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Section 1: 425 (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 24, 2019

 

 

Eldorado Resorts, Inc.

(Exact Name of registrant as specified in its charter)

 

 

 

Nevada   001-36629   46-3657681

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

100 West Liberty Street, Suite 1150

Reno, Nevada

  89501
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (775) 328-0100

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $0.00001 par value   ERI   NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement

Merger Agreement

On June 24, 2019, Eldorado Resorts, Inc., a Nevada corporation (“Eldorado”), Colt Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Eldorado (“Merger Sub”), and Caesars Entertainment Corporation, a Delaware corporation (“Caesars”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into Caesars, with Caesars continuing as the surviving corporation and direct wholly owned subsidiary of Eldorado (the “Merger”). In connection with the Merger, Eldorado will change its name to Caesars Entertainment, Inc.

On the terms and subject to the conditions set forth in the Merger Agreement, the aggregate consideration paid by Eldorado in respect of outstanding shares of common stock of Caesars (“Caesars Common Stock”) will be (a) an amount of cash equal to (i) the sum of (A) $8.40 plus (B) if the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), has not expired or been terminated by March 25, 2020, an amount equal to $0.003333 for each day (subject to certain exceptions described in the Merger Agreement) from March 25, 2020 until the closing date of the Merger (the “Closing Date”), multiplied by (ii) the number of shares of Caesars Common Stock outstanding at the effective time of the Merger (the “Aggregate Cash Amount”) and (b) a number of shares of common stock of Eldorado (“Eldorado Common Stock”) equal to 0.0899 multiplied by the number of shares of Caesars Common Stock outstanding at the effective time of the Merger (the “Aggregate Eldorado Share Amount”). Each holder of shares of Caesars Common Stock will be entitled to elect to receive, for each share of Caesars Common Stock held by such holder, either an amount of cash or a number of shares of Eldorado Common Stock with value equal to the Per Share Amount. The “Per Share Amount” is equal to (a) (i) the Aggregate Cash Amount, plus (ii) the product of (A) 0.0899 and (B) the Eldorado Common Stock VWAP and (C) the number of shares of Caesars Common Stock outstanding at the effective time of the Merger, divided by (b) the number of shares of Caesars Common Stock outstanding at the effective time of the Merger. Elections are subject to proration such that the aggregate amount of cash paid in exchange for outstanding shares of Caesars Common Stock in the Merger will not exceed the Aggregate Cash Amount and the aggregate number of shares of Eldorado Common Stock issued in exchange for shares of Caesars Common Stock in the Merger will not exceed the Aggregate Eldorado Share Amount. Outstanding options and other equity awards issued under Caesars’ stock plans will be treated in the manner set forth in the Merger Agreement and, to the extent entitled pursuant to the terms of the Merger Agreement and the underlying equity awards, will receive the Per Share Amount (or applicable portion thereof) in cash. “Eldorado Common Stock VWAP” means the volume weighted average price of a share of Eldorado Common Stock for a ten (10) trading day period, starting with the opening of trading on the eleventh (11th) trading day prior to the anticipated Closing Date to the closing of trading on the second (2nd) to last trading day prior to the anticipated Closing Date.

Immediately following the closing, the board of directors of Eldorado will, subject to certain exceptions described in the Merger Agreement, consist of 11 directors, five of whom shall be selected by Eldorado from the board of directors of Caesars as of the time of mailing the joint proxy statement for the Merger

The Merger Agreement contains customary representations and warranties from each of Caesars and Eldorado, and each party has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of its business prior to the closing, (2) the use of reasonable best efforts to consummate the Merger and obtain all required consents and approvals, including regulatory approvals, (3) the preparation and filing of a joint proxy statement and S-4 registration statement and (4) holding a meeting of shareholders to obtain their requisite approvals in connection with the Merger, including, among other approvals, the approval by Eldorado shareholders of the issuance of shares of Eldorado Common Stock in the Merger, certain amendments to the articles of incorporation of Eldorado, and the reincorporation of Eldorado in Delaware, and, subject to certain exceptions, the recommendation of the board of directors of each of Caesars and Eldorado that such approvals be provided. The Merger Agreement also prohibits Caesars and Eldorado from soliciting competing acquisition proposals, except that, subject to customary exceptions and limitations, prior to receiving shareholder approval, Caesars and Eldorado may, as applicable, provide information to, and negotiate with, a third party that makes an unsolicited acquisition proposal if the board of directors of Caesars or Eldorado, as applicable, determines that such acquisition proposal would reasonably be expected to result in a superior proposal with respect to an alternative transaction and failure to take such actions would be reasonably likely to be inconsistent with its fiduciary duties under applicable law.


Each of Eldorado’s and Caesars’ obligation to consummate the Merger is subject to the satisfaction or waiver of certain conditions, including, among others, (1) the expiration or termination of any applicable waiting period under the HSR Act, and receipt of required gaming approvals, (2) the absence of any governmental order or law prohibiting the consummation of the Merger, (3) adoption of the Merger Agreement by holders of a majority of the outstanding shares of Caesars Common Stock, (4) the approval of the issuance of shares of Eldorado Common Stock in the Merger, (5) the effectiveness of the registration statement for Eldorado Common Stock to be issued in the Merger and the authorization for listing of those shares on the Nasdaq Stock Market, (6) absence of a material adverse effect on the other party, (7) the accuracy of the other party’s representations and warranties, subject to customary materiality standards, (8) compliance of the other party with its respective covenants under the Merger Agreement in all material respects and (9) conversion or certain amendments of, or another mutually agreed arrangement with respect to, Caesars’ 5.00% convertible senior notes due 2024.

The Merger Agreement contains certain termination rights for each of Eldorado and Caesars, including if (1) the Merger is not consummated by June 24, 2020 (as it may be extended, the “End Date”), which date will be extended automatically until September 24, 2020 and thereafter until December 24, 2020, if all conditions precedent, other than the expiration of the waiting period under the HSR Act and/or receipt of required gaming approvals, have been satisfied or are capable of being satisfied, (2) there is a law prohibiting, permanently restraining, enjoining, or rendering unlawful the consummation of the Merger or the issuance of shares of Eldorado Common Stock in the Merger, (3) the required approval of the stockholders of Eldorado or Caesars is not obtained, or (4) there has been a breach of the covenants or representations and warranties by the other party that is not cured such that the applicable closing conditions are not satisfied. In addition, among other reasons, (a) a party may terminate the Merger Agreement in the event that the other party’s board of directors changes its recommendation in favor of the Merger (in the case of the board of directors of Caesars) or the issuance of shares of Eldorado Common Stock (in the case of the board of directors of Eldorado) and (b) Caesars may terminate the Merger Agreement under certain specified circumstances in order to accept a superior proposal in respect of an alternative transaction.

If the Merger Agreement is terminated in certain circumstances relating to changes in the recommendation of the board of directors of Caesars in favor of the Merger, entry by Caesars into an alternative transaction or in certain circumstances following the failure of Caesar’s stockholders to approve the Merger, Caesars will be required to pay Eldorado a termination fee of approximately $418.4 million. If the Merger Agreement is terminated in certain circumstances relating to changes in the recommendation of the board of directors of Eldorado in favor of the issuance of shares of Eldorado Common Stock in the Merger or in certain circumstances following the failure of Eldorado’s stockholders to approve such issuance, then Eldorado will be required to pay Caesars a termination fee of approximately $154.9 million. In addition, each party will be obligated to reimburse the other party’s expenses for an amount not to exceed $50 million if the Merger Agreement is terminated because of the failure to obtain the required approval of such party’s stockholders (creditable against any termination fee that may subsequently be paid by such party).

The Merger Agreement also provides that Eldorado will be obligated to pay a termination fee of approximately $836.8 million to Caesars if the Merger Agreement is terminated (i) due to a law or order relating to gaming or antitrust laws that prohibits or permanently enjoins the consummation of the transactions, (ii) because the required regulatory approvals were not obtained prior to the End Date or (iii) due to Parent willfully and materially breaching certain obligations with respect to the actions required to be taken by Parent to obtain required antitrust approvals.

A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.

The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual or financial information about Eldorado, Caesars, or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Merger


Agreement were made only for purposes of that agreement and as of specific dates; are solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of Eldorado or Caesars or any of their respective subsidiaries or affiliates. Eldorado’s disclosure schedule contains information that has been included in Eldorado’s prior public disclosures, as well as non-public information. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by Eldorado and Caesars. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the companies and the Merger that will be contained in, or incorporated by reference into, the proxy statement/prospectus that the parties will file in connection with the Merger, as well as in the other filings that each of Eldorado and Caesars make with the SEC.

Financing Commitments

In connection with entering into the Merger Agreement, on June 24, 2019, Eldorado entered into a debt financing commitment letter (the “Debt Commitment Letter”) and related fee letters with JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital (USA) Inc. and Macquarie Capital Funding LLC (the “Commitment Parties”). Pursuant to the Debt Commitment Letter, the Commitment Parties have committed to arrange and provide (i) Eldorado with: (w) a $1,000.0 million senior secured revolving credit facility, (x) a $3,000.0 million senior secured term loan b facility, (y) a $3,600.0 million senior secured 364-day bridge facility and (z) a $1,800.0 million senior unsecured bridge loan facility and (ii) a subsidiary of Caesars with a $2,400.0 million senior secured incremental term loan b facility (collectively, the “Financing”). The proceeds of the Financing will be used (a) to pay the cash portion of the Merger consideration, (b) refinance all of Eldorado’s existing credit facilities and outstanding senior notes, (c) refinance certain of Caesar’s existing debt, (d) pay transaction fees and expenses related to the foregoing and (e) for working capital and general corporate purposes. The availability of the borrowings under the Financing is subject to the satisfaction of certain customary conditions including the substantially concurrent closing of the Merger. Additionally, Eldorado entered into an engagement letter with the Commitment Parties (or their applicable affiliates) pursuant to which the Commitment Parties or their affiliates have been engaged to serve as joint bookrunning managing underwriters of, joint bookrunning managing placement agents for, or joint bookrunning managing initial purchasers in a bond offering by Eldorado that may be issued in lieu of all or part of the senior unsecured bridge loan facility of Eldorado referred to above.

A copy of the Debt Commitment Letter is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Debt Commitment Letter is qualified in its entirety by reference to the full text of the Debt Commitment Letter.

Voting Agreements

In connection with the execution of the Merger Agreement, on June 24, 2019, Eldorado and certain stockholders affiliated with Carl C. Icahn (collectively, the “Caesars Significant Stockholder”) entered into a voting agreement (the “Caesars Voting Agreement”), pursuant to which the Caesars Significant Stockholder has agreed, among other things, to vote all of its shares of Caesars Common Stock in favor of the Merger and adoption of the Merger Agreement.

The Caesars Voting Agreement shall terminate upon the earliest of (a) the Effective Time, (b) the termination of the Merger Agreement in accordance with its terms, (c) the entry into or effectiveness of certain amendments, modifications or waivers of the Merger Agreement that are submitted to and approved by the board of directors of Caesars but are not approved by a majority of the directors serving on the Transaction Committee of the board of directors of Caesars, or (d) written notice of termination by Parent to the Caesars Significant Stockholder.


A copy of the Caesars Voting Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference. The foregoing description of the Caesars Voting Agreement is qualified in its entirety by reference to the full text of the Caesars Voting Agreement.

Concurrently with the execution of the Caesars Voting Agreement, Caesars and Recreational Enterprises, Inc. (“REI”) entered into a voting agreement with respect to the shares of Eldorado Common Stock held by REI, on terms substantially similar to the terms of the Caesars Voting Agreement.

Real Estate Master Transaction Agreement

In connection with the execution of the Commitment Letters, on June 24, 2019, Eldorado entered into a Master Transaction Agreement (the “MTA”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things, Eldorado has agreed, subject to the consummation of the Merger and the other applicable conditions set forth therein and in any related documents, (i) through one or more of its subsidiaries (after giving effect to the Merger) to consummate one or more sale and leaseback transactions with VICI and/or its affiliates with respect to certain property described in the MTA, including the gaming facilities known as Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Atlantic City (the “Acquisition”), (ii) through one or more of its subsidiaries (after giving effect to the Acquisition) to amend the CPLV Lease, the Non-CPLV Lease and the Joliet Lease (each as defined in the MTA) in accordance with the terms of the MTA and receive certain consideration from VICI or its affiliates in respect thereof, (iii) to provide a guaranty in respect of each of the CPLV Lease, the Non-CPLV Lease and the Joliet Lease in accordance with the terms of the MTA, (iv) to enter into (or cause its applicable subsidiaries (after giving effect to the Acquisition) to enter into) certain right of first refusal agreements and a put-call right agreement in accordance with the terms of the MTA and (v) to undertake certain related transactions in connection with or related to the foregoing.

A copy of the MTA is attached hereto as Exhibit 10.3 and is incorporated herein by reference. The foregoing description of the MTA is qualified in its entirety by reference to the full text of the MTA.

Additional Information

This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. In connection with the proposed transaction, Eldorado intends to file with the SEC a registration statement on Form S-4 (the “registration statement”) that will include a joint proxy statement of Eldorado and Caesars that also constitutes a prospectus of Eldorado and Caesars (the “joint proxy statement/prospectus”). Each of Eldorado and Caesars will provide the joint proxy statement/prospectus to their respective stockholders. Eldorado and Caesars also plan to file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus or registration statement or any other document which Eldorado or Caesars may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain a copy of the joint proxy statement/prospectus (when it becomes available), the registration statement (when it becomes available) and other relevant documents filed by Eldorado and Caesars without charge at the SEC’s website, www.sec.gov, or by directing a request when such a filing is made to (1) Eldorado Resorts, Inc. by mail at 100 West Liberty Street, Suite 1150, Reno, Nevada 89501, Attention: Investor Relations, by telephone at (775) 328-0112 or by going to the Investor page on Eldorado’s corporate website at www.eldoradoresorts.com; or (2) Caesars Entertainment Corporation by mail at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109, Attention: Investor Relations, by telephone at (800) 319-0047, or by going to the Investors page on Caesars’ corporate website at investor.caesars.com.


Certain Information Regarding Participants

Eldorado, Caesars and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Eldorado and Caesars stockholders in respect of the proposed transaction under the rules of the SEC. You may obtain information regarding the names, affiliations and interests of Eldorado’s directors and executive officers in Eldorado’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 1, 2019, and its definitive proxy statement for its 2019 Annual Meeting, which was filed with the SEC on April 26, 2019.

Investors may obtain information regarding the names, affiliations and interests of Caesars’s directors and executive officers in Caesars’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 22, 2019, and its proxy statement for its 2019 Annual Meeting, which was filed with the SEC on May 15, 2019. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction if and when they become available. Investors should read the joint proxy statement/prospectus carefully and in its entirety when it becomes available before making any voting or investment decisions.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current expectations of Eldorado and Caesars and are subject to uncertainty and changes in circumstances. These forward-looking statements include, among others, statements regarding the expected synergies and benefits of a potential combination of Eldorado and Caesars, including the expected accretive effect of the proposed transaction on Eldorado’s results of operations; the anticipated benefits of geographic diversity that would result from the proposed transaction and the expected results of Caesars’ gaming properties; expectations about future business plans, prospective performance and opportunities; required regulatory approvals; the expected timing of the completion of the proposed transaction; and the anticipated financing of the proposed transaction. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should,” “will” or similar words intended to identify information that is not historical in nature. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. There is no assurance that the proposed transaction will be consummated, and there are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include: (a) risks related to the combination of Caesars and Eldorado and the integration of their respective businesses and assets; (b) the possibility that the proposed transaction with Caesars and the real estate transactions with VICI do not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; (c) the risk that the financing required to fund the proposed transaction is not obtained on the terms anticipated or at all; (d) potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; (e) potential litigation challenging the proposed transaction; (f) the possibility that the anticipated benefits of the proposed transaction, including cost savings and expected synergies, are not realized when expected or at all, including as a result of the impact of, or issues arising from, the integration of the two companies; (g) conditions imposed on the companies in order to obtain required regulatory approvals; (h) uncertainties in the global economy and credit markets and its potential impact on Eldorado’s ability to finance the proposed transaction; (i) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (j) diversion of management’s attention from ongoing business operations and opportunities; (k) the ability to retain certain key employees of Eldorado or Caesars; (l) risks associated with increased leverage from the proposed transaction; (m) changes in the value of Eldorado’s common stock between the date of the merger agreement and the closing of the proposed transaction; (n) competitive responses to the proposed transaction; (o) legislative, regulatory and economic developments; (p) uncertainties as to the timing of the consummation of the proposed transaction and the ability of each party to consummate the proposed transaction; and (q) additional factors discussed in the sections entitled “Risk Factors” and “Management’s Discussion and


Analysis of Financial Condition and Results of Operations” in Eldorado’s and Caesars’s respective most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. Other unknown or unpredictable factors may also cause actual results to differ materially from those projected by the forward-looking statements. The forward-looking statements in this document speak only as of date of this document. These factors are difficult to anticipate and are generally beyond the control of Eldorado and Caesars. Neither Eldorado nor Caesars undertakes any obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required to do so by law.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

2.1*    Agreement and Plan of Merger, dated as of June 24, 2019, by and among Caesars Entertainment Corporation, Eldorado Resorts, Inc. and Colt Merger Sub, Inc.
10.1    Commitment Letter, dated as of June  24, 2019, from JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital Funding LLC and Macquarie Capital (USA) Inc.
10.2    Voting Agreement, dated as of June 24, 2019, by and among Eldorado Resorts, Inc. and the Stockholders of Caesars Entertainment Corporation named therein.
10.3    Master Transaction Agreement, dated as of June 24, 2019, by and among VICI Properties L.P. and Eldorado Resorts, Inc.

 

*

Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Eldorado hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.


EXHIBIT INDEX

 

Exhibit
No.

  

Description

2.1*    Agreement and Plan of Merger, dated as of June 24, 2019, by and among Caesars Entertainment Corporation, Eldorado Resorts, Inc. and Colt Merger Sub, Inc.
10.1    Commitment Letter, dated as of June  24, 2019, from JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital Funding LLC and Macquarie Capital (USA) Inc.
10.2    Voting Agreement, dated as of June 24, 2019, by and among Eldorado Resorts, Inc. and the Stockholders of Caesars Entertainment Corporation named therein.
10.3    Master Transaction Agreement, dated as of June 24, 2019, by and among VICI Properties L.P. and Eldorado Resorts, Inc.


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: June 24, 2019     ELDORADO RESORTS, INC.
    By:   /s/ Thomas R. Reeg
      Chief Executive Officer
(Back To Top)

Section 2: EX-2.1 (EX-2.1)

EX-2.1

Exhibit 2.1

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

CAESARS ENTERTAINMENT CORPORATION,

ELDORADO RESORTS, INC.

and

COLT MERGER SUB, INC.

Dated as of June 24, 2019

 

 

 


TABLE OF CONTENTS

 

ARTICLE I

     2  

Section 1.1

  Definitions      2  

Section 1.2

  Interpretation      21  

ARTICLE II THE MERGER

     22  

Section 2.1

  The Merger      22  

Section 2.2

  Closing      22  

Section 2.3

  Effective Time      22  

Section 2.4

  Effects of the Merger      22  

Section 2.5

  Governing Documents      23  

Section 2.6

  Further Assurances      23  

ARTICLE III CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

     23  

Section 3.1

  Effect on Capital Stock      23  

Section 3.2

  Election Procedure for Company Common Stock      27  

Section 3.3

  Payment for Securities; Exchange of Company Common Stock      28  

Section 3.4

  Appointment of Exchange Agent      29  

Section 3.5

  Exchange of Shares      29  

Section 3.6

  Company Equity Awards      33  

ARTICLE IV REPRESENTATIONS AND WARRANTIES

     36  

Section 4.1

  Organization, Standing and Authority      36  

Section 4.2

  Capital Stock      37  

Section 4.3

  Subsidiaries      38  

Section 4.4

  Power      39  

Section 4.5

  Authority      39  

Section 4.6

  Regulatory Approvals; No Conflict      40  

Section 4.7

  Financial Reports and Regulatory Documents; Material Adverse Effect      41  

Section 4.8

  Litigation      42  

Section 4.9

  Regulatory Matters; Licensure      42  

Section 4.10

  Compliance with Laws      43  

Section 4.11

  Material Contracts; Defaults      44  

Section 4.12

  Real Property      45  

Section 4.13

  Environmental Matters      46  

Section 4.14

  Benefit Arrangements and Labor Matters      47  

Section 4.15

  Taxes      48  

Section 4.16

  Takeover Laws and Provisions      49  

Section 4.17

  Intellectual Property      50  

Section 4.18

  Insurance      51  

Section 4.19

  Accounting and Internal Controls      51  

 

i


Section 4.20

  Financial Advisors, Etc.      51  

Section 4.21

  Affiliate Transactions      52  

Section 4.22

  Ownership of Company Common Stock      52  

Section 4.23

  Financing      52  

Section 4.24

  Solvency      54  

Section 4.25

  Information Supplied      54  

Section 4.26

  Reliance      55  

Section 4.27

  No Other Representations or Warranties      56  

ARTICLE V COVENANTS AND AGREEMENTS

     56  

Section 5.1

  Conduct of Business      56  

Section 5.2

  Access; Contact with Business Relations      65  

Section 5.3

  No Solicitation      66  

Section 5.4

  Filings; Other Actions      71  

Section 5.5

  Regulatory Approvals; Efforts; Third-Party Consents      73  

Section 5.6

  Takeover Laws and Provisions      76  

Section 5.7

  Publicity      76  

Section 5.8

  Indemnification and Insurance      76  

Section 5.9

  Control of Operations      78  

Section 5.10

  Section 16 Matters      79  

Section 5.11

  Transaction Litigation      79  

Section 5.12

  Nasdaq Listing      79  

Section 5.13

  Company Indebtedness; Restructuring Transaction      79  

Section 5.14

  Notification of Certain Matters      83  

Section 5.15

  Employee Matters      83  

Section 5.16

  Financing Cooperation; Financing      85  

Section 5.17

  Post-Closing Directors      90  

Section 5.18

  Delaware Conversion      91  

ARTICLE VI CONDITIONS TO THE MERGER

     92  

Section 6.1

  Conditions to Each Party’s Obligation to Effect the Merger      92  

Section 6.2

  Conditions to Obligation of the Company to Effect the Merger      92  

Section 6.3

  Conditions to Obligation of Parent and Merger Sub to Effect the Merger      93  

Section 6.4

  Frustration of Closing Conditions      94  

ARTICLE VII TERMINATION

     94  

Section 7.1

  Termination or Abandonment      94  

Section 7.2

  Effect of Termination      96  

Section 7.3

  Termination Fee; Expenses      96  

ARTICLE VIII MISCELLANEOUS

     100  

Section 8.1

  No Survival      100  

Section 8.2

  Expenses      100  

 

ii


Section 8.3

  Counterparts; Effectiveness      100  

Section 8.4

  Governing Law      100  

Section 8.5

  Jurisdiction; Specific Enforcement      101  

Section 8.6

  Waiver of Jury Trial      102  

Section 8.7

  Notices      102  

Section 8.8

  Assignment; Binding Effect      103  

Section 8.9

  Severability      104  

Section 8.10

  Entire Agreement      104  

Section 8.11

  Amendments; Waivers      104  

Section 8.12

  Headings      104  

Section 8.13

  No Third-Party Beneficiaries; Liability of Financing Sources      104  

EXHIBITS

 

Exhibit A-1    Articles of Incorporation of Parent
Exhibit A-2    Bylaws of Parent
Exhibit A-3    Certificate of Incorporation of the Surviving Corporation
Exhibit A-4    Bylaws of the Surviving Corporation
Exhibit B-1    Delaware Certificate of Incorporation
Exhibit B-2    Delaware Bylaws

 

iii


AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of June 24, 2019, is entered into by and among Caesars Entertainment Corporation, a Delaware corporation (the “Company”), Eldorado Resorts, Inc., a Nevada corporation (“Parent”), and Colt Merger Sub, Inc., a Delaware corporation and a direct wholly owned Subsidiary (as defined below) of Parent (“Merger Sub”). The Company, Parent and Merger Sub are each sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

WHEREAS, the Parties intend that Merger Sub shall be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned Subsidiary of Parent;

WHEREAS, the Board of Directors of the Company (the “Company Board of Directors”) has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend the adoption of this Agreement by the stockholders of the Company and to submit this Agreement to the stockholders of the Company for adoption;

WHEREAS, the Board of Directors of Parent (the “Parent Board of Directors”) has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, Parent and its stockholders, and declared it advisable, to enter into this Agreement, (ii) adopted and approved the execution, delivery and performance by Parent of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and the issuance of shares of Parent Common Stock (as defined below) in connection with the transactions contemplated by this Agreement (the “Share Issuance”), and (iii) resolved to recommend the approval by its stockholders of the Share Issuance, the Delaware Conversion and the Parent A&R Charter and to submit the Share Issuance, the Delaware Conversion and the Parent A&R Charter to the stockholders of Parent for approval;

WHEREAS, the Board of Directors of Merger Sub has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, Merger Sub and its sole stockholder, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance by Merger Sub of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend the adoption of this Agreement by the sole stockholder of Merger Sub and to submit this Agreement to such stockholder for adoption, and Parent, as the sole stockholder of Merger Sub, has approved the execution, delivery and performance by Merger Sub of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and has adopted this Agreement;


WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the willingness of Parent to enter into this Agreement, the Company Significant Stockholder is entering into a voting agreement (the “Company Stockholder Voting Agreement”) with Parent pursuant to which the Company Significant Stockholder has agreed, on the terms and subject to the conditions set forth in the Company Stockholder Voting Agreement, to, among other things, vote all of its shares of Company Common Stock to adopt this Agreement in accordance with the DGCL (as defined below);

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the willingness of the Company to enter into this Agreement, the Parent Family Stockholder is entering into a voting agreement (the “Parent Stockholder Voting Agreement,” and together with the Company Stockholder Voting Agreement, the “Voting Agreements”) with the Company pursuant to which the Parent Family Stockholder has agreed, on the terms and subject to the conditions set forth in the Parent Stockholder Voting Agreement, to, among other things, vote all of its shares of Parent Common Stock in favor of the Share Issuance, the Delaware Conversion and the Parent A&R Charter; and

WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

Section 1.1 Definitions. As used in this Agreement, the following terms have the respective meanings set forth below:

2012 Plan” means the Caesars Entertainment Corporation 2012 Performance Incentive Plan (as amended).

2014 Plan” means the Caesars Acquisition Company 2014 Performance Incentive Plan.

2017 Plan” means the Caesars Entertainment Corporation 2017 Performance Incentive Plan (as amended).

Acceptable Confidentiality Agreement” has the meaning set forth in Section 5.3(c).

Action” has the meaning set forth in Section 5.8(b).

Adverse Recommendation Change” has the meaning set forth in Section 5.3(e).

Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise.

 

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Aggregate Cash Amount” has the meaning set forth in Section 3.1(c)(iv)(A).

Aggregate Company Share Amount” has the meaning set forth in Section 3.1(c)(iv)(B).

Aggregate Parent Share Amount” has the meaning set forth in Section 3.1(c)(iv)(C).

Agreement” has the meaning set forth in the Preamble.

Alternate Financing” has the meaning set forth in Section 5.16(e).

Antitrust Laws” means the Sherman Antitrust Act, as amended, the Clayton Antitrust Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.

Approvals” has the meaning set forth in Section 5.5(a).

Articles of Conversion” has the meaning set forth in Section 5.18(a).

Assumed Company Option” has the meaning set forth in Section 3.6(c)(ii).

Assumed Company Performance Unit Award” has the meaning set forth in Section 3.6(b)(ii)(C).

Assumed Company Restricted Unit Award” has the meaning set forth in Section 3.6(a).

Benefit Arrangement” means, with respect to any Person, each “employee benefit plan” (within the meaning of section 3(3) of ERISA), and all stock purchase, stock option, other equity or equity-related severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation, health and welfare, supplemental retirement benefits, paid time-off benefits and all other employee benefit or compensation plans, agreements, programs, policies or other arrangements, and any amendments thereto, in each case whether or not subject to ERISA and whether or not in writing, (a) under which any Employee of such Person or any current or former directors, agents, or individual independent contractors of such Person or its Subsidiaries has any present or future right to benefits, (b) sponsored or maintained by such Person or such Person’s Subsidiaries (including an ERISA Affiliate of such Person), or (c) under which such Person or such Person’s Subsidiaries (including an ERISA Affiliate of such Person) has had or may have any present or future liability, contingent or otherwise, including to any Employee of such Person or any current or former directors, agents or individual independent contractors of such Person or its Subsidiaries.

Book-Entry Shares” has the meaning set forth in Section 3.1(e).

Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks in the City of New York, New York are required or authorized by Law to be closed.

Cancelled Shares” has the meaning set forth in Section 3.1(b).

 

3


Cash Election” has the meaning set forth in Section 3.1(c)(i).

Cash Election Consideration” has the meaning set forth in Section 3.1(c)(i).

Cash Election Share” has the meaning set forth in Section 3.1(c)(i).

Ceased to Serve” means that such individual is not at a member of the Parent Board of Directors at the Effective Time because such individual has resigned or otherwise been removed as a member of the Parent Board of Directors (a) due to a final and binding determination by a Governmental Entity that such individual is not suitable to serve, or otherwise may not serve, as a member of the Parent Board of Directors or (b) because a Governmental Entity is likely to determine that such individual is not suitable to serve, or otherwise may not serve, as a member of the Parent Board of Directors.

Certificate” has the meaning set forth in Section 3.1(e).

Certificate of Conversion” has the meaning set forth in Section 5.18(a).

Certificate of Merger” has the meaning set forth in Section 2.3.

Closing” has the meaning set forth in Section 2.2.

Closing Date” has the meaning set forth in Section 2.2.

Closing Transaction Value” has the meaning set forth in Section 3.1(c)(iv)(D).

Code” means the U.S. Internal Revenue Code of 1986, as amended.

Company” has the meaning set forth in the Preamble.

Company 2025 Note Indenture” has the meaning set forth in Section 5.13(b).

Company 2025 Notes” has the meaning set forth in Section 5.13(b).

Company Board of Directors” has the meaning set forth in the Recitals.

Company Common Stock” means the common stock of the Company, par value $0.01 per share.

Company Credit Agreements” means, collectively, (a) that certain Credit Agreement, dated as of December 22, 2017, by and among Caesars Resort Collection, LLC, the other borrowers from time to time party thereto, the lenders party thereto, and Credit Suisse, AG, Cayman Islands Branch, as administrative agent, and (b) that certain Credit Agreement, dated as of October 6, 2017 (as amended by Amendment No. 1 thereto, dated as of April 16, 2018), by and among Caesars Entertainment Operating Company, Inc., CEOC, LLC, the lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint lead arrangers, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Barclays Bank PLC, Citigroup Global Markets Inc., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior

 

4


Funding, Inc. and UBS Securities LLC, as joint bookrunners, and Credit Suisse Securities (USA) LLC, as syndication agent and documentation agent, in each case, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in a manner not inconsistent with the terms of this Agreement.

Company Credit Agreements Payoff” has the meaning set forth in Section 5.13(a).

Company Disclosure Schedule” means the disclosure schedule delivered by the Company to Parent and Merger Sub concurrently with the execution and delivery of this Agreement.

Company Employees” has the meaning set forth in Section 5.15(b).

Company Equity Awards” means, collectively, the Company Options, the Company PSUs and the Company RSUs.

Company Expense Payment” has the meaning set forth in Section 7.3(d)(ii).

Company Intervening Event” means any material event or development or material change in circumstances with respect to the Company and its Subsidiaries, taken as a whole, first occurring or arising after the date of this Agreement and prior to the Company Stockholder Approval if and only if such event, development or change in circumstances was neither known nor reasonably foreseeable by the Company Board of Directors as of, or prior to, the date of this Agreement; provided, that in no event shall the following events, developments or changes in circumstances constitute a Company Intervening Event: (a) the receipt, existence or terms of a Takeover Proposal (which matters shall be addressed by and subject to Section 5.3), (b) events, occurrences, facts, conditions or changes arising out of, relating to or resulting from any steps taken by Parent described in Section 5.5(b), (c) changes in and of themselves in the market price or trading volume of Company Common Stock or (d) the fact in and of itself that the Company meets or exceeds or fails to meet or exceed internal or published projections, forecasts or revenue or earnings predictions for any period; provided, that the exceptions in clauses (c) and (d) shall not exclude any event, development or change in circumstance underlying any such change in market price or trading volume, or meeting or exceeding, or failure to meet or exceed such projections, forecasts or predictions.

Company Market-PSU” has the meaning set forth in Section 3.6(b)(ii)(C).

Company Option” means an option to purchase one or more shares of Company Common Stock granted under a Company Stock Plan.

Company Option Consideration” has the meaning set forth in Section 3.6(c)(i).

Company Option Net Shares” has the meaning set forth in Section 3.6(c)(i).

Company Preferred Stock” means the preferred stock of the Company, par value $0.01 per share.

 

5


Company PSU” means a restricted stock unit award granted under a Company Stock Plan that corresponds to one or more shares of Company Common Stock and which vests, in whole or in part, based on the achievement of performance or market-based conditions.

Company Recommendation” has the meaning set forth in Section 4.5(b).

Company RSU” means a restricted stock unit award granted under a Company Stock Plan that corresponds to one or more shares of Company Common Stock and which vests solely based on the passage of time.

Company Significant Stockholder” means, collectively, Carl C. Icahn and certain of his Affiliates.

Company Stock” means, collectively, the Company Common Stock and the Company Preferred Stock.

Company Stock Plans” means (a) the 2012 Plan, (b) the 2017 Plan, (c) the 2014 Plan and (d) the Caesars Entertainment Corporation Management Equity Incentive Plan.

Company Stockholder Approval” has the meaning set forth in Section 4.5(a).

Company Stockholder Voting Agreement” has the meaning set forth in the Recitals.

Company Stockholders’ Meeting” has the meaning set forth in Section 5.4(c).

Company Termination Fee” has the meaning set forth in Section 7.3(e).

Compliant” means, with respect to the Financing Information, (a) that such Financing Information does not contain any untrue statement of a material fact or omit to state any material fact, in each case with respect to the Company and its Subsidiaries, necessary in order to make the statements contained in such Financing Information, in the light of the circumstances under which they were made, not misleading, (b) Deloitte & Touche LLP shall not have withdrawn its audit opinion with respect to the portion of such Financing Information constituting audited financial statements (it being understood that in the event that such opinion is withdrawn, the Financing Information shall not be thereafter deemed to be Compliant until the date that a new audit opinion is issued with respect to the audited Financing Information by Deloitte & Touche LLP, another “big four” accounting firm or another independent public accounting firm reasonably acceptable to Parent) and (c) the Company has not determined to restate its historical financial statements contained in such Financing Information (it being understood that in the event that the Company has so determined, the Financing Information shall not be thereafter deemed to be Compliant until the date such restatement has been completed or the Company has indicated that it has concluded or otherwise determined that no such restatement shall be required).

Confidentiality Agreement” means that certain amended and restated confidentiality agreement, dated as of April 29, 2019, by and between the Company and Parent.

Consent Solicitation” has the meaning set forth in Section 5.13(c)(i).

 

6


Consent Solicitation Documents” has the meaning set forth in Section 5.13(c)(ii)(A).

Contract” means, with respect to a Person, any contract, note, bond, mortgage, indenture, deed of trust, license, lease, agreement, arrangement, commitment or other instrument or obligation, whether oral or written, that is binding on such Person under applicable Law.

control,” “controlled by” and “under common control with” have the meaning set forth in the definition of “Affiliate.”

Convertible Notes” has the meaning set forth in Section 3.1(c)(iv)(B).

Convertible Notes Indenture” means the Indenture, dated as of October 6, 2017, by and between the Company and Delaware Trust Company, as Trustee, relating to the Convertible Notes.

Convertible Notes Indenture Amendments” has the meaning set forth in Section 5.13(c)(i).

Convertible Notes Supplemental Indenture” has the meaning set forth in Section 5.13(c)(ii)(C).

Debt Financing” has the meaning set forth in Section 4.23(a).

Debt Financing Commitment” has the meaning set forth in Section 4.23(a).

Delaware Conversion” has the meaning set forth in Section 5.18(a).

Delaware Conversion Approval” has the meaning set forth in Section 4.5(a).

DGCL” has the meaning set forth in Section 2.1.

DGCL 262” has the meaning set forth in Section 3.3(a).

Discharge” has the meaning set forth in Section 5.13(b).

Disclosure Schedules” means, collectively, the Company Disclosure Schedule and the Parent Disclosure Schedule.

Dissenting Shares” has the meaning set forth in Section 3.3(a).

Effective Time” has the meaning set forth in Section 2.3.

Election Deadline” has the meaning set forth in Section 3.2(b).

Election Form” has the meaning set forth in Section 3.2(a).

Election Period” has the meaning set forth in Section 3.2(b).

 

7


Eligible Members” means individuals who are members of the Company Board of Directors as of immediately prior to the Joint Proxy Statement/Prospectus Mailing Date and have agreed to serve as members of the Parent Board of Directors.

Employees” means, with respect to any Person, the current and former employees of such Person and those of such Person’s Subsidiaries.

End Date” has the meaning set forth in Section 7.1(b).

Environment” means ambient air, vapors, surface water, groundwater, wetlands, drinking water supply, land surface, or subsurface strata and biota.

Environmental Claims” means all written claims, demands or proceedings alleging liabilities (including all reasonable and documented out-of-pocket fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigations, remediation and other response actions), fines, penalties and monetary damages arising under any Environmental Law.

Environmental Laws” means all applicable and legally enforceable federal, state and local Laws relating to Hazardous Substances, pollution, restoration or protection of the Environment or health or safety (to the extent relating to exposure to Hazardous Substances), including the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.), Safe Drinking Water Act (42 U.S.C. §3000(f) et seq.), Toxic Substances Control Act (15 U.S.C. §2601 et seq.), Clean Air Act (42 U.S.C. §7401 et seq.), Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §9601 et seq.) and other similar state and local Laws, in effect as of the date hereof.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

Escrow Trust Shares” means the shares of Company Common Stock held in escrow trust to satisfy unsecured claims pursuant to the Third Amended Joint Plan of Reorganization, filed with the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago on January 13, 2017, at Docket No. 6318.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and all regulations and rules issued thereunder, or any successor Law.

Exchange Agent” has the meaning set forth in Section 3.4.

Exchange Fund” has the meaning set forth in Section 3.5(a).

Exchange Ratio” has the meaning set forth in Section 3.1(c)(iv)(E).

 

8


Excluded Information” means (a) consolidated financial statements (to the extent not so provided in SEC filings), “segment reporting” (to the extent not so provided in SEC filings), separate Subsidiary financial statements and financial statements and data that would be required by Rule 3-05, 3-09, 3-10 or 3-16 of Regulation S-X (unless previously filed by the Company with the SEC), under the Securities Act, (b) information regarding officers or directors prior to consummation of the Merger (except biographical information if any of such persons will remain officers or directors after consummation of the Merger), executive compensation and related party disclosure or any Compensation Discussion and Analysis or information required by Item 302 (to the extent not so provided in SEC filings) or Item 402 of Regulation S-K under the Securities Act and any other information that would be required by Part III of Form 10-K (except to the extent previously filed with the SEC), (c) any description of all or any component of the Financing or the Related Financing, including any such description to be included in liquidity and capital resources disclosure or any “description of notes” or “description of other indebtedness,” or other information customarily provided by the Financing Sources, Related Financing Sources or their respective counsel, (d) risk factors relating to all or any component of the Financing or the Related Financing, (e) information regarding affiliate transactions that may exist following consummation of the Merger (unless the Company or any of its Subsidiaries was party to any such transactions prior to consummation of the Merger), (f) information regarding any post-Closing pro forma cost savings, synergies, capitalization, ownership or other post-Closing pro forma adjustments (excluding information that is historical financial information of the Company and is derivable by the Company from the books and records of the Company or any Subsidiary of the Company), (g) information necessary for the preparation of any projected or forward-looking financial statements, monthly financial statements or any other information, in each case, that is not readily available to the Company without undue effort or expense and, in the case of financial information, prepared or available in the ordinary course of its financial reporting practice or from its books and records and (h) in the case of a Rule 144A financing, other information customarily excluded from a Rule 144A offering memorandum.

Expense Payments” has the meaning set forth in Section 7.3(d)(ii).

Financing” means each of the Debt Financing and the Sale Leaseback Transaction.

Financing Agreement” means any credit agreement, indenture, purchase agreement, note or similar agreement, in each case, evidencing or relating to (x) indebtedness to be incurred in connection with any Debt Financing or (y) the transactions proposed to be effected pursuant to the Sale Leaseback Transactions.

Financing Information” means (a)(i) audited consolidated balance sheets of the Company and its consolidated Subsidiaries as of, and related audited consolidated statements of operations, comprehensive income/(loss), stockholders’ equity/(deficit) and cash flows of the Company and its consolidated Subsidiaries for the fiscal years ended, December 31, 2016, December 31, 2017 and December 31, 2018, and (ii) if the Closing Date is to occur more than sixty (60) days after December 31, 2019 (or such longer period after December 31, 2019 as the Company is permitted to file such financial statements with the SEC under the Exchange Act), an audited consolidated balance sheet of the Company and its consolidated Subsidiaries as of, and related audited consolidated statements of operations, comprehensive income/(loss), stockholders’ equity/(deficit) and cash flows of the Company and its consolidated Subsidiaries

 

9


for the fiscal year ended, December 31, 2019, (b) an unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of the most recent fiscal quarter (other than the fourth fiscal quarter of any fiscal year), and the related unaudited consolidated statements of operations and comprehensive income/(loss), stockholders’ equity/(deficit) and cash flows of the Company and its consolidated Subsidiaries for the most recent three-, six- or nine-month, as applicable, interim fiscal period, if any, in each case, that has been completed after the most recent fiscal year for which an audited balance sheet has been provided pursuant to clause (a) above and at least forty (40) days prior to the Closing Date (or such longer period after the end of the applicable fiscal quarter as the Company is permitted to file such financial statements with the SEC under the Exchange Act), and including, in the case of the statements of operations and comprehensive income/(loss) and cash flows, comparative information for the same period in the prior fiscal year; (c) to the extent not already provided under clause (a) or (b) above, other financial data of the Company and its Subsidiaries (i) required by paragraph (b) of Schedule I to the Debt Financing Commitment (as of the date of this Agreement) or (ii) that would be necessary for the underwriters or initial purchasers for a Debt Financing or Related Financing that is an offering of securities to receive customary “comfort” (including “negative assurance” comfort) from the independent accountants of the Company with respect to the financial information of the Company and its Subsidiaries included in the offering memorandum or prospectus for such Financing or Related Financing and (d) solely in the event deemed necessary by the SEC in connection with the Joint Proxy Statement/Prospectus and Parent has provided the Company with prompt written notice of such SEC determination, “carve out” financial statements as of the dates specified in clauses (a) and (b) above for the Company, giving effect to any the sale, divestiture or disposition of the assets, properties or businesses of the Company or its Subsidiaries made in connection with the matters described in Section 5.5; provided, that nothing in clauses (a), (b) and (c) shall include or require any Excluded Information; provided, further, that, for purposes of determining whether the Financing Information has been received by Parent to commence the fifteen (15) consecutive Business Day period referenced in the definition of “Marketing Period,” the forty (40)-day or sixty (60)-day (or such longer period as the Company is permitted to file the applicable financial statements with the SEC under the Exchange Act), as applicable, period referenced therein shall be measured based on the last day of such fifteen (15) consecutive Business Day period and not the Closing Date. Parent hereby acknowledges receipt of (x) the financial statements referred to in clause (a)(i) above and (y) the financial statements referred to in clause (b) above as of, and for the fiscal quarter ended, March 31, 2019 and for the fiscal quarter ended March 31, 2018.

Financing Sources” means (x) the Lenders and any other financial institutions that have committed to provide or have otherwise entered into agreements in connection with any part of the Debt Financing (including the parties to any joinder agreements, credit agreements or other definitive agreements relating thereto), Financing Agreements or other Contracts entered into pursuant thereto or relating thereto, and, to the extent Alternate Financing from alternative Persons is obtained in accordance with this Agreement, such other Persons and (y) Real Estate Financing Sources and, in the case of (x) and (y), their respective former, current and future direct or indirect Affiliates and each of their and their Affiliates’ representatives, shareholders, members, managers, controlling persons, general or limited partners, management companies, investment vehicles, officers, directors, employees, agents and representatives and each of their respective successors and assigns; provided, however, in no event shall Parent or any of its Affiliates be a “Financing Source.”

 

10


First Extended End Date” has the meaning set forth in Section 7.1(b).

Foreign Corrupt Practices Act” has the meaning set forth in Section 4.10(e).

Form S-4” has the meaning set forth in Section 4.25.

Former Company Employees” has the meaning set forth in Section 5.15(d).

GAAP” means generally accepted accounting principles in the United States.

Gaming” or “Gaming Activities” means the conduct of gaming and gambling activities, race or sports books and sports pools, or the use of gaming devices, equipment and supplies in the operation of a casino, simulcasting facility, race track, card club or other enterprise, including slot machines, gaming tables, cards, dice, gaming chips, player tracking systems, cashless wagering systems, mobile gaming systems, online real money gaming, online real money poker, poker tournaments, inter-casino linked systems and related and associated equipment, supplies and systems.

Gaming Approvals” means all licenses, permits, approvals, Orders, authorizations, registrations, findings of suitability, determinations of qualification, franchises, exemptions, waivers, concessions and entitlements issued by any Gaming Authority or under any Gaming Laws that are required of the applicable Party.

Gaming Authorities” means all international, national, foreign, domestic, federal, state, provincial, regional, local, tribal, municipal and other regulatory and licensing bodies, instrumentalities, departments, commissions, authorities, boards, officials, tribunals and agencies with authority over or responsibility for the regulation of Gaming within any Gaming Jurisdiction.

Gaming Jurisdictions” means all jurisdictions, domestic and foreign, and their political subdivisions, in which Gaming Activities are or may be lawfully conducted, including all Gaming Jurisdictions in which any of the Parties or their respective Subsidiaries or Affiliates currently conducts or may in the future conduct Gaming Activities.

Gaming Laws” means all Laws pursuant to which any Gaming Authority possesses regulatory, permit or licensing authority over the conduct of Gaming Activities, or the ownership or control of an interest in a Person that conducts Gaming Activities, in any Gaming Jurisdiction, all written and unwritten policies of any Gaming Authority and all written and unwritten interpretations by any Gaming Authority of such Laws or policies.

Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or that govern any Person’s internal affairs. For example, the “Governing Documents” of a corporation are its certificate or articles of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation or articles of organization.

 

11


Governmental Entities” means, in any jurisdiction, any (a) federal, state, local, tribal, foreign or international government, (b) court, arbitral or other tribunal, (c) governmental or quasi-governmental authority of any nature (including any political subdivision, instrumentality, branch, department, official or entity) or (d) agency, commission, authority or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature, including any Gaming Authority.

Hazardous Substance” means any pollutant, chemical, substance or waste that is subject to regulation, control or remediation under applicable Environmental Laws.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

Indemnified Party” has the meaning set forth in Section 5.8(b).

Initial End Date” has the meaning set forth in Section 7.1(b).

Intellectual Property” means all intellectual property of every kind, foreign or domestic, including all patents, patent applications, inventions (whether or not patentable), processes, procedures, technologies, discoveries, apparatus, know-how, Trade Secrets, trademarks, trademark registrations and applications, domain name registrations, social media addresses and accounts, trade dress, service marks, service mark registrations and applications, trade names, and all goodwill associated with the foregoing, copyright registrations, copyrightable and copyrighted works, data and databases, software, rights of publicity, rights of privacy, moral rights, rights to personal information, customer lists and confidential marketing and customer information.

IRS” means the U.S. Internal Revenue Service.

Joint Proxy Statement/Prospectus” means a proxy statement to be filed with the SEC for the purpose of obtaining the Company Stockholder Approval at the Company Stockholders’ Meeting and the Parent Stockholder Approval at the Parent Stockholders’ Meeting, as amended or supplemented from time to time.

Joint Proxy Statement/Prospectus Mailing Date” has the meaning set forth in Section 5.4(a).

knowledge” means, with respect to Parent or the Company, the actual knowledge of the individuals listed in Section 1.1(a) of the Parent Disclosure Schedule or of the Company Disclosure Schedule, as applicable.

Labor Contract” has the meaning set forth in Section 4.14(e).

Law” means all laws, principles of common law, statutes, constitutions, treaties, rules, regulations, ordinances, codes, rulings, Orders, decisions, subpoenas, verdicts and licenses of all Governmental Entities.

Leased Property” has the meaning set forth in Section 4.12.

 

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Lenders” has the meaning set forth in Section 4.23(a).

Letter of Transmittal” has the meaning set forth in Section 3.5(b).

Licensed Parties” has the meaning set forth in Section 4.9(b).

Licensing Affiliates” has the meaning set forth in Section 4.9(b).

Lien” means any mortgage, deed of trust, pledge, encumbrance, option, right of first refusal or first offer, conditional sale, lien, security interest, conditional or installment sale agreement, charge, proxy, voting trust or agreement, transfer restriction or other restriction on the use, voting, receipt of income or other exercise of any attribution of ownership under any stockholder or similar agreement.

Mailing Date” has the meaning set forth in Section 3.2(a).

Marketing Period” means the first period of fifteen (15) consecutive Business Days (a) commencing no earlier than the date that is three (3) Business Days after the date on which Parent shall have received the Financing Information and such Financing Information is Compliant (it being understood and agreed that if the Financing Information is not Compliant at any time during such fifteen (15) consecutive Business Day period, the Marketing Period shall terminate and restart when such Financing Information is Compliant) and (b) throughout and at the end of which Parent shall have the Financing Information and such Financing Information is Compliant (it being understood and agreed that if the Financing Information is not Compliant at any time during such fifteen (15) consecutive Business Day period, the Marketing Period shall terminate and restart when such Financing Information is Compliant); provided, that if the Company shall in good faith reasonably believe it has provided the Financing Information and such Financing Information is Compliant (it being understood and agreed that if the Financing Information is not Compliant at any time during such fifteen (15) consecutive Business Day period, the Marketing Period shall terminate and restart when such Financing Information is Compliant), it may deliver to Parent a written notice to that effect (stating when it believes it completed such delivery), in which case Parent shall be deemed to have such Financing Information and such Financing Information shall be deemed to be Compliant unless Parent in good faith reasonably believes the Company has not completed the delivery of the Financing Information or that such Financing Information is not Compliant and, within three (3) Business Days after the delivery of such notice by the Company, delivers a written notice to the Company to that effect (stating with reasonable specificity which Financing Information the Company has not delivered or what is not Compliant). Notwithstanding anything to the contrary herein, (i) July 5th of 2019 shall be excluded from the determination of the Marketing Period, (ii) if such fifteen (15) consecutive Business Day period has not ended by August 16, 2019, then such fifteen (15) consecutive Business Day period will not commence until September 3, 2019, (iii) November 28th and 29th of 2019 shall be excluded from the determination of the Marketing Period, and (iv) if such fifteen (15) consecutive Business Day period has not ended by December 18, 2019, then such fifteen (15) consecutive Business Day period will not commence until January 2, 2020, (v) July 3rd of 2020 shall be excluded from the determination of the Marketing Period, (vi) if such fifteen (15) consecutive business day period has not ended by August 21, 2020, then such fifteen (15) consecutive business day period will not commence until September 8, 2020 and (vii) November 26th and 27th of 2020 shall be excluded from the determination of the Marketing Period.

 

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Master Transaction Agreement” means the Master Transaction Agreement, dated as of the date hereof, by and between Parent and VICI Properties, L.P., as the same may be amended or modified from time to time.

Material Adverse Effect” means, with respect to the Company or Parent, any event, occurrence, fact, condition or change that is materially adverse to (a) the business, results of operations, financial condition or assets of the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the case may be, or (b) the ability of the Company or Parent, as the case may be, to consummate the transactions contemplated hereby; provided, however, that, for the purposes of clause (a), a “Material Adverse Effect” shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to or resulting from: (i) changes generally affecting the economy or financial or securities markets (including prevailing interest rates); (ii) the announcement of the transactions contemplated by this Agreement and each Party’s compliance with the terms and conditions of this Agreement and the transactions contemplated hereby, including actions taken by Parent pursuant to Section 5.5(b); (iii) any change in GAAP or applicable Law; (iv) any acts of terrorism, sabotage, military action, armed hostilities (whether foreign or domestic), acts of violence (whether foreign or domestic), acts of war (whether or not declared) or casualties, or any escalation or worsening thereof; (v) any damage, destruction, loss or casualty to any of the properties or assets of the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may be, that is covered by insurance; (vi) earthquakes, hurricanes, tornados, floods, mudslides, wildfires, other natural disasters, severe weather conditions or public health emergencies; (vii) the failure, in and of itself, to meet internal or published projections, forecasts, budgets or revenue, sales or earnings predictions for any period (but not the facts or circumstances underlying or contributing to any such failure); (viii) general conditions (or changes therein) in the travel, hospitality or gaming industries; (ix) actions taken, or omitted to be taken, with Parent’s (in the case of the Company) or the Company’s (in the case of Parent and Merger Sub) prior written consent; (x) any change, in and of itself, in the market price or trading volume of Parent Common Stock or Company Common Stock, as applicable, or in Parent’s or the Company’s credit ratings (but not the facts or circumstances underlying or contributing to any such change), or (xi) any Action commenced on behalf of the Company’s stockholders (in the case of the Company) or Parent’s stockholders (in the case of Parent) and arising from this Agreement or the transactions contemplated hereby (except as it relates to breaches of this Agreement by the Company or Parent, as applicable); provided, further, that any event, occurrence, fact, condition or change referred to in clauses (i), (iii), (iv), (vi) or (viii) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred, or would reasonably be expected to occur, to the extent that such event, occurrence, fact, condition or change has a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the case may be, compared to other participants in the industries in which the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may be, conduct their respective businesses.

Material Contract” has the meaning set forth in Section 4.11(a).

 

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Maximum Amount” has the meaning set forth in Section 5.8(c).

Merger” has the meaning set forth in the Recitals.

Merger Consideration” has the meaning set forth in Section 3.1(c).

Merger Sub” has the meaning set forth in the Preamble.

Multiemployer Plan” has the meaning set forth in Section 4.14(b).

Nasdaq” means the Nasdaq Global Select Market.

No Election Consideration” has the meaning set forth in Section 3.1(c)(iii).

No Election Share” has the meaning set forth in Section 3.2(b).

NRS” means the Nevada Revised Statutes.

Order” means any charge, order, writ, injunction, judgment, decree, ruling, determination, directive, award or settlement, whether civil, criminal or administrative.

Owned Property” has the meaning set forth in Section 4.12.

Parent” has the meaning set forth in the Preamble.

Parent A&R Charter” has the meaning set forth in Section 2.5(a).

Parent Benefit Plans” has the meaning set forth in Section 5.15(c).

Parent Board of Directors” has the meaning set forth in the Recitals.

Parent Charter Amendment Approval” has the meaning set forth in Section 4.5(a).

Parent Common Stock” means the common stock of Parent, par value $0.00001 per share.

Parent Common Stock VWAP” has the meaning set forth in Section 3.1(c)(iv)(F).

Parent Disclosure Schedule” means the disclosure schedule delivered by Parent to the Company concurrently with the execution and delivery of this Agreement.

Parent Equity Award” means, collectively, the Parent Options, the Parent PSUs and the Parent RSUs.

Parent Expense Payment” has the meaning set forth in Section 7.3(d)(i).

Parent Family Stockholder” means Recreational Enterprises, Inc.

 

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Parent Intervening Event” means any material event or development or material change in circumstances with respect to Parent and its Subsidiaries, taken as a whole, first occurring or arising after the date of this Agreement and prior to the Parent Stockholder Approval if and only if such event, development or change in circumstances was neither known nor reasonably foreseeable by the Parent Board of Directors as of, or prior to, the date of this Agreement; provided, that in no event shall the following events, developments or changes in circumstances constitute a Parent Intervening Event: (a) the receipt, existence or terms of a Takeover Proposal (which matters shall be addressed by and subject to Section 5.3), (b) events, occurrences, facts, conditions or changes arising out of, relating to or resulting from any steps taken by Parent described in Section 5.5(b), (c) changes in and of themselves in the market price or trading volume of Parent Common Stock or (d) the fact in and of itself that Parent meets or exceeds or fails to meet or exceed internal or published projections, forecasts or revenue or earnings predictions for any period; provided, that the exceptions in clauses (c) and (d) shall not exclude any event, development or change in circumstance underlying any such change in market price or trading volume, or meeting or exceeding, or failure to meet or exceed such projections, forecasts or predictions.

Parent Option” means an outstanding and unexercised option to purchase shares of Parent Common Stock granted under a Parent Stock Plan.

Parent PSU” means a restricted stock unit award granted under a Parent Stock Plan that corresponds to one or more shares of Parent Common Stock and which vests, in whole or in part, based on the achievement of performance or market-based conditions.

Parent Recommendation” has the meaning set forth in Section 4.5(c).

Parent RSU” means a restricted stock unit award granted under a Parent Stock Plan that corresponds to one or more shares of Parent Common Stock and which vests solely based on the passage of time.

Parent Stock Plans” means the (a) Isle of Capri Casinos, Inc. Second Amended and Restated 2009 Long-Term Stock Incentive Plan, (b) MTR Gaming Group, Inc. 2010 Long Term Incentive Plan, (c) Eldorado Resorts, Inc. 2015 Equity Incentive Plan and (d) Eldorado Resorts, Inc. Amended and Restated 2015 Equity Incentive Plan.

Parent Stockholder Approval” has the meaning set forth in Section 4.5(a).

Parent Stockholder Voting Agreement” has the meaning set forth in the Recitals.

Parent Stockholders’ Meeting” has the meaning set forth in Section 5.4(d).

Parent Termination Fee” has the meaning set forth in Section 7.3(e).

Parties” and “Party” have the meaning set forth in the Preamble.

Party Intellectual Property” means, with respect to any Party, all Intellectual Property owned by such Party or its Subsidiaries.

 

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Payoff Letter” has the meaning set forth in Section 5.13(a).

Per Share Amount” has the meaning set forth in Section 3.1(c)(iv)(G).

Person” means an individual, firm, corporation (including any non-profit corporation), partnership (general or limited), limited liability company, joint venture, association, trust, Governmental Entity or other entity or organization.

Previously Disclosed” means, with respect to any specific section or subsection of this Agreement, the information set forth by a Party in (a) the corresponding section or subsection of its Disclosure Schedule, (b) any other section or subsection of its Disclosure Schedule to the extent it is reasonably apparent on the face of such disclosure that the disclosure in such other section or subsection of its Disclosure Schedule is applicable to such specific section or subsection of this Agreement, (c) such Party’s SEC Filings filed at least two (2) Business Days prior to the date of this Agreement (excluding, in each case, any disclosures set forth in any risk factor section or in any other section to the extent they are forward-looking statements or cautionary, predictive or forward-looking in nature) or (d) in the case of Benefit Arrangements that are not material, a virtual data room established by the Company or Parent, as applicable; provided, that any such Benefit Arrangements shall be considered Previously Disclosed if form agreements with terms substantially comparable to the respective Benefit Arrangement have been provided in the applicable data room.

Properties” and “Property” have the meaning set forth in Section 4.12.

Qualifying Amendment” has the meaning set forth in Section 5.4(a).

Real Estate Financing Sources” means any purchaser or lessor of real estate pursuant to any Sale Leaseback Transaction.

Real Estate Purchase Agreements” means the Subject Property PSAs as defined in the Master Transaction Agreement.

Regulatory Breach Termination” means a termination of this Agreement by either Parent or the Company pursuant to (a) Section 7.1(h), (b) Section 7.1(c) in connection with any Law relating to Antitrust Laws or (c) Section 7.1(b) and at the time of such termination pursuant to Section 7.1(b), any of the conditions set forth in Section 6.1(b) (if the applicable Law relates to Antitrust Laws) or Section 6.1(e)(i) shall not have been satisfied and the conditions in Section 6.1(a) and Section 6.3 have been satisfied or are capable of being satisfied at or prior to the Closing, in each case of (b) and (c), if at the time of such termination, Parent shall have been in willful and material breach of its obligations with respect to Antitrust Laws under Section 5.5(b).

Related Financing” means any debt securities, credit facilities, other indebtedness for borrowed money, equity or equity-linked securities or other financing all or a portion of which is issued or incurred by any Real Estate Financing Source to fund the consideration payable by such Real Estate Financing Source in the Sale Leaseback Transaction.

 

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Related Financing Agreement” means any credit agreement, indenture, purchase agreement, note or similar agreement, in each case, evidencing or relating to indebtedness to be incurred in connection with any Related Financing.

Related Financing Commitment” means the commitment letter(s) and fee letters, including all exhibits, schedules, annexes and joinders thereto, dated as of the date of this Agreement, among the Real Estate Financing Sources and the financial institutions party thereto, in the form delivered to the Company by the Real Estate Financing Sources.

Related Financing Sources” means the financial institutions that have committed to provide or have otherwise entered into agreements in connection with any part of the Related Financing (including the parties to any joinder agreements, credit agreements or other definitive agreements relating thereto), and their respective former, current and future direct or indirect Affiliates and each of their and their Affiliates’ representatives, shareholders, members, managers, controlling persons, general or limited partners, management companies, investment vehicles, officers, directors, employees, agents and representatives and each of their respective successors and assigns.

Representatives” means, with respect to any Person, such Person’s directors, officers, employees, agents, consultants, advisors and other representatives, including legal counsel, accountants and financial advisors.

Requisite Gaming Approvals” means the Gaming Approvals set forth on Section 1.1(b) of the Parent Disclosure Schedule or of the Company Disclosure Schedule, as applicable.

Reverse Termination Fee” has the meaning set forth in Section 7.3(e).

Rights” means, with respect to any Person, securities or obligations convertible into or exercisable or exchangeable for, or giving any other Person any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such first Person.

Sale Leaseback Transactions” means the transactions contemplated by the Real Estate Purchase Agreements and the Master Transaction Agreement.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

SEC” means the U.S. Securities and Exchange Commission.

SEC Filings” has the meaning set forth in Section 4.7(a).

Second Extended End Date” has the meaning set forth in Section 7.1(b).

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Share Issuance” has the meaning set forth in the Recitals.

 

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Shortfall Number” has the meaning set forth in Section 3.1(d)(ii).

Solvent” has the meaning set forth in Section 4.24.

Specified Convertible Notes Indenture Amendments” has the meaning set forth in Section 5.13(c) of the Company Disclosure Schedule.

Stock Conversion Number” has the meaning set forth in Section 3.1(d).

Stock Election” has the meaning set forth in Section 3.1(c)(ii).

Stock Election Consideration” has the meaning set forth in Section 3.1(c)(ii).

Stock Election Number” has the meaning set forth in Section 3.1(d)(i).

Stock Election Share” has the meaning set forth in Section 3.1(c)(ii).

Subsidiary” and “Significant Subsidiary” have the meanings ascribed to those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.

Superior Proposal” means, with respect to the Company or Parent, a bona fide written Takeover Proposal (a) that the Company Board of Directors or the Parent Board of Directors, as applicable, determines in good faith, after consultation with its outside financial advisor and outside legal counsel, is reasonably capable of being completed, taking into account all financial, legal, regulatory, timing and other aspects of such proposal, including all conditions contained therein and the Person making such Takeover Proposal and (b) that the Company Board of Directors or the Parent Board of Directors, as applicable, determines in good faith after consultation with its outside financial advisor and outside legal counsel (taking into account any changes to this Agreement proposed by the other Party in response to such Takeover Proposal, and all financial, legal, regulatory, timing and other aspects of such Takeover Proposal, including all conditions contained therein and the Person making such proposal, and this Agreement) is more favorable to the stockholders of the Company or Parent, as applicable, from a financial point of view than the transactions contemplated by this Agreement. For purposes of this definition, “Takeover Proposal” shall have the meaning ascribed thereto in Section 1.1, except that all references to 20% shall be changed to 50%.

Surviving Corporation” has the meaning set forth in Section 2.1.

Takeover Laws” has the meaning set forth in Section 4.16.

Takeover Proposal” means, with respect to the Company or Parent, as the case may be, (a) any inquiry, proposal or offer for or with respect to (or expression by any Person that it is considering or may engage in) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture or other similar transaction involving such Party or any of its Subsidiaries whose assets, taken together, constitute 20% or more of such Party’s consolidated assets, (b) any inquiry, proposal or offer (including tender or exchange offers) to (or expression by any Person that it is considering or may seek to) acquire in any manner, directly or indirectly, in one or more transactions, 20% or more of the outstanding

 

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Company Common Stock or Parent Common Stock, as applicable, or securities of such Party representing 20% or more of the voting power of such Party or (c) any inquiry, proposal or offer to (or expression by any Person that it is considering or may seek to) acquire in any manner (including the acquisition of stock in any Subsidiary of such Party), directly or indirectly, in one or more transactions, assets or businesses of such Party or its Subsidiaries, including pursuant to a joint venture, representing 20% or more of the consolidated assets, revenues or net income of such Party, in each case, other than the Merger.

Takeover Provisions” has the meaning set forth in Section 4.16.

Tax” or “Taxes” means (a) all taxes, levies, imposts, duties and other similar assessments, including any income, alternative minimum or add-on tax, estimated, gross income, gross receipts, sales, use, real property transfer, documentary transfer, controlling interest, transactions, intangibles, ad valorem, value-added, escheat, franchise, registration, title, license, capital, paid-up capital, profits, withholding, employee withholding, payroll, worker’s compensation, unemployment insurance, social security, employment, excise, severance, stamp, transfer occupation, premium, recording, real property, personal property, federal highway use, commercial rent, environmental (including taxes under Section 59A of the Code), windfall profit or other tax, custom, duty or other like assessment, together with any interest, penalties, fines or additions to tax that may become payable in respect thereof imposed by any country, any Governmental Entity or subdivision or agency thereof, (b) any liability for the payment of any amounts of the type described in clause (a) of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group for any taxable period, and (c) any liability for the payment of any amounts of the type described in clause (a) or (b) of this sentence as a result of being a transferee of or successor, by Contract (other than any Contract entered into in the ordinary course of business consistent with past practice and the primary purpose of which is not the allocation or payment of Tax liability) or otherwise.

Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or declaration of estimated tax) supplied or required to be supplied to, or filed or required to be filed with, a Governmental Entity in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

Termination Date” has the meaning set forth in Section 5.1(a).

Termination Fee Payment” has the meaning set forth in Section 7.3(f).

Third-Party Consents” has the meaning set forth in Section 5.5(g).

Ticking Fee” has the meaning set forth in Section 3.1(c)(iv)(A).

Trade Secrets” means all trade secrets, confidential information and know-how, including processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists.

 

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Treasury Regulations” means the regulations promulgated by the U.S. Department of the Treasury under the Code.

UK Bribery Act” has the meaning set forth in Section 4.10(e).

Voting Agreements” has the meaning set forth in the Recitals.

Section 1.2 Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” 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, unless the context otherwise requires. Whenever the word “or” is used in this Agreement, it shall not be deemed exclusive. References to “$” mean U.S. dollars. References to “written” or “in writing” include any writing in electronic form. The phrases “the Company and its Subsidiaries,” “Parent and its Subsidiaries” and words of similar import when used in this Agreement shall be deemed to be followed by the words “taken as a whole.” All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References in this Agreement to specific Laws or to specific provisions of Laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time may be amended, modified or supplemented, including by succession of comparable successor statutes (provided, that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date). When used in reference to information or documents, other than with respect to any information or documents publicly available on the SEC’s Electronic Data Gathering and Retrieval System, the terms “made available,” “provided” and “delivered” mean that the information or documents referred to have been made available in the virtual data rooms established by the Company or Parent, as applicable, by no later than the day prior to the date of this Agreement. The inclusion of any item in the Company Disclosure Schedule or the Parent Disclosure Schedule shall not be deemed to be an admission or evidence of materiality of such item, nor shall it establish any standard of materiality for any purpose whatsoever. Each of the Parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship of any of the provisions of this Agreement.

 

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ARTICLE II

THE MERGER

Section 2.1 The Merger. At the Effective Time, upon the terms and subject to the satisfaction or valid waiver of the conditions set forth in this Agreement, and in accordance with the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”), Merger Sub shall be merged with and into the Company, whereupon the separate corporate existence of Merger Sub shall cease, and the Company shall continue its existence under the Laws of the State of Delaware as the surviving company in the Merger (the “Surviving Corporation”) and a wholly owned Subsidiary of Parent.

Section 2.2 Closing. The closing of the Merger (the “Closing”) shall take place by electronic exchange of documents on the third (3rd) Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the last of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of all conditions at the Closing), or at such other place, date and time as the Company and Parent may agree in writing: provided, however, that if the Marketing Period has not ended at such time, the Closing shall occur instead on (a) the earlier to occur of (i) any Business Day during the Marketing Period to be specified by Parent to the Company on no less than three (3) Business Days’ written notice and (ii) the third Business Day following the last day of the Marketing Period or (b) such other date and time as agreed to in writing by Parent and the Company; provided, further, that if the End Date occurs on or prior to such third (3rd) Business Day, then the Closing shall occur on the End Date if the conditions set forth in Article VI are satisfied or waived (to the extent permitted by applicable Law and other than those conditions that by their nature are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) as of the End Date and the Marketing Period has ended at such time. The date on which the Closing actually occurs is referred to as the “Closing Date.”

Section 2.3 Effective Time. Promptly following the Closing, the Company and Merger Sub shall cause to be filed with the Secretary of State of the State of Delaware a certificate of merger (the “Certificate of Merger”), executed and filed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL, in order to effect the Merger. The Merger shall become effective at such time as the Certificate of Merger has been filed with the Secretary of State of the State of Delaware or at such other, later date and time as the Company and Parent may agree and specify in the Certificate of Merger, executed and filed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL (the time the Merger becomes effective, the “Effective Time”).

Section 2.4 Effects of the Merger. The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, claims, obligations, liabilities and duties of the Company and Merger Sub shall become the debts, claims, obligations, liabilities and duties of the Surviving Corporation, all as provided under the DGCL.

 

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Section 2.5 Governing Documents.

(a) In the event that the Delaware Conversion Approval is not obtained but subject to the receipt of the Parent Charter Amendment Approval, at the Effective Time, Parent shall cause its Governing Documents to be amended and restated in their entirety in the forms attached hereto as Exhibit A-1 (the “Parent A&R Charter”) and Exhibit A-2, and as so amended shall be the Governing Documents of Parent until thereafter amended in accordance with the provisions thereof and applicable Law. Notwithstanding the foregoing, if the Delaware Conversion Approval is obtained, then Section 5.18 shall apply.

(b) At the Effective Time, the Governing Documents of the Surviving Corporation shall be amended and restated in their entirety in the forms attached hereto as Exhibit A-3 and Exhibit A-4, and as so amended shall be the Governing Documents of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and applicable Law.

Section 2.6 Further Assurances. If at any time before or after the Effective Time, Parent or the Company reasonably believes or is advised that any further instruments, deeds, assignments or assurances are reasonably necessary or desirable to consummate the Merger or to carry out the purposes and intent of this Agreement at or after the Effective Time, then the Parties and the Surviving Corporation and their respective officers and directors, as applicable, shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to consummate the Merger and to carry out the purposes and intent of this Agreement.

ARTICLE III

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger, and without any action on the part of Parent, Merger Sub, the Company or the holder of any shares or securities of Parent or the Company:

(a) Conversion of Merger Sub Common Stock. Each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

(b) Cancellation of Certain Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned or held in treasury by the Company, and each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned by Parent, any of its Subsidiaries or Merger Sub, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist (any such shares, “Cancelled Shares”), and no consideration shall be delivered in exchange therefor or in respect thereof.

 

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(c) Conversion of Company Common Stock. Subject to the other provisions of this Article III, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any Cancelled Shares and any Dissenting Shares), including the Escrow Trust Shares, shall be converted automatically into, and shall thereafter represent, the right to receive, at the election of the holder of such share of Company Common Stock pursuant to the procedures set forth in Section 3.2 and subject to any proration in accordance with Section 3.1(d), any of the following forms of consideration (the “Merger Consideration”):

(i) Cash Election Shares. Each share of Company Common Stock with respect to which an election to receive cash (a “Cash Election”) has been properly made and has not been properly revoked (each, a “Cash Election Share”) shall be converted into the right to receive the Per Share Amount in cash (without interest) (the “Cash Election Consideration”), subject to adjustment in accordance with Section 3.3(b).

(ii) Stock Election Shares. Each share of Company Common Stock with respect to which an election to receive stock consideration (a “Stock Election”) has been properly made and has not been properly revoked (each, a “Stock Election Share”) shall be converted into the right to receive a number of shares of Parent Common Stock equal to the Exchange Ratio, subject to adjustment in accordance with Section 3.3(b) (the “Stock Election Consideration”).

(iii) No Election Shares. Each No Election Share shall be converted into the right to receive the Cash Election Consideration or the Stock Election Consideration as determined in accordance with Section 3.1(d), subject to adjustment in accordance with Section 3.3(b) (the “No Election Consideration”).

(iv) Definitions.

(A) “Aggregate Cash Amount” means the product of (1) the Aggregate Company Share Amount and (2) the sum of (x) $8.40 plus (y) if the condition set forth in Section 6.1(e)(i) remains unsatisfied on March 25, 2020, an amount equal to $0.003333 (the “Ticking Fee”) multiplied by the number of days during the period beginning on March 25, 2020 and ending on the Closing Date; provided, however, that the Ticking Fee shall not apply during any day in which the condition set forth in Section 6.1(e)(i) shall have been satisfied and the condition set forth in Section 6.3(e) remains unsatisfied.

(B) “Aggregate Company Share Amount” means 682,161,838 shares of Company Common Stock; provided, however, that the “Aggregate Company Share Amount” shall be (1) increased by the number of shares of Company Common Stock that are issued, from and after the date hereof and prior to the Effective Time, pursuant to (A) the exercise of Company Options and other Company Equity Awards either (x) outstanding as of the date hereof or (y) issued after the date hereof pursuant to and in compliance with the terms of this Agreement or (B) conversion of the Company’s outstanding 5.00% Convertible Senior Notes due 2024 (the “Convertible Notes”) and (2) decreased in the event any shares of Company Common Stock become Cancelled Shares pursuant to Section 3.1(e).

 

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(C) “Aggregate Parent Share Amount” means 61,326,350 shares of Parent Common Stock; provided, however, that the “Aggregate Parent Share Amount” shall be (1) increased by the number of shares of Company Common Stock that are issued, from and after the date hereof and prior to the Effective Time, pursuant to (A) the exercise of Company Options and other Company Equity Awards either (x) outstanding as of the date hereof or (y) issued after the date hereof pursuant to and in compliance with the terms of this Agreement or (B) conversion of the Convertible Notes and (2) decreased in the event any shares of Company Common Stock become Cancelled Shares pursuant to Section 3.1(e), in each case on a basis of 0.0899 additional shares of Parent Common Stock for each share of Company Common Stock so issued or cancelled.

(D) “Closing Transaction Value” means the sum of (1) the Aggregate Cash Amount and (2) the product of the Aggregate Parent Share Amount and the Parent Common Stock VWAP.

(E) “Exchange Ratio” means the quotient, rounded to the nearest one ten-thousandth, of (1) the Per Share Amount divided by (2) the Parent Common Stock VWAP.

(F) “Parent Common Stock VWAP” means the volume weighted average price of a share of Parent Common Stock for a ten (10) trading day period, starting with the opening of trading on the eleventh (11th) trading day prior to the anticipated Closing Date to the closing of trading on the second (2nd) to last trading day prior to the anticipated Closing Date, as reported by Bloomberg Finance L.P.

(G) “Per Share Amount” means the quotient, rounded to the nearest one-tenth of a cent, obtained by dividing (1) the Closing Transaction Value by (2) the Aggregate Company Share Amount.

(d) Proration. Notwithstanding anything to the contrary in this Agreement, the total number of shares of Company Common Stock that will be converted into the Stock Election Consideration (the “Stock Conversion Number”) shall be equal to the quotient obtained by dividing (x) the Aggregate Parent Share Amount by (y) the Exchange Ratio. All other shares of Company Common Stock shall be converted into the right to receive the Cash Election Consideration (in each case, excluding Dissenting Shares and Cancelled Shares). Within ten (10) Business Days after the Effective Time, Parent shall cause the Exchange Agent to effect the allocation among the holders of Company Common Stock of rights to receive the Stock Election Consideration and the Cash Election Consideration as follows:

(i) If the aggregate number of shares of Company Common Stock with respect to which a Stock Election shall have been made (the “Stock Election Number”) exceeds the Stock Conversion Number, then (1) all Cash Election Shares and all No Election Shares of each holder thereof shall be converted into the right to receive the Cash Election Consideration, and (2) Stock Election Shares of each holder thereof

 

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will be converted into the right to receive the Stock Election Consideration in respect of that number of Stock Election Shares equal to the product of (A) the number of Stock Election Shares held by such holder and (B) a fraction, the numerator of which is the Stock Conversion Number and the denominator of which is the Stock Election Number, with the remaining number of such holder’s Stock Election Shares being converted into the right to receive the Cash Election Consideration.

(ii) If the Stock Election Number is less than the Stock Conversion Number (the amount by which the Stock Conversion Number exceeds the Stock Election Number, the “Shortfall Number”), then all Stock Election Shares shall be converted into the right to receive the Stock Election Consideration and the No Election Shares and Cash Election Shares shall be treated in the following manner:

(A) If the Shortfall Number is less than or equal to the number of No Election Shares, then (1) all Cash Election Shares shall be converted into the right to receive the Cash Election Consideration and (2) No Election Shares of each holder thereof shall convert into the right to receive the Stock Election Consideration in respect of that number of No Election Shares equal to the product of (x) the number of No Election Shares held by such holder and (y) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the total number of No Election Shares, with the remaining number of such holder’s No Election Shares being converted into the right to receive the Cash Election Consideration; or

(B) If the Shortfall Number exceeds the number of No Election Shares, then (1) all No Election Shares shall be converted into the right to receive the Stock Election Consideration and (2) Cash Election Shares of each holder thereof shall convert into the right to receive the Stock Election Consideration in respect of that number of Cash Election Shares equal to the product of (x) the number of Cash Election Shares held by such holder and (y) a fraction, the numerator of which is the amount by which the Shortfall Number exceeds the total number of No Election Shares and the denominator of which is the total number of Cash Election Shares, with the remaining number of such holder’s Cash Election Shares being converted into the right to receive the Cash Election Consideration.

(e) Treatment of Company Common Stock. From and after the Effective Time, all of the shares of Company Common Stock converted into the right to receive the Merger Consideration pursuant to this Section 3.1 shall no longer be outstanding, shall automatically be cancelled and shall cease to exist as of the Effective Time, and uncertificated shares of Company Common Stock represented by book-entry form (“Book-Entry Shares”) and each certificate that, immediately prior to the Effective Time, represented any such shares of Company Common Stock (each, a “Certificate”) shall thereafter represent only the right to receive (x) the Merger Consideration into which the shares of Company Common Stock represented by such Book-Entry Share or Certificate have been converted pursuant to this Section 3.1 and (y) any dividends or other distributions to which holders of Company Common Stock shall become entitled in accordance with Section 3.5(d).

 

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Section 3.2 Election Procedure for Company Common Stock.

(a) Election Form. Not less than thirty (30) days prior to the anticipated Effective Time or on such other date as Parent and the Company mutually agree (the “Mailing Date”), the Company shall mail an election form and other appropriate and customary transmittal materials, in such form mutually acceptable to Parent and the Company (the “Election Form”), to each holder of record of shares of Company Common Stock (other than any Cancelled Shares and any Dissenting Shares) as of a record date that is five (5) Business Days prior to the Mailing Date or such other date as mutually agreed to by Parent and the Company.

(b) Choice of Election. Each Election Form shall permit the holder (or the beneficial owner through customary documentation and instructions) to specify (i) the number of shares of Company Common Stock with respect to which such holder elects to receive the Stock Election Consideration, (ii) the number of shares of Company Common Stock with respect to which such holder elects to receive the Cash Election Consideration or (iii) that such holder makes no election with respect to such holder’s shares of Company Common Stock. Any shares of Company Common Stock with respect to which the Exchange Agent does not receive a properly completed Election Form during the period (the “Election Period”) from the Mailing Date to 5:00 p.m., New York time, on the second (2nd) Business Day prior to the Effective Time or such other time as mutually agreed by Parent and the Company (the “Election Deadline”) shall be deemed to be No Election Shares. Parent shall publicly announce the anticipated Election Deadline at least five (5) Business Days prior to the Election Deadline. If the Effective Time is delayed to a subsequent date, the Election Deadline shall be similarly delayed to a subsequent date (which shall be the second (2nd) Business Day prior to the Effective Time or such other date as mutually agreed to by Parent and the Company), and Parent shall promptly announce any such delay and, when determined, the rescheduled Election Deadline. For the purposes of this Agreement, “No Election Share” means each share of Company Common Stock for which (i) no election to receive Cash Election Consideration or Stock Election Consideration has been properly made, or no Election Form has been properly returned, in accordance with the terms of this Section 3.2, (ii) an Election Form specifies that the holder thereof makes no election with respect to such share or (iii) an election to receive Cash Election Consideration or Stock Election Consideration has been properly revoked in accordance with the terms of this Section 3.2. Shares of Company Common Stock that are Escrow Trust Shares at the Election Deadline shall be treated as No Election Shares.

(c) New Holders. Parent shall make available one (1) or more Election Forms as may reasonably be requested from time to time by all Persons who become holders or beneficial owners of shares of Company Common Stock during the Election Period, and the Company shall provide the Exchange Agent all information reasonably necessary for it to perform its duties as specified herein.

(d) Revocations; Exchange Agent. Any election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form during the Election Period. After a Cash Election or a Stock Election has been properly made with respect to any shares of Company Common Stock, any subsequent transfer of such shares of Company Common Stock shall automatically revoke such election. Any Election Form may be revoked or changed by the person submitting it, by written notice received by the Exchange Agent during the Election Period. In the event an Election Form is revoked during the Election Period, the shares of Company Common Stock represented by such Election Form shall

 

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be deemed to be No Election Shares, except to the extent a subsequent election is properly made during the Election Period. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive. None of the Parties or the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form.

Section 3.3 Payment for Securities; Exchange of Company Common Stock.

(a) Shares of Dissenting Stockholders. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder of record who did not vote in favor of the adoption of this Agreement (or consent thereto in writing) and is entitled to demand and properly demands appraisal of such shares of Company Common Stock pursuant to, and who complies in all respects with, Section 262 of the DGCL (“DGCL 262” and any such shares meeting the requirement of this sentence, “Dissenting Shares”) shall not be converted into the right to receive the Merger Consideration, but instead at the Effective Time shall be converted into the right to receive payment of such amounts as are payable in accordance with DGCL 262 (it being understood and acknowledged that at the Effective Time, such Dissenting Shares shall no longer be outstanding, shall automatically be cancelled and shall cease to exist, and such holder shall cease to have any rights with respect thereto other than the right to receive the fair value of such Dissenting Shares to the extent afforded by DGCL 262); provided, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to payment of the fair value of such Dissenting Shares under DGCL 262, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, without interest or duplication, the Merger Consideration. The Company shall give prompt written notice to Parent of any demands received by the Company for fair value of any shares of Company Common Stock pursuant to DGCL 262 and of any withdrawals of such demands, and, to the extent permitted by applicable Law, Parent shall have the opportunity to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, voluntarily make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of the foregoing.

(b) Certain Adjustments. If, between the date of this Agreement and the Effective Time (and as permitted by Article V), the outstanding shares of Company Common Stock or Parent Common Stock shall have been changed into a different number of shares or a different class of shares by reason of any stock dividend, subdivision, reorganization, reclassification, recapitalization, stock split, reverse stock split, combination or exchange of shares, or any similar event shall have occurred, then the Merger Consideration, the number of shares of Parent Common Stock to be delivered in the Merger, the Cash Election Consideration, the Stock Election Consideration, the No Election Consideration, the Aggregate Company Share Amount, the Aggregate Parent Share Amount and the Exchange Ratio, as the case may be, shall be equitably adjusted, without duplication, to proportionally reflect such change; provided, that nothing in this Section 3.3(b) shall be construed to permit the Company or Parent to take any action with respect to its securities that is prohibited by the terms of this Agreement.

 

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(c) No Fractional Shares. No fractional shares of Parent Common Stock shall be issued in the Merger upon the surrender for exchange of Certificates or with respect to Book-Entry Shares or otherwise, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of Parent. Each holder of Company Common Stock or a Company Equity Award converted pursuant to the Merger that would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after aggregating all shares evidenced by the Certificates and Book-Entry Shares delivered by such holder) shall receive from Parent, in lieu thereof and upon surrender thereof, a cash payment (without interest) in an amount equal to such fractional part of a share of Parent Common Stock multiplied by the Parent Common Stock VWAP (rounded down to the nearest penny).

Section 3.4 Appointment of Exchange Agent. Prior to the Effective Time, Parent shall appoint a bank or trust company to act as exchange agent (the “Exchange Agent”), the identity and the terms of appointment of which to be reasonably acceptable to the Company, for the payment of the Merger Consideration and shall enter into an agreement relating to the Exchange Agent’s responsibilities with respect thereto, in form and substance reasonably acceptable to the Company.

Section 3.5 Exchange of Shares.

(a) Deposit of Company Merger Consideration. Substantially concurrently with the Effective Time, but in no event later than the wire cut off deadline on the Closing Date, Parent shall deposit, or shall cause to be deposited (including by the Surviving Corporation), with the Exchange Agent (i) evidence of Parent Common Stock in book-entry form (and/or certificates representing such Parent Common Stock, at Parent’s election) representing the full number of whole shares of Parent Common Stock sufficient to deliver the stock portion of the aggregate Merger Consideration, (ii) cash in an amount sufficient to pay the cash portion of the aggregate Merger Consideration, in each case, payable in the Merger to all holders of Company Common Stock and (iii) to the extent applicable, cash in an amount sufficient for payment in lieu of fractional shares in accordance with Section 3.3(c). As needed from time to time after the Effective Time, Parent shall deposit, or shall cause to be deposited (including by Parent or the Surviving Corporation), with the Exchange Agent any dividends or other distributions with respect to Parent Common Stock to which holders of Company Common Stock become entitled pursuant to Section 3.5(d). Such shares of Parent Common Stock and cash provided to the Exchange Agent, together with any dividends or other distributions with respect thereto, are referred to collectively in this Agreement as the “Exchange Fund.”

(b) Exchange Procedures. As soon as reasonably practicable after the Effective Time and in any event within five (5) Business Days of the Closing Date, Parent shall cause the Exchange Agent to mail to each holder of record of shares of Company Common Stock whose shares of Company Common Stock were converted pursuant to Section 3.1(c) into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares shall pass, only upon, (A) with respect to shares evidenced by Certificates, delivery of the Certificates

 

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(or affidavits of loss in lieu thereof) and (B) with respect to Book-Entry Shares, proper delivery of an “agent’s message” regarding the book-entry transfer of Book-Entry Shares (or such other evidence, if any, of the transfer as the Exchange Agent may reasonably request), as applicable, to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably agree upon prior to the Effective Time) (the “Letter of Transmittal”) and (ii) instructions for use in effecting the surrender of Certificates or Book-Entry Shares in exchange for the Merger Consideration and any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled in accordance with Section 3.5(d).

(c) Surrender of Certificates or Book-Entry Shares. Upon surrender of Certificates or Book-Entry Shares to the Exchange Agent, together with a Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Exchange Agent, the holder of such Certificates or Book-Entry Shares shall be entitled to receive, within two (2) Business Days following the later to occur of (i) the Effective Time or (ii) the Exchange Agent’s receipt of such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, in exchange therefor the Merger Consideration into which the shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Agreement, together with any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled in accordance with Section 3.5(d). In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer or stock records of the Company, any cash to be paid upon, or shares of Parent Common Stock to be issued upon, due surrender of the Certificate or Book-Entry Share formerly representing such shares of Company Common Stock may be paid or issued, as the case may be, to such a transferee if such Certificate or Book-Entry Share is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer or other similar Taxes have been paid or are not applicable. No interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate or Book-Entry Share. Until surrendered as contemplated by this Section 3.5(c), each Certificate and Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive, upon such surrender, the Merger Consideration into which the shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Agreement, together with any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled in accordance with Section 3.5(d).

(d) Treatment of Unexchanged Shares. Whenever a dividend or other distribution is declared or made after the date of this Agreement with respect to any shares of Parent Common Stock with a record date after the Effective Time, such declaration shall include a dividend or other distribution in respect of all such shares of Parent Common Stock issuable pursuant to this Agreement. No dividends or other distributions, if any, with a record date after the Effective Time with respect to Parent Common Stock shall be paid to the holder of any unsurrendered share of Company Common Stock to be converted into cash and shares of Parent Common Stock pursuant to Section 3.1(c) until such holder shall surrender such share in accordance with this Section 3.5(d). After the surrender in accordance with this Section 3.5(d) of a share of Company Common Stock to be converted into cash and shares of Parent Common Stock pursuant to Section 3.1(c), the holder thereof shall be entitled to receive (in addition to the Merger Consideration payable to such holder pursuant to this Article III) any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to the share of Parent Common Stock represented by such share of Company Common Stock.

 

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(e) No Further Ownership Rights. The shares of Parent Common Stock delivered and cash paid in accordance with the terms of this Article III upon conversion of any shares of Company Common Stock shall be deemed to have been delivered and paid in full satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, (i) all holders of Certificates and Book-Entry Shares shall cease to have any rights as stockholders of the Company other than the right to receive the Merger Consideration into which the shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Agreement upon the surrender of such Certificates or Book-Entry Shares in accordance with Section 3.5(c) (together with any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled in accordance with Section 3.5(d)), without interest, and (ii) the stock transfer books of the Company shall be closed with respect to all shares of Company Common Stock outstanding immediately prior to the Effective Time. From and after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates or Book-Entry Shares formerly representing shares of Company Common Stock are presented to the Surviving Corporation, Parent or the Exchange Agent for any reason, such Certificates or Book-Entry Shares shall be cancelled and exchanged as provided in this Article III.

(f) Investment of Exchange Fund. The Exchange Agent shall invest any cash included in the Exchange Fund as directed by Parent; provided, however, that no such investment or loss thereon shall affect the amounts payable to holders of Company Common Stock pursuant to this Article III, and following any losses from any such investment, Parent shall promptly provide additional funds to the Exchange Agent for the benefit of the holders of shares of Company Common Stock at the Effective Time in the amount of such losses, which additional funds will be deemed to be part of the Exchange Fund, and such investments shall only be in short-term obligations of the United States of America with maturities of no more than thirty (30) days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations of issuers organized under the Laws of a state of the United States of America, rated A-1 or P-1 or better by S&P Global Ratings or Moody’s Investors Service, Inc., respectively. Parent shall cause the Exchange Fund to be (i) held for the benefit of the holders of Company Common Stock and (ii) applied promptly to making the payments pursuant to Section 3.1. The Exchange Fund shall not be used for any purpose other than to fund payments pursuant to Section 3.1, except as expressly provided for in this Agreement. Any interest or other income resulting from such investments shall be paid to Parent, upon demand.

(g) Termination of Exchange Fund. Any portion of the Exchange Fund (including any interest or other amounts received with respect thereto) that remains unclaimed by, or otherwise undistributed to, the holders of Certificates and Book-Entry Shares for twelve (12) months after the Effective Time shall be delivered to Parent, upon demand, and any holder of Certificates or Book-Entry Shares who has not theretofore complied with this Article III shall thereafter look only to Parent or the Surviving Corporation (subject to applicable abandoned property, escheat or other similar Laws), as general creditors thereof, for satisfaction of its claim for Merger Consideration and any dividends and distributions that such holder has the right to receive pursuant to this Article III without any interest thereon.

 

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(h) No Liability. None of the Parties or the Exchange Agent shall be liable to any Person in respect of any portion of the Exchange Fund or the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Notwithstanding any other provision of this Agreement, any portion of the Merger Consideration or the cash to be paid in accordance with this Article III that remains undistributed to the holders of Certificates and Book-Entry Shares as of immediately prior to the date on which the Merger Consideration or such cash would otherwise escheat to or become the property of any Governmental Entity shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

(i) Withholding Rights. Each of the Surviving Corporation, Parent and the Exchange Agent (without duplication) shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of a Certificate, a Book-Entry Share or a Company Equity Award pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under any applicable Tax Law. Any amounts so deducted and withheld shall be paid over to the appropriate Governmental Entity and shall be treated for all purposes of this Agreement as having been paid to the holder of the Certificate, Book-Entry Share or Company Equity Award in respect of which such deduction or withholding was made.

(j) Lost Certificates. If any Certificate shall have been lost, stolen, mutilated or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen, mutilated or destroyed and, if required by Parent or the Exchange Agent, the posting by such Person of a bond in such amount as Parent or the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Exchange Agent (or, if subsequent to the termination of the Exchange Fund and subject to Section 3.5(g), Parent) shall deliver, in exchange for such lost, stolen, mutilated or destroyed Certificate, the Merger Consideration and any dividends and distributions deliverable in respect thereof pursuant to this Agreement.

(k) Deferred Shares of Company Common Stock. Notwithstanding anything herein to the contrary, the Merger Consideration applicable to any shares of Company Common Stock, the delivery of which has been previously deferred pursuant to a valid deferral election under a non-qualified deferred compensation plan of the Company, shall be delivered at the time or time(s) set forth in the applicable deferral election, in accordance with Section 409A of the Code.

 

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Section 3.6 Company Equity Awards.

(a) Company RSUs. Immediately prior to the Effective Time, each Company RSU that is outstanding as of immediately prior to the Effective Time shall, by virtue of the Merger and without further action on the part of the holder thereof, be assumed by Parent as of the Effective Time and converted into a restricted unit award of Parent (each, an “Assumed Company Restricted Unit Award”). Each Assumed Company Restricted Unit Award shall cover that number of whole shares of Parent Common Stock equal to the product of (A) the number of shares of Company Common Stock underlying the applicable Company RSU immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio, with the result rounded down to the nearest whole number of shares of Parent Common Stock. Except as otherwise provided in this Section 3.6(a), each Assumed Company Restricted Unit Award shall continue to have, and shall be subject to, the same terms and conditions as applied to the corresponding Company RSU immediately prior to the Effective Time. Notwithstanding the foregoing, if the original terms and conditions applicable to a Company RSU granted under a Company Stock Plan do not expressly provide for the treatment of such Company RSU upon a termination of employment that occurs following a “change in control” or “corporate transaction” (as such terms are used in an applicable Company Stock Plan, or the award agreement, as applicable), then, upon such Company RSU becoming an Assumed Company Restricted Unit Award, the terms set forth on Section 3.6 of the Company Disclosure Schedule shall be deemed to apply to such Assumed Company Restricted Unit Award; provided, that all other terms and conditions applicable to such Company RSU shall continue to apply unaffected.

(b) Company PSUs.

(i) Immediately prior to the Effective Time, with respect to each outstanding Company PSU that, pursuant to its terms, requires accelerated vesting as of the Effective Time, the restrictions and vesting conditions applicable to such Company PSU shall lapse in accordance with the terms thereof and each such Company PSU shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted as of the Effective Time into the right to receive, with respect to each share of Company Common Stock underlying such Company PSU, the Cash Election Consideration. The Cash Election Consideration, less applicable Tax withholdings, shall be paid or provided to the holder of such Company PSU as soon as reasonably practicable following the Closing Date, but in no event later than ten (10) Business Days following the Closing Date.

(ii) Immediately prior to the Effective Time, with respect to each outstanding Company PSU that, pursuant to its terms, does not require accelerated vesting as of the Effective Time (and which is therefore not converted into the right to receive the Cash Election Consideration pursuant to Section 3.6(b)(i)), such Company PSU shall, by virtue of the Merger and without further action on the part of the holder thereof, be treated as follows:

(A) Company PSUs or portions thereof that are eligible to vest in respect of (I) performance conditions that are not based on share or market price and (II) performance achieved during the year in which the Closing occurs, shall vest based on the level of actual performance achievement of the applicable performance criteria through the end of the month immediately preceding the month in which the Closing occurs, as proportionately extrapolated through the remainder of the applicable performance period (as determined by the Compensation Committee of the Company

 

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Board of Directors, in its reasonable discretion and in consultation with Parent), and shall be converted as of the Effective Time into the right to receive, with respect to each share of Company Common Stock underlying the vested portion of such Company PSU, the Cash Election Consideration. The Cash Election Consideration, less applicable Tax withholdings, shall be paid or provided to the holder of such Company PSU as soon as reasonably practicable following the Closing Date, but in no event later than ten (10) Business Days following the Closing Date. Any such Company PSUs which do not become vested pursuant to this Section 3.6(b)(ii)(A) shall be cancelled as of the Effective Time without consideration.

(B) Company PSUs or portions thereof that are eligible to vest in respect of (I) performance conditions that are not based on stock or market price and (II) a performance period that has not yet commenced as of the Effective Time, shall vest based on deemed achievement at the “target” level performance, and shall be converted as of the Effective Time into the right to receive, with respect to each share of Company Common Stock underlying the vested portion of such Company PSU, the Cash Election Consideration. The Cash Election Consideration, less applicable Tax withholdings, shall be paid or provided to the holder of such Company PSU as soon as reasonably practicable following the Closing Date, but in no event later than ten (10) Business Days following the Closing Date. Any such Company PSUs which do not become vested pursuant to this Section 3.6(b)(ii)(B) shall be cancelled as of the Effective Time without consideration

(C) Company PSUs that are eligible to vest in respect of performance conditions that are based on stock or market price (each, a “Company Market-PSU”) shall, by virtue of the Merger and without further action on the part of the holder thereof, be assumed by Parent as of the Effective Time and converted into a performance-based restricted unit award of Parent (each, an “Assumed Company Performance Unit Award”). Each Assumed Company Performance Unit Award shall cover that number of whole shares of Parent Common Stock equal to the product of (I) the number of shares of Company Common Stock underlying the applicable Company Market-PSU immediately prior to the Effective Time, multiplied by (II) the Exchange Ratio, with the result rounded down to the nearest whole number of shares of Parent Common Stock. The stock-based or market-based performance conditions applicable to each Assumed Company Performance Unit Award shall be equal to the quotient obtained by dividing (x) the applicable stock-based or market-based performance target(s) of the applicable Company Market-PSU immediately prior to the Effective Time by (y) the Exchange Ratio (or, if the applicable stock-based or market-based performance target(s) are determined as a percentage or multiple of an initial value, then instead such initial value shall instead be divided by the Exchange Ratio). Except as otherwise provided in this Section 3.6(b)(ii)(C), each Assumed Company Performance Unit Award shall continue to have, and shall be subject to, the same terms and conditions as applied to the corresponding Company PSU immediately prior to the Effective Time. Notwithstanding the foregoing, if the original terms and conditions applicable to a Company Market-PSU granted under a Company Stock Plan do not expressly provide for the treatment of such Company Market-PSU upon a termination of employment that occurs following a “change in control” or “corporate transaction” (as such terms are used in an applicable

 

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Company Stock Plan, or the award agreement, as applicable), then, upon such Company Market-PSU becoming an Assumed Company Performance Unit Award, the terms set forth on Section 3.6 of the Company Disclosure Schedule shall be deemed to apply to such Assumed Company Performance Unit Award; provided, that all other terms and conditions applicable to such Company Market-PSU shall continue to apply unaffected.

(c) Company Options.

(i) Subject to Section 3.6(c)(i) of the Company Disclosure Schedule, immediately prior to the Effective Time, each Company Option or portion thereof that (A) is then outstanding and unexercised, (B) is vested and exercisable as of immediately prior to the Effective Time pursuant to its terms and (C) has a per share exercise price less than the Cash Election Consideration, shall, by virtue of the Merger and without further action on the part of the holder thereof, be cancelled as of the Effective Time and converted into the right to receive the Company Option Consideration. The Company Option Consideration, less applicable Tax withholdings, shall be paid or provided to the holder of such Company Option as soon as reasonably practicable following the Closing Date, but in no event later than ten (10) Business Days following the Closing Date. The “Company Option Consideration” with respect to any Company Option shall be equal to the product of (I) the Company Option Net Shares of such Company Option, multiplied by (II) the Cash Election Consideration. The “Company Option Net Shares” of any Company Option shall be equal to the quotient of (x) the product of (1) the excess of (X) the Cash Election Consideration over (Y) the applicable per share exercise price of such Company Option, multiplied by (2) the total number of shares of Company Common Stock subject to the vested portion of such Company Option, divided by (y) the Per Share Amount.

(ii) Immediately prior to the Effective Time, with respect to each outstanding and unexercised Company Option or portion thereof that is not cancelled pursuant to Section 3.6(c)(i), such Company Option or portion thereof shall, by virtue of the Merger and without further action on the part of the holder thereof, be assumed by Parent as of the Effective Time and converted into a stock option representing the right to acquire shares of Parent Common Stock (each, an “Assumed Company Option”). The number of shares of Parent Common Stock subject to each Assumed Company Option shall be equal to (A) the number of shares of Company Common Stock that were subject to such Company Option or the portion thereof which was not cancelled pursuant to Section 3.6(c)(i), multiplied by (B) the Exchange Ratio, with the result rounded down to the nearest whole number of shares of Parent Common Stock. The per share exercise price of each Assumed Company Option shall be equal to (I) the per share exercise price of such Company Option, divided by (II) the Exchange Ratio, with the result rounded up to the nearest whole cent. Except as otherwise provided in this Section 3.6(c)(ii), each Assumed Company Option shall continue to have, and shall be subject to, the same terms and conditions as applied to the corresponding Company Option or portion thereof which was not cancelled pursuant to Section 3.6(c)(i), immediately prior to the Effective Time. Notwithstanding the foregoing, if the original terms and conditions applicable to a Company Option granted under a Company Stock Plan do not expressly provide for the treatment of such Company Option upon a termination of employment that occurs

 

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following a “change in control” or “corporate transaction” (as such terms are used in an applicable Company Stock Plan, or the award agreement, as applicable), then, upon such Company Option becoming an Assumed Company Option, the terms set forth on Section 3.6 of the Company Disclosure Schedule shall be deemed to apply to such Assumed Company Option; provided, that all other terms and conditions applicable to such Company Option shall continue to apply unaffected.

(d) Company Actions. Notwithstanding anything in this Section 3.6, in the event the Company determines, in its discretion, to treat any Company PSUs in a manner that varies from the treatment outlined in Section 3.6(b), the Company may take any such actions necessary or appropriate to effect such determination. Prior to the Effective Time, the Company shall take all actions necessary (including adopting resolutions of the Company Board of Directors or any committee thereof) to effectuate the treatment of the Company Equity Awards contemplated by this Section 3.6. Parent shall take all corporate actions necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery with respect to the settlement of Assumed Company Restricted Unit Awards, Assumed Company Performance Unit Awards and Assumed Company Options pursuant to this Section 3.6. Parent shall file with the SEC, as soon as practicable following the Effective Time, a post-effective amendment to the Form S-4 or a registration statement on Form S-8 (or any successor form) relating to such shares of Parent Common Stock. Any conversion of Company Equity Awards pursuant to this Section 3.6 shall be done in a manner consistent with Section 409 of the Code.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Except as Previously Disclosed, (a) the Company hereby represents and warrants to Parent and Merger Sub (other than with respect to the representations and warranties set forth in Section 4.1(b), Section 4.2(b), Section 4.2(c), Section 4.3(e), Section 4.5(c), Section 4.5(d), Section 4.9(b), Section 4.20(a), Section 4.22, Section 4.23 and Section 4.24, which are made exclusively by Parent or Merger Sub, as applicable), (b) Parent hereby represents and warrants to the Company (other than with respect to the representations and warranties set forth in Section 4.1(a), Section 4.2(a), Section 4.5(b) and Section 4.20(b), which are made exclusively by the Company) and (c) Merger Sub hereby represents and warrants to the Company (only with respect to the representations and warranties set forth in Section 4.1(b), Section 4.1(c), Section 4.3(e), Section 4.5(a), Section 4.5(d), Section 4.6(b), Section 4.9(b), Section 4.23(b) and Section 4.24 through Section 4.27), in each case, as follows:

Section 4.1 Organization, Standing and Authority.

(a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

(b) (i) Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada and (ii) Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

 

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(c) It is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or assets or its conduct of business requires it to be so qualified, except where the failure to be so qualified or to be in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable. Such Party has made available to Parent (in the case of the Company) or the Company (in the case of Parent and Merger Sub) a complete and correct copy of its Governing Documents, each as amended to the date hereof, and such Governing Documents are in full force and effect as of the date hereof.

Section 4.2 Capital Stock.

(a) The authorized capital stock of the Company consists of 2,000,000,000 shares of Company Common Stock and 125,000,000 shares of Company Preferred Stock. As of the date of this Agreement, 682,161,838 shares of Company Common Stock (which number includes 8,276,428 Escrow Trust Shares) were outstanding, and no shares of Company Preferred Stock were outstanding. As of the date of this Agreement, 8,299,336 shares of Company Common Stock are subject to Company Options, 12,233,304 shares of Company Common Stock are subject to Company RSUs, and 4,465,147 shares of Company Common Stock are subject to Company PSUs (consisting of 1,066,848 Company PSUs that vest based on market conditions (assuming maximum level achievement) and 3,398,299 Company PSUs that vest based on performance conditions (assuming maximum level achievement)). As of the date of this Agreement, 4,248,265 shares of Company Common Stock were reserved for future grants under the Company Stock Plans, 8,057,879 shares are outstanding under the 2012 Plan, 14,441,380 shares are outstanding under the 2017 Plan, 16,250 shares are outstanding under the 2014 Plan, and 359 shares are outstanding under the Caesars Entertainment Corporation Management Equity Incentive Plan. All outstanding shares of Company Common Stock and Company Preferred Stock have been duly authorized and are validly issued and outstanding, fully paid and nonassessable, and subject to no preemptive rights (and were not issued in violation of any preemptive rights). Upon any issuance of any shares of Company Common Stock in accordance with the terms of the Company Stock Plans, such shares will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any Liens (other than Liens pursuant to applicable securities Laws and Gaming Laws). Except as set forth above and except for shares issuable pursuant to the Company Stock Plans, as of the date of this Agreement, there are no shares of Company Stock reserved for issuance. Except as set forth above, the Company does not have any Rights outstanding with respect to Company Stock, and the Company does not have any commitment to authorize, make grants in respect of, issue or sell any Company Stock or Rights, except as required by this Agreement. As of the date of this Agreement, the Company has no contractual obligations to redeem, repurchase or otherwise acquire, or to register with the SEC, any shares of Company Stock. No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which its stockholders may vote are issued and outstanding.

(b) The authorized capital stock of Parent consists of 200,000,000 shares of Parent Common Stock. As of the date of this Agreement, 77,719,956 shares of Parent Common Stock were outstanding. As of the date of this Agreement, no more than 1,939,778 shares of Parent Common Stock are subject to Parent Options or other Rights in respect of Parent Common Stock, and no more than 3,642,537 shares of Parent Common Stock were reserved for future grants under the Parent Stock Plans. All outstanding shares of Parent Common Stock

 

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have been duly authorized and are validly issued and outstanding, fully paid and nonassessable, and subject to no preemptive rights (and were not issued in violation of any preemptive rights). Upon any issuance of any shares of Parent Common Stock in accordance with the terms of the Parent Stock Plans, such shares will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any Liens (other than Liens pursuant to applicable securities Laws and Gaming Laws). Except as set forth above and except for shares issuable pursuant to the Parent Stock Plans, as of the date of this Agreement, there are no shares of Parent Common Stock reserved for issuance, Parent does not have any Rights outstanding with respect to Parent Common Stock, and Parent does not have any commitment to authorize, issue or sell any Parent Common Stock or Rights, except pursuant to this Agreement, outstanding Parent Options and the Parent Stock Plans. As of the date of this Agreement, Parent has no contractual obligations to redeem, repurchase or otherwise acquire, or to register with the SEC, any shares of Parent Common Stock. No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which its stockholders may vote are issued and outstanding.

(c) The shares of Parent Common Stock to be issued in the Merger have been duly authorized and, when issued in accordance with the terms of this Agreement, will be (i) validly issued, fully paid and nonassessable shares of capital stock and subject to no preemptive rights and (ii) duly listed on Nasdaq, subject to official notice of issuance.

Section 4.3 Subsidiaries.

(a) It has Previously Disclosed a list of all of its Significant Subsidiaries.

(b) (i) It and each of its Subsidiaries owns, directly or indirectly, all the outstanding equity securities of each of its Subsidiaries free and clear of any Liens (other than Liens pursuant to applicable securities Laws, Gaming Laws and inchoate tax Liens), (ii) no equity securities of any of its Subsidiaries are or may become required to be issued (other than to it or its wholly owned Subsidiaries) by reason of any Right or otherwise, (iii) there are no Contracts by which it or any of such Subsidiaries is or may be bound to sell or otherwise transfer any equity securities of any such Subsidiaries (other than to it or its wholly owned Subsidiaries), (iv) there are no Contracts relating to its rights to vote or to dispose of such securities and (v) all the equity securities of each Subsidiary held by it or its Subsidiaries have been duly authorized and are validly issued and outstanding, and if such Subsidiary is a corporation, fully paid and nonassessable.

(c) Each of its Subsidiaries has been duly organized, is validly existing and in good standing under the Laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in all jurisdictions where its ownership or leasing of property or its conduct of business requires it to be so qualified, except where the failure to be so qualified or to be in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

(d) It has Previously Disclosed (i) a list of all equity securities (other than equity securities of its Subsidiaries) that it and its Subsidiaries own, control or hold for their own account and (ii) a list of all bonds, debentures, notes or other similar obligations that it or any of its Subsidiaries has issued.

 

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(e) As of the date of this Agreement and as of immediately prior to the Effective Time, Merger Sub is a wholly owned direct Subsidiary of Parent. Since its date of incorporation, Merger Sub has not carried on any business or incurred any liabilities, nor has Merger Sub conducted any operations, other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.

Section 4.4 Power. It and each of its Subsidiaries has the corporate (or comparable) power and authority to carry on their respective businesses as such businesses are now being conducted and to own all their respective properties and assets, except where the failure to have such power or authority has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

Section 4.5 Authority.

(a) It has the corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and the Voting Agreements (in the case of the Company and Parent) and to consummate the transactions contemplated hereby, including the Merger. The execution, delivery and performance of this Agreement and the Voting Agreements (in the case of the Company and Parent), and the consummation of the transactions contemplated hereby, including the Merger, by it, have been duly and validly authorized by all necessary corporate action (including valid authorization and approval of this Agreement by its duly constituted board of directors), subject only to the receipt of (i) in the case of the Company, the adoption of the agreement of merger (as such term is defined in Section 251 of the DGCL) contained in this Agreement and the approval of the Merger by the holders of at least a majority of all of the outstanding shares of Company Common Stock in accordance with the Company’s Governing Documents (collectively, the “Company Stockholder Approval”), and (ii) in the case of Parent, the approval of the Share Issuance by the affirmative vote of a majority of votes cast by holders of Parent Common Stock (the “Parent Stockholder Approval”), (x) the approval of the Parent A&R Charter by the holders of at least a majority of all of the outstanding shares of Parent Common Stock in accordance with Parent’s Governing Documents (the “Parent Charter Amendment Approval”) and (y) the approval of the Delaware Conversion by the holders of at least a majority of all of the outstanding shares of Parent Common Stock in accordance with Parent’s Governing Documents (the “Delaware Conversion Approval”). Assuming due authorization, execution and delivery of this Agreement and the Voting Agreements (in the case of the Company and Parent) by the other Parties, this Agreement and each Voting Agreement (in the case of the Company and Parent) represents a legal, valid and binding obligation of it, enforceable against it in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any Action may be brought).

(b) On or prior to the date of this Agreement, the Company Board of Directors has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend the adoption of this Agreement by the stockholders of the Company and to submit this Agreement to the stockholders of the Company for adoption (the “Company Recommendation”).

 

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(c) On or prior to the date of this Agreement, the Parent Board of Directors has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, Parent and its stockholders, and declared it advisable, to enter into this Agreement, (ii) adopted and approved the execution, delivery and performance by Parent of this Agreement and, for purposes of Sections 78.438-439 of the NRS, the Parent Stockholder Voting Agreement and the consummation of the transactions contemplated hereby and thereby, including the Merger and the Share Issuance, and (iii) resolved to recommend the approval by its stockholders of the Share Issuance, the Delaware Conversion and the Parent A&R Charter and to submit the Share Issuance, the Delaware Conversion and the Parent A&R Charter to the stockholders of Parent for approval (the “Parent Recommendation”).

(d) On or prior to the date of this Agreement, the Board of Directors of Merger Sub has, upon the terms and subject to the conditions set forth herein, unanimously (i) determined that it is fair to, and in the best interests of, Merger Sub and its sole stockholder, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance by Merger Sub of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend the adoption of this Agreement by the sole stockholder of Merger Sub and to submit this Agreement to such stockholder for adoption, and Parent, as the sole stockholder of Merger Sub, has approved the execution, delivery and performance by Merger Sub of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and has adopted this Agreement.

Section 4.6 Regulatory Approvals; No Conflict.

(a) No consent from any Governmental Entity, including any Gaming Authority, is required to be made or obtained by it in connection with the execution, delivery and performance by such Party of its obligations under this Agreement and the other agreements, documents and instruments to which such Party is or will be a party, or the consummation by such Party of the transactions contemplated hereby and thereby, except for (i) filings of applications and notices with, and receipt of approvals or nonobjections from, the SEC, the state securities authorities and applicable securities exchanges, (ii) filing of the S-4 and the Joint Proxy Statement/Prospectus with the SEC and declaration by the SEC of the effectiveness of the S-4 under the Securities Act, (iii) the filing of the Certificate of Merger, (iv) the filing of the Certificate of Conversion with the Secretary of State of the State of Delaware and the Articles of Conversion with the Secretary of State of the State of Nevada in connection with the Delaware Conversion, if the Delaware Conversion Approval is obtained, (v) such filings with applicable securities exchanges as are necessary to obtain the listing authorizations contemplated by this Agreement, (vi) filings required to be made pursuant to the HSR Act and any other filings that may be required under any other applicable Antitrust Law, (vii) the Requisite Gaming Approvals and (viii) consents required under liquor Laws and licenses, if any.

 

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(b) Subject to receipt of the regulatory consents and approvals referred to in Section 4.6(a), the expiration of related waiting periods and required filings under federal and state securities Laws, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) constitute a breach or violation of, or a default under, or give rise to any Lien or give any third Person any acceleration of remedies, penalty, increase in benefit payable or right of termination under, any applicable Law, or any Order, governmental permit or license, or Contract of it or of any of its Subsidiaries or to which it or any of its Subsidiaries or any of their respective properties is subject or bound, (ii) constitute a breach or violation of its or any of its Significant Subsidiaries’ Governing Documents or (iii) require any consent or approval of a third Person under any such Law, Order, governmental permit or license, or Contract, except in the case of clauses (i) and (iii), for such breaches, violations, defaults, creations, accelerations, penalties, increases, consents or approvals the failure of which to make or obtain has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

Section 4.7 Financial Reports and Regulatory Documents; Material Adverse Effect.

(a) Such Party’s Annual Reports on Form 10-K (as amended) for the fiscal years ended December 31, 2017 and 2018, and all other reports, registration statements, definitive proxy statements or information statements filed by such Party or any of its Subsidiaries subsequent to December 31, 2018 under the Securities Act or under the Exchange Act (as amended, collectively, “SEC Filings”), in the form filed with the SEC as of the date filed, (i) complied (and any SEC Filings filed after the date hereof will comply) in all material respects with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (ii) did not (and any SEC Filings filed after the date hereof will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, taken as a whole and in the light of the circumstances under which they were made, not materially misleading. Each of the balance sheets contained in or incorporated by reference into any such SEC Filing (including the related notes and schedules thereto) fairly presented (and any such statements contained in any SEC Filings filed after the date hereof will fairly present) in all material respects such Party’s financial position and that of its Subsidiaries on a consolidated basis as of the date of such statement, and each of the statements of operations, comprehensive income/(loss), stockholders’ equity/(deficit) and cash flows or equivalent statements in such SEC Filing (including any related notes and schedules thereto) fairly presented (and any such statements contained in any SEC Filings filed after the date hereof will fairly present) in all material respects the results of operations and changes in income, stockholders’ equity and cash flows, as the case may be, of such Party and its Subsidiaries on a consolidated basis for the periods to which those statements relate, in each case, in accordance with GAAP consistently applied during the periods involved, except as may be noted therein, and subject to normal year-end audit adjustments and as permitted by Form 10-Q in the case of unaudited statements.

(b) It and its Subsidiaries have no liabilities, whether or not accrued, contingent or otherwise, that would be required to be reflected or reserved against on, or disclosed in, a consolidated balance sheet of it and its Subsidiaries prepared in accordance with GAAP, other than those reflected or reserved against in its balance sheets (and the notes thereto) included in such Party’s SEC Filings filed prior to the date of this Agreement and those incurred in the ordinary course of business consistent with past practice since December 31, 2018, except for such liabilities that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

 

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(c) From December 31, 2018 through the date of this Agreement, (i) it and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice (excluding the incurrence of expenses related to this Agreement and the transactions contemplated hereby), and (ii) no event has occurred or circumstance has arisen that, individually or taken together with all other facts, circumstances and events (described in this Article IV or otherwise), has had, or would reasonably be expected to have, a Material Adverse Effect with respect to it. Neither it nor any of its Subsidiaries is a party to any material “off-balance sheet arrangement” as defined in Item 303(a)(4) of Regulation S-K.

(d) Such Party has made available to the Company (in the case of Parent) and Parent (in the case of the Company) true, correct and complete copies of all material written correspondence between the SEC and such Party and any of such Party’s Subsidiaries occurring since December 31, 2018 and prior to the date hereof. There are no outstanding comments from, or unresolved issues raised by, the SEC with respect to any of such Party’s SEC Filings. None of its Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.

Section 4.8 Litigation. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, there is no (a) Action pending or, to its knowledge, threatened in writing against or affecting it or any of its Subsidiaries or (b) Order imposed upon or entered into by it, any of its Subsidiaries or the assets of it or any of its Subsidiaries.

Section 4.9 Regulatory Matters; Licensure.

(a) Neither it nor any of its Subsidiaries is subject to, or has been advised that it is reasonably likely to become subject to, any special procedures or restrictions imposed by any written Orders, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, or adopted any board resolutions at the request of, any Governmental Entity charged with the supervision or regulation of it or any of its Subsidiaries, other than procedures or restrictions imposed by any Gaming Authority in the ordinary course of business consistent with past practice. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, there are no formal or informal investigations relating to any regulatory matters pending before any Governmental Entity with respect to it or its Subsidiaries, other than investigations by any Gaming Authority in the ordinary course of business consistent with past practice.

(b) None of Parent, Merger Sub or any of their respective officers, directors, partners, managers, members, principals or Affiliates that may reasonably be considered in the process of determining the suitability of Parent and Merger Sub for a Gaming Approval by a Gaming Authority, or any holders of capital stock or other equity interests of Parent or Merger Sub who will be required to be licensed or found suitable under applicable Gaming Laws (the foregoing persons collectively, the “Licensing Affiliates”), has ever abandoned or withdrawn (in

 

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each case, in response to a communication from a Gaming Authority regarding a likely or impending denial, suspension or revocation) or been denied or had suspended or revoked a Gaming Approval, or an application for a Gaming Approval, by a Gaming Authority. Parent, Merger Sub and each of their respective Licensing Affiliates that is licensed or holds any Gaming Approval pursuant to applicable Gaming Laws (collectively, the “Licensed Parties”) is in good standing in each of the jurisdictions in which any such Licensed Party owns, operates or manages gaming facilities. To the knowledge of Parent, there are no facts that, if known to any Gaming Authority, would be reasonably likely to (i) result in the denial, revocation, limitation or suspension of a Gaming Approval of any of the Licensed Parties or (ii) result in a negative outcome to any finding of suitability proceedings of any of the Licensed Parties currently pending, or under the licensing, suitability, registration or approval proceedings necessary for the consummation of the Merger.

Section 4.10 Compliance with Laws. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, it and each of its Subsidiaries:

(a) conducts its business in compliance with all Laws applicable thereto;

(b) has all permits, licenses, authorizations, Orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; and all such permits, licenses, certificates of authority, Orders and approvals are in full force and effect and, to its knowledge, no suspension or cancellation of any of them is threatened;

(c) has not received, since December 31, 2017, any written or, to its knowledge, other notification from any Governmental Entity (i) asserting that it or any of its Subsidiaries is not in compliance with any of the statutes, regulations, rules or ordinances that such Governmental Entity enforces, (ii) threatening to revoke any license, franchise, permit or authorization of a Governmental Entity, (iii) requiring it or any of its Subsidiaries to enter into or consent to the issuance of any written Order, decree, agreement, memorandum of understanding or similar arrangement, commitment letter or similar submission, or extraordinary supervisory letter, or (iv) imposing or threatening to impose any monetary penalty, except, in each case, for regulatory violation letters and similar notifications from Governmental Entities received by it and its Subsidiaries in the ordinary course of business consistent with past practice that are not material to it and its Subsidiaries, taken as a whole;

(d) is not subject to any pending, or to its knowledge, threatened, investigation, review or disciplinary proceedings by any Governmental Entity against either of it or any of its Subsidiaries or any director or officer thereof in such capacity, except for such investigations, reviews and disciplinary proceedings instituted or conducted by Governmental Entities against it and its Subsidiaries in the ordinary course of business consistent with past practice that are not material to it and its Subsidiaries, taken as a whole; and

 

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(e) (i) is in compliance with the U.S. Foreign Corrupt Practices Act of 1977 (the “Foreign Corrupt Practices Act”), the UK Bribery Act 2010 (the “UK Bribery Act”) and any other U.S. and foreign Laws concerning corrupting payments and (ii) since December 31, 2018, has not been investigated by any Governmental Entity with respect to, or been given notice by a Governmental Entity of, any violation by it or any of its Subsidiaries of the Foreign Corrupt Practices Act, the UK Bribery Act or any other U.S. or foreign Laws concerning corrupting payments.

Section 4.11 Material Contracts; Defaults.

(a) Except for this Agreement, any Contract expressly contemplated to be entered into in connection with this Agreement, the Benefit Arrangements and the Labor Contracts and as Previously Disclosed (including, for the avoidance of doubt, agreements filed as exhibits to such Party’s SEC Filings and incorporated by reference thereto), as of the date of this Agreement, neither it nor any of its Subsidiaries is a party to or bound by:

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act);

(ii) any Contract with a third Person that involved individual or aggregate payments or consideration of more than $10,000,000, with respect to the Company, or $5,000,000, with respect to Parent, in the twelve (12)-month period ended December 31, 2018, or is expected by its terms to involve individual or aggregate payments or consideration of more than $10,000,000, with respect to the Company, or $5,000,000, with respect to Parent, in any twelve (12)-month period after December 31, 2018 (it being understood that it is not making any representation or warranty as to the actual amount of future payments that will be received under any such Contract), for goods and services furnished by or to it or any of its Subsidiaries (other than those that are terminable on no more than sixty (60) days’ notice and without liability or financial obligation to it or any of its Subsidiaries, it being understood and agreed that in no event will such Contracts be deemed Material Contracts for purposes of this Agreement);

(iii) any leases, subleases, licenses, sublicenses or other use or occupancy agreements relating to Leased Property having a remaining term of more than twelve (12) months and involving a payment of more than $10,000,000 annually;

(iv) any Contract under which it or any of its Subsidiaries has continuing material indemnification, earnout or similar obligations to any third Person in connection with the acquisition or disposition of a business;

(v) any Contract with a third Person for capital expenditures involving outstanding payments of more than $5,000,000, individually or in the aggregate, by or on behalf of it or any of its Subsidiaries;

(vi) any Contract involving a joint venture or strategic alliance, partnership or management agreement or other sharing of profits or losses with any third Person requiring the commitment of capital or the contribution of assets by it or other obligations of it in excess of $5,000,000, with respect to the Company, or $2,500,000, with respect to Parent, in each case, individually or in the aggregate, but expressly excluding any leases, subleases, licenses, sublicenses or other use or occupancy agreements involving any sharing of profits or losses between the parties thereto;

 

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(vii) any mortgages, indentures, guarantees, loans, credit agreements, security agreements or other Contracts relating to the borrowing of money or extension of credit, in each case, in excess of $10,000,000, with respect to the Company, or $5,000,000, with respect to Parent, in each case, other than (A) accounts receivable and accounts payable; (B) loans to or guarantees for its direct or indirect wholly owned Subsidiaries; and (C) capital lease obligations, purchase money debt and letter of credit, bank guaranty and similar facilities, in each case, in the ordinary course of business consistent with past practice;

(viii) any Contract containing covenants by it or any of its Affiliates not to (A) compete with any third Person or (B) engage in any line of business or activity in any geographic location, in each case that would be material to it and its Subsidiaries, taken as a whole; and

(ix) any Order or settlement or conciliation agreement with any Governmental Entity that imposes any material obligation on it or its Subsidiaries after the date of this Agreement.

Each contract of the type referred to in clauses (i) through (viii) above is referred to herein as a “Material Contract.”

(b) Each Material Contract is a valid and legally binding agreement of such Party or one of its Subsidiaries, as applicable, and, to its knowledge, the counterparty or counterparties thereto, is enforceable in accordance with its terms and is in full force and effect. Neither it nor any of its Subsidiaries or, to its knowledge, any counterparty or counterparties thereto is in breach of any provision of any Material Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default, except for such breaches and defaults that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

Section 4.12 Real Property. All real property and interests in real property owned in fee by it or any of its Subsidiaries (individually, an “Owned Property”) and all real property and interests in real property leased, subleased, licensed, sublicensed, used or otherwise occupied by it or one of its Subsidiaries and any prime or underlying leases, subleases, licenses, sublicenses or other use or occupancy agreements relating thereto (individually, a “Leased Property”) are set forth or described in the Form 10-K filed by it with the SEC for the year ended December 31, 2018 or otherwise Previously Disclosed, except for any Owned Property or Leased Property that is not, individually or in the aggregate, material to it and its Subsidiaries, taken as a whole. It or its Subsidiaries, as applicable, has good and valid fee title to all Owned Property and good and valid leasehold title to all Leased Property (an Owned Property or Leased Property being sometimes referred to herein, individually, as a “Property” and, collectively, the “Properties”), in each case subject only to (a) (i) Liens described in the Form 10-K filed by it with the SEC for the year ended December 31, 2018, (ii) Liens that are Previously Disclosed or of record and not

 

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material or (iii) inchoate workmen’s, repairmen’s or other similar Liens arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of it or any of its Subsidiaries or that individually or in the aggregate, do not impair, and would not reasonably be expected to impair, in each case, in any material respect, the continued use and operation of the Property to which they relate in the conduct of the business of it or its Subsidiaries as presently conducted, (b) leases, subleases and similar agreements Previously Disclosed or for the benefit of it or its Affiliates or that are not material to it and its Subsidiaries taken as a whole or to the operation of the Property to which they relate and that were entered into in the ordinary course of business consistent with past practice and (c) easements, covenants, rights-of-way and other similar restrictions of record, if any, that, (i) are for the benefit of it or its Affiliates or (ii) are granted to third parties and, individually or in the aggregate, do not impair, and would not reasonably be expected to impair, in each case, in any material respect, the continued use and operation of the Property to which they relate in the conduct of the business of it or its Subsidiaries as presently conducted. Any reciprocal easements, option agreements, rights of first refusal or rights of first offer with respect to any Property at which a casino, hotel or golf project is operated are Previously Disclosed (or with respect to reciprocal easements, are of record), except with respect to any such Property that is not, individually or in the aggregate, material to it and its Subsidiaries, taken as a whole. To its knowledge, there are no physical conditions or defects at any of the Properties at which casino or hotel operations are conducted that impair or would be reasonably expected to impair the continued operation and conduct of the casino, hotel and related businesses as presently conducted at each such Property. To its knowledge, all leases, subleases, licenses, sublicenses and other use or occupancy agreements pursuant to which it or its Subsidiaries leases, subleases, licenses, sublicenses, uses or occupies any Leased Property are valid and in full force and effect, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable. Except as Previously Disclosed, no uncured default of a material nature on the part of it or, if applicable, its Subsidiary or, to its knowledge, the landlord or sublandlord thereunder (as applicable), exists under any lease, sublease, license or sublicense pursuant to which any of them uses any Leased Property, and no event has occurred or circumstance exists which, with the giving of notice, the passage of time, or both, would constitute a material breach or default thereunder.

Section 4.13 Environmental Matters. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, (a) there has been no release or disposal of any Hazardous Substance by, under the direction of, or on behalf of it or any of its Subsidiaries, from, at, on or under any Property of it or its Subsidiaries, (b) there are no pending, or to its knowledge, threatened, Environmental Claims, (c) since December 31, 2014, neither it nor any of its Subsidiaries has received a written notice from any Governmental Entity or third party alleging a violation of any Environmental Law that has not been resolved, (d) it and its Subsidiaries possess all licenses, permits and other governmental approvals required under, and are in compliance with, all applicable Environmental Laws and (e) to its knowledge, there are no facts, circumstances or conditions that would reasonably be expected to give rise to an Environmental Claim. The representations and warranties in this Section 4.13 constitute the sole and exclusive representations and warranties of the Parties relating to environmental matters under this Agreement.

 

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Section 4.14 Benefit Arrangements and Labor Matters.

(a) All of its material Benefit Arrangements are Previously Disclosed. True and complete copies of all of its material Benefit Arrangements, including any trust instruments, financial statements and insurance contracts and, with respect to any employee stock ownership plan, loan agreements forming a part of any of its Benefit Arrangements, and all amendments thereto, have been made available to Parent or the Company, as applicable.

(b) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, all of its Benefit Arrangements, other than “multiemployer plans” within the meaning of Section 3(37) of ERISA (each, a “Multiemployer Plan”), are in compliance, in form and operation, with their terms and ERISA, the Code and other applicable Laws (including with respect to non-discrimination requirements, fiduciary duties and required regulatory filings). All of its Benefit Arrangements intended to be qualified under Section 401 of the Code are subject to a currently effective IRS determination or opinion letter regarding its tax-qualified status. With respect to any Benefit Arrangements that are Multiemployer Plans covered by Title IV of ERISA, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, (i) such Multiemployer Plans are Previously Disclosed, (ii) to its knowledge, no event has occurred that would be reasonably likely to present a risk of a partial or complete withdrawal from such Multiemployer Plan, within the meaning of Title IV, Subtitle E, Part 1 of ERISA, (iii) the transactions contemplated by this Agreement will not give rise to any liability under Title IV of ERISA and (iv) it has no current intention to withdraw from any Multiemployer Plan.

(c) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, all contributions required to be made under each Benefit Arrangement have been timely made or have been reflected in the consolidated financial statements filed with its SEC Filings. There is no pending or, to its knowledge, threatened Action relating to any of its Benefit Arrangements, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

(d) There has been no amendment to, announcement by it or any of its Subsidiaries relating to, or change in employee participation or coverage under, any of its Benefit Arrangements that would increase the expense of maintaining such plan above the level of the expense incurred therefor for the most recent fiscal year, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable. None of the execution of this Agreement, stockholder approval of this Agreement or the consummation of the transactions contemplated hereby will (either alone or in combination with any other event) (i) entitle any of its Employees to material severance pay or any material increase in severance pay upon any termination of employment, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or materially increase the amount payable under, any of its Benefit Arrangements, (iii) in the case of Parent, constitute a change in control under, or result in any acceleration of benefits under, the Parent Stock Plans or (iv) result in payments under any of its Benefit Arrangements that would not be deductible under Section 280G of the Code. Neither it nor any of its Subsidiaries is obligated to provide any Person with a “gross up” or similar payment in respect of any excise tax that may become payable under Section 409A of the Code or Section 4999 of the Code.

 

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(e) There is no pending or, to its knowledge, threatened material strike, slowdown, work stoppage, or lockout by or with respect to any of its Employees, and since December 31, 2018, no such material strike, slowdown, work stoppage, or lockout has occurred. It and its Subsidiaries are neither party to nor bound by any collective bargaining agreement or any other material labor-related agreement covering the terms and conditions of employment of any employee (any such agreement, a “Labor Contract”).

(f) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, it and its Subsidiaries are in compliance with (i) the terms of all Labor Contracts, (ii) all applicable Laws respecting employment and employment practices, including Laws with respect to the terms and conditions of employment, health and safety, wages and hours, “exempt” and “non-exempt” classifications in the United States, classifications of employees and independent contractors, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, termination of employment, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues and unemployment insurance and (iii) all applicable employee licensing requirements, and each has taken commercially reasonable measures to ensure that any Employee who is required to have a gaming or other license under any Gaming Laws or other Laws maintains such license in current and valid form.

(g) Other than (i) as required by Law or (ii) for continued health benefits, insurance or coverage provided pursuant to individual severance arrangements which do not exceed twenty-four (24) months following termination of service, none of its Benefit Arrangements provide for, and neither it nor any of its Subsidiaries has any obligation or liability to provide or with respect to the provision of, post-retirement or post-termination health, medical, life, hospitalization or other similar benefits, insurance or coverage, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable.

Section 4.15 Taxes. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable:

(a) All Tax Returns that are required to be filed or delivered (taking into account any extensions of time within which to file or deliver) by or with respect to it and its Subsidiaries have been duly and timely filed or delivered, and all such Tax Returns are complete and accurate in all respects.

(b) All Taxes due by it or its Subsidiaries have been timely paid in full (whether or not shown to be due on the Tax Returns referred to in Section 4.15(a)).

 

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(c) All Taxes that it or any of its Subsidiaries is obligated to withhold from amounts owing to any employee, creditor or third party have been paid over to the proper Governmental Entity in a timely manner, to the extent due and payable.

(d) No extensions or waivers of statutes of limitations for the assessment of Taxes (other than pursuant to an extension of time to file any Tax Return obtained in the ordinary course of business) have been given by or requested in writing with respect to any of its U.S. federal, state, local or foreign income Taxes or those of its Subsidiaries where such statute of limitations remains open.

(e) None of the Tax Returns referred to in Section 4.15(a) is currently under any audit, suit, proceeding, examination or assessment by the IRS or the relevant state, local or foreign taxing authority and neither it nor its Subsidiaries has received written notice from any taxing authority that an audit, suit, proceeding, examination or assessment in respect of such Tax Returns is pending or threatened.

(f) No outstanding or unsettled deficiencies or assessments have been asserted or made against it or its Subsidiaries by the relevant taxing authorities as a result of any audit or examination of any of the Tax Returns referred to in Section 4.15(a).

(g) During the past three years, no claim has been made in writing against it or its Subsidiaries by any taxing authorities in a jurisdiction where it or its Subsidiaries does not file Tax Returns that it or its Subsidiaries is or may be subject to taxation by that jurisdiction.

(h) Neither it nor any of its Subsidiaries is a party to or is otherwise bound by any Tax sharing, Tax allocation or Tax indemnification agreement or arrangement (other than such an agreement or arrangement (i) exclusively between or among it and its wholly owned Subsidiaries or (ii) the primary purpose of which is not the allocation or payment of Tax liability).

(i) Within the past two (2) years, neither it nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation” in a distribution intended to qualify for tax-free treatment under Section 355 of the Code.

(j) Neither it nor any of its Subsidiaries has participated in or been a party to a transaction that constitutes a “listed transaction” within the meaning of Section 1.6011-4(b)(2) of the Treasury Regulations.

(k) There are no Liens for Taxes upon its property and assets or any of its Subsidiaries’ property and assets except for Liens for Taxes not yet due and owing or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP.

Section 4.16 Takeover Laws and Provisions. It has taken, or as of immediately prior to the Effective Time will have taken, all action required to be taken by it in order to exempt this Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are, or as of immediately prior to the Effective Time will be, exempt from, the requirements of any “moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination,” or other antitakeover Laws of any state (collectively,

 

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Takeover Laws”). It has taken, or as of immediately prior to the Effective Time will have taken, all action required to be taken by it in order to make this Agreement and the transactions contemplated hereby comply with, and this Agreement and the transactions contemplated hereby do, or as of immediately prior to the Effective Time will, comply with, the requirements of any articles, sections or provisions of its Governing Documents concerning “business combination,” “fair price,” “voting requirement,” “constituency requirement,” or other related provisions (collectively, “Takeover Provisions”).

Section 4.17 Intellectual Property.

(a) To its knowledge, all of its and its Subsidiaries’ material Party Intellectual Property necessary for the operation of their respective businesses as presently conducted is valid, subsisting and enforceable. Its and each of its Subsidiaries (i) solely owns, free and clear of all Liens, all right, title and interest in and to their respective Party Intellectual Property necessary for the operation of their respective businesses as presently conducted, and (ii) owns or licenses all of the Intellectual Property necessary for the operation of their respective businesses as presently conducted. Its and its Subsidiaries’ material Party Intellectual Property is subsisting and, to its knowledge, valid, in full force and effect and enforceable. To its knowledge, upon the consummation of the transactions contemplated by this Agreement, all of its and its Subsidiaries’ Intellectual Property rights necessary for the operation of their respective businesses as presently conducted shall survive and be available for use in the same manner and on substantially the same terms as of immediately prior to the date hereof, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Company or Parent, as applicable.

(b) To its knowledge, the operation of its and its Subsidiaries’ respective businesses as presently conducted does not infringe, dilute, misappropriate or otherwise violate the Intellectual Property rights of any third person in any material respect. To its knowledge, no third person is infringing, diluting, misappropriating or otherwise violating its or its Subsidiaries’ Intellectual Property rights in any material respect. No action is pending or threatened in writing challenging the validity, enforceability, registration, ownership or use of its or its Subsidiaries’ Intellectual Property rights in any material respect.

(c) It and its Subsidiaries have taken reasonable measures to protect (i) their rights in their respective Party Intellectual Property and (ii) the confidentiality of all material Trade Secrets that are owned, used or held by it or its Subsidiaries, and to its knowledge, such material Trade Secrets have not been used, disclosed to or discovered by any person except pursuant to appropriate non-disclosure obligations or license agreements which have not been breached.

(d) It and each of its Subsidiaries complies in all material respects with (i) applicable Law, as well as its own rules, policies, and procedures, relating to privacy, data protection and the collection, retention, protection and use of personal information collected, used or held for use by it and its Subsidiaries, (ii) the applicable Payment Card Industry Data Security Standard with respect to any payment card data that it and its Subsidiaries has collected or handled, and (iii) all Contracts under which it or any Subsidiary is a party to or bound by relating to privacy, data protection and the collection, retention, protection and use of personal

 

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information collected, used or held for use by it and its Subsidiaries. No material claims have been asserted or threatened against it or its Subsidiaries alleging a violation of any Person’s privacy or personal information or data rights. To its knowledge, there have been no material security breaches in the information technology systems of it and its Subsidiaries or the information technology systems of any third person to the extent used by or on behalf of it and its Subsidiaries.

Section 4.18 Insurance. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or Parent, as applicable, it and each of its Subsidiaries maintain adequate insurance coverage for all normal risks incident to their respective businesses and their respective properties and assets. It and its Subsidiaries are in compliance in all material respects with the provisions of each insurance policy held by it and its Subsidiaries as of the date hereof for the benefit of it and its Subsidiaries. Neither it nor its Subsidiaries has received any written notice of cancellation of any such insurance policy.

Section 4.19 Accounting and Internal Controls.

(a) It and its Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. It has designed and implemented disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information relating to it and its Subsidiaries is made known to its management by others within those entities as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act.

(b) It has previously disclosed, based on its most recent evaluation prior to the date hereof, to its auditors and the audit committee of its board of directors (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in its internal controls over financial reporting.

Section 4.20 Financial Advisors, Etc.

(a) None of Parent, its Subsidiaries or any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated hereby, except that, in connection with this Agreement, the Parent Board of Directors has retained J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Macquarie Capital (USA) Inc. as its financial advisor. The Parent Board of Directors has received the opinion of J.P. Morgan Securities LLC to the effect that, as of the date thereof, and on the basis of and subject to the assumptions, limitations, qualifications and other matters considered in the preparation thereof as set forth in such opinion, the aggregate Merger Consideration to be paid by Parent in the Merger pursuant to this Agreement is fair, from a financial point of view, to Parent.

 

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(b) None of the Company, its Subsidiaries or any of their officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated herein, except that, in connection with this Agreement, the Company Board of Directors has retained PJT Partners LP as its financial advisor. The Company Board of Directors has received the opinion of PJT Partners LP to the effect that, as of the date thereof, and on the basis of and subject to the assumptions, limitations, qualifications and other matters considered in the preparation thereof as set forth in such opinion, the Merger Consideration to be paid to holders of Company Common Stock in the Merger pursuant to this Agreement is fair, from a financial point of view, to such holders.

Section 4.21 Affiliate Transactions. Since the date its most recent Form 10-K (in the case of the Company, as amended) was filed with the SEC, there have been no transactions, agreements, arrangements or understandings between it or any of its Subsidiaries, on the one hand, and any of its Affiliates (other than its Subsidiaries), on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC that have not been Previously Disclosed.

Section 4.22 Ownership of Company Common Stock. Neither Parent nor any of its controlled Affiliates (including Merger Sub) beneficially owns (as such term is used in Rule 13d-3 promulgated under the Exchange Act) any shares of Company Common Stock or any Rights to acquire shares of Company Common Stock or other securities of, or any other economic interest (through derivatives, securities or otherwise) in, the Company.

Section 4.23 Financing.

(a) Parent has delivered to the Company a true, complete and correct copy of one or more fully executed debt commitment letters, dated as of the date of this Agreement, and fully executed fee letters relating thereto (such commitment letter(s) and fee letter(s), including all exhibits, schedules, annexes and joinders thereto, as the same may be amended, modified, supplemented, extended or replaced from time to time in compliance with Section 5.16(d) is referred to herein as the “Debt Financing Commitment”), among Parent, JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Macquarie Capital Funding LLC and Macquarie Capital (USA) Inc. (the “Lenders”), pursuant to which, among other things, the Lenders have agreed, upon the terms and subject to the conditions of the Debt Financing Commitment, to provide or cause to be provided, on a several and not joint basis, the financing commitments described therein; provided, that, except for disclosure to the Company and its board of directors, officers, accountants, attorneys and other professional advisors, such fee letters may be redacted to remove fee amounts, the economic portion of any market “flex” provisions, pricing caps and other economics terms set forth therein, none of which affect the availability or net amount of the Debt Financing. The debt financing contemplated under the Debt Financing Commitment (including any debt securities and credit facilities issued in lieu of any portion of such debt financing as contemplated in the Debt Financing Commitment) is referred to herein as the “Debt Financing.”

 

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(b) The Debt Financing Commitment is, as of the date hereof, in full force and effect. The Debt Financing Commitment is the legal, valid, binding and enforceable obligation of Parent and, to the knowledge of Parent, the other parties thereto (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any Action may be brought). The Debt Financing Commitment has not been amended, modified, supplemented, extended or replaced, and will not be amended, modified, supplemented, extended or replaced, except as permitted under Section 5.16(d). As of the date hereof, (i) neither Parent nor, to the knowledge of Parent, any other party to the Debt Financing Commitment is in breach of any of its covenants or other obligations set forth in, or is in default under, the Debt Financing Commitment and (ii) no event has occurred which, with or without notice, lapse of time or both, would or would reasonably be expected to (A) constitute or result in a breach or default on the part of Parent (or, to the knowledge of Parent, any other party to the Debt Financing Commitment) under the Debt Financing Commitment, (B) constitute or result in a failure to satisfy a condition or other contingency set forth in the Debt Financing Commitment or (C) otherwise result in any portion of the Debt Financing not being available at or prior to the Closing. As of the date hereof, Parent has not received any notice or other communication from any party to the Debt Financing Commitment with respect to (i) any actual or potential breach or default on the part of Parent or any other party to the Debt Financing Commitment or (ii) any intention of such party to terminate the Debt Financing Commitment or to not provide all or any portion of the Debt Financing. As of the date hereof, Parent and Merger Sub (i) have no reason to believe (both before and after giving effect to any “flex” provisions contained in the Debt Financing Commitment) that, assuming the satisfaction of the conditions set forth in Section 6.1 and Section 6.3, they will be unable to satisfy on a timely basis each term and condition relating to the closing or funding of the Debt Financing and (ii) know of no fact, occurrence, circumstance or condition that, assuming the satisfaction of the conditions set forth in Section 6.1 and Section 6.3, would reasonably be expected to (A) cause the Debt Financing Commitment to fail to be satisfied, to terminate, to be withdrawn, modified, repudiated or rescinded or to be or become ineffective or (B) otherwise cause the full amount (or any portion) of the Debt Financing contemplated to be available under the Debt Financing Commitment to not be available to Parent and Merger Sub on a timely basis (and in any event no later than at the Closing). The aggregate proceeds contemplated by the Debt Financing Commitment, together with available cash on hand of Parent and the Company, will be sufficient for Parent and Merger Sub to (i) consummate the Merger and any other transactions contemplated by this Agreement upon the terms and subject to the conditions set forth in this Agreement, including (A) the payment of the Cash Election Amount and (B) any funds to be provided by Parent to the Company to enable the Company to fund payments (if any) required to be made in connection with the transactions contemplated by this Agreement in accordance with Section 3.6, (ii) repay any indebtedness required to be repaid, redeemed, retired, cancelled, terminated or otherwise satisfied or discharged in connection with the Merger and (iii) pay all fees, costs and expenses (including any premiums or penalties) in connection therewith on the Closing Date. There are no conditions precedent or other contingencies related to the funding of the full amount of the Debt Financing other than as expressly set forth in the Debt Financing Commitment. There are no side letters or other Contracts (except for customary engagement letters which do not contain provisions that impose any additional conditions or other contingencies to the funding of the Debt Financing, and true, correct and complete copies of which have been provided to the

 

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Company), whether written or oral, related to the funding of the full amount of the Debt Financing other than as expressly set forth in or expressly contemplated by the Debt Financing Commitment. Neither Parent nor any of its Affiliates has entered into any Contract, arrangement or understanding (i) awarding any agent, broker, investment banker or financial advisor any financial advisory role on an exclusive basis in connection with the Merger or (ii) expressly prohibiting any bank, investment bank or other potential provider of debt financing from providing or seeking to provide debt financing or financial advisory services to any Person in connection with a transaction relating to the Company or any of its Subsidiaries. All commitment fees or other fees or deposits required to be paid under the Debt Financing Commitment on or prior to the date of this Agreement have been paid in full.

Section 4.24 Solvency. As of the Effective Time, immediately after giving effect to the transactions contemplated by this Agreement, payment of the aggregate Merger Consideration, repayment or refinancing of any indebtedness in connection with the transactions contemplated by this Agreement, if any, and payment of all related fees and expenses, Parent, the Surviving Corporation and their respective Subsidiaries, on a consolidated basis, will be Solvent. For the purposes of this Section 4.24, the term “Solvent,” when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “fair saleable value” (determined on a going concern basis) of the assets of such Person will, as of such date, exceed the value of all “liabilities of such Person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable federal Laws governing determinations of the insolvency of debtors, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date and (c) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” mean that such Person will be able to generate enough cash from operations, asset dispositions or lines of credit, or a combination thereof, to meet its obligations as they become due.

Section 4.25 Information Supplied. The information supplied or to be supplied by it or its Representatives in writing expressly for inclusion in the Form S-4 to be filed by Parent in connection with the Share Issuance (the “Form S-4”) or any amendment or supplement thereto shall not, at the time the Form S-4 or such amendment or supplement is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by it with respect to statements made therein based on information supplied by the Company or its Representatives (in the case of Parent and Merger Sub) or Parent, Merger Sub and their respective Representatives (in the case of the Company) in writing expressly for inclusion therein. The information supplied or to be supplied by it or its Representatives in writing expressly for inclusion in the Joint Proxy Statement/Prospectus or any amendment or supplement thereto shall not, at the time the Joint Proxy Statement/Prospectus or such amendment or supplement is first mailed to the stockholders of the Company and of Parent and at the time of the Company Stockholders’ Meeting and Parent Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated

 

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therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by it with respect to statements made therein based on information supplied by the Company or its Representatives (in the case of Parent and Merger Sub) or by Parent, Merger Sub and their respective Representatives (in the case of the Company) in writing expressly for inclusion therein. The Form S-4 and the Joint Proxy Statement/Prospectus (solely with respect to the portion thereof based on information supplied or to be supplied by it or its Representatives for inclusion therein, but excluding any portion thereof based on information supplied by the Company or its Representatives (in the case of Parent and Merger Sub) or Parent, Merger Sub and their respective Representatives (in the case of the Company) in writing expressly for inclusion therein, with respect to which no representation or warranty is made by it) and any amendments or supplements thereto will comply, as of their respective dates of filing and as of the date of any amendment or supplement that supersedes an initial filing, as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. The information relating to it and its Subsidiaries which is provided by it or its Representatives in writing expressly for inclusion in any document filed with any Gaming Authority in connection herewith shall not, as of the date of any such filing, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by it with respect to statements made therein based on information supplied by the Company or its Representatives (in the case of Parent and Merger Sub) or by Parent, Merger Sub or their respective Representatives (in the case of the Company) in writing expressly for inclusion therein. Without limiting the generality of the foregoing, the Parties acknowledge that the Gaming Authorities may require the submission of a full, unredacted copy of the Debt Financing Commitment and other documents relating to the Debt Financing (but not the fee letters relating thereto unless such fee letters have been redacted to remove fee amounts, the economic portion of any market “flex” provisions, pricing caps and other economic terms set forth therein in a manner reasonably acceptable to the Financing Sources).

Section 4.26 Reliance.

(a) Each of the Parties has conducted its own independent review and analysis of the businesses, assets, condition, operations and prospects of Parent and its Subsidiaries (in the case of the Company) or the Company and its Subsidiaries (in the case of Parent and Merger Sub). In entering into this Agreement, each of the Parties has relied solely upon its own investigation and analysis, and such Party acknowledges that, except for the representations and warranties of the other Parties expressly set forth in this Article IV, none of Parent and its Subsidiaries (in the case of the Company), the Company and its Subsidiaries (in the case of Parent and Merger Sub) or any of their respective Representatives makes any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to the other Parties or their respective Representatives, and that such Party is not executing or authorizing the execution of this Agreement in reliance upon any such representation or warranty not explicitly set forth in this Article IV.

 

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(b) In connection with the Company’s investigation of Parent and Parent’s investigation of the Company, as applicable, each of the Company and Parent has received from Parent and its Representatives or the Company and its Representatives, as applicable, certain projections and other forecasts, including projected financial statements, cash flow items and other data and certain business plan information. Each of the Parties acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts and plans and accordingly is not relying on them, that such Party is familiar with such uncertainties, that such Party is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so furnished to it, and that such Party and its Representatives shall have no claim against any Person with respect thereto.

Section 4.27 No Other Representations or Warranties. Except for the representations and warranties expressly contained in this Article IV, none of the Parties, the Parties’ Affiliates or their respective Representatives makes, and each of the Parties acknowledges that none of the other Parties, such other Parties’ Affiliates or their respective Representatives makes, any express or implied representations or warranties with respect to such Party or its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding such Party or its Subsidiaries or any other matter furnished or provided to the other Parties or made available to the other Parties in any “data rooms,” “virtual data rooms,” management presentations or in any other form in expectation of, or in connection with, this Agreement or the transactions contemplated hereby. Each of the Parties disclaims any other representations or warranties, whether made by such Party, any of such Party’s Affiliates or their respective Representatives.

ARTICLE V

COVENANTS AND AGREEMENTS

Section 5.1 Conduct of Business.

(a) Except as expressly contemplated or required by this Agreement, as permitted by Section 5.3, as may be required by applicable Law or as set forth in Section 5.1(a) of the Company Disclosure Schedule or Section 5.1(a) of the Parent Disclosure Schedule, as applicable, or to the extent Parent or the Company, as applicable, otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), from the date hereof until the Effective Time or the date on which this Agreement is terminated pursuant to Section 7.1 (the “Termination Date”), each of the Company and Parent shall, and shall cause each of its respective Subsidiaries to, (i) conduct its business in the ordinary course of business consistent with past practice and in compliance with Law and (ii) use commercially reasonable efforts to preserve intact its business organization and maintain its existing relations with customers, suppliers, landlords, tenants, creditors, licensors, licensees, business partners, officers, key employees, consultants, insurers and others having business dealings with it, in each case, in all material respects; provided, however, that no action relating to the subject matter of any of the clauses of Section 5.1(b) or Section 5.1(d) that is permitted to be taken by the Company or any of its Subsidiaries without Parent’s consent or by Parent or any of its Subsidiaries without the Company’s consent, as applicable, shall be deemed a breach of this Section 5.1(a). From the date hereof until the Effective Time or the Termination Date, Merger Sub shall not, and Parent shall cause Merger Sub not to, carry on any business, incur any liabilities or conduct any operations, other than in connection with the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.

 

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(b) The Company agrees that from the date hereof until the Effective Time or the Termination Date, except as expressly contemplated or required by this Agreement, as may be required by applicable Law or as set forth in Section 5.1(b) of the Company Disclosure Schedule, without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed, except with respect to clauses (i), (ii), (iii), (iv), (v), (vi), (xvi) and (xix), as to which Parent may grant or withhold its consent in its sole discretion), it will not, and will cause each of its Subsidiaries not to:

(i) enter into any material new line of business outside the ordinary course of business consistent with past practice or in any jurisdiction that would reasonably be expected to require the receipt of additional consents or approvals of any Governmental Entity in connection with the consummation of the Merger or delay or impair the ability of the Parties to consummate the Merger;

(ii) amend (A) the Governing Documents of the Company, (B) the Governing Documents of its Subsidiaries in any material respect or (C) any terms of its outstanding equity interests or other securities;

(iii) make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of its capital stock, except for dividends from its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries;

(iv) notwithstanding anything in Section 5.1(b)(vii) or Section 5.1(b)(viii) to the contrary, issue, make grants or other promises with respect to, sell or encumber any of its equity interests or any securities or other interests convertible into, or rights to acquire, any of its equity interests, except pursuant to the exercise of Company Options or settlement of other Company Equity Awards outstanding as of the date hereof and in accordance with the terms of such instruments;

(v) adjust, split, combine, redeem, repurchase or otherwise acquire any shares of its capital stock (except in connection with cashless exercises or similar transactions pursuant to the exercise of Company Options or settlement (including settlement of Tax withholding obligations) of other awards or obligations outstanding as of the date hereof), or reclassify, combine, split, subdivide or otherwise amend the terms of its capital stock;

(vi) (A) make any acquisition of any other Person or business for aggregate consideration in excess of $25,000,000 or that would be reasonably expected to require the receipt of additional consents or approvals of any Governmental Entity in connection the consummation of the Merger or delay or impair the ability of the Parties to consummate the Merger, (B) make any loans or advances to any Person or (C) make any capital contributions to, or investments in, any other Person, in the case of clause (B),

 

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other than loans or advances to employees under tax-qualified plans or extensions of credit to customers, in each case, in the ordinary course of business or, in the case of clause (B) or (C), other than in connection with any transaction among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries;

(vii) except as required by a Benefit Arrangement or Labor Contract (provided that such Benefit Arrangement or Labor Contract must have been Previously Disclosed if material), (A) increase the compensation payable or that could become payable to directors or officers other than for officers in an amount not to exceed an annual increase of three percent (3%) of the applicable officer’s base salary, (B) increase the compensation payable or that could become payable to other Employees, other than increases in compensation made in the ordinary course of business consistent with past practice in an annual amount not to exceed four percent (4%) of the applicable Employee’s base salary or annualized hourly wage rate or three percent (3%) in the aggregate with respect to all such Employees, (C) enter into any new, or materially amend any existing, employment, severance, retention, change in control or similar Contract with any of its past or present officers or Employees other than entering into employment agreements or offer letters in the ordinary course of business consistent with past practice with newly hired Employees whose annual total compensation does not exceed $250,000, or (D) enter into any new, or amend any existing, Labor Contract; provided, that notwithstanding anything to the contrary contained herein, nothing shall affect the ability of the Company or its Subsidiaries to (x) renew any Labor Contract for a term of not more than one year, or (y) negotiate, enter into or amend any Labor Contract and related ancillary agreements (I) on terms consistent with past practice, that provide for a contract term that is no longer than the term of the expiring Labor Contract, and that do not impose an additional obligation that would have a material adverse impact on the financial position of the business unit or units supported by the applicable Labor Contract or (II) to the extent required by applicable Law; provided, further, that in no event shall the Company be permitted to take any action (or fail to take any action) with respect to a Benefit Arrangement subject to Title IV of ERISA or any Labor Contract that could reasonably be expected to result in a total or partial “withdrawal” under any Multiemployer Plan;

(viii) (A) enter into, establish, adopt or amend any Benefit Arrangement, or any trust agreement (or similar arrangement) related thereto (other than entering into employment agreements or offer letters in the ordinary course of business consistent with past practice with newly hired Employees whose annual total compensation does not exceed $250,000), (B) take any action to accelerate the vesting or exercisability of Company Equity Awards or other compensation or benefits payable under any Benefit Arrangement or to any Employee or (C) fund or in any other way secure or fund the payment of compensation or benefits under any Benefit Arrangement or to any Employee, except (1) as may be required by applicable Law, (2) is required by a Benefit Arrangement or Labor Contract (provided that such Benefit Arrangement or Labor Contract must have been Previously Disclosed if material), (3) amendments that do not materially increase benefits or result in materially increased administrative costs, or (4) as expressly permitted by this Agreement; provided, that notwithstanding anything to the contrary contained herein, nothing shall affect the ability of such Party to change its Benefit Arrangements (x) in the ordinary course in connection with annual renewals, (y) in connection with a change in Law or (z) in connection with any collective bargaining process;

 

 

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(ix) sell, transfer, lease, dispose of, grant or otherwise authorize the sale, transfer, lease, disposition or grant of any of its real properties or material tangible assets or the capital stock or equity interests in any of its Subsidiaries or a third Person with a value in excess of $25,000,000 in the aggregate, except in the ordinary course of business consistent with past practice;

(x) except in the ordinary course of business, cancel any material indebtedness for borrowed money (prior to the maturity date thereof, other than in connection with a refinancing or replacement with indebtedness permitted under this Agreement) owed to it or waive any of its claims or rights of substantial value;

(xi) (A) amend or modify the Company 2025 Note Indenture or the Company Credit Agreements in a manner (i) that would be materially adverse to the Company, (ii) that would prevent the Company from being able to incur or assume by operation of law the Financing to be so incurred or assumed by operation of law by the Company as contemplated by the Debt Financing Commitment (as of the date of this Agreement), or (iii) that would reasonably be expected to impair or delay the ability of the Company to redeem or repay, or increase the cost of the repayment of, obligations thereunder, (B) amend or modify any of the negative covenants (and definitions related thereto) contained in the Company Credit Agreements in a manner that is materially adverse to the Company without the prior written consent of the Lenders that are party to the Debt Financing Commitment, (C) incur or guarantee any indebtedness for borrowed money other than (w) in the ordinary course of business under the revolving portion of the Company Credit Agreements in effect on the date hereof (without giving effect to any incremental portion of any such Company Credit Agreements), (x) working capital facilities, capital lease obligations, purchase money debt and letter of credit, bank guaranty and similar facilities incurred in the ordinary course of business, (y) any other indebtedness in an aggregate principal amount not to exceed $5,000,000 and (z) loans to or guarantees for its direct or indirect wholly owned Subsidiaries, (D) make any capital expenditures in excess of the aggregate amount set forth in Section 5.1(b)(xi)(D) of the Company Disclosure Schedule, (E) issue any debt securities or any securities convertible into, or rights to acquire, any debt securities or (F) place any Lien on a material portion of its properties or assets other than in the ordinary course of business consistent with past practice;

(xii) other than as permitted by this Section 5.1, terminate (except with respect to the expiration of the stated term), renew (except with respect to the renewals of the Company’s insurance policies in the ordinary course of business), extend, or amend or modify in any material respect adverse to it (including by way of interpretation), any Material Contract, or enter into any Contract that would constitute a Material Contract if it were in effect as of the date of this Agreement;

 

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(xiii) make any material change to its financial accounting methods, principles or practices, except as may be required by Law or by GAAP;

(xiv) change or revoke any material Tax election, make any material Tax election inconsistent with past practice, materially change any of its Tax accounting methods, change any material annual Tax accounting period, settle or compromise any material Tax claim, assessment, audit or dispute, surrender any right to claim a material Tax refund, enter into any material closing agreement or other material written binding agreement with any taxing authority or any material Tax sharing agreement (other than any agreement the primary purpose of which is not the allocation or payment of Tax liability), consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment (other than pursuant to an extension of time to file any Tax Return obtained in the ordinary course of business), or file any amended material Tax Return;

(xv) enter into any settlement, consent decree or other similar Contract with a third party or Governmental Entity, other than settlements, consent decrees or other similar Contracts that are entered into in the ordinary course of business consistent with past practice, which only include monetary remedies or monetary obligations on the part of the Company and its Subsidiaries that are not material to the Company and its Subsidiaries, taken as a whole;

(xvi) notwithstanding anything herein to the contrary, knowingly take, or knowingly omit to take, any action that is reasonably likely to result in any of the conditions set forth in Article VI not being satisfied in a timely manner, except (with prior notice to the other Parties) as may be required by applicable Law;

(xvii) abandon, encumber, convey title (in whole or in part), license or grant a covenant not to sue or any other right to material Party Intellectual Property, other than in the ordinary course of business consistent with past practice;

(xviii) (A) modify or rescind any material license, franchise, permit or authorization of a Governmental Entity or (B) fail to make capital expenditures at any Property required under any Gaming Law or by any Gaming Authority;

(xix) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or dissolution, restructuring, recapitalization or reorganization; or

(xx) enter into any Contract with respect to, or otherwise agree or commit to do, any of the foregoing.

Notwithstanding anything herein to the contrary (including Section 5.1(a) and Section 5.1(b) hereof), without the prior written consent of Parent (which may be given or withheld in Parent’s sole discretion), the Company shall not, and shall cause each of its Subsidiaries not to, make, or commit to make, any cash expenditure that would, or could reasonably be expected to, (I) be made prior to the Closing Date and (II) exceed, individually or in the aggregate, $20,000,000, in each case, other than such expenditures or commitments (1) made in the

 

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ordinary course of business consistent with past practice, (2) that are capital expenditures and are not in excess of the aggregate capital expenditure budget set forth in Section 5.1(b)(xi)(D) of the Company Disclosure Schedule, (3) made pursuant to any Material Contract made available to Parent or any of its Representatives, or (4) expressly contemplated by this Agreement.

(c) Parent shall, and shall cause its Subsidiaries to, use their respective commercially reasonable efforts to (i) take any and all actions (and refrain from taking any and all actions) required to be taken (or refrained from taken) under the Master Transaction Agreement and the Ancillary Documents (as defined in the Master Transaction Agreement) in order to consummate the transactions contemplated therein, (ii) not otherwise take (or refrain from taking) any action that would constitute a breach or default under the terms of the Master Transaction Agreement and/or any of the Ancillary Documents and (iii) take any and all actions necessary to cause the satisfaction of the conditions set forth in Section 2.1(b)(i) of the Master Transaction on or prior to the Closing. At or prior to the Closing, Parent shall deliver to the Company a certificate signed by an executive officer of Parent and dated as of the Closing Date certifying to the effect that the conditions set forth in Section 2.1(b)(i) of the Master Transaction Agreement have been satisfied and that the VICI Consent (as defined in the Master Transaction Agreement) has become effective.

(d) Parent agrees that from the date hereof until the Effective Time or the Termination Date, except as expressly contemplated or required by this Agreement, as may be required by applicable Law or as set forth in Section 5.1(d) of the Parent Disclosure Schedule, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed, except with respect to clauses (i), (ii), (iii), (iv), (v), (vi), (xv) and (xviii), as to which the Company may grant or withhold its consent in its sole discretion), it will not, and will cause each of its Subsidiaries not to:

(i) enter into any material new line of business outside the ordinary course of business consistent with past practice or in any jurisdiction that would reasonably be expected to require the receipt of additional consents or approvals of any Governmental Entity in connection with the consummation of the Merger or delay or impair the ability of the Parties to consummate the Merger;

(ii) amend (A) the Governing Documents of Parent, (B) the Governing Documents of its Subsidiaries in any material respect (other than, in the case of the Governing Documents of Merger Sub, which shall not be modified in any respect) or (C) any terms of its outstanding equity interests or other securities;

(iii) make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of its capital stock, except for dividends from its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries;

(iv) issue, sell or encumber any of its equity interests or any securities convertible into, or rights to acquire, any of its equity interests, except (A) pursuant to the exercise of Parent Options or settlement of other awards outstanding as of the date hereof (or permitted hereunder to be granted after the date hereof) and in

 

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accordance with the terms of such instruments, (B) grants of stock options to purchase shares of Parent Common Stock (and issuances of shares of Parent Common Stock pursuant thereto) or other Parent Equity Awards (and issuances of shares of Parent Common Stock pursuant thereto), in each case, for employee promotions and new employee hires, in each case, to employees of Parent or Parent’s Subsidiaries below the level of senior vice president, in each case that are made in the ordinary course of business consistent with past practice, (C) the annual grant of equity-based awards to directors of Parent; provided, that any such grant to a director shall be for annual compensation for services on the Parent Board of Directors and shall be consistent with the annual grant to directors for Parent’s fiscal year ended December 31, 2018, as described in Parent’s definitive proxy statement for its annual stockholders meeting, or (D) the annual grant of equity-based awards to employees of Parent and its Subsidiaries in the ordinary course of business consistent with past practice;

(v) except as has been Previously Disclosed, adjust, split, combine, redeem, repurchase or otherwise acquire any shares of its capital stock (except in connection with cashless exercises or similar transactions pursuant to the exercise of Parent Options or settlement (including settlement of Tax withholding obligations) of other awards or obligations outstanding as of the date hereof or permitted to be granted after the date hereof), or reclassify, combine, split, subdivide or otherwise amend the terms of its capital stock;

(vi) (A) make any acquisition of any other Person or business, (B) make any loans or advances to any Person or (C) make any capital contributions to, or investments in, any other Person, in each such case that would be reasonably expected to impair the ability of Parent to consummate the Merger before the End Date;

(vii) (A) except as required by a Benefit Arrangement or Labor Contract (provided that such Benefit Arrangement or Labor Contract must have been Previously Disclosed if material), increase the compensation payable or that could become payable to directors or officers other than in the ordinary course of business consistent with past practice, (B) increase the compensation payable or that could become payable to other Employees, other than increases in compensation made in the ordinary course of business consistent with past practice in an annual amount not to exceed four percent (4%) of the applicable Employee’s base salary or annualized hourly wage rate or three percent (3%) in the aggregate with respect to all such Employees, (C) enter into any new, or amend any existing, Labor Contract; provided, that notwithstanding anything to the contrary contained herein, nothing shall affect the ability of Parent or its Subsidiaries to negotiate, enter into or amend any Labor Contract and related ancillary agreements (x) in the ordinary course of business consistent with past practice or (y) to the extent required by applicable Law;

(viii) (A) enter into, establish, adopt or amend any Benefit Arrangement, or any trust agreement (or similar arrangement) related thereto (other than entering into employment agreements or offer letters in the ordinary course of business consistent with past practice with newly hired Employees whose annual total compensation does not exceed $250,000), (B) take any action to accelerate the vesting or

 

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exercisability of Parent Equity Awards or other compensation or benefits payable under any Benefit Arrangement or to any Employee, other than in the ordinary course of business consistent with past practice or (C) fund or in any other way secure or fund the payment of compensation or benefits under any Benefit Arrangement or to any Employee, except (1) as may be required by applicable Law, (2) is required by a Benefit Arrangement or Labor Contract (provided that such Benefit Arrangement or Labor Contract must have been Previously Disclosed if material), (3) amendments that do not materially increase benefits or result in materially increased administrative costs, or (4) as expressly permitted by this Agreement; provided, that notwithstanding anything to the contrary contained herein, nothing shall affect the ability of such Party to change its Benefit Arrangements (x) in the ordinary course in connection with annual renewals, (y) in connection with a change in Law or (z) in connection with any collective bargaining process;

(ix) sell, transfer, lease, dispose of, grant or otherwise authorize the sale, transfer, lease, disposition or grant of any of its real properties or material assets with a value in excess of $25,000,000 in the aggregate, except in the ordinary course of business consistent with past practice;

(x) except in the ordinary course of business, cancel any material indebtedness (prior to the maturity date thereof, other than in connection with a refinancing or replacement with indebtedness permitted under this Agreement) owed to it or waive any of its claims or rights of substantial value;

(xi) (A) incur or guarantee any indebtedness for borrowed money, other than loans to or guarantees for its direct or indirect wholly owned Subsidiaries, (B) issue any debt securities or any securities convertible into, or rights to acquire, any debt securities or (C) place any Lien on a material portion of its properties or assets, in each case other than (w) in the ordinary course of business under the revolving portion of the Parent’s existing credit facilities in effect on the date hereof, (v) in connection with a refinancing of outstanding indebtedness or replacement with indebtedness permitted under this Agreement, (x) in connection with any acquisition permitted by this Section 5.1, (y) working capital facilities, capital lease obligations, purchase money debt and letter of credit, bank guaranty and similar facilities incurred in the ordinary course of business and (z) any other indebtedness, debt securities or any securities convertible into, or rights to acquire, any debt securities, in an aggregate principal amount not to exceed $5,000,000;

(xii) make any material change to its financial accounting methods, principles or practices, except as may be required by Law or by GAAP;

(xiii) change or revoke any material Tax election, make any material Tax election inconsistent with past practice, materially change any of its Tax accounting methods, change any material annual Tax accounting period, settle or compromise any material Tax claim, assessment, audit or dispute, surrender any right to claim a material Tax refund, enter into any material closing agreement or other material written binding agreement with any taxing authority or any material Tax sharing agreement (other than

 

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any agreement the primary purpose of which is not the allocation or payment of Tax liability), consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment (other than pursuant to an extension of time to file any Tax Return obtained in the ordinary course of business), or file any amended material Tax Return;

(xiv) enter into any settlement, consent decree or other similar Contract with a third party or Governmental Entity, other than settlements, consent decrees or other similar Contracts that (A) are entered into in the ordinary course of business consistent with past practice and only include monetary remedies or obligations on the part of the Parent and its Subsidiaries or (B) would not be material to the Parent and its Subsidiaries, taken as a whole;

(xv) notwithstanding anything herein to the contrary, knowingly take, or knowingly omit to take, any action that is reasonably likely to result in any of the conditions set forth in Article VI not being satisfied in a timely manner, except (with prior notice to the other Parties) as may be required by applicable Law;

(xvi) abandon, encumber, convey title (in whole or in part), license or grant a covenant not to sue or any other right to material Party Intellectual Property, other than in the ordinary course of business consistent with past practice;

(xvii) (A) modify or rescind any material license, franchise, permit or authorization of a Governmental Entity or (B) fail to make capital expenditures at any Property required under any Gaming Law or by any Gaming Authority;

(xviii) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or dissolution, restructuring, recapitalization or reorganization;

(xix) make any capital expenditures in excess of the aggregate amount set forth in Section 5.1(d)(xix) of the Parent Disclosure Schedule; or

(xx) enter into any Contract with respect to, or otherwise agree or commit to do, any of the foregoing.

Notwithstanding anything herein to the contrary (including Section 5.1(a) and Section 5.1(d) hereof), without the prior written consent of the Company (which may be given or withheld in the Company’s sole discretion), Parent shall not, and shall cause each of its Subsidiaries not to, make, or commit to make, any cash expenditure that would, or could reasonably be expected to, (I) be made prior to the Closing Date and (II) exceed, individually or in the aggregate, $10,000,000, in each case, other than such expenditures or commitments (1) made in the ordinary course of business consistent with past practice, (2) that are capital expenditures and are not in excess of the aggregate capital expenditure budget set forth in Section 5.1(d)(xix) of the Parent Disclosure Schedule, (3) made pursuant to any Material Contract made available to the Company or any of its Representatives, or (4) expressly contemplated by this Agreement.

 

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(e) The Company agrees that from the date of this Agreement until the Effective Time or the Termination Date, it shall, and shall cause its applicable Subsidiaries to, take (or not take) the actions set forth on Section 5.1(e) of the Company Disclosure Schedule.

Section 5.2 Access; Contact with Business Relations.

(a) From and after the date of this Agreement until the Effective Time or, if earlier, the Termination Date, for purposes of facilitating the transactions contemplated hereby, each of the Company and Parent shall afford each other and their respective Representatives such reasonable access during normal business hours upon reasonable prior notice, to its and its Subsidiaries’ personnel and properties, contracts, commitments, books and records and any report, schedule or other document filed or received by it pursuant to the requirements of applicable Laws and with such additional accounting, financing, operating, environmental and other data and information regarding it and its Subsidiaries, as such other Party may reasonably request. In addition, the Company agrees that it shall afford the Real Estate Financing Sources and their Representatives such reasonable access during normal business hours upon reasonable prior notice, and shall otherwise cooperate with Parent and use commercially reasonable efforts to permit the Real Estate Financing Sources to take such actions, as necessary to enable Parent to cause Subsidiaries of the Company to satisfy Parent’s obligations under the Master Transaction Agreement (and the transactions and agreements contemplated thereby (including the Real Estate Purchase Agreements). Notwithstanding the foregoing, neither the Company nor Parent shall be required to provide access to or make available to any Person any document or information that, in the reasonable judgment of such Party, (i) violates any of its obligations with respect to confidentiality, (ii) is subject to any attorney-client, work-product or other legal privilege or (iii) the disclosure of which would violate any applicable Law or legal duty; provided, that the withholding Party will use commercially reasonable efforts to allow such access or disclosure in a manner that does not result in loss or waiver of such privilege, including entering into appropriate common interest or similar agreements; provided, further, that nothing herein shall authorize Parent or its Representatives to undertake any invasive environmental testing or sampling at any of the properties owned, operated or leased by the Company or its Subsidiaries and nothing herein shall authorize the Company or its Representatives to undertake any environmental testing or sampling at any of the properties owned, operated or leased by Parent or its Subsidiaries. Each of Parent and the Company agrees that it will not, and will cause its Subsidiaries and Representatives not to, use any information obtained pursuant to this Section 5.2 for any competitive or other purpose unrelated to the consummation of the transactions contemplated by this Agreement (which transactions, for the avoidance of doubt, shall include with respect to Parent any Financing and Related Financing). Each of the Company and Parent will use its commercially reasonable efforts to minimize any disruption to the businesses of the other Party that may result from requests for access.

(b) Notwithstanding anything in this Agreement to the contrary, from and after the date of this Agreement until the Effective Time or, if earlier, the Termination Date, neither the Company nor Parent shall (and neither of them shall permit any of their respective Representatives or Affiliates to) contact any employee (other than a member of management involved with the transactions contemplated by this Agreement), customer, supplier, distributor or other material business relation of Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent) regarding (i) Parent

 

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or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent), (ii) the business of Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent) or (iii) the transactions contemplated by this Agreement, in each case, without the prior written consent of Parent or the Company, as applicable (such consent not to be unreasonably withheld, conditioned or delayed); provided, that this Section 5.2(b) shall not restrict any Representatives of the Company or Parent, as applicable, from receiving incoming correspondence in the ordinary course (such as answering phone calls) from any landlord, tenant, customer, supplier, distributor or other material business relation of Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent), so long as (A) such contact was not, directly or indirectly, solicited or encouraged by the Company, Parent or any of their respective Representatives or Affiliates, as applicable, (B) the Company or Parent, as applicable, informs Parent or the Company, as applicable, of such correspondence as soon as reasonably practicable, (C) such Representative immediately informs such landlord, tenant, customer, supplier, distributor or other material business relation of the restrictions contained in this Section 5.2(b) and does not engage in any substantive discussions with any such landlord, tenant, customer, supplier, distribution or other material business relation relating to (1) Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent), (2) the business of Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent) or (3) the transactions contemplated by this Agreement, and (D) such Representative does not represent that it is authorized to, nor does it negotiate or enter into, any Contract (in principle or otherwise) on behalf of Parent or any of its Subsidiaries (in the case of the Company) or the Company or any of its Subsidiaries (in the case of Parent).

(c) The Parties hereby agree that all information provided to them or their respective Representatives in connection with this Agreement and the consummation of the transactions contemplated hereby shall be governed in accordance with the Confidentiality Agreement, which shall survive the termination of this Agreement in accordance with the terms set forth therein.

(d) No investigation by any Party of the business and affairs of the other Parties, pursuant to this Section 5.2 or otherwise, will affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the conditions to any Party’s obligation to consummate the transactions contemplated by this Agreement.

Section 5.3 No Solicitation.

(a) Except as expressly permitted by this Section 5.3, the Company, on the one hand, and Parent, on the other hand, shall, and each shall cause its Subsidiaries and their respective directors, officers and employees to, and shall use its reasonable best efforts to cause its and its Subsidiaries’ other Representatives and Affiliates to, (i) immediately cease any solicitation, knowing encouragement, discussions or negotiations with any Person that may be ongoing with respect to a Takeover Proposal, and promptly instruct (to the extent it has contractual authority to do so and has not already done so prior to the date of this Agreement) or otherwise request, any Person that has executed a confidentiality or non-disclosure agreement within the twelve (12)-month period prior to the date of this Agreement in connection with any

 

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actual or potential Takeover Proposal to return or destroy all such confidential information or documents previously furnished in connection therewith or material incorporating any such information in the possession of such Person or its Representatives (and to confirm in writing the return or destruction of all such information) and (ii) from and after the date of this Agreement until the Effective Time or, if earlier, the Termination Date, not, directly or indirectly, (A) solicit, initiate or knowingly facilitate or knowingly encourage any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Takeover Proposal, (B) engage in, continue or otherwise participate in any substantive discussions or negotiations regarding, or furnish to any other Person any non-public information in connection with or for the purpose of encouraging or facilitating, a Takeover Proposal (other than (x) solely in response to an unsolicited inquiry, to refer the inquiring Person to this Section 5.3(a) or (y) upon receipt of a bona fide, unsolicited written Takeover Proposal from any Person that did not result from a breach of this Section 5.3(a), solely to the extent necessary to ascertain facts or clarify terms with respect to a Takeover Proposal for the Company Board of Directors or the Parent Board of Directors, as applicable, to be able to have sufficient information to make the determination described in Section 5.3(b)) or (C) approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment or agreement in principle providing for a Takeover Proposal.

(b) Except as expressly provided by this Agreement, none of the Parties shall take any action to exempt any Person from the Takeover Laws or the Takeover Provisions or otherwise cause such restrictions not to apply. Except (x) as necessary to take any actions that the Company, Parent or any third party would otherwise be permitted to take pursuant to this Section 5.3 (and in such case only in accordance with the terms hereof) or (y) if the Company Board of Directors or the Parent Board of Directors, as applicable, determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that any such action or forbearance would be reasonably likely to be inconsistent with its fiduciary duties under applicable Law, (i) neither the Company and its Subsidiaries, on the one hand, nor Parent and its Subsidiaries, on the other hand, shall release any third party from, or waive, amend or modify any provision of, or grant permission under any (A) standstill provision in any Contract to which the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as applicable, is a party or (B) confidentiality provision in any Contract to which the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as applicable, is a party (excluding any waiver under a confidentiality provision that does not, and would not reasonably be likely to, facilitate or encourage a Takeover Proposal) and (ii) each of the Company and Parent shall, and shall cause its Subsidiaries to, enforce the confidentiality and standstill provisions of any such Contract; provided, that, for the avoidance of doubt, any automatic release from the standstill provisions of any such Contract in accordance with its terms shall not constitute a breach of this Section 5.3(b).

(c) Notwithstanding anything to the contrary contained in this Section 5.3, (x) if at any time from and after the date of this Agreement and (i) prior to obtaining the Company Stockholder Approval, the Company, or (ii) prior to the obtaining the Parent Stockholder Approval, Parent, directly or indirectly receives a bona fide, unsolicited written Takeover Proposal made after the date of this Agreement from any Person and such Party, its Affiliates and their respective Representatives are not in material breach of this Section 5.3 and (y) if the Company Board of Directors or the Parent Board of Directors, as applicable,

 

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determines in good faith, after consultation with its outside legal counsel, that such Takeover Proposal constitutes or would reasonably be expected to lead to a Superior Proposal, and failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under applicable Law, then such Party and its Representatives may, directly or indirectly, (A) furnish, pursuant to an Acceptable Confidentiality Agreement, information (including non-public information) with respect to such Party and its Subsidiaries, and afford access to the business, properties, assets, employees, officers, Contracts, books and records of such Party and its Subsidiaries, to the Person that has made such Takeover Proposal and its Representatives and potential sources of funding; provided, that such Party shall substantially concurrently with the delivery to such Person provide to the other Parties any non-public information concerning such Party or any of its Subsidiaries that is provided or made available to such Person or its Representatives unless such non-public information has been previously provided or made available to the other Parties and (B) engage in or otherwise participate in discussions or negotiations with the person making such Takeover Proposal (including as a part thereof, making counterproposals) and its Representatives and potential sources of financing regarding such Takeover Proposal. “Acceptable Confidentiality Agreement” means any customary confidentiality agreement that contains provisions that are no less favorable in the aggregate to the Company than those applicable to Parent or to Parent than those applicable to the Company, as applicable, that are contained in the Confidentiality Agreement; provided, that such confidentiality agreement shall not prohibit compliance by the Company with any of the provisions of this Section 5.3.

(d) Each of the Company and Parent shall promptly (and in no event later than forty-eight (48) hours after receipt) notify, orally and in writing, one another of any Takeover Proposal received by such Party or any of its Representatives, which notice shall include the identity of the Person making the Takeover Proposal and the material terms and conditions thereof (including copies of any written proposal relating thereto provided to such Party or any of its Representatives) and indicate whether such Party has furnished non-public information to, or entered into discussions or negotiations with, such third party. Each of the Company and Parent shall keep one another reasonably informed on a reasonably current basis as to the status of (including changes to any material terms of, and any other material developments with respect to) such Takeover Proposal. Each of the Company and Parent agrees that it and its Subsidiaries will not enter into any Contract with any Person subsequent to the date of this Agreement that prohibits such Party from providing any information to Parent in accordance with this Section 5.3.

(e) Except as expressly permitted by this Section 5.3(e), the Company Board of Directors and the Parent Board of Directors shall not (i) (A) fail to include the Company Recommendation (in the case of the Company Board of Directors) or the Parent Recommendation (in the case of the Parent Board of Directors) in the Joint Proxy Statement/Prospectus, (B) change, qualify, withhold, withdraw or modify, or authorize or publicly propose to change, qualify, withhold, withdraw or modify, in a manner adverse to Parent, the Company Recommendation (in the case of the Company Board of Directors) or to the Company, the Parent Recommendation (in the case of the Parent Board of Directors), (C) make or publicly propose to make any recommendation in connection with a tender offer or exchange offer other than a recommendation against such offer or a customary “stop, look and listen” communication by the Company Board of Directors or the Parent Board of Directors, as

 

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applicable, of the type contemplated by Rule 14d-9(f) under the Exchange Act (it being understood that the Company Board of Directors or the Parent Board of Directors, as applicable, may refrain from taking a position with respect to such a tender offer or exchange offer until the close of business as of the tenth (10th) Business Day after the commencement of such tender offer or exchange offer pursuant to Rule 14d-9(f) under the Exchange Act without such action being considered an Adverse Recommendation Change so long as the Company reaffirms the Company Recommendation or Parent reaffirms the Parent Recommendation during such period), (D) other than with respect to the period of up to ten (10) Business Days applicable to formal tender or exchange offers that are the subject of the preceding clause (C), fail to recommend against a Takeover Proposal or fail to reaffirm the Company Recommendation or the Parent Recommendation, as applicable, in either case within ten (10) Business Days after a request by Parent or the Company, as applicable, to do so; provided, however, that (1) such ten (10) Business Day period shall be extended for an additional ten (10) Business Days following any material modification to any Takeover Proposal occurring after the receipt of Parent’s or the Company’s written request, as applicable, and (2) each of Parent and the Company shall be entitled to make such a written request for reaffirmation only once for each Takeover Proposal and once for each material amendment to such Takeover Proposal (any action described in this clause (i) being referred to as an “Adverse Recommendation Change”); or (ii) authorize, cause or permit the Company or any of its Subsidiaries (in the case of the Company Board of Directors) or Parent or any of its Subsidiaries (in the case of the Parent Board of Directors) to enter into any letter of intent, agreement, commitment or agreement in principle providing for any Takeover Proposal (other than an Acceptable Confidentiality Agreement entered into in accordance with Section 5.3(c)). Notwithstanding anything to the contrary set forth in this Agreement, prior to the time the Company Stockholder Approval or the Parent Stockholder Approval is obtained, (x) the Company Board of Directors or the Parent Board of Directors, as applicable, may make an Adverse Recommendation Change if (1) the Company or Parent, as applicable, is not in material breach of this Section 5.3 and (2) after receiving a bona fide unsolicited written Takeover Proposal, the Company Board of Directors or the Parent Board of Directors, as applicable, has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that (i) such Takeover Proposal constitutes a Superior Proposal and (ii) in light of such Takeover Proposal, the failure to take such action would be reasonably likely to be inconsistent with the Company Board of Directors’ or the Parent Board of Directors’ fiduciary duties under applicable Law and (y) the Company may terminate this Agreement in order to enter into a binding written agreement with respect to a Superior Proposal in accordance with Section 7.1(k); provided, that the Company Board of Directors or the Parent Board of Directors, as applicable, has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that failure to take such action would be reasonably likely to be inconsistent with the Company Board of Directors’ or the Parent Board of Directors’ fiduciary duties under applicable Law; provided, however, that, prior to making any Adverse Recommendation Change or terminating this Agreement as described in clauses (x) and (y) of this sentence, (A) the Company has given Parent, or Parent has given the Company, as applicable, at least four (4) Business Days’ prior written notice of its intention to take such action (which notice shall specify the material terms and conditions of any such Superior Proposal) and the Company has contemporaneously provided to Parent, or Parent has contemporaneously provided to the Company, as applicable, a copy of the Superior Proposal and a copy of any written proposed transaction documents with the person making such Superior Proposal, (B) the

 

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Company has negotiated in good faith with Parent, or Parent has negotiated in good faith with the Company, during such notice period to enable Parent or the Company, as applicable, to propose revisions to the terms of this Agreement such that it would cause such Superior Proposal to no longer constitute a Superior Proposal, (C) following the end of such notice period, the Company Board of Directors or the Parent Board of Directors, as applicable, shall have considered in good faith any revisions to the terms of this Agreement proposed in writing by Parent (in the case of the Company Board of Directors) or the Company (in the case of the Parent Board of Directors), and shall have determined, after consultation with its outside financial advisors and outside legal counsel, that the Superior Proposal continues to constitute a Superior Proposal if the revisions proposed by Parent or the Company, as applicable, were to be given effect, and (D) in the event of any change to any material terms of such Superior Proposal, the Company shall have delivered to Parent, or Parent shall have delivered to the Company, as applicable, an additional notice consistent with that described in clause (A) above of this proviso and a new notice period under clause (A) of this proviso shall commence (except that the four (4) Business Day period notice period referred to in clause (A) above of this proviso shall instead be equal to the longer of (i) two (2) Business Days and (ii) the period remaining under the notice period under clause (A) of this proviso immediately prior to the delivery of such additional notice under this clause (D)) during which time the Company shall be required to comply with the requirements of this Section 5.3(e) anew with respect to such additional notice, including clauses (A) through (D) above of this proviso.

(f) Other than in connection with a Superior Proposal (which, for the avoidance of doubt, shall be subject to Section 5.3(e) and shall not be subject to this Section 5.3(f)), nothing in this Agreement shall prohibit or restrict the Company Board of Directors from making an Adverse Recommendation Change in response to a Company Intervening Event, or the Parent Board of Directors from making an Adverse Recommendation Change in response to a Parent Intervening Event, if the Company Board of Directors or the Parent Board of Directors, as applicable, has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that the failure of the Company Board of Directors or the Parent Board of Directors, as applicable, to make an Adverse Recommendation Change would be reasonably likely to be inconsistent with the Company Board of Directors’ or the Parent Board of Directors’ fiduciary duties under applicable Law; and provided, further, that, prior to making such Adverse Recommendation Change, (i) the Company has given Parent, or Parent has given the Company, as applicable, at least four (4) Business Days’ prior written notice of its intention to take such action, which notice shall specify the reasons therefor, (ii) the Company or Parent, as applicable, has negotiated, and directed its Representatives to negotiate, in good faith with Parent or the Company, as applicable, during such notice period after giving any such notice to enable Parent or the Company, as applicable, to propose revisions to the terms of this Agreement such that it would not permit the Company Board of Directors or the Parent Board of Directors, as applicable, to make an Adverse Recommendation Change pursuant to this Section 5.3(f) and (iii) following the end of such notice period, the Company Board of Directors or the Parent Board of Directors, as applicable, shall have considered in good faith any revisions to the terms of this Agreement proposed in writing by Parent or the Company, as applicable, and shall have determined, after consultation with its outside financial advisors and outside legal counsel, that failure to make an Adverse Recommendation Change in response to such Company Intervening Event or Parent Intervening Event, as applicable, would be reasonably likely to be inconsistent with the Company Board of Directors’ or the Parent Board of Directors’ fiduciary duties under applicable Law.

 

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(g) Nothing contained in this Section 5.3 shall prohibit the Company or the Company Board of Directors, on the one hand, or Parent or the Parent Board of Directors, on the other hand, from taking and disclosing to the stockholders of the Company or Parent, as applicable, a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any “stop, look and listen” communication or any other similar disclosure to the stockholders of the Company or Parent, as applicable, pursuant to Rule 14d-9(f) under the Exchange Act if, in the determination in good faith of the Company Board of Directors or the Parent Board of Directors, as applicable, after consultation with outside counsel, the failure so to disclose would be reasonably likely to be inconsistent with the fiduciary duties under applicable Law or obligations under applicable federal securities Law of the Company Board of Directors or the Parent Board of Directors, as applicable.

Section 5.4 Filings; Other Actions.

(a) As promptly as reasonably practicable following the date of this Agreement, (i) Parent and the Company shall prepare the Form S-4, which will include the Joint Proxy Statement/Prospectus, (ii) Parent and the Company shall file with the SEC the Joint Proxy Statement/Prospectus and (iii) Parent shall file the Form S-4, which will include the Joint Proxy Statement/Prospectus, in connection with the registration under the Securities Act of the shares of Parent Common Stock to be issued in the Merger. Parent shall use its reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as reasonably practicable after such filing and to keep the Form S-4 effective as long as necessary to consummate the Merger and the other transactions contemplated hereby. Each of Parent and the Company will cause the Joint Proxy Statement/Prospectus to be mailed to its respective stockholders, as applicable, as soon as reasonably practicable after the Form S-4 is declared effective by the SEC under the Securities Act (the date upon which such mailing occurs, the “Joint Proxy Statement/Prospectus Mailing Date”). Parent shall use its reasonable best efforts, and the Company shall reasonably cooperate with Parent, to keep the Form S-4 effective through the Closing in order to permit the consummation of the transactions contemplated by this Agreement, including the Merger and the Share Issuance. Parent shall also take any action required to be taken under any applicable state securities Laws in connection with the Share Issuance and the reservation of shares of Parent Common Stock in the Merger, and the Company shall furnish all information concerning the Company and the holders of Company Common Stock, or holders of a beneficial interest therein, as may be reasonably requested by Parent in connection with any such action. No filing or mailing of, or amendment or supplement to, the Form S-4 or the Joint Proxy Statement/Prospectus will be made by Parent or the Company, as applicable, without the other Party’s prior consent (which shall not be unreasonably withheld, conditioned or delayed) and without providing the other Party a reasonable opportunity to review and comment thereon (which comments shall be considered by the other Party in good faith); provided, however, that Parent or the Company, as applicable, in connection with an Adverse Recommendation Change, a Takeover Proposal or a Superior Proposal may amend or supplement the Joint Proxy Statement/Prospectus or the Form S-4 (including by incorporation by reference) pursuant to a Qualifying Amendment, and in such event, this right of approval shall apply only with respect to information relating to the other Party or its business, financial

 

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condition or results of operations. A “Qualifying Amendment” means an amendment or supplement to the Form S-4 or the Joint Proxy Statement/Prospectus (including by incorporation by reference) to the extent it contains (a) an Adverse Recommendation Change, (b) a statement of the reason of the Company Board of Directors or the Parent Board of Directors, as applicable, for making such Adverse Recommendation Change, (c) a factually accurate statement by the Company or Parent that describes the Company’s or Parent’s receipt of a Takeover Proposal or Superior Proposal, the terms of such proposal and the operation of this Agreement with respect thereto, and (d) additional information reasonably related to the foregoing.

(b) Each of Parent and the Company shall promptly notify one another upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to the Form S-4 or Joint Proxy Statement/Prospectus, and shall, as promptly as practicable after receipt thereof, provide one another with copies of all correspondence between it and its Representatives, on one hand, and the SEC, on the other hand, and all written comments with respect to the Joint Proxy Statement/Prospectus or the Form S-4 and advise one another of any oral comments with respect to the Joint Proxy Statement/Prospectus or the Form S-4. Each of Parent and the Company shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Joint Proxy Statement/Prospectus, and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comment from the SEC with respect to the Form S-4. Parent or the Company, as applicable, will advise one another promptly after it receives oral or written notice of the time when the Form S-4 has become effective or any supplement or amendment thereto has been filed, the threat or issuance of any stop order, the suspension of the qualification of the shares of Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any oral or written request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the Form S-4 or comments thereon and responses thereto or requests by the SEC for additional information, and will promptly provide one another with copies of any written communication from the SEC or any state securities commission. If at any time prior to the Effective Time any information relating to Parent or the Company, or any of their respective Affiliates, officers or directors, is discovered by Parent or the Company that should be set forth in an amendment or supplement to the Form S-4 or the Joint Proxy Statement/Prospectus, so that either such document would not include a misstatement of a material fact or omit to state any material fact necessary to make the statements therein (in light of the circumstances under which they were made), not misleading, the Party that discovers such information shall promptly notify the other Parties and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company. Each of Parent and the Company shall reasonably cooperate upon the other Party’s request in amending or supplementing the Joint Proxy Statement/Prospectus pursuant to a Qualifying Amendment made in compliance with this Agreement.

(c) As promptly as reasonably practicable following the clearance of the Joint Proxy Statement/Prospectus by the SEC, the Company shall take all action necessary in accordance with applicable Laws and the Company’s Governing Documents to duly give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval (the “Company Stockholders Meeting”) and not postpone or adjourn the Company Stockholders’ Meeting except (i) to the extent required by applicable Law or to solicit additional proxies or (ii) votes in favor of adoption of this Agreement if sufficient votes to

 

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constitute the Company Stockholder Approval have not been obtained; provided, that, unless otherwise agreed by the Parties, the Company Stockholders’ Meeting may not be postponed or adjourned to a date that is more than twenty (20) days after the date for which the Company Stockholders’ Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law). The Company will, except in the case of an Adverse Recommendation Change, through the Company Board of Directors, recommend that its stockholders adopt this Agreement and will use reasonable best efforts to solicit from its stockholders proxies in favor of the adoption of this Agreement and to take all other action necessary or advisable to secure the vote or consent of its stockholders required by the rules of Nasdaq or applicable Laws to obtain such approvals.

(d) As promptly as reasonably practicable following the clearance of the Joint Proxy Statement/Prospectus by the SEC, Parent shall take all action necessary in accordance with applicable Laws and Parent’s Governing Documents to duly give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the Parent Stockholder Approval (the “Parent Stockholders Meeting”) and not postpone or adjourn the Parent Stockholders’ Meeting except to the extent required by applicable Law or to solicit additional proxies and votes in favor of adoption of this Agreement if sufficient votes to constitute the Parent Stockholder Approval have not been obtained; provided, that, unless otherwise agreed by the Parties, the Parent Stockholders’ Meeting may not be postponed or adjourned to a date that is more than twenty (20) days after the date for which the Parent Stockholders’ Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law). Parent will, except in the case of an Adverse Recommendation Change, through the Parent Board of Directors, recommend that its stockholders approve the Share Issuance, the Delaware Conversion and the Parent A&R Charter and will use reasonable best efforts to solicit from its stockholders proxies in favor of the Share Issuance, the Delaware Conversion and the Parent A&R Charter and to take all other action necessary or advisable to secure the vote or consent of its stockholders required by the rules of Nasdaq or applicable Laws to obtain such approvals.

(e) The Company and Parent will use their respective reasonable best efforts to hold the Company Stockholders’ Meeting and the Parent Stockholders’ Meeting on the same date and at the same time.

Section 5.5 Regulatory Approvals; Efforts; Third-Party Consents.

(a) Prior to the Closing, the Parties shall use their respective reasonable best efforts to promptly take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under this Agreement and any applicable Laws, including the HSR Act and Gaming Laws, to consummate and make effective, as promptly as practicable after the date hereof, the Merger, including (i) the preparation and filing of all applications, forms, registrations, petitions, notices and other documents required to be filed to consummate the Merger, including prompt filing of a Notification and Report Form pursuant to the HSR Act, (ii) the preparation of any financial or non-financial information required by any Gaming Authority or Governmental Entity pursuant to any Antitrust Law or Gaming Law, in each case in connection with the transactions contemplated by this Agreement, (iii) the satisfaction of the conditions to consummating the Merger, (iv) the defending of any Actions, whether judicial or administrative, challenging this Agreement or the consummation of the transactions

 

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contemplated by this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, (v) the taking of all actions necessary to obtain (and cooperating with each other in obtaining) as promptly as practicable any consent, authorization, Order or approval of, or any exemption by, or to avoid any Action or other challenge of the legality of the transactions contemplated by this Agreement by, any Governmental Entity (which actions shall include furnishing all information and documentary material required by any Gaming Authority or other Governmental Entity) required to be obtained or made by any of the Parties or their respective Subsidiaries in connection with the Merger or the taking of any action contemplated by this Agreement (collectively, “Approvals”), and (vi) the execution and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of this Agreement. Additionally, each of the Parties and their respective Affiliates shall not take any action after the date of this Agreement with the intent of (i) imposing any delay in the obtaining of, or increasing the risk of not obtaining, the expiration or termination of any applicable waiting period pursuant to the HSR Act, or any other Approval, including Gaming Approvals, necessary to consummate the transactions contemplated hereby, (ii) increasing the risk of any Governmental Entity entering an Order prohibiting the consummation of the transactions contemplated hereby or (iii) increasing the risk of not being able to remove any such Order on appeal or otherwise.

(b) Without liming the generality of Parent’s and the Company’s undertakings pursuant to Section 5.5(a), Parent and its Affiliates shall take any and all steps necessary, and the Company shall reasonably cooperate with Parent and its Affiliates in their efforts, to avoid or eliminate each and every impediment under any Antitrust Law or Gaming Law that may be asserted by any antitrust or competition Governmental Entity or Gaming Authority so as to enable the Parties to close the Merger as promptly as practicable, and in any event prior to the End Date, including proposing, negotiating, committing to and effecting, by consent decree, hold separate orders or otherwise, (i) the sale, divestiture or disposition of its or its Subsidiaries assets, properties or businesses or of the assets, properties or businesses of the Company or its Subsidiaries, (ii) the holding separate of particular assets or placing operating properties in trust upon the Closing pending obtaining control upon subsequent receipt of Approval from applicable Gaming Authority or Governmental Entity pursuant to applicable Antitrust Laws or Gaming Laws and (iii) the entry into such other arrangements, agreements or amendments as are necessary or advisable in order to obtain any required Approvals or the expiration or termination of any applicable waiting period pursuant to the HSR Act and to avoid the entry of, or to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that would restrain, delay or prevent the consummation of the transactions contemplated hereby as soon as possible (and in any event before the End Date).

(c) In furtherance and not in limitation of the provisions of Section 5.5(a), each Party agrees to make promptly but in no event later than fifteen (15) Business Days after the date of this Agreement an appropriate and complete filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement and to supply as promptly as practicable to the appropriate Governmental Entities any additional information and documentary material that may be requested pursuant to the HSR Act. None of the Parties shall extend any waiting period under the HSR Act without, or enter into any agreement with the Federal Trade Commission or the U.S. Department of Justice or any other Governmental Entity that would restrain, delay or prevent the consummation of the transactions contemplated by this Agreement except with, the prior written consent of the other Parties (which shall not be unreasonably withheld, conditioned or delayed).

 

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(d) Parent and the Company shall each keep the other apprised of the status of matters relating to the completion of the Merger and work cooperatively in connection with obtaining all required Approvals undertaken pursuant to the provisions of this Section 5.5. In that regard, prior to the Closing, each Party shall promptly consult with the other Parties with respect to, and provide any necessary information with respect to (and, in the case of correspondence, provide the other Parties (or their counsel) copies of), all filings made by such Party with any Governmental Entity or any other information supplied by such Party to, or correspondence with, a Governmental Entity in connection with this Agreement or the Merger. Each Party shall promptly inform the other Parties, and if in writing, furnish the other Parties with copies of (or, in the case of oral communications, advise the other Parties orally of) any material communication from any Governmental Entity or third party regarding the Merger or any proposed agreement or arrangement with any Governmental Entity or third party in connection with the Merger, and permit the other Parties to review and discuss in advance, and consider in good faith the views of the other Parties in connection with, any proposed communication, or proposed agreement or arrangement, with any such Governmental Entity or third party. None of the Parties shall initiate, and to the extent reasonably practicable participate in, any meeting or teleconference with any Governmental Entity in connection with this Agreement or the Merger unless it consults with the other Parties in advance and, to the extent permitted by such Governmental Entity and applicable Law, gives the other Parties the opportunity to attend and participate thereat (whether by telephone or in person). Each Party shall furnish the other Parties with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between it and any such Governmental Entity or third party with respect to this Agreement or the Merger and furnish the other Parties with such necessary information and reasonable assistance as any such other Party may reasonably request in connection with its preparation of necessary filings or submissions of information to any such Governmental Entity; provided, however, that materials provided pursuant to this Section 5.5 may be redacted (i) to remove references concerning the valuation of the Company, the Merger or other confidential information (including personal financial and other confidential personal information), (ii) as necessary to comply with contractual arrangements or applicable Laws and (iii) as necessary to address reasonable privilege concerns, and the Parties may reasonably designate any competitively sensitive or any confidential business material provided to the other under this Section 5.5(d) as “counsel only” or, as appropriate, as “outside counsel only.”

(e) In furtherance and not in limitation of the provisions of Section 5.5(b), Parent and Merger Sub agree to, and agree to cause their Affiliates and their respective directors, officers, partners, managers, members, principals and stockholders to, and the Company agrees to, prepare and submit to the Gaming Authorities as promptly as practicable, and in any event no later than forty-five (45) days from the date of this Agreement, all initial applications and supporting documents necessary to obtain all Requisite Gaming Approvals.

 

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(f) Notwithstanding anything herein to the contrary, Parent shall determine the strategy to be pursued for obtaining and lead any efforts to obtain all required Approvals; provided, that Parent shall, in good faith, take into consideration the Company’s views, suggestions and comments regarding such strategy and efforts.

(g) Parent shall, and shall cause its Affiliates to, use their respective reasonable best efforts to obtain, and Company shall use its reasonable best efforts to cooperate with Parent and its Affiliates in their efforts to obtain, any third-party consents or approvals (other than the Approvals) (collectively, “Third-Party Consents”) that are necessary or desirable for consummation of the transactions contemplated by this Agreement; provided, however, that notwithstanding anything to the contrary in this Agreement, (i) the Company and its Subsidiaries shall not be obligated to obtain any Third-Party Consents, or pay any fees in connection therewith, pursuant to this Agreement and (ii) the conditions to the obligations of Parent and Merger Sub to consummate the Merger set forth in Section 6.3 shall not be deemed to include the obtaining of any Third-Party Consents.

Section 5.6 Takeover Laws and Provisions. If any Takeover Laws or Takeover Provisions may become, or may purport to be, applicable to the Merger or any other transactions contemplated hereby, each of the Parties shall grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby.

Section 5.7 Publicity. Parent and the Company agree to issue a mutually acceptable initial joint press release announcing this Agreement. None of the Parties shall issue or cause the publication of, and each of them shall cause their Affiliates and Representatives not to issue or publish, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of Parent and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), except (a) as may be required by applicable Law or stock exchange rules (upon the advice of counsel), (b) in connection with an Adverse Recommendation Change or (c) for any disclosures made in compliance with Section 5.3; provided, that in the case of clauses (a), (b) and (c), Parent or the Company, as applicable, shall use its reasonable best efforts to provide the other Party a reasonable opportunity to comment on such press release or public announcement in advance of such issuance or publication; provided, further, that, for purposes of clarity and the avoidance of doubt, no Party shall be required to obtain consent pursuant to this Section 5.7 to the extent any communication (including any internal announcement to employees) is not inconsistent in any material respect with information that has been previously been made public in compliance with the obligations set forth in this Section 5.7.

Section 5.8 Indemnification and Insurance.

(a) Parent and Merger Sub agree that all rights to exculpation, indemnification and advancement of expenses for acts or omissions occurring at or prior to the Effective Time (including any matters arising in connection with the transactions contemplated hereby), whether asserted or claimed prior to, at or after the Effective Time, now existing in favor of the current or former directors, officers or employees, as the case may be, of the Company or any of its Subsidiaries as provided in their respective Governing Documents or in any Contract shall survive the Merger and shall continue in full force and effect. For a period of six (6) years from

 

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the Effective Time, Parent and the Surviving Corporation shall maintain in effect (to the fullest extent permitted under applicable Law) any and all exculpation, indemnification and advancement of expenses provisions of the Company’s and any of its Subsidiaries’ Governing Documents in effect immediately prior to the Effective Time (to the extent and for so long as such entities remain in existence following the Effective Time) or in any Contracts of the Company or its Subsidiaries with any of their respective current or former directors, officers or employees in effect immediately prior to the Effective Time, and shall not amend, repeal or otherwise modify any such provisions or the exculpation, indemnification or advancement of expenses provisions of the applicable Party’s Governing Documents in any manner that would adversely affect the rights thereunder of any individuals who immediately before the Effective Time were current or former directors, officers or employees of the Company or any of its Subsidiaries; provided, however, that all rights to indemnification and exculpation in respect of any Action pending or asserted within such period shall continue until the disposition or resolution of such Action.

(b) The Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, to the fullest extent permitted under applicable Law, indemnify and hold harmless (and advance funds in respect of each of the foregoing) each current and former director, officer or employee of the Company or any of its Subsidiaries and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of the Company or any of its Subsidiaries (each, together with such Person’s heirs, executors or administrators, an “Indemnified Party”), in each case, against any costs or expenses (including advancing attorneys’ fees and expenses in advance of the final disposition of any claim, suit, proceeding, arbitration or investigation to each Indemnified Party to the fullest extent permitted by applicable Law; provided, however, that the Indemnified Party to whom expenses are advanced provides an undertaking consistent with the Governing Documents of the Company and applicable Law to repay such amounts if it is ultimately determined that such person is not entitled to indemnification), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (an “Action”), arising out of, relating to or in connection with any action or omission by them in their capacities as such occurring or alleged to have occurred whether commenced before or after the Effective Time (including any matters arising in connection with the transactions contemplated hereby and including acts or omissions in connection with such Indemnified Party serving as an officer, director, employee or other fiduciary of any entity if such service was at the request or for the benefit of the Company). In the event of any such Action, the Surviving Corporation shall cooperate with the Indemnified Party in the defense of any such Action.

(c) For a period of six (6) years from the Effective Time, Parent shall cause to be maintained in effect the coverage provided by the policies of directors’ and officers’ liability insurance and fiduciary liability insurance in effect as of the date hereof by the Company and its Subsidiaries or provide substitute policies for the Company and its current and former directors and officers who are currently covered by the directors’ and officers’ liability insurance and fiduciary liability insurance coverage in effect as of the date hereof by the Company and its Subsidiaries, in either case, of not less than the existing coverage and with other terms not less

 

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favorable to the insured persons than the directors’ and officers’ liability insurance and fiduciary liability insurance coverage with respect to matters existing or arising on or before the Effective Time, including the transactions contemplated hereby; provided, however, that Parent shall not be required to pay annual premiums in excess of 300% of the last annual premium paid by the Company prior to the date hereof in respect of the coverages (the “Maximum Amount”) required to be obtained pursuant hereto, but in such case shall be obligated to obtain a policy with the greatest coverage possible that does not exceed 300% of the last annual premium paid by the Company prior to the date hereof. Prior to the Effective Time, the Company shall, or if the Company is unable to, shall cause the Surviving Corporation as of the Effective Time to, purchase a “tail policy” with respect to acts or omissions occurring or alleged to have occurred prior to the Effective Time that were committed or alleged to have been committed by such Indemnified Parties in their capacity as such; provided, that in no event shall the cost of such policy, if purchased by the Company, exceed the Maximum Amount and, if such a “tail policy” is purchased, Parent shall have no further obligations under this Section 5.8(c).

(d) Parent shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified Party in enforcing the indemnity and other obligations provided in this Section 5.8.

(e) The rights of each Indemnified Party shall be in addition to, and not in limitation of, any other applicable rights such Indemnified Party may have under the Governing Documents of the Company or any of its Subsidiaries or the Surviving Corporation, any other indemnification arrangement, the DGCL, the NRS or otherwise.

(f) The obligations of Parent and the Surviving Corporation under this Section 5.8 shall not be terminated, amended or modified in any manner so as to adversely affect any Indemnified Party (including its successors, heirs and legal representatives) to whom this Section 5.8 applies without the consent of such Indemnified Party. It is expressly agreed that, notwithstanding any other provision of this Agreement that may be to the contrary, (i) the Indemnified Parties to whom this Section 5.8 applies shall be third-party beneficiaries of this Section 5.8 and (ii) this Section 5.8 shall survive consummation of the Merger and shall be enforceable by such Indemnified Parties and their respective successors, heirs and legal representatives against Parent and the Surviving Corporation and their respective successors and assigns.

(g) In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then and in each such case, the Surviving Corporation shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation assume the obligations set forth in this Section 5.8.

Section 5.9 Control of Operations. Without in any way limiting any Party’s rights or obligations under this Agreement, the Parties understand and agree that (a) nothing contained in this Agreement shall give Parent or the Company, directly or indirectly, the right to control or direct the other Party’s operations prior to the Effective Time and (b) prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.

 

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Section 5.10 Section 16 Matters. Prior to the Effective Time, Parent and the Company shall take all such steps as may be required to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of shares of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the Merger by each individual who is as of immediately prior to the Effective Time subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company or who will immediately after the Effective Time become subject to such reporting requirements with respect to Parent, in each case, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Section 5.11 Transaction Litigation. Each of Parent and the Company shall provide one another with the opportunity to participate in, at such other Party’s sole expense, such Party’s defense or settlement of any stockholder Action against such Party or any of its directors or officers relating to the transactions contemplated by this Agreement, including the Merger. Each of Parent and the Company agrees that it shall not settle or offer to settle any such Action commenced prior to or after the date of this Agreement that contemplates any equitable relief or that would reasonably be expected to prevent, impede or materially delay the consummation of the transactions contemplated by this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed.

Section 5.12 Nasdaq Listing. Parent shall cause the shares of Parent Common Stock to be issued in the Merger and shares of Parent Common Stock to be reserved for issuance upon settlement or exercise of equity awards in respect of Parent Common Stock to be approved for listing on Nasdaq, subject to official notice of issuance, prior to the Closing Date.

Section 5.13 Company Indebtedness; Restructuring Transaction.

(a) If requested by Parent, the Company shall use commercially reasonable efforts to cause to be delivered to Parent and Merger Sub no later than three (3) Business Days prior to the Closing Date customary payoff letters with respect to the Company Credit Agreements (each, a “Payoff Letter”), from the Persons to whom such indebtedness is owed (or the applicable agent or trustee on their behalf), which Payoff Letter together with any related release documentation shall, among other things, include the payoff amount with respect to the applicable Company Credit Agreement and provide that Liens (and guarantees), if any, granted in connection therewith relating to the assets, rights and properties of the Company and its Subsidiaries securing such indebtedness, shall, upon the payment of the amount set forth in the Payoff Letter on or prior to the Closing Date, be released and terminated (the “Company Credit Agreements Payoff”); provided, that (i) in no event shall this Section 5.13(a) (A) require the Company or any of its Subsidiaries to cause or permit the Company Credit Agreements Payoff to occur unless the Closing has occurred or (B) require the Company or any of its Subsidiaries to incur any expense required to effect the Company Credit Agreements Payoff prior to the Closing that is not advanced or substantially simultaneously reimbursed by Parent, and (ii) at the Closing, Parent or its designee (which may be the Company) shall deposit with the appropriate agent under the Company Credit Agreements the funds sufficient to actually effect the Company Credit Agreements Payoff.

 

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(b) Prior to or on the Closing Date, if requested by Parent, the Company shall use its commercially reasonable efforts to cooperate with Parent to take such actions as are necessary to effect the redemption on the Closing Date and, if requested by Parent, the satisfaction and discharge (the “Discharge”) on the Closing Date, of all of the 5.250% Senior Notes due 2025 issued under the Company 2025 Note Indenture (the “Company 2025 Notes”) in accordance with the terms of the Indenture, dated as of October 16, 2017, as amended by the Supplemental Indenture, dated as of December 22, 2017, by and among Caesars Resort Collection, LLC, each of the subsidiary guarantors party thereto, CRC Finco, Inc. and Deutsche Bank Trust Company Americas, as trustee, governing the Company 2025 Notes (as amended, the “Company 2025 Note Indenture”), including, at Parent’s reasonable written request, issuing a notice of redemption with respect to the Company 2025 Notes pursuant to the requisite provisions of the Company 2025 Note Indenture; provided, that nothing in this Section 5.13(b) shall require the Company or any Subsidiaries of the Company (i) to issue any notice of redemption prior to the Closing unless it is (and is permitted by the Company 2025 Note Indenture to be) subject to and conditioned upon the occurrence of the Closing or (ii) prior to the Closing, pay or deposit any amounts required to redeem or Discharge the Company 2025 Notes unless Parent has previously provided to the Company, or made arrangements satisfactory to the Company for deposit with the trustee under the Company 2025 Note Indenture, in each case, all funds required by the Company 2025 Note Indenture by the time required by the Company 2025 Note Indenture in order to complete such redemption or Discharge, including pursuant to a deposit by the Company or its Subsidiaries of all or a portion of such amounts on or following the Closing.

(c) With respect to the Convertible Notes:

(i) The Company shall use reasonable best efforts to commence a consent solicitation with respect to the Convertible Notes (the “Consent Solicitation”) for the purpose of obtaining consents from the holders of a majority in aggregate principal amount of the outstanding Convertible Notes (the “Requisite Consents”) to effect the amendments summarized in Section 5.13(c) of the Company Disclosure Schedule (collectively, the “Convertible Notes Indenture Amendments”). The terms and conditions of the Consent Solicitation, including the timing, amount of any applicable consent fee and structure, shall be in the sole discretion of the Company. The Company shall keep Parent reasonably informed of the status of the Consent Solicitation.

(ii) With respect to the Consent Solicitation:

(A) The Company shall use reasonable best efforts to prepare all proposed forms of documentation necessary and appropriate in connection with the Consent Solicitation, including the consent solicitation statement, and to the extent necessary, related letters of transmittal and other related documents (collectively, the “Consent Solicitation Documents”). The Company shall provide Parent with copies of the Consent Solicitation Documents. If at any time prior to the completion of the Consent Solicitation, any information should be discovered by the Company or Parent necessary

 

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to ensure that the Consent Solicitation Documents do not contain any untrue statement of a material fact or omit to state any material fact required to be stated or incorporated by reference therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other party, and the Company shall use reasonable best efforts to cause an appropriate amendment or supplement describing such information to be disseminated to the holders of the Convertible Notes or to otherwise disseminate such information to the holders of the Convertible Notes.

(B) The Company shall use reasonable best efforts to execute a customary solicitation agent agreement with one or more financial institutions reasonably acceptable to the Company (it being understood and agreed that the financial institutions that have delivered the Debt Financing Commitment shall be reasonably acceptable to the Company ), retaining such financial institution(s) as the solicitation agent(s) in connection with the Consent Solicitation, and shall use its commercially reasonable efforts to assist the solicitation agent(s) in obtaining a list of beneficial holders of the Convertible Notes (or The Depository Trust Company participants holding Convertible Notes on behalf of such beneficial holders), customary legal opinions as may be reasonably requested by the solicitation agent(s) and any other customary documents reasonably required by the solicitation agent(s) in connection with the Consent Solicitation.

(C) Promptly following the expiration of the Consent Solicitation, assuming the Requisite Consents have been properly delivered (and not revoked), the Company shall use reasonable best efforts to execute, and request that the trustee under the Convertible Notes Indenture execute, a supplemental indenture effecting the Convertible Notes Indenture Amendments (the “Convertible Notes Supplemental Indenture”) and shall provide all documents required in connection therewith to such trustee; provided, that notwithstanding the fact that the Convertible Notes Supplemental Indenture may become effective earlier, the proposed amendments set forth therein shall not be required to become operative, and the Company shall not be required to pay any consent fee or other related fees and expenses of the Consent Solicitation unless and until the Effective Time has occurred and all other conditions of the Consent Solicitation have been satisfied or waived.

(iii) The Company shall pay any consent fee for the Consent Solicitation and all fees and expenses of any solicitation agent, information agent, depositary or other Person retained in connection with the Consent Solicitation; provided that the Company shall not be required to pay any consent fee or other related fees and expenses of the Consent Solicitation unless and until the Effective Time has occurred and all other conditions of the Consent Solicitation have been satisfied or waived.

(iv) If requested by the Company, Parent shall use reasonable best efforts to cooperate and consult with the Company with respect to such alternative transactions as may be identified by the Company to be taken in lieu of, or in addition to, the Consent Solicitation in order to otherwise achieve the effects of the Consent Solicitation with respect to the Specified Convertible Notes Indenture Amendments (as defined in Section 5.13(c) of the Company Disclosure Schedule) or to replace the Consent Solicitation (any such transaction so effected with the mutual agreement of the Company and Parent and the applicable Lenders, an “Alternative Notes Transaction”).

 

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(v) In the event that the Effective Time has not occurred prior to the first date on which the Convertible Notes may be mandatorily converted by the Company pursuant to Section 10.13 of the Convertible Notes Indenture (the “Mandatory Conversion Trigger Date”) and on the Mandatory Conversion Trigger Date Convertible Notes remain outstanding, the Company shall take all steps necessary and permitted pursuant to the terms of the Convertible Notes Indenture to cause all of the Convertible Notes then outstanding to be converted pursuant to, and in compliance with, such Section 10.13 as soon as possible in accordance with the Convertible Notes Indenture following the Mandatory Conversion Trigger Date.

(d) Notwithstanding anything to the contrary in this Agreement, Parent shall promptly, upon request by the Company, reimburse the Company for all out-of-pocket fees, costs and expenses (including reasonable attorneys’ fees) incurred by the Company in connection with this Section 5.13 (other fees, costs and expenses incurred in connection with Section 5.13(c)) and shall indemnify and hold harmless the Company, its Subsidiaries and their respective Representatives from and against any and all losses, damages, claims, costs or expenses suffered or incurred by any of them in connection with any redemption or Discharge of the Company 2025 Note Indenture (or failure to redeem or Discharge, as the case may be) requested by Parent hereunder and any information used in connection therewith, except to the extent arising from or based upon any information provided by the Company or any of its Subsidiaries or Representatives specifically for use in connection with the redemption or Discharge. Parent shall provide forms reasonably satisfactory to the Company of any documentation required to effect any action pursuant to this Section 5.13 (other than documentation for any Consent Solicitation pursuant to Section 5.13(c)).

(e) To the extent Parent elects to cause the amounts outstanding under the Company Credit Agreements and Company 2025 Notes to be repaid, redeemed or satisfied and discharged, Parent shall cause (i) the Company Credit Agreements Payoff to occur on the Closing Date and (ii) the redemption and Discharge of all of the Company 2025 Notes on the Closing Date or the satisfaction and discharge of the Company 2025 Note Indenture on the Closing Date.

(f) On or prior to the Closing Date, the Company shall:

(i) cause all of the outstanding equity interests of CEOC LLC to be contributed (via merger or direct contribution) to Caesars Resort Collection, LLC;

(ii) at the request of Parent, form new wholly owned subsidiaries, contribute the real property, buildings and other improvements subject to the Real Estate Purchase Agreements to such subsidiaries and take such other reasonable actions to facilitate the transactions required pursuant to the Real Estate Purchase Agreements and the Master Transaction Agreement; and

 

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(iii) at the request of Parent, cause the Internal Restructuring (as defined in the Master Transaction Agreement) to occur.

Section 5.14 Notification of Certain Matters. Each of the Parties shall promptly notify the other Parties of any fact, event or circumstance known to it that (a) has had or is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to have a Material Adverse Effect on the Company or Parent, as applicable, or (b) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein; provided, that any failure to give notice in accordance with the foregoing with respect to any change or event shall not be deemed to constitute a violation of this Section 5.14 or the failure of any condition set forth in Section 6.2 or Section 6.3 to be satisfied, or otherwise constitute a breach of this Agreement by the Party failing to give such notice, in each case unless the underlying change or event would independently result in a failure of the conditions set forth in Section 6.2 or Section 6.3 to be satisfied.

Section 5.15 Employee Matters.

(a) Unless Parent provides written notice to the Company no later than three (3) Business Days prior to the Effective Time, the Company, shall one (1) Business Day prior to the Effective Time, adopt resolutions terminating any Benefit Arrangement intended to qualify as a qualified cash or deferred arrangement under Section 401(k) of the Code, effective no later than the day immediately preceding the date the Company and Parent become members of the same controlled group of corporations (as defined in Section 414(b) of the Code). The form and substance of such resolutions shall be subject to the reasonable approval of Parent, and the Company shall provide evidence that such resolutions have been adopted by the Company and/or its Subsidiaries, as applicable.

(b) Except where applicable Law or the provisions of a Labor Contract in effect as of the date hereof (or entered into or modified following the date hereof in compliance with Section 5.1) require more favorable treatment, from the Effective Time and continuing for twelve (12) months following the Effective Time, Parent shall, or shall cause its Subsidiaries (including the Company or any of its Subsidiaries) to, provide each current employee of the Company or any of its Subsidiaries (the “Company Employees”), to the extent such employee remains employed by Parent or its Subsidiaries (including the Company or any of its Subsidiaries), (i) no less than the annual base salary or wage rate and cash bonus opportunities (excluding retention or stay opportunities) that in each case were provided to such employee immediately prior to the Effective Time and (ii) other employee benefits (excluding equity-based or equity-linked compensation or benefits, and excluding any defined benefit pension or retiree medical benefits except as required by applicable Law or the provisions of a Labor Contract (or entered into or modified following the date hereof in compliance with Section 5.1) that are substantially comparable in the aggregate to those provided to such employee as of immediately prior to the Effective Time. Without limiting the foregoing, from the Effective Time and continuing for a period of at least twelve (12) months following the Effective Time, Parent agrees to provide or cause its Subsidiaries (including the Company and its Subsidiaries) to provide to each Company Employee severance payments and benefits that are no less favorable than the severance payments and benefits for which such Company Employee was eligible immediately prior to the Effective Time; provided, that such severance payments and benefits are

 

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either (1) Previously Disclosed as of the date hereof (or entered into or modified following the date hereof in compliance with Section 5.1), or (2) set forth on Section 5.15 of the Company Disclosure Schedule, and, in each case, only to the extent the terms of such payments and benefits have not been modified following the date hereof (except for modifications that are expressly permitted by the terms of this Agreement).

(c) With respect to employee benefit plans, programs, policies and arrangements that are established or maintained by Parent or its Subsidiaries (including the Company and its Subsidiaries) from and after the Effective Time (the “Parent Benefit Plans”), to the extent applicable (i) Company Employees (and their eligible dependents) shall be given credit for their service with the Company and its Subsidiaries for all purposes, including eligibility to participate, vesting and benefit accrual (but not benefit accrual under a defined benefit pension plan), to the same extent such service was taken into account by the Company and its Subsidiaries under a corresponding Benefit Arrangement of the Company or its Subsidiaries immediately prior to the Effective Time, (ii) any waiting periods, evidence of insurability requirements, or the application of any pre-existing condition limitations shall be waived for Company Employees (and their eligible dependents) as of the Effective Time (provided that in the case of any insured arrangement, subject to applicable Law, such waivers shall be subject to the consent of the applicable insurer and Parent shall use commercially reasonable efforts to obtain such consent) and (iii) all Company Employees (and their eligible dependents) shall be given credit for amounts paid under a corresponding Benefit Arrangement of the Company or its Subsidiaries during the same period for purposes of applying deductibles, copayments and out of pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the applicable Parent Benefit Plans (provided that in the case of any insured arrangement such credit shall be subject to the consent of the applicable insurer and Parent shall use commercially reasonable efforts to obtain such consent). Notwithstanding the foregoing provisions of this Section 5.15(c), service and other amounts shall not be credited to Company Employees (or their eligible dependents) to the extent the crediting of such service or other amounts would result in the duplication of benefits.

(d) As of the Effective Time, the Company and/or its applicable Subsidiaries shall continue as a party to, as required and by operation of Law (and, to the extent required by an applicable agreement or arrangement or applicable Law, Parent shall cause the Company and/or its applicable Subsidiaries to assume and agree to perform in accordance with their terms), all employment, consulting, severance, bonus, retention, change in control, incentive and other compensation agreements and arrangements and Labor Contracts existing as of the Effective Time between the Company or any of its Subsidiaries and any director, officer or employee thereof or covering Company Employees (or former employees of the Company or any of its Subsidiaries (“Former Company Employees”)) or in which Company Employees (or Former Company Employees) are eligible to participate; provided that each such agreement or arrangement is Previously Disclosed or is entered into or modified after the date hereof and prior to the Effective Time by the Company or any of its Subsidiaries in compliance with Section 5.1.

(e) The Company (including the Compensation Committee of the Company Board of Directors and all relevant Company human resources personnel) shall consult with Parent prior to establishing or announcing any incentive arrangements (including any annual bonus arrangements) for any employees or other service providers of the Company or any of its

 

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Subsidiaries covering any performance period that begins after the date of this Agreement, including with respect to the establishing of any performance metrics, goals, targets or payout levels, and including with respect to design parameters generally. The Company (including the Compensation Committee of the Company Board of Directors and all relevant Company human resources personnel) shall consult with Parent prior to paying or announcing any incentive amounts (including pursuant to any annual bonus arrangements) following the date of this Agreement to any employees or other services providers of the Company or any of its Subsidiaries.

(f) The Parties shall, and shall cause their respective Affiliates to, reasonably cooperate and use their respective reasonable best efforts to comply promptly with all applicable Laws that may be imposed on them or any of their Affiliates with respect to carrying out any and all required or necessary communications, including information, notice and consultation, and effects and decisional bargaining, and any action required to facilitate any required assumption of Labor Contracts, with Employees or any labor or trade union, labor organization, works council, staff association, worker representative or any other employee representative body.

(g) Nothing contained in this Agreement (including this Section 5.15), express or implied (i) shall be construed to establish, amend, or modify any employee benefit plan, program, agreement or arrangement, (ii) shall alter or limit the ability of Parent, the Company or any of their respective Affiliates to amend, modify or terminate any employee benefit or employment plan, program, agreement, or arrangement after the Effective Time, (iii) is intended to confer or shall confer upon any current or former employee any right to employment or continue employment, or constitute or create an employment agreement with any employee, or (iv) is intended to confer or shall confer upon any individual or any legal representative of any individual (including employee, retirees, or dependents or benefits of employees or retirees) any right as a third-party beneficiary of this Agreement.

Section 5.16 Financing Cooperation; Financing.

(a) The Company shall, and shall cause its Subsidiaries to, and shall use reasonable best efforts to cause its and their respective Representatives to, at Parent’s sole expense, provide to Parent such cooperation as is reasonably requested by Parent in connection with arranging, obtaining or syndicating any Financing or Related Financing and consummating the transactions contemplated by the Real Estate Purchase Agreements and the Master Transaction Agreement; provided, that such requested cooperation pursuant to Section 5.13 and this Section 5.16(a) (i) does not conflict with or violate applicable Law or the Governing Documents of the Company or any of its Subsidiaries, (ii) does not unreasonably interfere with the business or operations of the Company and its Subsidiaries, (iii) is not required to the extent that it would cause any condition to the Closing set forth in Article VI to not be satisfied or cause any representation or warranty in this Agreement to be breached, (iv) does not cause the Company or any of its Subsidiaries to violate any obligation of confidentiality or any other Contract binding on the Company or any of its Subsidiaries, (v) does not require the Company or any of its Subsidiaries to pay or incur any commitment or other similar fee or incur or assume any liability or obligation in connection with the Financing or Related Financing or any actions taken pursuant to Section 5.13 prior to the Closing that is not advanced or substantially simultaneously reimbursed by Parent, (vi) does not cause, and would not reasonably be expected

 

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to cause, any director, officer or employee of the Company or any of its Subsidiaries or any Representatives to incur any personal liability, (vii) except as described in clause (K) below, does not require the directors of the Company or any of its Subsidiaries to authorize or adopt any resolutions approving the agreements, documents, instruments, actions or transactions contemplated in connection with (A) the Financing, in each case that is not contingent upon the Closing or would take effect prior to the Effective Time or (B) the Related Financing, (viii) except as described in clause (K) below, does not require that the Company or any of its Subsidiaries or their respective directors, officers or employees execute, deliver or enter into or perform any Contract in connection with (A) the Financing that would be effective prior to the Closing (other than customary authorization or representation letters or auditor engagement letters for purposes of effecting the cooperation envisioned hereunder) or (B) the Related Financing, (ix) does not require the Company to (x) prepare or provide Excluded Information, (y) without limiting the scope of its obligations pursuant to clauses (C) and (D) below or the definition of “Financing Information,” prepare or provide pro forma financial statements or (z) change any fiscal period, (x) does not require the Company or its Subsidiaries (or use any efforts to cause its counsel to) deliver any opinions or reliance letters, including, in connection with the transactions contemplated hereby under any existing debt agreements of the Company or its Subsidiaries (except as set forth in Section 5.13(c)), or to provide access to or disclose information that would jeopardize any attorney-client privilege of the Company or any of its Subsidiaries, or (xi) does not require the Company or its Subsidiaries to file or furnish any reports or information with the SEC in connection with the Financing or the Related Financing, except, after consultation between the Parent and the Company and their respective Representatives, the furnishing on Current Reports on Form 8-K by the Company of information to be included in documents or marketing materials with respect to the Financing or Related Financing to the extent required in order to satisfy the Company’s Regulation FD disclosure obligations, which cooperation may include using reasonable best efforts to (A) cause the individuals set forth in Section 5.16 of the Company Disclosure Schedule to be available, during normal business hours and upon reasonable advance notice, to participate in a reasonable number of meetings, presentations, road shows, due diligence sessions and sessions with rating agencies in connection with the Financing or the Related Financing; (B) assist with the preparation of customary materials relating to the Company and its Subsidiaries for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents customarily required in connection with the Financing or the Related Financing, in each case, as may be reasonably requested by Parent; (C) as promptly as reasonably practicable upon the reasonable request by Parent, furnish Parent and its Financing Sources with financial and other pertinent information regarding the Company and its Subsidiaries that is customarily required to prepare any offering memorandum, registration statement, prospectus, confidential information memorandum, lender presentation and other materials, in each case, customarily required in connection with the Financing or Related Financing (including the Financing Information); (D) as promptly as reasonably practicable upon the reasonable request by Parent, furnish Parent with customary financial and other information as may be reasonably necessary for Parent or the Real Estate Financing Sources to prepare a customary pro forma consolidated balance sheet and related pro forma consolidated statements of income (including, without limitation, any property level financials required to prepare pro forma financials as a result of asset sales and the Sale Leaseback Transactions) of Parent and its Subsidiaries giving effect to the Merger and to any sale, divestiture, lease, sublease, license,

 

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sublicense or other disposition of any assets, properties or businesses of the Company or its Subsidiaries that is consummated, or with respect to which a definitive agreement is entered into, during the period beginning on the date of this Agreement and ending substantially currently with the Closing, in each case of the foregoing in this clause (D), that would be required pursuant to the requirements of Regulation S-X under the Securities Act, and assisting Parent with Parent’s preparation of such pro forma financial statements (it being understood that, notwithstanding anything to the contrary set forth herein, the Company shall have no obligation to prepare any pro forma financial statements or projections, each of which Parent shall be solely responsible for), (E) promptly (but in any event no later than four (4) Business Days prior to the Closing Date) furnish to the Financing Sources all customary information regarding the Company and its Subsidiaries that is reasonably requested by the Financing Sources and is required in connection with, and in accordance with the terms of, the Debt Financing by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, and a certification regarding beneficial ownership as required by 31 C.F.R. §1010.230 to any Financing Source that has requested such certification, relating to the Company or any of its Subsidiaries, in each case to the extent requested by Parent in writing at least ten (10) Business Days prior to the Closing; (F) use reasonable best efforts to obtain appraisals, surveys, title insurance, landlord waivers and estoppels, non-disturbance agreements, environmental assessments and other documentation and items relating to any Financing or Related Financing as reasonably requested by Parent, and, if requested by Parent, to cooperate with and assist Parent in obtaining such documentation and items; (G) provide customary authorization letters authorizing the distribution of information to prospective lenders regarding the Company, subject to customary terms and conditions; (H) direct the Company’s independent registered accountants to provide customary comfort letters (including “negative assurance” and change period comfort) with respect to the historical financial information regarding the Company and its Subsidiaries referenced in clause (C) and that is included in an offering memorandum or prospectus for a securities offering comprising part of the Debt Financing to the extent such financial information is customarily subject to a comfort letter (including to provide any necessary management representation letters); (I) update any Financing Information as may be necessary for such Financing Information to remain Compliant; (J) upon the reasonable request of Parent, facilitate the execution and delivery by the Company or its Subsidiaries of the documents related to any Financing or Related Financing to which they are to be a party following the Closing, including obtaining title insurance and reasonably facilitating the provision of guarantee and pledging of collateral by executing and delivering definitive financing documents, including pledge and security documents, customary certificates and other documents (including original stock certificates) (provided that (A) none of the documents or certificates shall be executed and/or delivered except in connection with and for the Closing and (B) such actions and documents thereof shall become effective and operative only after or concurrently with, the occurrence of the Closing); (K) reasonably cooperate with Parent, and use commercially reasonable efforts to assist Parent in taking, actions necessary to satisfy Parent’s obligations under the Master Transaction Agreement and the transactions and agreements contemplated thereby (including the Real Estate Purchase Agreement) prior to the Closing; and (L) ensure that any syndication efforts in connection with the Debt Financing benefit from the Company’s existing lending and investment banking relationships. The Company and its Subsidiaries hereby consent to the use of their logos in connection with the Debt Financing; provided, that such names, marks, and logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage the Company, any of its Subsidiaries or the reputation or goodwill of the Company of any of its Subsidiaries.

 

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(b) Parent shall indemnify, defend and hold harmless the Company, its Subsidiaries and their respective Representatives from and against any and all losses suffered or incurred by them in connection with any action taken by them at the request of Parent or Merger Sub or otherwise pursuant to this Section 5.16 or in connection with the arrangement of the Financing or any Related Financing and/or any information provided by the Company, its Subsidiaries or their respective Representatives utilized in connection therewith other than to the extent such losses arise from the bad faith, gross negligence or willful misconduct of the Company or its Subsidiaries, as determined by a final, non-appealable judgment of a court of competent jurisdiction. Nothing contained in this Section 5.16 or otherwise shall require the Company or any of its Subsidiaries to be an issuer or other obligor with respect to any Financing prior to the Closing or any Related Financing. All material nonpublic information regarding the Company and its Subsidiaries provided to any of Parent, Merger Sub or their respective Representatives pursuant to this Section 5.16 shall be kept confidential by them in accordance with the Confidentiality Agreement except for disclosure to potential lenders and investors and their respective Representatives as required in connection with any Financing or Related Financing subject to confidentiality protections customary for such Financing or Related Financing (which shall, in any event, require “click through” or other affirmative action acknowledging such provisions). This Section 5.16(b) shall survive the consummation of the Merger and the Effective Time and any termination of this Agreement, and is intended to benefit, and may be enforced by, the Company and its Subsidiaries (and the Company and its Subsidiaries shall be third-party beneficiaries of Parent’s obligations under this Section 5.16(b)), and their respective successors and assigns, and shall be binding on Parent, Merger Sub and their respective successors and assigns.

(c) Parent shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange, obtain and complete the Debt Financing at or before the Closing on the terms and conditions described in the Debt Financing Commitment (including any “flex” terms contained therein) (as amended, supplemented, modified, replaced, terminated, reduced or waived in accordance with Section 5.16(d)), including using reasonable best efforts to:

(i) comply with, maintain in effect and enforce the Debt Financing Commitment, and, once entered into, the Financing Agreements with respect thereto;

(ii) negotiate Financing Agreements with respect to the Debt Financing on the terms and conditions contained in the Debt Financing Commitment (including any “flex” terms contained therein);

(iii) satisfy on a timely basis all conditions applicable to the Debt Financing in the Debt Financing Commitment and any Financing Agreements with respect thereto;

 

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(iv) enforce its rights under the Debt Financing Commitment and any Financing Agreements with respect thereto; and

(v) consummate the Debt Financing at or prior to the Closing.

(d) Parent shall not agree to or permit any amendment, supplement or other modification or replacement of, or any termination or reduction of, or grant any waiver of, any condition, remedy or other provision under the Debt Financing Commitment without the prior written consent of the Company if such amendment, supplement, modification, replacement, termination, reduction or waiver would or would reasonably be expected to (i) delay or prevent the Closing, (ii) reduce the aggregate net proceeds of the Debt Financing from that contemplated by the Debt Financing Commitment as in effect on the date hereof, (iii) impose new or additional conditions or otherwise expand, amend or modify any of the conditions to the receipt of the Debt Financing, in each case, in a manner that would or would reasonably be expected to delay, prevent, make less likely or otherwise adversely impact the ability of Parent to obtain the Debt Financing at or prior to the Closing, (iv) make the funding of the Debt Financing (or satisfaction of the conditions thereto) less likely to occur at or prior to the Closing, or (v) adversely impact (A) the ability of Parent to consummate the transactions contemplated by this Agreement by the Closing Date or (B) the ability of any of Parent or Merger Sub to enforce its rights against other parties under the Debt Financing Commitment or any Financing Agreements with respect thereto; it being understood that notwithstanding the foregoing Parent may amend the Debt Financing Commitment to add lenders, lead arrangers, bookrunners, syndication agents or similar entities that had not executed the Debt Financing Commitment as of the date of this Agreement and otherwise amend, modify or restate the Debt Financing Commitment in any manner not inconsistent with this sentence. Upon any amendment of the Debt Financing Commitment in accordance with this Section 5.16(d), Parent shall deliver a copy thereof to the Company and (i) references herein to “Debt Financing Commitment” shall include such documents as amended in compliance with this Section 5.16(d) and (ii) references to “Debt Financing” or “Financing” shall include the financing contemplated by the Debt Financing Commitment as amended in compliance with this Section 5.16(d).

(e) Notwithstanding Section 5.16(d), in the event any portion of the Debt Financing becomes or would reasonably be expected to become unavailable on the terms and conditions contemplated in the Debt Financing Commitment, (i) Parent shall promptly notify the Company thereof (and, in any event, within two (2) Business Days) and (ii) Parent shall use its reasonable best efforts to arrange and obtain alternative financing from alternative sources (the “Alternate Financing”) (A) on conditions not less favorable to Parent and Merger Sub than the Debt Financing Commitment, (B) at least equal to the amount of such unavailable or potentially unavailable portion of the Debt Financing Commitment and in an amount sufficient to consummate the Merger on the Closing Date no later than the Closing Date and (C) on terms not materially less beneficial to Parent or Merger Sub. True, complete and correct copies of any new financing commitment letter (including any associated engagement letter and related fee letter (which fee letter may be redacted to remove fee amounts and other economic terms, none of which affect the availability or the net amount of such Debt Financing)) shall be promptly provided to the Company. In the event any Alternate Financing is obtained in accordance with this Section 5.16, any reference in this Agreement to “Debt Financing Commitment” or “Debt Financing” shall include the debt financing contemplated by such Alternate Financing.

 

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(f) Parent shall keep the Company reasonably informed of the status of its efforts to obtain the Financing and provide the Company with copies of any Financing Agreements related thereto upon the execution thereof. Without limiting the generality of the foregoing, Parent shall (i) give the Company prompt written notice of (A) any default, breach or threatened breach in writing by any party of any of the Debt Financing Commitment or Financing Agreements related thereto or related to any other Financing or Related Financing of which any of Parent, Merger Sub or their Representatives or Affiliates become aware or any withdrawal, termination, repudiation or rescission or threatened withdrawal, termination, repudiation or rescission in writing thereof, (B) any dispute or disagreement between or among the parties to any Debt Financing Commitment or Financing Agreements or (C) if at any time, for any reason, Parent believes that it will not be able to obtain all or a portion of the Debt Financing or any other Financing at or prior to the Closing on the terms and conditions, in the manner or from the sources contemplated by the Debt Financing Commitment (or, in the case of any other Financing, the Financing Agreements with respect thereto) and (ii) otherwise keep the Company reasonably informed of the status of its efforts to arrange the Debt Financing (or any Alternate Financing). Parent shall use commercially reasonable efforts to keep the Company reasonably informed of the status of efforts of the Real Estate Financing Sources to obtain the Related Financing and shall give the Company prompt written notice if it becomes aware of any reason that the Real Estate Financing Sources will not be able to obtain all or a portion of the Related Financing.

(g) In the event any Financing is funded in advance of the Closing Date, Parent, or its applicable Subsidiary, shall keep and maintain at all times prior to the Closing Date the proceeds of such Financing available for the purpose of funding the transactions contemplated by this Agreement and such proceeds shall be maintained as unrestricted cash or cash equivalents, free and clear of all Liens; provided, that if the terms of any such Financing requires the proceeds of such Financing to be held in escrow or in a secured proceeds account (or similar arrangement) pending the consummation of the transactions contemplated under this Agreement, then such proceeds shall be held in escrow or in a secured proceeds account, in each case, pursuant to a customary agreement, with applicable Liens in favor of the escrow agent, trustee or other applicable agent for the benefit of the applicable lenders or security holders with customary release provisions for such funds in accordance with the Debt Financing Commitment (as in effect on the date hereof) (or, in the case of any other Financing, the Financing Agreements with respect thereto).

(h) Each of Parent and Merger Sub acknowledges and agrees that obtaining any Debt Financing, any other Financing or any Related Financing is not a condition to the Closing.

Section 5.17 Post-Closing Directors. Parent shall take all such action within its power as may be necessary or appropriate such that immediately following the Effective Time the Parent Board of Directors shall consist of up to eleven (11) directors to be designated by Parent as follows:

(a) so long as Thomas R. Reeg has not Ceased to Serve, (i) five (5) Eligible Members of the Company Board of Directors and (ii) six (6) members of the Parent Board of Directors as of immediately prior to the Effective Time;

 

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(b) if Thomas R. Reeg has Ceased to Serve, (i) six (6) Eligible Members of the Company Board of Directors and (ii) five (5) members of the Parent Board of Directors as of immediately prior to the Effective Time; or

(c) if Thomas R. Reeg and Gary L. Carano have Ceased to Serve, (i) five (5) Eligible Members of the Company Board of Directors and (ii) four (4) members of the Parent Board of Directors as of immediately prior to the Effective Time.

Section 5.18 Delaware Conversion.

(a) To the extent that the Delaware Conversion Approval shall have been obtained and subject to the provisions of this Agreement, promptly following the Closing, Parent shall cause a certificate of conversion (the “Certificate of Conversion”) to be executed, acknowledged and filed with the Secretary of State of the State of Delaware and articles of conversion (the “Articles of Conversion”) to be executed and filed with the Secretary of State of the State of Nevada to effect its conversion from a Nevada corporation to a Delaware corporation in accordance with the relevant provisions of the DGCL and the NRS, as applicable (the “Delaware Conversion”). If the Secretary of State of the State of Delaware or the Secretary of State of the State of Nevada requires any changes in the Certificate of Conversion or Articles of Conversion, respectively, as a condition to filing or issuing a certificate to the effect that the Delaware Conversion is effective, Parent shall execute any necessary document incorporating such changes, provided such changes are not inconsistent with and do not result in any material change in the terms of this Agreement. The Delaware Conversion will become effective at such time as the Certificate of Conversion has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be agreed by the Company and Parent in writing and specified in the Certificate of Conversion in accordance with the DGCL.

(b) At the effective time of the Delaware Conversion: (i) the articles of incorporation of Parent shall be replaced with the certificate of incorporation substantially in the form attached hereto as Exhibit B-1, and, as so replaced, shall be the certificate of incorporation of Parent until thereafter amended in accordance with the terms thereof or as provided by applicable Law; and (ii) the bylaws of Parent shall be replaced with the bylaws substantially in the form attached hereto as Exhibit B-2, and, as so replaced, shall be the bylaws of Parent until thereafter amended in accordance with the terms thereof, the certificate of incorporation of Parent, or as provided by applicable Law.

(c) For United States federal and applicable state and local income tax purposes, it is intended by the parties hereto that the Delaware Conversion qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code and that this Agreement constitute a “plan of reorganization” for purposes of Sections 354, 361 and 368 of the Code within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3.

(d) On the record date fixed to determine the stockholders entitled to receive notice of and vote at the stockholders’ meeting at which the Delaware Conversion Approval will be sought and at the effective time of the Delaware Conversion, the shares of Parent Common Stock to be converted pursuant to the Delaware Conversion shall at all times be listed on Nasdaq, and there shall be no shares of Company Preferred Stock outstanding or the certificate of

 

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designation creating any class or series of Company Preferred Stock shall provide that such shares shall have no right of dissent. At the effective time of the Delaware Conversion, the shares of the Delaware corporation into which the shares of Parent Common Stock will be converted shall be listed on Nasdaq.

ARTICLE VI

CONDITIONS TO THE MERGER

Section 6.1 Conditions to Each Partys Obligation to Effect the Merger. The respective obligations of each Party to effect the Merger shall be subject to the fulfillment (or waiver by all Parties, to the extent permissible under applicable Law) at or prior to the Effective Time of the following conditions:

(a) Stockholder Approvals. Each of (i) the Company Stockholder Approval and (ii) the Parent Stockholder Approval shall have been obtained.

(b) No Legal Prohibition. No Law issued by any Governmental Entity (including any Gaming Authority) shall have been adopted, promulgated or issued that would prohibit, restrain, enjoin or render unlawful the consummation of the Merger or the Share Issuance.

(c) S-4 Effectiveness. The Form S-4 shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no Actions for that purpose shall have been threatened in writing by the SEC that have not been withdrawn.

(d) Listing Approval. The shares of Parent Common Stock to be issued in the Merger and to be reserved for issuance pursuant to Section 3.2 shall have been approved for listing on Nasdaq, subject to official notice of issuance.

(e) Regulatory Approvals. (i) Any waiting period applicable to the Merger under the HSR Act shall have expired or been terminated and (ii) all Requisite Gaming Approvals shall have been duly obtained and shall be in full force and effect.

Section 6.2 Conditions to Obligation of the Company to Effect the Merger. The obligation of the Company to effect the Merger is further subject to the fulfillment (or waiver by the Company, to the extent permissible under applicable Law) at or prior to the Effective Time of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of Parent and Merger Sub set forth in Section 4.1(b), Section 4.5 (other than clause (b) thereof), Section 4.6(b)(ii) (with respect to Parent and Merger Sub only), Section 4.7(c)(ii), Section 4.16 and Section 4.20 shall be true and correct in all material respects, both when made and as of the Closing Date, as if made on such date (except to the extent expressly made as of an earlier date, in which case as of such date), (ii) the representations and warranties of Parent set forth in Section 4.2(b) shall be true and correct in all respects except for de minimis inaccuracies, both when made and as of the Closing Date, as if made as of such date (except to the extent expressly

 

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made as of an earlier date, in which case as of such date), (iii) the representations and warranties of Parent set forth in Section 4.2(c) and of Parent and Merger Sub set forth in Section 4.3(e) shall be true and correct in all respects, both when made and as of the Closing Date, as if made on such date (except to the extent expressly made as of an earlier date, in which case as of such date) and (iv) the other representations and warranties of Parent and Merger Sub set forth in Article IV shall be true and correct both when made and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such date), as if made as of such date, except with respect to this clause (iv) where the failure of such representations and warranties to be so true and correct (without regard to “materiality,” “Material Adverse Effect” and similar qualifiers contained in such representations and warranties) has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent.

(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by them prior to the Effective Time.

(c) No Parent Material Adverse Effect. Since the date of this Agreement, there has not been any Material Adverse Effect under clause (a) of the definition thereof with respect to Parent; provided, however, that for purposes of determining the satisfaction of the condition in this Section 6.2(c), a “Material Adverse Effect” shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to or resulting from any steps taken by Parent described in Section 5.5(b).

(d) Closing Certificate. Parent shall have delivered to the Company a certificate, dated as of the Closing Date and signed by Parent’s Chief Executive Officer or Chief Financial Officer, certifying to the effect that the conditions set forth in Section 6.2(a) and Section 6.2(b) have been satisfied.

Section 6.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger. The obligation of Parent and Merger Sub to effect the Merger is further subject to the fulfillment (or the waiver by Parent, to the extent permissible under applicable Law) at or prior to the Effective Time of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of the Company set forth in Section 4.1(a), Section 4.5(a), Section 4.5(b), Section 4.6(b)(ii) (with respect to the Company only), Section 4.7(c)(ii), Section 4.16 and Section 4.20 shall be true and correct in all material respects, both when made and as of the Closing Date, as if made on such date (except to the extent expressly made as of an earlier date, in which case as of such date), (ii) the representations and warranties of the Company set forth in Section 4.2(a) shall be true and correct in all respects except for de minimis inaccuracies both when made and as of the Closing Date, as if made as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), and (iii) the other representations and warranties of the Company set forth in Article IV shall be true and correct both when made and as of the Closing Date, as if made as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), except with respect to this clause (iii) where the failure of such representations and warranties to be so true and correct (without regard to any qualifications or exceptions contained as to “materiality,” “Material Adverse Effect” and similar qualifiers contained in such representations and warranties) has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

 

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(b) Performance of Obligations of the Company. The Company shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it prior to the Effective Time.

(c) No Company Material Adverse Effect. Since the date of this Agreement, there has not been any Material Adverse Effect under clause (a) of the definition thereof with respect to the Company.

(d) Closing Certificate. The Company shall have delivered to Parent a certificate, dated as of the Closing Date and signed by the Company’s Chief Executive Officer or Chief Financial Officer, certifying to the effect that the conditions set forth in Section 6.3(a) and Section 6.3(b) have been satisfied.

(e) Convertible Notes. One of the following shall have occurred: (i) the Requisite Consents to the Specified Convertible Notes Indenture Amendments shall have been obtained, and a supplemental indenture effecting such Specified Convertible Notes Indenture Amendments shall be in full force and effect; (ii) all of the Convertible Notes shall have been converted into shares of Company Common Stock and/or cash or shall have otherwise ceased to be outstanding; or (iii) an Alternative Notes Transaction shall have been effected.

Section 6.4 Frustration of Closing Conditions. None of the Company, Parent or Merger Sub may rely, either as a basis for not consummating the Merger or terminating this Agreement and abandoning the Merger, on the failure of any condition set forth in Section 6.1, Section 6.2 or Section 6.3, as the case may be, to be satisfied if such failure was caused by such Party’s material breach of this Agreement.

ARTICLE VII

TERMINATION

Section 7.1 Termination or Abandonment. Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or after the Company Stockholder Approval or the Parent Stockholder Approval has been obtained (except as otherwise provided below):

(a) by the mutual written consent of the Company and Parent;

(b) by either the Company or Parent, if the Merger shall not have been consummated on or prior to June 24, 2020 (the “Initial End Date” and, as such date may be extended pursuant to this Section 7.1(b), the “End Date”); provided, however, that the Initial End Date shall be automatically extended until September 24, 2020 (the “First Extended End Date”) and the First Extended End Date shall be automatically extended until December 24, 2020 (the “Second Extended End Date”), if on the Initial End Date or the First Extended End Date, as applicable, one or more of the conditions set forth in Section 6.1(b) (as the result only of an

 

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Antitrust Law or Gaming Law) or Section 6.1(e) has not been satisfied but all of the other conditions set forth in Article VI have been satisfied or are capable of being satisfied; provided, further, that, if on the Initial End Date or the First Extended End Date, all of the conditions set forth in Article VI, other than the condition in Section 6.3(e), shall have been satisfied or are capable of being satisfied, then the End Date shall be automatically extended to the date that is three (3) Business Days after such condition has been satisfied, but in no event beyond the Second Extended End Date; provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to a Party if the failure of the Closing to occur by such date shall be due to the material breach by such Party of any representation, warranty, covenant or other agreement of such Party set forth in this Agreement;

(c) by either the Company or Parent, if any Law shall have been adopted, promulgated or issued by any Governmental Entity (including any Gaming Authority) that prohibits, permanently restrains, permanently enjoins or renders unlawful the consummation of the Merger or the Share Issuance, and such Law shall have become final and nonappealable; provided, however, that the right to terminate this Agreement under this Section 7.1(c) shall not be available to a Party if such injunction was primarily due to the failure of such Party to perform any of its obligations under this Agreement;

(d) by either the Company or Parent, if the Company Stockholders’ Meeting (including any adjournments or postponements thereof) shall have concluded and the Company Stockholder Approval shall not have been obtained;

(e) by either the Company or Parent, if the Parent Stockholders’ Meeting (including any adjournments or postponements thereof) shall have concluded and the Parent Stockholder Approval shall not have been obtained;

(f) by the Company, if Parent or Merger Sub shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement (other than willful and material breaches of its obligations with respect to Antitrust Laws under Section 5.5(b), which is addressed in Section 7.1(h)), which breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in Section 6.2(a) or Section 6.2(b) and (ii) by its nature, cannot be cured prior to the End Date or, if such breach or failure is capable of being cured by the End Date, Parent has not cured such breach or failure within thirty (30) days after receiving written notice from the Company describing such breach or failure in reasonable detail (provided, that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained herein that would result in a failure of a condition set forth in Section 6.3(a) or Section 6.3(b));

(g) by Parent, if the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) if it occurred or was continuing to occur on the Closing Date, would result in a failure of a condition set forth in Section 6.3(a) or Section 6.3(b) and (ii) by its nature, cannot be cured prior to the End Date or, if such breach or failure is capable of being cured by the End Date, the Company has not cured such breach or failure within thirty (30) days after receiving written notice from Parent describing such breach or failure in reasonable detail (provided, that Parent is not then in material breach of any representation, warranty, covenant or other agreement contained herein that would result in a failure of a condition set forth in Section 6.2(a) or Section 6.2(b));

 

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(h) by the Company, if Parent shall have been in willful and material breach of its obligations with respect to Antitrust Laws under Section 5.5(b), which breach, by its nature, cannot be cured or, if such breach is capable of being cured, has not been cured within thirty (30) days after receiving written notice from the Company describing such breach in detail (provided, that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained herein that would result in a failure of a condition set forth in Section 6.3(a) or Section 6.3(b));

(i) by Parent, prior to receipt of the Company Stockholder Approval, in the event of an Adverse Recommendation Change with respect to the Company;

(j) by the Company, prior to the receipt of the Parent Stockholder Approval, in the event of an Adverse Recommendation Change with respect to Parent; or

(k) by the Company, at any time prior to receipt of the Company Stockholder Approval in order to enter into an agreement with respect to a Superior Proposal pursuant to Section 5.3; provided, however, that the Company shall not terminate this Agreement pursuant to this Section 7.1(k) unless in advance of or concurrently with such termination the Company pays, or causes to be paid, the Company Termination Fee as provided in Section 7.3.

Section 7.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 7.1, notice thereof shall be given to the other Parties, specifying the provisions hereof pursuant to which such termination is made and the basis therefor described in reasonable detail, and this Agreement shall terminate (except for the provisions of Section 5.13(c), Section 5.16(b), this Section 7.2, Section 7.3 and Article VIII), and there shall be no other liability on the part of any of the Parties to one another except as provided in the Confidentiality Agreement, and the provisions of Section 5.13(c), Section 5.16(b), this Section 7.2 and Section 7.3, and liability arising out of or the result of, intentional fraud or any willful and material breach of any covenant or agreement or willful and material breach of any representation or warranty in this Agreement occurring prior to termination (it being understood and agreed that Parent’s or Merger Sub’s failure to consummate the Closing in a circumstance in which all of the conditions set forth in Section 6.1 and Section 6.3 have been satisfied (or waived), other than those conditions that by their nature are to be satisfied (or waived) contemporaneously with the Closing, shall constitute a willful and material breach of this Agreement), in which case the aggrieved Party shall not be limited to expense payment or any fee payable pursuant to Section 7.3, and shall be entitled to all rights and remedies available at Law or in equity.

Section 7.3 Termination Fee; Expenses.

(a) If this Agreement is terminated:

(i) by Parent pursuant to Section 7.1(i);

 

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(ii) by the Company pursuant to Section 7.1(k); or

(iii) (A) by (I) either Parent or the Company pursuant to Section 7.1(d) or (II) Parent pursuant to Section 7.1(g), (B) a Takeover Proposal with respect to the Company shall have been publicly announced or shall have become publicly known and shall not have been publicly withdrawn, in the case of clause (A)(I), prior to the Company Stockholders’ Meeting or, in the case of clause (A)(II), prior to such termination, and (C) within twelve (12) months after the termination of this Agreement, the Company or any of its Subsidiaries consummates a transaction that is a Takeover Proposal, or enters into a definitive agreement with a third party with respect to a transaction that is a Takeover Proposal;

then the Company shall pay to Parent the Company Termination Fee by wire transfer (to an account designated by Parent) in immediately available funds in the case of clause (i), within two (2) Business Days of such termination, or, in the case of clause (ii), at or prior to such termination, or, in the case of clause (iii), upon the earlier of the consummation of the transaction or the entry of a definitive agreement with respect to the transaction contemplated by such Takeover Proposal.

(b) If this Agreement is terminated:

(i) by the Company pursuant to Section 7.1(j); or

(ii) (A) by (I) either Parent or the Company pursuant to Section 7.1(e) or (II) the Company pursuant to Section 7.1(f), (B) a Takeover Proposal with respect to Parent shall have been publicly announced or shall have become publicly known and shall not have been publicly withdrawn, in the case of clause (A)(I), prior to the Parent Stockholders’ Meeting or, in the case of clause (A)(II), prior to such termination, and (C) within twelve (12) months after the termination of this Agreement, Parent or any of its Subsidiaries consummates a transaction that is a Takeover Proposal, or enters into a definitive agreement with a third party with respect to a transaction that is a Takeover Proposal;

then Parent shall pay to the Company the Parent Termination Fee by wire transfer (to an account designated by the Company) in immediately available funds in the case of clause (i), within two (2) Business Days of such termination, or, in the case of clause (ii), at or prior to such termination, or, in the case of clause (iii), upon the earlier of the consummation of the transaction or the entry of a definitive agreement with respect to the transaction contemplated by such Takeover Proposal.

(c) If this Agreement is terminated:

(i) by either Parent or the Company pursuant to Section 7.1(c) in connection with any Law relating to Antitrust Laws or Gaming Laws, including the Gaming Approvals;

 

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(ii) by either Parent or the Company pursuant to Section 7.1(b) and at the time of such termination, any of the conditions set forth in Section 6.1(b) (if the applicable Law relates to Antitrust Laws or Gaming Laws, including the Gaming Approvals) or Section 6.1(e) shall not have been satisfied and the conditions in Section 6.1(a) and Section 6.3 have been satisfied or are capable of being satisfied at or prior to the Closing; or

(iii) by the Company pursuant to Section 7.1(h);

then, except as set forth in Section 7.3(f) with respect to a Reverse Termination Fee that becomes payable in circumstances constituting a Regulatory Breach Termination, Parent shall pay to the Company promptly (but in any event no later than the second Business Day after such termination) the Reverse Termination Fee.

(d) Expense Payments.

(i) If this Agreement is terminated by either Parent or the Company pursuant to Section 7.1(d), the Company shall pay Parent an amount not to exceed $50,000,000 in respect of Parent’s reasonable and documented out-of-pocket costs and expenses in connection with this Agreement (the “Parent Expense Payment”) by wire transfer (to an account designated in writing by Parent) in immediately available funds within two (2) Business Days after such termination.

(ii) If this Agreement is terminated by either Parent or the Company pursuant to Section 7.1(e), the Parent shall pay Company an amount not to exceed $50,000,000 in respect of the Company’s reasonable and documented out-of-pocket costs and expenses in connection with this Agreement (the “Company Expense Payment” and, together with the Parent Expense Payment, the “Expense Payments”) by wire transfer (to an account designated in writing by the Company) in immediately available funds within two (2) Business Days after such termination.

(e) “Company Termination Fee” shall be an amount equal to $418,407,185. “Parent Termination Fee” shall be an amount equal to $154,945,692. “Reverse Termination Fee” shall be an amount equal to $836,814,370.

(f) Each of the Parties hereby agrees that any and all remedies set forth in this Agreement, including payment of the Company Termination Fee, the Parent Termination Fee or the Reverse Termination Fee, as applicable (in each case, a “Termination Fee Payment”), and the Expense Payments, shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby, or at Law or in equity upon such Party, and the exercise by any Party of any one remedy will not preclude the exercise of any other remedy; provided, however, that a Termination Fee Payment that becomes due and payable in accordance with Section 7.3(a), Section 7.3(b) or Section 7.3(c) shall be compensation and liquidated damages for the loss suffered by the Company or Parent, as applicable, as a result of the failure of the Merger to be consummated and to avoid the difficulty of determining damages under the circumstances and none of the Parties shall have any other liability to one another after the payment of such Termination Fee Payment, except in the case of intentional fraud or a willful and material breach of this Agreement or as specifically set forth in this Section 7.3(f) with respect to a Reverse Termination Fee becomes payable in circumstances constituting a Regulatory Breach

 

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Termination. Notwithstanding anything to the contrary in this Agreement, if a Termination Fee Payment shall become due and payable in accordance with Section 7.3(a), Section 7.3(b) or Section 7.3(c), as applicable, from and after such termination and payment of such Termination Fee Payment pursuant to and in accordance with Section 7.3(a), Section 7.3(b) or Section 7.3(c), as applicable, the paying Party shall have no further liability of any kind for any reason in connection with this Agreement or the termination contemplated hereby other than as provided under Section 7.3(a), Section 7.3(b) or Section 7.3(c), as applicable, except in the case of intentional fraud or a willful and material breach of this Agreement. Each of the Parties acknowledges that any Termination Fee Payment that becomes due and payable in accordance with Section 7.3(a), Section 7.3(b) or Section 7.3(c) is not intended to be a penalty, but rather constitutes liquidated damages in a reasonable amount that will compensate the Company or Parent, as the case may be, in the circumstances in which such Termination Fee Payment is due and payable and that do not involve intentional fraud or a willful and material breach of this Agreement, for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision. In no event shall any Party be entitled to more than one payment of the Termination Fee Payment in connection with a termination of this Agreement pursuant to which the Termination Fee Payment is payable, and if the Termination Fee Payment is payable at such time as the receiving Party has already received payment or concurrently receives payment from the paying Party in respect of the Parent Expense Payment or the Company Expense Payment, as applicable, the amount of such Parent Expense Payment or the Company Expense Payment actually received by Parent or the Company, as applicable, shall be deducted from the Termination Fee Payment due and payable to such Party; provided, however, that in the event Parent is required to pay both the Parent Termination Fee and the Reverse Termination Fee pursuant to this Section 7.3, Parent shall be required to pay to the Company only the Reverse Termination Fee. Solely for purposes of this Section 7.3, “Takeover Proposal” shall have the meaning ascribed thereto in Section 1.1, except that all references to 20% shall be changed to 50%. Notwithstanding anything to the contrary in this Agreement, if the Reverse Termination Fee becomes payable in circumstances constituting a Regulatory Breach Termination, the Company may elect in its sole discretion to either (i) demand payment of such Reverse Termination Fee in writing, in which case such Reverse Termination Fee will be paid by Parent to the Company by wire transfer to the account designated by the Company in immediately available funds within two (2) Business Days of such written demand or (ii) directly or indirectly, pursue an award of monetary damages or any other remedy available to it at law or in equity; provided, that, for purposes of clarity and for the avoidance of doubt, the Company’s exercise of any right to seek specific performance or other equitable relief pursuant to the terms of this Agreement shall not affect the Company’s right to terminate this Agreement pursuant to Section 7.1 or collect the Reverse Termination Fee (it being understood that in no event shall the Company be entitled both to specific performance to cause Parent to consummate the Merger and payment of the Reverse Termination Fee); provided, further, that, under no circumstances will the Company be entitled to receive both an award of monetary damages in connection with a Regulatory Breach Termination and payment of all or any portion of the Reverse Termination Fee.

 

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(g) Each of the Parties acknowledges that the agreements contained in this Section 7.3 are an integral part of the transactions contemplated hereby, and that, without these agreements, the Parties would not enter into this Agreement. Accordingly, if a Party fails to pay in a timely manner any amount due pursuant to this Section 7.3, then such Party shall reimburse the other Party for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in the collection of such overdue amount, including in connection with any related Actions commenced and pay interest on such amount from and including the date payment of such amount was due to but excluding the date of actual payment at the prime rate set forth in The Wall Street Journal in effect on the date such payment was required to be made.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 No Survival. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Merger, except for covenants and agreements that contemplate performance after the Effective Time or otherwise expressly by their terms survive termination of this Agreement or the Effective Time.

Section 8.2 Expenses. Except as set forth in Section 7.3 and as set forth herein with respect to the Financing or in the Debt Financing Commitment or any Financing Agreement, whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger, this Agreement and the transactions contemplated hereby shall be paid by the Party incurring or required to incur such expenses.

Section 8.3 Counterparts; Effectiveness. This Agreement may be executed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by telecopy, electronic delivery or otherwise) to the other Parties. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document will have the same effect as physical delivery of the paper document bearing the original signature.

Section 8.4 Governing Law. This Agreement, and all claims or causes of action (whether at Law, in equity, in contract, in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. Notwithstanding anything to the contrary herein, any Action, controversy or dispute of any kind or nature, whether at Law, in equity, in contract, in tort or otherwise, involving a Financing Source or Related Financing Source in connection with this Agreement, the Financing, the Debt Financing Commitment, the Related Financing, the Related Financing Commitment or the transactions contemplated hereby or thereby shall (except as expressly set forth in the Debt Financing Commitment, Related Financing Commitment, any Financing Agreement or any Related Financing Agreement) be governed by, and construed in accordance

 

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with, the Laws of the State of New York; provided, however, that, notwithstanding the foregoing, it is understood and agreed that any matter to which a Financing Source or Related Financing Source is a party that is related to a Material Adverse Effect, the interpretation of the definition of “Material Adverse Effect” and the determination of whether the Merger has been consummated in accordance with the terms of this Agreement, in each case, shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

Section 8.5 Jurisdiction; Specific Enforcement.

(a) The Parties agree that irreparable damage would occur (for which monetary damages, even if available, would not be an adequate remedy) in the event that any of the provisions of this Agreement were not performed (including failing to take such actions as are required of each of them hereunder to consummate the transactions contemplated by this Agreement), or were threatened to be not performed, in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) and all such rights and remedies at Law or in equity shall be cumulative, except as may be limited by Section 7.3. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other Party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity. The Parties further agree that no Party shall be required to obtain, secure, furnish or post any bond, security or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.5 and each Party waives any objection to the imposition of such relief or any right it may have to require the obtaining, securing, furnishing or posting of any such bond, security or similar instrument. In addition, each of the Parties irrevocably agrees that any Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any other Party or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the Parties hereby irrevocably submits with regard to any such Action for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any Action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the Parties hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any Action with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent

 

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permitted by applicable Law, any claim that (i) the Action in such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each of the Parties agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. To the fullest extent permitted by applicable Law, each of the Parties hereby consents to the service of process in accordance with Section 8.7; provided, however, that nothing herein shall affect the right of any Party to serve legal process in any other manner permitted by Law.

(b) Notwithstanding anything herein to the contrary, each of the Parties agrees on behalf of itself, its Subsidiaries and their respective Representatives that it, its Subsidiaries and their respective Representatives will not bring or support any Action, whether in Law, in equity, in contract, in tort or otherwise, against the Financing Sources, Related Financing Sources and their respective current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or advisors, in each case, in their respective capacities as such, in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Financing or the performance thereof, in any forum other than the federal and New York state courts located in the Borough of Manhattan within the City of New York and the appellate courts thereof.

Section 8.6 Waiver of Jury Trial. EACH OF THE PARTIES ON BEHALF OF ITSELF, ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION (WHETHER AT LAW, IN EQUITY, IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE FINANCING, THE DEBT FINANCING COMMITMENT, THE RELATED FINANCING, THE RELATED FINANCING COMMITMENT OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING ANY ACTION OR PROCEEDING INVOLVING OR AGAINST ANY FINANCING SOURCE OR RELATED FINANCING SOURCE).

Section 8.7 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (a) upon personal delivery to the Party to be notified, (b) when received when sent by email or facsimile by the Party to be notified; provided, however, that notice given by email or facsimile shall not be effective unless either (i) a duplicate copy of such email or fax notice is promptly given by one of the other methods described in this Section 8.7 or (ii) the receiving Party delivers a written confirmation of receipt for such notice either by email or fax or any other method described in this Section 8.7; or (c) when delivered by a courier (with confirmation of delivery), in each case, to the Party to be notified at the following address:

To Parent or Merger Sub:

Eldorado Resorts, Inc.

100 West Liberty Street, Suite 1150

Reno, Nevada 89501

Facsimile:    (281) 683-7511
Email:    [email protected]
Attention:    Thomas R. Reeg

 

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with copies to (which shall not constitute notice):

Milbank LLP

2029 Century Park East, 33rd Floor

Los Angeles, California 90067

Facsimile:    (213) 892-4721
Email:    [email protected]
Attention:    Deborah R. Conrad

To the Company:

Caesars Entertainment Corporation

One Caesars Palace Drive

Las Vegas, NV 89109

Facsimile:    (702) 407-6000
Email:    [email protected]
Attention:    Michelle Bushore

with copies to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California 90071

Facsimile:    (213) 687-5600
Email:    [email protected]
   [email protected]
Attention:    Brian J. McCarthy
   Andrew D. Garelick

or to such other address as any Party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated or personally delivered; provided, that any notice received by facsimile transmission or electronic mail or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (addressee’s local time) or on any day that is not a Business Day shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next Business Day. Any Party may notify, in accordance with the procedures set forth in this Section 8.7, any other Party of any changes to the address or any of the other details specified in this paragraph; provided, however, that such notification shall only be effective on the date specified in such notice or five (5) Business Days after the notice is properly given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

Section 8.8 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the Parties without the prior written consent of the other Parties. Subject to the first sentence of this Section 8.8, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns. Any purported assignment not permitted under this Section 8.8 shall be null and void.

 

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Section 8.9 Severability. Any term, covenant, restriction or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms, covenants, restrictions and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

Section 8.10 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto, the Disclosure Schedules and the Confidentiality Agreement, constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the Parties, or among any of them, with respect to the subject matter hereof and thereof, and, subject to Section 8.13, this Agreement is not intended to grant standing to any Person other than the Parties.

Section 8.11 Amendments; Waivers. At any time prior to the Effective Time, any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by a duly authorized representative of each of the Parties; provided, however, that after receipt of Company Stockholder Approval, if any such amendment or waiver shall by applicable Law or in accordance with the rules and regulations of Nasdaq require further approval of the stockholders of the Company, the effectiveness of such amendment or waiver shall be subject to the approval of the stockholders of the Company. Notwithstanding the foregoing, no failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. Notwithstanding anything to the contrary contained herein, Section 7.2, the second sentence of Section 8.4, Section 8.5(b), Section 8.6, this sentence of Section 8.11 and Section 8.13 (and any defined terms as used in such provisions (but not as used for any other purpose in this Agreement)) and any other provision of this Agreement to the extent modifying the substance of such provision may not be amended, supplemented, waived or otherwise modified in a manner materially adverse to the Financing Sources without the prior written consent of any such adversely affected Financing Source.

Section 8.12 Headings. Headings of the Articles and Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretive effect whatsoever. The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 8.13 No Third-Party Beneficiaries; Liability of Financing Sources. Each of the Parties agrees that their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the other Parties, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any person other than the Parties any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, other than after the Effective Time:

 

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(a) with respect to the provisions of Section 5.8, which shall inure to the benefit of the Persons benefitting therefrom who are intended to be third-party beneficiaries thereof;

(b) the rights of holders of Company Common Stock to receive the Merger Consideration in accordance with the terms and conditions of this Agreement; and

(c) the rights of holders of Company Equity Awards to receive the payments contemplated by the applicable provisions of Section 3.6, in each case, in accordance with the terms and conditions of this Agreement;

provided, that the Financing Sources and Related Financing Sources shall be express third-party beneficiaries of Section 7.2, the second sentence of Section 8.4, Section 8.5(b), Section 8.6, the last sentence of Section 8.11 and this Section 8.13, each such Section shall expressly inure to the benefit of the Financing Sources and the Related Financing Sources and each of them shall be entitled to rely on and enforce the provisions of such Sections. Notwithstanding anything to the contrary contained herein but subject to the proviso at the end of this sentence, the Company agrees on behalf of itself, its Subsidiaries and their respective Representatives that it, its Subsidiaries and their respective Representatives shall not have any rights or claims against any Financing Source or Related Financing Source in its capacity as such (or any current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or advisors of any such Financing Source or Related Financing Source in its capacity as such) in connection with this Agreement, the Financing, the Debt Financing Commitment, the Related Financing, the Related Financing Commitment or the transactions contemplated hereby or thereby, whether at law or equity, contract, tort or otherwise, nor shall any Financing Source or Related Financing Source in its capacity as such (or any current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or advisors of any Financing Source or Related Financing Source in its capacity as such) have any obligations or liability to the Company or any of its Subsidiaries in connection with this Agreement, the Financing, the Debt Financing Commitment, the Related Financing, the Related Financing Commitment or the transactions contemplated hereby or thereby, all of which are hereby waived; provided, that the foregoing shall not be interpreted as (i) limiting the ability of Parent or any Affiliate of Parent to enforce their rights and remedies under the Debt Financing Commitment or any Financing Agreement or (ii) otherwise limiting the obligations of the Financing Sources to Parent (and its successors, assigns and Affiliates) and/or the other rights of the parties to the Debt Financing Commitment or any Financing Agreement.

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first above written.

 

CAESARS ENTERTAINMENT CORPORATION
    By:   /s/ Tony Rodio
  Name: Tony Rodio
  Title:   Chief Executive Officer


ELDORADO RESORTS, INC.
By:   /s/ Thomas R. Reeg
  Name: Thomas R. Reeg
  Title:   Chief Executive Officer
COLT MERGER SUB, INC.
By:   /s/ Edmund L. Quatmann, Jr.
  Name: Edmund L. Quatmann, Jr.
  Title:   Secretary
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Section 3: EX-10.1 (EX-10.1)

EX-10.1

Exhibit 10.1

Execution Version

 

JPMORGAN CHASE BANK, N.A.
383 Madison Avenue
New York, New York 10179
  CREDIT SUISSE AG
CREDIT SUISSE
LOAN FUNDING LLC
Eleven Madison Avenue
New York, New York 10010

MACQUARIE CAPITAL (USA) INC.

MACQUARIE CAPITAL FUNDING LLC

125 West 55th Street

New York, NY 10019

CONFIDENTIAL

June 24, 2019

Eldorado Resorts, Inc.

100 West Liberty Street, Suite 1150

Reno, Nevada 89501

Attention: Chief Financial Officer

$1,000.0 Million Senior Secured Revolving Credit Facility

$3,000.0 Million Senior Secured Term Loan B Facility

$2,400.0 Million Senior Secured Incremental Term Loan B Facility

$3,600.0 Million Senior Secured 364-Day Bridge Loan Facility

$1,800.0 Million Senior Unsecured Bridge Loan Facility

Commitment Letter

Ladies and Gentlemen:

You have advised JPMorgan Chase Bank, N.A. (together with any of its designated affiliates, “JPMorgan”), Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate, “CS”), Credit Suisse Loan Funding LLC (“CSLF” and, together with CS and their respective affiliates, “Credit Suisse”), Macquarie Capital Funding LLC (“Macquarie Lender”) and Macquarie Capital (USA) Inc. (“Macquarie Capital” and, together with Macquarie Lender, “Macquarie” and, together with JPMorgan and Credit Suisse, collectively, the “Initial Commitment Parties”, and together with any Additional Initial Lenders (as defined below) and any Additional Lead Arrangers (as defined below), the “Commitment Parties” or “we” or “us”) that Eldorado Resorts, Inc., a Nevada corporation (the “Borrower” or “you”), seeks financing for the Transactions described in the Transaction Description attached hereto as Exhibit A (the “Transaction Description”). We understand that the sources the Borrower expects to use to fund the Transactions and to pay fees and expenses in connection therewith will include (and that the financing and the sources described below, are anticipated to be sufficient to fund the Transactions and to pay fees and expenses in connection therewith):

(a) a senior secured term loan facility in an aggregate principal amount of $3,000.0 million (the “Term Loan B Facility” and the term B loans funded thereunder, “Term B Loans”) to be provided to the Borrower as a new term loan facility;

(b) a senior secured revolving credit facility in an aggregate principal amount of $1,000.0 million (the “Revolving Credit Facility” and the commitments provided thereunder, the “Revolving Commitments” and, together with the Term Loan B Facility, the “Borrower Senior Secured Credit Facilities”) to be provided to the Borrower as a new revolving credit facility;


(c) a senior secured term loan facility in an aggregate principal amount of $2,400.0 million (the “Incremental Term Loan B Facility” and the term B loans funded thereunder, “Incremental Term B Loans” and, together with the Borrower Senior Secured Credit Facilities, the “Senior Secured Credit Facilities”) to be provided to Caesars Resort Collection, LLC, a Delaware limited liability company (“CRC”), as an incremental term loan facility under that certain Credit Agreement, dated as of December 22, 2017 (as amended, the “Existing CRC Credit Agreement”), among CRC, the other borrowers party thereto from time to time, the lenders party thereto from time to time and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent (in such capacities, the “CRC Administrative Agent”);

(d) (1) the Viper Proceeds (as defined below) and (2) the Gaming Asset Sales Proceeds (as defined below), or, if (A) all or any portion of the Viper Proceeds are not received by the Company (as defined below), CRC, CEOC (as defined below) or any of their respective subsidiaries, (B) the Company, CRC, CEOC or any of their respective subsidiaries are not permitted to distribute all or any portion of the Viper Proceeds to the Borrower, on or prior to the Funding Date (as defined below), or (C) all or any portion of the Gaming Asset Sales Proceeds are not received by the Borrower on or prior to the Funding Date, a senior secured 364-day bridge loan facility in an aggregate principal amount equal to $3,600.0 million (the “Secured Bridge Facility” and the bridge loans funded thereunder, “Secured Bridge Loans”), to be provided to the Borrower as a new credit facility; provided, that the aggregate amount of the Secured Bridge Facility funded on the Funding Date shall be reduced on a dollar for dollar basis by (x) any and all Viper Proceeds actually received by the Borrower following the date of this Commitment Letter (as defined below) and on or prior to the Funding Date and (y) any and all Gaming Asset Sales Proceeds actually received by the Borrower following the date of this Commitment Letter and on or prior to the Funding Date. For purposes hereof, (1) “Viper Proceeds” shall mean, with respect to the Viper Sale and Leaseback Transactions (as defined below) and the Viper Lease Financing (as defined below), the excess, if any, of (i) the cash received by the Company, CRC, CEOC or any of their respective subsidiaries in connection therewith (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received and only to the extent received on or prior to the Funding Date) over (ii) the sum of (A) payments made to retire any debt that is secured by such asset and that is required to be repaid in connection with such transaction, (B) the expenses incurred by the Company, CRC, CEOC or any of their respective restricted subsidiaries in connection therewith, (C) taxes reasonably estimated to be payable in connection with such transaction, and (D) the amount of reserves established by the Company, CRC, CEOC or any of their respective restricted subsidiaries in good faith and pursuant to commercially reasonable practices for adjustment in respect of the sale price of such asset or assets or otherwise in connection with such transaction in accordance with applicable generally accepted accounting principles, (2) “Gaming Asset Sale Proceeds” shall mean, with respect to any Gaming Asset Sale (as defined below), the excess, if any, of (i) the cash received by the Borrower (or the Borrower’s subsidiaries and distributed to the Borrower) in connection therewith (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received and only to the extent received on or prior to the Funding Date) over (ii) the sum of (A) payments made to retire any debt that is secured by such asset and that is required to be repaid in connection with the sale thereof (other than debt under the Existing Borrower Credit Agreement (as defined below)), (B) the expenses incurred by the Borrower or any of its restricted subsidiaries in connection therewith, (C) taxes reasonably estimated to be payable in connection with such transaction, and (D) the amount of reserves established by the Borrower or any of its restricted subsidiaries in good faith and pursuant to commercially reasonable practices for adjustment in respect of the sale price of such asset or assets in accordance with applicable generally accepted accounting principles and (3) “Gaming Asset Sale” means (x) any Specified Borrower Asset Sale (as defined below) that occurs on or prior to the Funding Date or (y) any other sale by the Borrower or any of its subsidiaries (excluding the Company and its subsidiaries) of any casino or other gaming property (other than Isle of Capri Casino Kansas City and Lady Luck Casino Vicksburg) which sale results in the receipt by the Borrower of Gaming Asset Sale Proceeds of at least $50.0 million on or prior to the Funding Date.

 

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(e) the issuance by the Borrower of $1,800.0 million of new senior unsecured notes (the “New Senior Unsecured Notes”) or, if all or any portion of the New Senior Unsecured Notes are not issued and sold on or prior to the Funding Date or all or any portion of the proceeds thereof are not made available to the Borrower on the Funding Date, a senior unsecured bridge loan facility in an aggregate principal amount equal to (i) $1,800.0 million less (ii) any New Senior Unsecured Notes that are issued and sold on or prior to the Funding Date, the proceeds of which are made available to the Borrower on the Funding Date, to be provided to the Borrower as a new credit facility (the “Unsecured Bridge Loans” and, together with any Rollover Loans and Exchange Notes (each as defined in the Unsecured Bridge Facility Term Sheet (as defined below)), the “Unsecured Bridge Facility” and, collectively with the Senior Secured Credit Facilities and the Secured Bridge Facility, the “Credit Facilities”);

(f) the issuance of shares of common stock of the Borrower to the existing shareholders of the Company pursuant to the Acquisition Agreement (as defined below); and

(g) cash of the Borrower and the Company.

Capitalized terms used herein but not defined herein shall have the meanings given to them in the Schedules and Exhibits attached hereto, as applicable. Except as the context otherwise requires, references to the “Borrower and its subsidiaries” will include the Company and its subsidiaries after giving effect to the Acquisition (as defined below).

1. Commitment.

(a) In connection with the Transactions, (i) JPMorgan is pleased to advise you of its several, but not joint, commitment to provide (1) 50.00% of the Term Loan B Facility, (2) 50.00% of the Revolving Credit Facility, (3) 50.00% of the Incremental Term Loan B Facility, (4) 100.00% of the Secured Bridge Facility and (5) 50.00% of the Unsecured Bridge Facility, (ii) CS is pleased to advise you of its several, but not joint, commitment to provide (1) 35.00% of the Term Loan B Facility, (2) 35.00% of the Revolving Credit Facility, (3) 35.00% of the Incremental Term Loan B Facility and (4) 35.00% of the Unsecured Bridge Facility and (iii) Macquarie Lender (together with JPMorgan, CS and each Additional Initial Lender, the “Initial Lenders”) is pleased to advise you of its several, but not joint, commitment to provide (1) 15.00% of the Term Loan B Facility, (2) 15.00% of the Revolving Credit Facility, (3) 15.00% of the Incremental Term Loan B Facility and (4) 15.00% of the Unsecured Bridge Facility, in each case, upon the terms set forth in this letter and in Exhibit A, Exhibit B (the “Borrower Senior Secured Credit Facilities Term Sheet”), Exhibit C (the “Incremental Term Loan B Facility Term Sheet”), Exhibit D (the “Secured Bridge Facility Term Sheet”) and Exhibit E (the “Unsecured Bridge Facility Term Sheet” and, together with the Borrower Senior Secured Credit Facilities Term Sheet, the Incremental Term Loan B Facility Term Sheet and the Secured Bridge Facility Term Sheet, the “Term Sheets”) hereto (this letter agreement, together with the Schedules and Exhibits attached hereto is referred to herein as the “Commitment Letter”) and subject solely to the applicable Funding Conditions (as defined below).

(b) The Lead Arrangers (as defined below) may syndicate the Credit Facilities and obtain commitments for the Credit Facilities from a syndicate of banks, financial institutions and other entities identified by the Lead Arrangers in consultation with you and acceptable to you (your consent not to be unreasonably withheld or delayed) (such banks, financial institutions and other entities committing to the Credit Facilities, including the Initial Lenders, the “Lenders”) upon the terms and subject to the conditions set forth in this Commitment Letter; provided that the Lead Arrangers shall not syndicate the Credit Facilities to, or obtain commitments with respect to the Credit Facilities from, (i) certain banks, financial institutions and other institutional lenders identified to the Lead Arrangers by you in writing on or prior to the date hereof, (ii) any competitors of the Borrower, the Company or their respective subsidiaries identified to the Lead Arrangers by you in writing on or prior to the date hereof (each, a “Competitor”), (iii) any affiliate of any person referred to in clause (i) or (ii) of this definition identified by you to the Lead Arrangers in writing (other than, in the case of affiliates of Competitors, bona fide fixed income investors or debt funds which invest in a portfolio of loans in the ordinary course of business and in respect of which such Competitor does not, directly or indirectly, possess the power to direct or cause the direction of the investment policies of such entity) and (iv) any other person that is clearly identifiable solely on the basis

 

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of the similarity of its name as an affiliate of any person referred to in clause (i) or (ii) of this definition (other than, in the case of affiliates of Competitors, bona fide fixed income investors or debt funds which invest in a portfolio of loans in the ordinary course of business and in respect of which such Competitor does not, directly or indirectly, possess the power to direct or cause the direction of the investment policies of such entity) (the entities described in clauses (i), (ii), (iii) and (iv) of this paragraph, collectively, “Disqualified Institutions”); provided that you may, after the date hereof, supplement in writing to the Lead Arrangers (if on or prior to the Funding Date) or the applicable Administrative Agent (as defined below) (if after the Funding Date), the list of Competitors pursuant to clause (ii) above and affiliates pursuant to clause (iii) above; provided, however, that (x) any subsequent designation of a Disqualified Institution will not become effective until three (3) business days after such designation is provided (it being understood that no such subsequent designation shall apply to any entity that is party to a pending trade at the time of such designation) and (y) any such additional designation of a Competitor pursuant to clause (ii) above and any identification of an affiliate pursuant to clause (iii) above shall not apply retroactively to any prior assignment or participation to any Lender permitted hereunder at the time of such assignment or participation but additional assignments and participations to such person shall be prohibited; provided, further, that the Lead Arrangers agree to keep you informed as to the progress of syndication. Notwithstanding each Lead Arranger’s right to syndicate the Credit Facilities and receive commitments with respect thereto, unless you agree in writing (and except with respect to the appointment of Additional Initial Lenders as provided in Section 1(d) below), (i) no Initial Lender shall be relieved, released or novated from its obligations hereunder (including its obligation to fund its commitment under the Credit Facilities on the date of the consummation of the Acquisition with the proceeds of the initial funding under the Credit Facilities (such date, the “Funding Date”)) in connection with any syndication, assignment, participation or allocation until the Funding Date has occurred, (ii) no assignment or novation or syndication by any Initial Lender shall become effective as between you and the Initial Lenders with respect to all or any portion of any Initial Lender’s commitments in respect of the Credit Facilities until the Funding Date has occurred, and (iii) each of the Initial Lenders shall retain exclusive control over all rights and obligations with respect to its commitments, including all rights with respect to consents, modifications, waivers and amendments, until the Funding Date has occurred. You agree that JPMorgan may perform its responsibilities through its affiliate, J.P. Morgan Securities LLC.

(c) JPMorgan, CSLF and Macquarie Capital, acting alone or through or with affiliates selected by them, will act as the joint bookrunners and joint lead arrangers (in such capacities, together with each Additional Lead Arranger, the “Lead Arrangers”) in arranging and syndicating the Credit Facilities. No additional agents, co-agents, bookrunners or arrangers will be appointed and no other titles will be awarded without the prior written approval of the Lead Arrangers and the Borrower; provided that (i) within 15 business days following the date hereof, you may appoint one or more additional arrangers for the Credit Facilities (other than the Secured Bridge Facility) and award such arrangers additional agent, co-agent, lead arranger, bookrunner, manager or arranger titles (any such agent, co-agent, lead arranger, bookrunner, manager or arranger, an “Additional Lead Arranger”) in a manner and with economics determined by you in consultation with the Lead Arrangers (it being understood that, to the extent you appoint additional agents, arrangers, co-agents, bookrunners or co-managers or confer other titles in respect of any such Credit Facilities, the commitments of such appointed entities’ lending affiliates (each an “Additional Initial Lender”) and the share of the economics allocated to such Additional Initial Lenders with respect to the each of the Credit Facilities shall be allocated to such Additional Initial Lenders and in the amounts as determined by the Borrower and consented to by the Initial Commitment Parties party hereto on the date hereof (such consent not to be unreasonably withheld or delayed) and it being agreed that (1) such allocations to such Additional Initial Lenders and resultant reductions of the commitments and economics of the Initial Commitment Parties shall be allocated as previously discussed between you and us, (2) such allocations shall not be required to be applied pro rata amongst the Credit Facilities, (3) such allocations shall not be required to reduce the commitments and economics of the Initial Commitment Parties on a pro rata basis), and (4) the economics granted to any Additional Lead Arranger shall not exceed, determined based on a percentage of the total economics, the economics granted to the Initial Commitment Parties in respect of such applicable Credit Facility, (ii) (x) JPMorgan shall have not less than (1) 20.50% of the total economics for the Term Loan B Facility, (2) 18.50% of the total economics for the Revolving Credit

 

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Facility, (3) 20.50% of the total economics for the Incremental Term Loan B Facility, and (4) 20.50% of the total economics for the Unsecured Bridge Facility, in each case payable under the Fee Letter (as defined below) (excluding administrative agent fees which shall be for the account of the applicable Administrative Agent), (y) Credit Suisse shall have not less than (1) 16.48% of the total economics for the Term Loan B Facility, (2) 15.08% of the total economics for the Revolving Credit Facility, (3) 16.48% of the total economics for the Incremental Term Loan B Facility, and (4) 16.48% of the total economics for the Unsecured Bridge Facility, in each case payable under the Fee Letter (excluding administrative agent fees which shall be for the account of the applicable Administrative Agent) and (z) Macquarie shall have not less than (1) 11.52% of the total economics for the Term Loan B Facility, (2) 10.92% of the total economics for the Revolving Credit Facility, (3) 11.52% of the total economics for the Incremental Term Loan B Facility and (4) 11.52% of the total economics for the Unsecured Bridge Facility, in each case payable under the Fee Letter (excluding administrative agent fees which shall be for the account of the applicable Administrative Agent) and (iii) upon the execution by any Additional Lead Arranger (and its related Additional Initial Lender) of customary joinder documentation pursuant to which such Additional Lead Arranger’s affiliated Additional Initial Lender makes a commitment as an Initial Lender under the Credit Facilities, each such Additional Lead Arranger (and its affiliated Additional Initial Lender) shall thereafter constitute (other than for purposes of this paragraph) an “Initial Lender”, “Commitment Party” and “Lead Arranger” hereunder, as applicable. JPMorgan will perform the roles and exercise the authority customary of a left lead arranger for each of the Credit Facilities (other than the Incremental Term Loan B Facility) and CSLF will perform the roles and exercise the authority customary of a left lead arranger for the Incremental Term Loan B Facility. In all marketing materials and loan documents (i) related to the Credit Facilities (other than the Incremental Term Loan B Facility) in which the names and logos of the Lead Arrangers appear, such names and logos shall appear in the following order: JPMorgan, Credit Suisse, Macquarie, and (ii) related to the Incremental Term Loan B Facility in which the names and logos of the Lead Arrangers appear, such names and logos shall appear in the following order: Credit Suisse, JPMorgan, Macquarie and, in each case, with respect to the Additional Lead Arrangers, as agreed between you and such Additional Lead Arrangers.

(d) (i) JPMorgan will act as the sole administrative agent and collateral agent for the Borrower Senior Secured Credit Facilities (in such capacities, the “Senior Administrative Agent”), (ii) Credit Suisse AG, Cayman Islands Branch will continue to act as the CRC Administrative Agent, (iii) JPMorgan will act as the sole administrative agent and collateral agent for the Secured Bridge Facility (in such capacity, the “Secured Bridge Administrative Agent”) and (iv) JPMorgan will act as the sole administrative agent for the Unsecured Bridge Facility (in such capacity, the “Unsecured Bridge Administrative Agent” and, together with the Senior Administrative Agent, the CRC Administrative Agent and the Secured Bridge Administrative Agent, the “Administrative Agents”).

(e) Notwithstanding anything to the contrary contained in this Commitment Letter, the fee letter among you and the Commitment Parties, dated as of the date hereof (the “Fee Letter”), or any other letter agreement or undertaking concerning the financing of the Transactions to the contrary, your obligations to assist in syndication efforts as provided herein, (including the covenants set forth in Sections 3 and 4 below of this Commitment Letter), shall not constitute a condition to the commitments hereunder or the funding of the Credit Facilities on the Funding Date.

2. Conditions to Funding of Commitments Under Credit Facilities.

(a) The commitment of the Initial Lenders in respect of the Credit Facilities and the undertaking of the Lead Arrangers to provide the services described herein with respect to the Credit Facilities, in each case, are subject only to the satisfaction (or waiver by the Lead Arrangers) of each of the following conditions (the “Funding Conditions”): (i) with respect to each Credit Facility, the execution and delivery by the Borrower or CRC, as applicable, and the other applicable loan parties of definitive documentation (the “Financing Documentation”) solely with respect to such Credit Facility consistent with this Commitment Letter and the Fee Letter (it being agreed that the Financing Documentation shall not contain any conditions precedent to the initial borrowing under the Credit Facilities on the Funding

 

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Date other than the Funding Conditions) and (ii) with respect to each Credit Facility, the satisfaction or waiver by the Lead Arrangers of the conditions expressly set forth in Schedule I attached hereto expressly applicable to such Credit Facility. There are no conditions (implied or otherwise) to the commitments hereunder (including compliance with the terms of this Commitment Letter, the Fee Letter and the Financing Documentation) other than the Funding Conditions, and upon satisfaction (or waiver by the Lead Arrangers) of the Funding Conditions, the applicable Initial Lenders shall cause the initial funding under the Credit Facilities on the Funding Date to occur. It is acknowledged and agreed that none of the consummation of the Viper Transactions (as defined below), the CEOC Event (as defined below), the Specified Borrower Asset Sales or any other Gaming Asset Sales shall be a condition to the commitments hereunder or the initial funding under any of the Credit Facilities on the Funding Date.

(b) Notwithstanding anything in this Commitment Letter, the Fee Letter, the Financing Documentation or any other agreement or other undertaking concerning the financing of the Transaction to the contrary, (a) the only representations the making and accuracy of which shall be a condition to the availability of the Credit Facilities on the Funding Date shall be (i) such of the representations made by the Company in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you (or your affiliate) have the right to terminate your (or your affiliate’s) obligations under the Acquisition Agreement or otherwise decline to consummate the Acquisition as a result of a breach of such representations in the Acquisition Agreement (the “Specified Acquisition Agreement Representations”) and (ii) with respect to each Credit Facility, solely the Specified Representations (as defined below) with respect to such Credit Facility; and (b) the terms of the Financing Documentation shall be in a form such that each Credit Facility is available on the Funding Date if the Funding Conditions for such Credit Facility are satisfied or waived by the Lead Arrangers.

For purposes hereof, “Specified Representations” means: (i) with respect to each of the Borrower Senior Secured Credit Facilities, the Secured Bridge Facility and the Unsecured Bridge Facility, the representations and warranties of the Borrower and the Guarantors under such Credit Facility relating to organizational status of the Borrower and such Guarantors and good standing of the Borrower in its jurisdiction of organization, organizational power and authority to enter into the Financing Documentation for such Credit Facility, due authorization, execution, delivery and enforceability of the Financing Documentation for such Credit Facility, no conflicts (limited to entry into the Financing Documentation for such Credit Facility, borrowing thereunder and (x) in the case of the Borrower Senior Secured Credit Facilities, the granting of liens on the Collateral (as defined in the Borrower Senior Secured Credit Facilities Term Sheet) to secure the Borrower Senior Secured Credit Facilities and (y) in the case of the Secured Bridge Facility, the granting of liens on the Collateral (as defined in the Borrower Senior Secured Credit Facilities Term Sheet) to secure the Secured Bridge Facility, in each case, solely to the extent required hereunder) with charter documents of the Borrower and such Guarantors, solvency of the Borrower and its subsidiaries on a consolidated basis on the Funding Date after giving effect to the Transactions (and defined in a manner consistent with the Solvency Certificate attached as Exhibit F hereto), Federal Reserve margin regulations, the Investment Company Act, use of proceeds of such Credit Facility on the Funding Date not in violation of the Foreign Corrupt Practices Act, the Patriot Act (as defined below) or sanctions and anti-corruption laws, and, solely in the case of the Borrower Senior Secured Credit Facilities and the Secured Bridge Facility, the creation, validity and perfection of the security interests granted in the intended Collateral (subject to the Certain Funds Provision (as defined below)); and (ii) with respect to the Incremental Term Loan B Facility, the representations and warranties of CRC and the Guarantors under the Incremental Term Loan B Facility relating to organizational status of CRC and such Guarantors and good standing of CRC, organizational power and authority to enter into the Financing Documentation for the Incremental Term Loan B Facility, due authorization, execution, delivery and enforceability of the Financing Documentation for the Incremental Term Loan B Facility, no conflicts (limited to entry into the Financing Documentation for the Incremental Term Loan B Facility, borrowing thereunder and the granting of liens on the Collateral (as defined in the Existing CRC Credit Agreement) to secure the Incremental Term Loan B Facility solely to the extent required hereunder) with charter documents of CRC and such Guarantors, solvency of CRC and its subsidiaries on a consolidated basis on the Funding Date after giving effect to the Transactions (and defined in a manner consistent with the Solvency Certificate attached as

 

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Exhibit F hereto), Federal Reserve margin regulations, the Investment Company Act, use of proceeds of the Incremental Term Loan B Facility on the Funding Date not in violation of the Foreign Corrupt Practices Act, the Patriot Act or sanctions laws, and the creation, validity and perfection of the security interests granted in the intended Collateral to secure the Incremental Term Loan B Facility (subject to the Certain Funds Provision).

To the extent any security interest in the intended Collateral for any Credit Facility (other than any Collateral the security interest in which may be perfected by (x) the filing of a UCC financing statement or (y) the possession of the stock certificates, to the extent certificated, of (A) the Borrower’s material domestic wholly-owned restricted subsidiaries (other than the Company and its subsidiaries), (B) the Company and (C) to the extent received by the Borrower from the Company on or prior to the Funding Date after you have used commercially reasonable efforts to obtain them on or prior to the Funding Date, material domestic wholly-owned restricted subsidiaries of the Company) is not or cannot be provided on the Funding Date, as applicable, (i) without undue burden or expense, (ii) as a result of any requirement to obtain approvals from governmental authorities under applicable governing law that have not been obtained prior to the Funding Date (it being understood that applicable gaming law requires prior approval of liens on certain of the pledged equity, which approvals may not be obtained prior to the Funding Date and the receipt of such approvals and the delivery of the certificates representing such pledged equity interests shall not be a condition to the funding of the Credit Facilities) or (iii) after your use of commercially reasonable efforts to do so, then the provision and/or perfection of such security interest(s) or deliverable shall not constitute a condition precedent to the availability of any Credit Facility on the Funding Date but shall be required to be delivered after the Funding Date pursuant to arrangements to be mutually agreed by the Borrower and the Lead Arrangers, acting reasonably (it being understood notwithstanding anything to the contrary provided herein, that in no event shall (x) the Borrower be required pursuant to the terms hereof to deliver mortgages in respect of owned or leased real property of the Borrower or the Guarantors (as defined in the Borrower Senior Secured Credit Facilities Term Sheet) for any Credit Facility on a date that is earlier than 90 days after the Funding Date (or such longer period as the Senior Administrative Agent may determine in its reasonable discretion) or (y) CRC be required pursuant to the terms hereof to deliver mortgages or mortgage modifications for existing mortgages in respect of owned or leased real property of CRC or the Guarantors (including CEOC and any of its subsidiaries that are required to become Guarantors under the Existing CRC Credit Agreement after the CEOC Event) (as defined in the Existing CRC Credit Agreement) on a date that is earlier than 90 days after the Funding Date (or such longer period as the CRC Administrative Agent may determine in its reasonable discretion)). In no event shall the funding of the commitments of any Credit Facility hereunder be conditioned upon the funding of any other Credit Facility hereunder and the satisfaction of the conditions to funding each Credit Facility shall be determined independently for such Credit Facility. This paragraph and the two immediately preceding paragraphs shall be referred to as the “Certain Funds Provision”.

3. Syndication.

(a) You agree to assist (and to use your commercially reasonable efforts (to the extent consistent with the terms of the Acquisition Agreement) to cause the Company to assist) the Lead Arrangers actively until the earlier to occur of (i) a Successful Syndication (as defined in the Fee Letter) and (ii) 30 days after the Funding Date (such earlier date, the “Syndication Date”), in achieving a syndication of the Credit Facilities that is reasonably satisfactory to the Lead Arrangers and you; provided that, it is understood that the Initial Lenders’ commitments hereunder are not conditioned upon the syndication of, or receipt of commitments in respect of, the Credit Facilities, and in no event shall the commencement or successful completion of syndication of the Credit Facilities constitute a condition to the availability of the Credit Facilities on the Funding Date or at any time thereafter. To assist the Lead Arrangers in their syndication and arrangement efforts for the Credit Facilities, you agree that from the date of your acceptance of this Commitment Letter until the Syndication Date with respect to the Credit Facilities, you will (i) make senior management of the Borrower available to prospective Lenders on reasonable prior notice and at times during normal business hours and places to be mutually agreed upon (and your using commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to cause appropriate senior

 

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management of the Company to be available for such meetings)), (ii) host, with the Lead Arrangers, one meeting and a reasonable number of conference calls to be mutually agreed with prospective Lenders at a time during normal business hours and place to be mutually agreed upon (and your using commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to cause appropriate officers of the Company to be available for such meetings and such conference calls)), (iii) assist, and, if applicable, use commercially reasonable efforts to cause your non-legal advisors and (to the extent consistent with the Acquisition Agreement) the Company’s non-legal advisors to assist, the Lead Arrangers in the preparation of customary confidential information memoranda and other customary marketing materials to be used in connection with the syndication and arrangement and provide (and use commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to cause the Company to provide) the Lead Arrangers upon reasonable request with other customary information, including financial information required in Schedule I attached hereto and projections (but no more than five years of projections) prepared by the Borrower), in connection with syndication of the Credit Facilities that is reasonably available to you and your advisors (and (to the extent consistent with the Acquisition Agreement) the Company and its advisors), (iv) use commercially reasonable efforts to ensure that the syndication efforts of the Lead Arrangers benefit from the existing lending relationships of the Borrower and (to the extent consistent with the Acquisition Agreement) the Company, and (v) use commercially reasonable efforts to obtain, at the Borrower’s expense, (I) a current corporate rating of the Borrower from Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”), (II) a current corporate family rating of the Borrower from Moody’s Investors Service, Inc. (“Moody’s”) and (III) a current rating with respect to each Credit Facility from each of S&P and Moody’s, in each case, prior to the launch of general syndication of the Credit Facilities, and to participate actively in the process of securing such ratings, including having senior management of the Borrower meet with such rating agencies (it being understood, however, that neither the obtaining of such ratings nor any specific rating shall be a condition to the availability of the Credit Facilities on the Funding Date). Upon the written request of the Initial Commitment Parties, you will (i) furnish, for no fee, to the Lead Arrangers an electronic version of the Borrower’s trademarks, service marks and corporate logo and (ii) use your commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to cause the Company to furnish, for no fee, to the Lead Arrangers an electronic version of the Company’s trademarks, service marks and corporate logo, in each case, for use in marketing materials for the purpose of facilitating the syndication of the Credit Facilities (collectively, the “Licenses”); provided, however, that the Licenses shall be used solely for the purpose described above and may not be assigned or transferred. In connection with the foregoing requirements to provide assistance, you will not be required to provide any information to the extent that the provision thereof would violate or waive any attorney-client or other privilege, constitute attorney work product or violate any law, rule or regulation, or any obligation of confidentiality owing to a third party and binding on you, the Company or your or its respective affiliates. Notwithstanding anything herein to the contrary, the only financial statements that shall be required to be provided to the Lead Arrangers as a condition precedent to closing shall be those required to be delivered pursuant to paragraph (b) of Schedule I hereof.

(b) (i) The Initial Commitment Parties will manage, in consultation with you, all aspects of the syndication of the Borrower Senior Secured Credit Facilities, including decisions as to the selection and number of potential Lenders to be approached (provided that no Disqualified Institutions shall be approached without your prior written consent), when they will be approached, whose commitments for the Borrower Senior Secured Credit Facilities will be accepted, any titles offered to the Lenders under the Borrower Senior Secured Credit Facilities and the final allocations of the commitments under the Borrower Senior Secured Credit Facilities, subject in each case to the final two sentences of this Section 3(b)(i) and to Section 1(b). Notwithstanding the foregoing, which Lenders’ commitments for the Borrower Senior Secured Credit Facilities will be accepted and titles offered to Lenders for the Borrower Senior Secured Credit Facilities will all be subject to your prior approval (not to be unreasonably withheld). It is also understood and agreed that the distribution of the fees with respect to the Borrower Senior Secured Credit Facilities among the Lenders will be mutually agreed between you and the Initial Commitment Parties.

 

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(ii) The Initial Commitment Parties will manage, in consultation with you, all aspects of the syndication of the Incremental Term Loan B Facility, including decisions as to the selection and number of potential Lenders to be approached (provided that no Disqualified Institutions shall be approached without your prior written consent), when they will be approached, whose commitments for the Incremental Term Loan B Facility will be accepted, any titles offered to the Lenders under the Incremental Term Loan B Facility and the final allocations of the commitments under the Incremental Term Loan B Facility, subject in each case to the final two sentences of this Section 3(b)(ii) and to Section 1(b). Notwithstanding the foregoing, which Lenders’ commitments for the Incremental Term Loan B Facility will be accepted and titles offered to Lenders for the Incremental Term Loan B Facility will all be subject to your prior approval (not to be unreasonably withheld). It is also understood and agreed that the distribution of the fees with respect to the Incremental Term Loan B Facility among the Lenders will be mutually agreed among you and the Initial Commitment Parties.

(iii) JPMorgan will manage, in consultation with you, all aspects of the syndication of the Secured Bridge Facility, including decisions as to the selection and number of potential Lenders to be approached (provided that no Disqualified Institutions shall be approached without your prior written consent), when they will be approached, whose commitments for the Secured Bridge Facility will be accepted, any titles offered to the Lenders under the Secured Bridge Facility and the final allocations of the commitments under the Secured Bridge Facility, subject in each case to the final two sentences of this Section 3(b)(iii) and to Section 1(b). Notwithstanding the foregoing, which Lenders’ commitments for the Secured Bridge Facility will be accepted and titles offered to Lenders for the Secured Bridge Facility will all be subject to your prior approval (not to be unreasonably withheld). It is also understood and agreed that the distribution of the fees with respect to the Secured Bridge Facility among the Lenders will be mutually agreed between you and JPMorgan.

(iv) The Initial Commitment Parties will manage, in consultation with you, all aspects of the syndication of the Unsecured Bridge Facility, including decisions as to the selection and number of potential Lenders to be approached (provided that no Disqualified Institutions shall be approached without your prior written consent), when they will be approached, whose commitments for the Unsecured Bridge Facility will be accepted, any titles offered to the Lenders under the Unsecured Bridge Facility and the final allocations of the commitments under the Unsecured Bridge Facility, subject in each case to the final two sentences of this Section 3(b)(iv) and to Section 1(b). Notwithstanding the foregoing, which Lenders’ commitments for the Unsecured Bridge Facility will be accepted and titles offered to Lenders for the Unsecured Bridge Facility will all be subject to your prior approval (not to be unreasonably withheld). It is also understood and agreed that the distribution of the fees with respect to the Unsecured Bridge Facility among the Lenders will be mutually agreed between you and the Initial Commitment Parties.

(c) Effective from your agreement to and acceptance of this Commitment Letter and continuing through the later of (i) the Syndication Date and (ii) the Funding Date, the Borrower and its controlled subsidiaries will not arrange, offer, place or syndicate (or cause to be arranged, offered, placed or syndicated) any debt securities or syndicated bank financing by or on behalf of itself or any of its controlled subsidiaries (and you will use your commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to ensure that the Company will not arrange, offer, place or syndicate (or cause to be arranged, offered, placed or syndicated) any debt securities or credit facilities by or on behalf of the Company or any of its controlled subsidiaries) without the consent of the Initial Commitment Parties (which shall not be unreasonably withheld), if such issuance, offering, placement or arrangement would materially impair the primary syndication of the Credit Facilities; provided that, notwithstanding the foregoing, you, the Company and your and its respective subsidiaries may arrange, offer, place or syndicate (i) the New Senior Unsecured Notes, (ii) indebtedness constituting working capital, purchase money or capital lease financing, (iii) the Viper Transactions (or any other sale and leaseback transaction), (iv) indebtedness permitted to be incurred by the Company and its subsidiaries pursuant to the Acquisition Agreement and (v) (x) any refinancings, extensions or replacements of the foregoing and (y) any other refinancings, extensions or replacements of existing debt financing of you, the Company or your or its respective subsidiaries that, in the case of clause (y), will mature within 24 months following the date of this Commitment Letter.

 

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4. Information.

(a) You represent and warrant that (i) all written information (other than the Projections (as defined below), forward looking information, information of a general economic or general industry nature and third-party reports) concerning the Borrower and its subsidiaries and the Transactions that has been or will be made available to the Commitment Parties by you, or any of your representatives (on your behalf), in connection with any aspect of the financing transactions contemplated hereby (the “Information”), when taken as a whole, does not, and in the case of Information made available after the date hereof, will not when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not materially misleading (giving effect to all supplements and updates thereto) and (ii) all financial projections concerning the Borrower and its subsidiaries taking into account the consummation of the Transactions, that have been or will be made available to the Commitment Parties by you, or any of your representatives (on your behalf), in connection with any aspect of the financing transactions contemplated hereby (the “Projections”) have been and will be prepared in good faith based upon assumptions believed by you to be reasonable at the time made and at the time such Projections are furnished to us, it being understood such assumptions and Projections are as to future events and are not to be viewed as facts, are subject to significant uncertainties and contingencies, many of which are outside of your control, that no assurance can be given that any particular Projections will be realized and that actual results may vary significantly from the Projections and such differences may be material. You agree that, if at any time prior to the later of the Funding Date and the Syndication Date, you become aware that any of the representations in the preceding sentence would be incorrect in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will promptly supplement, or cause to be supplemented (or, prior to the Funding Date, in the case of Information and Projections regarding the Company and its subsidiaries, use commercially reasonable efforts to supplement, or cause to be supplemented), the Information and Projections, as applicable, so that such representations will be correct in all material respects under those circumstances; provided that any such supplementation shall cure any breach of such representations. Solely as they relate to matters with respect to the Company and its subsidiaries, prior to the Funding Date, the foregoing representations, warranties and covenants are made to your knowledge. In issuing these commitments and in arranging and syndicating the Credit Facilities, the Commitment Parties are and will be using and relying on the Information and Projections without independent verification thereof; provided however, the accuracy of the representations in this Section 4(a) shall not be a condition to our obligations hereunder or the initial funding of the Credit Facilities on the Funding Date.

(b) You acknowledge that (i) the Lead Arrangers on your behalf will make available the Information, Projections and other marketing materials and presentations, including confidential information memoranda to be used in connection with the syndication of the Credit Facilities (collectively, the “Informational Materials”), to prospective Lenders by posting the Informational Materials on SyndTrak Online, Intralinks or by other similar electronic means (collectively, the “Electronic Means”), and (ii) certain prospective Lenders may not wish to receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the Borrower, the Company or the Borrower or the Company’s respective subsidiaries or any of their respective securities, and who may be engaged in investment and other market-related activities with respect to such entities’ securities (each such Lender, a “Public Lender”, and each Lender that is not a Public Lender, a “Private Lender”). At the reasonable request of the Initial Commitment Parties, (A) you will assist, and cause your subsidiaries to assist (including using commercially reasonable efforts (to the extent consistent with the Acquisition Agreement) to cause the Company to assist), the Lead Arrangers in the preparation of an additional version of the Informational Materials to be used in connection with the syndication of the Credit Facilities to Public Lenders, which will not contain MNPI (the “Public Informational Materials”), and (B) you will identify and conspicuously mark any Public Informational Materials “PUBLIC”. By marking materials as “PUBLIC”, you shall be deemed to have represented to the Lead Arrangers and prospective Lenders (to the extent that the foregoing are recipients thereof) that such Informational Materials do not contain any MNPI. Notwithstanding the foregoing, you agree that the Lead Arrangers may distribute the following documents

 

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to all prospective Lenders (including the Public Lenders) on your behalf unless you advise the Initial Commitment Parties in writing (including by email) within a reasonable time prior to their intended distributions (after you have been given a reasonable opportunity to review such documents) that such material should only be distributed to prospective Private Lenders: (x) administrative materials for prospective Lenders, such as lender meeting invitations and funding and closing memoranda, (y) notifications of changes to the Credit Facilities’ terms and (z) drafts and final versions of term sheets and definitive documents with respect to the Credit Facilities. If you advise the Initial Commitment Parties that any of the foregoing items should be distributed only to Private Lenders, then the Lead Arrangers will not distribute such materials to Public Lenders without further discussion with you. Before distribution of any Informational Materials (a) to prospective Private Lenders, you shall provide the Lead Arrangers with a customary letter authorizing the dissemination of the Informational Materials and (b) to prospective Public Lenders, you shall provide the Lead Arrangers with a customary letter authorizing the dissemination of the Public Informational Materials and confirming the absence of MNPI therefrom. It is hereby agreed that the information package containing solely Public Informational Materials will contain customary language exculpating you, the Company, the Lead Arrangers and your and their respective affiliates, with respect to any liability related to the use of the contents of such information package or any related marketing materials by any recipients thereof.

5. Indemnification.

(a) You agree to indemnify and hold harmless the Commitment Parties, the Lenders and each of their respective affiliates and their and their affiliates’ respective directors, officers, employees, agents, advisors and other principals and the successors and permitted assigns of the foregoing (each, an “Indemnified Party”) from and against any and all actions, suits, losses, claims, damages, liabilities and expenses of any kind or nature, joint or several, to which such Indemnified Party may become subject or that may be incurred or asserted or awarded against such Indemnified Party, in each case, arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) any matters contemplated by this Commitment Letter, the Transactions or any related transaction (including, without limitation, the execution and delivery of this Commitment Letter, the Financing Documentation for the Credit Facilities and the closing of the Transactions) or (ii) the use or the contemplated use of the proceeds of the Credit Facilities and any other financings undertaken pursuant to the Transactions (IN ALL CASES (SUBJECT TO THE FOLLOWING PROVISO), WHETHER OR NOT CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNIFIED PARTY), and to reimburse each Indemnified Party within 30 days following written demand therefor (together with reasonable backup documentation supporting such reimbursement request) for all reasonable and documented out-of-pocket expenses (including (but limited in the case of legal fees and expenses to) the reasonable and documented attorneys’ fees, expenses and charges of one primary counsel for all Indemnified Parties and one firm of local and gaming counsel for all Indemnified Parties in each relevant material jurisdiction (and, in the case of a conflict of interest where the Indemnified Party affected by such conflict informs you of such conflict and thereafter retains its own counsel, of another counsel in each relevant material jurisdiction for such affected Indemnified Party)) related to such actions, suits, losses, claims, damages, liabilities and expenses; provided that no Indemnified Party will have any right to indemnification or reimbursement for any of the foregoing to the extent resulting from (x) such Indemnified Party’s own gross negligence, bad faith or willful misconduct or the gross negligence, bad faith or willful misconduct of such Indemnified Party’s controlled affiliates or any of its or their directors, officers, employees, agents, controlling persons, members, representatives or principals (each a “Related Party”), in each case, as determined by a final non-appealable judgment of a court of competent jurisdiction, (y) a material breach of this Commitment Letter or the Fee Letter by such Indemnified Party or its Related Parties, in each case, as determined by a final non-appealable judgment of a court of competent jurisdiction or (z) arising from any dispute among Indemnified Parties or Lenders or their Related Parties other than any claims (A) arising out of any act or omission of you or any of your subsidiaries or (B) against a Commitment Party in its capacity as a Lead Arranger or any agent, arranger or bookrunner. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity

 

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shall be effective whether or not such investigation, litigation or proceeding is brought by you, the Company or your or its respective equityholders or creditors, whether or not an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. None of you, the Borrower, your or its respective subsidiaries nor any Indemnified Party will be liable for any indirect, consequential or punitive damages that may be alleged as a result of this Commitment Letter or any element of the Transactions; provided that nothing contained in this sentence shall limit your indemnity and reimbursement obligations to the extent set forth in this paragraph (including your indemnity and reimbursement obligations to indemnify us for indirect, special, punitive or consequential damage that are included in any third party claim in connection with which such Indemnified Party is entitled to indemnification hereunder). No Indemnified Party will be liable to you, your affiliates or any other person for any damages arising from the use by others of Informational Materials or other materials obtained by Electronic Means except to the extent of direct or actual damages resulting from the gross negligence, bad faith or willful misconduct or material breach of this Commitment Letter of such Indemnified Party or a Related Party of such Indemnified Party, as determined by a final non-appealable judgment of a court of competent jurisdiction. You shall not, without the prior written consent of each Indemnified Party affected thereby (which consent will not be unreasonably withheld), settle any threatened or pending claim or action that would give rise to the right of any Indemnified Party to claim indemnification hereunder unless such settlement (a) includes a full and unconditional release of all liabilities that are the subject of such claim or action against such Indemnified Party and (b) does not include any statement as to or an admission of fault, culpability or failure to act by or on behalf of any Indemnified Party.

(b) Each Indemnified Party shall be obligated to refund or return any and all amounts paid to it under this Section 5 or the following Section 6 to such Indemnified Party or its Related Parties for any such losses, claims, damages, liabilities or expenses to the extent such Indemnified Party is not ultimately entitled to payment of such amounts in accordance with the terms hereof.

(c) You shall not be liable for any settlement of any claim, litigation or proceeding effected without your consent (which consent shall not be unreasonably withheld, delayed or conditioned) or any expenses incurred or associated therewith, but if settled with your written consent, you agree to indemnify and hold harmless each Indemnified Party or Related Party, as the case may be, from and against any and all losses, claims, damages and liabilities of any kind or nature in accordance with and subject to the limitations contained in the preceding paragraphs of this Section 5.

6. Expenses. If the Funding Date occurs, you shall reimburse each of the Commitment Parties within 30 days following written demand therefor (or on the Funding Date, to the extent invoiced at least 3 business days prior to the Funding Date) (together with reasonable backup documentation supporting such reimbursement request) for all reasonable and documented out-of-pocket costs and expenses (including, without limitation, reasonable legal fees and expenses and due diligence expenses, which fees and expenses shall be limited to one primary counsel to the Lead Arrangers, the Administrative Agents and the Lenders taken as a whole and one local and gaming counsel in each relevant material jurisdiction (which may include a single counsel acting in multiple jurisdictions)) to the Lead Arrangers, the Administrative Agents and the Lenders taken as a whole and all reasonable printing, reproduction, document delivery, travel, CUSIP, Intralinks, SyndTrak Online, ClearParSM and communication costs incurred in connection with the syndication, arrangement and execution of the Credit Facilities and the preparation, review, negotiation, execution and delivery of this Commitment Letter, the Fee Letter and the Financing Documentation. You acknowledge that we may receive a benefit, including without limitation, a discount, credit or other accommodation, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.

7. Confidentiality.

(a) This Commitment Letter and the Fee Letter (collectively, the “Commitment Documents”) and the existence and contents hereof and thereof shall be confidential and may not be disclosed by you in whole or in part to any person without our prior written consent, except for (i) the disclosure hereof or

 

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thereof on a confidential basis to your directors, officers, employees, agents, accountants, attorneys and other professional advisors retained by you in connection with the Transaction (and you shall be responsible for your affiliates’ and your directors, officers, employees, agents, accountants, attorneys and other professional advisors’ compliance with this paragraph), (ii) in any legal or administrative proceeding or as otherwise required by law or compulsory legal process or to the extent requested or required by governmental and/or regulatory authorities, including to regulatory (including gaming) authorities in connection with obtaining requisite consents and approvals for the Credit Facilities and the Transactions (in which case you, to the extent reasonably practicable and not prohibited by applicable law, agree to inform the Commitment Parties promptly thereof), (iii) this Commitment Letter and the Fee Letter (which, except for disclosure to the Company and its board of directors, officers, accountants, attorneys and other professional advisors, shall be redacted in a manner reasonably satisfactory to the Initial Commitment Parties to exclude fee amounts, but which may include the “Total Cap” and “Market Flex” provisions) on a confidential basis to the Company, Viper and the respective board of directors, officers, employees, agents, accountants, attorneys and other professional advisors of the Company and Viper in connection with their consideration of the Transactions, (iv) if the Lead Arrangers consent in writing to such proposed disclosure (such consent not to be unreasonably withheld, delayed or conditioned), (v) disclosure in connection with the enforcement of your rights hereunder or under the Fee Letter or (vi) to the extent that the Commitment Documents or the existence and contents thereof become publicly available other than by reason of disclosure by you or any of your affiliates in violation of this Commitment Letter or any other duty of confidentiality owing by them to us, any of our affiliates or any of their respective representatives; provided that you may disclose, after your acceptance of the Commitment Documents, (1) this Commitment Letter, but not the Fee Letter, in any required filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges and in any syndication or other marketing materials, registration statements, offering memoranda or prospectus in connection with the Credit Facilities, the New Senior Unsecured Notes, the Viper Transactions and the Acquisition, (2) the Commitment Documents to potential Additional Lead Arrangers or Additional Initial Lenders on a confidential basis, (3) the existence of the Fee Letter (but not the contents of the Fee Letter) and the aggregate amount of the fees contained in the Fee Letter as part of the Projections, pro forma information or a generic disclosure of aggregate sources and uses related to fee amounts to the extent customary or required in marketing materials, any proxy or other public filing or any prospectus or offering memorandum or confidential information memorandum and (4) Exhibit A, Exhibit B, Exhibit C, Exhibit D and Exhibit E or any other summary of the terms of the Credit Facilities to prospective Lenders or any ratings agency in connection with the Transactions, the Viper Transactions and/or the New Senior Unsecured Notes or its review of the Borrower or the Company. Your obligations under this paragraph (except with respect to the Fee Letter and the contents thereof) shall automatically terminate two years following the date of this Commitment Letter.

(b) The Commitment Parties and their affiliates will use all information provided to them or such affiliates by or on behalf of you, the Company or your or its respective affiliates or any of your or its respective representatives in connection with the transactions contemplated hereby solely for the purpose of providing the services which are the subject of this Commitment Letter and shall not disclose any such information in whole or in part to any person without your prior written consent; provided that nothing herein shall prevent the Commitment Parties from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any legal or administrative proceeding, or otherwise as required by applicable law or regulation or compulsory legal process or as requested by a governmental authority (in which case the Commitment Parties, to the extent reasonably practicable and not prohibited by applicable law, agree to inform you promptly thereof), (b) upon the request or demand of any regulatory authority having jurisdiction over the Commitment Parties or any of their affiliates (in which case, except with respect to any audit or examination conducted by bank accountants or any regulatory authority exercising examination or regulatory authority, the Commitment Parties, to the extent reasonably practicable and not prohibited by applicable law, agree to inform you promptly thereof), (c) to the extent that such information becomes publicly available other than by reason of disclosure by the Commitment Parties or any of their affiliates in violation of this Commitment Letter or any other duty of confidentiality owing by them to you, the Company, any of your or its respective affiliates or any of your or its respective

 

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representatives, (d) to the extent that such information is received by the Commitment Parties from a third party that is not to the Commitment Parties’ knowledge subject to confidentiality obligations owing to you, the Company or your or its respective affiliates or any of your or its respective representatives, (e) to the extent that such information is independently developed by the Commitment Parties, (f) to the Commitment Parties’ affiliates and their and their affiliates’ respective directors, officers, employees, legal counsel, independent auditors and other experts or agents (collectively, “Representatives”) who need to know such information in connection with the Transactions and are informed of the confidential nature of such information (and each of us shall be responsible for our respective affiliates’ and their Representatives’ compliance with this paragraph), (g) to prospective Lenders, participants or assignees or any potential counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or CRC or any of their respective subsidiaries or any of their respective obligations, in each case, who agree (which agreement may be pursuant to customary syndication practice) to be bound by the terms of this paragraph (or language substantially similar to this paragraph), (h) for purposes of establishing a “due diligence” defense, (i) to enforce their rights under this Commitment Letter and the Fee Letter or (j) to ratings agencies and market data collectors in connection with the Transactions; provided that notwithstanding anything to the contrary provided herein, no disclosure of any such information may be made to any Disqualified Institution. The Commitment Parties’ obligations under this paragraph shall automatically terminate and be superseded by the confidentiality provisions in the Financing Documentation, to the extent covered therein upon the initial funding thereunder and shall in any event automatically terminate two years following the date of this Commitment Letter.

(c) The Commitment Parties hereby notify you that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”) and 31 C.F.R. Section 1010.230 (the “Beneficial Ownership Regulation”), each of them is required to (i) obtain, verify and record information that identifies the loan parties, which information includes your name and address and other information that will allow the Commitment Parties and the other Lenders to identify you in accordance with the Patriot Act and (ii) obtain a certification regarding beneficial ownership (a “Beneficial Ownership Certification”) from the Borrower and CRC. This notice is given in accordance with the requirements of the Patriot Act and the Beneficial Ownership Regulation and is effective as to each Commitment Party and each Lender.

8. Other Services.

(a) You acknowledge that the Commitment Parties and their affiliates are full service financial institutions engaged, either directly or through their affiliates, in a broad array of activities, including commercial and investment banking, financial advisory, market making and trading, investment management (both public and private investing), investment research, principal investment, financial planning, benefits counseling, risk management, hedging, financing, brokerage and other financial and non-financial activities and services globally. In the ordinary course of their various business activities, the Commitments Parties and their affiliates and funds or other entities in which the Commitment Parties or their affiliates invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of its customers. In addition, the Commitment Parties or their affiliates may at any time communicate independent recommendations and/or publish or express independent research views in respect of such assets, securities or instruments.

(b) You acknowledge that the Commitment Parties or their affiliates may be providing financing or other services to parties whose interests may conflict with yours or the Company’s. Each of the Commitment Parties agrees that it will not furnish confidential information obtained from you or the Company to any of their other customers and that they will treat confidential information relating to you and the Company and your and the Company’s respective affiliates with the same degree of care as they treat their own confidential information. The Commitment Parties further advise you that they will not make available to you confidential information that they have obtained or may obtain from any other customer.

 

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(c) In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (a) (i) the arranging and other services described herein regarding the Credit Facilities are arm’s-length commercial transactions between you and your affiliates, on the one hand, and the Commitment Parties, on the other hand, (ii) you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby; (b) (i) each Commitment Party has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity (except as expressly set forth in any engagement letters between such Commitment Party and you or your affiliates) and (ii) no Commitment Party has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the Fee Letter or in any engagement letters between such Commitment Party and you or your affiliates, or in any other letter agreements with respect to the New Senior Unsecured Notes between such Commitment Party and you or your affiliates; and (c) each Commitment Party and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and the Company’s and those of your and the Company’s affiliates, and the Commitment Parties have no obligation to disclose any of such interests to you or the Company or your or the Company’s respective affiliates. You agree that you will not assert any claim against any Commitment Party based on an alleged breach of fiduciary duty by the Commitment Party in connection with this Commitment Letter and the transactions contemplated hereby (except pursuant to a duty arising under or as a result of any engagement letters or other agreements between such Commitment Party and you or your affiliates).

(d) The Borrower acknowledges that certain of the Commitment Parties are currently acting as lenders under the Existing CRC Credit Agreement and that Credit Suisse is acting as the CRC Administrative Agent under the Existing CRC Credit Agreement. The Borrower further acknowledges that the Borrower’s and its affiliates’ rights and obligations under any other agreement with the Commitment Parties or any of their respective affiliates (including the Existing CRC Credit Agreement) that currently or hereafter may exist are, and shall be, separate and distinct from the rights and obligations of the parties pursuant to this Commitment Letter, and none of such rights and obligations under such other agreements shall be affected by the Commitment Parties’ performance or lack of performance of services hereunder. The Borrower further acknowledges that the Commitment Parties or any of their respective affiliates may currently or in the future participate in other debt or equity transactions on behalf of or render financial advisory services to the Borrower or other companies that may be involved in a competing transaction. The Borrower hereby agrees that the Commitment Parties may render their services under this Commitment Letter notwithstanding any actual or potential conflict of interest presented by the foregoing, and the Borrower hereby waives any conflict of interest claims relating to the relationship between any Commitment Party and the Borrower and its affiliates in connection with the engagement contemplated hereby, on the one hand, and Borrower exercise by such Commitment Party or any of its affiliates of any of their rights and duties under the Existing CRC Credit Agreement, on the other hand, provided that the foregoing shall not limit the Commitment Parties’ obligations that are expressly provided herein.

(e) As you know, JPMorgan, Credit Suisse and Macquarie have been retained by the Borrower (or one of its affiliates) as a financial advisor (in such capacity, the “Financial Advisors”) in connection with the Acquisition. You agree to such retention, and further agree not to assert any claim you might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from the engagement of either Financial Advisor, on the one hand, and JPMorgan, Credit Suisse, Macquarie and their respective affiliates’ relationships with you as described and referred to herein, on the other. Each of the Commitment Parties party hereto acknowledges (i) the retention of JPMorgan, Credit Suisse and Macquarie as Financial Advisors and (ii) that such relationship does not create any fiduciary duties or fiduciary responsibilities to such Commitment Party on the part of JPMorgan, Credit Suisse and Macquarie or their respective affiliates.

 

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9. Acceptance/Expiration of Commitments.

(a) This Commitment Letter and the commitment and agreements of the Commitment Parties and the undertakings of the Lead Arrangers set forth herein shall automatically terminate at 11:59 p.m. (Eastern Time) on June 28, 2019, without further action or notice, unless signed counterparts of this Commitment Letter and the Fee Letter shall have been delivered to the Commitment Parties by such time (and upon such delivery, this Commitment Letter and the Fee Letter shall be binding agreements among the Commitment Parties and you).

(b) In the event this Commitment Letter is accepted by you as provided in the preceding paragraph, the commitment and agreements of the Commitment Parties and the undertakings of the Lead Arrangers set forth herein, and your obligations under this Commitment Letter and the Fee Letter, except as set forth in Section 10 of this Commitment Letter and in the Fee Letter, will automatically terminate without further action or notice at 11:59 p.m. (Eastern Time) on the earliest to occur of (i) the termination of the Acquisition Agreement in accordance with its terms without the closing of the Acquisition, (ii) the consummation of the Acquisition without the funding of the Credit Facilities on the date of such consummation and (iii) the date that is 5 business days after the “End Date” as defined in the Acquisition Agreement as in effect on the date hereof and giving effect to any extension thereof in accordance with the Acquisition Agreement as in effect on the date hereof (the “Expiration Date”).

10. Survival. The sections of this Commitment Letter relating to Syndication, Indemnification, Information, Expenses, Confidentiality, Other Services, Survival, Governing Law and Miscellaneous shall survive any termination or expiration of this Commitment Letter or the commitment of the Commitment Parties or the undertakings of the Lead Arrangers set forth herein; provided that (x) the provisions hereof relating to Indemnification and Expenses shall be terminated on the Funding Date and superseded in their entirety by the definitive Financing Documentation to the extent covered thereby and (y) the provisions hereof relating to Information shall survive only until the later of the Syndication Date and the Funding Date, in each case, at which time such obligations shall terminate and be of no further force and effect.

11. Governing Law. THIS COMMITMENT LETTER AND THE FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; provided, that, notwithstanding the foregoing to the contrary, it is understood and agreed that any determinations as to (x) the accuracy of any Specified Acquisition Agreement Representations and whether as a result of any breach thereof you (or your affiliate) have the right to terminate your (or your affiliate’s) obligations under the Acquisition Agreement or to otherwise decline to consummate the Acquisition under the Acquisition Agreement, (y) the interpretation of “Material Adverse Effect” (as defined in the Acquisition Agreement) and (z) the determination of whether the Acquisition has been consummated in accordance with the Acquisition Agreement, shall, in each case, be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY PROCEEDING, CLAIM, COUNTERCLAIM OR ACTION BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE FEE LETTER OR THE PERFORMANCE OF THE SERVICES HEREUNDER OR THEREUNDER. The parties hereto hereby agree that any suit or proceeding arising in respect of this Commitment Letter or the Fee Letter or any of the matters contemplated hereby or thereby will be brought exclusively in the U.S. District Court for the Southern District of New York or, if such court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and the parties hereto hereby agree to submit to the exclusive jurisdiction of, and venue in, such court. The parties hereto hereby agree that service of any process, summons, notice or document by registered mail addressed to you or the Commitment Parties will be effective service of process against such party for any action or proceeding relating to any such dispute. The parties hereto irrevocably and unconditionally waive any objection to venue of any such action or proceeding brought in any such court and any claim that any such

 

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action or proceeding has been brought in an inconvenient forum. A final judgment in any such action or proceeding may be enforced in any other courts with jurisdiction over you or each of the Commitment Parties.

12. Miscellaneous. This Commitment Letter and the Fee Letter embody the entire agreement among the Commitment Parties, you and your subsidiaries with respect to the specific matters set forth above and supersede all prior agreements and understandings relating to the subject matter hereof. Those matters that are not covered or made clear herein, in the Existing CRC Credit Agreement and the Fee Letter are subject to mutual agreement of the parties. No person has been authorized by any of the Commitment Parties to make any oral or written statements inconsistent with this Commitment Letter and the Fee Letter. This Commitment Letter and the Fee Letter shall not be assignable by any party hereto without the prior written consent of the other parties hereto, and any purported assignment without such consent shall be void; provided that you may assign this Commitment Letter and the Fee Letter to any wholly-owned subsidiary of you in connection with the consummation of the Transactions. This Commitment Letter and the Fee Letter are not intended to benefit or create any rights in favor of any person other than the parties hereto and, with respect to indemnification, each Indemnified Party. This Commitment Letter and the Fee Letter may be executed in separate counterparts, and delivery of an executed signature page of this Commitment Letter and the Fee Letter by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the Fee Letter may only be amended, modified or superseded by an agreement in writing signed by you and each of the Commitment Parties party hereto.

Each of the parties hereto agrees that each of this Commitment Letter and the Fee Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity) with respect to the subject matter contained herein and therein, including an agreement to negotiate in good faith the definitive documentation for the Credit Facilities by the parties hereto in a manner consistent with this Commitment Letter and the Fee Letter and to fund the commitments hereunder on the Funding Date, in each case, enforceable at law and in equity in accordance with their terms and subject only to the Funding Conditions as provided in Section 2 of this Commitment Letter, subject to the Certain Funds Provision.

[Signature Pages Follow]

 

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We are pleased to have been given the opportunity to assist you in connection with the financing for the Transactions.

 

Sincerely,
JPMORGAN CHASE BANK, N.A.
By:  

/s/ Brian Smolowitz

Name:   Brian Smolowitz
Title:   Vice President

[Signature Page to Commitment Letter]


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
By:  

/s/ Whitney Gaston

Name:   Whitney Gaston
Title:   Authorized Signatory
By:  

/s/ Marc Zihlmann

Name:   Marc Zihlmann
Title:   Authorized Signatory
CREDIT SUISSE LOAN FUNDING LLC
By:  

/s/ Joseph Palambini

Name:   Joseph Palambini
Title:   Managing Director

[Signature Page to Commitment Letter]


MACQUARIE CAPITAL (USA) INC.
By:  

/s/ Lisa Grushkin

Name:   Lisa Grushkin
Title:   Managing Director
By:  

/s/ Jeff Abt

Name:   Jeff Abt
Title:   Managing Director
MACQUARIE CAPITAL FUNDING LLC
By:  

/s/ Lisa Grushkin

Name:   Lisa Grushkin
Title:   Managing Director
By:  

/s/ Jeff Abt

Name:   Jeff Abt
Title:   Managing Director

[Signature Page to Commitment Letter]


Agreed to and accepted as of the date first

above written:

ELDORADO RESORTS, INC.
By:  

/s/ Bret Yunker

Name:   Bret Yunker
Title:   Chief Financial Officer

[Signature Page to Commitment Letter]


SCHEDULE I

Conditions Precedent to Closing

Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Schedule I is attached or in the Exhibits to the Commitment Letter.

The initial funding of the loans under the Credit Facilities on the Funding Date will be subject to the following conditions precedent:

(a) The Acquisition shall be consummated in all material respects in accordance with the Acquisition Agreement, substantially concurrently with the initial funding of the Credit Facilities, and no provision thereof shall have been amended or waived by you, and no consent with respect to any term or condition thereof shall have been given thereunder by you, in a manner materially adverse to the interests of the Commitment Parties or the Lenders in their capacities as such without the prior written consent of the Initial Commitment Parties (such approval not to be unreasonably withheld, conditioned or delayed) (it being agreed that (A) (i) any decrease in the cash portion of the purchase price of not more than 10% shall not be materially adverse to the interests of the Commitment Parties or the Lenders in their respective capacities as such so long as such decrease is allocated to reduce the Unsecured Bridge Facility on a dollar for dollar basis and (ii) any decrease in the number of shares constituting the equity portion of the purchase price of not more than 10% shall not be materially adverse to the interest of the Commitment Parties or the Lenders in their respective capacities as such; (B) the granting of any consent under the Acquisition Agreement that is not materially adverse to the interests of the Commitment Parties or the Lenders in their respective capacities as such shall not otherwise constitute an amendment or waiver; (C) any amendment to or modification of the definition of “Material Adverse Effect” with respect to the Company in the Acquisition Agreement to which you agree shall be deemed to be materially adverse to the interests of the Commitment Parties and the Lenders in their capacities as such; (D) any waiver of (or material modification having the effect of a waiver of) the condition set forth in Section 6.1(e)(ii) of the Acquisition Agreement (as in effect on the date hereof) as to gaming approvals to which you agree shall be deemed to be materially adverse to the interests of the Commitment Parties and the Lenders in their capacities as such); and (E) any waiver of (or material modification having the effect of a waiver of) the condition set forth in Section 6.3(e) of the Acquisition Agreement (as in effect on the date hereof) as to the Company Convertible Senior Notes (as defined below) to which you agree shall be deemed to be materially adverse to the interests of the Commitment Parties and the Lenders in their capacities as such).

(b) The Lead Arrangers shall have received: (i) audited consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity (deficit) and cash flows of the Borrower and its consolidated subsidiaries (excluding the Company and its subsidiaries) as of the end of (in the case of such balance sheet) and for the three most recent fiscal years of the Borrower ended more than 90 days prior to the Funding Date; (ii) unaudited quarterly consolidated condensed balance sheets and related consolidated condensed statements of operations, comprehensive income (loss), changes in stockholders’ equity (deficit) and cash flows of the Borrower and its consolidated subsidiaries (excluding the Company and its subsidiaries) as of the end of (in the case of such balance sheet) and for the period (if any) commencing after the end of the fiscal year covered by the most recent audited financial statements of the Borrower and ending on the last day of the most recent fiscal quarter (other than the fourth fiscal quarter of any fiscal year) ended at least 45 days prior to the Funding Date; (iii) audited consolidated balance sheets and related consolidated statements of operations and comprehensive income/(loss), changes in stockholders’ equity/(deficit) and cash flows of the Company and its consolidated subsidiaries as of the end of (in the case of such balance

 

Schedule I - 1


sheet) and for the three most recent fiscal years of the Company ended more than 90 days prior to the Funding Date; (iv) unaudited quarterly consolidated condensed balance sheets and related consolidated condensed statements of operations and comprehensive income/(loss), changes in stockholders’ equity/(deficit) and cash flows of the Company and its consolidated subsidiaries as of the end of (in the case of such balance sheet) and for the period (if any) commencing after the end of the fiscal year covered by the most recent audited financial statements of the Company and ending on the last day of the most recent fiscal quarter (other than the fourth fiscal quarter of any fiscal year) ended at least 45 days prior to the Funding Date; and (v) an unaudited consolidated pro forma balance sheet and statement of operations of the Borrower and its consolidated subsidiaries (including the Company and its consolidated subsidiaries) as of the last day and for the four fiscal quarter period ending on the last day of the most recently completed four fiscal quarter period for which historical financial statements of the Borrower and its consolidated subsidiaries have been delivered pursuant to clauses (i) and (ii), prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of the fiscal year beginning on or immediately prior to such period (in the case of such statement of operations). The Lead Arrangers hereby acknowledge receipt of the financial statements in the foregoing clauses (i) and (iii) as of and for the fiscal years ended December 31, 2016, December 31, 2017 and December 31, 2018, and in the foregoing clauses (ii) and (iv) as of and for the fiscal quarter ended March 31, 2019. The filing with the SEC of the financial statements required by clauses (i), (ii), (iii) and (iv) by the Borrower or the Company will satisfy the foregoing requirements. In addition, in the event that the Borrower delivers to the Lead Arrangers (including if such information is filed with the SEC) financial information relating to any fiscal periods more recently ended than those required by this paragraph (b), such delivery shall be deemed to satisfy the requirements of this paragraph (b).

(c) You shall have afforded the Lead Arrangers a period of no less than 15 consecutive business days, which days may (at the Borrower’s option) but shall not be required to, include the Funding Date (the “Marketing Period”), to syndicate the Credit Facilities; provided that such 15 consecutive business day period shall be deemed to start on the date of the receipt by the Lead Arrangers of the historical financial statements required under paragraph (b) above and the pro forma financial statements required under paragraph (b)(v) above, in each case, with the term “Funding Date” therein replaced for the purpose of this parenthetical with the date of delivery of such financial statements (subject to the Borrower’s rights pursuant to the last sentence of paragraph (b) above); provided that, if on any date during the Marketing Period the financial statements delivered at the start of such period would be required to be updated if the term “Funding Date” was replaced by such date of the Marketing Period, such 15 business day period shall continue and not restart if you shall have delivered such updated financial statements on such date; provided, further, that (i) July 5th of 2019 shall be excluded from the determination of the Marketing Period, (ii) if such 15 consecutive business day period has not ended by August 16, 2019, then such 15 consecutive business day period will not commence until September 3, 2019, (iii) November 28th and 29th of 2019 shall be excluded from the determination of the Marketing Period, (iv) if such 15 consecutive business day period has not ended by December 18, 2019, then such 15 consecutive business day period will not commence until January 2, 2020, (v) July 3rd of 2020 shall be excluded from the determination of the Marketing Period, (vi) if such 15 consecutive business day period has not ended by August 21, 2020, then such 15 consecutive business day period will not commence until September 8, 2020 and (vii) November 26th and 27th of 2020 shall be excluded from the determination of the Marketing Period. The Borrower may notify the Initial Commitment Parties in writing that the Borrower reasonably believes that it has delivered the financial statements required for the commencement of the Marketing Period and that such Marketing Period has therefore commenced on the date specified in such notice, and any such delivery of such a written notice shall be deemed to be conclusive evidence of the commencement of the Marketing Period

 

Schedule I - 2


on the date specified in such notice unless the Initial Commitment Parties object in written detail (stating with specificity what information has not been delivered) within 2 business days after receipt of such notice.

(d) With respect to the Unsecured Bridge Facility, unless waived by the Initial Commitment Parties, the Borrower shall have (i) prepared one or more offering memoranda or private placement memoranda (the “Offering Document”) related to the New Senior Unsecured Notes (all in customary form for the particular type of offering) including all financial statements customary for offerings of debt securities similar to the New Senior Unsecured Notes under Rule 144A; provided that, the Offering Document does not need to include such information customarily excluded in Rule 144A offerings, including, but not limited to, information required by Rules 3-05, 3-09, 3-10 or 3-16 of Regulation S-X under the Securities Act, information required by Item 302 of Regulation S-K, Compensation Discussion and Analysis or other information required by Item 402 or Item 601 of Regulation S-K under the Securities Act, XBRL exhibits and the executive compensation and related person disclosure rules related to SEC Release Nos. 33-8732A, 34-54302A and IC-2744A, (ii) arranged for delivery of drafts of customary (for high yield debt private placements by the Borrower or its affiliates, or the Company or its affiliates, as applicable) “comfort letters” (including customary “negative assurances”) with respect to the financial information of the Borrower and the Company, respectively, in the Offering Documents that independent accountants of the Borrower and the Company, respectively, would be prepared to deliver upon completion of customary procedures in connection with the offering of the New Senior Unsecured Notes and (iii) afforded the Investment Bank a period of no less than 15 consecutive business days (the “Notes Marketing Period”) following receipt of the Offering Document, to seek to place the New Senior Unsecured Notes (it being understood that the date, if any, of the issuance of the New Senior Unsecured Notes shall, at the Borrower’s option, qualify as a date upon which the Investment Bank had an opportunity to seek to place the New Senior Unsecured Notes); provided that (i) July 5th of 2019 shall be excluded from the determination of the Notes Marketing Period, (ii) if such 15 consecutive business day period has not ended by August 16, 2019, then such 15 consecutive business day period will not commence until September 3, 2019, (iii) November 28th and 29th of 2019 shall be excluded from the determination of the Notes Marketing Period, (iv) if such 15 consecutive business day period has not ended by December 18, 2019, then such 15 consecutive business day period will not commence until January 2, 2020, (v) July 3rd of 2020 shall be excluded from the determination of the Marketing Period, (vi) if such 15 consecutive business day period has not ended by August 21, 2020, then such 15 consecutive business day period will not commence until September 8, 2020 and (vii) November 26th and 27th of 2020 shall be excluded from the determination of the Marketing Period. It is hereby agreed that the Borrower may notify the Initial Commitment Parties in writing that the Borrower reasonably believes that it has delivered an Offering Document required for the commencement of the Notes Marketing Period and that such Notes Marketing Period has therefore commenced on the date specified in such notice, and any such delivery of such a written notice shall be deemed to be conclusive evidence of the commencement of the Notes Marketing Period on the date specified in such notice unless the Initial Commitment Parties object in written detail (stating with specificity what information has not been delivered) within 2 business days after receipt of such notice.

(e) With respect to each applicable Credit Facility, the (i) Specified Representations for such Credit Facility shall be true and correct in all material respects (except for those representations qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the Funding Date and (ii) the Specified Acquisition Agreement Representations shall be true and correct to the extent required by the Certain Funds Provision.

 

Schedule I - 3


(f) Since the date of the Acquisition Agreement, there has not been any Material Adverse Effect (as defined in the Acquisition Agreement) under clause (a) of the definition thereof with respect to the Company (a “Company Material Adverse Effect”) that would result in the failure of a condition precedent to your (or your affiliate’s) obligations under the Acquisition Agreement.

(g) All fees then due to the Administrative Agents, the Lead Arrangers and the Lenders under the Fee Letter shall have been paid from the proceeds of the fundings under the Financing Documentation on the Funding Date or otherwise, and all expenses contemplated by the Commitment Letter and the Fee Letter to be paid or reimbursed to the Administrative Agents, the Lead Arrangers and the Lenders that have been invoiced a reasonable period of time prior to the Funding Date (and in any event, invoiced at least 3 business days prior to the Funding Date (except as otherwise agreed by the Borrower)) shall have been paid from the proceeds of the fundings under the Financing Documentation on the Funding Date or otherwise.

(h) The Existing Debt Payoff (as defined in Exhibit A) shall be consummated substantially concurrently with, or shall be on the Funding Date promptly following, the initial funding of the Credit Facilities.

(i) Each of the Borrower, CRC and the applicable Guarantors, if any, under each applicable Credit Facility shall have provided the documentation and other information to the applicable Administrative Agent that are required by regulatory authorities under applicable “know-your-customer” rules and regulations, including the Patriot Act, at least 3 business days prior to the closing of the Credit Facilities, to the extent requested in writing at least 10 business days prior to the closing of the Credit Facilities.

(j) If the Borrower or CRC qualifies as a “legal entity customer” under the Beneficial Ownership Regulation and is not subject to any exemption thereunder, it shall deliver to each requesting Lender a Beneficial Ownership Certification as required by the Beneficial Ownership Regulation in relation to itself, at least 3 business days prior to the closing of the Credit Facilities, to the extent requested in writing at least 10 business days prior to the closing of the Credit Facilities.

(k) The applicable Administrative Agent shall have received a solvency certificate substantially in the form of Exhibit F hereto with respect to the applicable Credit Facilities from the chief financial officer, chief accounting officer or other financial officer of the Borrower or CRC, as applicable. Each applicable Administrative Agent and the applicable Lenders shall have received customary opinions of counsel to the Borrower or CRC, as applicable, and any applicable Guarantors under the applicable Credit Facilities and of appropriate local counsel and other customary corporate resolutions, secretary’s certificates, evidence of existence of the Borrower or CRC, as applicable, and the applicable Guarantors and good standing of the Borrower or CRC, as applicable, from the applicable public official in its jurisdiction of organization, customary borrowing notices (which shall not be required to include any representation or statement as to the absence (or existence) of any default or event of default or any bring-down of representations and warranties) and customary officer’s certificates (which shall not be required to include any representation or statement as to the absence (or existence) of any default or event of default or any bring-down of representations and warranties).

(l) With respect to the Borrower Senior Secured Credit Facilities and subject to Section 2 of the Commitment Letter and the Certain Funds Provision, (i) the Senior Administrative Agent (on behalf of the applicable Lenders) shall have a valid and perfected first priority lien

 

Schedule I - 4


(subject to permitted liens) and security interest in the Collateral (for purposes of this paragraph, as defined in the Borrower Senior Secured Credit Facilities Term Sheet) and (ii) all filings and recordations necessary in connection with perfecting the liens and security interests in the applicable Collateral shall have been duly made or authorized by the Borrower or the applicable Guarantor to be made.

(m) With respect to the Secured Bridge Facility and subject to Section 2 of the Commitment Letter and the Certain Funds Provision, (i) the Secured Bridge Administrative Agent (on behalf of the applicable Lenders) shall have a valid and perfected first priority lien (subject to permitted liens) and security interest in the Collateral (for purposes of this paragraph, as defined in the Borrower Senior Secured Credit Facilities Term Sheet) and (ii) all filings and recordations necessary in connection with perfecting the liens and security interests in the applicable Collateral shall have been duly made or authorized by the Borrower or the applicable Guarantor to be made.

(n) With respect to the Existing CRC Credit Agreement and solely to the extent required thereby and subject to Section 2 of the Commitment Letter and the Certain Funds Provision, (i) the CRC Administrative Agent (on behalf of the applicable Lenders) shall have a valid and perfected first priority lien (subject to permitted liens) and security interest in the Collateral (for purposes of this paragraph, as defined in the Existing CRC Credit Agreement and including the property of CEOC and its wholly owned material domestic restricted subsidiaries that become guarantors under the Existing CRC Credit Agreement) and (ii) all filings and recordations necessary in connection with perfecting with the liens and security interests in the applicable Collateral shall have been duly made or authorized by the applicable Loan Party (as defined in the Existing CRC Credit Agreement) to be made.

 

Schedule I - 5


EXHIBIT A

Transaction Description

Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in the Commitment Letter or the other Schedules and Exhibits to the Commitment Letter.

The Borrower intends to acquire all of the issued and outstanding equity interests of Caesars Entertainment Corporation (the “Company”) pursuant to that certain Agreement and Plan of Merger, dated as of June 24, 2019 (the “Acquisition Agreement”), by and among the Borrower, Colt Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and the Company (the “Acquisition”).

In connection with the foregoing, it is intended that:

(a) The Borrower may dispose of certain assets identified to the Lead Arrangers as (i) Mountaineer Casino, Racetrack & Resort, (ii) Isle Casino Cape Girardeau and (iii) Lady Luck Casino Caruthersville (collectively, the “Specified Borrower Asset Sales”); provided that the occurrence of any or all of the Specified Borrower Asset Sales shall not be a condition to the funding of the Credit Facilities on the Funding Date and it is understood that some or all of the Specified Borrower Asset Sales may occur after the Funding Date or not at all (it being understood that nothing herein shall restrict the sale of any other asset of the Borrower or the Company or their restricted subsidiaries permitted by the Acquisition Agreement).

(b) CEOC, CRC, the Company or a subsidiary thereof may (i) obtain certain lease or debt financing from VICI Properties Inc. (“Viper”) and/or one or more subsidiaries thereof in an aggregate principal amount of approximately $1,404.0 million (the “Viper Lease Financing”) and/or (ii) consummate one or more sale and leaseback transactions with Viper and/or one or more subsidiaries thereof of the real properties commonly known as Harrah’s New Orleans, Harrah’s Laughlin and/or Harrah’s Atlantic City or other gaming properties in lieu thereof (the “Viper Sale and Leaseback Transactions” and, together with the Viper Lease Financing, the “Viper Transactions”) for expected net cash proceeds of approximately $1,810.0 million, and CEOC, CRC or the Company or the applicable subsidiary thereof, as applicable, may distribute the net cash proceeds of the Viper Transactions to the Borrower; provided that the occurrence of any or all of the Viper Transactions and the distribution of the Viper Proceeds to the Borrower shall not be a condition to the funding of the Credit Facilities on the Funding Date, and it is understood that some or all of the Viper Transactions may occur after the Funding Date or not at all and/or the distribution of the Viper Proceeds to the Borrower may occur after the Funding Date or not at all (regardless of whether the Viper Transactions occur).

(c) The Borrower (1) will obtain the Borrower Senior Secured Credit Facilities as described in Exhibit B to the Commitment Letter, (2) may (A) issue the New Senior Unsecured Notes and/or (B) if any or all of the New Senior Unsecured Notes are not issued on or prior to the Funding Date and/or the proceeds thereof are not made available to the Borrower on the Funding Date, borrow up to such unissued or unavailable amount in the form of Unsecured Bridge Loans as described in Exhibit E and (3) may (A) receive all or a portion of the Viper Proceeds and/or the Gaming Asset Sales Proceeds and/or (B) (i) if any or all of the Viper Proceeds are not received by CEOC, CRC, or the Company or any of their respective subsidiaries, or if CEOC, CRC or any of their respective subsidiaries are not permitted to distribute all or any portion of the Viper Proceeds to the Borrower, on or prior to the Funding Date and/or (ii) if any or all of the Gaming Asset Sales Proceeds are not received by the Borrower on or prior to the Funding Date, borrow up to such amount that is not issued and/or received and/or that may not be distributed in the form of Secured Bridge Loans as described in Exhibit D.

 

Exhibit A - 1


(d) Pursuant to the Acquisition Agreement, the Borrower will consummate the Acquisition, pursuant to which Merger Sub will merge with and into the Company with the Company as the surviving entity of such merger, and, if applicable, the other transactions described therein. The Borrower may convert to a Delaware corporation in connection with the Transaction.

(e) Either (i) the Company may directly or indirectly contribute all of its equity interests in CEOC, LLC (“CEOC”), a subsidiary of the Company, to CRC (the “CEOC Contribution”), (ii) CEOC may become a co-borrower under the Existing CRC Credit Agreement and a co-issuer under the indenture dated as of October 16, 2017, among CRC, CRC Finco, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, relating to the 5.250% senior notes due 2025 of CRC and CRC Finco, Inc. (the “Existing CRC Indenture”) (the “CEOC Co-Borrower Event”) or (iii) CRC may otherwise merge or consolidate with, or acquire, directly or indirectly, all of the equity interests in CEOC (the “CEOC Acquisition” and either of the CEOC Contribution, the CEOC Co-Borrower Event or the CEOC Acquisition, the “CEOC Event”); provided that the occurrence of a CEOC Event shall not be a condition to the funding of the Credit Facilities on the Funding Date and it is understood that the CEOC Event may occur after the Funding Date or not at all.

(f) CRC will obtain the Incremental Term Loan B Facility as described in Exhibit C to the Commitment Letter and apply a portion of the proceeds thereof, together with cash on hand of the Company and its subsidiaries, to repay in full the indebtedness outstanding under that certain Credit Agreement, dated as of October 6, 2017 (the “Existing CEOC Credit Agreement”), among CEOC, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent (the “CEOC Debt Payoff”).

(g) Except as set forth in paragraph (f) above, the proceeds of the Credit Facilities, together with cash on hand of the Borrower and the Company (including Gaming Asset Sale Proceeds) and the proceeds of the New Senior Unsecured Notes (if any), the Secured Bridge Loans (if any), the Unsecured Bridge Loans (if any) and the Viper Proceeds (if any) will be applied (i) to pay the cash consideration for the Acquisition, (ii) to pay the fees, costs and expenses incurred in connection with the Transactions (the amounts set forth in the immediately preceding clauses (i) and (ii), collectively, the “Acquisition Costs”), (iii) to repay in full the indebtedness outstanding under the Borrower’s existing Credit Agreement, dated as of April 17, 2017 (the “Existing Borrower Credit Agreement”), among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, (iv) to repay (or redeem, repurchase, defease or satisfy and discharge) in full all of the Borrower’s (1) 7.00% Senior Notes due 2023, (2) 6.00% Senior Notes due 2025 and (3) 6.00% Senior Notes due 2026, in each case, together with all accrued interest, fees and premiums thereon, (v) to repurchase any of the Company’s 5.00% convertible senior notes due 2024 (the “Company Convertible Senior Notes”) from holders, pursuant to a fundamental change purchase offer or otherwise in connection with the Transactions, to pay any cash portion of the conversion consideration due upon conversion or tender of the Company Convertible Senior Notes to holders of which that elect to convert or tender such Company Convertible Senior Notes, in each case, together with all accrued interest, fees and premiums thereon, if any, and to pay any consent solicitation fees (it being understood that any of the Company Convertible Senior Notes may remain outstanding after the Funding Date, including that any Company Convertible Senior Notes the holders of which do not elect to accept the Company’s fundamental change purchase offer and do not elect to convert or tender such Company Convertible Senior Notes may remain outstanding after the fundamental change purchase date), and (vi) at the election of the Borrower, repay other existing indebtedness of the Company and its subsidiaries (clauses (iii) and (iv), together with the CEOC Debt Payoff, the “Existing Debt Payoff”).

The transactions described above are collectively referred to as the “Transactions”.

 

Exhibit A - 2


EXHIBIT B

Borrower Senior Secured Credit Facilities Term Sheet

[attached]

 

Exhibit B


EXHIBIT B

Eldorado Resorts, Inc.

$3,000.0 million Senior Secured Term Facility

$1,000.0 million Senior Secured Revolving Facility

Summary of Principal Terms and Conditions1

 

Borrower:    Eldorado Resorts, Inc., a Nevada corporation (the “Borrower”).
Agent:    JPMorgan, acting through one or more of its branches or affiliates, will act as administrative agent and collateral agent for the Senior Facilities (as defined below) (in such capacities, the “Agent”) for a syndicate of banks, financial institutions and other institutional lenders reasonably acceptable to the Borrower and excluding in all events Disqualified Institutions (together with the Initial Lenders, the “Lenders”), and will perform the duties customarily associated with such roles.
Arrangers:    JPMorgan, CSLF and Macquarie Capital will act as joint lead arrangers for the Senior Facilities (the “Lead Arrangers”), JPMorgan, CSLF and Macquarie Capital will act as joint bookrunners for the Senior Facilities (the “Bookrunners” and, together with the Lead Arrangers and any additional agents, arrangers and bookrunners appointed by the Borrower, each in such capacity, an “Arranger” and, collectively, the “Arrangers”), and will perform the duties customarily associated with such roles. Other agents, arrangers and bookrunners may be appointed by the Borrower as contemplated in the Commitment Letter.
Syndication Agent:    At the option of the Borrower, one or more financial institutions identified by the Borrower (in such capacity, the “Syndication Agent”).
Documentation Agent:    At the option of the Borrower, one or more financial institutions identified by the Borrower (in such capacity, the “Documentation Agent”).
Financing Documentation:    The definitive documentation with respect to the Senior Facilities (the “Financing Documentation”) will contain the terms set forth in this Summary of Principal Terms and Conditions (this “Senior Facilities Term Sheet”) and to the extent not inconsistent herewith, will otherwise be based on and substantially consistent with the Existing CRC Credit Agreement (the “Documentation Precedent”) (including provisions therein with respect to Gaming Leases (as defined below) and management and support agreements related to Gaming Leases), with such modifications as are necessary to (a) reflect the terms set forth in this Senior Facilities Term Sheet, (b) give due regard to the financial model delivered to the Lead Arrangers on June 21, 2019 (the “Borrower Model”), the operational and strategic requirements of the Borrower and its subsidiaries (including as to the operational and strategic requirements of the Company and its subsidiaries) in light of their industries, businesses, geographic locations, business practices, financial accounting and proposed business plan after giving effect to the

 

1

All capitalized terms used but not defined herein shall have the meanings assigned thereto in the Commitment Letter to which this Summary of Principal Terms and Conditions is attached (the “Commitment Letter”).

 

B-1


  

Acquisition, (c) with respect to basket amounts and leverage-based thresholds and subject to clause (a), with modifications to reflect the Funding Date leverage and EBITDA (defined consistent with the Documentation Precedent, and including, for avoidance of doubt, any addbacks (1) described in the Borrower Model, (2) included in the Existing Borrower Credit Agreement or (3) described in the quality of earnings report or the financial legal diligence report, dated June 11, 2019, prepared by a nationally recognized accounting firm reasonably selected by Borrower delivered to the Lead Arrangers on June 13, 2019) of the Borrower and its subsidiaries relative to the respective amounts, thresholds and EBITDA for the Company and its subsidiaries in the Documentation Precedent and (d) reflect administrative agency and operational matters reasonably acceptable to the Agent and the Borrower (and to include modifications to incorporate customary provisions addressing the certification regarding beneficial ownership as required by 31 C.F.R. § 1010.230, the treatment of division and series transactions of limited liability companies under Delaware and other applicable law, “QFC stay rules”, the potential replacement of LIBOR and customary ERISA representations and covenants by lenders). The Financing Documentation shall be at least as favorable to the Borrower and its subsidiaries as (a) the Documentation Precedent and (b) the Existing Borrower Credit Agreement. This paragraph is referred to herein as the “Documentation Principles”.

 

Any lease pursuant to which the Borrower or its subsidiaries lease the real property and related improvements underlying any facility operated by the Borrower or its subsidiaries (each, a “Gaming Lease”) (and the rent thereunder) shall be treated as an operating lease for all purposes under the Financing Documentation and shall not constitute a capital lease, indebtedness or a lien or give rise to interest expense (and corresponding adjustments shall be made to EBITDA and net income) for any purpose under the Financing Documentation regardless of how the Borrower or its subsidiaries may treat the Gaming Lease for financial reporting purposes.

 

EBITDA” shall be defined in a manner consistent with the Documentation Principles (provided that consolidated net income shall be calculated without any reduction or limitation due to any restriction under the Company’s or its subsidiaries’ existing debt documents or master lease support agreements), and in any event shall include addbacks for all items of the type set forth in the Borrower Model.

Senior Facilities:   

(A)  a senior secured term loan B facility in an aggregate principal amount of $3,000.0 million (the “Term Facility” and loans thereunder, the “Term Loans”). The Term Loans will be funded in full on the Funding Date in United States Dollars.

  

(B)  a senior secured revolving credit facility in an aggregate principal amount of $1,000.0 million (the “Revolving Facility” and, together with the Term Facility, the “Senior Facilities”), up to an amount to be agreed of which will be available through a

 

B-2


  

subfacility in the form of letters of credit. The Revolving Facility may be funded in United States Dollars, Canadian Dollars, Euros, Pounds Sterling and Japanese Yen.

 

The Revolving Facility shall be made available upon the same day notice in the case of ABR loans.

Incremental Facilities:    The Borrower will be permitted to increase the Revolving Facility or add one or more additional revolving facilities (each, an “Incremental Revolving Facility”) or increase the Term Facility or add one or more additional term loan credit facilities (each, an “Incremental Term Facility” and, collectively, the “Incremental Facilities”) on terms consistent with the Documentation Principles;
  

provided that:

 

(i) the aggregate principal amount of all Incremental Facilities shall not exceed the sum of (w) the greater of $2,175.0 million and the Corresponding Multiple of LTM EBITDA (as defined below), less the aggregate outstanding principal amount of all incremental facilities issued and/or incurred in reliance on paragraph (1) of the definition of “Incremental Amount” in the Existing CRC Credit Agreement (or equivalent thereof in the documents governing any refinancing thereof), plus (x) all (A) voluntary prepayments of and debt buybacks pursuant to Dutch auctions (limited to the amount of cash paid) (which prepayments and buybacks may be consummated substantially concurrently with the incurrence of, and be funded with the proceeds of, Incremental Facilities incurred under this clause (x)) with respect to any indebtedness incurred pursuant to clause 4(xv) under “Negative Covenants” below (or any refinancing thereof), and (B) commitment reductions of indebtedness incurred pursuant to clause 4(xv) under “Negative Covenants” below (or any refinancing thereof), in each case under this clause (B) that is a revolving facility, other than those funded with the proceeds of long-term indebtedness, plus (y) all (A) voluntary prepayments of and debt buybacks pursuant to Dutch auctions (limited to the amount of cash paid) with respect to, the Term Facility, any Incremental Term Facility that is secured on a pari passu basis with the Senior Facilities, any Incremental Equivalent Debt (as defined below) that is secured on a pari passu basis with the Senior Facilities or any indebtedness incurred pursuant to clauses 4(i) or 4(iv) under “Negative Covenants” below (or any refinancing thereof) that is secured on a pari passu basis with the Senior Facilities, and (B) commitment reductions of the Revolving Facility or any Incremental Revolving Facility, Incremental Equivalent Debt or any indebtedness incurred pursuant to clauses 4(i) or 4(iv) under “Negative Covenants” below (or any refinancing thereof), in each case under this clause (B) that is a revolving facility other than those funded with the proceeds of long-term indebtedness, plus (z) such additional amount so long as, on the date of incurrence thereof or, if an LCT Election (as defined below) is made, on the applicable LCT Test Date (as defined below), (a) in the case of loans under such Incremental Facilities secured by liens on the Collateral (as defined below) that rank pari passu with the

 

B-3


   liens on the Collateral securing the Senior Facilities, the ratio of funded debt outstanding that is secured by a first priority lien on the Collateral or on the “Collateral” under the Existing CRC Credit Agreement (net of unrestricted cash and cash equivalents) to adjusted EBITDA (the “Net First Lien Leverage Ratio”) on a Pro Forma Basis (to be defined in a manner consistent with the Documentation Principles) will be no greater than, at the Borrower’s option, (i) 0.25x greater than the Net First Lien Leverage Ratio on the Funding Date or (ii) if incurred in connection with a permitted acquisition or other permitted investment, the Net First Lien Leverage Ratio immediately prior to the incurrence of such Incremental Facility (in each case, calculated without netting the cash proceeds of such Incremental Facility on the date of incurrence and in the case of any Incremental Facilities constituting revolving credit facilities, assuming that such facilities were fully drawn on the date of effectiveness thereof), (b) in the case of loans under such Incremental Facilities secured by liens on the Collateral that rank junior to the liens on the Collateral securing the Senior Facilities, the ratio of all funded debt outstanding that is secured by a lien on the Collateral or on the “Collateral” under the Existing CRC Credit Agreement (net of unrestricted cash and cash equivalents) to adjusted EBITDA (the “Net Secured Leverage Ratio”) on a Pro Forma Basis will be no greater than, at the Borrower’s option, (i) 0.50x greater than the Net Secured Leverage Ratio on the Funding Date or (ii) if incurred in connection with a permitted acquisition or other permitted investment, the Net Secured Leverage Ratio immediately prior to the incurrence of such Incremental Facility (in each case, calculated without netting the cash proceeds of such Incremental Facility on the date of incurrence and in the case of any Incremental Facilities constituting revolving credit facilities, assuming such facilities were fully drawn on the date of effectiveness thereof) and (c) in the case of unsecured indebtedness under such Incremental Facilities, the ratio of adjusted EBITDA to total cash interest expense (the “Fixed Charge Coverage Ratio”) on a Pro Forma Basis is not less than, at the Borrower’s option, (i) 2.00 to 1.00 or (ii) if incurred in connection with a permitted acquisition or other permitted investment, the Fixed Charge Coverage Ratio immediately prior to the incurrence of such Incremental Facility (in each case, calculated in the case of any Incremental Facilities constituting revolving credit facilities, assuming such facilities were fully drawn on the date of effectiveness thereof) (provided, however, that if amounts incurred under this clause (z) are incurred concurrently with the incurrence of Incremental Facilities in reliance on clause (w), clause (x) and/or clause (y) above, the Net First Lien Leverage Ratio, the Net Secured Leverage Ratio or the Fixed Charge Coverage Ratio, as applicable, shall not include amounts incurred in reliance on clause (w), clause (x) and/or clause (y) (it being understood that any portion of any Incremental Facility incurred in reliance on clause (w), clause (x) and/or clause (y) may be reclassified, as the Borrower may elect from time to time, as incurred under clause (z) if the Borrower meets the applicable ratio under clause (z) at such time on a Pro Forma Basis));

 

B-4


  

(ii) to the extent required by the lenders providing such Incremental Facilities as set forth in the applicable incremental assumption agreement, no event of default shall have occurred and be continuing or would result therefrom (but, in any event, if any such Incremental Facility is established for a purpose other than an acquisition or investment that is permitted by the Financing Documentation, no payment or bankruptcy event of default (with respect to the Borrower) shall have occurred and be continuing or would result therefrom);

 

(iii) the loans under such additional credit facilities shall be senior secured obligations or shall be unsecured and shall rank pari passu with or, at the Borrower’s option, junior in right of security to the other Senior Facilities or be unsecured; provided, that, there shall be no borrowers or guarantors in respect of such Incremental Facilities that are not the Borrower or a Guarantor (as defined below) and there shall be no collateral security for such Incremental Facilities other than Collateral; and provided, further, that, if such additional credit facilities rank junior in right of security with the Senior Facilities or are unsecured, (x) such additional credit facilities will be established as a separate facility from the Senior Facilities, (y) such Incremental Facilities that rank junior in right of security shall be subject to an intercreditor agreement consistent with the Documentation Principles, and (z) for the avoidance of doubt, such Incremental Facilities will not be subject to clause (vii) below;

 

(iv) the additional revolving loan commitments will mature no earlier than the Revolving Facility and shall have no amortization and all other terms of any such additional revolving loan commitments (other than pricing, maturity, participation in voluntary and mandatory prepayments or commitment reductions or ranking as to security) shall be (A) on then current market terms, or (B) in the case of unsecured debt, customary for “high yield” securities or (C) substantially similar to, or not materially less favorable to the Borrower and its subsidiaries than, the terms and conditions, taken as a whole, applicable to the Revolving Facility (except for covenants or other provisions (x) applicable only to periods after the latest final maturity date of the Revolving Facility existing at the time of such additional revolving loan commitments or (y) that are otherwise reasonably satisfactory to the Agent);

 

(v) the loans under the additional term loan facilities will mature no earlier than, and will have a weighted average life to maturity (without giving effect to any amortization or prepayments on the outstanding Term Loans or Incremental Term Loans, as applicable) no shorter than, that of the Term Facility (provided, that (1) bridge loans, the terms of which provide for an automatic extension of the maturity date thereof, subject to customary conditions, to a date that is not earlier than the latest maturity date of the Term Facility (“Extendable Bridge Loans”) and (2) up to $500.0 million (the “Inside Maturity Basket”) in the aggregate of Incremental Term Facilities, Incremental Equivalent Debt in the form of term facilities, Refinancing Term Facilities (as defined below), Refinancing Debt (as defined below) and/or any term facilities incurred pursuant to clauses 4(i) or 4(iv) under “Negative Covenants” below may have a maturity date that is earlier than the maturity of, and a weighted average life that is shorter than, the Term Facility) and all other terms of

 

B-5


  

any such additional term loan facility (other than pricing, amortization, maturity, participation in voluntary and mandatory prepayments or ranking as to security) shall be (A) on then current market terms, or (B) in the case of unsecured debt, customary for “high yield” securities or (C) substantially similar to, or not materially less favorable to the Borrower and its subsidiaries than, the terms and conditions, taken as a whole, applicable to the Term Facility (except for covenants or other provisions (x) applicable only to periods after the latest final maturity date of the Term Facility existing at the time of such additional term loan facilities, or (y) that are otherwise reasonably satisfactory to the Agent);

 

(vi) with respect to mandatory prepayments of term loans and mandatory commitment reductions of revolving loans, the Incremental Facilities shall not participate on a greater than pro rata basis than the Term Facility and the Revolving Facility, respectively; and

 

(vii) the interest rate margins and original issue discount or upfront fees (if any) and interest rate floors (if any) applicable to any Incremental Facility shall be determined by the Borrower and the lenders thereunder; provided that if the “yield” (to be defined to include upfront fees and original issue discount on customary terms and any interest rate floor (subject to the first proviso hereto below) but excluding any structuring, commitment and arranger fees or similar fees (unless such fees are paid to lenders generally in a syndication of such Incremental Facility)) of any Incremental Term Facility incurred under clause (i)(z) above that is a broadly syndicated U.S. dollar denominated term loan secured by liens on the Collateral that rank pari passu with the liens on the Collateral securing the Senior Facilities exceeds the “yield” on the Term Facility by more than 75 basis points, the applicable margins for the Term Facility shall be increased to the extent necessary so that the “yield” on the Term Facility is 75 basis points less than the “yield” on the Incremental Term Facility; provided that, if Adjusted LIBOR (as defined in Annex B-I hereto) in respect of such Incremental Term Facility includes a floor greater than the floor applicable to the Term Facility and such floor is greater than Adjusted LIBOR in effect for a 3-month interest period at such time, such increased amount (above the greater of such floor and such Adjusted LIBOR) shall be equated to interest rate for purposes of determining the applicable interest rate under such Incremental Term Facility; provided that this clause (vii) shall not be applicable to any Incremental Term Facility that (A) is incurred more than 6 months after the Funding Date, (B) is incurred to fund a permitted acquisition or investment, (C) has a maturity greater than one year after the maturity date of the Term Facility or (D) is in an aggregate amount equal to or less than $500.0 million.

 

Subject to clause (ii) above, Incremental Facilities shall, if agreed by the lenders providing such Incremental Facility, be subject to customary “SunGard” or “certain funds” conditionality provisions.

 

B-6


   The Borrower may issue, in lieu of any Incremental Term Facility, first lien secured or junior lien secured or unsecured notes, first lien loans, junior lien loans, unsecured loans, or secured or unsecured “mezzanine” debt (“Incremental Equivalent Debt”) (in each case, if in the form of junior lien or unsecured loans or notes, with a maturity at least 91 days after the maturity of the initial Term Loans (other than in the case of Extendable Bridge Loans), and to the extent secured, subject to customary intercreditor terms to be consistent with the Documentation Principles) if the applicable conditions to effecting and borrowing under an Incremental Term Facility (as if such Incremental Equivalent Debt were an Incremental Term Loan) set forth in clauses (i) through (vii) above would have been satisfied, provided that, the provisions of clause (vii) above shall not apply other than with respect to U.S. dollar denominated broadly syndicated senior term loans secured by liens on the Collateral that rank pari passu with the liens on the Collateral securing the Senior Facilities and clause (v) above shall not apply to any customary bridge facility so long as the long term debt into which any such customary bridge facility is to be converted satisfies such clauses.
Purpose:   

(A)  The proceeds of the Term Facility will be used (i) on the Funding Date to finance the Acquisition, to repay existing indebtedness of the Borrower and its subsidiaries (including the Company and its subsidiaries), and to pay fees and expenses and (ii) on and after the Funding Date for working capital and general corporate purposes (including, without limitation, for permitted acquisitions and transactions costs).

  

(B)  The proceeds of loans under the Revolving Facility will be used by the Borrower from time to time on or after the Funding Date for working capital and general corporate purposes (including, without limitation, for permitted acquisitions and transaction costs); provided that the amount of the Revolving Facility drawn on the Funding Date shall be subject to the limitation set forth under “Availability” below.

Refinancing Facilities:    The Financing Documentation will permit the Borrower to refinance loans under the Term Facility or any Incremental Term Facility or replace commitments under the Revolving Facility or any Incremental Revolving Facility from time to time, in whole or part, with one or more new term facilities (each, a “Refinancing Term Facility”) or new revolving credit facilities (each, a “Refinancing Revolving Facility”; the Refinancing Term Facilities and the Refinancing Revolving Facilities are collectively referred to as “Refinancing Facilities”), respectively, under the Financing Documentation with the consent of the Borrower, and the institutions providing such Refinancing Term Facility or Refinancing Revolving Facility or with one or more additional series of senior unsecured notes or loans or senior secured notes or loans that will be secured by the Collateral on a pari passu basis with the Senior Facilities or secured notes or loans that are junior in right of security in the Collateral (any such notes or loans, “Refinancing Debt”); provided that (i) any Refinancing Term Facility or Refinancing Debt (other than Extendable Bridge Loans) do not mature prior to the maturity date of, or have a shorter weighted average life (without giving effect to any

 

B-7


   amortization or prepayments on the outstanding Term Loans or Incremental Term Loans, as applicable) than, or, with respect to notes, have mandatory prepayment provisions (other than related to customary asset sale (and similar events) and change of control offers) that result in prepayments of such Refinancing Debt prior to, the loans under the Term Facility being refinanced, (ii) any Refinancing Revolving Facility does not mature (or require commitment reductions or amortization) prior to the maturity date of the revolving commitments being replaced, (iii) there shall be no borrowers or guarantors in respect of any Refinancing Facility or Refinancing Debt that are not the Borrower or a Guarantor, (iv) the other terms and conditions, taken as a whole, of any such Refinancing Term Facility, Refinancing Revolving Facility or Refinancing Debt (excluding pricing (as to which no “most favored nation” clause shall apply) and optional prepayment or redemption terms) are (A) on then current market terms, or (B) in the case of unsecured debt, customary for “high yield” securities or (C) substantially similar to, or not materially less favorable to the Borrower and its subsidiaries than, the terms and conditions, taken as a whole, applicable to the term facility or revolving facility being refinanced or replaced (except for covenants or other provisions (x) applicable only to periods after the latest final maturity date of the Term Facility and the Revolving Facility existing at the time of such refinancing or (y) that are otherwise reasonably satisfactory to the Agent), (v) with respect to (1) Refinancing Debt secured by Collateral or (2) any Refinancing Facility secured by liens on the Collateral that are junior in priority to the liens on the Collateral securing the Senior Facilities, such agreements or liens will be subject to an intercreditor agreement consistent with the Documentation Principles or otherwise reasonably acceptable to the Agent and (vi) except to the extent otherwise permitted under the Financing Documentation (including utilization of any other available baskets or incurrence-based amounts) the aggregate principal amount of any Refinancing Facility or Refinancing Debt shall not be greater than the aggregate principal amount (or committed amount) of the term facility or revolving facility (as applicable) being refinanced or replaced plus any fees, premiums, original issue discount and accrued interest associated therewith, and costs and expenses related thereto, and such term facility or revolving facility being refinanced or replaced will be permanently reduced substantially simultaneously with the issuance thereof.
Availability:   

(A)  The full amount of the Term Facility must be drawn in a single drawing on the Funding Date. Amounts borrowed under the Term Facility that are repaid or prepaid may not be reborrowed.

  

(B)  From and after the Funding Date, the Revolving Facility will be available at any time prior to the final maturity of the Revolving Facility, in minimum principal amounts and upon notice to be agreed upon but consistent with the Documentation Principles; provided that the amount of loans under the Revolving Facility that may be borrowed on the Funding Date shall not exceed $500.0 million. Amounts repaid or prepaid under the Revolving Facility may be reborrowed.

 

B-8


  

(C)  The full amount of the letter of credit subfacility shall be available on and after the Funding Date.

Interest Rates and Fees:    As set forth on Annex B-I hereto.
Letters of Credit:   

Letters of credit under the Revolving Facility will be issued by Agent (or its designated affiliate) and, if included as an additional L/C Issuer, one or more Lenders acceptable to the Borrower and the Agent that agree to issue letters of credit (each, an “L/C Issuer”); provided that each Arranger (or the applicable affiliate of each Arranger) shall have a letter of credit commitment that is proportionate with its commitment under the Revolving Facility on the Funding Date; provided, further, that no L/C Issuer shall be required to issue trade or commercial letters of credit without its prior written consent. Each letter of credit shall expire not later than the earlier of (a) 12 months after its date of issuance (or such longer period as may be agreed by the relevant L/C Issuer and the Borrower) and (b) the fifth business day prior to the final maturity of the Revolving Facility; provided, however, that any letter of credit may provide for renewal thereof for additional periods of up to 12 months (which in no event shall extend beyond the date referred to in clause (b) above, except to the extent cash collateralized or backstopped pursuant to arrangements reasonably acceptable to the relevant L/C Issuer). Existing letters of credit may be rolled over or back-stopped under the Revolving Facility on the Funding Date. Letters of credit may be issued in United States Dollars, Canadian Dollars, Euros, Pounds Sterling and Japanese Yen.

 

Drawings under any letter of credit shall be reimbursed by the Borrower on terms consistent with the Documentation Principles. To the extent that the Borrower does not reimburse the L/C Issuer on such time frame, the Lenders under the Revolving Facility shall be irrevocably obligated to reimburse the L/C Issuer pro rata based upon their respective Revolving Facility commitments.

 

The issuance of all letters of credit shall be subject to the customary and reasonable procedures of the relevant L/C Issuer.

 

The Financing Documentation will include customary provisions consistent with the Documentation Principles to protect the L/C Issuer in the event any Lender under the Revolving Facility is a “Defaulting Lender” (to be defined in a manner consistent with the Documentation Principles).

Final Maturity and Amortization:   

(A)  Term Facility

 

The Term Facility will mature on the date that is seven (7) years after the Funding Date, and, commencing with the first full fiscal quarter ended after the Funding Date, will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Term Facility with the balance payable on the maturity date of the Term Facility.

 

B-9


  

(B)  Revolving Facility

 

The Revolving Facility will mature and the commitments thereunder will terminate on the date that is five (5) years after the Funding Date.

Guarantees:    All obligations of the Borrower under the Senior Facilities and, at the option of the Borrower, under any interest rate protection or other hedging arrangements entered into with the Agent, the Arrangers, an entity that is a Lender at the time of such transaction (or on the Funding Date, if applicable), or any affiliate of any of the foregoing (“Hedging Arrangements”), or any cash management arrangements with any such person (“Cash Management Arrangements”), will be unconditionally guaranteed (the “Guarantees”) by each existing and subsequently acquired or organized wholly owned domestic subsidiary of the Borrower (other than domestic subsidiaries that are subsidiaries of foreign subsidiaries of the Borrower that are “controlled foreign corporations” within the meaning of Section 957(a) of the Internal Revenue Code of 1986, as amended (“CFCs”) or that are FSHCOs (as defined below)) (the “Guarantors”), subject to exceptions to be agreed upon and consistent with the Documentation Principles, including, without limitation, (a) unrestricted subsidiaries, (b) immaterial subsidiaries (to be defined in a manner consistent with the Documentation Principles), (c) any subsidiary that is prohibited by applicable law (including gaming law), rule, regulation or contract (with respect to any such contractual restriction, only to the extent existing on the Funding Date or on the date the applicable person becomes a direct or indirect subsidiary of the Borrower) from guaranteeing the Senior Facilities or which would require governmental (including regulatory) or third party consent, approval, license or authorization to provide a Guarantee (unless such consent, approval, license or authorization has been received and the Borrower shall be under no obligation to seek such consent (other than use of commercially reasonable efforts to obtain such consent in respect of gaming laws)), (d) any subsidiary for which the providing of a Guarantee could reasonably be expected to result in an adverse tax consequence to the Borrower or one of its subsidiaries that is not de minimis as determined in good faith by the Borrower, (e) any subsidiary that owns no material assets other than (i) the equity interests (including for this purpose any debt or other instrument treated as equity for U.S. federal income tax purposes) of one or more foreign subsidiaries of the Borrower that are CFCs and/or one or more FSHCOs and (ii) cash, cash equivalents and incidental assets related thereto held on a temporary basis (a “FSHCO”), (f) special purpose receivables or securitization entities, joint ventures, captive insurance subsidiaries, or other special purpose entities, in each case, designated by the Borrower, (g) unless otherwise elected by the Borrower in its sole discretion, (i) until the termination of the “CPLV” MLSA (as defined in the Existing CRC Credit Agreement),

 

B-10


   the “Non-CPLV” MLSA and the “Joliet” MLSA, the Company and each of its subsidiaries and (ii) at any time, CRC, CEOC and each of their respective subsidiaries and (h) in the case of any obligation under any Hedging Arrangement that constitutes a “swap” within the meaning of section 1(a)(947) of the Commodity Exchange Act, any subsidiary of the Borrower that is not an “Eligible Contract Participant” as defined under the Commodity Exchange Act. Notwithstanding the foregoing, subsidiaries may be excluded from the guarantee requirements in circumstances where the Borrower and the Agent reasonably agree that the cost or other consequence (including any adverse tax consequences) of providing such a guarantee is excessive in relation to the value afforded thereby, and all guarantees shall be subject in all respects to applicable gaming laws, regulations and approvals. The Borrower shall be permitted, in its sole discretion, to cause any excluded subsidiary to become a Guarantor; provided that in the case of non-U.S. subsidiaries, the jurisdiction of organization of such non-U.S. subsidiary is reasonably satisfactory to the Agent.
Security:   

Subject to exceptions described below and other exceptions to be agreed upon and consistent with the Documentation Principles, the Senior Facilities, the Guarantees and, at the option of the Borrower, any Hedging Arrangements and any Cash Management Arrangements will be secured on a first-priority basis (subject to permitted liens) by substantially all the owned assets of the Borrower and each Guarantor, in each case whether owned on the Funding Date or thereafter acquired (collectively, the “Collateral”), including but not limited to: (i) a perfected first-priority pledge of all the equity interests directly held by the Borrower or any Guarantor (which pledge, in the case of any subsidiary (x) that is a foreign subsidiary of a domestic entity or (y) is a FSHCO, shall be limited to 100% of the non-voting equity interests (if any) and 65% of the voting equity interests of such subsidiary) and (ii) perfected first-priority security interests in, and mortgages on, substantially all owned tangible and intangible assets of the Borrower and each Guarantor (with all required mortgages being permitted to be delivered on a post-closing basis); provided that, in each case, all such pledges and liens shall be subject in all respects to applicable gaming laws, regulations and approvals (it being understood and agreed that pledges of certain equity interests and other assets will require post-closing approval of gaming authorities and that such pledges will not be effectuated on the Funding Date).

 

Notwithstanding anything to the contrary, the Collateral shall exclude the following (collectively, the “Excluded Property”): (i) any fee-owned real property with a fair market value of less than $50.0 million and all leasehold interests in real property with a fair market value of less than $50.0 million; provided that mortgaging of real property will be subject to prior delivery to each Arranger of life of loan flood insurance determinations and other documents required by applicable flood laws; (ii) motor vehicles and other assets subject to certificates of title, letter of credit rights (other than to the extent such rights can be perfected by filing a UCC-1) and commercial tort claims with a value of less than an amount

 

B-11


   to be agreed; (iii) pledges and security interests prohibited by applicable law (including gaming law), rule, regulation or contractual obligation (with respect to any such contractual obligation, only to the extent permitted by the Financing Documentation and binding on such assets on the Funding Date or on the date the applicable person becomes a direct or indirect subsidiary of the Borrower) (in each case, except to the extent such prohibition is unenforceable after giving effect to the applicable provisions of the Uniform Commercial Code) or which could require governmental (including regulatory) consent, approval, license or authorization to be pledged (unless such consent, approval, license or authorization has been received and the Borrower shall be under no obligation to seek such consent (other than use of commercially reasonable efforts to obtain such consent in respect of gaming laws)); (iv) equity interests in (x) any person other than wholly-owned subsidiaries to the extent the pledge thereof is not permitted by the terms of such person’s organizational documents, joint venture agreement or shareholder agreement or similar contractual obligation and other Excluded Securities (to be defined in a manner consistent with the Documentation Principles), (y) unrestricted subsidiaries and (z) unless otherwise elected by the Borrower in its sole discretion, (i) until the termination of the “CPLV” MLSA, the “Non-CPLV” MLSA and the “Joliet” MLSA, the Company and each of its subsidiaries and (ii) at any time, CRC, CEOC and their respective subsidiaries (for the avoidance of doubt it being understood that unless elected by the Borrower, no property of (i) until the termination of the “CPLV” MLSA, the “Non-CPLV” MLSA and the “Joliet” MLSA the Company or each of its subsidiaries, and (ii) at any time, CRC, CEOC or their respective subsidiaries, shall be included in the Collateral); (v) assets to the extent a security interest in such assets could reasonably be expected to result in material adverse tax consequences as determined in good faith by the Borrower; (vi) any lease, license or other agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or create a right of termination in favor of any other party thereto (other than the Borrower or any Guarantor) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code; (vii) those assets as to which the Agent and the Borrower reasonably agree that the cost or other consequence (including any adverse tax consequences) of obtaining such a security interest or perfection thereof are excessive in relation to the value afforded thereby; (viii) any governmental licenses or state or local franchises, charters and authorizations (including gaming licenses), to the extent security interests in such licenses, franchises, charters or authorizations are prohibited or restricted thereby or require the consent of any governmental agency or authority (to the extent such consent has not been obtained) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code; (ix) “intent-to-use” trademark applications prior to the filing of a statement of use; (x) assets subject to liens securing permitted securitization financings (including receivables financings); (xi) other customary exclusions under applicable local law or in applicable local jurisdictions; (xii) any cash or cash equivalents (and the related escrow accounts, segregated accounts or

 

B-12


  

similar accounts) held or received on behalf of third parties (other than the Borrower or any Guarantor), including the lessors (or lenders to such lessors) under any Gaming Lease, or to be applied in accordance with any Gaming Lease; (xiii) any equipment or other asset subject to liens securing permitted acquired debt (limited to the acquired assets), sale and leaseback transactions, capital lease obligations, slot financing arrangements or other purchase money debt, if the contract or other agreement providing for such debt or capital lease obligation prohibits or requires the consent of any person (other than the Borrower or any Guarantor) as a condition to the creation of any other security interest on such equipment or asset and, in each case, such indebtedness and prohibition or requirement is permitted under the Financing Documentation; (xiv) the Non-Core Land and the Pompano Park Real Property (each as defined in the Existing Borrower Credit Agreement) and (xv) other exceptions to be mutually agreed upon.

 

In addition, in no event shall (1) control agreements or control, lockbox or similar arrangements be required, (2) landlord, mortgagee and bailee waivers be required, (3) notices be required to be sent to account debtors or other contractual third parties prior to the occurrence of an event of default or (4) foreign-law governed security documents or perfection under foreign law be required except with respect to any Guarantor organized outside of the United States (in which case such documents and perfection actions shall be limited to the jurisdiction of formation of such Guarantor).

 

All the above-described pledges, security interests and mortgages shall be created on terms, and pursuant to documentation consistent with the Documentation Principles, subject to exceptions to be agreed.

Intercreditor Agreement:    The security interests on the Collateral securing the Senior Facilities shall be pari passu with the security interests on the Collateral securing the Secured Bridge Facility and such security interests and related creditor rights between the Lenders, on the one hand, and the lenders under the Secured Bridge Facility, on the other hand, will be set forth in a customary intercreditor agreement on terms to be mutually agreed between the Borrower and the applicable Administrative Agents (the “Intercreditor Agreement”).
Mandatory Prepayments:   

Limited to the following:

 

(i) unless the net cash proceeds are reinvested (or committed to be reinvested) in the business within 18 months, after a non-ordinary course asset sale or other non-ordinary course disposition of property (other than permitted securitizations and other exceptions to be agreed consistent with the Documentation Principles) of the Borrower or any restricted subsidiary (including insurance and condemnation proceeds), 100% of the net cash proceeds in excess of an annual amount equal to $180.0 million from such non-ordinary course asset sales or other non-ordinary course dispositions of property, shall be applied to prepay the loans under the Term Facility or, no more than ratably, other indebtedness secured by

 

B-13


  

a lien on the Collateral that ranks pari passu with the liens that secure the Term Facility, subject to customary and other exceptions (consistent with the Documentation Principles) to be agreed upon; provided that, if at the time of receipt of the net cash proceeds from an asset sale or other disposition or at any time thereafter prior to the applicable reinvestment or prepayment date, pro forma for such asset sale and the application of the proceeds thereof, (i) the Net First Lien Leverage Ratio is less than or equal to 0.50x less than the Net First Lien Leverage Ratio on the Funding Date, only 50% of such net cash proceeds shall be subject to the mandatory prepayments and reinvestment requirements or (ii) the Net First Lien Leverage Ratio is less than or equal to 1.00x less than the Net First Lien Leverage Ratio on the Funding Date, none of such net cash proceeds shall be subject to the mandatory prepayments and reinvestment requirements; provided further that the Borrower may elect to deem reinvestments (or commitments for reinvestments) that occur prior to receipt of the proceeds of a non-ordinary course asset sale or other non-ordinary course disposition of property to have been reinvested in accordance with the provisions of the Financing Documentation, so long as such reinvestments (or commitments for reinvestments) shall have been made no earlier than the execution of a definitive agreement or the occurrence of the relevant casualty event, as applicable, for such non-ordinary course asset sale or other non-ordinary course disposition;

 

(ii) beginning with the first full fiscal year of the Borrower after the Funding Date, 50% of Excess Cash Flow (to be defined in a manner consistent with the Documentation Principles), subject to a minimum threshold to be agreed and with stepdowns to 25% subject to a pro forma Net First Lien Leverage Ratio of less than or equal to 0.50x less than the Net First Lien Leverage Ratio on the Funding Date and to 0% subject to a pro forma Net First Lien Leverage Ratio of less than or equal to 1.00x less than the Net First Lien Leverage Ratio on the Funding Date (in each case, calculated without excluding Development Debt (as defined below)), of the Borrower and its restricted subsidiaries shall be used to prepay the loans under the Term Facility or, no more than ratably, other indebtedness secured by a lien on the Collateral that ranks pari passu with the liens that secure the Term Facility; provided that (A) any voluntary prepayment of Loans (including any debt buybacks (in an amount not to exceed the amount of cash paid)) or other pari passu secured indebtedness or indebtedness incurred pursuant to clauses 4(i), 4(iv), 4(xv) or 4(xvi) under “Negative Covenants” below (or any refinancing thereof) made during any fiscal year (or, without duplication, after the end of such fiscal year and prior to the date of such mandatory prepayment) (including Loans under the Revolving Facility or other applicable revolving facility to the extent commitments thereunder are permanently reduced by the amount of such prepayments at the time of such prepayment) and (B) any voluntary prepayment of Loans under the Revolving Facility that were borrowed on the Funding Date to fund any OID or upfront fees required to be funded on the Funding Date pursuant to the “Market Flex” provisions in the Fee Letter made during any fiscal year (or, without duplication, after the end of such fiscal year and prior to the date of such mandatory prepayment), but excluding in all cases prepayments funded

 

B-14


  

with the incurrence of long-term indebtedness (other than revolving loans), shall be credited against Excess Cash Flow prepayment obligations for such fiscal year on a dollar-for-dollar basis;

 

(iii) net cash proceeds of indebtedness incurred by the Borrower and its restricted subsidiaries (other than indebtedness permitted to be incurred (other than Refinancing Facilities and Refinancing Debt)) will be applied pursuant to mandatory prepayment provisions consistent with the Documentation Principles; and

 

(iv) within 120 days following the Funding Date, the Term Facility shall be prepaid in an aggregate amount equal to the principal amount of the outstanding Company Convertible Senior Notes that were not, in each case as of the date that is 60 days after the Funding Date, (i) repurchased from holders pursuant to a fundamental change purchase offer, tender offer or otherwise, (ii) converted to shares of the Company’s common stock and/or cash in accordance with the indenture governing the Company Convertible Senior Notes, or (iii) otherwise redeemed, repurchased or discharged, in each case, on or prior to such date; provided, that, any such prepayments under this clause (iv) shall be made pro rata across the Unsecured Bridge Facility, the New Senior Unsecured Notes and the Term Facility.

  

Notwithstanding the foregoing, the Borrower shall not be required to make mandatory prepayments with (a) any Viper Proceeds or any Gaming Asset Sale Proceeds or any net cash proceeds from any other asset sale or other disposition of property to the extent that such net cash proceeds are required to be applied to prepay the Secured Bridge Facility or the Unsecured Bridge Facility and (b) net cash proceeds from any asset sale or other disposition of property, Excess Cash Flow or net cash proceeds from any incurrence of indebtedness, in each case, to the extent that such net cash proceeds or Excess Cash Flow are (i) required to be applied to prepay indebtedness under the Existing CRC Credit Agreement or Existing CRC Indenture or to be reinvested by CRC or its subsidiaries by the terms of the Existing CRC Credit Agreement or the Existing CRC Indenture or (ii) attributable to CRC or its subsidiaries and cannot be distributed by CRC in accordance with the Existing CRC Credit Agreement or the Existing CRC Indenture.

 

The Borrower will be permitted to direct the application of mandatory prepayments among classes of loans under the Term Facility (including with respect to Incremental Facilities) at its sole discretion; provided, that mandatory prepayments may not be directed to a later maturing class without at least a pro rata repayment of each earlier maturing class; provided, further, notwithstanding the foregoing, (x) the Borrower shall be permitted to make prepayment of the Secured Bridge Facility or the Unsecured Bridge Facility on a better than pro rata basis in accordance with the terms of such Credit Facilities; and (y) any prepayment shall be applied first, to the Secured Bridge Facility, and thereafter, following prepayment in full of all obligations under the Secured Bridge Facility, the Unsecured Bridge Facility. Mandatory prepayments shall be applied to the amortization payments under the applicable classes of loans under the Term Facility in direct order of maturity.

 

B-15


  

Notwithstanding the foregoing, each Lender under the Term Facility shall have the right to reject its pro rata share of any mandatory prepayments described above, in which case the amounts so rejected may be retained by the Borrower and used for any purpose not prohibited by the Financing Documentation and will be included in the calculation of the Cumulative Credit (as defined below).

 

Prepayments attributable to foreign subsidiaries’ Excess Cash Flow and asset sale proceeds will be limited under the Financing Documentation to the extent the repatriation of funds to fund such prepayments (x) is prohibited, restricted or delayed by applicable local laws or material documents (including constituent documents) or (y) could reasonably be expected to result in adverse tax consequences that are not de minimis as determined in good faith by the Borrower; provided that in any event the Borrower shall use its commercially reasonable efforts (which shall not be required to extend beyond 12 months after the applicable prepayment date) to eliminate such tax effects in its reasonable control in order to make such prepayments. The non-application of any prepayment amounts as a consequence of the foregoing provisions will not, for the avoidance of doubt, constitute a default or an event of default, and such amounts shall be available for working capital purposes of the Borrower and its restricted subsidiaries as long as not required to be prepaid in accordance with the foregoing provisions. Notwithstanding the foregoing, any prepayments required after application of the above provision shall be net of any costs, expenses or taxes incurred by the Borrower or any of its affiliates and arising as a result of compliance with the preceding sentence.

Voluntary Prepayments and Reductions in Commitments:   

Voluntary reductions of the unutilized portion of the commitments under the Senior Facilities and prepayments of borrowings thereunder will be permitted at any time, in minimum principal amounts to be agreed upon (consistent with the Documentation Principles), without premium or penalty, except as described below, subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period. All voluntary prepayments of the Term Facility will be applied as the Borrower may direct.

 

The Borrower shall pay a “prepayment premium” in connection with any Repricing Event (as defined below) with respect to all or any portion of the Term Facility that occurs on or before the date that is six months after the Funding Date, in an amount equal to 1.00% of the principal amount of the Term Facility subject to such Repricing Event.

 

The term “Repricing Event” shall mean (i) any voluntary prepayment or repayment of Term Loans with the proceeds of, or any conversion of Term Loans into, any substantially concurrent issuance solely by the Borrower of a new or replacement tranche of long-term senior secured

 

B-16


  

first lien term loans incurred solely by the Borrower that are broadly syndicated to banks and other institutional investors in financings similar to the Term Loans the primary purpose of which is to (and which does) reduce the “effective yield” applicable to the Term Loans and (ii) any amendment to the Term Facility the primary purpose of which is to (and which does) reduce the yield applicable to the Term Loans (it being understood that (x) any prepayment premium with respect to a Repricing Event shall apply to any required assignment by a non-consenting Lender in connection with any such amendment pursuant to so-called yank-a-bank procedures and (y) in each case, the yield shall exclude any structuring, commitment and arranger fees or other similar fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans), other than, in the case of each of clauses (i) and (ii), in connection with a change of control, a transformative acquisition, investment or disposition (whether or not such acquisition, investment or disposition is permitted under the Financing Documentation), a refinancing of indebtedness incurred pursuant to clauses 4(xv) or 4(xvi) under “Negative Covenants” below (or any refinancing thereof) or any other transaction not permitted by the Financing Documentation.

 

The Borrower shall be permitted to offer to make a prepayment of the Senior Facilities at par pro rata among the Term Facility and any Incremental Term Facilities and to apply any amounts rejected by the Lenders under such facilities to prepay other indebtedness of the Borrower or make restricted payments so long as the Borrower is in compliance with the Financial Covenant (as defined below) on a Pro Forma Basis (calculated without excluding Development Debt) and no event of default is continuing; provided, however, notwithstanding the foregoing, (x) the Borrower shall be permitted to make prepayment of the Secured Bridge Facility or the Unsecured Bridge Facility on a better than pro rata basis and (y) any prepayment shall be applied first, to the Secured Bridge Facility, and thereafter, following prepayment in full of all obligations under the Secured Bridge Facility, the Unsecured Bridge Facility.

Representations and Warranties:    Only the following representations and warranties will apply (to be applicable to the Borrower and its restricted subsidiaries), subject to customary and other exceptions and qualifications to be agreed upon, consistent with the Documentation Principles: organization, existence, and power; qualification; authorization and enforceability; no conflict with law (including gaming law), material contracts or organizational documents; governmental consents; subsidiaries; accuracy of historical financial statements and other written information in all material respects as of the Funding Date; projections; no Material Adverse Effect since the Funding Date; absence of litigation; compliance with laws (including ERISA, environmental laws and gaming laws), the PATRIOT Act, OFAC, margin regulations, Foreign Corrupt Practices Act and applicable sanction and anti-corruptions laws; payment of taxes; ownership of properties; governmental regulation; inapplicability of the Investment Company Act; closing date solvency on a consolidated basis; labor

 

B-17


  

matters; validity, priority and perfection of security interests (subject to permitted liens and the Certain Funds Provision) in the Collateral; intellectual property; use of proceeds; and insurance.

 

Material Adverse Effect” means (a) on the Funding Date, a Company Material Adverse Effect and (b) after the Funding Date, a material adverse effect on (i) the business, assets, operations or financial condition of the Borrower and its subsidiaries, taken as a whole (excluding any matters disclosed to the Arrangers prior to the Funding Date or disclosed in the most recent Annual Report on Form 10-K or any quarterly or periodic report of the Borrower or the Company filed prior to the Funding Date) or (ii) the material rights or remedies (taken as a whole) of the Agent and the Lenders under the Financing Documentation.

Conditions Precedent to Initial Borrowing:    The initial borrowing under the Senior Facilities is subject solely to the Funding Conditions with respect to the Senior Facilities set forth in the Commitment Letter (subject to the Certain Funds Provision).
Conditions Precedent to all Subsequent Borrowings after the Funding Date:    (a) Delivery of notice of borrowing, (b) accuracy of all representations and warranties in all material respects set forth in the Financing Documentation as of the date of the relevant credit extension except to the extent any such representation and warranty expressly relates to an earlier date, in which case such representation and warranty shall be required to be accurate in all material respects as of such earlier date, and (c) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit (in each case of clauses (b) and (c), except in connection with Incremental Facilities to the extent not required by the Lenders providing such Incremental Facilities, as set forth in the applicable incremental assumption agreement).
Affirmative Covenants:    Limited to the following (to be applicable to the Borrower and its restricted subsidiaries), subject to customary (consistent with the Documentation Principles) and other baskets, exceptions and qualifications to be agreed upon: delivery of annual and quarterly (for the first three fiscal quarters of each fiscal year of the Borrower) financial statements (accompanied by customary management discussion and analysis) and other information (within 105 and 60 days for annual and quarterly financials, respectively; provided that the quarterly financial statements for the first three fiscal quarters ending after the Funding Date may be delivered within 75 days), and with annual financial statements to be accompanied by an audit opinion from nationally recognized auditors that is not subject to qualification as to “going concern” or the scope of such audit other than solely with respect to, or resulting solely from an upcoming maturity date under debt occurring within one year from the time such opinion is delivered or potential inability to satisfy a financial maintenance covenant on a future date or in a future period; annual budgets; delivery of quarterly compliance certificates; delivery of notices of default; maintenance of books and records; quarterly lender calls (it being agreed that if the Borrower hosts a quarterly investor or financial results call to which the Lenders have access, such call will

 

B-18


   satisfy the requirement for a lender call); inspections (including books and records and subject to frequency (so long as there is no ongoing event of default) and cost reimbursement and confidentiality limitations); maintenance of organizational existence and rights and privileges; maintenance of adequate insurance; commercially reasonable efforts to maintain public ratings (but not to maintain a specific rating); payment of material taxes; corporate franchises; compliance with laws (including environmental laws and gaming laws); compliance with PATRIOT Act, FCPA, OFAC and applicable sanctions and anti-corruption laws; ERISA; additional guarantors and collateral; and use of proceeds.
Negative Covenants:    Only the following negative covenants will apply (to be applicable to the Borrower and its restricted subsidiaries), subject to customary exceptions and qualifications (consistent with the Documentation Principles) and others to be agreed upon (including in any event (i) a customary basket amount or “Cumulative Credit” to be based on either 50% of consolidated net income or retained Excess Cash Flow (as determined by the Borrower prior to the launch of general syndication) and to include a “starter” basket equal to the greater of (x) $240.0 million and (y) the Corresponding Multiple of LTM EBITDA, and otherwise defined in a manner consistent with the Documentation Principles, that may be used for, among other things, investments, dividends and distributions, stock repurchases and the prepayment of subordinated debt and (ii) the exceptions described below):
   1. Limitation on non-ordinary course dispositions of assets, with carveouts permitting, among other things, (i) the non-ordinary course disposition of assets subject only to (x) no event of default exists or would result therefrom on the date of the execution of definitive documentation with respect to such disposition, (y) with respect to any such disposition in excess of $115.0 million, the Borrower’s receipt of fair market value (as determined by the Borrower in good faith), at least 75% of the proceeds consisting of cash or cash equivalents (including a customary designated non-cash consideration basket consistent with the Documentation Principles, but not less than the greater of $490.0 million and the Corresponding Multiple of LTM EBITDA) and (z) net cash proceeds being reinvested or used to repay debt to the extent required by the mandatory prepayment provisions above, (ii) the sale and leaseback transactions permitted under the covenant described in paragraph 9 below, (iii) securitization and receivables financings not to exceed an amount to be mutually agreed, (iv) permitted asset swaps for similar assets or assets used in a similar business (provided that at least 90% of such assets must be used in a similar business) with no annual dollar cap but subject to (x) no event of default exists or would result therefrom on the date of the execution of definitive documentation with respect to such disposition, (y) with respect to any swap of assets with aggregate gross consideration in excess of $30.0 million, immediately after giving effect thereto the Borrower shall be in compliance with the Financial Covenant on a Pro Forma Basis (if elected by the Borrower, calculated as of the date of the execution of definitive documentation with respect to such disposition) and (z) any swap of assets with aggregate gross

 

B-19


  

consideration in excess of $30.0 million must be approved by a majority of the board of directors, (v) a general basket not less than the greater of $55.0 million and the Corresponding Multiple of LTM EBITDA, (vi) dispositions of non-Collateral assets in an amount not to exceed $55.0 million and the Corresponding Multiple of LTM EBITDA, (vii) dispositions of non-core assets acquired in connection with a permitted acquisition or other permitted investment, and (viii) scheduled dispositions (including the Specified Borrower Asset Sales, the other Viper Transactions and dispositions disclosed to the Lead Arrangers prior to the date hereof (including those listed on the schedules to the Acquisition Agreement as in effect as of the date hereof)).

 

2. Limitation on mergers and acquisitions; provided, there shall be no limitation as to the amount of such mergers and acquisitions (but subject to the limitations set forth in clause (iv) of paragraph 5 below).

 

3. Limitations on dividends and stock repurchases and optional redemptions (and optional prepayments) of subordinated debt with carveouts for, among other things, (i) permitted refinancings of such debt, (ii) the Cumulative Credit, subject to no continuing event of default, so long as immediately after giving effect thereto, the Borrower is in compliance on a Pro Forma Basis with the Financial Covenant (calculated without excluding Development Debt), (iii) other restricted payments in an amount not to exceed the greater of $225.0 million and the Corresponding Multiple of LTM EBITDA, subject to no continuing event of default, (iv) cashless exchanges of subordinated debt (subject to the refinancing debt being subordinated to the same extent as the refinanced debt and other customary restrictions on the refinancing debt consistent with the Documentation Principles), (v) restricted payments made with certain designated equity contributions and/or equity sales received after the Funding Date that are excluded from the calculation of the Cumulative Credit and not utilized to incur indebtedness pursuant to clause (xii) of paragraph 4 below, (vi) restricted payments out of declined proceeds not applied to the prepayment of Term Loans in an amount not to exceed $170.0 million, (vii) additional restricted payments and redemptions and prepayments of subordinated debt so long as the ratio of funded debt outstanding (net of unrestricted cash and cash equivalents) to adjusted EBITDA (the “Net Total Leverage Ratio”) on a Pro Forma Basis is not greater than 0.50x less than the Net Total Leverage Ratio on the Funding Date (calculated without excluding Development Debt), subject to no continuing event of default and (viii) permit restricted payments in connection with the Transactions and, for the avoidance of doubt, the prepayment or repayment of the Secured Bridge Facility.

 

4. Limitation on indebtedness, which shall, among other things, (i) permit the incurrence of indebtedness (subject to customary restrictions with respect to maturity, weighted average life and mandatory prepayments (but subject to customary exclusions for Extendable Bridge Loans and the Inside Maturity Basket)) if, after giving effect to the incurrence of such indebtedness and the use of proceeds

 

B-20


   thereof (but without netting the cash proceeds on the date of incurrence thereof), (A) in the case of indebtedness secured by liens on the Collateral ranking pari passu with the liens on the Collateral securing the Term Facility, the Net First Lien Leverage Ratio on a Pro Forma Basis is not greater than, at the Borrower’s election, (1) 0.25x greater than the Net First Lien Leverage Ratio on the Funding Date or (2) if incurred in connection with a permitted acquisition or other permitted investment, the Net First Lien Leverage Ratio immediately prior to the incurrence of such indebtedness; provided that the MFN provisions applicable to the Incremental Facilities shall apply on the same terms to any broadly syndicated U.S. dollar denominated term loans secured by liens on the Collateral ranking pari passu to the liens on the Collateral securing the Term Facility incurred pursuant to this clause (i)(A), (B) in the case of indebtedness secured by liens on the Collateral ranking junior to the liens on the Collateral securing the Term Facility, the Net Secured Leverage Ratio on a Pro Forma Basis is not greater than, at the Borrower’s election, (1) 0.50x greater than the Net Secured Leverage Ratio on the Funding Date or (2) if incurred in connection with a permitted acquisition or other permitted investment, the Net Secured Leverage Ratio immediately prior to the incurrence of such indebtedness and (C) in the case of unsecured indebtedness the Fixed Charge Coverage Ratio on a Pro Forma Basis is not less than, at the Borrower’s election, (1) 2.00 to 1.00 or (2) if incurred in connection with a permitted acquisition or other permitted investment, the Fixed Charge Coverage Ratio immediately prior to the incurrence of such indebtedness; provided that the aggregate principal amount of indebtedness incurred under this clause (i) by non-Guarantor subsidiaries shall not exceed an amount equal to the greater of $400.0 million and the Corresponding Multiple of LTM EBITDA (reduced by the aggregate outstanding principal amount of indebtedness incurred by non-Guarantor subsidiaries under clause (iv) of this paragraph 4), (ii) permit the incurrence of capital lease obligations, purchase money debt and slot financing arrangements in an outstanding principal amount not to exceed the greater of $900.0 million and the Corresponding Multiple of LTM EBITDA, (iii) include a general basket for indebtedness in an outstanding principal amount not to exceed the greater of $750.0 million and the Corresponding Multiple of LTM EBITDA, (iv) permit indebtedness incurred (subject to customary restrictions with respect to maturity, weighted average life and mandatory prepayments) or assumed in connection with acquisitions without limit so long as at the time of incurrence or assumption, no event of default shall have occurred and be continuing or would result therefrom and after giving effect to such acquisition on a Pro Forma Basis, the applicable ratio level set forth in clause (i) with respect to the type of debt being incurred or assumed is satisfied on a Pro Forma Basis for such acquisition; provided that the aggregate principal amount of indebtedness incurred under this clause (iv) by non-Guarantor subsidiaries shall not exceed the greater of $400.0 million and the Corresponding Multiple of LTM EBITDA (reduced by the aggregate outstanding principal amount of indebtedness incurred by non-Guarantor subsidiaries under clause (i) of this paragraph 4), (v) permit securitization financings (including receivables sales and financings) in an amount not to exceed $115.0 million, (vi) permit the

 

B-21


  

incurrence of Refinancing Facilities and Refinancing Debt, (vii) permit indebtedness existing on the Funding Date (with any indebtedness with an outstanding principal amount greater than $20.0 million to be scheduled) and refinancings thereof, (viii) permit Incremental Equivalent Debt, (ix) permit indebtedness of joint ventures and/or indebtedness incurred on behalf thereof or representing guarantees of indebtedness of joint ventures, in an aggregate outstanding principal amount not to exceed the greater of $340.0 million and the Corresponding Multiple of LTM EBITDA, (x) permit indebtedness of non-Guarantor subsidiaries in an aggregate principal amount not to exceed the greater of $350.0 million and the Corresponding Multiple of LTM EBITDA, (xi) permit Qualified Non-Recourse Debt and any Project Financing (each to be defined consistent with the Documentation Principles) in an aggregate outstanding principal amount not to exceed $1,500.0 million (less amounts incurred pursuant to clause (xiii) below), (xii) permit indebtedness or disqualified stock in an aggregate outstanding principal amount not to exceed 100% of the net cash proceeds received from sale or issuance of qualified equity interests or capital contributions that do not constitute “cure equity” and that are excluded from the calculation of the Cumulative Credit, (xiii) permit up to $1,500.0 million of Development Debt (less amounts incurred pursuant to clause (xi) above), so long as no event of default has occurred and is continuing or would result therefrom, (xiv) permit indebtedness under the New Senior Unsecured Notes and/or the Unsecured Bridge Facility, (xv) permit indebtedness of CRC and its subsidiaries under the Existing CRC Credit Agreement (including any “Incremental Facilities” permitted thereunder and, without duplication, any other indebtedness permitted to be incurred by CRC or its subsidiaries by the Existing CRC Credit Agreement), the Existing CRC Indenture and the Incremental Term B Loans, (xvi) permit indebtedness under the Secured Bridge Facility, (xvii) permit indebtedness that has been defeased or discharged pursuant to the prepayment or deposit of amounts sufficient to satisfy such indebtedness as it becomes due or irrevocably called for redemption, (xviii) permit indebtedness issued in escrow pursuant to customary escrow arrangements, (xix) permit unsecured indebtedness owed to Capri Insurance Company in respect of premiums and reserves in an amount not to exceed $25.0 million and (xx) permit refinancing indebtedness of any debt that was permitted when incurred.

 

5. Limitation on loans and investments, which shall, among other things, (i) include a general basket for investments in an outstanding amount not to exceed the greater of $975.0 million and the Corresponding Multiple of LTM EBITDA, plus the Cumulative Credit (plus unused amounts under clause (ii) below), (ii) include a basket for investments in similar businesses in an outstanding amount not to exceed the greater of $415.0 million and the Corresponding Multiple of LTM EBITDA (plus unused amounts under clause (i) above), (iii) permit additional investments in joint ventures in an amount not to exceed the greater of $600.0 million and the Corresponding Multiple of LTM EBITDA, (iv) include an exception for permitted business acquisitions (including unlimited acquisitions of entities that will become restricted

 

B-22


  

subsidiaries), so long as (x) after giving effect thereto no event of default shall have occurred and be continuing or would result therefrom and (y) for any such acquisition in excess of $75.0 million, after giving effect to such acquisition, the Borrower shall be in compliance on a Pro Forma Basis with the Financial Covenant, (v) permit investments in restricted subsidiaries without limit, (vi) permit additional investments in unrestricted subsidiaries in an amount not to exceed the greater of $210.0 million and the Corresponding Multiple of LTM EBITDA, (vii) permit additional investments to the extent that payment is made with, or such investments are received in exchange for, qualified equity interests of the Borrower or any parent entity, (viii) permit investments in joint ventures to develop or operate nightclubs, bars, restaurants, recreation, exercise or gym facilities, or entertainment or retail venues or similar or related establishments or facilities within any project not to exceed the greater of $225.0 million and the Corresponding Multiple of LTM EBITDA, (ix) permit guarantees of any permitted obligations of the Borrower and the restricted subsidiaries, (x) permit investments existing on the Funding Date (with any investments greater than $20.0 million to be scheduled), (xi) permit investments constituting the cash deposits held in escrow or trust with respect to indebtedness permitted under clauses (xvii) and (xviii) of paragraph 4 above, (xii) permit investments deemed to be made in connection with the issuance of letters of credit for the account of any subsidiary or other person not to exceed $450.0 million, (xiii) permit additional investments so long as the Net Total Leverage Ratio on a Pro Forma Basis is not greater than 0.50x less than the Net Total Leverage Ratio on the Funding Date (calculated without excluding Development Debt) and (xiv) permit investments in connection with the Transactions.

 

6. Limitation on liens, which shall, among other things, (i) permit the incurrence of liens on assets of non-Guarantor subsidiaries so long as such liens secure obligations of non-Guarantor subsidiaries that are otherwise permitted, (ii) permit the incurrence of junior liens on Collateral, subject to compliance with a Net Secured Leverage Ratio on a Pro Forma Basis that is not greater than, at the Borrower’s election, (1) 0.50x greater than the Net Secured Leverage Ratio on the Funding Date or (2) if incurred in connection with a permitted acquisition or other permitted investment, the Net Secured Leverage Ratio immediately prior to the incurrence of such liens; provided, that such junior liens on Collateral shall be subject to an intercreditor agreement consistent with the Documentation Principles, (iii) permit the incurrence of pari passu liens on Collateral (including liens securing notes or additional credit facilities), subject to compliance with a Net First Lien Leverage Ratio on a Pro Forma Basis that is not greater than, at the Borrower’s election, (1) 0.25x greater than the Net First Lien Leverage Ratio on the Funding Date or (2) if incurred in connection with a permitted acquisition or other permitted investment, the Net First Lien Leverage Ratio immediately prior to the incurrence of such liens; provided that such notes and additional credit facilities (a) shall be subject to an intercreditor agreement consistent with the Documentation Principles and (b) the MFN provisions applicable to the Incremental Facilities shall apply on the same terms to any broadly syndicated U.S. dollar denominated term

 

B-23


  

loans secured by liens on the Collateral ranking pari passu to the liens on the Collateral securing the Term Facility incurred pursuant to this clause (iii), (iv) permit liens securing indebtedness permitted under clause (iv) of paragraph 4 above; provided that any such indebtedness shall be subject to an intercreditor agreement consistent with the Documentation Principles in the case of liens on the Collateral, (v) permit liens existing on the Funding Date (with any liens securing indebtedness with an outstanding principal amount in excess of $20.0 million to be scheduled), (vi) permit liens securing securitization financings (including receivables financings), (vii) include a general basket for liens in an outstanding amount not to exceed the greater of $750.0 million and the Corresponding Multiple of LTM EBITDA, (viii) permit liens pursuant to Gaming Leases, (ix) permit liens securing indebtedness permitted under clauses (ii), (iv), (vi), (viii), (xi), (xiii), (xv), (xvi), (xvii), (xviii) and (xix) of paragraph 4 above subject to customary limitations consistent with the Documentation Principles, and (x) permit refinancing liens of any liens that were permitted when incurred.

 

7. Limitation on transactions with affiliates involving aggregate consideration in excess of $50.0 million per transaction and which shall permit, among other things, payments under management agreements (including management fees).

 

8. Limitation on changes in the business of the Borrower and its restricted subsidiaries.

 

9. Limitation on sale/leaseback transactions, which shall permit, among other things, sale/leaseback transactions with respect to (i) property that does not constitute Collateral, (ii) property owned by the Borrower or any domestic subsidiary that is acquired after the Funding Date so long as consummated within 365 days after acquisition of such property, (iii) property owned by a subsidiary that is not a Guarantor, (iv) any other property so long as (x) no event of default has occurred or would result therefrom on the date of the execution of definitive documentation with respect to such disposition, (y) with respect to any sale/leaseback transaction with net cash proceeds in excess of $50.0 million, immediately after giving effect thereto, the Borrower would be in compliance with the Financial Covenant on a Pro Forma Basis (if elected by the Borrower, calculated as of the date of the execution of definitive documentation with respect to such disposition) and (z) if such property was owned by the Borrower or any domestic subsidiary on the Funding Date, the net proceeds are used to prepay the Term Facility to the extent required by the Financing Documentation (v) Project Financings (to be defined consistent with the Documentation Principles) and (vi) other transactions pursuant to call rights agreements, rights of first refusal agreements and binding sale agreements in existence on the Funding Date (including, without limitation, the Specified Borrower Asset Sales and the other Viper Transactions).

 

B-24


  

10. Limitation on restrictions of subsidiaries to pay dividends or make distributions and limitations on negative pledges (which shall in any event permit the restrictions and limitations under the Existing CRC Credit Agreement and the Existing CRC Indenture and any permitted refinancings thereof).

 

11. Limitation on changes to fiscal year.

 

12. Limitation on modifications to organizational documents and material subordinated debt documents.

   Any transactions (including any payments to affiliates) contemplated by, or consummated in connection with, operation management agreements and the management and lease support agreements will in any event be permitted by the Financing Documentation.
  

In the event the Borrower or any of its restricted subsidiaries incurs or issues indebtedness, grants any lien or makes a restricted payment, payment on junior debt or investment, the Financing Documentation shall (x) permit the Borrower to, in its sole discretion, determine which category or categories such indebtedness, investment or restricted payment is incurred, issued or made under, as the case may be, and (y) at any time thereafter, permit the Borrower to, in its sole discretion, reclassify, reallocate or divide such indebtedness, lien, investment, payment on junior debt or restricted payment, as the case may be, among additional or different categories.

 

All ratios and calculations shall be measured on a Pro Forma Basis (to be defined in a manner consistent with the Documentation Principles and as described below).

 

Unless the Borrower elects otherwise, if the Borrower or any of its restricted subsidiaries in connection with the consummation of any transaction or series of related transactions (x) incurs indebtedness, creates liens, makes asset sales or other dispositions, makes investments, makes restricted payments, designates any subsidiary as restricted or unrestricted or repays any indebtedness or takes any other action under or as permitted by a ratio-based basket and (y) incurs indebtedness, creates liens, makes asset sales or other dispositions, makes investments, makes restricted payments, designates any subsidiary as restricted or unrestricted or repays any indebtedness or takes any other action under or as permitted by a non-ratio-based basket (which shall occur on the same business day as the events in clause (x) above), then the applicable ratio will be calculated with respect to any such action under the applicable ratio-based basket without regard to any such action under such non-ratio-based basket under the same covenant made in connection with such transaction or series of related transactions.

 

Corresponding Multiple of LTM EBITDA” means, with respect to any dollar basket, the amount of such dollar basket divided by the adjusted EBITDA on a Pro Forma Basis of the Borrower and its restricted subsidiaries for the most recently available four fiscal quarter period as of the Funding Date, after giving effect to the Transactions, expressed as a multiple.

 

B-25


Limited Condition Transaction:   

For purposes of (i) determining compliance with any provision of the Financing Documentation which requires the calculation of the Net First Lien Leverage Ratio, the Net Secured Leverage Ratio, the Net Total Leverage Ratio and Fixed Charge Coverage Ratio, (ii) determining compliance with representations, warranties, defaults or events of default or (iii) testing availability under baskets set forth in the Financing Documentation (including baskets measured as a percentage of EBITDA or total assets), in each case, in connection with a “limited condition” transaction (including any applicable permitted acquisition or permitted investment subject to a letter of intent or purchase agreement, and any unconditional repayment or redemption of, or offer to purchase, any indebtedness, and in each case any incurrence of indebtedness or grant of liens in connection with the foregoing) of the Borrower and its restricted subsidiaries (any such transaction, a “Limited Condition Transaction”), at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), the date of determination of whether any such action is permitted hereunder, shall be deemed to be the date the definitive agreements for such Limited Condition Transaction (or commitments with respect to the indebtedness to be incurred in connection therewith) are entered into (the “LCT Test Date”), and if, after giving pro forma effect to the Limited Condition Transaction and the other transactions to be entered into in connection therewith as if they had occurred at the beginning of the most recent test period ending prior to the LCT Test Date, the Borrower could have taken such action on the relevant LCT Test Date in compliance with such ratio or basket, default condition or representation, such ratio or basket, default condition or representation shall be deemed to have been complied with.

 

For the avoidance of doubt, if the Borrower has made an LCT Election and any of the ratios or baskets for which compliance was determined or tested as of the LCT Test Date are exceeded as a result of fluctuations in any such ratio or basket (including due to fluctuations of the target of any Limited Condition Transaction) at or prior to the consummation of the relevant transaction or action, such baskets or ratios will not be deemed to have been exceeded as a result of such fluctuations. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of debt and the use of proceeds thereof) had been consummated.

 

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Financial Covenant:   

Term Facility: None.

 

Revolving Facility: Only the following financial covenant with regard to the Borrower and its restricted subsidiaries on a consolidated basis: a Net First Lien Leverage Ratio set at a 30% cushion to LTM EBITDA on the Funding Date with no stepdowns (the “Financial Covenant”).

 

The Financial Covenant will be tested as of the last day of each fiscal quarter if the aggregate amount of funded loans and letters of credit (excluding letters of credit under the Revolving Facilities up to $170.0 million and cash collateralized letters of credit) under the Revolving Facility on such date exceeds an amount equal to 25% of the then outstanding commitments under the Revolving Facility (the “Testing Threshold”), with the first quarterly covenant test to commence as of the last day of the first full fiscal quarter ending after the Funding Date (if otherwise applicable on such date).

 

All financial ratios shall be calculated on a Pro Forma Basis (defined in a manner consistent with the Documentation Principles); provided that, except as otherwise expressly provided in this Senior Facilities Term Sheet, all financial ratios shall be calculated with a reduction in total and secured debt of up to $1,500.0 million (less the aggregate outstanding principal amount of indebtedness outstanding pursuant to clause (xi) of paragraph 4 under “Negative Covenants” above) used to finance expansion capital expenditures, joint ventures, development projects and casinos and “racinos” owned by the Borrower or its restricted subsidiaries or where the Borrower or its restricted subsidiaries have a management agreement (including, without limitation hotels, restaurants and other similar projects related or ancillary to such casinos and “racinos”) so long as construction is diligently pursued until the end of the first full fiscal quarter following the earlier of (x) completion of the associated construction and (y) opening of the associated project (such indebtedness, “Development Debt”) (and EBITDA attributable to such projects shall be annualized until the fourth full fiscal quarter after such completion or opening).

   For purposes of determining compliance with the Financial Covenant, any cash equity contribution (which shall be common equity or otherwise in a form reasonably acceptable to the Agent) contributed to the Borrower or any cash proceeds of the issuance of equity securities by the Borrower (which shall be common equity or otherwise in a form reasonably acceptable to the Agent) following the first day of the applicable fiscal quarter and on or prior to the day that is 15 business days after the day on which financial statements are required to be delivered for such fiscal quarter (the “Cure Date”) will be included in the calculation of consolidated EBITDA solely for the purposes of determining compliance with the Financial Covenant at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of consolidated EBITDA, a “Specified Equity Contribution”); provided that (a) in each four consecutive fiscal quarter period, there shall be at least two fiscal

 

B-27


  

quarters in respect of which no Specified Equity Contribution is made, (b) no more than five Specified Equity Contributions may be made during the term of the Revolving Facility, (c) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause the Borrower to be in compliance with the Financial Covenant on a Pro Forma Basis, (d) all Specified Equity Contributions shall be disregarded for purposes of determining any financial ratio-based conditions, pricing or any baskets with respect to the covenants contained in the Financing Documentation and shall not build the Cumulative Credit and (e) there shall be no pro forma reduction in indebtedness with the proceeds of any Specified Equity Contribution for determining compliance with the Financial Covenant for the fiscal quarter in respect of which such Specified Equity Contribution is made (either directly through prepayment or indirectly as a result of the netting of unrestricted cash).

 

The Financing Documentation will contain a standstill provision prohibiting the exercise of remedies related to any breach of the Financial Covenant during the period in which any Specified Equity Contribution will be made after delivery of written notice to the Agent of the Borrower’s intention to cure the Financial Covenant with the proceeds of the Specified Equity Contribution; provided that such standstill shall apply solely in respect of the breach (or prospective breach) of the Financial Covenant giving rise thereto and, to the extent the applicable Specified Equity Contribution has not been made prior to the applicable Cure Date, such standstill shall end when such Specified Equity Contribution may no longer be timely made in respect of such fiscal quarter. No Lender or L/C Issuer, as applicable, shall be required to fund any revolving loans or issue any letters of credit, as applicable, under the Revolving Facility at any time during such standstill period.

Events of Default:    Only the following (subject to customary thresholds and grace periods to be agreed upon, consistent with the Documentation Principles, and applicable to Borrower and its restricted subsidiaries): nonpayment of principal, interest or other amounts; violation of covenants (provided that with respect to the Financial Covenant, a breach shall only result in an event of default with respect to the Term Facility upon the Lenders under the Revolving Facility having terminated the commitments under the Revolving Facility and accelerating any loans thereunder then outstanding); incorrectness of representations and warranties in any material respect; cross event of default and cross acceleration to material indebtedness having an outstanding principal amount of more than $300.0 million; bankruptcy and similar events; material final monetary judgment defaults (in excess of insurance or indemnities) (same dollar threshold as cross default to material indebtedness); ERISA events; actual or asserted invalidity of guarantees or security documents in each case representing a material portion of the guarantees or the collateral; payment event of default under the CPLV Master Lease and the Non-CPLV Master Lease (in each case, as defined in the Existing CRC Credit Agreement); and change of control (to be defined); revocation or other loss of gaming licenses or permits on terms consistent with the Documentation Principles.

 

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Unrestricted Subsidiaries:    In addition to subsidiaries designated as unrestricted subsidiaries on the Funding Date, after the Funding Date the Borrower may, subject to (i) the investments covenant, (ii) no continuing event of default before and after giving effect to such designation and (iii) compliance with the Financial Covenant on a Pro Forma Basis, designate any subsidiary as an “unrestricted subsidiary” and subsequently, subject to no continuing event of default, redesignate any such unrestricted subsidiary as a restricted subsidiary; provided that, notwithstanding the foregoing, the Borrower may designate as an unrestricted subsidiary on the Funding Date (1) any subsidiary that is designated as “unrestricted” under the Existing Borrower Credit Agreement, the Company Convertible Senior Notes, the Existing CRC Credit Agreement or the Existing CEOC Credit Agreement, in each case, immediately prior to the Funding Date, (2) Caesars Baltimore Investment Company LLC and its subsidiaries, (3) Caesars Korea Holding Company LLC and its subsidiaries and (4) other subsidiaries of the Borrower and the Company to be agreed between the Borrower and the Company, on the one hand, and the Agent, on the other hand. Unrestricted subsidiaries will not be subject to the representations and warranties, affirmative or negative covenant or event of default provisions of the Financing Documentation, and the results of operations and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of calculating the financial ratios contained in the Financing Documentation on terms consistent with the Documentation Principles.
Voting:   

Customary for facilities of this type and consistent with the Documentation Principles; provided, that except as described below, there shall be no “class” voting.

 

For the avoidance of doubt, amendments and waivers of the Financial Covenant (and related defaults and definitions as used therein) and the conditions to borrowing under the Revolving Facility shall only require the approval of Lenders holding more than 50% of the aggregate amount of the commitments under the Revolving Facility.

 

In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all directly and adversely affected Lenders (or all Lenders or all directly and adversely affected Lenders of a particular class or classes),

 

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   if the consent to such Proposed Change of all Lenders whose consent is required is not obtained (but the consent of the Required Lenders or more than 50% (in principal amount) of the directly and adversely affected Lenders (or of the applicable Lenders of a particular class or classes), as applicable, is obtained) (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then the Borrower may, at its option and at its sole expense and effort, upon notice to such Non-Consenting Lender and the Agent, (x) require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to customary restrictions on assignment), all its interests, rights and obligations under the Senior Facilities with respect to the applicable class or classes of loans to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment) and/or (y) terminate the commitment of such Non-Consenting Lender and prepay such Lender on a non-pro rata basis; provided that, such Non-Consenting Lender shall have received payment of an amount equal to the outstanding principal of its loans, accrued interest thereon, accrued fees and all other amounts then due and owing to it under the Financing Documentation with respect to such class or classes from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts).
Cost and Yield Protection; Defaulting Lenders:   

Customary for facilities of this type and consistent with the Documentation Principles (including, without limitation, customary provisions relating to Dodd-Frank and Basel III) including provisions for replacing or terminating the commitments of (i) any Defaulting Lender and (ii) any Lender seeking indemnity for increased costs or grossed-up tax payments or unable to fund Adjusted LIBOR Loans.

 

There will be tax gross-up provisions customary for facilities of this type and consistent with the Documentation Principles.

Assignments and Participations:    The Lenders will be permitted to assign loans and commitments under the Senior Facilities with the consent of the Borrower (not to be unreasonably withheld or delayed and as to which, in the case of the Term Facility, the Borrower will be deemed to have consented 10 business days after any request for consent if the Borrower has not otherwise responded by such date); provided that such consent of the Borrower shall not be required (i) under the Revolving Facility, if such assignment is made to another Lender under the Revolving Facility, (ii) under the Term Facility, if such assignment is made to another Lender or an affiliate or approved fund of a Lender, or (iii) after the occurrence and during the continuance of an event of default relating to payment default or bankruptcy of the Borrower. All assignments will also require the consent of the Agent (subject to exceptions consistent with the Documentation Principles), and, with respect to assignment under the Revolving Facility, the L/C Issuer, not to be unreasonably withheld or delayed. Each assignment, in the case of the Term Facility, will be in an amount of an integral multiple of $1,000,000. Each assignment, in the case of the Revolving Facility, will be in an amount of an integral

 

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   multiple of not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof. Assignments will not be required to be pro rata between the Senior Facilities. The Agent will receive a processing and recordation fee of $3,500, payable by the assignor and/or the assignee, with each assignment.
   The Lenders will be permitted to sell participations in loans and commitments subject to the restrictions set forth herein, in the Commitment Letter and consistent with the Documentation Principles. Voting rights of participants (i) shall be limited to matters in respect of (a) increases in commitments of such participant, (b) reductions of principal, interest or fees payable to such participant, (c) extensions of final maturity or interest or fee payment dates or scheduled amortization of the loans or commitments in which such participant participates and (d) releases of all or substantially all of the value of the Guarantees, or all or substantially all of the Collateral and (ii) for clarification purposes, shall not include the right to vote on waivers of defaults or events of default.
   Notwithstanding the foregoing, assignments (and, to the extent the Disqualified Institutions list is made available to any Lender upon request, participations) shall not be permitted to Disqualified Institutions (it being understood that the Borrower may add competitors (and affiliates of competitors (other than bona fide debt funds)) and affiliates of other Disqualified Institutions to the list of Disqualified Institutions from time to time); provided that (x) the foregoing shall not apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest in the Senior Facilities to the extent such party was not a Disqualified Institution at the time of the applicable assignment or participation, as the case may be and (y) any subsequent designation of a Disqualified Institution will not become effective until three business days after such designation is provided (it being understood that no such subsequent designation shall apply to any entity that is party to a pending trade at the time of such designation); provided, further, that the Agent shall have no duties or responsibilities for monitoring or enforcing prohibitions on assignments or participations to Disqualified Institutions or Affiliated Lenders.
   Assignments shall not be deemed non-pro rata payments. Non-pro rata prepayments will be permitted to the extent required to permit “extension” transactions and “replacement” facility transactions (with existing and/or new Lenders), subject to customary restrictions consistent with the Documentation Principles (but in no event shall “extension” transactions be subject to “most favored nation” provisions or default stoppers).
   Assignments to the affiliates of the Borrower (other than the Borrower’s subsidiaries, except as set forth below) (each, an “Affiliated Lender”) shall be permitted, subject only to the following limitations:

 

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   (i) no receipt of information provided solely to Lenders and no participation in Lender meetings;
   (ii) the purchaser shall not be required to make any representation to the seller at the time of the assignment that it does not possess material non-public information and such seller shall deliver a customary “big boy” letter;
   (iii) Affiliated Lenders may not purchase loans or commitments under the Revolving Facility;
   (iv) the amount of Term Loans owned or held by such Affiliated Lenders may not, in the aggregate, exceed 25% of the outstanding principal amount of such Term Loans, calculated as of the date of such purchase;
   (v) for purposes of any amendment, waiver or modification of the loan documents (other than any such amendment requiring the consent of each affected Lender) that does not adversely affect such Affiliated Lender (in its capacity as a Lender) in a disproportionately adverse manner as compared to other Lenders, Affiliated Lenders will be deemed to have voted in the same proportion as non-affiliated Lenders voting on such matter; and
   (vi) any Affiliated Lender that becomes a Lender shall waive its rights to bring actions (in its capacity as a Lender) against the Agent.
   Assignments of Term Loans to Debt Fund Affiliates (as defined below) will be permitted and will not be subject to the foregoing limitations; provided that, for purposes of determining whether the required lenders have consented to any amendment or waiver under the Financing Documentation, the aggregate amount of Term Loans of Debt Fund Affiliates will be excluded to the extent in excess of 49.9% of the outstanding principal amount of Term Loans required to constitute “Required Lenders”.
   Debt Fund Affiliates” shall mean entities managed by the affiliates of the Borrower or funds advised by their respective affiliated management companies that are primarily engaged in, or advise funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and for which no personnel making investment decisions in respect of any equity fund which has a direct or indirect equity investment in the Borrower or its restricted subsidiaries has the right to make any investment decisions.
Non-Pro Rata Repurchases:    Borrower and its subsidiaries may purchase from any Lender, at individually negotiated prices, outstanding principal amounts under the Term Facility in a non-pro rata manner through Dutch auctions, open market purchases or otherwise; provided that (i) the purchaser shall not be required to make any representation to the seller at the time of the

 

B-32


   assignment that it does not possess material non-public information and such seller shall deliver a customary “big boy” letter, (ii) any loans so repurchased by the Borrower or any subsidiary shall be immediately and automatically cancelled, (iii) no proceeds of loans under the Revolving Facility shall be utilized to make such purchases and (iv) no event of default exists or would result therefrom.
Expenses and Indemnification:    Indemnification by Borrower of the Agent, Arrangers, Syndication Agent, Documentation Agent, Lenders and L/C Issuer, and their respective affiliates and the respective officers, directors, employees, agents, controlling persons, members and representatives of each of the foregoing and their respective successors and assigns (each, an “Indemnified Person”) for matters arising out of or in connection with the Commitment Letter, the Fee Letter, the Transactions, the Senior Facilities or any related transaction or any claim, actions, suits, inquiries, litigation, investigation or other proceeding (regardless of whether such Indemnified Person is a party thereto and regardless of whether such matter is initiated by the Borrower’s equity holders, creditors or any other third party or by the Borrower or any of their respective affiliates) that relates to the Transactions, including the Senior Facilities or any transactions in connection therewith (limited in the case of legal fees to the reasonable documented out-of-pocket legal expenses incurred in connection with investigating or defending any of the foregoing by one firm of counsel for all Indemnified Persons, taken as a whole (and, if necessary, by a single firm of local counsel in each relevant material jurisdiction and/or a single firm of gaming counsel, in each case, for all Indemnified Persons, taken as a whole (and, in the case of an actual or perceived conflict of interest where the Indemnified Person(s) affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel with the Borrower’s prior consent (not to be unreasonably withheld or delayed), of another firm of counsel (and local counsel and/or gaming counsel, in each case, if applicable) for all such affected Indemnified Person(s) taken as a whole) and in the case of fees or expenses with respect to any other advisor or consultant, solely to the extent the Borrower has consented to the retention of such person)); provided that no Indemnified Person will be indemnified for (A) losses, claims, damages, liabilities or related expenses (i) to the extent they are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the willful misconduct, bad faith or gross negligence of such Indemnified Person or any of such Indemnified Person’s controlled or controlling affiliates or any of its or their respective officers, directors, employees, agents, controlling persons, members or representatives (collectively, such Indemnified Person’s “Related Persons”), or (ii) arising out of a material breach by such Indemnified Person (or any of such Indemnified Person’s Related Persons) of its obligations under the Commitment Letter, the Fee Letter or the Financing Documentation (as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (iii) arising out of any claim, actions, suits, inquiries, litigation, investigation or proceeding that does not involve an act or omission of the Borrower or any of its affiliates and that is brought by an Indemnified Person against any other

 

B-33


  

Indemnified Person (other than any claim, actions, suits, inquiries, litigation, investigation or proceeding against any Agent, any Arranger, the Syndication Agent, the Documentation Agent, or the L/C Issuer in its capacity as such), (B) any settlement entered into by such Indemnified Person (or any of such Indemnified Person’s Related Persons) without the Borrower’s written consent (such consent not to be unreasonably withheld, delayed or conditioned), or (C) any expenses of the type referred to in the immediately following paragraph except to the extent such expenses would otherwise be of the type referred to in this paragraph.

 

In addition, if the Funding Date occurs, all reasonable, documented out-of-pocket expenses (in the case of legal counsel, limited to the fees, disbursements and other charges of one firm of counsel for all such persons, taken as a whole (and, if necessary, by a single firm of local counsel in each relevant material jurisdiction and/or a single firm of gaming counsel, in each case, for all such persons, taken as a whole), in the case of an actual or perceived conflict of interest where the Indemnified Person(s) affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel with the Borrower’s prior written consent (not to be unreasonably withheld or delayed), of another firm of counsel (and local counsel and/or gaming counsel, in each case, if applicable) for all such affected Indemnified Person(s) taken as a whole, and in the case of fees or expenses with respect to any other advisor or consultant, solely to the extent the Borrower has consented to the retention of such person) of (x) the Agent, Arrangers, the Syndication Agent, the Documentation Agent, the L/C Issuer and the Lenders for the enforcement costs and documentary taxes associated with the Senior Facilities and (y) the Agent in connection with the preparation, execution and delivery of any amendment, waiver or modification of the Senior Facilities (whether or not such amendment, waiver or modification is approved by the Lenders) will in each case be paid by the Borrower within 30 days of written demand (including documentation reasonably supporting such request).

Regulatory Matters:    Consistent with the Documentation Principles.
Governing Law and Forum:    New York.
Counsel to Agent and Arrangers:    Cahill Gordon & Reindel LLP.

 

B-34


ANNEX B-I

 

Interest Rates:    The interest rates under the Term Facility will be, at the option of the Borrower, Adjusted LIBOR plus 3.50% or ABR plus 2.50%.
   The interest rates under the Revolving Facility will be, at the option of the Borrower, Adjusted LIBOR plus 3.25% or ABR plus 2.25%; provided that from and after the Borrower’s delivery of the financial statements for the first full fiscal quarter commencing after the Funding Date, the interest rate margins shall be based on the following pricing grid:

 

Net Total Leverage Ratio

  

Adjusted LIBOR

  

ABR

> 4.75x

   3.25%    2.25%

£ 4.75x but > 4.25x

   3.00%    2.00%

£ 4.25x but > 3.75x

   2.75%    1.75%

£ 3.75x

   2.50%    1.50%

 

   The Borrower may elect interest periods of 1, 2, 3 or 6 months (or, if agreed to by all relevant Lenders, 12 months or, if agreed to by the Agent, a shorter period) for Adjusted LIBOR borrowings.
   Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans determined by reference to the Agent’s Prime Rate (as defined below)) and interest shall be payable at the end of each interest period and, in any event, at least every three months.
   ABR” is the Alternate Base Rate, which is the highest of (a) the rate last quoted by The Wall Street Journal (or another national publication selected by the Agents) as the U.S. prime rate (the “Prime Rate”), (b) the federal funds effective rate from time to time plus 0.50% per annum and (c) one-month Adjusted LIBOR plus 1.00% per annum.
   Adjusted LIBOR” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for the applicable interest period appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen) or other applicable page or screen for loans denominated in U.S. dollars; provided that if Adjusted LIBOR shall be less than zero, such rate shall be deemed zero.
Default Rate:    With respect to overdue principal, the applicable interest rate plus 2.00% per annum, and with respect to any other overdue amount (including overdue interest), the interest rate applicable to ABR loans plus 2.00% per annum and in each case, shall be payable on written demand.

 

B-35


Letter of Credit Fees:    A per annum fee equal to the spread over Adjusted LIBOR under the Revolving Facility will accrue on the aggregate face amount of outstanding letters of credit under the Revolving Facility, payable in arrears at the end of each quarter and upon the termination of the Revolving Facility, in each case for the actual number of days elapsed over a 360-day year. Such fees shall be distributed to the Lenders participating in the Revolving Facility pro rata in accordance with the amount of each such Lender’s Revolving Facility commitment, with exceptions for Defaulting Lenders. In addition, the Borrower shall pay to the L/C Issuer, for its own account, (a) a fronting fee equal to 0.125% per annum of the aggregate face amount of outstanding letters of credit, payable in arrears at the end of each quarter and upon the termination of the Revolving Facility, calculated based upon the actual number of days elapsed over a 360-day year, and (b) customary issuance and administration fees.
Commitment Fees:    0.50% per annum on the average daily undrawn portion of the commitments in respect of the Revolving Facility, payable quarterly in arrears after the Funding Date and upon the termination of the commitments, calculated based on the number of days elapsed in a 360-day year. Such fees shall be distributed to the Lenders participating in the Revolving Facility pro rata in accordance with the amount of each such Lender’s Revolving Facility commitment, with exceptions for Defaulting Lenders; provided that from and after the Borrower’s delivery of the financial statements for the first full fiscal quarter commencing after the Funding Date, the commitment fee shall be based on a pricing grid to be agreed.

 

B-36


EXHIBIT C

Incremental Term Loan B Facility Term Sheet

[attached]

 

Exhibit C


EXHIBIT C

Caesars Resort Collection, LLC

$2,400.0 Million Senior Secured Incremental Term Loan B Facility

Summary of Principal Terms and Conditions1

 

Borrower:    Caesars Resort Collection, LLC (the “CRC Borrower”).
CEOC Event:    Upon the consummation of the Transactions (as defined below) on the Funding Date, either (a) the Company will directly or indirectly contribute all of its equity interests in CEOC, LLC (“CEOC”) to the CRC Borrower (the “CEOC Contribution”), (b) CEOC will become a co-borrower under the Existing CRC Credit Agreement and a co-issuer under the Existing CRC Indenture (the “CEOC Co-Borrower Event”) or (c) CRC may otherwise acquire, directly or indirectly, all of the equity interests in CEOC (the “CEOC Acquisition” and either of the CEOC Contribution, the CEOC Co-Borrower Event or the CEOC Acquisition, the “CEOC Event”) and, in either case, CEOC will repay all of the outstanding indebtedness under the Existing CEOC Credit Agreement. Upon the consummation of the CEOC Event, certain baskets and thresholds under the Existing CRC Credit Agreement shall automatically be increased as set forth in the Existing CRC Credit Agreement due to the occurrence of a “CEOC Event” (as defined in the Existing CRC Credit Agreement).
Agent:    Credit Suisse AG, Cayman Islands Branch will continue to act as administrative agent and collateral agent under the Existing CRC Credit Agreement, including with respect to the Incremental Term Loan B Facility (as defined below) (in such capacities, the “Agent”), and will continue to perform the duties customarily associated with such roles.
Arrangers:    CSLF, JPMorgan and Macquarie Capital will act as joint lead arrangers for the Incremental Term Loan B Facility (the “CRC Lead Arrangers”), CSLF, JPMorgan and Macquarie Capital will act as joint bookrunners for the Incremental Term Loan B Facility (the “CRC Bookrunners” and, together with the CRC Lead Arrangers and any additional agents, arrangers and bookrunners appointed by the Borrower, each in such capacity, a “CRC Arranger” and, collectively, the “CRC Arrangers”), and will perform the duties customarily associated with such roles. Other agents, arrangers and bookrunners may be appointed by the Borrower as contemplated in the Commitment Letter.
Syndication Agent:    At the option of the Borrower, one or more financial institutions identified by the Borrower (in such capacity, the “Syndication Agent”).
Documentation Agent:    At the option of the Borrower, one or more financial institutions identified by the Borrower (in such capacity, the “Documentation Agent”).

 

1 

All capitalized terms used but not defined herein shall have the meanings assigned thereto in the Commitment Letter to which this Summary of Principal Terms and Conditions is attached (the “Commitment Letter”).

 

C-1


Transactions:   

The CRC Borrower intends to (a) incur incremental term loans under that certain Credit Agreement, dated as of December 22, 2017 (as amended, restated, supplemented or otherwise modified prior to the Funding Date, the “Existing CRC Credit Agreement”), among the CRC Borrower, the other borrowers party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, in order to repay in full the outstanding indebtedness of CEOC under that certain Credit Agreement, dated as of October 6, 2017 (as amended, restated, supplemented or otherwise modified prior to the Funding Date, the “Existing CEOC Credit Agreement”), among CEOC, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, (b) consummate the other Transactions (as defined below) and (c) pay the Transaction Costs (as defined below).

 

In connection with the foregoing, the CRC Borrower proposes to enter into an Incremental Assumption Agreement (the “Incremental Assumption Agreement”) to the Existing CRC Credit Agreement in order to borrow incremental term loans.

 

Substantially simultaneously with the CRC Borrower’s incurrence of the Incremental Term Loan B Facility and the closing of the Incremental Assumption Agreement, the CEOC Event will be consummated.

 

The transactions described above (including the execution and delivery of the Incremental Assumption Agreement, the incurrence of the Incremental Term B Loans, the repayment of the Existing CEOC Credit Agreement, the consummation of the Acquisition (as defined in the Commitment Letter), the consummation of the CEOC Event and the payment of fees and expenses in connection therewith (the “Transaction Costs”)) are collectively referred to herein as the “Transactions”.

Master Leases and Management and Lease Support Agreements:   

CEOC and certain subsidiaries of CEOC and the CRC Borrower (collectively, the “Master Lease Tenants”) have entered into, and may in the future enter into, one or more Master Leases with wholly-owned subsidiaries (“Landlord”) of VICI Properties Inc., pursuant to which the Master Lease Tenants leased the real property and related improvements underlying the gaming facilities operated by CEOC and the CRC Borrower and their subsidiaries identified therein (the “Master Leases”). The Master Leases (and the rent thereunder) will not constitute indebtedness or interest expense for any purpose under the Existing CRC Credit Agreement regardless of how the CRC Borrower treats the Master Leases for financial reporting purposes.

 

In addition, in connection with certain of the Master Leases, the Master Lease Tenants, the Company, Landlord, one or more wholly owned subsidiaries of the Company (collectively, the “Managers”) and certain of their affiliates have entered into, and may in the future enter into, one

 

C-2


   or more Management and Lease Support Agreements, pursuant to which the Managers are engaged to manage certain of the gaming facilities subject to the Master Leases and the Company has guaranteed the obligations of certain of the Master Lease Tenants to Landlord.
Incremental Term Loan B Facility:    A senior secured incremental term loan B facility in an aggregate principal amount of $2,400.0 million (the “Incremental Term Loan B Facility” and the loans thereunder, the “Incremental Term B Loans”). The Incremental Term Loan B Facility will be funded in full on the Funding Date of the Incremental Assumption Agreement (the “Funding Date”) in United States Dollars.
Incremental Facilities:    Same as Existing CRC Credit Agreement; provided that that if the All-in Yield of any Incremental Term Facility (each as defined in the Existing CRC Credit Agreement) incurred under clause (2)(a) of the definition of “Incremental Amount” in the Existing CRC Credit Agreement that is a broadly syndicated U.S. dollar denominated term loan secured by liens on the Collateral (as defined in the Existing CRC Credit Agreement) that rank pari passu with the liens on the Collateral securing the Incremental Term Loan B Facility exceeds the All-In Yield on the Incremental Term Loan B Facility by more than 75 basis points, the applicable margins for the Incremental Term Loan B Facility shall be increased to the extent necessary so that the All-in Yield on the Incremental Term Loan B Facility is 75 basis points less than the All-in Yield on the Incremental Term Facility; provided that, if Adjusted LIBOR (as defined in Annex C-I hereto) in respect of such Incremental Term Facility includes a floor greater than the floor applicable to the Incremental Term Loan B Facility and such floor is greater than Adjusted LIBOR in effect for a 3-month interest period at such time, such increased amount (above the greater of such floor and such Adjusted LIBOR) shall be equated to interest rate for purposes of determining the applicable interest rate under such Incremental Term Facility; provided that this paragraph shall not be applicable to any Incremental Term Facility that (A) is incurred more than 6 months after the Funding Date, (B) is incurred to fund a permitted acquisition or investment, (C) has a maturity greater than one year after the maturity date of the Incremental Term Loan B Facility or (D) is in an aggregate amount equal to or less than $500.0 million.
Purpose:    The proceeds of the Incremental Term Loan B Facility will be used on the Funding Date, together with cash on hand of the Company and its subsidiaries, (a) to repay all outstanding indebtedness of CEOC under the Existing CEOC Credit Agreement, (b) to finance the Acquisition, (c) pay the Transaction Costs and (d) for working capital and general corporate purposes of the CRC Borrower and its subsidiaries. The CRC Borrower shall be permitted to dividend or distribute any of the proceeds of the Incremental Term Loan B Facility to the Borrower on or after the Funding Date to the extent permitted by the Existing CRC Credit Agreement.

 

C-3


Refinancing Facilities:    Same as Existing CRC Credit Agreement.
Availability:    The full amount of the Incremental Term Loan B Facility shall be drawn in a single drawing on the Funding Date. Amounts borrowed under the Incremental Term Loan B Facility that are repaid or prepaid may not be reborrowed.
Interest Rates and Fees:    As set forth on Annex C-I hereto.
Final Maturity and Amortization:    The Incremental Term Loan B Facility will mature on the date that is seven (7) years after the Funding Date, and, commencing with the first full fiscal quarter ended after the Funding Date, will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Incremental Term Loan B Facility with the balance payable on the maturity date of the Incremental Term Loan B Facility.
Guarantees:    Same as Existing CRC Credit Agreement (including CEOC and its wholly owned domestic restricted subsidiaries to the extent required by, and in accordance with the provisions (including grace periods) of the Existing CRC Credit Agreement).
Security:    Subject to the Certain Funds Provision, same as Existing CRC Credit Agreement (including the property of CEOC and its wholly owned domestic restricted subsidiaries that become Guarantors (as defined in the Existing CRC Credit Agreement) to the extent required by, and in accordance with the provisions (including grace periods) of the Existing CRC Credit Agreement).
Mandatory Prepayments:    Same as Existing CRC Credit Agreement.
Voluntary Prepayments and Reductions in Commitments:   

Same as Existing CRC Credit Agreement.

 

The CRC Borrower shall pay a “prepayment premium” in connection with any Repricing Event (as defined below) with respect to all or any portion of the Incremental Term Facility that occurs on or before the date that is six months after the Funding Date, in an amount equal to 1.00% of the principal amount of the Incremental Term Facility subject to such Repricing Event.

 

The term “Repricing Event” shall mean (a) any voluntary prepayment or repayment of Incremental Term B Loans with the proceeds of, or any conversion of the Incremental Term B Loans into, any substantially concurrent issuance solely by the CRC Borrower of a new or replacement tranche of long-term senior secured first lien term loans incurred solely by the CRC Borrower that are broadly syndicated to banks and other institutional investors in financings similar to the Incremental Term B Loans, the primary purpose of which is to (and which does) reduce the “effective yield” applicable to the Incremental Term B Loans and (b) any amendment to the Incremental Term Facility the primary purpose of which is to (and which does) reduce the yield

 

C-4


   applicable to the Incremental Term B Loans (it being understood that (i) any prepayment premium with respect to a Repricing Event shall apply to any required assignment by a non-consenting Lender in connection with any such amendment pursuant to so-called yank-a-bank procedures and (ii) in each case, the yield shall exclude any structuring, commitment and arranger fees or other similar fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans), other than, in the case of each of clauses (a) and (b), in connection with a change of control, a transformative acquisition, investment or disposition (whether or not such acquisition, investment or disposition is permitted under the Existing CRC Credit Agreement), a refinancing of indebtedness under the Borrower Senior Secured Credit Facilities, the Existing CRC Indenture or the Secured Bridge Facility or any other transaction not permitted by the Existing CRC Credit Agreement.
Representations and Warranties:    Same as Existing CRC Credit Agreement.
Conditions Precedent to Borrowing:    The borrowing under the Incremental Term Loan B Facility is subject solely to the Funding Conditions with respect to the Incremental Term Loan B Facility set forth in the Commitment Letter (subject to the Certain Funds Provision).
Affirmative Covenants:    Same as Existing CRC Credit Agreement.
Negative Covenants:    Same as Existing CRC Credit Agreement.
Financial Covenant:    None.
Events of Default:    Same as Existing CRC Credit Agreement.
Unrestricted Subsidiaries:    Same as Existing CRC Credit Agreement.
Voting:    Same as Existing CRC Credit Agreement.
Cost and Yield Protection; Defaulting Lenders:    Same as Existing CRC Credit Agreement.
Assignments and Participations:    Same as Existing CRC Credit Agreement.
Non-Pro Rata Repurchases:    Same as Existing CRC Credit Agreement.
Expenses and Indemnification:    Same as Existing CRC Credit Agreement.
Regulatory Matters:    Same as Existing CRC Credit Agreement.
Governing Law and Forum:    New York.

 

C-5


Counsel to Agent and Arrangers:    Cahill Gordon & Reindel LLP.

 

C-6


ANNEX C-I

 

Interest Rates:    The interest rates under the Incremental Term Facility will be, at the option of the CRC Borrower, Adjusted LIBOR plus 3.25% or ABR plus 2.25%.
   The CRC Borrower may elect interest periods of 1, 2, 3 or 6 months (or, if agreed to by all relevant Lenders, 12 months or, if agreed to by the Agent, a shorter period) for Adjusted LIBOR borrowings.
   Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans determined by reference to the Agent’s Prime Rate (as defined below)) and interest shall be payable at the end of each interest period and, in any event, at least every three months.
   ABR” is the Alternate Base Rate, which is the highest of (a) the rate of interest publicly announced by the Agent as its prime rate in effect at its principal office in New York City (the “Prime Rate”), (b) the federal funds effective rate from time to time plus 0.50% per annum and (c) one-month Adjusted LIBOR plus 1.00% per annum.
   Adjusted LIBOR” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for the applicable interest period appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen) or other applicable page or screen for loans denominated in U.S. dollars; provided that if Adjusted LIBOR shall be less than zero, such rate shall be deemed zero. The Incremental Assumption Agreement will amend the Existing CRC Credit Agreement to include LIBOR successor provisions with respect to the Incremental Term Loan B Facility as set forth therein.
Default Rate:    Same as Existing CRC Credit Agreement.

 

C-7


EXHIBIT D

Secured Bridge Facility Term Sheet

[attached]

 

Exhibit D


EXHIBIT D

Eldorado Resorts, Inc.

$3,600.0 million Senior Secured 364-Day Bridge Loan Facility

Summary of Principal Terms and Conditions1

 

Borrower:    Eldorado Resorts, Inc., a Nevada corporation (the “Borrower”).
Agent:    JPMorgan, acting through one or more of its branches or affiliates, will act as administrative agent and collateral agent for the Secured Bridge Facility (as defined below) (in such capacities, the “Agent”) for a syndicate of banks, financial institutions and other institutional lenders reasonably acceptable to the Borrower and excluding in all events Disqualified Institutions (together with the Initial Lenders, the “Lenders”), and will perform the duties customarily associated with such roles.
Arrangers:    JPMorgan will act as sole lead arranger and sole bookrunner for the Secured Bridge Facility (in such capacities, the “Arranger”), and will perform the duties customarily associated with such roles.
Financing Documentation:    The definitive documentation with respect to the Secured Bridge Facility (the “Financing Documentation”) will contain the terms set forth in this Summary of Principal Terms and Conditions (this “Secured Bridge Facility Term Sheet”) and to the extent not inconsistent herewith, will otherwise be based on and substantially consistent with the financing documentation for the Borrower Senior Secured Credit Facilities. This paragraph is referred to herein as the “Documentation Principles”.
Secured Bridge Facility:    A senior secured 364-day bridge term loan facility in an aggregate principal amount of $3,600.0 million (the “Secured Bridge Facility” and loans thereunder, the “Secured Bridge Loans”), less the aggregate amount on a dollar for dollar basis of (x) any Viper Proceeds received by the Borrower after the date hereof and on or prior to the Funding Date and (y) any Gaming Asset Sale Proceeds actually received by the Borrower after the date hereof and on or prior to the Funding Date. The Secured Bridge Loans will be funded in full on the Funding Date in United States Dollars.
Purpose:    The proceeds of the Secured Bridge Facility will be used (i) on the Funding Date to finance the Acquisition, to repay existing indebtedness of the Borrower and its subsidiaries, and to pay fees and expenses and (ii) on and after the Funding Date for working capital and general corporate purposes (including, without limitation, for permitted acquisitions and transactions costs).

 

1

All capitalized terms used but not defined herein shall have the meanings assigned thereto in the Commitment Letter to which this Summary of Principal Terms and Conditions is attached (the “Commitment Letter”).

 

D-1


Availability:    The full amount of the Secured Bridge Facility must be drawn in a single drawing on the Funding Date. Amounts borrowed under the Secured Bridge Facility that are repaid or prepaid may not be reborrowed.
Interest Rates and Fees:    As set forth on Annex D-I hereto.
Final Maturity and Amortization:    The Secured Bridge Facility shall terminate and all amounts outstanding thereunder shall be due and payable 364 days following the Funding Date. The Secured Bridge Facility will not have scheduled amortization.
Guarantees:    Same as Borrower Senior Secured Credit Facilities.
Security:    Subject to the Certain Funds Provision, same as Borrower Senior Secured Credit Facilities.
Intercreditor Agreement:    The security interests on the Collateral (as defined in the Borrower Senior Secured Credit Facilities Term Sheet) securing the Secured Bridge Facility shall be pari passu with the security interests on the Collateral securing the Borrower Senior Secured Credit Facilities and such security interests and related creditor rights between the Lenders, on the one hand, and the lenders under the Borrower Senior Secured Credit Facilities, on the other hand, will be set forth in a customary intercreditor agreement on terms to be mutually agreed between the Borrower and the applicable Administrative Agents (the “Intercreditor Agreement”).
Mandatory Prepayments:   

Limited to the following:

 

(i)    100% of the net cash proceeds from any non-ordinary course asset sale or other non-ordinary course disposition of property (other than permitted securitizations and other exceptions to be agreed consistent with the Documentation Principles) of the Borrower or any restricted subsidiary (including insurance and condemnation proceeds), or other non-ordinary course dispositions of property, shall be applied to prepay the loans under the Secured Bridge Facility or, no more than ratably, other indebtedness secured by a lien on the Collateral that ranks pari passu with the liens that secure the Secured Bridge Facility, subject to customary and other exceptions and thresholds (consistent with the Documentation Principles) to be agreed upon;

 

(ii)    net cash proceeds of indebtedness incurred by the Borrower and its restricted subsidiaries (other than indebtedness permitted to be incurred) will be applied pursuant to mandatory prepayment provisions consistent with the Documentation Principles; and

 

(iii)    (x) Viper Proceeds that are received by the Borrower and its restricted subsidiaries after the Funding Date, (y) Gaming Asset Sale Proceeds that are received by the Borrower after the Funding Date and (z) net cash proceeds of the issuance of equity interests after the Funding Date by the Borrower (subject to exceptions to be agreed).

 

D-2


  

Notwithstanding the foregoing, the Borrower shall not be required to make mandatory prepayments with net cash proceeds from any asset sale or other disposition of property, net cash proceeds from any incurrence of indebtedness, net cash proceeds from any equity issuance or any Viper Proceeds or Gaming Asset Sales Proceeds to the extent that such net cash proceeds are (i) required to be applied to prepay indebtedness under the Existing CRC Credit Agreement or the Existing CRC Indenture or to be reinvested by CRC or its subsidiaries by the terms of the Existing CRC Credit Agreement or the Existing CRC Indenture or (ii) attributable to CRC or its subsidiaries and cannot be distributed by CRC in accordance with the Existing CRC Credit Agreement or the Existing CRC Indenture.

 

The Borrower shall direct the application of mandatory prepayments to (i) first, the Secured Bridge Facility, and (ii) second, following prepayment in full of all obligations under the Secured Bridge Facility, the Unsecured Bridge Facility.

 

Notwithstanding the foregoing, each Lender under the Secured Bridge Facility shall, at the option of the Borrower, have the right to reject its pro rata share of any mandatory prepayments described above, in which case the amounts so rejected may be retained by the Borrower and used for any purpose not prohibited by the Financing Documentation and will be included in the calculation of the Cumulative Credit (as defined in the Borrower Senior Secured Credit Facilities Term Sheet).

Voluntary Prepayments:    Voluntary prepayments of borrowings under the Secured Bridge Facility will be permitted at any time, in minimum principal amounts to be agreed upon (consistent with the Documentation Principles), without premium or penalty, except as described below, subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period; provided, that the Borrower shall be required to prepay all obligations under the Secured Bridge Facility in full prior to applying any prepayments to the Unsecured Bridge Facility or any other Credit Facilities.
Representations and Warranties:    Same as Borrower Senior Secured Credit Facilities.
Conditions Precedent to Borrowing:    The borrowing under the Secured Bridge Facility is subject solely to the Funding Conditions with respect to the Secured Bridge Facility set forth in the Commitment Letter (subject to the Certain Funds Provision).
Affirmative Covenants:    Same as Borrower Senior Secured Credit Facilities.

 

D-3


Negative Covenants:    Same as Borrower Senior Secured Credit Facilities; provided that the limitations on restricted payments, liens and debt will be more restrictive than those set forth in the Borrower Senior Secured Credit Facilities on terms to be mutually agreed.
Limited Condition Transaction:    Same as Borrower Senior Secured Credit Facilities.
Financial Covenant:    None.
Events of Default:    Same as Borrower Senior Secured Credit Facilities.
Unrestricted Subsidiaries:    Same as Borrower Senior Secured Credit Facilities.
Voting:    Same as Borrower Senior Secured Credit Facilities.
Cost and Yield Protection; Defaulting Lenders:    Same as Borrower Senior Secured Credit Facilities.
Assignments and Participations:    Same as Borrower Senior Secured Credit Facilities.
Non-Pro Rata Repurchases:    Same as Borrower Senior Secured Credit Facilities.
Expenses and Indemnification:    Same as Borrower Senior Secured Credit Facilities.
Regulatory Matters:    Consistent with the Documentation Principles.
Governing Law and Forum:    New York.
Counsel to Agent and Arranger:    Cahill Gordon & Reindel LLP.

 

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ANNEX D-I

 

Interest Rates:    The interest rates under the Secured Bridge Facility will be, at the option of the Borrower, Adjusted LIBOR plus 2.50% or ABR plus 1.50%; provided that the interest rate margins will increase by 0.50% on each of the 90th, 180th, and 270th day after the Funding Date.
   The Borrower may elect interest periods of 1, 2, 3 or 6 months (or, if agreed to by all relevant Lenders, 12 months or, if agreed to by the Agent, a shorter period) for Adjusted LIBOR borrowings.
   Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans determined by reference to the Agent’s Prime Rate (as defined below)) and interest shall be payable at the end of each interest period and, in any event, at least every three months.
   ABR” is the Alternate Base Rate, which is the highest of (a) the rate last quoted by The Wall Street Journal (or another national publication selected by the Agent) as the U.S. prime rate (the “Prime Rate”), (b) the federal funds effective rate from time to time plus 0.50% per annum and (c) one-month Adjusted LIBOR plus 1.00% per annum.
   Adjusted LIBOR” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for the applicable interest period appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen) or other applicable page or screen for loans denominated in U.S. dollars; provided that if Adjusted LIBOR shall be less than zero, such rate shall be deemed zero.
Default Rate:    With respect to overdue principal, the applicable interest rate plus 2.00% per annum, and with respect to any other overdue amount (including overdue interest), the interest rate applicable to ABR loans plus 2.00% per annum and in each case, shall be payable on written demand.

 

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EXHIBIT E

Unsecured Bridge Facility Term Sheet

[attached]

 

Exhibit E


EXHIBIT E TO COMMITMENT LETTER

SENIOR UNSECURED BRIDGE LOAN FACILITY

SUMMARY OF PROPOSED TERMS AND CONDITIONS1

 

I.    Parties

Borrower    Eldorado Resorts, Inc., a Nevada corporation (the “Borrower”).
Guarantors    The Guarantors, and the guarantees provided thereunder, will be the same as the Borrower Senior Secured Credit Facilities.
Arrangers    JPMorgan, CSLF, and Macquarie Capital (each, an “Unsecured Bridge Arranger” and together with the Unsecured Bridge Lead Arranger, the “Unsecured Bridge Arrangers”). The Unsecured Bridge Arrangers will perform the duties customarily associated with such roles.
Administrative Agent    JPMorgan (in such capacity, the “Bridge Administrative Agent”). The Bridge Administrative Agent will perform the duties customarily associated with such role.
Lenders    JPMorgan, CS, and Macquarie Lender (collectively, the “Initial Unsecured Bridge Lenders”) and a syndicate of banks, financial institutions and other entities (together with the Initial Unsecured Bridge Lenders, the “Unsecured Bridge Lenders”) identified by the Unsecured Bridge Arrangers and subject to the approval of the Borrower (not to be unreasonably withheld) in accordance with the Commitment Letter.
Loan Documents    The definitive documentation governing or evidencing the Unsecured Bridge Facility (collectively, the “Unsecured Bridge Loan Documentation”).

II.   Types and Amounts of Facilities

Bridge Facility    A senior unsecured bridge loan facility in an aggregate principal amount equal to $1,800.0 million less the aggregate gross proceeds of the New Senior Unsecured Notes of the Borrower (or a subsidiary thereof) issued on or prior to the Funding Date (the “Unsecured Bridge Facility” and the loans thereunder, the “Unsecured Bridge Loans”).

 

1 

All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this Summary of Proposed Terms and Conditions is attached (the “Commitment Letter”) and the other schedules and exhibits attached to the Commitment Letter.

 

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   The full amount of the Unsecured Bridge Facility shall be available to the Borrower in U.S. dollars in a single drawing on the Funding Date.
   Amounts borrowed under the Unsecured Bridge Facility that are repaid or prepaid may not be reborrowed.
Ranking    The Unsecured Bridge Loans will be senior unsecured obligations of the Borrower and the Guarantors.
Amortization of Bridge Facility    None.
Use of Proceeds    The proceeds of the Unsecured Bridge Loans will be used directly or indirectly to finance, in part, the Acquisition, the Acquisition Costs and the Existing Debt Payoff, and to pay fees and expenses in connection with the foregoing.
Conversion into Rollover Loans    If the Unsecured Bridge Loans have not been previously prepaid in full for cash on or prior to the first anniversary of the Funding Date (or if such date is not a Business Day, the first Business Day thereafter) (the “Rollover Date”), the principal amount of the Unsecured Bridge Loans outstanding on the Rollover Date may, at the option of the Borrower but subject to the conditions precedent set forth in Annex I hereto, be converted into senior unsecured rollover loans with a maturity of 8 years from the Funding Date and otherwise having the terms set forth in Annex I hereto (the “Rollover Loans”). Any Unsecured Bridge Loans not converted into Unsecured Rollover Loans shall be repaid in full on the Rollover Date.
Exchange into Exchange Notes    Each Unsecured Bridge Lender that is (or will immediately transfer its Exchange Notes to) an Eligible Holder (as defined in Annex II hereto) will have the right, at any time on or after the Rollover Date, upon reasonable prior written notice, to exchange Rollover Loans held by it for senior unsecured notes of the Borrower having the terms set forth in Annex II hereto (the “Exchange Notes”). Notwithstanding the foregoing, the Borrower will not be required to exchange Rollover Loans for Exchange Notes unless at least $200.0 million of Exchange Notes would be issued in such exchange. In connection with each such exchange, or at any time prior thereto if requested by the Initial Unsecured Bridge Lenders, the Borrower shall (i) use commercially reasonable efforts to deliver to the Unsecured Bridge Lender that is receiving Exchange Notes, and to such other Unsecured Bridge Lenders as the Unsecured Bridge

 

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   Lenders reasonably request, an offering memorandum of the type customarily utilized by the Borrower and its affiliates in a Rule 144A offering of high yield securities covering the resale of such Exchange Notes or Unsecured Bridge Loans by such Unsecured Bridge Lenders, in such form and substance as is customary for similar offerings by the Borrower and its affiliates, and use commercially reasonable efforts to keep such offering memorandum updated in a manner as would be required pursuant to a customary Rule 144A securities purchase agreement for an offering by the Borrower and its affiliates, (ii) execute an exchange agreement containing provisions customary in Rule 144A transactions (including indemnification provisions) by the Borrower or its affiliates if requested by the Initial Unsecured Bridge Lenders, (iii) use commercially reasonable efforts to deliver or cause to be delivered such opinions and accountants’ comfort letters addressed to the Initial Unsecured Bridge Lenders and such certificates as the Initial Unsecured Bridge Lenders may request as would be customary in Rule 144A offerings by the Borrower and its affiliates and (iv) take such other actions, and use commercially reasonable efforts to cause its advisors, auditors and counsel to take such actions, as reasonably and customarily requested by the Initial Unsecured Bridge Lenders in connection with issuances or resales of Exchange Notes or Unsecured Bridge Loans, including providing to the Initial Unsecured Bridge Lenders such information regarding the business and operations of the Borrower and its subsidiaries as is reasonably requested and customarily provided in due diligence investigations by the Initial Unsecured Bridge Lenders and their affiliates in connection with purchases or resales of securities in 144A offerings by the Borrower or its affiliates.

III. Certain Payment Provisions

  
Interest Rate    Interest on the Unsecured Bridge Loans shall accrue at the LIBO Rate for an interest period of 3 months plus the Applicable Margin.
   As used herein:
   Applicable Margin” shall initially be 475 basis points for the first three months after the Closing Date, and will increase by an additional 50 basis points at the end of such three-month period each subsequent three-month period for as long as the Unsecured Bridge Loans are outstanding; provided that the interest rate shall not exceed the Total Cap (as defined in the Fee Letter).

 

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   LIBO Rate” means the higher of (i) the London Interbank Offered Rate or a comparable or successor rate which rate is approved by the Bridge Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Bridge Administrative Agent from time to time) at approximately 11:00 a.m., London time, two business days prior to the commencement of such interest period, for deposits in U.S. Dollars (for delivery on the first day of such interest period) with a term of three months and (ii) 0.00% per annum.
Interest Payment Dates    The last day of each relevant interest period and on the applicable maturity date.
Default Rate    All overdue principal, interest, fees and other amounts outstanding under the Unsecured Bridge Facility shall bear interest at 2.00% per annum above the rate otherwise applicable thereto and shall be payable on demand.
Rate and Fee Basis    All per annum rates shall be calculated on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day).
Optional Prepayments    The Unsecured Bridge Loans may be prepaid on or prior to the Rollover Date, without premium or penalty, in whole or in part, upon written notice, at the option of the Borrower, at any time, together with accrued interest to the prepayment date; provided, however, the Borrower shall only be permitted to prepay any Unsecured Bridge Loans following prepayment in full of all obligations under the Secured Bridge Facility.
Mandatory Prepayments    The Borrower shall prepay the Unsecured Bridge Loans without premium or penalty, together with accrued interest to the prepayment date, (a) with all net cash proceeds from the issuance or incurrence after the Funding Date of additional debt of the Borrower or any of its restricted subsidiaries other than certain debt permitted under the Unsecured Bridge Loan Documentation (including, without limitation, refinancing debt, intercompany debt, purchase money indebtedness incurred in the ordinary course of business, and revolving borrowings), (b) with all net cash proceeds from any issuance of equity interests after the Funding Date by the Borrower the proceeds of which are contributed to the Borrower, subject to exceptions to be agreed (including stock options issued under a management incentive plan,

 

E-4


   equity issued in connection with any other acquisition and, for the avoidance of doubt, the equity being utilized to satisfy the equity portion of the consideration for the Acquisition), (c) with net cash proceeds from any non-ordinary course asset sales or dispositions received by the Borrower or any restricted subsidiary after the Funding Date, subject to exceptions and reinvestment rights consistent with the Unsecured Bridge Documentation Principles (as defined herein) and (d) within 120 days following the Funding Date, the Unsecured Bridge Loans shall be prepaid in an aggregate amount equal to the principal amount of the outstanding Company Convertible Senior Notes that were not, in each case as of the date that is 60 days after the Funding Date, (i) repurchased from holders pursuant to a fundamental change purchase offer, tender offer or otherwise, (ii) converted to shares of the Company’s common stock and/or cash in accordance with the indenture governing the Company Convertible Senior Notes, or (iii) otherwise redeemed, repurchased or discharged, in each case, on or prior to such date; provided, that, any such prepayments under this clause (d) shall be made pro rata across the Unsecured Bridge Loans, the New Senior Unsecured Notes and the Term Facility.