture.

 

# ARTICLE XI

 

# EVENTS OF DEFAULT ANDREMEDIES

 

## SECTION 11.1  Events of Default.  It shall be an Event of Default hereunder ifthere shall have occurred and be continuing an Event of Default under theIndenture.

##  

## SECTION 11.2  Remedies in Case of an Event of Default.  If any Event of Default shall have occurredand be continuing, the Mortgagee may at its option, in addition to any otheraction permitted under this Mortgage or the Indenture or by law, statute or inequity, take one or more of the following actions to the greatest extentpermitted by local law:

##  

##### (i)            bywritten notice to the Issuer and the Mortgagor, declare the entire unpaidamount of the Secured Obligations to be due and payable immediately;

#####  

##### (ii)           personally,or by its agents or attorneys, (A) give notice of such Event of Default tothe Lessor, (B) to the extent permitted by the Mortgaged Lease and the Landlords’ EstoppelCertificate and Agreement Among Interested Parties dated as of even dateherewith, act in all respects as lessee under the Mortgaged Lease andperform on behalf of and for the account of the Mortgagor any of theobligations of lessee thereunder, (C) enter into and upon and takepossession of all or any part of the Leasehold Premises, together with thebooks, records and accounts of the Mortgagor relating thereto, and exclude theMortgagor, its agents and servants wholly therefrom, (D) use, operate,manage and control the Leasehold Premises and conduct the business thereof,(E) maintain and restore the Leasehold Premises, (F) make all necessary orproper repairs, renewals and replacements and such useful Alterations theretoand thereon as the Mortgagee may deem advisable, (G) manage, lease andoperate the Leasehold Premises and carry on the business thereof and exerciseall rights and powers of the Mortgagor with respect thereto either in the nameof the Mortgagor or otherwise or (H) collect and receive all Rents.  The Mortgagee shall be under no liability foror by reason of any such taking of possession, entry,

 

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##### removal or holding, operation or management exceptthat any amounts so received by the Mortgagee shall be applied in accordancewith the provisions of the Indenture;

#####  

##### (iii)          withor without entry, personally or by its agents or attorneys, (A) sell theMortgaged Property and all estate, right, title and interest, claim and demandtherein at one or more sales in one or more parcels, in accordance with theprovisions of Section 11.3 or (B) institute and prosecuteproceedings for the complete or partial foreclosure of the Lien and securityinterests created and evidenced hereby; or

#####  

##### (iv)          takesuch steps to protect and enforce its rights whether by action, suit orproceeding at law or in equity for the specific performance of any covenant,condition or agreement in the Indenture, the Notes and the CollateralDocuments, or in aid of the execution of any power granted in this Mortgage, orfor any foreclosure hereunder, or for the enforcement of any other appropriatelegal or equitable remedy or otherwise as the Mortgagee shall elect.

#####  

## SECTION 11.3  Sale of Mortgaged Property if Event ofDefault Occurs; Proceeds of Sale.

##  

##### (i)            Ifany Event of Default shall have occurred and be continuing, the Mortgagee mayinstitute an action to foreclose this Mortgage or take such other action as maybe permitted and available to the Mortgagee at law or in equity for the enforcementof the Indenture and the Notes and realization on the Mortgaged Property andproceeds thereon through power of sale or to final judgment and executionthereof for the Secured Obligations, and in furtherance thereof the Mortgageemay sell the Mortgaged Property, at such time and place, upon such terms andafter such notice thereof as may be required or permitted by law or statute orin equity.  The Mortgagee may execute anddeliver to the purchaser at such sale a conveyance of all the Mortgagor’sInterest in the Leases and the Mortgaged Property, each of which conveyancesand assignments shall contain recitals as to the Event of Default upon whichthe execution of the power of sale herein granted depends, and the Mortgagorhereby constitutes and appoints the Mortgagee the true and lawful attorney infact of the Mortgagor to make any such recitals, sale, assignment andconveyance, and all of the acts of the Mortgagee as such attorney in fact arehereby ratified and confirmed.  TheMortgagor agrees that such recitals shall be binding and conclusive upon theMortgagor and that any assignment or conveyance to be made by the Mortgageeshall divest the Mortgagor of all right, title, interest, equity and right ofredemption, including any statutory redemption, in and to the MortgagedProperty.  The power and agency herebygranted are coupled with an interest and are irrevocable by death ordissolution, or otherwise, and are in addition to any and all other remedieswhich the Mortgagee may have hereunder, at law or in equity.  So long as the Secured Obligations, or anypart thereof, remain unpaid, the Mortgagor agrees that possession of theMortgaged Property by the Mortgagor, or any person claiming under theMortgagor, shall be as tenant, and, in case of a sale under power or uponforeclosure as provided in this Mortgage, the Mortgagor and any person inpossession under the Mortgagor, as to whose interest such sale was not madesubject, shall, at the option of the purchaser at such sale, then become and betenants holding over, and shall forthwith deliver possession to such purchaser,or be summarily dispossessed in accordance with the laws applicable to tenantsholding over.  One or more exercises ofpowers herein granted shall not extinguish or exhaust such powers, until theentire Mortgaged Property is sold or all amounts secured hereby are paid infull.

 

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##### (ii)           Inthe event of any sale made under or by virtue of this Article XI,the entire principal of, and interest in respect of the Secured Obligations, ifnot previously due and payable, shall, at the option of the Mortgagee,immediately become due and payable, anything in this Mortgage to the contrarynotwithstanding.

#####  

##### (iii)          Theproceeds of any sale made under or by virtue of this Article XI,together with any other sums which then may be held by the Mortgagee under thisMortgage, whether under the provisions of this Article XI orotherwise, shall be applied in accordance with the provisions of the Indenture.

#####  

##### (iv)          TheMortgagee may bid for and acquire the Mortgaged Property or any part thereof atany sale made under or by virtue of this Article XI and, in lieu ofpaying cash therefor, may make settlement for the purchase price by creditingagainst the purchase price the unpaid amounts (whether or not then due andowing) in respect of the Secured Obligations, after deducting from the salesprice the expense of the sale and the reasonable costs of the action orproceedings and any other sums that the Mortgagee is authorized to deduct underthis Mortgage.

#####  

##### (v)           TheMortgagee may adjourn from time to time any sale by it to be made under or byvirtue hereof by announcement at the time and place appointed for such sale orfor such adjourned sale or sales, and, the Mortgagee, without further notice orpublication, may make such sale at the time and place to which the same shallbe so adjourned.

#####  

##### (vi)          Ifthe Leasehold Premises is comprised of more than one parcel of land, theMortgagee may take any of the actions authorized by this Section 11.3 inrespect of any or a number of individual parcels.

#####  

## SECTION 11.4  Additional Remedies in Case of an Event ofDefault.

##  

##### (i)            TheMortgagee shall be entitled to recover judgment as aforesaid either before,after or during the pendency of any proceedings for the enforcement of theprovisions hereof, and the right of the Mortgagee to recover such judgmentshall not be affected by any entry or sale hereunder, or by the exercise of anyother right, power or remedy for the enforcement of the provisions hereof, orthe foreclosure of, or absolute conveyance pursuant to, this Mortgage.  In case of proceedings against the Mortgagorin insolvency or bankruptcy or any proceedings for its reorganization or involvingthe liquidation of its assets, the Mortgagee shall be entitled to prove thewhole amount of principal and interest and other payments, charges and costsdue in respect of the Secured Obligations to the full amount thereof without deductingtherefrom any proceeds obtained from the sale of the whole or any part of theMortgaged Property; provided, however, that in no case shall theMortgagee receive a greater amount than the aggregate of such principal,interest and such other payments, charges and costs (with interest at theDefault Rate) from the proceeds of the sale of the Mortgaged Property and thedistribution from the estate of the Mortgagor.

#####  

##### (ii)           Anyrecovery of any judgment by the Mortgagee and any levy of any execution underany judgment upon the Mortgaged Property shall not affect in any manner or toany extent the Lien and security interests created and evidenced hereby uponthe Mortgaged Property or any part thereof, or

 

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##### any conveyances,powers, rights and remedies of the Mortgagee hereunder, but such conveyances,powers, rights and remedies shall continue unimpaired as before.

#####  

##### (iii)          Anymonies collected by the Mortgagee under this Section 11.4 shall beapplied in accordance with the provisions of Section 11.3(iii).

#####  

## SECTION 11.5  Legal Proceedings After an Event ofDefault.

##  

##### (i)            Afterthe occurrence and during the continuance of any Event of Default andimmediately upon the commencement of any action, suit or legal proceedings toobtain judgment for the Secured Obligations or any part thereof, or of anyproceedings to foreclose the Lien and security interest created and evidencedhereby or otherwise enforce the provisions hereof or of any other proceedingsin aid of the enforcement hereof, the Mortgagor shall enter its voluntary appearancein such action, suit or proceeding.

#####  

##### (ii)           Uponthe occurrence and during the continuance of an Event of Default, the Mortgageeshall be entitled forthwith as a matter of right, concurrently or independentlyof any other right or remedy hereunder either before or after declaring theSecured Obligations or any part thereof to be due and payable, to theappointment of a receiver without giving notice to any party and without regardto the adequacy or inadequacy of any security for the Secured Obligations orthe solvency or insolvency of any person or entity then legally or equitablyliable for the Secured Obligations or any portion thereof.  The Mortgagor hereby consents to theappointment of such receiver. Notwithstanding the appointment of any receiver, the Mortgagee shall beentitled as pledgee to the possession and control of any cash, deposits orinstruments at the time held by or payable or deliverable under the terms ofthe Indenture to the Mortgagee.

#####  

##### (iii)          TheMortgagor shall not (A) at any time insist upon, or plead, or in anymanner whatsoever claim or take any benefit or advantage of any stay orextension or moratorium law, any exemption from execution or sale of theMortgaged Property or any part thereof, wherever enacted, now or at any time hereafterin force, which may affect the covenants and terms of performance hereof,(B) claim, take or insist on any benefit or advantage of any law now orhereafter in force providing for the valuation or appraisal of the MortgagedProperty, or any part thereof, prior to any sale or sales of the MortgagedProperty which may be made pursuant to this Mortgage, or pursuant to anydecree, judgment or order of any court of competent jurisdiction or(C) after any such sale or sales, claim or exercise any right under anystatute heretofore or hereafter enacted to redeem the property so sold or anypart thereof.  To the extent permitted byapplicable law, the Mortgagor hereby expressly (A) waives all benefit oradvantage of any such law or laws, including, without limitation, any statuteof limitations applicable to this Mortgage, (B) waives all rights to have theMortgaged Property marshalled on any foreclosure of this Mortgage, (C) waivesany and all rights to trial by jury in any action or proceeding related to theenforcement hereof, (D) waives any objection which it may now or hereafterhave to the laying of venue of any action, suit or proceeding brought inconnection with this Mortgage and further waives and agrees not to plead thatany such action, suit or proceeding brought in any such court has been broughtin an inconvenient forum and (E) covenants not to hinder, delay or impede theexecution of any power granted or delegated to the Mortgagee by this Mortgagebut to suffer and permit the execution of every such power as though no suchlaw or laws had been made or enacted. The Mortgagee shall not be liable for any

 

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##### incorrect orimproper payment made pursuant to this Article XI in the absence ofgross negligence or willful misconduct.

#####  

## SECTION 11.6  Remedies Not Exclusive.  No remedy conferred upon or reserved to theMortgagee by this Mortgage is intended to be exclusive of any other remedy orremedies, and each and every such remedy shall be cumulative and shall be inaddition to every other remedy given under this Mortgage or now or hereafterexisting at law or in equity.  Any delayor omission of the Mortgagee to exercise any right or power accruing on anyEvent of Default shall not impair any such right or power and shall not beconstrued to be a waiver of or acquiescence in any such Event of Default.  Every power and remedy given by this Mortgagemay be exercised from time to time concurrently or independently, when and asoften as may be deemed expedient by the Mortgagee in such order and manner asthe Mortgagee, in its sole discretion, may elect.  If the Mortgagee accepts any monies requiredto be paid by the Mortgagor under this Mortgage after the same become due, suchacceptance shall not constitute a waiver of the right either to require promptpayment, when due, of all other sums secured by this Mortgage or to declare anEvent of Default with regard to subsequent defaults.  If the Mortgagee accepts any monies requiredto be paid by the Mortgagor under this Mortgage in an amount less than the sumthen due, such acceptance shall be deemed an acceptance on account only and onthe condition that it shall not constitute a waiver of the obligation of theMortgagor to pay the entire sum then due, and the Mortgagor’s failure to paythe entire sum then due shall be and continue to be a default hereundernotwithstanding acceptance of such amount on account.

##  

## SECTION 11.7  Sale of Mortgaged Lease.  The word “sale” as used in this Article XIwith respect to the Mortgaged Lease shall mean the sale, transfer, assignmentor conveyance for value of the leasehold interest of the Mortgagor in theMortgaged Lease, together with all of the Mortgagor’s right, title and interestin and to the other items comprising the Mortgaged Property.

##  

## SECTION 11.8  Special Louisiana Provisions.

##  

##### (i)            Withoutlimiting the generality of the foregoing, should one or more Events of Defaultoccur or exist and be continuing under this Mortgage, as provided above, theMortgagee, at its option, may exercise any one or more of this following rightsand remedies, in addition to any other rights and remedies provided by law andunder this Mortgage to the greatest extent permitted by applicable Louisianalaw.  Nothing contained herein shall beconstrued as constituting the Mortgagee as mortgagee in possession in absenceof the actual taking of possession of the Leasehold Premises by the Mortgagee.

#####  

##### (ii)           TheMortgagee shall have the right, at its sole option, to accelerate the maturityand demand immediate payment in full of any and all of the SecuredObligations.  The Mortgagee shall thenhave the right to commence appropriate foreclosure proceedings against theMortgaged Property and against the Mortgagor’s rights as provided in thisMortgage.

#####  

##### (iii)          Inthe event that the Mortgagee elects to commence appropriate Louisianaforeclosure proceedings under this Mortgage, the Mortgagee may cause theMortgaged Property, or any part or parts thereof, to be immediately seized andsold, whether in term of court or in vacation, under ordinary or executoryprocess, in accordance with applicable Louisiana law, to the highest bidder forcash,

 

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##### with or withoutappraisement, and without the necessity of making additional demand upon ornotifying the Mortgagor or placing the Mortgagor in default, all of which areexpressly waived.

#####  

##### (iv)          Forpurposes of foreclosure under Louisiana executory process procedures, theMortgagor confesses judgment and acknowledges to be indebted to the Mortgagee,up to the full amount of the indebtedness in principal, interest, costs,expenses, reasonable attorney’s fees and other fees and charges and amountscontemplated hereunder.  The Mortgagorfurther confesses judgment and acknowledges to be indebted unto and in favor ofthe Mortgagee in the amount of all future advances that the Mortgagee may makeon the Mortgagor’s behalf pursuant to this Mortgage, together with interestthereon.  To the extent permitted underapplicable Louisiana law, the Mortgagor additionally waives:  (1) the benefit of appraisal as provided inArticles 2332, 2336, 2723, and 2724 of the Louisiana Code of Civil Procedure,and all other laws with regard to appraisal upon judicial sale; (2) the demandand three (3) days’ delay provided under Articles 22639 and 2721 of theLouisiana Code of Civil Procedure; (3) the notice of seizure as provided underArticles 2293 and 2721 of the Louisiana Code of Civil Procedure; (4) the three(3) days’ delay provided under Articles 2331, 2722 and 2723 of the LouisianaCode of Civil Procedure and all other Articles not specifically mentionedabove.  The Mortgagor further agrees thatany declaration of fact made by authentic act before a Notary Public and twowitnesses, by a Person declaring that such facts are within his or herknowledge, shall constitute authentic evidence of such facts for purposes offoreclosure under applicable Louisiana law and for purposes of La. R.S.9:3504(D)(6) and La. R.S. 10:9-508, to the extent applicable.

#####  

##### (v)           Should anyor all of the Mortgaged Property be seized as an incident to an action for therecognition or enforcement of this Mortgage, by executory process,sequestration, attachment, writ of fieri facias or otherwise, the Mortgagorhereby agrees that the court issuing any such order shall, if requested by theMortgagee, appoint the Mortgagee, or any agent designated by the Mortgagee orany Person named by the Mortgagee at the time such seizure is requested, or anytime thereafter, as Keeper of the Mortgaged Property as provided under La. R.S.9:5136, et seq.  Such a Keeper shall beentitled to reasonable compensation.  TheMortgagor agrees to pay the reasonable fees of such Keeper which compensationto the Keeper shall also be secured by this Mortgage in the form of any futureadvances as provided in this Mortgage.

#####  

##### (vi)          Should itbecome necessary for the Mortgagee to foreclose under this Mortgage, alldeclarations of fact, which are made under an authentic act before a NotaryPublic in the presence of two witnesses, by a person declaring such facts tolie within his or her knowledge, shall constitute authentic evidence forpurposes of executory process and also for purposes of La. R.S. 9:3509.1, La.R.S. 9:3504(D)(6) and La. R.S. 10:9-508, where applicable.

#####  

##### (vii)         Shouldone or more Events of Default occur or exist under this Mortgage, the Mortgageeshall have the additional right, at its sole option, to separately sell theaforesaid rights, or any part of parts thereof, at private or publiccompensation, or on credit, or for future delivery, without the assumption ofany credit risk.  The sale of theaforesaid rights may be without appraisement, the benefit of which is alsoexpressly waived by the Mortgagor.  TheMortgagee may exercise any other remedies with regard to the Mortgagor’s rightsas may be authorized under the Louisiana Commercial Laws (La. R.S. 10:9-101, etseq.).

 

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##### (viii)        Tothe extent provided by law, and in the event of foreclosure under this Mortgage,or other transfer of title or assignment of the Mortgaged Property, or any partor parts thereof, in lieu of payment of the Secured Obligations, whether inwhole or in part, all policies of insurance and other rights applicable to theforeclosed Mortgaged Property upon transfer of the Mortgaged Property shallautomatically inure to the benefit of and shall pass to the purchaser(s) ortransferee(s) thereof, subject to the rights of the purchaser(s) ortransferee(s) to reject such insurance coverage and/or rights at its or theirsole option and election.

#####  

##### (ix)           TheMortgagee may, in addition to or in lieu of the foregoing remedies, in theMortgagee’s sole discretion, commence an appropriate action against theMortgagor seeking specific performance of any covenant contained in thisMortgage or in aid of the execution or enforcement of any power in thisMortgage granted.

#####  

##### (x)            Except asmay be prohibited by applicable law, all of the Mortgagee’s rights andremedies, whether evidenced by this Mortgage or by any other writing, shall becumulative and may be exercised singularly or concurrently.  Election by the Mortgagee to pursue anyremedy shall not exclude pursuit of any other remedy, and an election to makeexpenditures or to take action to perform an obligation of the Mortgagor underthis Mortgage, after the Mortgagor’s failure to perform shall not affect theMortgagee’s right to declare a default and exercise its remedies.  Nothing under this Mortgage or otherwiseshall be construed so as to limit or restrict the rights and remedies availableto the Mortgagee following an Event of Default, or in any way to limit orrestrict the rights and abilities of the Mortgagee to proceed directly againstMortgagor and/or against any other co-maker, guarantor, surety or endorser ofthe Secured Obligations, and/or to proceed against any other collateraldirectly or indirectly securing the Secured Obligations.

#####  

# ARTICLE XII

 

# SECURITY AGREEMENT ANDFIXTURE FILING

 

## SECTION 12.1  Security Agreement.

##  

## (i)            This Mortgage shallconstitute a Security Agreement as defined in the Louisiana Commercial Laws,La. R.S. § 10:101 et seg., and shall create and evidence a security interest inall the equipment and in all the other items of Mortgaged Property in which asecurity interest may be granted pursuant to the Louisiana Commercial Laws andthe Mortgaged Lease (collectively, “Personal Property”).

##  

## (ii)           The remedies for anyviolation of the covenants, terms and conditions of the agreements hereincontained shall be as prescribed herein or by general Louisiana law or, as tosuch part of the security which is also reflected in any financing statementfiled to perfect the security interest herein created, by the specificstatutory provisions now or hereinafter enacted and specified in the LouisianaCommercial Laws, all at Mortgagee’s sole election.  The mention in any financing statement of (1)the rights in or the proceeds of any fire or hazard insurance policy, or (2)any award in eminent domain proceedings for a taking or for loss of value, or(3) Mortgagor’s interest as lessor in any present or future lease or rights toincome growing out of the use or occupancy of the Mortgaged Property whetherpursuant

 

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## tolease or otherwise, shall never be construed as in any way altering any of therights of Mortgagee under this Mortgage or impugning the priority of theMortgagee’s lien granted hereby or by any other recorded document.  Rather, such mention in the financing statementis declared to be for the protection of the Mortgagee in the event any court orjudge shall at any time hold with respect to (1), (2) and (3) above, thatnotice of Mortgagee’s priority of interest to be effective against a particularclass of persons, including, but not limited to, the Federal Government and anysubdivisions or entity of the Federal Government, must be filed with the clerkof court of any parish (or Jefferson Parish Recorder of Mortgages) pursuant toSection 9-401 of the Louisiana Commercial Laws.

##  

## SECTION 12.2 Fixture Filing.  From the date ofits recording, this Mortgage shall be effective as a fixture financingstatement with respect to all goods constituting part of the Mortgaged Propertywhich are to become fixtures related to the Land.  For this purpose, the following informationis set forth:

##  

##### (a)           Nameand Address of Debtor:

#####  

Jalouof Jefferson, LLC7340 Westbank ExpresswayMarrero, Louisiana  70072

 

and

 

##### (b)           Nameand Address of Secured Party:

#####  

WellsFargo Bank, National AssociationCorporate Trust Services 213 Court Street, Suite 703Middletown, Connecticut 06457

 

(c)           Thisdocument covers goods which are to become fixtures.  All items that are fixtures on the date ofthis Mortgage shall be subject to the mortgage Lien granted hereunder.

 

# ARTICLE XIII

#  

# FURTHER ASSURANCES

#  

## SECTION 13.1  Recording Documentation To Assure Security.  The Mortgagor shall, forthwith after theexecution and delivery hereof and thereafter, from time to time, cause thisMortgage and any financing statement, continuation statement or similarinstrument relating to any thereof or to any property intended to be subject tothe Lien hereof to be filed, registered and recorded in such manner and in suchplaces as may be required by any present or future law in order to publishnotice of and fully to protect the validity and priority thereof or the Lienhereof purported to be created upon the Mortgaged Property and the interest andrights of the Mortgagee therein.  TheMortgagor shall (if it has not already done so), at its sole cost and expense,properly, duly and validly record an appropriate memorandum of the MortgagedLease and any amendments or supplements thereto in each jurisdiction in whichany of the

 

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## LeaseholdPremises may be situated.  The Mortgagorshall pay or cause to be paid all taxes and fees incident to such filing,registration and recording, and all reasonable expenses incident to thepreparation, execution and acknowledgment thereof, and of any instrument offurther assurance, and all Federal or state stamp taxes or other taxes, dutiesand charges arising out of or in connection with the execution and delivery ofsuch instruments.

##  

## SECTION 13.2  Further Acts.  The Mortgagor shall, at the sole cost andexpense of the Mortgagor, do, execute, acknowledge and deliver all and everysuch further acts, deeds, conveyances, mortgages, assignments, notices ofassignment, transfers, financing statements, continuation statements,instruments and assurances as the Mortgagee shall from time to time reasonablyrequest, which may be necessary in the judgment of the Mortgagee from time totime to assure, perfect, convey, assign, mortgage, transfer and confirm untothe Mortgagee, the property and rights hereby conveyed or assigned or which theMortgagor may be or may hereafter become bound to convey or assign to theMortgagee or for carrying out the intention or facilitating the performance ofthe terms hereof or the filing, registering or recording hereof.  Without limiting the generality of theforegoing, in the event that the Mortgagee desires to exercise any remedies,consensual rights or attorney-in-fact powers set forth in this Mortgage anddetermines it necessary to obtain any approvals or consents of any GovernmentalAuthority or any other Person therefor, then, upon the reasonable request ofthe Mortgagee, the Mortgagor agrees to use its reasonable efforts to assist andaid the Mortgagee to obtain as soon as practicable any necessary approvals orconsents for the exercise of any such remedies, rights and powers.  In the event the Mortgagor shall fail(i) within ten (10) Business Days after demand, to execute or take anyaction required to be executed or taken by the Mortgagor under this Section13.2 to the extent same is necessary to maintain perfection of the Liengranted to Mortgagee hereunder or (ii) such failure shall constitute an Eventof Default, to execute or take any action required to be executed or taken bythe Mortgagor under this Section 13.2 (other than the type described inclause (i) of this sentence) then, in each of the cases described in clauses(i) and (ii) of this sentence, the Mortgagee may execute or take the same asthe attorney-in-fact for the Mortgagor, such power of attorney being coupledwith an interest and is irrevocable.

##  

## SECTION 13.3  Additional Security.  Without notice to or consent of the Mortgagorand without impairment of the Lien and rights created by this Mortgage, theMortgagee may accept (but the Mortgagor shall not be obligated to furnish) fromthe Mortgagor or from any other Person, additional security for the SecuredObligations.  Neither the giving hereofnor the acceptance of any such additional security shall prevent the Mortgageefrom resorting, first, to such additional security, and, second, to thesecurity created by this Mortgage without affecting the Mortgagee’s Lien andrights under this Mortgage.

 

# ARTICLE XIV

 

# MISCELLANEOUS

 

## SECTION 14.1  Covenants To Run with the LeaseholdPremises.  All of the grants,covenants, terms, provisions and conditions in this Mortgage shall run with theLeasehold Premises and shall apply to, and bind the successors and assigns of,the Mortgagor.  If there shall be morethan one mortgagor with respect to the Mortgaged Property, the covenants andwarranties hereof shall be joint and several.

 

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## SECTION 14.2  No Merger.  The rights and estate created by thisMortgage shall not, under any circumstances, be held to have merged into anyother estate or interest now owned or hereafter acquired by the Mortgageeunless the Mortgagee shall have consented to such merger in writing, suchconsent not to be unreasonably withheld.

##  

## SECTION 14.3  Concerning Mortgagee.

##  

##### (i)            TheMortgagee has been appointed as trustee pursuant to the Indenture.  The actions of the Mortgagee hereunder aresubject to the provisions of the Indenture. The Mortgagee shall have the right hereunder to make demands, to givenotices, to exercise or refrain from exercising any rights, and to take orrefrain from taking action (including, without limitation, the release orsubstitution of the Mortgaged Property), in accordance with this Mortgage andthe Indenture.  The Mortgagee may employagents and attorneys-in-fact in connection herewith and shall not be liable forthe negligence or misconduct of any such agents or attorneys-in-fact selectedby it in good faith.  The Mortgagee mayresign and a successor Mortgagee may be appointed in the manner provided in theIndenture.  Upon the acceptance of anyappointment as the Mortgagee by a successor Mortgagee, that successor Mortgageeshall thereupon succeed to and become vested with all the rights, powers,privileges and duties of the retiring Mortgagee under this Mortgage, and theretiring Mortgagee shall thereupon be discharged from its duties and obligationsunder this Mortgage.  After any retiringMortgagee’s resignation, the provisions hereof shall inure to its benefit as toany actions taken or omitted to be taken by it under this Mortgage while it wasthe Mortgagee.

#####  

##### (ii)           TheMortgagee shall be deemed to have exercised reasonable care in the custody andpreservation of the Mortgaged Property in its possession if such MortgagedProperty is accorded treatment substantially equivalent to that which theMortgagee, in its individual capacity, accords its own property consisting ofsimilar instruments or interests, it being understood that neither theMortgagee nor any of the Secured Parties shall have responsibility for takingany necessary steps to preserve rights against any Person with respect to anyMortgaged Property.

#####  

##### (iii)          TheMortgagee shall be entitled to rely upon any written notice, statement,certificate, order or other document or any telephone message believed by it tobe genuine and correct and to have been signed, sent or made by the properperson, and, with respect to all matters pertaining to this Mortgage and itsduties hereunder, upon advice of counsel selected by it.

#####  

##### (iv)          Ifany portion of the Mortgaged Property also constitutes collateral granted tothe Mortgagee under any other deed of trust, mortgage, security agreement,pledge or instrument of any type, in the event of any conflict between theprovisions hereof and the provisions of such other deed of trust, mortgage,security agreement, pledge or instrument of any type in respect of suchcollateral, the Mortgagee, in its sole discretion, shall select which provisionor provisions shall control.

#####  

## SECTION 14.4  Mortgagee May Perform; Mortgagee AppointedAttorney-in-Fact.  If the Mortgagorshall fail to perform any covenants contained in this Mortgage, subject to anyapplicable grace periods or contest rights permitted pursuant to Article IXhereof or as otherwise permitted by any Collateral Document (including, withoutlimitation, the Mortgagor’s covenants to (i) pay the premiums in respect of allrequired insurance policies hereunder, (ii) pay Charges, (iii) make repairs,(iv) discharge

 

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## Liensor (v) pay or perform any obligations of the Mortgagor under any MortgagedProperty) or if any warranty on the part of the Mortgagor contained hereinshall be breached, the Mortgagee may (but shall not be obligated to) do thesame or cause it to be done or remedy any such breach, and may expend funds forsuch purpose; provided, however, that the Mortgagee shall in noevent be bound to inquire into the validity of any tax, Lien, imposition orother obligation which the Mortgagor fails to pay or perform as and whenrequired hereby and which the Mortgagor does not contest in accordance with theprovisions of Article IX hereof. Any and all amounts reasonably so expended by the Mortgagee shall bepaid by the Mortgagor in accordance with the provisions of Section 14.5hereof.  Neither the provisions of this Section14.4 nor any action taken by the Mortgagee pursuant to the provisions ofthis Section 14.4 shall prevent any such failure to observe any covenantcontained in this Mortgage nor any breach of warranty from constituting anEvent of Default.  Upon the occurrenceand during the continuance of an Event of Default the Mortgagor hereby appointsthe Mortgagee its attorney-in-fact, with full authority in the place and steadof the Mortgagor and in the name of the Mortgagor to take any action and toexecute any instrument consistent with the terms hereof and the otherCollateral Documents which the Mortgagee may deem necessary or advisable toaccomplish the purposes hereof.  Theforegoing grant of authority is a power of attorney coupled with an interestand such appointment shall be irrevocable for the term hereof.  The Mortgagor hereby ratifies all that suchattorney shall lawfully do or cause to be done by virtue hereof.

##  

## SECTION 14.5  Expenses  The Mortgagor will upon demand pay to theMortgagee the amount of any and all reasonable costs and expenses, includingthe reasonable fees and expenses of its counsel and the reasonable fees andexpenses of any experts and agents which the Mortgagee may incur in connectionwith (i) any action, suit or other proceeding affecting the Mortgaged Propertyor any part thereof commenced, in which action, suit or proceeding theMortgagee is made a party or participates or in which the right to use theMortgaged Property or any part thereof is threatened, or in which it becomesnecessary in the judgment of the Mortgagee to defend or uphold the Lien hereof(including, without limitation, any action, suit or proceeding to establish oruphold the compliance of the Mortgaged Property with any Requirements of Law),(ii) the collection of the Secured Obligations, (iii) the enforcementand administration hereof, (iv) the custody or preservation of, or the sale of,collection from, or other realization upon, any of the Mortgaged Property, (v)the exercise or enforcement of any of the rights of the Mortgagee or anySecured Party hereunder or (vi) the failure by the Mortgagor to perform orobserve any of the provisions hereof. All amounts expended by the Mortgagee and payable by the Mortgagor underthis Section 14.5 shall be due upon demand therefor (together withinterest thereon accruing at the Default Rate during the period from andincluding the date on which such funds were so expended to the date ofrepayment) and shall be part of the Secured Obligations.  The Mortgagor’s obligations under this Section 14.5shall survive the termination hereof and the discharge of the Mortgagor’s otherobligations under this Mortgage.

##  

## SECTION 14.6  Indemnity.

##  

##### (i)            TheMortgagor agrees to indemnify, pay and hold harmless the Mortgagee and each ofthe other Secured Parties and the officers, directors, employees, agents andAffiliates of the Mortgagee and each of the other Secured Parties(collectively, the “Indemnitees”) from and against any and all otherliabilities, obligations, losses, damages, penalties, actions, judgments,suits, claims, costs (including, without limitation, settlement costs),expenses or disbursements of any kind or nature whatsoever (including, withoutlimitation, the reasonable fees and disbursements of counsel for suchIndemnitees in

 

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##### connection withany investigative, administrative or judicial proceeding, commenced orthreatened, whether or not such Indemnitee shall be designated a partythereto), which may be imposed on, incurred by or asserted against thatIndemnitee, in any manner relating to or arising out hereof, the Indenture, theNotes, any other Collateral Document or any other document evidencing theSecured Obligations (including, without limitation, any misrepresentation by theMortgagor in this Mortgage, the Indenture, the Notes, any other CollateralDocument or any other document evidencing the Secured Obligations (the “IndemnifiedLiabilities”); provided, however, that the Mortgagor shallhave no obligation to an Indemnitee hereunder with respect to IndemnifiedLiabilities to the extent it has been determined by a final decision (after allappeals and the expiration of time to appeal) by a court of competentjurisdiction that such Indemnified Liabilities arose from the gross negligenceor willful misconduct of that Indemnitee. To the extent that the undertaking to indemnify, pay and hold harmlessset forth in the preceding sentence may be unenforceable because it isviolative of any law or public policy, the Mortgagor shall contribute themaximum portion which it is permitted to pay and satisfy under applicable law,to the payment and satisfaction of all Indemnified Liabilities incurred by theIndemnitees or any of them.

#####  

##### (ii)           Survival.  The obligations of the Mortgagor contained inthis Section 14.6 shall survive the termination hereof and the dischargeof the Mortgagor’s other obligations under this Mortgage, the Indenture and theother Collateral Documents.

#####  

##### (iii)          Reimbursement.  Any amount paid by any Indemnitee as to whichsuch Indemnitee has the right to reimbursement shall constitute SecuredObligations secured by the Mortgaged Property.

#####  

## SECTION 14.7  Continuing Security Interest; Assignment.  This Mortgage shall create a continuing Lienon and security interest in the Mortgaged Property and shall (i) bebinding upon the Mortgagor, its respective successors and assigns and(ii) inure, together with the rights and remedies of the Mortgageehereunder, to the benefit of the Mortgagee and the other Secured Parties andeach of their respective successors, transferees and assigns.  No other Persons (including, withoutlimitation, any other creditor of Mortgagor) shall have any interest herein orany right or benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), anyHolder of the Notes may assign or otherwise transfer any indebtedness held byit that is secured by this Mortgage to any other Person, and such other Personshall thereupon become vested with all the benefits in respect thereof grantedto such Holder, herein or otherwise, subject however, to the provisions of theIndenture.

##  

## SECTION 14.8  Termination; Release.  The Mortgaged Property shall be released fromthe Lien of this Mortgage in accordance with the provisions of Article 10 ofthe Indenture.

##  

## SECTION 14.9  Modification in Writing.  No amendment, modification, supplement,termination or waiver of or to any provision hereof, nor consent to anydeparture by the Mortgagor therefrom, shall be effective unless the same shallbe done in accordance with the terms of the Indenture and unless in writing andsigned by the Mortgagee and Mortgagor. Any amendment, modification or supplement of or to any provision hereof,any waiver of any provision hereof and any consent to any departure by theMortgagor from the terms of any provision hereof shall be effective only in thespecific instance and for the specific purpose for which made or given.  Except where notice is specifically requiredby this Mortgage or any other Collateral Document, no notice to or demand onthe Mortgagor in

 

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## anycase shall entitle the Mortgagor to any other or further notice or demand insimilar or other circumstances.

##  

## SECTION 14.10  Notices.  Unless otherwise provided herein or in theIndenture, any notice or other communication herein required or permitted to begiven shall be given in the manner and become effective as set forth in theIndenture, if to the Mortgagor, addressed to it at the address of the Issuer setforth in the Indenture, and as to the Mortgagee, addressed to it at its addressset forth in the Indenture, or in each case at such other address as shall bedesignated by such party in a written notice to the other party complying as todelivery with the terms of this Section 14.10.

##  

## SECTION 14.11  GOVERNING LAW; SERVICE OF PROCESS; WAIVEROF JURY TRIAL.  THIS MORTGAGE SHALLBE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THELAWS OF THE STATE IN WHICH THE LEASEHOLD PREMISES ARE LOCATED, WITHOUT REGARDTO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE VALIDITY ORPERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, INRESPECT OF ANY PARTICULAR ITEM OR TYPE OF MORTGAGED PROPERTY ARE GOVERNED BYTHE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.  THE MORTGAGOR AGREES THAT SERVICE OF PROCESSIN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED ORCERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TOTHE ISSUER AT ITS ADDRESS SET FORTH IN THE INDENTURE OR AT SUCH OTHER ADDRESSOF WHICH THE MORTGAGEE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO.  IF ANY AGENT APPOINTED BY THE MORTGAGORREFUSES TO ACCEPT SERVICE, THE MORTGAGOR HEREBY AGREES THAT SERVICE UPON IT BYMAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHERMANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE MORTGAGEE TO BRINGPROCEEDINGS AGAINST THE MORTGAGOR IN THE COURTS OF ANY OTHER JURISDICTION.  THE MORTGAGOR HEREBY IRREVOCABLY WAIVES ALLRIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUTOF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

## SECTION 14.12  Severability of Provisions.  Any provision hereof which is prohibited orunenforceable in any jurisdiction shall, as to such jurisdiction, beineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or affecting the validity or enforceabilityof such provision in any other jurisdiction.

##  

## SECTION 14.13  Limitation on Interest Payable.  It is the intention of the parties to conformstrictly to the usury laws, whether state or Federal, that are applicable tothe transaction of which this Mortgage is a part.  All agreements between the Mortgagor and theMortgagee, whether now existing or hereafter arising and whether oral orwritten, are hereby expressly limited so that in no contingency or event whatsoevershall the amount paid or agreed to be paid by the Mortgagor for the use,forbearance or detention of the money to be loaned or advanced under theIndenture or any related document or for the payment or performance of anycovenant or obligation contained herein or in the Indenture or any relateddocument exceed the maximum amount permissible under applicable Federal orstate usury laws.  If under

 

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## anycircumstances whatsoever fulfillment of any such provision, at the timeperformance of such provision shall be due, shall involve exceeding the limitof validity prescribed by law, then the obligation to be fulfilled shall bereduced to the limit of such validity. If under any circumstances the Mortgagor shall have paid an amountdeemed interest by applicable law, which would exceed the highest lawful rate,such amount that would be excessive interest under applicable usury laws shallbe applied to the reduction of the principal amount owing in respect of theSecured Obligations and not to the payment of interest, or if such excessiveinterest exceeds the unpaid balance of principal and any other amounts duehereunder, the excess shall be refunded to the Mortgagor.  All sums paid or agreed to be paid for theuse, forbearance or detention of the principal under any extension of credit bythe Mortgagee shall, to the extent permitted by applicable law, and to theextent necessary to preclude exceeding the limit of validity prescribed by law,be amortized, prorated, allocated and spread from the date hereof until paymentin full of the Secured Obligations so that the actual rate of interest onaccount of such principal amounts is uniform throughout the term hereof.

##  

## SECTION 14.14  Business Days.  In the event any time period or any dateprovided in this Mortgage ends or falls on a day other than a Business Day,then such time period shall be deemed to end and such date shall be deemed tofall on the next succeeding Business Day, and performance herein may be made onsuch Business Day, with the same force and effect as if made on such other day.

##  

## SECTION 14.15  Relationship.  The relationship of the Mortgagee to theMortgagor hereunder is strictly and solely that of lender and borrower andmortgagor and mortgagee and nothing contained in the Indenture, the Notes, thisMortgage or any other document or instrument now existing and delivered inconnection therewith or otherwise in connection with the Secured Obligations isintended to create, or shall in any event or under any circumstance beconstrued as creating a partnership, joint venture, tenancy-in-common, jointtenancy or other relationship of any nature whatsoever between the Mortgageeand the Mortgagor other than as lender and borrower and mortgagor andmortgagee.

##  

## SECTION 14.16  Waiver of Stay.

##  

##### (i)            TheMortgagor agrees that in the event that the Mortgagor or any property or assetsof the Mortgagor shall hereafter become the subject of a voluntary orinvoluntary proceeding under the Bankruptcy Code or the Mortgagor shallotherwise be a party to any Federal or state bankruptcy, insolvency, moratoriumor similar proceeding to which the provisions relating to the automatic stayunder Section 362 of the Bankruptcy Code or any similar provision in any suchlaw is applicable, then, in any such case, whether or not the Mortgagee hascommenced foreclosure proceedings under this Mortgage, the Mortgagee shall beentitled to relief from any such automatic stay as it relates to the exerciseof any of the rights and remedies (including, without limitation, any foreclosureproceedings) available to the Mortgagee as provided in this Mortgage, in anyother Collateral Document or any other document evidencing the SecuredObligations.

#####  

##### (ii)           TheMortgagee shall have the right to petition or move any court having jurisdictionover any proceeding described in Section 14.16(i) hereof for thepurposes provided therein, and the Mortgagor agrees (i) not to oppose any suchpetition or motion and (ii) at the Mortgagor’s sole cost and expense, to assistand cooperate with the Mortgagee, as may be requested by the Mortgagee fromtime to time, in obtaining any relief requested by the Mortgagee, including,without limitation, by filing any such

 

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##### petitions,supplemental petitions, requests for relief, documents, instruments or otheritems from time to time requested by the Mortgagee or any such court.

#####  

## SECTION 14.17  No Credit for Payment of Taxes orImpositions.  The Mortgagor shall notbe entitled to any credit against the principal, premium, if any, or interestpayable under the Indenture or the Notes, and the Mortgagor shall not beentitled to any credit against any other sums which may become payable underthe terms thereof or hereof, by reason of the payment of any Charge on the MortgagedProperty or any part thereof.

##  

## SECTION 14.18  No Claims Against the Mortgagee.  Nothing contained in this Mortgage shallconstitute any consent or request by the Mortgagee, express or implied, for theperformance of any labor or services or the furnishing of any materials orother property in respect of the Leasehold Premises or any part thereof, nor asgiving the Mortgagor any right, power or authority to contract for or permitthe performance of any labor or services or the furnishing of any materials orother property in such fashion as would permit the making of any claim againstthe Mortgagee in respect thereof or any claim that any Lien based on theperformance of such labor or services or the furnishing of any such materialsor other property is prior to the Lien hereof.

##  

## SECTION 14.19  Obligations Absolute.  All obligations of the Mortgagor hereundershall be absolute and unconditional irrespective of:

##  

##### (i)            anybankruptcy, insolvency, reorganization, arrangement, readjustment, composition,liquidation or the like of the Mortgagor, the Issuer or any other Guarantor;

#####  

##### (ii)           anylack of validity or enforceability of the Indenture, the Notes or any otheragreement or instrument relating thereto;

#####  

##### (iii)          anychange in the time, manner or place of payment of, or in any other term of, allor any of the Secured Obligations, or any other amendment or waiver of or anyconsent to any departure from the Indenture, the Notes or any other agreementor instrument relating thereto;

#####  

##### (iv)          anyexchange, release or non-perfection of any other collateral, or any release oramendment or waiver of or consent to any departure from any guarantee, for allor any of the Secured Obligations;

#####  

##### (v)           anyexercise or non-exercise, or any waiver of any right, remedy, power or privilegeunder or in respect hereof, the Indenture, the Notes or any agreement orinstrument relating thereto except as specifically set forth in a waivergranted pursuant to the provisions of Section 14.9 hereof; or

#####  

##### (vi)          anyother circumstances which might otherwise constitute a defense available to, ora discharge of, the Mortgagor.

#####  

## SECTION 14.20  Last Dollars Secured.  This Mortgage secures only a portion of theIndebtedness owing or which may become owing by the Mortgagor.  The parties agree that any payments

 

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## orrepayments of such Indebtedness by the Mortgagor shall be and be deemed to beapplied first to the portion of the Indebtedness that is not secured hereby, itbeing the parties’ intent that the portion of the Indebtedness last remainingunpaid shall be secured hereby.

##  

## SECTION 14.21  Mortgaged Lease.

##  

##### (i)            TheMortgagor shall punctually and properly perform, observe and otherwise complyin all material respects with each and every covenant, agreement, requirementand condition set forth in the Mortgaged Lease and do or cause to be done allthings necessary or appropriate to keep the Mortgaged Lease in full force andeffect and to preserve and keep unimpaired the rights of the Mortgagorthereunder.  Upon the reasonable requestof the Mortgagee at reasonable intervals, the Mortgagor shall, subject to theterms of the Mortgaged Lease, request from the Lessor an estoppel certificate,addressed to the Mortgagee, stating that there is no default under theMortgaged Lease, or any state of facts which, with the passage of time ornotice or both, would constitute a default thereunder, or if there be anydefault under the Mortgaged Lease, giving the details thereof.

#####  

##### (ii)           Inthe event the Mortgagor acquires the fee simple title or any other estate orinterest in the property subject to the Mortgaged Lease, such acquisition willnot merge with the leasehold estate created by the Mortgaged Lease, but suchother estate or interest will remain discrete and immediately become subject tothe Lien of this Mortgage, and the Mortgagor shall execute, acknowledge anddeliver any instruments requested by the Mortgagee to confirm the coverage ofthe Lien evidenced hereby upon such other estate or interest.  The Mortgagor shall pay any and allconveyance or mortgage taxes and filing or similar fees in connection with theexecution, delivery, filing or recording of any such instrument.

#####  

##### (iii)          TheMortgagor shall promptly notify the Mortgagee in writing of the occurrence ofany default (or any event which, with the lapse of time or notice or both,would constitute a default) on the part of or caused by any party to theMortgaged Lease.  If for any reason theMortgagor cannot timely make any payment under the Mortgaged Lease or performor comply with any of its obligations under the Mortgaged Lease, the Mortgagorshall notify the Mortgagee in sufficient time to enable the Mortgagee (but theMortgagee shall not be obligated) timely to make such payments and/or toperform or comply with such other obligations. On receipt by the Mortgagee from the Mortgagor pursuant to this Section14.21(iii), or from the Lessor under the Mortgaged Lease, of any suchnotice of default by, or inability to make any payment by, the Mortgagorthereunder, the Mortgagee may rely thereon and, after reasonable notice to theMortgagor, take such action as the Mortgagee deems necessary or desirable tocure such default, even though the existence of such default or the naturethereof is denied by the Mortgagor or by any other Person.

#####  

##### (iv)          Exceptas otherwise permitted under Section 10.6 of the Indenture, the Mortgagorshall not, without the prior written consent of the Mortgagee which consentshall not be unreasonably withheld, amend, modify, surrender, impair, forfeit,cancel or terminate, or permit the amendment, modification, surrender,impairment, forfeiture, cancellation or termination of, the Mortgaged Lease inwhole or in part, whether or not a default shall have occurred and shall becontinuing under either thereof.  Anysuch termination, cancellation, modification, change, supplement, alteration,amendment or extension

 

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##### without the priorwritten consent contemplated by this subsection 14.21(iv) shall be void and ofno force or effect.

#####  

##### (v)           Theleasehold estate of the Mortgagor created by the Mortgaged Lease and the estateof the Lessor under the Mortgaged Lease shall each at all times remain separateand apart and retain their separate identities, and no merger of the leaseholdor easement estate of the Mortgagor with the estate of the Lessor will resultwith respect to the Mortgagee or with respect to any purchaser acquiring theMortgaged Property at any sale on foreclosure of the Lien of this Mortgage withoutthe written consent of the Mortgagee.

#####  

##### (vi)          TheMortgagor covenants and agrees that if it shall be the subject of a proceedingunder the Federal Bankruptcy Code, it shall not elect to treat the MortgagedLease as terminated (pursuant to Section 365 of the Federal Bankruptcy Code orany similar statute or law) without the prior written consent of the Mortgageewhich consent shall not be unreasonably withheld.  The Mortgagor hereby irrevocably assigns tothe Mortgagee the right to exercise such election.

#####  

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THUSDONE AND PASSED, on the day, month and year first written above, effective asof the Effective Date, in the State and Parish aforesaid, by the undersignedMortgagor in the presence of the undersigned Notary and the undersignedcompetent witnesses, who hereunto sign their names with Mortgagor after readingof the whole.

 

 
| WITNESSES:                                 | MORTGAGOR:                             |                |
|--------------------------------------------|----------------------------------------|---------------------|
|                                       |                                   |                |
|                                       |                                   |                |
|                                       | JALOU OF  JEFFERSON, LLC,              |                |
|                                       | a Louisiana  limited liability company |                |
|                                       |                                   |                |
|                                       |                                   |                |
| /s/ Thomas E.  Hamilton                    |                                   | By:                 | /s/ Ian M. Stewart |   |
| Printed  Name:  Thomas E. Hamilton    |                                   | Ian M. Stewart      |   |
|                                       |                                   | Authorized  Officer |   |
|                                       |                                   |                |
| /s/ Sterling W.  Dale, Jr.                 |                                   |                |   |
| Printed  Name:  Sterling W. Dale, Jr. |                                   |                |
|                                       |                                   |                |
|                                       |                                   |                |
|                                       | /s/ Perryann P.  Whitehurst            |                |
|                                       | Notary  Public                         |                |
|                                            |                                        |                     |  |  |  |  |

 

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Schedule A

 

Legal Description

 

ONE CERTAIN LOT OFGROUND, situated in the State of Louisiana, Parish of Jefferson, in that partknown as Ames Farms, which portion of ground is designated as LOT 25X2A on aplat of survey and resubdivision by Dading, Marques and Associates, Inc., datedOctober 22, 2002 last revised September 10, 2003 being composed of original Lot24-A-1-A, and portions of Lots 25-X2 and 24-B-2-A Ames Farms and Lots P, O, Q,and R Square 4 of Borne Subdivision, bounded by West Bank Expressway, JungBlvd., Rachel Street, Falcone Street, St. Rita Place, Fourth Street and BergerRoad and being more fully described as follows:

 

Commencing at thenorthwest corner of Westbank Expressway and Berger Road, thence measure alongthe north right of way line of West Bank Expressway in a westerly direction adistance of 253.51 plan, 253.73 title to the point of beginning, thence measurealong said right of way in a westerly direction along the arc of a curve to theright having a radius of 3785.02 a distance of 168.81’ to a point, thencecontinue along said right of way line north 73 degrees 11’ 07” west adistance of 344.16’ to a point, thence measure north 14 degrees 55’ 24” east adistance of 304.24 plan, 307.76 actual to the south right of way line ofRachel Street, thence measure along the south right of way line of RachelStreet South 73 degrees 32’ 20” east a distance of 112.16’ to a point, thencemeasure north 14 degrees 57’ 26” east a distance of 790.95’ to a point, thencemeasure north 40 degrees 10’ 17” east a distance of 160.62’ to a point, thencemeasure south 75 degrees 55’ 57” east a distance of 215.15 to a point,thence measure south 14 degrees 04’ 03” west a distance of256.20’ to a point, thence measure north 74 degrees 17’ 17” west adistance of 97.78’ to a point, thence measure south 14 degrees 04’ 03” west adistance of 300’ to a point, thence measure south 74 degrees 17’ 17” east adistance of 195.56 to a point, thence measure south 14 degrees 04’ 03” west adistance of 700’ to the point of beginning, and containing 10 acres.

 

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Schedule B

 

Prior Liens

 

1.               Eachof the liens and other encumbrances excepted as being prior to the Lien hereofas set forth in Schedule B to the marked title insurance commitment issuedby Lawyers Title Insurance Corporation, dated as of the date hereof anddelivered to the Trustee on the date hereof, bearing Lawyers Title InsuranceCorporation reference number 40887 /dd relating to the real property describedin Schedule A attached hereto.

 

2.               Zoningand building ordinances and regulations, to the extent they constitutePermitted Liens of the type described in clause (4) of the definition thereof.

 

Schedule C

 

Leases Affecting the Mortgaged Property

 

1.                                       SubleaseAgreement between Jalou of Jefferson, LLC, as Landlord, and Subway Real EstateCorp., as Tenant, dated December 9, 2004.

 

2.                                       SubleaseAgreement between, Jalou of Jefferson, LLC, as Sub-lessor, and Point of Sale,L.L.C. as Sub-lessee, dated July 1, 2004.

 

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