TABLE OF CONTENTS

				Page
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION				1
Section 1.1		Definitions		1
Section 1.2		Principles of Construction		55
ARTICLE II. GENERAL TERMS				56
Section 2.1		Loan Commitment; Disbursement to Borrowers		56
Section 2.2		Interest Rate		57
Section 2.3		Loan Payment		64
Section 2.4		Prepayments		65
Section 2.5		Release of Property		74
Section 2.6		Cash Management		89
Section 2.7		Extensions of the Initial Maturity Date		94
Section 2.8		Exit Fee		102
Section 2.9		Unused Advance Fee		103
ARTICLE III. CONSTRUCTION LOAN.				104
Section 3.1		Construction Loan Advances		104
Section 3.2		Conditions Precedent to Initial Construction Loan Advance		106
Section 3.3		Conditions Precedent to Subsequent Construction Loan Advances		113
Section 3.4		Conditions of Final Construction Loan Advance		117
Section 3.5		No Reliance		118
Section 3.6		Procedures for Loan Advances		118
Section 3.7		Direct Advances to Third Parties		119
Section 3.8		Loan Advances Do Not Constitute a Waiver		120
Section 3.9		Cost Overruns; Reallocation of Line Items		120
Section 3.10		Contingency Reallocations		122
Section 3.11		Stored Materials		122
Section 3.12		Loan Balancing and Shortfalls		123
Section 3.13		Quality of Work		124
Section 3.14		Imported Materials		124
Section 3.15		Approval of Change Orders		124
Section 3.16		Construction Covenants		125
Section 3.17		Pre-Construction Advances		129
Section 3.18		Work at Adjacent Property		134
Section 3.19		Administrative Agent		135
Section 3.20		Monthly Interest Payments During Construction		137
Section 3.21		Construction Loan Advances Once Construction Loan is Fully Advanced		138
Section 3.22		Right of Borrowers to Halt Construction and Restore.		140

 

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ARTICLE IV. REPRESENTATIONS AND WARRANTIES.				143
Section 4.1		Representations of Borrowers		143
Section 4.2		Survival of Representations		158
Section 4.3		Definition of Borrowers’ Knowledge		158
ARTICLE V. COVENANTS OF BORROWERS				158
Section 5.1		Affirmative Covenants		158
Section 5.2		Negative Covenants		176
ARTICLE VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION				184
Section 6.1		Insurance		184
Section 6.2		Casualty		189
Section 6.3		Condemnation		190
Section 6.4		Restoration		191
ARTICLE VII. RESERVE FUNDS				195
Section 7.1		Required Repair Fund		195
Section 7.2		Tax and Insurance Escrow Fund		198
Section 7.3		Replacements and Replacement Reserve		198
Section 7.4		Interest Reserve Fund		199
Section 7.5		Initial Renovation Reserve Fund		200
Section 7.6		General Reserve Fund		204
Section 7.7		Construction Loan Reserve Fund		205
Section 7.8		Reserve Funds, Generally		205
ARTICLE VIII. DEFAULTS				206
Section 8.1		Event of Default		206
Section 8.2		Remedies		211
ARTICLE IX. SPECIAL PROVISIONS				215
Section 9.1		Sale of Note and Securitization		215
Section 9.2		Securitization Indemnification		217
Section 9.3		Intentionally Omitted		220
Section 9.4		Exculpation		220
Section 9.5		Matters Concerning Managers and Liquor Manager		224
Section 9.6		Matters Concerning Gaming Operator		225
Section 9.7		Servicer		225
Section 9.8		Restructuring of Loan		226
ARTICLE X. MISCELLANEOUS				227
Section 10.1		Survival		227
Section 10.2		Lender’s Discretion		227
Section 10.3		Governing Law		227
Section 10.4		Modification, Waiver in Writing		229

 

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Section 10.5		Delay Not a Waiver		229
Section 10.6		Notices		229
Section 10.7		Trial by Jury		231
Section 10.8		Headings		232
Section 10.9		Severability		232
Section 10.10		Preferences		232
Section 10.11		Waiver of Notice		232
Section 10.12		Remedies of Borrowers		232
Section 10.13		Expenses; Indemnity		232
Section 10.14		Schedules and Exhibits Incorporated		234
Section 10.15		Offsets, Counterclaims and Defenses		234
Section 10.16		No Joint Venture or Partnership; No Third Party Beneficiaries		234
Section 10.17		Publicity		235
Section 10.18		Waiver of Marshalling of Assets		236
Section 10.19		Waiver of Counterclaim		236
Section 10.20		Conflict; Construction of Documents; Reliance		236
Section 10.21		Brokers and Financial Advisors		237
Section 10.22		Prior Agreements		237
Section 10.23		Joint and Several Liability		237
Section 10.24		Certain Additional Rights of Lender (VCOC)		237
Section 10.25		Future Funding, Participations and Assignment		238
ARTICLE XI. INTENTIONALLY OMITTED				239
ARTICLE XII. GAMING PROVISIONS				239
Section 12.1		Operation of Casino Component		239
Section 12.2		Gaming Liquidity Requirements		241
ARTICLE XIII. RIGHT OF FIRST OFFER				242
Section 13.1		Right of First Offer		242
Section 13.2		Right of First Offer Procedure		242
Section 13.3		Application to Credit Suisse		243

 

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EXHIBITS AND SCHEDULES

Schedule I-A		—		Legal Description of Hotel/Casino Property
Schedule I-B		—		Legal Description of Café Property
Schedule I-C		—		Legal Description of Adjacent Property
Schedule II		—		Description of Project
Schedule III		—		Intentionally Omitted
Schedule IV		—		Allocated Loan Amounts
Schedule V		—		FF&E, Capital & Equipment Leases
Schedule VI		—		Organizational Structure
Schedule VII		—		Approximate Release Parcel
Schedule VIII		—		Litigation
Schedule IX		—		Operating Permits
Schedule X		—		Rent Roll
Schedule XI		—		IP
Schedule XII		—		Required Repairs — Deadlines for Completion
Schedule XIII		—		Schedule and Budget for Initial Renovations
Schedule XIV		—		Projected Monthly Net Operating Income
Schedule XV		—		Net Worth Requirements
Schedule XVI		—		Uses of Working Capital Advance
Schedule XVII		—		Right of First Offer Terms for Affiliate Release Parcel Purchasers and Affiliate Adjacent Parcel Purchasers
Schedule XVIII		—		Right of Last Look Terms for Affiliate Release Parcel Purchasers and Affiliate Adjacent Parcel Purchasers
Exhibit A				Advance Request
Exhibit B				Anticipated Cost Report
Exhibit C				Architect’s Consent
Exhibit D				Construction Completion Guaranty
Exhibit E				Construction Manager’s Consent
Exhibit F				General Contractor’s Consent
Exhibit G				Major Contractor’s Consent
Exhibit H				Application and Certificate for Payment
Exhibit I				Architect’s Certificate
Exhibit J				Construction Manager’s Certificate
Exhibit K				Contractor’s Certificate
Exhibit L-1				Lien Waiver — Progress Payment/Conditional
Exhibit L-2				Lien Waiver — Progress Payment/Unconditional
Exhibit L-3				Lien Waiver — Final Payment/Conditional
Exhibit L-4				Lien Waiver — Final Payment/Unconditional
Exhibit M				Affirmation of Payment
Exhibit N				General Contractor’s Certificate
Exhibit O				Form of Casino Component Lease
Exhibit P				Letter of Credit Reduction Notice

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT , dated as of February 2, 2007 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Agreement ”), among COLUMN FINANCIAL, INC. , a Delaware corporation, having an address at 11 Madison Avenue, New York, New York 10010 (together with its successors and assigns, “ Lender ”), and HRHH HOTEL/CASINO, LLC , a Delaware limited liability company, having its principal place of business c/o Morgans Hotel Group Co., 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“ Hotel/Casino Borrower ”), HRHH CAFE, LLC , a Delaware limited liability company, having its principal place of business c/o Morgans Hotel Group Co., 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“ Café Borrower ”), HRHH DEVELOPMENT, LLC , a Delaware limited liability company, having its principal place of business c/o Morgans Hotel Group Co., 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“ Adjacent Borrower ”), HRHH IP, LLC , a Delaware limited liability company, having its principal place of business c/o Morgans Hotel Group Co., 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“ IP Borrower ”), and HRHH GAMING, LLC , a Nevada limited liability company, having its principal place of business c/o Morgans Hotel Group Co., 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“ Gaming Borrower ”; and each of Hotel/Casino Borrower, Café Borrower, Adjacent Borrower, IP Borrower and Gaming Borrower, individually, a “ Borrower ”, and collectively, “ Borrowers ”), jointly and severally.

W I T N E S S E T H :

WHEREAS , Borrowers desire to obtain the Loan (as hereinafter defined) from Lender; and

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

NOW, THEREFORE , in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, and for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby covenant, agree, represent and warrant as follows:

ARTICLE I.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1             Definitions.

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

“ Acceptable Counterparty ” shall mean any counterparty to the Interest Rate Cap Agreement that has and shall maintain, until the expiration of the applicable Interest Rate Cap

 

Agreement, a long-term unsecured debt rating of at least “AA-” by S&P and “Aa3” from Moody’s, which rating shall not include a “t” or otherwise reflect a termination risk.

“ Acquisition Costs ” shall mean $932,576,584.29, representing the costs paid on the Closing Date directly or indirectly in connection with the acquisition of the Properties and the IP and/or in making the Loan (including, without limitation, required deposits to Reserve Funds).

“ Acquisition Loan ” shall mean that portion of the Loan to be made by Lender to Borrowers on the date hereof pursuant to this Agreement in the principal amount equal to the Acquisition Loan Amount.

“ Acquisition Loan Advance ” shall mean the advance of the Acquisition Loan Amount made on the date hereof pursuant to the provisions of this Agreement.

“ Acquisition Loan Amount ” shall mean an amount equal to $760,000,000.00, which represents the portion of the principal amount of the Loan advanced pursuant to this Agreement on the date hereof.

“ Additional Insolvency Opinion ” shall have the meaning set forth in Section 4.1.30(d) hereof.

“ Additional Non-Qualified Mandatory Prepayment ” shall have the meaning set forth in Section 2.4.2(d) hereof.

“ Additional Non-Qualified Prepayment Date ” shall mean July 1, 2008.

“ Administrative Agent ” shall have the meaning set forth in Section 3.19.1 hereof.

“ Administrative Agent Fee ” shall mean an annual fee payable to the Administrative Agent equal to $200,000.00, payable in equal quarterly installments, in advance.

“ Adjacent Borrower ” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“ Adjacent Parcel Purchaser ” shall have the meaning set forth in Section 2.5.2(a) hereof.

“ Adjacent Parcel Release Price ” shall have the meaning set forth in Section 2.5.2(a)(vi) hereof.

“ Adjacent Parcel Sale ” shall have the meaning set forth in Section 2.5.2(a) hereof.

“ Adjacent Property ” shall mean that or those certain parcel(s) of real property more particularly described on Schedule I-C attached hereto and made a part hereof, the Improvements thereon and all personal property owned by Adjacent Borrower and encumbered by the Mortgage, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clause of the Mortgage and referred to therein as the “Adjacent Property”.

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“ Adjacent Property IP License ” shall have the meaning set forth in Section 5.1.26(b) hereof.

“ Advance Request ” shall mean that certain form of Advance Request attached hereto as Exhibit A .

“ Affiliate ” shall mean, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.

“Affiliate Adjacent Parcel Purchaser” shall have the meaning set forth in Section 2.5.2(a) .

“Affiliate Adjacent Parcel Release Price” shall have the meaning set forth in Section 2.5.2(a)(vi) .

“ Affiliate IP License ” shall have the meaning set forth in Section 5.1.26(d) hereof.

 “Affiliate IP Purchaser” shall have the meaning set forth in Section 2.5.3(a) .

“Affiliate IP Release Price” shall have the meaning set forth in Section 2.5.3(a)(vi) .

“ Affiliate Joint Venture Counterparty ” shall mean any party to an Affiliate Joint Venture who is a Restricted Party or any Affiliate thereof.

“ Affiliate Release Parcel Purchaser ” shall have the meaning set forth in Section 2.5.1(a) .

“ Affiliate Release Parcel Release Price ” shall have the meaning set forth in Section 2.5.1(a)(vi) .

“ Affiliated IP Party ” shall mean (i) any subsidiary of any Borrower hereafter formed with Lender’s consent, (ii) HRHI, but only from and after the consummation of the transactions contemplated by the Merger Agreement, and (iii) any subsidiary of HRHI, but only from and after the consummation of the transactions contemplated by the Merger Agreement.

“ Affiliated Manager ” shall mean any Manager in which any Borrower or any Guarantor has, directly or indirectly, any legal, beneficial or economic interest.

“ Affirmation of Payment ” shall have the meaning set forth in Section 3.3(b)(iii) .

“ Aggregate Monthly Amount ” shall have the meaning set forth in Section 2.6.2(b) hereof.

“ Agreement Regarding Morton Indemnification and Escrow ” shall mean that certain Collateral Assignment and Acknowledgment (Morton Indemnification), dated as of the date hereof, made by PM Realty, LLC, Red, White and Blue Pictures, Inc., Peter A. Morton, 510 Development Corporation, Morgans Hotel Group Co., Morgans Group LLC and Chicago Title

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Agency of Nevada, Inc. in favor of Lender, (i) acknowledging that Lender is a third party beneficiary of the Morton Indemnification and the PWR/RWB Escrow Agreement, and (ii) consenting to Lender’s rights under Section 5.2.11 hereof.

“ Allocated Loan Amount ” shall mean, with respect to the Adjacent Property (on a per acre basis) and the IP, the amount of the Loan allocated to each of the Adjacent Property (on a per acre basis) and the IP as set forth on Schedule IV attached hereto and made a part hereof; provided , however , that throughout the term of the Loan, if applicable, the Allocated Loan Amounts shall be adjusted as follows: (a) in the event that any Borrower shall make a voluntary prepayment of the Loan, the Allocated Loan Amount for the Adjacent Property (on a per acre basis) and/or the IP, to the extent any of the foregoing is then securing the Loan, shall be reduced by an amount equal to (i) the aggregate amount of such prepayment multiplied by (ii) the Allocated Loan Percentage for the Adjacent Property (on a per acre basis) or the IP, as applicable, and (b) in the event of a Casualty or Condemnation to the Adjacent Property resulting in the application of Net Proceeds to the Loan in accordance with the provisions of this Agreement, the Allocated Loan Amount for the Adjacent Property shall be reduced by the amount of such Net Proceeds up to the amount of the Allocated Loan Amount for the Adjacent Property (on an aggregate basis), but any excess Net Proceeds over the Allocated Loan Amount for the Adjacent Property shall not reduce the Allocated Loan Amount for the IP, it being expressly acknowledged and agreed by Lender and Borrowers that under no circumstances other than the foregoing clauses (a) and (b) , including the payment of any Release Parcel Release Price, Adjacent Parcel Release Price or IP Release Price, shall the payment of any principal of the Loan, or any other event, result in the reduction of the Allocated Loan Amount for the Adjacent Property (either on a per acre or aggregate basis) or the IP.

“ Allocated Loan Percentage ” shall mean, with respect to the Adjacent Property (on a per acre basis) or the IP, as applicable, as of any date of determination and calculated prior to the prepayment with respect to which the Allocated Loan Amount calculation is being made on such date of determination, a fraction, expressed as a percentage, (i) the numerator of which is the Allocated Loan Amount for the Adjacent Property (on a per acre basis) or the IP, as applicable, and (ii) the denominator of which is the difference between $1,360,000,000.00 less any principal prepayments made prior to the prepayment with respect to which the Allocated Loan Amount calculation is being made on such date of determination.

“ Alteration Threshold Amount ” shall mean (i) prior to Substantial Completion of the Project (but excluding any portion of the Project), Two Million and No/100 Dollars ($2,000,000.00), and (ii) following Substantial Completion of the Project, Three Million and No/100 Dollars ($3,000,000.00).

“ Alternative Minimum Interest Reserve Amount ” shall have the meaning set forth in Section 2.4.2(b)(ii) hereof.

“ Alternative Minimum Mandatory Letter of Credit ” shall have the meaning set forth in Section 2.4.2(b)(ii) hereof.

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“ Annual Budget ” shall mean the operating budget, including all planned Capital Expenditures, for all of the Properties, collectively, prepared by Borrowers or the applicable Manager(s) for the applicable Fiscal Year or other period.

“ Anticipated Cost Report ” shall mean a report in the form set forth in Exhibit B executed by the Construction Manager which sets forth the anticipated costs to complete construction of the Project, after giving effect to costs incurred during the previous month and any anticipated Change Orders.

“ Applicable Exit Fee Percentage ” shall mean one percent (1%), unless Borrowers shall fully repay the Debt on or prior to the Maturity Date with the proceeds of a Refinancing Loan which is provided by Credit Suisse or an Affiliate thereof (whether or not it is Lender), in which case it shall mean one-half of one percent (0.50%).  Borrowers expressly acknowledge and agree that neither Lender nor Credit Suisse nor any Affiliate thereof shall have any obligation to offer or to provide any Refinancing Loan and the failure to offer or to provide any Refinancing Loan shall not affect Borrowers’ obligation to pay the Exit Fee.

“ Applicable Interest Rate ” shall mean the rate or rates at which the Outstanding Principal Balance bears interest from time to time in accordance with the provisions of Section 2.2.3 hereof.  The Applicable Interest Rate for the initial Interest Period is Nine and 47/100ths (9.47)%.

“ Appraised Value ” shall mean the appraised value of the applicable Property or the applicable portion thereof based on one or more appraisals reasonably acceptable to Lender conducted by one or more licensed appraisers.

“ Approved Annual Budget ” shall have the meaning set forth in Section 5.1.11(d) hereof.

“ Approved Bank ” shall mean a bank or other financial institution which has a minimum long term unsecured debt rating of at least “AA” by S&P and Fitch and “Aa2” by Moody’s.

“ Approved Pre-Construction Expenses ” shall have the meaning specified in Section 3.17.1(a) hereof.

“ Architect ” shall mean each of (i) Klai Juba Architects, the architect engaged by (or on behalf of) one or more Borrowers or an Affiliate thereof with respect to the Project on the date hereof, (ii) any other architect engaged by (or on behalf of) one or more Borrowers with respect to the Project after the date hereof and approved by Lender in its reasonable discretion, and (iii) any successor of any of the foregoing, in each case as approved by Lender in its reasonable discretion; provided , that in no event shall any Architect (a) be an Affiliate of any Restricted Party or (b) have any equity interest or any equivalent thereof in any of the Properties or in any Restricted Party.

“ Architect’s Certificate ” shall have the meaning set forth in Section 3.2(f)(xi) .

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“ Architect’s Contract ” shall mean a contract for architectural services to be entered into by and between one or more Borrowers and Architect in respect of the Project and approved by Lender in its reasonable discretion.

“ Architect’s Consent ” shall mean an Architect Certification and Consent Agreement executed and delivered by the Architect in favor of Lender and substantially in the form attached as Exhibit C .

“ Asbestos Survey ” shall have the meaning set forth in Section 3.18(b) .

“ Assignment of Contracts ” shall mean that certain Assignment of Contracts, Operating Permits and Construction Permits, dated as of the date hereof, from Borrowers to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Assignment of Leases ” shall mean that certain first priority Assignment of Leases and Rents, dated as of the date hereof, from Hotel/Casino Borrower, Café Borrower, Adjacent Borrower and Gaming Borrower, as assignors, to Lender, as assignee, assigning to Lender all of each such Borrower’s right, title and interest in and to the Leases and Rents of its Property as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Assignment of Liquor Management Agreement ” shall mean that certain Assignment of Liquor Management Agreement and Subordination of Management Fees, dated as of the date hereof, among Lender, Hotel/Casino Borrower and HRHI, in its capacity as the Liquor Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Assignment of Management Agreement ” shall mean either of the Assignment of Management Agreement (Adjacent Property) or the Assignment of Management Agreement (All Properties).

“ Assignment of Management Agreement (Adjacent Property) ” shall mean that certain Assignment of Management Agreement (Adjacent Property), dated as of the date hereof, among Lender, Adjacent Borrower and Sub-Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Assignment of Management Agreement (All Properties) ” shall mean that certain Assignment of Management Agreement and Subordination of Management Fees (All Properties), dated as of the date hereof, among Lender, Café Borrower, Hotel/Casino Borrower, Adjacent Borrower and the Affiliated Manager of such Properties, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Assignment of Restaurant Management Agreement ” shall mean that certain Assignment of Restaurant Management Agreement, dated as of the date hereof, among Lender, Hotel/Casino Borrower, EGG, LLC and Kerry Simon, the managers of Simon Kitchen and Bar at the Hotel/Casino Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

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“ Award ” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation of all or any part of any Property.

“ Bankruptcy Action ” shall mean with respect to any Person (a) such Person filing a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (c) such Person filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for any involuntary petition from any Person; (d) such Person consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, or examiner for such Person or any portion of any Property; or (e) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.

“ Bankruptcy Code ” shall mean 11 U.S.C. § 101 et seq. , as the same may be amended from time to time.

“ Basic Carrying Costs ” shall mean, for any period, with respect to each Property, the sum of the following costs associated with such Property:  (a) Taxes, (b) Other Charges, and (c) Insurance Premiums.

“Bonafide Adjacent Parcel Purchaser” shall have the meaning set forth in Section 2.5.2(a) .

“Bonafide Adjacent Parcel Release Price” shall have the meaning set forth in Section 2.5.2(a)(v) .

“Bonafide IP Purchaser” shall have the meaning set forth in Section 2.5.3(a) .

“Bonafide IP Release Price” shall have the meaning set forth in Section 2.5.3(a)(v) .

 “ Bonafide Release Parcel Purchaser ” shall have the meaning set forth in Section 2.5.1(a) .

“ Bonafide Release Parcel Release Price ” shall have the meaning set forth in Section 2.5.1(a)(v) .

“ Borrower ” and “ Borrowers ” shall have the meanings set forth in the introductory paragraph hereto, together with its or their successors and permitted assigns.

“ Borrower Advance Date ” shall have the meaning set forth in Section 3.21 hereof.

“ Breakage Costs ” shall have the meaning set forth in Section 2.2.3(h) hereof.

“ Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business.

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“ Café Borrower ” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“ Café Property ” shall mean that or those certain parcel(s) of real property more particularly described on Schedule 1-B attached hereto and made a part hereof, the Improvements thereon and all personal property owned by Café Borrower and encumbered by the Mortgage, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clause of the Mortgage and referred to therein as the “Cafe Property”.

“ Capital Expenditures ” shall mean, for any period, the amount expended for items capitalized under GAAP and the Uniform System of Accounts (including expenditures for building improvements or major repairs, leasing commissions and tenant improvements, but excluding capitalized interest).

“ Cash Management Account ” shall have the meaning set forth in Section 2.6.2(a) hereof.

“ Cash Management Agreement ” shall mean that certain Cash Management Agreement, dated as of the date hereof, by and among Borrowers and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Casino Account ” shall mean, if and when Gaming Borrower becomes the Gaming Operator in accordance with the terms of this Agreement, individually or collectively, one or more accounts established and maintained from time to time by Gaming Borrower and reasonably approved by Lender; provided , however , that any such Casino Account shall be established and maintained pursuant to, and in accordance with, all applicable Gaming Laws and shall be subject to a security interest in favor of Lender pursuant to the Loan Documents.

“ Casino Component ” shall mean that portion of the Hotel/Casino Property devoted to the operation of a casino gaming operation and, as of the date hereof, leased to HRHI pursuant to the HRHI Lease and subleased to Gaming Operator pursuant to the Gaming Sublease, including, without limitation, those areas devoted to the conduct of games of chance, facilities associated directly with gaming operations, including, without limitation, casino support areas such as surveillance and security areas, cash cages, counting and accounting areas and gaming back-of-the-house areas, in each case, to the extent the operation thereof requires a Gaming License under applicable Gaming Laws, as more particularly described and set forth in the HRHI Lease and the Gaming Sublease as the “Premises”.

“ Casino Component Lease ” shall mean a lease substantially in the form attached hereto as Exhibit O , by and between Hotel/Casino Borrower, as lessor, and Gaming Borrower, as lessee, pursuant to which Hotel/Casino Borrower shall lease the Casino Component to Gaming Borrower for the operation of the Casino Component as a casino, which, provided no monetary Default or any Event of Default has occurred and is continuing, shall be entered into upon (i) Gaming Borrower’s receipt of all necessary approvals from the Gaming Authorities, (ii) the termination of the Gaming Sublease pursuant to the terms thereof, (iii) the surrender of any Gaming Licenses by the existing licensee under applicable Gaming Laws, if required, (iv) the

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issuance to Gaming Borrower of all Gaming Licenses necessary to operate the Casino Component as a casino, and (v) the effectiveness of such Gaming Licenses.

“ Casualty ” shall have the meaning set forth in Section 6.2 hereof.

“ Casualty Consultant ” shall have the meaning set forth in Section 6.4(c)(iii) hereof.

“ Casualty Retainage ” shall have the meaning set forth in Section 6.4(c)(iv) hereof.

“ Certificate ” shall have the meaning set forth in Section 7.1.2 hereof.

“ Certificate of Occupancy ” shall mean a permanent or temporary certificate of occupancy, in either case, for the portion of the Project specified in such certificate of occupancy issued by the applicable Governmental Authority pursuant to applicable Legal Requirements which permanent or temporary certificate of occupancy shall permit such portion of the Project covered thereby to be lawfully occupied and used for its intended purposes, shall be in full force and effect and, in the case of a temporary certificate of occupancy, shall permit full use and lawful occupancy of the portion(s) of the Project covered thereby, and if such temporary certificate of occupancy shall provide for an expiration date, any Punch List Items which must be completed in order for such temporary certificate of occupancy to be renewed or extended shall be completed no later than fifteen (15) days prior to the applicable expiration date thereof.

“ Change Order ” shall mean any change order, amendment, deviation, supplement, addition, deletion, revision or other modification in any respect to the Plans and Specifications, the Loan Budget, the Construction Schedule, the Architect’s Agreement, any Major Contract or any other contract or subcontract with a Trade Contractor, including minor departures from the Plans and Specifications pursuant to field orders.

“ Closing Completion Guaranty ” shall mean that certain Closing Guaranty of Completion, dated as of the date hereof, from Guarantors to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Closing Date ” shall mean the date of the funding of the Loan.

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

“ Collateral Assignment of Interest Rate Cap Agreement ” shall mean that certain Collateral Assignment of Interest Rate Cap Agreement, dated as of the date hereof, executed by Borrowers in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Comparable Hotel/Casinos ” shall mean hotel and casino resorts in Las Vegas, Nevada which are of a similar nature, quality and scope as the hotel and casino resort being operated on the Hotel/Casino Property as of the date hereof, including, without limitation, Mandalay Bay Resort and Casino, MGM Grand Hotel and Casino, The Palms Casino Resort and Caesars Palace, in each of the foregoing instances, as existing and being operated on the date hereof.

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

“ Condemnation Proceeds ” shall have the meaning set forth in Section 6.4(c) hereof.

“ Constituent Member ” shall mean any direct member or partner in any Borrower and any Person that, directly or indirectly through one or more other partnerships, limited liability companies, corporations or other entities is a stockholder, member or partner in any Borrower.

“ Construction Completion Guaranty ” shall mean a Construction Guaranty of Completion from Guarantors in favor of Lender in the form attached hereto as Exhibit D , as such agreement may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Construction Consultant ” shall mean a Person engaged by Lender to inspect the Project and the Properties as construction progresses and to consult with and to provide advice to, and to render reports to, Lender which, at Lender’s option, may be either an officer or employee of Lender or a consulting architect, engineer or inspector appointed or engaged by Lender at the sole cost and expense of Borrowers.  On the date hereof, the Construction Consultant is Inspection & Valuation International, Inc.

“ Construction Consultant Approval ” shall mean, with respect to any Advance Request delivered hereunder, a certificate or report of the Construction Consultant approving such Advance Request and confirming the satisfaction (or waiver in writing by Lender) of the conditions to the applicable Construction Loan Advance set forth in Section 3.2 , 3.3 and/or 3.4 , hereof, as applicable, based upon a site observation of the Project made by the Construction Consultant not more than thirty (30) days prior to the applicable Requested Disbursement Date, which shall include, among other things, the following:

(a)            a certification that the Construction Consultant has received and approved (i) with respect to the Initial Construction Loan Advance, all known Plans and Specifications, or (ii) with respect to all subsequent Construction Loan Advances, all known Change Orders;

(b)            a certification, in the Construction Consultant’s reasonable professional opinion, that the work performed as of the date thereof is substantially in accordance with the Plans and Specifications, and the Construction Loan Advance requested pursuant to the Advance Request is substantially in accordance with the Loan Budget and the Construction Schedule;

(c)            (i) verification of the portion of the Project completed as of the date of such site observation, and (ii) an estimate of (A) the percentage of the construction of the Project completed as of the date of such site observation on the basis of work in place as part of the Project and the approved Loan Budget and the value of such completed construction, (B) the Hard Costs actually incurred for work in place as part of the Project as of the date of such site

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observation, (C) the sum necessary to complete construction of the Project in accordance with the Plans and Specifications, and (D) the amount of time from the date of such site observation that will be required to achieve Substantial Completion of the Project;

(d)            a certification that all amounts requested under the Advance Request that are for the payment of Hard Costs have been incurred for work and materials actually performed and delivered and consistent with the Plans and Specifications for such Project to date, except as set forth in Section 3.1.11 hereof;

(e)            a certification that no Shortfall then exists;

(f)             a certification that the Advance Request does not include any amounts in respect of Stored Materials or, if the Advance Request does include amounts in respect of Stored Materials, then a certification (i) as to the value of Stored Materials stored at the Hotel/Casino Property or the Adjacent Property, (ii) as to the value of Stored Materials stored off-site, and (iii) that the requirements of Section 3.1.11 hereof are satisfied with respect to all such Stored Materials;

(g)            a certification, to the best knowledge of the Construction Consultant (for which purpose it has, to the extent reasonably appropriate in its professional judgment, relied upon observations, certifications and responses of the applicable Architect and Persons employed for the construction of the Project), that the construction of the Project to the date of the Advance Request has been performed in a good and workmanlike manner, in conformity with good construction and engineering practices and in compliance in all material respects with the Plans and Specifications and the Construction Schedule;

(h)            a certification that the Construction Consultant has reviewed all Advance Requests made prior to the date thereof and compared the invoices or other documentation supporting such prior Construction Loan Advances with the Line Item categories presently in effect and that the total advances to date in each such Line Item category do not exceed the budgeted amount for such category in any material respect, except as permitted pursuant to Sections 3.9 , 3.10 and/or 3.15 hereof; and

(i)             a certification that (i) the Loan Budget fairly represents in all material respects the Project Costs that it reasonably anticipates will be incurred through the date of Final Completion in the aggregate and for each Line Item substantially in accordance with the Plans and Specifications, and (ii) the Construction Consultant is not aware of any material costs that will be needed to be paid or incurred by Borrowers in order to cause Substantial Completion or Final Completion to occur other than the Project Costs identified in the Loan Budget.

“ Construction Loan ” shall mean that portion of the Loan to be made by Lender to Borrowers pursuant to this Agreement in an aggregate principal amount not to exceed the Construction Loan Amount.

“ Construction Loan Advance ” shall mean any advance of any portion of the Construction Loan Amount pursuant to this Agreement, including, without limitation, (i) any Pre-Construction Advance once advanced in accordance with Section 3.17 hereof, (ii) the Second Anniversary Unfunded Construction Loan Advance, if applicable, and/or (iii) any

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subsequent advance of funds advanced into the Construction Loan Reserve Account pursuant to the Second Anniversary Unfunded Construction Loan Advance as contemplated under Section 3.1(d) hereof, if applicable, in each of the foregoing instances, in accordance with the terms hereof.

“ Construction Loan Amount ” shall mean, as of any date of determination, an amount equal to the lesser of (i) $600,000,000.00 or (ii) the amount that, when added to the Outstanding Principal Balance as of such date of determination, will cause the Total Cost Ratio to equal 80%, whichever of the foregoing clauses (i) or (ii) is less being the maximum aggregate amount of Construction Loan Advances that could be made hereunder as of such date of determination.

“ Construction Loan Reserve Account ” shall have the meaning set forth in Section 7.7.1 hereof.

“ Construction Management Agreement ” shall mean an agreement to be entered into by and between Borrowers and Construction Manager providing for the construction of the Project in accordance with the Plans and Specifications prepared in accordance with the requirements of this Agreement and approved by Lender in its reasonable discretion.

“ Construction Manager ” shall mean a construction manager to be engaged by one or more Borrowers or any Affiliate thereof in connection with the Project and approved by Lender in its reasonable discretion; provided , that in no event shall the Construction Manager (a) be an Affiliate of any Restricted Party or (b) have any equity interest or any equivalent thereof in any of the Properties or in any Restricted Party.

“ Construction Manager’s Certificate ” shall have the meaning set forth in Section 3.2(f)(xi) .

“ Construction Manager’s Consent ” shall mean a Construction Manager Certification and Consent Agreement executed and delivered by the Construction Manager in favor of Lender and substantially in the form attached as Exhibit E .

“ Construction Qualification Date ” shall mean April 1, 2008, subject to Excusable Delay not to exceed fifteen (15) days.

“Construction Restoration Completion Notice” shall have the meaning set forth in Section 3.22(c) hereof.

“Construction Restoration Payment Statement” shall have the meaning set forth in Section 3.22(c) hereof.

“ Construction Schedule ” shall mean a schedule for the construction and completion of the Project, in form and substance acceptable to Lender in its reasonable discretion, and including, without limitation, (i) a construction progress schedule reflecting the anticipated dates of completion of specified subcategories of the Loan Budget, (ii) a trade-by-trade breakdown of the estimated periods of commencement and completion of the work to be completed in connection with the Project, and (iii) such other information as the Construction Consultant shall reasonably require.

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“ Contingency (Hard Costs) ” shall mean the amount allocated as a contingency reserve in the Loan Budget for Hard Costs, which shall in no event start out being less than ten percent (10%) of the total amount of the Hard Costs included in the Loan Budget.

“ Contingency Line Item ” shall have the meaning set forth in Section 3.10(a) .

“ Contingency (Soft Costs) ” shall mean the amount allocated as a contingency reserve in the Loan Budget for Soft Costs, which shall in no event start out being less than five percent (5%) of the total amount of the Soft Costs included in the Loan Budget, excluding, however, the interest Line Item.

“ Contingency ” shall mean, collectively, the Contingency (Hard Costs) and the Contingency (Soft Costs).

“ Contractor’s Certificate ” shall have the meaning set forth in Section 3.2(f)(xi) .

“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.  “ Controlled ” and “ Controlling ” shall have correlative meanings.

“ Cost Savings ” shall have the meaning set forth in Section 3.9(b) hereof.

“ Counterparty ” shall mean, with respect to the Interest Rate Cap Agreement, IXIS Financial Products Inc., and with respect to any Replacement Interest Rate Cap Agreement, any substitute Acceptable Counterparty.

“ Credit Suisse ” shall mean Credit Suisse Securities (USA) LLC and its successors in interest.

“ Debt ” shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note together with all interest accrued and unpaid thereon and all other sums (including, if applicable, any Spread Maintenance Premium, any Prepayment Fee, the Unused Advance Fee, the Administrative Agent Fee and the Exit Fee) due to Lender in respect of the Loan under the Note, this Agreement, the Mortgage and the other Loan Documents.

“ Debt Service ” shall mean, with respect to any particular period of time, scheduled interest payments due under this Agreement and the Note.

“ Debt Service Coverage Ratio ” shall mean, as of any date of determination, a ratio in which:

(a)            the numerator is the Pro-Forma Net Cash Flow as of such date of determination; and

(b)            the denominator is the aggregate amount of interest that is reasonably estimated by Lender to be due and payable on the Outstanding Principal Balance as of such date of determination for the following full twelve (12) calendar month period.

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“ Debt Yield ” shall mean:

(a)            for all calculations of Debt Yield except in connection with the Second Qualified Extension Option, a ratio (expressed as a percentage) in which: (i) the numerator is the Net Cash Flow for the trailing twelve (12) calendar month period ending with the last calendar month prior to the date of determination for which financial reports have been delivered under Section 5.1.1 hereof, as reasonably determined by Lender based on the financial statements delivered to Lender pursuant to Section 5.1.11 hereof, and (ii) the denominator is the Outstanding Principal Balance as of such date of determination, subject, however, to the provisions of Section 2.7.3 hereof; and

(b)            for the calculation of Debt Yield in connection with the Second Qualified Extension Option, a ratio (expressed as a percentage) in which: (i) the numerator is the Net Cash Flow for a period equal to the lesser of (A) the trailing twelve (12) calendar month period ending with the last calendar month prior to the date of determination for which financial reports have been delivered under Section 5.1.1 hereof, or (B) the period commencing on the first (1st) day of the First Full Operating Month through and including the last day of the last calendar month prior to the date of determination for which financial reports have been delivered under Section 5.1.1 hereof, with such Net Cash Flow, in the case of the foregoing clause (B) , then being reasonably annualized by Lender, and in each of the foregoing cases under clause (A) or (B) above, as reasonably determined by Lender based on the financial statements delivered to Lender pursuant to Section 5.1.11 hereof, and (ii) the denominator is the Outstanding Principal Balance as of such date of determination, subject, however, to the provisions of Section 2.7.3 hereof.

“ Debt Yield Letter of Credit ” shall have the meaning set forth in Section 2.7.3(b) hereof.

“ Deeded Adjacent Property ” shall have the meaning set forth in Section 3.2(u) hereof.

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

“ Default Rate ” shall mean a rate per annum equal to the lesser of (a) the Maximum Legal Rate and (b) four percent (4%) above the Applicable Interest Rate.

“ Determination Date ” shall mean, (i) with respect to the initial Interest Period, the date that is two (2) London Business Days prior to the Closing Date, and (ii) with respect to any subsequent Interest Period, the date that is two (2) London Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commences.

“ Disbursement Schedule ” shall mean the schedule of the amounts of Construction Loan Advances anticipated to be requisitioned by Borrowers each month during the term of the Loan, as certified by Borrower and reasonably approved by Lender and the Construction Consultant.

“ Disclosure Document ” shall mean a prospectus, prospectus supplement, private placement memorandum, offering memorandum, offering circular or other offering documents,

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in each case in preliminary or final form, used to offer Securities in connection with a Securitization.

“ DLJ Entities ” shall have the meaning set forth in Section 10.16(c) hereof.

“ DLJ Guarantor ” shall mean DLJ MB IV HRH, LLC, a Delaware limited liability company, together with its successors and permitted assigns.

“ DLJMB Parties ” shall have the meaning set forth in Section 9.4 hereof.

“ Draw Request ” shall mean, with respect to each Construction Loan Advance, an Advance Request together with all other documents required by this Agreement to be furnished to Lender as a condition to such Construction Loan Advance.

“ Eighteen Month Anniversary ” shall mean the date that is eighteen calendar months from the Closing Date.

“ Eligible Account ” shall mean a separate and identifiable “deposit account”, as such term is defined in any applicable Uniform Commercial Code, from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company, is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authority.  An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

“ Eligible Institution ” shall mean a depository institution or trust company, the short term unsecured debt obligations or commercial paper of which are rated at least “A-1+” by S&P, “P-1” by Moody’s and “F-1+” by Fitch in the case of accounts in which funds are held for thirty (30) days or less (or, in the case of accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s).

“ Embargoed Person ” shall have the meaning set forth in Section 4.1.35 hereof.

“ Environmental Indemnity ” shall mean that certain Borrowers Environmental Indemnity Agreement, dated as of the date hereof, executed by Borrowers in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Equipment ” shall have the meaning set forth in the granting clause of the Mortgage.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

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“ Event of Default ” shall have the meaning set forth in Section 8.1(a) hereof.

“ Excess Cash Flow ” shall have the meaning set forth in Section 2.6.2(b) hereof.

“ Excess Cash Termination Conditions ” shall mean that (i) as of any Financial Determination Date, the Properties have achieved and maintained a Debt Service Coverage Ratio of not less than 1.10 to 1.00 for the immediately preceding two (2) consecutive calendar quarters, and (ii) no Event of Default shall have occurred and be continuing.

“ Excess Cash Release Date ” shall mean the date upon which the Excess Cash Termination Conditions have been satisfied.

“ Excess Fully Funded IP Release Proceeds ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Excess IP Release Proceeds ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Excess Non-Fully Funded IP Release Proceeds ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Exchange Act ” shall have the meaning set forth in Section 9.2(a) hereof.

“ Exchange Act Filing ” shall have the meaning set forth in Section 5.1.11(f) hereof.

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of Borrowers hereunder, (a) income or franchise taxes imposed on (or measured by reference to) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, or any other jurisdiction in which it is subject to tax solely as a result of any present or former connection between the Administrative Agent, such Lender or other recipient, as applicable, and the jurisdiction imposing such tax other than a present or former connection solely as a result of the activities and transactions specifically contemplated by this Agreement, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) of this definition, and (c) in the case of a Non-U.S. Lender, any withholding tax that is imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender designates a new lending office, unless the designation of such new lending office was at the request of Borrowers, or is attributable to such Non-U.S. Lender’s failure to comply with Section 2.2.3(e)(iii) hereof, except to the extent that such Non-U.S. Lender was entitled, at the time of designation of a new lending office, to receive additional amounts from Borrowers with respect to such withholding tax pursuant to Section 2.2.3(e) hereof.

“ Excusable Delay ” shall mean a delay due to acts of god, governmental restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of any Borrower and not arising out of (a) the negligence, willful misconduct or illegal act of any

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Borrower or any Affiliate of any Borrower, or (b) any cause or circumstance resulting from the insolvency, bankruptcy or lack of funds of any Borrower, any Guarantor or any Affiliate of any Borrower or any Guarantor.

“ Existing FF&E Leases ” shall have the meaning set forth in the definition of “Special Purpose Entity” set forth below.

“ Exit Fee ” shall have the meaning set forth in Section 2.8 hereof.

“ Extended Maturity Date ” shall mean, as applicable, either (a) the Qualified Extended Maturity Date as set forth in Section 2.7.2 hereof, or (b) the Non-Qualified Extended Maturity Date as set forth in Section 2.7.1 hereof.

“ Extension Debt Service Coverage Ratio ” shall mean, with respect to any Extension Term, a ratio for the applicable twelve (12) month period in which:

(a)            the numerator is the Projected Underwritten Net Cash Flow for such Extension Term; and

(b)            the denominator is the aggregate amount of interest that would be payable on the sum of the Outstanding Principal Balance as of the first day of such Extension Term plus the amount of any anticipated Construction Loan Advances in accordance with the Construction Schedule, if any, for the following full twelve (12) calendar month period at an interest rate equal to the Strike Price applicable to such Extension Term plus the Spread.

“ Extension Interest Shortfall ” shall mean, with respect to each Extension Term, the difference between: (a) the Required Net Cash Flow with respect to such Extension Term, less (b) the amount on deposit in the Interest Reserve Fund as of the day immediately preceding the first (1 st ) day of such Extension Term.

“ Extension Option ” shall mean any Qualified Extension Option or Non-Qualified Extension Option, as applicable.

“ Extension Term ” shall mean any Qualified Extension Term or Non-Qualified Extension Term, as applicable.

“ Extra Non-Accrued Interest ” shall have the meaning set forth in Section 2.4.5 hereof.

“ Extraordinary Expense ” shall have the meaning set forth in Section 5.1.11(e) hereof.

“ FF&E ” shall mean all furniture, furnishings, fixtures and equipment required for the operation of any of the Properties, including, without limitation, (i) lobby furniture, carpeting, draperies, paintings, bedspreads, television sets, office furniture and equipment such as safes, cash registers, and accounting, duplicating and communication equipment, telephone systems, back and front of the house computerized systems, guest room furniture, specialized hotel equipment such as equipment required for the operation of kitchens, laundries, the front desk, dry cleaning facilities, bar and cocktail lounges, restaurants, recreational facilities as they may exist from time to time, and decorative lighting, material handling equipment and cleaning and

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engineering equipment and all other fixtures, equipment, apparatus and personal property needed for such purposes, (ii) Gaming Equipment which any Borrower is lawfully permitted to own or lease, and (iii) rock and roll memorabilia unique to the Hotel/Casino Property and similar in character to the other rock and roll memorabilia displayed at the Hotel/Casino Property.

“ FF&E Expenditures ” shall mean amounts expended for the purchase, replacement and/or installation of FF&E at the Properties.

“ FF&E Expenditures Work ” shall mean any labor performed or materials installed in connection with any FF&E Expenditures.

“ Final Completion ” shall mean that, in addition to Substantial Completion, (i) all Punch List Items shall have been completed Lien free and substantially in accordance with the Plans and Specifications, all Legal Requirements and this Agreement, (ii) one or more Certificates of Occupancy shall have been issued (if subject to any conditions, such conditions being acceptable to Lender in its sole and absolute discretion) for the entire Project, and (iii) reasonably satisfactory evidence shall have been delivered to Lender confirming that all other Governmental Approvals have been issued and all other Legal Requirements have been satisfied in all material respects so as to allow the Project to be used and operated in accordance with the Loan Documents.

“ Financial Determination Date ” shall have the meaning set forth in Section 2.6.4 hereof.

“ First Anniversary ” shall mean the first anniversary of the Closing Date.

“ First Full Operating Month ” shall mean the calendar month following the month in which Substantial Completion occurs.

“ First Non-Qualified Extended Maturity Date ” shall mean February 9, 2010.

“ First Non-Qualified Extension Option ” shall have the meaning set forth in Section 2.7.1(a) hereof.

“ First Non-Qualified Extension Term ” shall have the meaning set forth in Section 2.7.1(a) hereof.

“ First Qualified Extended Maturity Date ” shall mean February 9, 2011.

“ First Qualified Extension Option ” shall have the meaning set forth in Section 2.7.2(a) hereof.

“ First Qualified Extension Term ” shall have the meaning set forth in Section 2.7.2(a) hereof.

“ Fiscal Year ” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the term of the Loan.

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“ Fitch ” shall mean Fitch, Inc.

“ Fully Prepaid IP Sale ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Future Funding Obligations ” shall have the meaning set forth in Section 10.25(a) hereof.

“ GAAP ” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.

“ Gaming Assets ” shall have the meaning set forth in the Gaming Sublease.

“ Gaming Assets Note ” shall mean that certain Gaming Asset Note dated as February 2, 2007 made by the Gaming Operator to HRHI, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Gaming Authority ” shall mean any of the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board and any other Governmental Authority and/or regulatory authority or body or any agency which has, or may at any time after the Closing Date have, jurisdiction over the gaming activities or the sale or distribution of liquor at any of the Properties, or any successor to any such authority.

“ Gaming Borrower ” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“ Gaming Employees ” shall have the meaning set forth in the Gaming Sublease.

“ Gaming Equipment ” shall mean any and all gaming devices (as defined in NRS 463.0155), gaming device parts, inventory and other related gaming equipment and supplies used in connection with the operation of a casino, including, without limitation, slot machines, gaming tables, cards, dice, chips, tokens (including slot machine tokens not currently in circulation, and “reserve” chips, if any, not currently in circulation), player tracking systems, cashless wagering systems (as defined in NRS 463.014) and associated equipment (as defined in NRS 463.0136), which are located at any Property, are owned or leased by any Borrower and are used or useable exclusively in the present or future operation of slot machines and live games at any Property, together with all improvements and/or additions thereto, mobile gaming systems (as defined in Regulation 14.010(11) under NRS Chapter 463), all contracts necessary to own or operate any of the Gaming Equipment and/or to conduct gaming operations for the Casino Component, all assignable manufacturers and other warranties applicable to the Gaming Equipment, all computer hardware and software used to operate the Gaming Equipment and/or to conduct gaming operations for the Casino Component.

“ Gaming Laws ” shall mean the provisions of the Nevada Gaming Control Act, codified as NRS Chapter 463, as amended from time to time, all regulations of the Gaming Authorities promulgated thereunder, as amended from time to time, the provisions of the Clark County Code, as amended from time to time, and all other laws, statutes, rules, rulings, orders, ordinances, regulations and other Legal Requirements of any Gaming Authority.

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“ Gaming License ” shall mean any license, qualification, franchise, accreditation, approval, registration, permit, finding of suitability or other authorization relating to gaming, the gaming business or the operation of a casino under the Gaming Laws or required by any Gaming Authority or otherwise necessary under any Gaming Laws for the operation of gaming, the gaming business or a resort casino at the Hotel/Casino Property.

“ Gaming Liquidity Requirement ” shall mean, if and when Gaming Borrower becomes the Gaming Operator in accordance with the terms of this Agreement, the minimum bankroll requirements for cash and cash equivalents required to be maintained by Gaming Borrower pursuant to the Gaming Laws in an amount no greater than is mandated by Nevada Gaming Commission Regulation 6.150.

“ Gaming Member ” shall mean HRHH Gaming Member, LLC, a Delaware limited liability company.

“ Gaming Operating Reserve ” shall mean, if and when Gaming Borrower becomes the Gaming Operator in accordance with the terms of this Agreement, such cash funds and reserves that are held and maintained by Gaming Borrower, in its capacity as the duly licensed operator of the Casino Component under applicable Gaming Laws, either on-site at the Hotel/Casino Property or in the Casino Account, including, without limitation, casino chips, tokens, checks and markers; provided that all such Gaming Operating Reserves (i) are established and maintained solely for use in the day-to-day operation and management of the Casino Component in the ordinary course of business, and (ii) are funded and maintained in accordance with the requirements of all applicable Gaming Laws and are in the amounts that are reasonable and customary for casino operations at Comparable Hotel/Casinos (it being agreed that 110% of statutory or regulatory minimums shall be deemed a reasonable and customary minimum amount for these purposes).

“ Gaming Operator ” shall mean (i) for so long as the Gaming Sublease is in effect and all required Gaming Licenses are maintained in accordance with applicable Gaming Laws, Golden HRC, LLC, a Nevada limited liability company, the subtenant under the Gaming Sublease, and (ii) during any time when the Gaming Sublease is not in effect, a Qualified Gaming Operator who is supervising, managing and operating all gaming activities at the Hotel/Casino Property.

“ Gaming Recognition Agreement ” shall mean that certain Recognition Agreement, dated as of the date hereof, executed by Lender, Hotel/Casino Borrower, HRHI and Golden HRC LLC in connection with the Gaming Sublease, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Gaming Shortfall Notes ” shall mean the “Shortfall Notes” as defined in the Gaming Sublease.

“ Gaming Sublease ” shall mean that certain Casino Sublease, dated as of November 6, 2006, by and among MHG HR Acquisition Corp., as sublandlord, Morgans Hotel Group Co., and Golden HRC, LLC, as subtenant (it being acknowledged and agreed that, upon consummation of the transactions under the Merger Agreement, HRHI succeeded to the interests

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of MHG HR Acquisition Corp. thereunder), covering the Casino Component of the Hotel/Casino Property as more particularly described therein, as such Casino Sublease was modified by that certain First Amendment to Casino Sublease, dated as of January 9, 2007 and by the Gaming Recognition Agreement, and as the same may hereafter be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Gaming Surplus Fund Reserve ” shall mean the “Surplus Fund Reserve” as defined in the Gaming Sublease.

“ Gaming Working Capital Note ” shall mean the “Working Capital Note” as defined in the Gaming Sublease.

“ General Contractor ” shall mean each of (i) the general contractor engaged by (or on behalf of) one or more Borrowers or any Affiliate thereof with respect to the Project from time to time after the date hereof and approved by Lender in its reasonable discretion (which approval may take into account, without limitation, the financial condition and stability of any proposed general contractor), and (ii) any successor of the foregoing approved by Lender in its reasonable discretion (which approval may also take into account, without limitation, the financial condition and stability of any such successor); provided , that in no event shall the General Contractor (a) be an Affiliate of any Restricted Party or (b) have any equity interest or any equivalent thereof in any of the Properties or in any Restricted Party.

“ General Contract ” shall mean a guaranteed maximum price contract with the General Contractor entered into by one or more Borrowers or any Affiliate thereof in connection with the Project and approved by Lender in its reasonable discretion; provided , that (i) it shall be based on Plans and Specifications that are at least eighty percent (80%) complete in the Construction Consultant’s reasonable opinion and have been approved up to such point of completion by Lender and Construction Consultant in their reasonable discretion, and (ii) in no event shall allowances within such contract exceed fifteen percent (15%) of the guaranteed maximum price.

“ General Contractor’s Consent ” shall mean a General Contractor’s Performance Letter executed and delivered by the General Contractor in favor of Lender and substantially in the form attached as Exhibit F .

“ General Reserve Account ” shall have the meaning set forth in Section 7.6.1 hereof.

“ General Reserve Excess Cash Conditions ” shall mean, as of any Financial Determination Date, that (i) for the prior calendar month, the Net Operating Income from the Properties exceeded the projected Net Operating Income from the Properties as set forth on Schedule XIV attached hereto by at least fifteen percent (15%), and (ii) no Event of Default shall have occurred and be continuing.

“ General Reserve Fund ” shall have the meaning set forth in Section 7.6.1 hereof.

“ Governmental Approvals ” shall mean all approvals, consents, waivers, orders, acknowledgments, authorizations, permits and licenses required under applicable Legal Requirements to be obtained from any Governmental Authority for the construction of any and

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all of the Project and/or the use, occupancy and operation following completion of construction, as the context requires.

“ Governmental Authority ” shall mean any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence, including, without limitation, any Gaming Authority.

“ Gross Income from Operations ” shall mean, for any period, all Rents and all other income and proceeds (whether in cash or on credit, and computed in accordance with GAAP and, to the extent applicable with respect to the Hotel/Casino Property, the Uniform System of Accounts), received by any Borrower or by any Manager (on behalf of any Borrower) or by Sub-Manager (on behalf of any Borrower or any Manager) for the use, occupancy or enjoyment of any of the Properties, or any part thereof, or received by any Borrower or any Manager or Sub-Manager for the sale of any goods, services or other items sold on or provided from any of the Properties in the ordinary course of such Property’s operation, including, without limitation: (a) all income and proceeds received under Leases, including, without limitation, the HRHI Lease; (b) all income and proceeds received from rental of rooms and commercial, meeting, conference and/or banquet space within any of the Properties including net parking revenue; (c) all income and proceeds received from food and beverage operations and from catering services conducted from any of the Properties even though rendered outside of any of the Properties; (d) without duplication of the foregoing clause (a) or the following clause (e) , all income, proceeds and other amounts received by any Borrower under the Gaming Sublease; (e) without duplication of the foregoing clauses (a) or (d) , all income, proceeds and revenue generated from gaming activities at any Property; (f) any payments received by or on behalf of any Borrower under the Gaming Assets Note, the Shortfall Notes or the Working Capital Note or from the Surplus Fund Reserve; (g) all income and proceeds from business interruption, rental interruption and use and occupancy insurance with respect to the operation of any of the Properties (after deducting therefrom all necessary costs and expenses incurred in the adjustment or collection thereof); (h) all Awards for temporary use (after deducting therefrom all costs incurred in the adjustment or collection thereof and in Restoration of any of the Properties); (i) all income and proceeds from judgments, settlements and other resolutions of disputes with respect to matters which would be includable in this definition of “Gross Income from Operations” if received in the ordinary course of any of the Properties’ operation (after deducting therefrom all necessary costs and expenses incurred in the adjustment or collection thereof); (j) interest on credit accounts, rent concessions or credits, and other required pass-throughs and interest on Reserve Funds; and (k) deposits received for rental of rooms; and “Gross Income from Operations” shall also include all licensing fees and other income and receipts generated by the IP; but “Gross Income from Operations” shall exclude (1) gross receipts received by lessees, licensees or concessionaires of any of the Properties (but not any percentage rents or similar payments derived therefrom); (2) income and proceeds from the sale or other disposition of goods, FF&E, capital assets and other items not in the ordinary course of the operation of the applicable Property; (3) federal, state and municipal excise, sales and use taxes collected directly from customers, patrons or guests of any of the Properties as a part of or based on the sales price of any goods, services or other items, such as gross receipts, room, admission, cabaret or equivalent taxes; (4) Awards (except to the extent provided in clause (h) above); (5) refunds, rebates, discounts and other similar credits of amounts not included in Operating Expenses at any time and uncollectible accounts; (6)

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gratuities collected by the employees at any of the Properties; (7) the proceeds of any financing, refinancing or sale of any of the Properties (or all of the membership interests in any Borrower) or the FF&E; (8) other non-recurring income or proceeds resulting other than from the use or occupancy of any of the Properties, or any part thereof, or other than from the sale of goods, services or other items sold on or provided from any of the Properties in the ordinary course of business; (9) any credits or refunds made to customers, guests or patrons in the form of allowances or adjustments to previously recorded revenues; (10) deposits received for rental of banquet space or business or conference meeting rooms; (11) security deposits received under any Leases, unless and until the same shall be applied in accordance with the terms of the applicable Lease(s); (12) all proceeds from insurance to the extent not included in income pursuant to clause (g) above; and (13) any disbursements to any Borrower from any of the Reserve Funds and any interest earned thereon.

“ Guarantor ” shall mean each of the Morgans Guarantor and the DLJ Guarantor.

“ Guarantor Transfer ” shall have the meaning set forth in Section 5.2.10(d)(D) hereof.

“ Hard Costs ” shall mean, collectively, the costs set forth in the Loan Budget which are for labor, materials, equipment, furniture and fixtures and fees and expenses of any construction manager and/or general contractor engaged in connection with the Project.

“ Hotel/Casino Borrower ” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“ Hotel/Casino Property ” shall mean that or those certain parcel(s) of real property more particularly described on Schedule I-A attached hereto and made a part hereof, the Improvements thereon and all personal property owned by Hotel/Casino Borrower and encumbered by the Mortgage, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clause of the Mortgage and referred to therein as the “Hotel Casino Property”.

“ HRHI ” shall mean Hard Rock Hotel, Inc., a Nevada corporation, together with its successors and permitted assigns.

“ HRHI Gaming Agreement ” shall mean that certain HRHI Gaming Agreement, dated as of the date hereof, executed by Lender, Hotel/Casino Borrower and HRHI in connection with the Gaming Sublease and the gaming operations at the Hotel/Casino Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ HRHI Guaranty ” shall mean that certain HRHI Guaranty Agreement, dated as of the date hereof, from HRHI to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ HRHI Lease ” shall mean that certain Lease, dated the date hereof, between Hotel/Casino Borrower, as landlord, and HRHI, as tenant, covering the Casino Component of the Hotel/Casino Property as more particularly described therein, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

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“ HRHI Security Agreement ” shall mean that certain HRHI Security Agreement, dated as of the date hereof, from HRHI to Lender, securing the HRHI Guaranty and covering certain assets of HRHI described therein, including, without limitation, all of HRHI’s right, title and interest in and to the Gaming Assets Note, the Gaming Shortfall Notes, the Gaming Surplus Fund Reserve and the Gaming Working Capital Note, as such HRHI Security Agreement may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ HR Holdings ” shall mean Hard Rock Hotel Holdings, LLC, a Delaware limited liability company.

“ Improvements ” shall have the meaning set forth in the granting clause of the Mortgage with respect to each Property.

“ Indebtedness ” of a Person, at a particular date, means the sum (without duplication) at such date of (a) all indebtedness or liability of such Person (including, without limitation, amounts for borrowed money and indebtedness in the form of mezzanine debt and preferred equity); (b) obligations evidenced by bonds, debentures, notes, or other similar instruments; (c) obligations for the deferred purchase price of property or services (including trade obligations for which such Person or its assets are liable); (d) obligations under letters of credit (for which such Person is liable if such amounts were advanced thereunder or for which such Person is liable to reimburse); (e) obligations under acceptance facilities; (f) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds, to invest in any Person or entity, or otherwise to assure a creditor against loss for which funds are required to be paid; and (g) obligations secured by any Liens, for which such Person or its assets are liable.

“ Indemnified Liabilities ” shall have the meaning set forth in Section 10.13(b) hereof.

“ Indemnified Person ” shall have the meaning set forth in Section 9.2(b) hereof.

“ Indemnified Taxes ” shall mean taxes other than Excluded Taxes.

“ Independent Director ” or “ Independent Manager ” shall mean a Person who is not at the time of initial appointment, or at any time while serving as a director or manager, as applicable, and has not been at any time during the preceding five (5) years: (a) a stockholder, director (with the exception of serving as the Independent Director or Independent Manager of a Borrower or Gaming Member), officer, employee, partner, member (other than a “special member” or “springing member”), manager, attorney or counsel of any Borrower, Gaming Member, HRHI or any Affiliate of any of them; (b) a customer, supplier or other person who derives any of its purchases or revenues from its activities with any Borrower, Gaming Member, HRHI or any Affiliate of any of them; (c) a Person Controlling or under common Control with any such stockholder, director, officer, employee, partner, member, manager, customer, supplier or other Person; or (d) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, customer, supplier or other Person.  A natural Person who satisfies the foregoing definition other than subparagraph (b) shall not be disqualified from serving as an Independent Director or Independent Manager of a Borrower or Gaming Member if such natural Person is an independent director or independent manager

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provided by a nationally recognized company that provides professional independent directors or independent managers and that also provides other corporate services in the ordinary course of its business.  A natural Person who otherwise satisfies the foregoing definition except for being the independent director or independent manager of a “special purpose entity” affiliated with any Borrower or Gaming Member that does not own a direct or indirect equity interest in any Borrower or Gaming Member shall not be disqualified from serving as an Independent Director or Independent Manager of a Borrower or Gaming Member if such individual is at the time of initial appointment, or at any time while serving as a Independent Director of a Borrower or Gaming Member, an Independent Director or Independent Manager of a “special purpose entity” affiliated with a Borrower or Gaming Member (other than any Person that owns a direct or indirect equity interest in any Borrower or Gaming Member) if such natural Person is an independent director or independent manager provided by a nationally-recognized company that provides professional independent directors or independent managers.

“ Initial Construction Loan Advance ” shall mean Lender’s first Construction Loan Advance, excluding, however, any Pre-Construction Advance and the Second Anniversary Unfunded Construction Loan Advance.

“ Initial Maturity Date ” shall mean, as applicable, either (a) the Qualified Initial Maturity Date, in the event the Qualification Conditions have been satisfied on or prior to the Construction Qualification Date, or (b) the Non-Qualified Initial Maturity Date, in the event the Qualification Conditions have not been satisfied on or prior to the Construction Qualification Date.

“ Initial Maturity Extension Interest Shortfall ” shall mean, for purposes of determining the amount of the interest Line Item in the Loan Budget as set forth in Section 3.2(l)(ii) hereof, the difference between: (a) the difference between (i) the projected underwritten Net Cash Flow to be earned from and after the date of the Initial Construction Loan Advance through the last day of the Initial Maturity Extension Period, as reasonably estimated and underwritten by Lender based on the Approved Annual Budget then in effect and underwriting criteria consistent with that used by Lender to determine the amount of the deposit to the Interest Reserve Fund on the Closing Date, less (ii) the amount of interest which is anticipated to be due and payable on the Loan from and after the date of the Initial Construction Loan Advance through the last day of the Initial Maturity Extension Period, taking into account the anticipated Construction Loan Advances from and after the date of the Initial Construction Loan Advance through the last day of the Initial Maturity Extension Period, all as reasonably estimated by Lender based on the then applicable Spread; less (b) the amount on deposit in the Interest Reserve Fund in excess of the Minimum Balance as of the date of the Initial Construction Loan Advance.

“ Initial Maturity Extension Period ” shall mean a one (1) year extension of the Loan which shall automatically occur, without the payment of any fee or other sums and without Lender, any Borrower or any other Person taking any action, upon the satisfaction of the Qualification Conditions on or prior to the Construction Qualification Date.

“ Initial Renovation Costs ” shall mean the costs and expenses of performing the Initial Renovations as set forth on the budget for the Initial Renovations included in Schedule XIII attached hereto and made a part hereof.

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“ Initial Renovation Reserve Account ” shall have the meaning set forth in Section 7.5.1 hereof.

“ Initial Renovation Reserve Fund ” shall have the meaning set forth in Section 7.5.1 hereof.

“ Initial Renovations ” shall have the meaning set forth in Section 7.5.1 hereof.

“ Initial Renovations Budget ” shall mean a budget, prepared by Borrowers and approved by Lender in its reasonable discretion, which shall identify the costs and expenses, on a project-by-project and line item basis, for which the Initial Renovation Reserve Funds may be used, and all amendments and modifications thereto reasonably approved by Lender.

“ Initial Renovations Shortfall ” shall have the meaning set forth in Section 7.5.2 hereof.

“ Insolvency Opinion ” shall mean that certain non-consolidation opinion letter dated the date hereof delivered by Latham & Watkins LLP in connection with the Loan.

“ Insurance Premiums ” shall have the meaning set forth in Section 6.1(b) hereof.

“ Insurance Proceeds ” shall have the meaning set forth in Section 6.4(c) hereof.

“ Intellectual Property Security Agreement ” shall mean that certain Intellectual Property Security Agreement, dated as of the date hereof, among IP Borrower and HRHI, as debtors, and Lender, as secured party, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Interest Period ” shall mean, with respect to any Payment Date, the period commencing on the ninth (9th) day of the preceding calendar month and terminating on and including the eighth (8th) day of the calendar month in which such Payment Date occurs; provided , however , that no Interest Period shall end later than the Maturity Date (other than for purposes of calculating interest at the Default Rate), and the initial Interest Period shall begin on and include the Closing Date and shall end on and include February 8, 2007.

“ Interest Rate Cap Agreement ” shall mean, as applicable, an interest rate cap agreement (together with the confirmation and schedules relating thereto) in form and substance reasonably satisfactory to Lender by and among Borrowers and an Acceptable Counterparty or a Replacement Interest Rate Cap Agreement.

“ Interest Reserve Account ” shall have the meaning set forth in Section 7.4.1 hereof.

“ Interest Reserve Fund ” shall have the meaning set forth in Section 7.4.1 hereof.

“ Internal Approvals ” shall have the meaning set forth in Section 13.2(b) hereof.

“ IP ” shall have the meaning ascribed to such term in Section 4.1.37(a) hereof.

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“ IP Agreements ” shall have the meaning ascribed to such term in Section 4.1.37(a) hereof.

“ IP Borrower ” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“ IP License ” shall have the meaning set forth in Section 5.1.26(a) hereof.

“ IP Material Adverse Effect ” shall have the meaning ascribed to such term in Section 4.1.37(d) hereof.

“ IP Release Price ” shall have the meaning set forth in Section 2.5.3(a)(vi) hereof.

“ IP Sale ” shall have the meaning set forth in Section 2.5.3(a) hereof.

“ Joint Venture ” shall mean any Person in which an Affiliate Joint Venture Counterparty owns a direct and/or indirect ownership interest, whether in the form of one or more membership interests, one or more partnership interests or capital stock.

“ Junior Holder ” shall have the meaning set forth in Section 10.25(a) hereof.

“ Junior Participation ” shall have the meaning set forth in Section 10.25(a) hereof.

“ Lease ” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Property, including, without limitation, the HRHI Lease, and (a) every modification, amendment or other agreement relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement, and (b) every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.  The foregoing definition expressly excludes ordinary course hotel room rentals.

“ Legal Requirements ” shall mean, with respect to each Property, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting such Property or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Gaming Laws and the Americans with Disabilities Act of 1990, as amended, and all permits, licenses and authorizations and regulations relating thereto, including, without limitation, all Governmental Approvals, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to any Borrower, at any time in force affecting such Property or any part thereof, including, without limitation, any which may (a) require repairs, modifications or alterations in or to such Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.

“ Lender ” shall have the meaning set forth in the introductory paragraph hereto.

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“ Lender Monthly Interest Advance ” shall have the meaning set forth in Section 3.20.1 hereof.

“ Lender’s Rejection Notice ” shall have the meaning set forth in Section 13.2(c) hereof.

“ Lender Successor Owner ” shall have the meaning set forth in Section 5.1.23 hereof.

“ Letter of Credit ” shall mean an irrevocable, unconditional (other than ministerial conditions), transferable, clean sight draft letter of credit, as the same may be replaced, split, substituted, modified, amended, supplemented, assigned or otherwise restated from time to time, (either an evergreen letter of credit or a letter of credit which does not expire until at least two (2) Business Days after the Maturity Date or such earlier date as such Letter of Credit is no longer required pursuant to the terms of this Agreement) in favor of Lender and entitling Lender to draw thereon based solely on a statement purportedly executed by an officer of Lender stating that it has the right to draw thereon, and issued by a (i) domestic Approved Bank or the U.S. agency or branch of a foreign Approved Bank, or if there are no domestic Approved Banks or U.S. agencies or branches of a foreign Approved Bank then issuing letters of credit, then such letter of credit may be issued by a domestic bank, the long term unsecured debt rating of which is the highest such rating then given by the Rating Agency or Rating Agencies, as applicable, to a domestic commercial bank, or (ii) Credit Suisse, Cayman Islands Branch so long as it has and maintains a minimum long term unsecured debt rating of at least “A+” by S&P and Fitch and “A1” by Moody’s.

“ Letter of Credit Reduction Notice ” shall mean a notice, in the form attached hereto as Exhibit P or in such other form as Lender shall reasonably approve, requesting that the issuer of any Required Equity Letter of Credit amend such Required Letter of Credit to evidence a reduction in the amount thereof.

“ Liabilities ” shall have the meaning set forth in Section 9.2(b) hereof.

“ LIBOR ” shall mean, with respect to each Interest Period, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/100,000th of 1% (0.00001%)) for deposits in U.S. dollars, for a one-month period, that appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m., London time, on the related Determination Date.  If such rate does not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such Determination Date, LIBOR shall be the arithmetic mean of the offered rates (expressed as a percentage per annum) for deposits in U.S. dollars for a one-month period that appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such Determination Date, if at least two such offered rates so appear.  If fewer than two such offered rates appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such Determination Date, Lender shall request the principal London office of any four major reference banks in the London interbank market selected by Lender in its reasonable discretion to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for a one-month period as of 11:00 a.m., London time, on such Determination Date for amounts of not less than U.S. $1,000,000.  If at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations.  If fewer than two such quotations are so provided, Lender shall request any three major banks in New

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York City selected by Lender in its reasonable discretion to provide such bank’s rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for a one-month period as of approximately 11:00 a.m., New York City time on the applicable Determination Date for amounts of not less than U.S. $1,000,000.  If at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates.  LIBOR shall be determined conclusively by Lender or its agent, absent manifest error.

“ LIBOR Loan ” shall mean the Loan at such time as interest thereon accrues at a rate of interest based upon LIBOR.

“ Licensed IP ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Lien ” shall mean, with respect to each Property, any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting any Borrower, the related Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.  For the avoidance of doubt, “Lien” shall not be deemed to include any Permitted IP Encumbrances.

“ Line Item ” shall mean a line item of cost or expense set forth in the Loan Budget, as the same may be adjusted in compliance with the terms hereof.

“ Line Item Component ” shall have the meaning set forth in Section 3.9(b) hereof.

“ Liquor Management Agreement ” shall mean, with respect to the Hotel/Casino Property and, if applicable, the Adjacent Property, that certain Liquor Management and Employee Services Agreement, dated as of the date hereof, between Hotel/Casino Borrower and HRHI, in its capacity as the Liquor Manager, as the same may be amended, modified or supplemented from time to time, pursuant to which the Liquor Manager shall manage all alcoholic beverage services at the Hotel/Casino Property and, if applicable, the Adjacent Property, or, if the context requires, a Replacement Liquor Management Agreement.

“ Liquor Manager ” shall mean, with respect to the Hotel/Casino Property, HRHI, or, if the context requires, another Qualified Liquor Manager.

“ Loan ” shall mean the loan made by Lender to Borrowers pursuant to this Agreement in a maximum principal amount of up to ONE BILLION THREE HUNDRED SIXTY MILLION and No/100 Dollars ($1,360,000,000.00), which shall be comprised of the Acquisition Loan and the Construction Loan and shall be evidenced by the Note.

“ Loan Advance ” or “ Loan Advances ” shall mean (i) the Acquisition Loan Advance, and (ii) each Construction Loan Advance made by Lender to or for the account of Borrowers after the Closing Date pursuant to the terms of this Agreement.

“ Loan Budget ” shall mean the budget for total estimated Project Costs prepared by Borrowers and approved by Lender in its reasonable discretion, which shall detail all items of

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direct and indirect costs estimated to be incurred in connection with the construction of the Project, and all amendments and modifications thereto approved by Lender in accordance with this Agreement.

“ Loan Documents ” shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Environmental Indemnity, each O&M Agreement, each Assignment of Management Agreement, the Assignment of Restaurant Management Agreement, the Assignment of Liquor Management Agreement, the Intellectual Property Security Agreement, the Gaming Recognition Agreement, the HRHI Gaming Agreement, the Agreement Regarding Morton Indemnification and Escrow, the Assignment of Contracts, the Non-Recourse Guaranty, the Non-Qualified Prepayment Guaranty, the Closing Completion Guaranty, the Construction Completion Guaranty (if and when executed and delivered in accordance with the terms of this Agreement), the HRHI Guaranty, the HRHI Security Agreement, the Cash Management Agreement, the Collateral Assignment of Interest Rate Cap Agreement and all other documents executed and/or delivered in connection with the Loan.

“ Loan-to-Value Ratio ” shall mean the ratio, as of a particular date, in which the numerator is equal to the Outstanding Principal Balance and the denominator is equal to the appraised value of the applicable Properties based on one or more appraisals reasonably acceptable to Lender conducted by one or more licensed appraisers.

“ Lockbox Account ” shall have the meaning set forth in Section 2.6.1(a) hereof.

“ Lockbox Bank ” shall mean Wells Fargo Bank, National Association, or any successor or permitted assigns thereof.

“ London Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in London, England are not open for business.

“ Major Contractor ” shall mean the Construction Manager, the General Contractor and any other contractor hired by one or more Borrowers or an Affiliate thereof or any subcontractor, in any of the foregoing instances, approved by Lender in its reasonable discretion, and either (i) supplying design services, labor and/or materials in connection with the Project for an aggregate contract price, initially or thereafter by virtue of Change Orders, equal to or greater than (a) for purposes of the definition of “Payment and Performance Bonds” set forth below and all provisions of this Agreement related thereto, and for purposes of all requirements herein for obtaining Lien waivers (except if a lower amount is otherwise expressly provided), $2,000,000.00, and (b) for all other provisions of this Agreement, $5,000,000.00, in each of the foregoing instances, whether pursuant to one contract or agreement or multiple contracts or agreements, or (ii) which relates to major design elements such as engineering, traffic flow and landscape architecture, or (iii) which relates to major project elements such as steel, concrete, HVAC systems, windows, doors and other similar items; provided , that in no event shall any Major Contractor (a) be an Affiliate of any Restricted Party or (b) have any equity interest or any equivalent thereof in any of the Properties or in any Restricted Party.

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“ Major Contractor’s Consent ” shall mean a Major Contractor Certification and Consent Agreement executed and delivered by the applicable Major Contractor in favor of Lender and substantially in the form attached as Exhibit G .

“ Major Contracts ” shall mean any contract with a Major Contractor.

“ Major Lease ” shall mean any of the following: (i) any Lease of space at any of the Properties for retail, restaurant or any other use in excess of 20,000 square feet to a single tenant or by the aggregate of one or more affiliated tenants, (ii) any Lease of space at any of the Properties for retail, restaurant or any other use providing for net rental payments (including, without limitation, percentage rent) in excess of $7,500,000 per annum to a single tenant or by the aggregate of one or more affiliated tenants, it being acknowledged and agreed that for purposes of determining whether a new Lease is a Major Lease, percentage rent shall be estimated based on Lender’s reasonable underwriting at the time of Lease execution, (iii) any Lease of space at any of the Properties with an Affiliate of Borrower, or (iv) any Lease that is not the result of arm’s length negotiations.

“ Management Agreement ” shall mean, with respect to each Property, the property management agreement entered into by and between the applicable Borrower or Borrowers and the applicable Manager, as the same has been and may be amended, modified or supplemented from time to time, pursuant to which such Manager is to provide property management and other services with respect to the Property owned by such Borrower, or, if the context requires, a Replacement Management Agreement; provided , however , that the foregoing definition shall expressly exclude the Sub-Management Agreement.

“ Manager ” shall mean Morgans Hotel Group Management LLC or, if the context requires, a Qualified Manager who is managing any of the Properties, it being understood that the foregoing definition shall expressly exclude the Sub-Manager.

“ Material Change Order ” shall mean any Change Order with respect to the Project, other than with respect to any guaranteed maximum price Major Contract, that, together with all other Change Orders theretofore entered into with respect to the Project, (i) increases any Line Item in the Loan Budget in excess of (a) the greater of ten percent (10%) over the original amount of such Line Item stated in the Loan Budget, but in no event in excess of $1,000,000.00, or (b) $500,000.00 over the original amount of such Line Item stated in the Loan Budget, and/or (ii) increases the aggregate amount of the Loan Budget in excess of ten percent (10%) over the original amount thereof.

“ Material Economic Terms ” shall have the meaning set forth in Section 13.1 hereof.

“ Maturity Date ” shall mean the Initial Maturity Date or, if applicable, the Extended Maturity Date, or such other date on which the final payment of principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.

“ Maximum Legal Rate ” shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents,

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under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

“ Merger Agreement ” shall mean that certain Agreement and Plan of Merger, dated as of May 11, 2006, by and among Morgans Hotel Group Co., MHG HR Acquisition Corp., Hard Rock Hotel, Inc. and Peter A. Morton, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 30, 2007.

“ Minimum Balance ” shall mean, as of any Payment Date, an amount equal to the amount of the Monthly Interest Payment due on such Payment Date calculated at the Applicable Interest Rate in effect on such Payment Date.

“ Minimum Mandatory Amount ” shall mean, as of any date of determination, (a) if one or more Release Parcel Sales have not resulted in Release Parcel Release Prices paid to Lender in an aggregate amount of at least $40,000,000.00 prior to such date of determination, then the Minimum Mandatory Amount shall mean $110,000,000.00, or (b) if one or more Release Parcel Sales have resulted in Release Parcel Release Prices paid to Lender in an aggregate amount in excess of $40,000,000.00 prior to such date of determination, then the Minimum Mandatory Amount shall mean an amount equal to the difference between (i) $110,000,000.00 and (ii) the aggregate amount of Release Parcel Release Prices paid to Lender prior to such date of determination, but in no event shall such calculation result in a negative number.

“ Minimum Mandatory Prepayment ” shall have the meaning set forth in Section 2.4.2(b)(i) hereof.

“ Minor Casualty ” shall mean any injury or damage to the Improvements on the Hotel/Casino Property and/or the Adjacent Property, including any partially constructed portion of the Project, (i) the cost of which to Restore, together with any prior such damages which (A) have not yet been Restored or (B) with respect to which Net Proceeds in an amount sufficient for Restoration have not yet been received by Borrowers or Lender as required pursuant to this Agreement, is less than $5,000,000.00, and (ii) is not materially interfering with, and is not, in Lender’s reasonable judgment, reasonably likely to materially interfere with, the progress of construction of the Project.

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Monthly Interest Advance ” shall have the meaning set forth in Section 3.20.1 hereof.

“ Monthly Interest Payment ” shall have the meaning set forth in Section 2.3.1 hereof.

“ Monthly Gaming Requirement Certificate ” shall have the meaning set forth in Section 12.2 hereof.

“ Morgans Guarantor ” shall mean Morgans Group LLC, a Delaware limited liability company, together with its successors and permitted assigns.

“ Morgans Parent ” shall mean Morgans Hotel Group Co., a Delaware corporation, together with its successors and permitted assigns.

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“ Mortgage ” shall mean that certain first priority Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Financing Statement (Fixture Filing), dated the date hereof, executed and delivered by Borrowers as security for the Loan and encumbering the Properties, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Morton ” shall mean Peter A. Morton.

“ Morton Assigned IP ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Morton Indemnification ” shall mean that certain Indemnification Agreement dated as of May 11, 2006 between Morgans Hotel Group Co., the indirect parent of each of the Borrowers, and Morton, as the same has been and may be amended, modified or supplemented from time to time.

“ Named Knowledge Parties ” shall have the meaning set forth in Section 4.3 hereof.

“ Net Cash Flow ” shall mean, for any period, the amount obtained by subtracting (a) (i) Operating Expenses for the Properties, and (ii) monthly contributions to the Replacement Reserve Fund, in each of the foregoing instances, for such period, from (b) Gross Income from Operations for such period.

“ Net Cash Flow Schedule ” shall have the meaning set forth in Section 5.1.11(b) hereof.

“ Net Operating Income ” shall mean, for any period, the amount obtained by subtracting Operating Expenses for the Properties for such period from Gross Income from Operations for such period.

“ Net Proceeds ” shall have the meaning set forth in Section 6.4(c) hereof.

“ Net Proceeds Deficiency ” shall have the meaning set forth in Section 6.4(c)(vi) hereof.

“Net Worth Requirements ” shall mean those requirements set forth on Schedule XV attached hereto and made a part hereof.

“ New Mezzanine Loan ” shall have the meaning set forth in Section 9.8 hereof.

“ Non-Fully Prepaid IP Sale ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Non-Qualified Extended Maturity Date ” shall have the meaning set forth in Section 2.7.1 hereof.

“ Non-Qualified Extension Option ” shall have the meaning set forth in Section 2.7.1 hereof.

“ Non-Qualified Extension Term ” shall have the meaning set forth in Section 2.7.1 hereof.

“ Non-Qualified Initial Maturity Date ” shall mean February 9, 2009.

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“ Non-Qualified Mandatory Prepayment ” shall have the meaning set forth in Section 2.4.2(c) hereof.

“ Non-Qualified Prepayment Guaranty ” shall mean that certain Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of the date hereof, from Guarantors to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Non-Qualified Prepayment Letter of Credit ” shall have the meaning set forth in Section 2.4.2(c) hereof.

“ Non-Recourse Guaranty ” shall mean that certain Guaranty Agreement, dated as of the date hereof, from Guarantors to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Non-U.S. Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than laws of the United States of America, any State thereof or the District of Columbia.

“ Note ” shall mean that certain Promissory Note of even date herewith in the principal amount of up to ONE BILLION THREE HUNDRED SIXTY MILLION and No/100 Dollars ($1,360,000,000.00), made by Borrowers in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“ Notice ” shall have the meaning set forth in Section 10.6 hereof.

“ NRS ” shall mean the Nevada Revised Statutes, as amended from time to time.

“ O&M Agreement ” shall mean an Operations and Maintenance Agreement, dated as of the date hereof, by and among a Borrower and Lender given in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.  On the Closing Date, an O&M Agreement shall be entered into by each of Hotel/Casino Borrower and Lender and Adjacent Borrower and Lender.

“ Obligations ” shall mean, collectively, Borrowers’ obligations for the payment of the Debt and the performance of the Other Obligations.

“ Officer’s Certificate ” shall mean a certificate delivered to Lender by a Borrower which is signed by an authorized officer or manager of such Borrower or a Constituent Member, as applicable, which shall in all events be subject to Section 9.4 hereof.

“ Operating Expenses ” shall mean, for any period, the total of all expenditures, computed in accordance with GAAP, of whatever kind during such period relating to the operation, maintenance and/or management of any of the Properties that are incurred on a regular monthly or other periodic basis, including without limitation, utilities, ordinary repairs, maintenance, environmental and engineering (but excluding utilities) (which ordinary repairs, maintenance, environmental and engineering (but excluding utilities) for the purposes of this definition shall be no less than an assumed expense of $400,000.00 per month, and following the

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First Full Operating Month, such assumed expense shall increase to $600,000.00 per month, insurance, license fees, property taxes and assessments, advertising expenses, base and incentive management fees, payroll and related taxes, computer processing charges, tenant improvements and leasing commissions, operational equipment or other lease payments as approved by Lender, and other similar costs, but excluding depreciation and amortization with respect to the Properties, Debt Service, Capital Expenditures, items that would otherwise constitute Project Costs, Extraordinary Expenses, the cost of any items incurred at any Manager’s expense pursuant to any Management Agreement or at the Sub-Manager’s expense pursuant to the Sub-Management Agreement, non-recurring expenses and contributions to the Replacement Reserve Fund, the Tax and Insurance Escrow Fund and any other reserves required under the Loan Documents.  Operating Expenses shall also include the cost (computed in accordance with GAAP) of any complimentary food, beverages, hotel room and/or other amenities provided to any customers or guests of the Hotel/Casino Property, including, without limitation, under the Gaming Sublease, under the Liquor Management Agreement and/or under any Management Agreement.

“ Operating Permits ” shall have the meaning set forth in Section 4.1.22 hereof.

“ Optional IP Release Payment ” shall have the meaning set forth in Section 2.4.3(g) hereof.

“ Other Charges ” shall mean all ground rents, maintenance charges, impositions other than Taxes, and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Property, now or hereafter levied or assessed or imposed against such Property or any part thereof.

“ Other Obligations ” shall mean (a) the performance of all obligations of each Borrower contained herein; (b) the performance of each obligation of each Borrower contained in any other Loan Document; and (c) the performance of each obligation of each Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of this Agreement, the Note or any other Loan Documents.

“ Other Taxes ” means any and all stamp or documentary taxes or any other excise or property taxes, or similar governmental charges or levies imposed, enacted or to become effective after the date hereof, arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.  Other Taxes shall not include Excluded Taxes.

“ Outstanding Principal Balance ” shall mean, as of any date, the outstanding principal balance of the Loan.

“ Owned IP ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Partial Adjacent Parcel ” shall have the meaning set forth in Section 2.5.2(a) hereof.

“ Partial Release Parcel ” shall have the meaning set forth in Section 2.5.1(a) hereof.

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“ Payment and Performance Bonds ” shall mean dual-obligee payment and performance bonds relating to each Major Contractor other than the General Contractor, issued by a surety company or companies and in form and content reasonably acceptable to Lender, in each case in an amount not less than the full contract price, together with a dual obligee and modification rider in form reasonably acceptable to Lender which shall be attached thereto.

“ Payment Date ” shall mean the ninth (9th) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately preceding Business Day.  The first Payment Date shall be February 9, 2007 for all purposes of this Agreement other than the payment of the Monthly Interest Payments (because Borrowers and Lender acknowledge that stub interest through February 9, 2007 is being paid on the Closing Date) and the required deposits to the Tax and Insurance Escrow Fund (because Borrowers and Lender acknowledge that the required initial deposit to the Tax and Insurance Escrow Fund through February 9, 2007 is being deposited on the Closing Date), and the first Payment Date for purposes of the Monthly Interest Payments and the required deposits to the Tax and Insurance Escrow Fund shall be March 9, 2007.

“ Permitted Adjacent/Café Uses ” shall have the meaning set forth in Section 4.1.11 hereof.

“ Permitted Encumbrances ” shall mean, with respect to a Property, collectively (a) the Liens and security interests created by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the Title Insurance Policy relating to such Property, (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet delinquent, (d) such other title and survey exceptions, documents, agreements or instruments as Lender has approved or may approve in writing in Lender’s reasonable discretion, (e) easements, restrictions, covenants and/or reservations which are necessary for the operation of such Property that do not and would not have a material adverse effect on (i) the business operations, economic performance, assets, financial condition, equity, contingent liabilities, material agreements or results of operations of any Borrower, any Guarantor or any Property or (ii) the value of, or cash flow from, any Property, (f) zoning restrictions and/or laws affecting such Property that do not and would not have a material adverse effect on (i) the business operations, economic performance, assets, financial condition, equity, contingent liabilities, material agreements or results of operations of any Borrower, any Guarantor or any Property or (ii) the value of, or cash flow from, any Property, (g) the Liens securing any Existing FF&E Leases and/or any Permitted Future FF&E Leases, and (h) any other Liens which are being duly contested in accordance with the provisions of Section 5.1.1 or 5.1.2 hereof or Section 3.6(b) of the Mortgage, but only for so long as such contest shall be permitted pursuant to said Section 5.1.1 or 5.1.2 hereof or Section 3.6(b) of the Mortgage, as applicable.

“ Permitted Future FF&E Leases ” shall have the meaning set forth in the definition of “Special Purpose Entity” set forth below.

“ Permitted Investment Fund ” shall have the meaning set forth in the definition of “Qualified Guarantor Transferee” set forth below.

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“ Permitted Investments ” shall have the meaning set forth in the Cash Management Agreement.

“ Permitted IP Encumbrances ” shall mean, with respect to the IP, collectively (a) the Liens and security interests created by the Loan Documents, (b) such other Liens or security interests as Lender may approve in writing in Lender’s sole discretion, (c) the Liens on the IP set forth on Schedule XI hereto, which shall be extinguished on or prior to the Closing Date, and (d) any other IP Agreements permitted under this Agreement.

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

“ Personal Property ” shall have the meaning set forth in the granting clause of the Mortgage with respect to each Property.

“ Physical Conditions Report ” shall mean, with respect to each Property, a report prepared by a company reasonably satisfactory to Lender regarding the physical condition of such Property, reasonably satisfactory in form and substance to Lender.

“ Pink Taco IP ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Pink Taco License ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Plans and Specifications ” shall mean the plans and specifications for the Project prepared by the Architect and reasonably approved by Lender in accordance with the terms hereof, as the same may be amended and supplemented from time to time in accordance with the terms of this Agreement.

“ Policies ” shall have the meaning specified in Section 6.1(b) hereof.

“ Pre-Construction Advance ” shall have the meaning set forth in Section 3.17.1 hereof.

“ Pre-Construction Budget ” shall mean a budget, prepared by Borrowers and approved by Lender in its reasonable discretion, which shall identify the costs and expenses for which the proceeds of any Pre-Construction Advance may be used, and all amendments and modifications thereto reasonably approved by Lender; provided , however , that at such time, if ever, as the Loan Budget shall be approved by Lender in accordance with the terms of this Agreement, the Pre-Construction Budget shall thereafter be deemed null and void and the proceeds of all subsequent Pre-Construction Advances, if any, shall be used to pay costs and expenses set forth in the Loan Budget.

“ Pre-Construction Letter of Credit ” shall have the meaning set forth in Section 3.17.1(g) hereof.

“ Pre-Construction Work ” shall have the meaning set forth in Section 3.17.1(b) hereof.

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“ Prepayment Fee ” shall mean an amount equal to the following:

(i)            two percent (2.0%) of each of the Minimum Mandatory Prepayment (or any partial payment on account thereof), each Release Parcel Release Price, each Adjacent Parcel Release Price and the IP Release Price, if any of the foregoing are due and payable in accordance with the terms of this Agreement after the Closing Date through, but excluding, May 9, 2007;

(ii)           one and one-half percent (1.5%) of each of the Minimum Mandatory Prepayment (or any partial payment on account thereof), each Release Parcel Release Price, each Adjacent Parcel Release Price and the IP Release Price, if any of the foregoing are due and payable in accordance with the terms of this Agreement on or after May 9, 2007 through, but excluding, December 9, 2007; and

(iii)          one percent (1.0%) of each of the Minimum Mandatory Prepayment (or any partial payment on account thereof), each Release Parcel Release Price, each Adjacent Parcel Release Price and the IP Release Price, if any of the foregoing are due and payable in accordance with the terms of this Agreement on or after December 9, 2007 through, but excluding, the Prepayment Fee Release Date.

“ Prepayment Fee Release Date ” shall mean May 9, 2008.

“ Prescribed Laws ” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the International Emergency Economic Power Act, 50 U.S.C. §1701 et. seq., and (d) all other Legal Requirements relating to money laundering or terrorism.

“ Prime Rate ” shall mean the annual rate of interest publicly announced by Citibank, N.A. in New York, New York, as its base rate, as such rate shall change from time to time.  If Citibank, N.A. ceases to announce a base rate, Prime Rate shall mean the rate of interest published in The Wall Street Journal from time to time as the “Prime Rate”.  If more than one “Prime Rate” is published in The Wall Street Journal for a day, the average of such “Prime Rates” shall be used, and such average shall be rounded up to the nearest one-hundredth (100th) of one percent (1%).  If The Wall Street Journal ceases to publish the “Prime Rate”, Lender shall select an equivalent publication that publishes such “Prime Rate”, and if such “Prime Rates” are no longer generally published or are limited, regulated or administered by a governmental or quasigovernmental body, then Lender shall select a comparable interest rate index.

“ Prime Rate Loan ” shall mean the Loan at such time as interest thereon accrues at a rate of interest based upon the Prime Rate.

“ Prime Rate Spread ” shall mean the difference (expressed as the number of basis points) between (a) LIBOR plus the Spread on the date LIBOR was last applicable to the Loan and (b) the Prime Rate on the date that LIBOR was last applicable to the Loan; provided , however , in no event shall such difference be a negative number.

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“ Pro-Forma Net Cash Flow ” shall mean, as of any date of determination, (i) Gross Income from Operations collected for the trailing three (3) month period ending with the last calendar month for which financial reports are then required to have been delivered under Section 5.1.11 hereof, multiplied by four (4), less (ii) actual Operating Expenses for the trailing twelve (12) month period ending with such last calendar month for which financial reports are then required to have been delivered under Section 5.1.11 hereof, as adjusted by Lender to reflect any actual increases to Operating Expenses then known to Lender ( i.e ., real estate taxes and insurance premiums) as reflected in the Approved Annual Budget in effect.

“ Project ” shall mean those renovations and improvements (exclusive of the Initial Renovations) expected to be constructed and performed on the Hotel/Casino Property and the Adjacent Property in accordance with the terms of this Agreement and the other Loan Documents, including, without limitation, a parking facility, an expansion of the hotel and casino on the Hotel/Casino Property and the construction of an approximately 440 room hotel facility, as generally described on Schedule II attached hereto and as more particularly described in the Plans and Specifications.

“ Project Cost Ceiling ” shall mean an amount equal to the difference between (i) the amount of the Required Equity Letter of Credit delivered pursuant to Section 3.2(h) in connection with the Initial Construction Loan Advance minus (ii) $50,000,000.00.

“ Project Cost Ceiling Date ” shall mean the date upon which the Project Costs incurred or expended by Borrowers in connection with the Project reach the Project Cost Ceiling.

“ Project Costs ” shall mean, collectively, all Hard Costs and Soft Costs incurred or to be incurred in connection with the financing, development, design, engineering, procurement, installation and construction of the Project until Final Completion thereof, in each case as set forth in the Loan Budget.

“ Projected Underwritten Net Cash Flow ” shall mean, with respect to each Extension Option, the projected underwritten Net Cash Flow to be earned during the applicable Extension Term, as reasonably estimated and underwritten by Lender based on (i) the Approved Annual Budget then in effect and (ii) underwriting criteria consistent with that used by Lender to determine the amount of the deposit to the Interest Reserve Fund on the Closing Date.

“ Property ” and “ Properties ” shall mean, individually and collectively, each and every one of the Hotel/Casino Property, the Café Property and the Adjacent Property that, as of any particular date, is subject to the terms of this Agreement, the Mortgage and the other Loan Documents.

“ Provided Information ” shall mean any and all financial and other information prepared and provided by any Borrower, any Manager, Sub-Manager, HRHI or any Guarantor or under the supervision or control of any Borrower, any Manager, Sub-Manager, HRHI or any Guarantor (but excluding third party independent reports) with respect to one or more of the Properties, the IP, any Borrower, any Manager, Sub-Manager, HRHI and/or any Guarantor.

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“ Publicly Traded Company ” shall mean any Person with a class of securities traded on a national or international securities exchange and/or registered under Section 12(b) or 12(g) of the Securities Exchange Act or 1934.

“ Punch List Items ” shall mean, collectively, minor or insubstantial details of construction, decoration, mechanical adjustment or installation, which do not materially hinder or impede the use, operation, or maintenance of the Project.

“ Purchaser Licensed IP ” shall have the meaning set forth in Section 2.5.3(a)(xi) hereof.

“ PWR/RWB Escrow Agreement ” shall mean that certain Escrow Agreement dated as of May 11, 2006 between PM Realty, LLC, Red, White and Blue Pictures, Inc., Morton, 510 Development Corporation, Morgans Hotel Group Co., the indirect parent of each of the Borrowers, Morgans Group LLC and Chicago Title Agency of Nevada, Inc., as the same has been and may be amended, modified or supplemented from time to time.

“ Qualification Conditions ” shall mean, collectively, that (i) the satisfaction of the conditions for the Initial Construction Loan Advance set forth in Section 3.2 hereof shall have occurred, (ii) no Event of Default shall have occurred and be continuing, and (iii) Lender shall have advanced the Initial Construction Loan Advance; provided , however , that if the conditions set forth in the foregoing clauses (i) and (ii) have been satisfied and the failure of Lender to have advanced the Initial Construction Loan Advance is due to no fault of Borrowers or any Affiliate thereof, then the Qualification Conditions shall be deemed satisfied notwithstanding that the Initial Construction Loan Advance has not actually been advanced.

“ Qualified Extended Maturity Date ” shall have the meaning set forth in Section 2.7.2 hereof.

“ Qualified Extension Option ” shall have the meaning set forth in Section 2.7.2 hereof.

“ Qualified Extension Term ” shall have the meaning set forth in Section 2.7.2 hereof.

“ Qualified Gaming Operator ” shall mean (a) Golden HRC, LLC, (b) Gaming Borrower, if and when Gaming Borrower shall become the Gaming Operator for the Hotel/Casino Property in accordance with the provisions of Article XII hereof, or (c) a reputable and experienced gaming operator (which may be an Affiliate of any Borrower) possessing experience in supervising, operating and managing gaming activities at properties similar in size, scope, use and value as the Hotel/Casino Property, provided , that with respect to any Person under any of the foregoing clauses (a), (b) or (c) , such Person shall have, at all times during its engagement as Gaming Operator, all required approvals and licenses from all applicable Governmental Authorities, including, without limitation, all Gaming Authorities, and provided , further , that with respect to the foregoing clause (c) : (i) such Person shall be reasonably acceptable to Lender and such Person shall agree to operate the gaming operations at the Hotel/Casino Property pursuant to one or more written agreements previously approved by Lender in its reasonable discretion (including, by way of example but without limitation, a new lease and/or sublease and related recognition agreement), (ii) after a Securitization has occurred, Borrowers shall have obtained prior written confirmation from the applicable Rating Agencies that the supervision, operation and management of the gaming activities at the Hotel/Casino

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Property by such Person will not cause a downgrade, withdrawal or qualification of the then current ratings of the Securities or any class thereof, and (iii) if such Person is an Affiliate of any Borrower, (A) if such Affiliate was covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an update of such Insolvency Opinion or Additional Insolvency Opinion, as applicable, which addresses the new relationship between such Affiliate and Borrowers, or (B) if such Affiliate was not covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an Additional Insolvency Opinion with respect to such Affiliate and Borrowers.

“ Qualified Guarantor Transferee ” shall mean any one or more of the following:

(i)            an investment trust, bank, saving and loan association, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan;

(ii)           an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act, as amended, or an entity that is an “accredited investor” within the meaning of Regulation D under the Securities Act, as amended;

(iii)          an institution substantially similar to any of the entities described in the foregoing clause (i) or (ii) ;

(iv)          any entity Controlling or Controlled by or under common Control with any of the entities described in the foregoing clause (i) or (ii) ;

(v)           any Person (a) with a long-term unsecured debt rating from the Rating Agencies of at least Investment Grade or (b) who, together with its Affiliates, (A) (x) owns in its entirety, or (y) owns a general partnership interest, managing membership interest or other equivalent ownership and management interest in, an entity that owns, or (z) operates, at least ten (10) full service hotels exclusive of the Properties totaling in the aggregate no less than 3,500 rooms; or

(vi)          any other Person (including opportunity funds) that has been approved as a Qualified Guarantor Transferee by the Rating Agencies.

“ Qualified Initial Maturity Date ” shall mean February 9, 2010.

“ Qualified Liquor Manager ” shall mean either (a) HRHI, (b) Gaming Borrower, (c) Hotel Casino Borrower, (d) Golden HRC, LLC, or (e) a reputable and experienced liquor management organization (which may be an Affiliate of any Borrower) possessing experience in managing all or substantially all alcoholic beverage services at properties similar in size, scope, use and value as the Hotel/Casino Property, provided , that (i) any Person referred to in the foregoing clause (a) through (e) shall have, at all times during its engagement as the Liquor Manager, all Governmental Approvals necessary to provide all alcoholic beverage services at the Hotel/Casino Property, and (ii) with respect to clause (e) above, (A) after a Securitization has occurred, Borrowers shall have obtained prior written confirmation from the applicable Rating Agencies that management of all alcoholic beverage services at the Hotel/Casino Property by

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such Person will not cause a downgrade, withdrawal or qualification of the then current ratings of the Securities or any class thereof, and (B) if such Person is an Affiliate of any Borrower, (1) if such Affiliate was covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an update of such Insolvency Opinion or Additional Insolvency Opinion, as applicable, which addresses the new relationship between such Affiliate and Borrowers, or (2) if such Affiliate was not covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an Additional Insolvency Opinion with respect to such Affiliate and Borrowers.

“ Qualified Manager ” shall mean either (a) any Manager with respect to the Property it is managing on the date hereof, or (b) in the reasonable judgment of Lender, a reputable and experienced property management organization (which may be an Affiliate of any Borrower or Guarantor) possessing experience in managing properties similar in size, scope, use and value as the applicable Property, provided , that with respect to clause (b) above, (i) after a Securitization has occurred, Borrowers shall have obtained prior written confirmation from the applicable Rating Agencies that management of the applicable Property by such Person will not cause a downgrade, withdrawal or qualification of the then current ratings of the Securities or any class thereof, and (ii) if such Person is an Affiliate of any Borrower, (A) if such Affiliate was covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an update of such Insolvency Opinion or Additional Insolvency Opinion, as applicable, which addresses the new relationship between such Affiliate and Borrowers, or (B) if such Affiliate was not covered in the Insolvency Opinion or in any subsequent Additional Insolvency Opinion, Borrowers shall have obtained and delivered to Lender an Additional Insolvency Opinion with respect to such Affiliate and Borrowers.

“ Qualified Real Estate Guarantor ” shall mean (i) Morgans Group LLC or (ii) a Qualified Guarantor Transferee that (i) is regularly engaged in the business of making or owning commercial real estate loans (including mezzanine loans with respect to commercial real estate), (ii) operating hospitality properties, or (iii) employing executive level employees with at least ten (10) years of experience with regard to the same as part of a business segment or business sector of a Qualified Guarantor Transferee.

“ Rank ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Rank IP ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Rank License ” shall have the meaning set forth in Section 4.1.37(b) hereof.

“ Rating Agencies ” shall mean, prior to the final Securitization of the Loan, each of S&P, Moody’s and Fitch, or any other nationally recognized statistical rating agency which has been designated by Lender and, after the final Securitization of the Loan, shall mean any of the foregoing that have rated any of the Securities.

“ Re-Dating ” shall have the meaning set forth in Section 9.1.2 hereof.

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“ Refinancing Loan ” shall mean a loan or loans (i) the proceeds of which is/are used in whole or in part to refinance the Loan, and/or (ii) is/are secured by a lien on any of the Properties and/or the IP and/or the direct or indirect ownership interests in one or more Borrowers.

“ Registered, ” with respect to any IP, means any IP issued by, registered with, renewed by or the subject of a pending application before, any Governmental Authority or Internet domain name registrar.

“ Regulation AB ” shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

“ Related Loan ” shall mean a loan to an Affiliate of any Borrower or secured by a Related Property, that is included in a Securitization with the Loan.

“ Related Property ” shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is “related” within the meaning of the definition of Significant Obligor, to any Property.

“ Release Parcel ” shall mean a portion of the Adjacent Property consisting of approximately, but in no event less than, fifteen (15) acres and substantially identified on Schedule VII attached hereto and made a part hereof, on which no portion of the Project is contemplated to be constructed, as such portion is reasonably approved by Lender prior to the date of the first Release Parcel Sale.

“ Release Parcel Binding Contract ” shall have the meaning set forth in Section 2.4.2(b)(i) hereof.

“ Release Parcel Release Price ” shall have the meaning set forth in Section 2.5.1(a)(vi) hereof.

“ Release Parcel Purchaser ” shall have the meaning set forth in Section 2.5.1(a) hereof.

“ Release Parcel Sale ” shall have the meaning set forth in Section 2.5.1(a) hereof.

“ Relinquishment Effective Date ” shall have the meaning set forth in Section 3.1(c) hereof.

“ Relinquishment Notice ” shall have the meaning set forth in Section 3.1(c) hereof.

“ Remaining Adjacent Property ” shall mean that portion of the Adjacent Property that does not constitute the Release Parcel.

“ REMIC Requirements ” shall have the meaning set forth in Section 2.5.1(a)(xvi) hereof.

“ Rents ” shall mean, with respect to each Property, all rents (including, without limitation, percentage rents), rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Action) or in lieu of rent or rent

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equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues (including liquor revenues), deposits (including, without limitation, security deposits, utility deposits and deposits for rental of rooms, but excluding deposits for rental of banquet space or business or conference meeting rooms), accounts, cash, issues, profits, charges for services rendered, all other amounts payable as rent under any Lease or other agreement relating to any Property (including without limitation the Liquor Management Agreement or Replacement Liquor Management Agreement), and other payments and consideration of whatever form or nature received by or paid to or for the account of or benefit of any Borrower, any Manager, Sub-Manager or any of their respective agents or employees from any and all sources arising from or attributable to any Property and/or the Improvements thereon, and proceeds, if any, from business interruption or other loss of income insurance, including, without limitation, all hotel receipts, revenues and net credit card receipts collected from guest rooms, restaurants, bars, meeting rooms, banquet rooms and recreational facilities, revenues from telephone services, internet services, laundry services and television, all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of any Property or rendering of services by any Borrower or any operator or manager of the hotel or the commercial space located in any of the Improvements or acquired from others (including, without limitation, from the rental of any office space, retail space, guest rooms or other space, halls, stores, and offices, and deposits securing reservations of such space), net license, lease, sublease and net concession fees and rentals, health club membership fees, food and beverage wholesale and retail sales, service charges and vending machine sales.

“ Replacement Interest Rate Cap Agreement ” shall mean an interest rate cap agreement from an Acceptable Counterparty with terms substantially identical to the Interest Rate Cap Agreement except that the same shall be effective in connection with replacement of the Interest Rate Cap Agreement following a downgrade of the long-term unsecured debt rating of the Counterparty; provided , that with respect to any Replacement Interest Rate Cap Agreement to be delivered by Borrowers to Lender in connection with Borrower’s exercise of any Extension Option, the strike price shall be the Strike Price applicable to such Extension Option being exercised; and, provided , further , that to the extent any such interest rate cap agreement does not meet the foregoing requirements, a “Replacement Interest Rate Cap Agreement” shall be such interest rate cap agreement reasonably approved in writing by Lender.

“ Replacement Liquor Management Agreement ” shall mean, collectively, (a) either (i) a management agreement with a Qualified Liquor Manager substantially in the same form and substance as the Liquor Management Agreement being replaced, or (ii) a liquor management agreement with a Qualified Liquor Manager, which liquor management agreement shall be reasonably acceptable to Lender in form and substance, provided , with respect to this subclause (ii) , after the occurrence of a Securitization, Lender, at its option, may require that Borrowers obtain confirmation from the applicable Rating Agencies that such liquor management agreement will not cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any class thereof; and (b) an assignment of liquor management agreement and subordination of liquor management fees in a form reasonably acceptable to Lender, executed and delivered to Lender by Borrowers and such Qualified Liquor Manager at Borrowers’ expense.

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“ Replacement Management Agreement ” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Management Agreement being replaced, or (ii) a management agreement with a Qualified Manager, which management agreement shall be reasonably acceptable to Lender in form and substance, provided , with respect to this subclause (ii) , after the occurrence of a Securitization, Lender, at its option, may require that Borrowers obtain confirmation from the applicable Rating Agencies that such management agreement will not cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any class thereof; and (b) an assignment of management agreement and subordination of management fees substantially in the form then used by Lender (or such other form and substance reasonably acceptable to Lender), executed and delivered to Lender by Borrowers and such Qualified Manager at Borrowers’ expense.

“ Replacement Reserve Account ” shall have the meaning set forth in Section 7.3.1 hereof.

“ Replacement Reserve Fund ” shall have the meaning set forth in Section 7.3.1 hereof.

“ Replacements ” shall have the meaning set forth in Section 7.3.1 hereof.

“ Requested Disbursement Date ” shall have the meaning set forth in Section 3.6 hereof.

“ Required Equity Amount ” shall have the meaning set forth in Section 3.2(h) hereof.

“ Required Equity Letter of Credit ” shall have the meaning set forth in Section 3.2(h) hereof.

“ Required Net Cash Flow ” shall mean, with respect to each Extension Term, the amount of Net Cash Flow that will need to be generated during such Extension Term in order to achieve an Extension Debt Service Coverage Ratio of 1.05 to 1.00.

“ Required Prepayment ” shall have the meaning set forth in Section 2.4.2(b) hereof.

“ Required Repair Account ” shall have the meaning set forth in Section 7.1.1 hereof.

“ Required Repair Fund ” shall have the meaning set forth in Section 7.1.1 hereof.

“ Required Repairs ” shall have the meaning set forth in Section 7.1.1 hereof.

“ Reserve Funds ” shall mean, collectively, the Tax and Insurance Escrow Fund, the Replacement Reserve Fund, the Required Repair Fund, the Initial Renovation Reserve Fund, the Interest Reserve Fund, the General Reserve Fund, any funds on deposit in the Construction Loan Reserve Account, any Shortfall Funds and any other escrow fund established pursuant to the Loan Documents.

“ Restoration ” shall mean the repair and restoration of a Property after a Casualty or Condemnation as nearly as possible to the condition such Property was in immediately prior to

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such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender to the extent required hereunder.

“ Restoration Threshold ” shall mean Ten Million Dollars ($10,000,000.00).

“ Restoration Value Threshold ” shall mean that (i) in the case of a Condemnation, the Net Proceeds are less than 15% of the then current fair market value of the applicable Property, and (ii) in the case of a Casualty, the Net Proceeds are less than 30% of the then current fair market value of the applicable Property.

“ Restricted Party ” shall mean, collectively, each Borrower, HRHI, HR Holdings and each Guarantor.

“ Retainage ” shall mean, for each construction contract and subcontract, the greater of (i) ten percent (10%) of all Hard Costs funded to the Trade Contractor (or any General Contractor to the extent any General Contractor is performing the work) under such contract or subcontract until such time as the work to be provided thereunder is fifty percent (50%) complete as reasonably determined and certified by the Construction Consultant, at which time the retainage holdback upon each subsequent payment under such contract or subcontract shall be reduced to such amount as is necessary to maintain a retainage holdback, taking into account the amount already being held back, equal to at least five percent (5%) of the total amount of the applicable contract or subcontract, including any increases thereto, and (ii) the actual retainage under such contract or subcontract.

“Revised Maturity Date” shall have the meaning set forth in Section 3.22(b) hereof.

“ Right of First Offer ” shall have the meaning set forth in Section 13.1 hereof.

“ Right of First Offer Notice ” shall have the meaning set forth in Section 13.1 hereof.

“ Right of First Offer Information and Materials ” shall have the meaning set forth in Section 13.2(b) hereof.

“ ROFO Term Sheet ” shall have the meaning set forth in Section 13.2(d) hereof.

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

“ Sale or Pledge ” shall mean a voluntary or involuntary sale, conveyance, assignment, transfer, encumbrance or pledge of, or a grant of option with respect to, a legal or beneficial interest.

“ Sale Request ” shall have the meaning set forth in Section 2.5.1(a)(i) hereof.

“ Second Anniversary ” shall mean the second anniversary of the Closing Date.

“ Second Anniversary Unfunded Construction Loan Advance ” shall have the meaning set forth in Section 3.1 hereof.

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“ Second Non-Qualified Extended Maturity Date ” shall mean February 9, 2011.

“ Second Non-Qualified Extension Option ” shall have the meaning set forth in Section 2.7.1(b) hereof.

“ Second Non-Qualified Extension Term ” shall have the meaning set forth in Section 2.7.1(b) hereof.

“ Second Qualified Extended Maturity Date ” shall mean February 9, 2012.

“ Second Qualified Extension Option ” shall have the meaning set forth in Section 2.7.2(b) hereof.

“ Second Qualified Extension Term ” shall have the meaning set forth in Section 2.7.2(b) hereof.

“ Securities ” shall have the meaning set forth in Section 9.1 hereof.

“ Securities Act ” shall have the meaning set forth in Section 9.2(a) hereof.

“ Securitization ” shall have the meaning set forth in Section 9.1 hereof.

“ Servicer ” shall have the meaning set forth in Section 9.7 hereof.

“ Servicing Agreement ” shall have the meaning set forth in Section 9.7 hereof.

“ Severed Loan Documents ” shall have the meaning set forth in Section 8.2(c) hereof.

“ Shortfall ” shall mean, at any given time, the amount by which the sum of (i) the unfunded portion of the then applicable Construction Loan Amount, taking into account the existing unapplied Contingency Line Items and applying a percentage of completion analysis with respect thereto, (ii) any General Reserve Funds then on deposit in the General Reserve Account, if any, and (iii) any Interest Reserve Funds then on deposit in the Interest Reserve Account in excess of the Minimum Balance, if any, is less than the actual sum, as reasonably estimated by Lender (based on advice of Construction Consultant), which will be required to complete the Project in accordance with the Plans and Specifications, the Loan Budget and all Legal Requirements, and to pay all unpaid Project Costs in connection therewith, including, without limitation, the payment of interest through and including the Qualified Initial Maturity Date ( i.e ., including the Initial Maturity Extension Period).

“ Shortfall Account ” shall have the meaning set forth in Section 3.12(b) hereof.

“ Shortfall Funds ” shall have the meaning set forth in Section 3.12(a) hereof.

“ Significant Obligor ” shall have the meaning set forth in Item 1101(k) of Regulation AB under the Securities Act.

“ Soft Costs ” shall mean, collectively, the costs set forth in the Loan Budget which are not Hard Costs, including, without limitation, fees and expenses of any architect or engineer

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engaged in connection with the Project, fees and expenses of Borrowers’ counsel and Lender’s counsel, fees and expenses of the Construction Consultant and the Administrative Agent, Debt Service, pre-opening costs and expenses, operating supplies and equipment and such other costs as are set forth in the Loan Budget.

“ Special Purpose Entity ” shall mean a limited partnership or limited liability company that since the date of its formation and at all times on and after the date thereof, has complied with and shall at all times comply with the following requirements:

(a)           was, is and will be organized solely for the purpose of (i) (A) acquiring, developing, constructing, owning, holding, selling, leasing, transferring, exchanging, managing and operating one of the Properties or the IP and incidental personal and intangible property related thereto, (B) operating the gaming and/or liquor operations at the Hotel/Casino Property and owning incidental personal and intangible property related thereto, (C) entering into this Agreement with Lender, (D) refinancing its Property or the IP in connection with repayment of the Loan, and/or (E) transacting lawful business that is incident, necessary and appropriate to accomplish any of the foregoing; or (ii) acting as a general partner of the limited partnership that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property or managing member of the limited liability company that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property;

(b)           has not been and is not engaged in, and will not engage in, any business unrelated to (i) (A) the construction, financing, acquisition, development, ownership, management or operation of one of the Properties or the IP and incidental personal and intangible property related thereto, or (B) operating the gaming operations and/or liquor operations at the Hotel/Casino Property and owning incidental personal and intangible property related thereto, (ii) acting as general partner of the limited partnership that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property, or (ii) acting as managing member of the limited liability company that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property;

(c)           has not had, does not have and will not have any assets other than those related to one of the Properties or the IP or the gaming and/or liquor operations at the Hotel/Casino Property, or, if such entity is a general partner in a limited partnership, its general partnership interest in the limited partnership that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property, or, if such entity is a managing member of a limited liability company, its membership interest in the limited liability company that owns one of the Properties or the IP or that acts as the gaming operator and/or liquor manager at the Hotel/Casino Property;

(d)           has not engaged, sought or consented to, and to the fullest extent permitted by law, will not engage in, seek or consent to, any: (i) dissolution, winding up, liquidation, consolidation, merger or sale of all or substantially all of its assets outside of its ordinary course of business and other than as expressly permitted in this Agreement; (ii) other than as expressly permitted in this Agreement, transfer of partnership or membership interests (if such entity is a general partner in a limited partnership or a managing member in a limited liability company); or

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(iii) amendment of its limited partnership agreement, articles of organization, certificate of formation or operating agreement (as applicable) with respect to the matters set forth in this definition unless Lender issues its prior written consent, which consent shall not be unreasonably withheld, and, after the occurrence of a Securitization, the confirmation in writing from the applicable Rating Agencies that such amendment will not, in and of itself, result in a downgrade, withdrawal or qualification of the then current ratings assigned to any Securities or any class thereof in connection with any Securitization;

(e)           if such entity is a limited partnership, has had, now has, and will have, as its only general partners, Special Purpose Entities that are limited liability companies;

(f)            if such entity is a limited liability company with more than one member, has had, now has and will have at least one member that is a Special Purpose Entity that is a corporation that has at least two (2) Independent Directors or a limited liability company that has at least two (2) Independent Managers and that, in either instance, owns at least one-tenth of one percent (.10%) of the equity of the limited liability company;

(g)           if such entity is a limited liability company with only one member, has been, now is, and will be, a limited liability company organized in the State of Delaware that (i) has as its only member a non-managing member; (ii) has at least two (2) Independent Managers and has not caused or allowed and will not cause or allow the taking of any “Material Action” (as defined in such entity’s operating agreement) without the unanimous affirmative vote of one hundred percent (100%) of the member and such entity’s two (2) Independent Managers; and (iii) at least one (1) springing member (or two (2) springing members if such springing members are natural persons who will replace a member of such entity seriatim not simultaneously) that will become a member of such entity upon the occurrence of an event causing the member to cease to be a member of such limited liability company;

(h)           if such entity is (i) a limited liability company, has had, now has and will have an operating agreement, or (ii) a limited partnership, has had, now has and will have a limited partnership agreement, that, in each case, provides that such entity will not: (A) to the fullest extent permitted by law, take any actions described in Subsection (d)(i) above; (B) engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this definition, in each instance, without the prior written consent of Lender, which consent shall not be unreasonably withheld, and, after the occurrence of a Securitization, confirmation in writing from the applicable Rating Agencies that engaging in such other business activity or such amendment, as applicable, will not, in and of itself, result in a downgrade, withdrawal or qualification of the then current ratings assigned to any Securities or any class thereof in connection with any Securitization; or (C) without the affirmative vote of two (2) Independent Managers and of all the partners or members of such entity, as applicable (or the vote of two (2) Independent Managers of its general partner or managing member, if applicable), file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest;

(i)            has been, is and will remain solvent and has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as

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the same have or shall become due, and has maintained, is maintaining and will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided , however , this provision shall not require the equity owner(s) of such entity to make any additional capital contributions;

(j)            has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity;

(k)           other than as provided in the Cash Management Agreement or in any Management Agreement with respect to one or more other Borrowers, has maintained and will maintain its accounts, books and records separate from any other Person (except other Borrowers) and has filed and will file its own tax returns, except to the extent that it has been or is (i) required to file consolidated tax returns by law; or (ii) treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law;

(l)            has maintained and will maintain its own (except with other Borrowers) records, books, resolutions (if any) and agreements;

(m)          other than as provided in the Cash Management Agreement or in any Management Agreement with respect to one or more other Borrowers, (i) has not commingled and will not commingle its funds or assets with those of any other Person; and (ii) has not participated and will not participate in any cash management system with any other Person;

(n)           has held and will hold its assets in its own name;

(o)           has conducted and will conduct its business in its name or in a name franchised or licensed to it by an entity other than an Affiliate of any Borrower, except for services rendered under a business management services agreement with an Affiliate that complies with the terms contained in Subsection (dd) below, so long as the manager, or equivalent thereof, under such business management services agreement holds itself out as an agent of such Borrower;

(p)           has maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person and has not permitted and will not permit its assets to be listed as assets on the financial statement of any other entity except as required by GAAP (or such other accounting basis acceptable to Lender); provided , however , that a Borrower’s assets may be included in a consolidated financial statement of its Affiliate, provided that such assets shall also be listed on such Single Purpose Entity’s own separate balance sheet;

(q)           has paid and will pay its own liabilities and expenses, including the salaries of its own employees (if any), out of its own funds and assets, and has maintained and will maintain, or will enter into a contract with an Affiliate to maintain, which contract shall be reasonably satisfactory to Lender in form and substance and shall be subject to the requirements of clause (dd) below, a sufficient number of employees (if any) in light of its contemplated business operations; provided , however , this provision shall not require the equity owner(s) of such entity to make any additional capital contributions;

(r)            has observed and will observe all Delaware or Nevada, as applicable, partnership or limited liability company formalities, as applicable;

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(s)           has not incurred and will not incur any Indebtedness other than (i) the Debt, Taxes and Other Charges, (ii) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding two percent (2%) of the then Outstanding Principal Balance (not including any trade payables in an amount not to exceed $200,000 that are the subject of a good faith dispute by a Borrower, in appropriate proceedings therefor, and for which adequate reserves have been established by such Borrower); provided that any Indebtedness incurred pursuant to subclause (ii) shall be (A) paid within sixty (60) days of the date incurred (other than attorneys’ and other professional fees) and (B) incurred in the ordinary course of business, (iii) the FF&E, capital and equipment leases shown on Schedule V attached hereto and made a part hereof, provided that the aggregate principal amount payable thereunder does not exceed $5,000,000 and shall be paid within sixty (60) days of the date when due (collectively, the “ Existing FF&E Leases ”), (iv) any FF&E, capital and equipment leases hereinafter entered into in connection with any of the Properties in the ordinary course of business, provided that the aggregate principal amount payable thereunder does not exceed $15,000,000 and shall be paid within sixty (60) days of the date when due (collectively, “ Permitted Future FF&E Leases ”), and (v) any Letters of Credit required or permitted to be furnished hereunder or any reimbursement obligation with respect thereto;

(t)            has not assumed or guaranteed or become obligated for, and will not assume or guarantee or become obligated for, the debts of any other Person and has not held out and will not hold out its credit as being available to satisfy the obligations of any other Person except as permitted pursuant to this Agreement; except, if such entity is a general partner of a limited partnership, in such entity’s capacity as general partner of such limited partnership or a member of a limited liability company, in such entity’s capacity as a member of such limited liability company;

(u)           has not acquired and will not acquire obligations or securities of its partners, members or shareholders or any other Affiliate except with respect to the ownership of the limited liability company interests or partnership interests (as applicable) of the Single Purpose Entities as shown on the organizational chart attached to this Agreement as Schedule VI ;

(v)           has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including, but not limited to, paying for shared office space and services performed by any employee of an Affiliate; provided , however , to the extent invoices for such services are not allocated and separately billed to each entity, there is a system in place that provides that the amount thereof that is to be allocated among the relevant parties will be reasonably related to the services provided to each such party;

(w)          has maintained and used, now maintains and uses and will maintain and use separate invoices and checks bearing its name.  The invoices and checks utilized by the Special Purpose Entity or utilized to collect its funds or pay its expenses have borne and shall bear its own name and have not borne and shall not bear the name of any other entity unless such entity is clearly designated as being the Special Purpose Entity’s agent;

(x)            except as provided in the Loan Documents, has not pledged and will not pledge its assets to secure the obligations of any other Person;

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(y)           has held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name or in a name franchised or licensed to it by an entity other than an Affiliate of any Borrower and not as a division or part of any other Person, except for services rendered under a business management services agreement with an Affiliate that complies with the terms contained in Subsection (dd) below, so long as the manager, or equivalent thereof, under such business management services agreement holds itself out as an agent of such Borrower;

(z)            except as provided in the Cash Management Agreement or in any Management Agreement, has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

(aa)         has not made and will not make loans to any Person or hold evidence of indebtedness issued by any other Person or entity (other than cash and investment grade securities issued by an entity that is not an Affiliate of or subject to common ownership with such entity);

(bb)         has not identified and will not identify its partners, members or shareholders, or any Affiliate of any of them, as a division or part of it, and has not identified itself and shall not identify itself as a division of any other Person;

(cc)         except for capital contributions and capital distributions expressly permitted under the terms and conditions of its organizational documents and properly reflected in its books and records, has not entered into or been a party to and will not enter into or be a party to, any transaction with its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are commercially reasonable and are no less favorable to it than would be obtained in a comparable arm’s length transaction with an unrelated third party;

(dd)         except with respect to the Independent Managers, has not had and will not have any obligation to indemnify, and has not indemnified and will not indemnify, its partners, officers, directors or members, as the case may be, unless such an obligation was and is fully subordinated to the Debt and will not constitute a claim against it in the event that cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation;

(ee)         does not and will not have any of its obligations guaranteed by any Affiliate except for (i) Guarantors pursuant to the Non-Recourse Guaranty, the Non-Qualified Prepayment Guaranty, the Closing Completion Guaranty and the Construction Completion Guaranty, and (ii) HRHI pursuant to the HRHI Guaranty; provided , that if such entity is a limited partnership, such entity’s general partner will be generally liable for its obligations; and

(ff)           has complied and will comply with all of the terms and provisions contained in its organizational documents.

“ Spread ” shall mean, subject to application of the Default Rate, 4.15%; provided , however , that (a) subject to the following clause (b) , if Substantial Completion has not occurred on or before the date which is twenty-four (24) months from the date of the Initial Construction Loan Advance, the Spread shall increase to 4.65% from and including such date which is twenty-four (24) months from the date of the Initial Construction Loan Advance through but excluding

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the first Payment Date following Substantial Completion, following which the Spread shall again be 4.15%, and (b) if the Second Non-Qualified Extension Term is exercised in accordance with the terms of Section 2.7.1 hereof, the Spread in effect from time to time pursuant to the foregoing clause (a) shall increase by 0.25% throughout the Second Non-Qualified Extension Term and thereafter until the Obligations are paid in full.

“ Spread Maintenance Premium ” shall mean, with respect to any prepayment of the Outstanding Principal Balance prior to the Spread Maintenance Release Date, other than any prepayment from the proceeds of any Minimum Mandatory Prepayment (or any partial payment on account thereof), Non-Qualified Mandatory Prepayment, Additional Non-Qualified Mandatory Prepayment, Release Parcel Release Price, Adjacent Parcel Release Price and/or IP Release Price, an amount equal to the product of (a) the principal amount of such prepayment, multiplied by (b) the Spread, and multiplied by (c) a fraction, the numerator of which shall equal the actual number of days from the date of such payment through the Spread Maintenance Release Date and the denominator of which is 360; provided , however , if any such prepayment shall occur on a day other than a Payment Date, the numerator of such fraction shall equal the actual number of days from the next succeeding ninth (9th) day of a calendar month through the Spread Maintenance Release Date.

“ Spread Maintenance Release Date ” shall mean, as applicable, either (i) May 9, 2008, in the event the Qualification Conditions have not been satisfied on or prior to the Construction Qualification Date, or (ii) August 9, 2008, in the event the Qualification Conditions have been satisfied on or prior to the Construction Qualification Date.

“ State ” shall mean the State of Nevada.

“Stop Notice” shall have the meaning set forth in Section 3.22(a) hereof.

“ Stored Materials ” shall have the meaning set forth in Section 3.11 hereof.

“ Strike Price ” shall mean, as applicable, with respect to:

(i)            the period commencing on the Closing Date through and including the Initial Maturity Date, five and one-half percent (5.5%) per annum; and

(ii)           for each Extension Term, a rate to be selected by Borrowers no later than ten (10) days prior to the first day of such Extension Term, which shall in no event exceed one percent (1%) in excess of LIBOR as of the most recent Determination Date.

“ Sub-Management Agreement ” shall mean that certain Paradise Bay Club Apartments Management Agreement, dated as of September 17, 2004, between PM Realty LLC (predecessor-in-interest to Adjacent Borrower) and Sub-Manger, with respect to the Adjacent Property, as the same has been and may be amended, modified or supplemented from time to time.

“ Sub-Manager ” shall mean, with respect to the Adjacent Property, ConAm Management Corporation.

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“ Subsequent Required Equity Amount ” shall have the meaning set forth in Section 3.3(d) hereof.

“ Substantial Completion ” shall mean the Lien free (subject to Borrowers’ rights to contest certain Liens as provided in Sections 5.1.1 and 5.1.2 hereof and Section 3.6(b) of the Mortgage) substantial completion of the Project substantially in accordance with the Plans and Specifications, all Legal Requirements and this Agreement, such compliance to be evidenced to the reasonable satisfaction of Lender and the Construction Consultant, together with the delivery to Lender of one or more Certificates of Occupancy (if subject to any conditions, such conditions being reasonably acceptable to Lender) for the Project (except to the extent third parties under Leases who are not Affiliates of any Restricted Party have not obtained their Certificate(s) of Occupancy) and evidence that all other Governmental Approvals have been issued and all other Legal Requirements have been satisfied as necessary to permit the commencement at the Project of substantially all gaming, hotel, food and beverage operations contemplated in the space constituting the Project in accordance with the Plans and Specifications other than immaterial portions thereof.

“ Survey ” shall mean a current survey of each of the Properties, certified to the title company and Lender and their successors and assigns, in form and content reasonably satisfactory to Lender.

“ Tax and Insurance Escrow Fund ” shall have the meaning set forth in Section 7.2 hereof.

“ Taxes ” shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against any Property or part thereof, together with all interest and penalties thereon.

“ Terrorism Cap ” shall have the meaning set forth in Section 6.1(a)(x) hereof.

“ Terrorism Insurance ” shall have the meaning set forth in Section 6.1(a)(x) hereof.

“ Third Party IP License ” shall have the meaning set forth in Section 5.1.26(c) hereof.

“ Third Party Lenders ” shall mean third party institutional lenders which are in the business of providing loans similar to the Refinancing Loans

“ Title Company ” shall mean First American Title Insurance Company, or any successor title company reasonably acceptable to Lender and licensed to issue title insurance in the State of Nevada.

“ Title Insurance Policy ” shall mean one or more ALTA mortgagee title insurance policies in a form reasonably acceptable to Lender (or, if the Properties are in a State which does not permit the issuance of such ALTA policy, such form as shall be permitted in such State and reasonably acceptable to Lender) issued with respect to the Properties and insuring the lien of the Mortgage as against such Properties.

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“ Total Costs ” shall mean, as of any date of determination, (i) the sum of all Acquisition Costs and all Project Costs, less (ii) any Release Parcel Release Price, Adjacent Parcel Release Price and/or IP Release Price paid to Lender prior to such date of determination.

“ Total Cost Ratio ” shall mean, as of any date of determination, a ratio, expressed as a percentage, in which (i) the numerator is the Outstanding Principal Balance as of such date of determination, and (ii) the denominator is the Total Costs as of such date of determination.

“ Trade Contractor ” shall mean any contractor, subcontractor or supplier that provides labor, materials, equipment or services in connection with the construction of the Project, including specifically any Major Contractor, but excluding specifically the Architect.

“ Transfer ” shall have the meaning set forth in Section 5.2.10(b) hereof.

“ Transfer Restricted Party ” shall mean, collectively, each Borrower, each Constituent Member of each Borrower, HRHI, HR Holdings and each Guarantor.

“ Trust ” shall have the meaning set forth in Section 10.25(a) hereof.

“ Unaffiliated Joint Venture Counterparty ” shall mean any party to any Affiliate Joint Venture other than any Affiliate Joint Venture Counterparty.

“ Uniform System of Accounts ” shall mean the most recent edition of the Uniform System of Accounts for Hotels, as adopted by the American Hotel and Motel Association.

“ Unused Advance Fee ” shall have the meaning set forth in Section 2.9 hereof.

“ U.S. Obligations ” shall mean non-redeemable securities evidencing an obligation to timely pay principal and/or interest in a full and timely manner that are direct obligations of the United States of America for the payment of which its full faith and credit is pledged.

“ Zoning Reports ” shall mean the zoning reports regarding each of the Properties obtained by Lender from The Planning & Zoning Resource Corp. in connection with making the Loan.

Section 1.2            Principles of Construction.   All references to sections, subsections, clauses, exhibits and schedules are to sections, subsections, clauses, exhibits and schedules in or to this Agreement unless otherwise specified.  All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise.  Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All uses in this Agreement of the phrase “any Borrower” shall be deemed to mean “any one or more of the Borrowers including all of the Borrowers”.  All uses in this Agreement of the phrase “any Property” or “any of the Properties” shall be deemed to mean “any one or more of the Properties including all of the Properties”.  All uses in this Agreement of the phrase “the IP” shall be deemed to mean “all or any part of the IP”.  Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

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ARTICLE II.
GENERAL TERMS

Section 2.1                                    Loan Commitment; Disbursement to Borrowers .

2.1.1                      Agreement to Lend and Borrow .   Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrowers hereby jointly and severally agree to accept the Loan.

2.1.2                      Acquisition Loan.   Borrowers hereby acknowledge and agree that, on the date hereof, Lender made the Acquisition Loan Advance to Borrowers in the principal amount of $760,000,000.00, which Acquisition Loan Advance represents a full disbursement of all proceeds of the Acquisition Loan in the maximum principal amount of the Acquisition Loan Amount.  The Acquisition Loan is evidenced by the Note and this Agreement, is secured by the Mortgage and the other Loan Documents and shall be repaid with interest, costs and charges as more particularly set forth in the Note, this Agreement, the Mortgage and the other Loan Documents.  Principal amounts of the Acquisition Loan which are repaid for any reason may not be reborrowed.  Lender shall not fund any portion of the Acquisition Loan from any account holding “plan assets” of one or more plans within the meaning of 29 C.F.R. 2510.3-101 unless such Acquisition Loan will not constitute a non-exempt prohibited transaction under ERISA.  Borrowers shall use the proceeds of the Acquisition Loan to (a) directly or indirectly acquire the Properties and the IP, (b) repay and discharge any existing loans relating, directly or indirectly, to any of the Properties and/or the IP, (c) make deposits into the Reserve Funds on the Closing Date in the amounts provided herein, (d) pay costs and expenses incurred in connection with the closing of the Loan, as reasonably approved by Lender, as set forth on a sources and uses of funds schedule executed by Borrowers and Lender on the Closing Date, and (e) for such other purposes as shall be reasonably approved by Lender, as set forth on a sources and uses of funds schedule executed by Borrowers and Lender on the Closing Date.

2.1.3                      Construction Loan.   Subject to the conditions and upon the terms herein provided, Lender hereby agrees to lend to Borrowers, and Borrowers hereby agree to borrow from Lender, the Construction Loan in a maximum principal amount not to exceed the Construction Loan Amount.  The Construction Loan is evidenced by the Note and this Agreement, is secured by the Mortgage and the other Loan Documents and shall be repaid with interest, costs and charges as more particularly set forth in the Note, this Agreement, the Mortgage and the other Loan Documents.  Principal amounts of the Construction Loan which are repaid for any reason may not be reborrowed.  Lender shall not fund any portion of the Construction Loan from any account holding “plan assets” of one or more plans within the meaning of 29 C.F.R. 2510.3-101 unless such Construction Loan will not constitute a non-exempt prohibited transaction under ERISA.  Borrowers shall use the proceeds of the Construction Loan to pay Project Costs as contemplated hereunder.  The Construction Loan shall be advanced in accordance with the provisions of Article III hereof.

2.1.4                      Maximum Aggregate Loan Amount.   Notwithstanding anything contained herein or in any other Loan Document to the contrary, the aggregate amount advanced under the Acquisition Loan and the Construction Loan shall not under any circumstances exceed the Loan Amount.  Other than the disbursement of the Acquisition Loan Advance made on the

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date hereof and any Construction Loan Advances made pursuant to this Agreement, Lender shall have no obligation to loan any additional funds in respect of the Loan.

Section 2.2                                    Interest Rate

2.2.1                      Interest Generally.   Interest on the Outstanding Principal Balance shall accrue from the Closing Date to but excluding the Maturity Date at the Applicable Interest Rate.  Borrowers shall pay to Lender on each Payment Date the interest accrued on the Loan for the preceding Interest Period.

2.2.2                      Interest Calculation.   Interest on the Outstanding Principal Balance shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year by (c) the Outstanding Principal Balance.  If, at any time, Lender or Borrowers determine that Lender has miscalculated the Applicable Interest Rate (whether because of a miscalculation of LIBOR or otherwise), such party shall notify the other of the necessary correction.  Upon the agreement of the parties as to the correction, if the corrected Applicable Interest Rate represents an increase in the applicable monthly payment, Borrowers shall, within ten (10) days after receipt of notice from Lender, pay to Lender the corrected amount.  Upon the agreement of the parties as to the correction, if the corrected Applicable Interest Rate represents an overpayment by Borrowers to Lender and no Event of Default then exists, Lender shall promptly refund the overpayment to Borrowers or, at Borrowers’ option, credit such amounts against Borrowers’ payment next due hereunder.

2.2.3                      Determination of Interest Rate.   (a) The Applicable Interest Rate with respect to the Loan shall be: (i) LIBOR plus the Spread with respect to the applicable Interest Period for a LIBOR Loan or (ii) the Prime Rate plus the Prime Rate Spread for a Prime Rate Loan if the Loan is converted to a Prime Rate Loan pursuant to the provisions of Section 2.2.3(c) or (f) hereof.

(b)                                  Subject to the terms and conditions of this Section 2.2.3 , the Loan shall be a LIBOR Loan and Borrowers shall pay interest on the Outstanding Principal Balance at LIBOR plus the Spread for the applicable Interest Period.  Any change in the Applicable Interest Rate hereunder due to a change in LIBOR shall become effective as of the opening of business on the first day of the applicable Interest Period.

(c)                                   In the event that Lender shall have determined in good faith (which determination shall be conclusive and binding upon Borrowers absent manifest error) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such determination, confirmed in writing, to Borrowers at least one (1) Business Day prior to the last day of the related Interest Period.  If such notice is given, the related outstanding LIBOR Loan shall be converted, on the first day of the next occurring Interest Period, to a Prime Rate Loan.

(d)                                  If, pursuant to the terms of this Agreement, any portion of the Loan has been converted to a Prime Rate Loan and Lender shall determine in good faith (which

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determination shall be conclusive and binding upon Borrowers absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, Lender shall give notice by telephone of such determination, confirmed in writing, to Borrowers at least one (1) Business Day prior to the last day of the related Interest Period.  If such notice is given, the related outstanding Prime Rate Loan shall be converted to a LIBOR Loan on the first day of the next occurring Interest Period.

(e)                                   (i)  Except as otherwise expressly provided in this Section 2.2.3(e) , with respect to a LIBOR Loan, all payments made by Borrowers hereunder shall be made free and clear of, and without reduction for or on account of, any Indemnified Taxes or Other Taxes; provided that if Borrowers shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (A) the sum payable shall be increased as necessary so that after making all such required deductions (including deductions applicable to additional sums payable under this Section 2.2.3 ) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (B) Borrowers shall make such deductions, and (C) Borrowers shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  If Lender gives Borrowers written notice that any such amounts are payable by Borrowers, Borrowers shall pay all such amounts to the relevant Governmental Authority in accordance with applicable Legal Requirements by the later of (1) five (5) Business Days after receipt of demand from Lender and (2) their due date, and, as promptly as possible thereafter, such Borrower shall send to Lender an original official receipt, if available, or certified copy thereof showing payment of such Indemnified Taxes or Other Taxes.

(ii)                                   Without duplication of any additional amounts paid pursuant to this Section 2.2.3(e) , each Borrower shall indemnify the Administrative Agent and Lender, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, provided that, if Borrowers determine that any such Indemnified Taxes or Other Taxes were not correctly or legally imposed or asserted, the Administrative Agent or the Lender, as applicable, shall, upon payment by Borrowers of the full amount of any Indemnified Taxes or Other Taxes, allow Borrowers to contest (and shall cooperate in such contest), the imposition of such tax upon the reasonable request of Borrowers and at Borrowers’ expense; provided , however , that the Administrative Agent or Lender shall not be required to participate in any contest that would, in its reasonable judgment, expose it to a material commercial disadvantage or require it to disclose any information it considers confidential or proprietary.  A certificate as to the amount of such payment or liability delivered to Borrowers by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender (together with any supporting detail reasonably requested by Borrowers), shall be conclusive, provided that such amounts are determined on a reasonable basis.

(iii)                                Any Non-U.S. Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which

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Borrowers are located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, or as reasonably requested by Borrowers, such properly completed and executed documentation prescribed by applicable law or reasonably requested by Borrowers as will permit such payments to be made without withholding or at a reduced rate of withholding.  Each Non-U.S. Lender shall deliver to Borrowers and the Administrative Agent (or, in the case of a participant, to the Lender from which the related participation shall have been purchased), on or before the date that such Non-U.S. Lender becomes a party to this Agreement, two (2) properly completed and duly executed copies of U.S. Internal Revenue Service Form W-8BEN, Form W-8IMY or Form W-8ECI, as applicable, (or successor forms thereto), claiming a complete exemption from, or reduction of, U.S. federal withholding tax on all payments by Borrowers under this Agreement.  Each Non-U.S. Lender shall promptly provide such forms upon becoming aware of the obsolescence, expiration or invalidity of any form previously delivered by such Non-U.S. Lender (unless it is legally unable to do so as a result of a change in law) and shall promptly notify Borrowers at any time it determines that any previously delivered forms are no longer valid.

(iv)                               Lender or any successor and/or assign of Lender that is incorporated under the laws of the United States of America or a state thereof agrees that, on or before it becomes a party to this Agreement and from time to time thereafter before the expiration or obsolescence of the previously delivered form, it will deliver to Borrowers a United States Internal Revenue Service Form W-9 or successor applicable form, as the case may be, to establish exemption from United States backup withholding tax.  If required by applicable law,