(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. ☐
If this form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
DESCRIPTION OF THE EXCHANGE NOTES
You can find the definitions of certain terms used in this description under the caption “—Certain Definitions.” In this
description, the words “we,” “us,” “our” or “Issuer” refer only to Eldorado Resorts, Inc. and not to any of its Subsidiaries.
Escrow Issuer issued the Existing Notes under the Indenture. On May 1, 2017, we executed a Supplemental Indenture to the Indenture,
pursuant to which we assumed all of Escrow Issuer’s obligations under the Existing Notes and the Indenture. We will issue the Exchange Notes under the Indenture. The terms of the Exchange Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”). The terms of the Exchange Notes are identical in all material respects to the Existing Notes except that, upon completion of the exchange
offer, the transfer restrictions and registration rights relating to the Existing Notes will not apply to the Exchange Notes.
The
following description is a summary of the material provisions of the Indenture. It does not restate such agreement in its entirety. We urge you to read the Indenture because it, and not this description, defines your rights as holders of the
Exchange Notes. Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the Indenture.
The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the
Indenture.
Brief description of the Exchange Notes and the Note Guarantees
The Exchange Notes
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will be general senior unsecured obligations of the Issuer;
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will rank pari passu in right of payment with all of our existing and future senior Indebtedness, including the ERI Credit Facility and the 7% Notes;
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will rank senior in right of payment to any existing and future subordinated Indebtedness of the Issuer;
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will be effectively subordinated in right of payment to all of our existing and future secured Indebtedness, including the ERI Credit Facility, to the extent of the value of the assets securing such Indebtedness; and
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will be unconditionally guaranteed by the Guarantors.
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The Note Guarantees
The Exchange Notes will be jointly and severally guaranteed by the Guarantors. The Exchange Note Guarantees:
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will be general senior unsecured obligations of the applicable Guarantor;
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will rank pari passu in right of payment to all of the applicable Guarantor’s existing and future senior Indebtedness, including the applicable Guarantor’s guarantees under the ERI Credit Facility and the 7%
Notes;
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will rank senior in right of payment to any existing and future subordinated Indebtedness of the applicable Guarantor;
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will be effectively subordinated to all secured Indebtedness of each Guarantor, including the applicable Guarantor’s guarantees under the ERI Credit Facility, to the extent of the value of the assets securing such
Indebtedness; and
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will be structurally subordinated to all liabilities of any Subsidiary of a Guarantor that is not a Guarantor.
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The 7% Notes Indenture, the Indenture and the ERI Credit Facility permit us and the Guarantors to incur additional indebtedness, including
secured indebtedness. The Notes and the Note Guarantees are effectively subordinated to our obligations and the obligations of the Guarantors under the ERI Credit Facility and any future secured indebtedness that we or the Guarantors incur, to the
extent of the value of the collateral securing the ERI Credit Facility or such other indebtedness. See “Risk Factors—Risks Related to the Notes and Our Substantial Indebtedness—Despite our current indebtedness levels, we and our
subsidiaries may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness.”
Under the circumstances described below under the caption “—Certain covenants—Designation of Restricted and Unrestricted
Subsidiaries,” we will be permitted to designate certain of the Restricted Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries and subsidiaries or other entities owned by our Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants in the Indenture and will not guarantee the Notes.
Principal, maturity and interest
The Notes are issued in the aggregate principal amount of $375.0 million. The Issuer may issue additional Notes (“Additional
Notes”) under the Indenture from time to time after this offering. Any issuance of Additional Notes is subject to compliance with all of the covenants in the Indenture, including the covenant described below under the caption
“—Certain covenants—Incurrence of indebtedness and issuance of preferred stock.” The Exchange Notes offered hereby and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all
purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Notes and any Additional Notes will be substantially identical with respect to redemption and matters requiring approval of the
holders of the Notes and will benefit on a
pari passu
basis from the Note Guarantees. The Issuer will issue Notes in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. The Notes will mature on April 1,
2025. Interest on the Notes will accrue at the rate of 6.000% per annum and will be payable
semi-annually
in arrears on April 1 and October 1, commencing on October 1, 2017. Interest on
overdue principal and interest will accrue at a rate that is 1% per annum higher than the then applicable interest rate on the Notes. The Issuer will make each interest payment to the holders of record on the immediately preceding March 15
and September 15, respectively.
Interest on the Notes will accrue from the date of original issuance or, if interest has already
been paid, from the date it was most recently paid. Interest will be computed on the basis of a
360-day
year comprised of twelve
30-day
months.
Methods of receiving payments on the Notes
If a holder of Notes has given wire transfer instructions to the Issuer, the Issuer will pay all principal, interest and premium, if any, on
that holder’s Notes in accordance with those instructions. All other payments on the Notes will be made at the office or agency of the paying agent and registrar within the contiguous United States unless the Issuer elects to make interest
payments by check mailed to the noteholders at their addresses set forth in the register of holders.
Paying agent and registrar for the Notes
The trustee will initially act as paying agent and registrar. The Issuer may change the paying agent or registrar without prior notice to the
holders of the Notes, and the Issuer or any of its Subsidiaries may act as paying agent or registrar.
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Transfer and exchange
A holder may transfer or exchange Notes in accordance with the provisions of the Indenture. The registrar and the trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. The Issuer and the registrar will not be required to transfer or
exchange any note selected for redemption. Also, the Issuer and the registrar will not be required to transfer or exchange any note for a period of 15 days before a selection of Notes to be redeemed. Any transferred Notes may be subject to
mandatory disposition pursuant to Gaming Laws in certain circumstances. See “—Gaming redemption.”
Note Guarantees
The Existing Notes are guaranteed, and the Exchange Notes will be guaranteed, on a senior unsecured basis by each of our Restricted
Subsidiaries that guarantee the ERI Credit Facility. In the future, any Restricted Subsidiary that is a Domestic Subsidiary, other than any Immaterial Subsidiary, will become a Guarantor, as described under “—Certain
covenants—Additional Note guarantees.” A Subsidiary will not be an Immaterial Subsidiary to the extent it guarantees or otherwise provides credit support for any Indebtedness of the Issuer or another Guarantor. These Note Guarantees will
be joint and several senior unsecured obligations of the Guarantors.
A Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Issuer or another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such
consolidation or merger assumes all the obligations of that Guarantor under its Note Guarantee and the Indenture pursuant to a supplemental indenture in form satisfactory to the trustee; or
(b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the
Indenture.
The Note Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by
way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary of the Issuer, if the sale or other disposition does not violate the “Asset Sale”
provisions of the Indenture;
(2) in connection with any sale or other disposition of Capital Stock of that Guarantor to a
Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary of the Issuer, if the sale or other disposition does not violate the “Asset Sale” provisions of the Indenture and the
Guarantor ceases to be a Restricted Subsidiary of the Issuer as a result of the sale or other disposition;
(3) if the
Issuer designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture;
(4) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the
captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and discharge”; or
(5) upon the dissolution of a Guarantor if its assets are distributed to the Issuer or another Guarantor.
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See “—Repurchase at the option of holders—Asset sales.”
Optional redemption
At any time prior to
April 1, 2020, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture, upon not less than 30 nor more than 60 days’ prior written notice to the holders and
the trustee, at a redemption price equal to 106.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and Additional Interest, if any, to the date of redemption (subject to the rights of holders of Notes on the
relevant record date to receive interest on the relevant interest payment date), with the net cash proceeds of an Equity Offering by the Issuer;
provided
that:
(1) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture (excluding Notes held by the
Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and
(2) the
redemption occurs prior to 180 days after the date of the closing of such Equity Offering.
At any time prior to April 1, 2020,
the Issuer, at its option, may on one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior written notice to the holders and the trustee, at a redemption price equal to 100% of the
principal amount of Notes redeemed
plus
the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the date of redemption (subject to the rights of holders of Notes on the relevant record date to receive
interest due on the relevant payment date).
Except pursuant to the two preceding paragraphs, the Notes will not be redeemable at the
Issuer’s option prior to April 1, 2020.
On or after April 1, 2020, the Issuer may on any one or more occasions redeem all
or a part of the Notes, upon not less than 30 nor more than 60 days’ prior written notice to the holders and the trustee, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid
interest and Additional Interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the
twelve-month
period beginning on April 1 of the years indicated below (subject
to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date):
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2020
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104.500
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103.000
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101.500
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2023 and thereafter
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100.000
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Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes
or portions thereof called for redemption on the applicable redemption date.
Notice of redemption of any Notes given under the Indenture
may be conditional.
Mandatory redemption
The Issuer is not required to make mandatory repayments or sinking fund payments with respect to the Notes.
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Gaming redemption
Each holder, by accepting a Note, shall be deemed to have agreed that, if any Gaming Authority requires that a person who is a holder or the
beneficial owner of Notes be registered, licensed, qualified or found suitable under applicable Gaming Laws, such holder or beneficial owner, as the case may be, shall apply for a license, qualification or a finding of suitability in accordance with
such Gaming Laws. If such Person fails to apply or become registered, licensed or qualified or is found unsuitable, the Issuer shall have the right, at its option:
(1) to require such Person to dispose of its Notes or beneficial interest therein within 30 days of receipt of notice of
the Issuer’s election or such earlier date as may be requested or prescribed by such Gaming Authority; or
(2) to
redeem such Notes, upon not less than 30 days’ prior written notice to the holders and the trustee (or such earlier date as may be requested or prescribed by such Gaming Authority), at a redemption price equal to:
(a) the lesser of:
(i) the Person’s cost for such Notes, plus accrued and unpaid interest and Additional Interest, if any, to the earlier of
the date of redemption or the date of the finding of unsuitability or failure to comply; and
(ii) 100% of the principal
amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to the earlier of the date of redemption or the date of the finding of unsuitability or failure to comply; or
(b) such other amount as may be required by applicable law or order of the Gaming Authority.
The Issuer shall notify the trustee in writing of any such disqualified holder status or redemption as soon as practicable. Neither the Issuer
nor the trustee shall be responsible for any costs or expenses any holder or beneficial owner may incur in connection with its registration, application for a license, qualification or a finding of suitability, or any renewal or continuation of the
foregoing or compliance with any other requirement of a Gaming Authority. Those costs and expenses will be the obligations of the holder or beneficial owner, as applicable.
Repurchase at the option of holders
Change of
control
If a Change of Control occurs, each holder of Notes will have the right to require the Issuer to repurchase all or any
part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the Issuer will offer a Change of
Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of holders of
Notes on the relevant record date to receive interest due on the relevant interest payment date. Within ten business days following any Change of Control, the Issuer will mail a notice to each holder and the trustee (or send electronically in
accordance with the applicable procedures of DTC in the case of notes in global form) describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified
in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is sent, pursuant to the procedures required by the Indenture and described in such notice. The Issuer will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control. To the extent that the provisions of any securities
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laws or regulations conflict with the Change of Control provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.
On the Change of Control
Payment Date, the Issuer will, to the extent lawful:
(1) accept for payment all Notes or portions of Notes properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered; and
(3) deliver or cause to be delivered
to the trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.
The paying agent will promptly send to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the trustee
will promptly authenticate and mail (or cause to be transferred by book-entry in accordance with the applicable procedures of DTC) to each holder a new note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The
Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable
whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the Notes to require that the Issuer repurchase
or redeem the Notes in the event of a takeover, recapitalization or similar transaction.
The Issuer will not be required to make a Change
of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the Indenture as described above under the caption “—Optional
redemption,” unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon
the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.
If holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a
Change of Control Offer and the Issuer, or any third party making a Change of Control Offer in lieu of the Issuer as described above, purchases all of the Notes validly tendered and not withdrawn by such holders, the Issuer or such third party will
have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described above, to redeem all Notes that remain outstanding following such
purchase at a price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest to, but not including, the date of redemption (subject to the right of holders of record of Notes on the relevant record date to receive
interest due on the relevant interest payment date).
The definition of “Change of Control” includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Issuer and its Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law.
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Accordingly, the ability of a holder of Notes to require the Issuer to repurchase its Notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Issuer and its Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset sales
The Issuer will not,
and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Issuer (or such
Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (measured as of the date of the definitive agreement with respect to such Asset Sale) of the assets or Equity
Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration received in the Asset Sale by
the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:
(a) any liabilities, as shown on the Issuer’s most recent consolidated balance sheet, of the Issuer or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation or indemnity agreement that releases the Issuer or
such Restricted Subsidiary from or indemnifies against further liability;
(b) any securities, notes or other obligations
received by the Issuer or any such Restricted Subsidiary from such transferee that are within 180 days following the closing of such Asset Sale converted by the Issuer or such Restricted Subsidiary into cash, to the extent of the cash actually
so received;
(c) any Designated Non-Cash Consideration received by the Issuer or such Restricted Subsidiary in such Asset
Sale having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (c) that is at the time outstanding, not to exceed $100.0 million at the time of the receipt of such
Designated Non-Cash Consideration, with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value; and
(d) any stock or assets of the kind referred to in clause (2), (3) or (4) of the next paragraph of this
covenant.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Issuer (or the applicable Restricted
Subsidiary, as the case may be) may apply such Net Proceeds:
(1) to permanently repay, prepay, redeem or purchase:
(a) obligations under (i) the ERI Credit Facility (and other than with respect to proceeds from a Designated Asset Sale,
permanently reduce commitments with respect thereto) and (ii) other secured Indebtedness of the Issuer, if applicable (other than any Disqualified Stock), or secured Indebtedness of a Guarantor; and/or
(b) Obligations under the Indenture, the Notes and the Note Guarantees or any other Pari Passu Debt of the Issuer or any
Guarantor;
provided
that if the Issuer or any Restricted Subsidiary shall so repay or prepay any such other Pari Passu Debt, the Issuer will reduce (or offer to reduce) Obligations under the Indenture, the Notes and the Note Guarantees on a
pro rata
basis (based on the amount so applied to such repayments or prepayments) by, at its option, (i) redeeming Notes pursuant to Article 3 of the Indenture, (ii) making an offer (in accordance with the procedures set forth
below for an Asset Sale Offer) to all holders to purchase their Notes at a purchase price of at
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least 100% of the principal amount thereof, plus the amount of accrued but unpaid interest and Additional Interest, if any, thereon up to the principal amount of Notes to be repurchased or
(iii) purchasing Notes through privately negotiated transactions or open market purchases, in a manner that complies with the Indenture and applicable securities law;
(2) to acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted Business, if, after giving
effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of the Issuer;
(3) to improve real property or make a capital expenditure;
(4) to acquire other assets that are used or useful in a Permitted Business; or
(5) any combination of the foregoing;
provided, however
, that if the Issuer or any Restricted Subsidiary contractually commits within such
365-day
period to apply the Net Proceeds within 180 days of such contractual commitment in accordance with any of the above clauses (1) through (5), and such Net Proceeds are subsequently applied as contemplated by such contractual commitment,
then the requirement for the application of Net Proceeds set forth in this paragraph shall be considered satisfied.
Pending the final
application of any Net Proceeds, the Issuer (or the applicable Restricted Subsidiary) may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds from Asset Sales in any manner that is not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute
“Excess Proceeds
.
” Within 20 business days after the aggregate amount of Excess Proceeds exceeds $25.0 million, the Issuer will make an offer (an “Asset Sale Offer”) to all holders of Notes (with a copy to the
trustee) and all holders of other Pari Passu Debt containing provisions similar to those set forth in the Indenture with respect to offers to purchase, prepay or redeem with the proceeds of sales of assets to purchase, prepay or redeem the maximum
principal amount of Notes and such other Pari Passu Debt (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed out of
the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, prepayment or redemption, subject to the rights of
holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess
Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other Pari Passu Debt tendered into (or required to be prepaid or redeemed in connection with) such Asset Sale Offer exceeds the
amount of Excess Proceeds, the trustee will select the Notes and such other Pari Passu Debt to be purchased on a
pro rata
basis or by lot (and, in the case of notes in global form, in accordance with the applicable procedures of DTC), based
on the amounts tendered or required to be prepaid or redeemed (with such adjustments as may be deemed appropriate by the Issuer so that only Notes in minimum denominations of $2,000, or an integral multiple of $1,000 in excess thereof, will be left
outstanding). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.
The Issuer will comply with
the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of
Notes pursuant to a Change of Control Offer or an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control or Asset Sale provisions of the Indenture, the Issuer will comply with
the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control or Asset Sale provisions of the Indenture by virtue of such compliance.
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The agreements governing other Indebtedness of the Issuer and its Restricted Subsidiaries,
including the ERI Credit Facility, the Indenture and the 7% Notes Indenture contain, and future agreements will likely contain, prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale. The exercise
by the holders of Notes of their right to require the Issuer to repurchase the Notes upon a Change of Control or Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the
financial effect of such repurchases on the Issuer. In the event a Change of Control or Asset Sale occurs at a time when the Issuer is prohibited from purchasing Notes, the Issuer could seek the consent of its lenders to the purchase of Notes or
could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain a consent or repay those borrowings, the Issuer will remain prohibited from purchasing Notes. In that case, the Issuer’s failure to purchase
tendered Notes would constitute an Event of Default under the Indenture which could, in turn, constitute a default under the other indebtedness. Finally, the Issuer’s ability to pay cash to the holders of Notes upon a repurchase may be limited
by the Issuer’s then existing financial resources. See “Risk Factors—Risks Related to the Notes and Our Substantial Indebtedness—We may not be able to repurchase the Notes upon a change of control or pursuant to an asset sale
offer.”
Selection and notice
If less than all of the Notes are to be redeemed at any time, the trustee will select Notes for redemption on a
pro rata
basis or by lot
(or, in the case of Notes issued in global form as discussed under
“—Book-entry,
delivery and form,” based on a method that most nearly approximates a
pro rata
selection as the trustee
deems fair and appropriate in accordance with the applicable procedures of DTC) unless otherwise required by law or applicable stock exchange or depositary requirements.
No Notes of $2,000 or less can be redeemed in part. The Issuer will mail notices of redemption by first class mail (or send such notices
electronically in accordance with the applicable procedures in the case of Notes in global form) at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address (with a copy to
the trustee), except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture.
If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount
of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the holder of Notes upon cancellation of the original Note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of Notes called for redemption unless the Issuer defaults in the payment of the redemption price.
Financial Calculations for Limited Condition Acquisitions
When calculating the availability under any basket or ratio under the Indenture, in each case in connection with a Limited Condition
Acquisition and other transactions in connection therewith (including any incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock and the use of proceeds thereof), the date of determination of such basket or ratio and of any
Default or Event of Default may, at the option of the Issuer, be the date the definitive agreement(s) for such Limited Condition Acquisition is entered into. Any such ratio or basket shall be calculated on a pro forma basis, including with such
adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Fixed Charge Coverage Ratio,” after giving effect to such Limited Condition Acquisition and other transactions in
connection therewith (including any incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock and the use of proceeds thereof) as if they had been consummated at the beginning of the applicable period for purposes of determining
the ability to consummate any such Limited Condition Acquisition;
41
provided
that if the Issuer elects to make such determination as of the date of such definitive agreement(s), then (x) the Issuer shall be deemed to be in compliance with such ratios
or baskets solely for purposes of determining whether the Limited Condition Acquisition and other transactions in connection therewith (including any incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock and the use of
proceeds thereof), is permitted under the Indenture, and (y) such ratios or baskets shall not be tested at the time of consummation of such Limited Condition Acquisition or related transactions;
provided, further
, that if the Issuer
elects to have such determinations occur at the time of entry into such definitive agreement(s), any such transactions (including any incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock and the use of proceeds thereof)
shall be deemed to have occurred on the date the definitive agreement(s) is entered into and shall be deemed outstanding thereafter for purposes of calculating any ratios or baskets under the Indenture after the date of such definitive agreement(s)
and before the consummation of such Limited Condition Acquisition, unless such definitive agreement(s) is terminated or such Limited Condition Acquisition or incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock or such other
transaction to which pro forma effect is being given does not occur.
Certain covenants
Restricted payments
The Issuer
will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any
dividend or make any other payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the
Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Issuer and other than dividends or distributions payable to the Issuer or a Restricted Subsidiary of the Issuer);
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or
consolidation involving the Issuer, any direct or indirect parent of the Issuer or any Restricted Subsidiary) any Equity Interests of the Issuer or any Restricted Subsidiary (other than Disqualified Stock within one year of the Stated Maturity
thereof or any such Equity Interests held by the Issuer, any direct or indirect parent of the Issuer or a Restricted Subsidiary of the Issuer);
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of an Issuer or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries), except a payment of
interest or principal at the Stated Maturity thereof or a purchase, repurchase, or other acquisition of Indebtedness subordinated in right of payment to the Notes or any Note Guarantee made in contemplation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the date of such purchase, redemption or other acquisition; or
(4) make any Restricted Investment
(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such Restricted Payment;
(b) the Issuer would, at the time
of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable
four-quarter
period, have
42
been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the
caption “—Incurrence of indebtedness and issuance of preferred stock”; and
(c) such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries since the date of the Indenture (excluding Restricted Payments permitted by clauses (2) through (15) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(1) 50% of the Consolidated Net Income of the Issuer
for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Notes are initially issued to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit);
plus
(2) 100% of the fair market value of the aggregate net proceeds received by the Issuer since the date of the Indenture as a
contribution to its equity capital or from the issue or sale of Qualifying Equity Interests of the Issuer or from the issue or sale of convertible or exchangeable Disqualified Stock of the Issuer or convertible or exchangeable debt securities of the
Issuer, in each case that have been converted into or exchanged for Qualifying Equity Interests of the Issuer (other than Qualifying Equity Interests and convertible or exchangeable Disqualified Stock or debt securities sold to a Subsidiary of the
Issuer);
plus
(3) to the extent that any Restricted Investment that was made after the date of the Indenture is
(a) sold or otherwise cancelled, liquidated or repaid for value, or results in, or is otherwise returned or reduced by, the payment of principal, interest, dividends or distributions, or repayments of loans or advances, or other transfers of
assets, or the satisfaction, release, expiration, cancellation or reduction (other than by means of payments by the Issuer or a Restricted Subsidiary) of Indebtedness or other obligations (including any such Indebtedness or other obligations
guaranteed by the Issuer or any of its Restricted Subsidiaries), or any payments under management contracts or services agreements, or (b) made in an entity that subsequently becomes a Restricted Subsidiary of the Issuer or has been merged,
consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary, the amount of any such cash payment or the Fair Market Value of any such Property so received in a
transaction described in clause (a) and, in the case of clause (b) the Fair Market Value of such Restricted Investment;
plus
(4) to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the date of the Indenture is
redesignated as a Restricted Subsidiary after the date of the Indenture, the Fair Market Value of the Issuer’s Restricted Investment in such Subsidiary as of the date of such redesignation;
plus
(5) 100% of any dividends or distributions received in cash and 100% of the Fair Market Value of any Property received in any
such dividend or distribution by the Issuer or a Restricted Subsidiary after the date of the Indenture from an Unrestricted Subsidiary of the Issuer, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the
Issuer for such period.
The preceding provisions will not prohibit:
(1) the payment of any dividend or the consummation of any irrevocable repurchase, redemption, defeasance or other acquisition
or retirement within 60 days after the date of declaration of the dividend or giving of the notice of repurchase, redemption, defeasance or other acquisition or retirement, as the case may be, if at the date of declaration or notice, the
dividend or repurchase, redemption, defeasance or other acquisition or retirement would have complied with the provisions of the Indenture;
(2) the making of any Restricted Payment in exchange for, or out of or with the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the
43
Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to the Issuer;
provided
that the amount of any such net cash proceeds that are
utilized for any such Restricted Payment will not be considered to be net proceeds of Qualifying Equity Interests for purposes of clause (c)(2) of the preceding paragraph and will not be considered to be net cash proceeds from an Equity
Offering for purposes of the “Optional Redemption” provisions of the Indenture;
(3) the payment of any dividend
(or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Issuer to the holders of its Equity Interests on a
pro rata
basis;
(4) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of an Issuer or any
Guarantor that is contractually subordinated to the Notes or to any Note Guarantee or any Disqualified Stock of the Issuer or any Restricted Subsidiary thereof (including all accrued interest on the Indebtedness, all accrued and unpaid dividends on
Disqualified Stock, and the amount of all penalties, fees, costs, expenses, discounts and premiums incurred in connection therewith and any original issue discount or debt issuance costs with respect thereto) in exchange for or with the net cash
proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;
(5) the payment of amounts
necessary to repurchase Indebtedness or Equity Interests of the Issuer or any Restricted Subsidiary to the extent required by any Gaming Authority having jurisdiction over the Issuer or any Restricted Subsidiary or deemed necessary by the Board of
Directors of the Issuer in order to avoid the suspension, revocation or denial of a gaming license by that Gaming Authority;
(6) the repurchase of Equity Interests deemed to occur upon the exercise, conversion or exchange of stock options, warrants,
other rights to acquire Equity Interests or other convertible or exchangeable securities if such Equity Interests represent all or a portion of the exercise price thereof or upon the grant, vesting or exercise of restricted stock, restricted stock
units or similar equity incentives to satisfy tax withholding or similar tax obligations with respect thereto;
(7) the
payment, by the Issuer, of cash in lieu of the issuance of fractional shares upon the exercise of any option, warrant or similar instrument or upon the conversion or exchange of Equity Interests of the Issuer;
(8) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified
Stock of the Issuer or any preferred stock of any Restricted Subsidiary of the Issuer issued on or after the date of the Indenture in accordance with the Fixed Charge Coverage Ratio test described below under the caption “—Incurrence of
indebtedness and issuance of preferred stock”;
(9) the repurchase, redemption or other acquisition or retirement for
value of any Indebtedness of an Issuer or any Guarantor that is unsecured or is contractually subordinated to the Notes or to any Note Guarantee or Disqualified Stock or preferred stock, in each case that is required to be repurchased or redeemed
pursuant to provisions similar to those described under the caption “Repurchase at the option of holders—Change of control” or “—Repurchase at the option of holders—Asset sales”;
provided
that, prior to such
repurchase, a redemption or other acquisition or retirement for value, an Asset Sale Offer or Change of Control Offer shall have been made and all Notes tendered and not withdrawn by holders in such Change of Control Offer or Asset Sale Offer, as
applicable, have been repurchased (up to the maximum amount of Notes required to be so purchased, in the case of an Asset Sale Offer);
(10) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any
Restricted Subsidiary of the Issuer held by any current or former officer, director, employee or consultant (or family members, spouses or former spouses, heirs of, estates of or trusts formed by such persons) of the Issuer or any of its Restricted
Subsidiaries pursuant to any equity subscription agreement, stock option agreement, employment agreement, severance agreement, shareholders’ agreement or similar agreement;
provided
that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests may not exceed $10.0 million in any
twelve-month
period;
44
(11) any payments made, or the performance of any transactions, in each case, as
described in this offering memorandum under the heading “Use of Proceeds”;
(12) the distribution, as a dividend
or otherwise, of Equity Interests of, or Indebtedness owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries;
(13) payment of consideration pursuant to, and the performance of all other transactions contemplated by, the terms of the
Merger Agreement;
(14) any Restricted Payment, so long as (i) immediately before and after giving effect to such
Restricted Payment no Event of Default has occurred and is continuing and (ii) after giving effect to such Restricted Payment, the Consolidated Leverage Ratio of the Issuer on a pro forma basis is less than 3.0 to 1.0; and
(15) so long as no Default or Event of Default has occurred and is continuing, other Restricted Payments in an aggregate amount
not to exceed $200.0 million since the date of the Indenture.
The amount of all Restricted Payments (other than cash) will be the Fair
Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
For purposes of determining compliance with this covenant, in the event that a Restricted Payment or Investment meets the criteria of more
than one of the categories described in clauses (1) through (15) above, or is permitted pursuant to the first paragraph of this covenant or pursuant to any of clauses (1) through (21) of the definition of “Permitted
Investments,” the Issuer will be entitled to classify such Restricted Payment (or, in each case, portion thereof) on the date of its payment or later reclassify such Restricted Payment (or, in each case, portion thereof) in any manner that
complies with this covenant.
Incurrence of indebtedness and issuance of preferred stock
The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit any
of its Restricted Subsidiaries to issue any shares of preferred stock;
provided
,
however
, that the Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness
(including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for the Issuer’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which
such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively,
“Permitted Debt”):
(1) the incurrence by the Issuer or any Guarantor (and/or the guarantee thereof by the Issuer
or any Guarantor) of Indebtedness and letters of credit under the ERI Credit Facility or other Credit Facilities;
provided
that the aggregate principal amount of all such Indebtedness outstanding under this clause (1) as of any date of
incurrence (after giving pro forma effect to the application of the proceeds of such incurrence), including all Permitted Refinancing Indebtedness incurred to repay, redeem, extend, refinance, renew, replace, defease or refund any Indebtedness
incurred pursuant to this clause (1), shall not exceed the greater of (i) $1,750.0 million and (ii) 4.0 times Consolidated EBITDA of the Issuer and its Restricted Subsidiaries for the twelve-month period ended at the end of the most recent
fiscal quarter
45
for which financial statements are available, to be reduced dollar-for-dollar by the aggregate amount of all Net Proceeds from Asset Sales applied by the Issuer or any of its Restricted
Subsidiaries to permanently repay Indebtedness under the Credit Facilities pursuant to the covenant described above under the caption “—Repurchase at the option of holders—Asset sales”;
(2) the incurrence by the Issuer and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes to be issued on the date of the
Indenture and the related Note Guarantees and any Exchange Notes (and guarantees thereof) issued in exchange for the initial Notes pursuant to the Registration Rights Agreement (other than any Additional Notes and the related Note Guarantees);
(4) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease
Obligations, FF&E Financing, mortgage financings or purchase money obligations or other Indebtedness, in each case, incurred in connection with capital expenditures or for the purpose of financing all or any part of the purchase price or cost of
design, construction, installation, renovation, repair, expansion, refurbishment or improvement of property, plant or equipment used or useful in the business of the Issuer or any of its Restricted Subsidiaries, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4) not to exceed the greater of $200.0 million and 12% of Consolidated
Tangible Assets;
(5) the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, any Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the
first paragraph of this covenant or clause (2), (3), (5) or (15) of this paragraph;
(6) the incurrence by the
Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries;
provided
,
however
, that:
(a) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such
Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of an Issuer, or the Note Guarantee, in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a
Person other than the Issuer or a Restricted Subsidiary of the Issuer and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of
shares of preferred stock;
provided
,
however
, that (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer or a Restricted Subsidiary of the
Issuer and (b) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an issuance of such preferred stock by such
Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Issuer or any of its
Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by an Issuer or any
of the Guarantors of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer to the extent that the guaranteed Indebtedness was permitted to be incurred by
46
another provision of this covenant;
provided
that if the Indebtedness being guaranteed is subordinated to or
pari passu
with the Notes, then the Guarantee must be subordinated or
pari passu
, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Issuer or
any of the Guarantors of Indebtedness in respect of bid, payment or other performance bonds, surety bonds, release, appeal and similar bonds, statutory obligations, workers’ compensation claims, self-insurance obligations and bankers’
acceptances in the ordinary course of business, and reimbursement obligations in respect of the foregoing;
(11) the
incurrence by the Issuer or any of the Guarantors of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness
is covered within five business days;
(12) the incurrence by the Issuer or any of its Restricted Subsidiaries arising in
connection with endorsement of instruments for deposit in the ordinary course of business;
(13) the incurrence by the
Issuer or any of its Restricted Subsidiaries of Indebtedness deemed to exist pursuant to the terms of a joint venture agreement as a result of a failure of the Issuer or such Restricted Subsidiary to make a required capital contribution therein;
provided
that the only recourse on such Indebtedness is limited to the Issuer’s or such Restricted Subsidiary’s equity interests in the related joint venture;
(14) Indebtedness arising from agreements of the Issuer or any of its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring
all or any portion of such business, assets or subsidiary for the purpose of financing that acquisition;
provided
that: (a) such Indebtedness is not reflected at the time of such incurrence or assumption on the balance sheet of the
Issuer or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on that balance sheet for
purposes of this clause (a)); and (b) in the case of a disposition, the maximum assumable liability in respect of that Indebtedness shall at no time exceed the gross proceeds including
non-cash
proceeds (the fair market value of those
non-cash
proceeds being measured at the time received and without giving effect to any subsequent changes in value), actually received by the Issuer and/or that
Restricted Subsidiary in connection with that disposition;
(15) Acquired Debt and other Indebtedness of Persons
outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged into, the Issuer or any of its Restricted Subsidiaries or incurred or issued to finance a merger consolidation or other acquisition;
provided, however
, that at the time such Person is acquired, either (i) the Issuer would have been able to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant on a pro forma basis after giving
effect to the incurrence of such Acquired Debt or Indebtedness pursuant to this clause (15) or (ii) on a pro forma basis, the Fixed Charge Coverage Ratio of the Issuer and its Restricted Subsidiaries would be higher than such ratio
immediately prior to such acquisition or merger;
(16) the incurrence by the Issuer or any of its Restricted Subsidiaries
of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness
incurred pursuant to this clause (16) not to exceed $100.0 million;
(17) (i) Indebtedness representing deferred
compensation to employees of the Issuer or any of its Restricted Subsidiaries incurred in the ordinary course of business, and (ii) Indebtedness consisting of obligations of the Issuer or any of its Restricted Subsidiaries under deferred
compensation or other similar arrangements incurred by such Person in connection with any Investment permitted under “—Restricted payments” above;
47
(18) Indebtedness consisting of the financing of insurance premiums; and
(19) Indebtedness owed to Capri Insurance Company in respect of premiums and reserves in an aggregate principal amount not to
exceed $25.0 million at any one time outstanding.
For purposes of determining compliance with this “Incurrence of indebtedness and
issuance of preferred stock” covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (19) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, the Issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with
this covenant. Indebtedness under the ERI Credit Facility will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of “Permitted Debt.” If obligations in respect
of letters of credit are incurred pursuant to a Credit Facility and relate to other Indebtedness, then such letters of credit shall be treated as incurred pursuant to clause (1) of the definition of “Permitted Debt.” Except as
provided in the preceding sentence, Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included.
In connection with the incurrence or issuance, as applicable, of (x) revolving loan Indebtedness under this covenant or (y) any
commitment relating to the incurrence or issuance of Indebtedness, Disqualified Stock or preferred stock under this covenant and the granting of any Lien to secure any such Indebtedness, the Issuer or the applicable Restricted Subsidiary may
designate such incurrence or issuance and the granting of any such Lien as having occurred on the date of first incurrence or issuance of such revolving loan Indebtedness or commitment (such date, the “Deemed Date”), and any related
subsequent actual incurrence or issuance or granting of any such Lien therefor will be deemed for all purposes under the Indenture to have been incurred or issued and granted on such Deemed Date, including, without limitation, for purposes of
calculating the Fixed Charge Coverage Ratio and usage of any other baskets or ratios under the Indenture (as applicable).
The accrual of
interest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on, or fees with respect to, any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification
of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not
be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this covenant;
provided
, in each such case, that the amount of any such accrual, accretion or payment shall be included in
Fixed Charges of the Issuer as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any
Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness determined on a constant yield to maturity basis over time, in the case of any
Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other
Indebtedness;
(3) in the case of a Guarantee of Indebtedness, the maximum amount of the Indebtedness guaranteed under such
Guarantee; and
48
(4) in respect of Indebtedness of another Person secured by a Lien on the assets
of the specified Person, the lesser of:
(a) the Fair Market Value of such assets subject to such Lien at the date of
determination; and
(b) the amount of the Indebtedness of the other Person secured by such Lien.
Liens
The Issuer will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur or assume any Lien, except a Permitted Lien on or with respect to any of its property or assets including any shares of stock or Indebtedness of any
Restricted Subsidiary, whether owned on the issue date or thereafter acquired, or any income, profits or proceeds therefrom, unless: in the case of any Lien securing Indebtedness that is subordinate in right of payment to the Notes or the
Guarantees, the Notes or the Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority to such Lien, as long as such Indebtedness is secured by such Lien; and in all other cases, the Notes or the Guarantees, as
the case may be, are secured on an equal and ratable basis with the obligations secured by such Lien for so long as such obligations are secured by such Lien.
For purposes of determining compliance with this covenant, (A) a Lien securing an item of Indebtedness need not be permitted solely by
reference to one category of permitted Liens (or any portion thereof) described in the definition of “Permitted Liens” or pursuant to the first paragraph of this covenant but may be permitted in part under any combination thereof and
(B) in the event that a Lien securing an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Liens (or any portion thereof) described in the definition of “Permitted Liens” or
pursuant to the first paragraph of this covenant, the Issuer may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred or issued at such later time), such Lien securing such item of Indebtedness (or
any portion thereof) in any manner that complies with this covenant and at the time of incurrence, issuance, classification or reclassification will be entitled to only include the amount and type of such Lien or such item of Indebtedness secured by
such Lien (or any portion thereof) in one of the categories of permitted Liens (or any portion thereof) described in the definition of “Permitted Liens” or pursuant to the first paragraph of this covenant and, in such event, such Lien
securing such item of Indebtedness (or any portion thereof) will be treated as being incurred, issued or existing pursuant to only such clause or clauses (or any portion thereof) or pursuant to the first paragraph hereof without giving pro forma
effect to such item (or portion thereof) when calculating the amount of Liens or Indebtedness that may be incurred or issued pursuant to any other clause or paragraph (or portion thereof) at such time. In addition, with respect to any revolving loan
Indebtedness or commitment relating to the incurrence or issuance of Indebtedness that is designated to be incurred or issued on any date pursuant to the fourth paragraph of the covenant described under “Incurrence of indebtedness and issuance
of preferred stock,” any Lien that does or that shall secure such Indebtedness may also be designated by the Issuer or any Restricted Subsidiary to be incurred on such date and, in such event, any related subsequent actual incurrence of such
Lien shall be deemed for all purposes under the Indenture to be incurred on such prior date, including for purposes of calculating usage of any “Permitted Lien.”
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence or issuance of
such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness that is not deemed to be an
incurrence of Indebtedness for purposes of the covenant entitled “Incurrence of indebtedness and issuance of preferred stock.”
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Dividend and other payment restrictions affecting restricted subsidiaries
The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or
make any other distributions on its Capital Stock to the Issuer or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Issuer or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:
(1) agreements in effect on the date of the Indenture and any amendments, restatements, modifications, renewals, supplements,
refundings, replacements or refinancings of those agreements;
provided
that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not, in the good faith determination of the Board of
Directors of the Issuer, materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of the Indenture;
(2) the Indenture, the Notes and the Note Guarantees;
(3) agreements governing other Indebtedness permitted to be incurred under the provisions of the covenant described above under
the caption “—Incurrence of indebtedness and issuance of preferred stock” and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements;
provided
that the
restrictions therein are not, in the good faith determination of the Board of Directors of the Issuer, materially more restrictive, taken as a whole, than those contained in the Indenture, the Notes and the Note Guarantees;
(4) applicable law, rule, regulation or order, including without limitation restrictions imposed by Gaming Authorities;
(5) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Issuer or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;
provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be
incurred;
(6) customary
non-assignment
provisions in contracts, licenses and
leases entered into in the ordinary course of business;
(7) purchase money obligations for property acquired in the
ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(9) any restriction or encumbrance contained in contracts for the sale
of assets to be consummated in accordance with the Indenture solely in respect of the assets to be sold pursuant to such contract;
(10) Permitted Refinancing Indebtedness;
provided
that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are not, in the good faith determination of the Board
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of Directors of the Issuer, materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
(11) Liens permitted to be incurred under the provisions of the covenant described above under the caption
“—Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;
(12) agreements
in existence with respect to a Restricted Subsidiary at the time it becomes a Restricted Subsidiary;
provided, however
, that such agreements are not entered into in anticipation or contemplation thereof;
(13) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale
agreements,
sale-leaseback
agreements, stock sale agreements and other similar agreements (including agreements entered into in connection with a Restricted Investment), which limitation is applicable only to
the assets that are the subject of such agreements;
(14) restrictions on cash or other deposits or net worth made to
secure letters of credit or surety or other bonds issued in connection therewith or imposed by customers or suppliers under contracts entered into in the ordinary course of business; and
(15) Credit Facilities that, taken as a whole, are, in the good faith determination of the Board of Directors of the Issuer,
customary for Credit Facilities of Persons engaged in a Permitted Business.
Merger, consolidation or sale of assets
The Issuer will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Issuer is the
surviving entity), or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to
another Person, unless:
(1) either: (a) the Issuer is the surviving entity; or (b) the Person formed by or
surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made (the “Successor”) is an entity organized or existing under the laws of the
United States, any state of the United States or the District of Columbia; and, if such entity is not a corporation, a
co-obligor
of the Notes is a corporation organized or existing under any such laws;
(2) the Successor (if other than the Issuer), assumes all the obligations of the Issuer under the Notes, the Indenture and the
Registration Rights Agreement pursuant to agreements in form reasonably satisfactory to the trustee;
(3) immediately after
such transaction, no Default or Event of Default exists; and
(4) the Issuer or the Successor would, on the date of such
transaction after giving
pro forma
effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable
four-quarter
period (a) be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of indebtedness and issuance of preferred
stock”; or (b) have had a Fixed Charge Coverage Ratio equal to or greater than the actual Fixed Charge Coverage Ratio for the Issuer for such four quarter period.
In addition, the Issuer will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to any other Person.
Upon any sale, assignment, transfer, conveyance
or other disposition of all or substantially all of the Issuer’s and its Restricted Subsidiaries’ assets, taken as a whole, in compliance with the provisions of this “Merger, consolidation or sale of assets” covenant, the Issuer
will be released from the obligations under the
51
Notes and the Indenture except with respect to any obligations that arise from, or are related to, such transaction.
This “Merger, consolidation or sale of assets” covenant will not apply to any sale, assignment, transfer, conveyance, lease or other
disposition of assets between or among the Issuer and its Restricted Subsidiaries. Clauses (3) and (4) of the first paragraph of this covenant will not apply to (1) any merger or consolidation of the Issuer with or into one of its
Restricted Subsidiaries for any purpose or (2) with or into an Affiliate solely for the purpose of reincorporating the Issuer in another jurisdiction.
Transactions with affiliates
The
Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer involving aggregate payments or consideration in excess of $5.0 million (each, an “Affiliate
Transaction”) unless:
(1) the Affiliate Transaction is on terms that are no less favorable to the Issuer or the
relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person; and
(2) the Issuer delivers to the trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $20.0 million, a resolution of the Board of Directors of the Issuer set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with this covenant and that such
Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Issuer.
The following
items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:
(1) any indemnification or employment, consultancy, advisory, severance or separation agreement, employee benefit plan or any
similar arrangement, including any issuances of securities, loans or other payments, grants or awards, in each case in respect of or to employees, officers, directors, advisors or consultants entered into by the Issuer or any of its Restricted
Subsidiaries in the ordinary course of business and payments pursuant thereto;
(2) transactions between or among the
Issuer and/or its Restricted Subsidiaries;
(3) management agreements (including tax management arrangements arising out
of, or related to, the filing of a consolidated tax return) entered into, consistent with past practice, by the Company or any Restricted Subsidiary, on the one hand, and an Unrestricted Subsidiary or other entity, on the other hand, pursuant to
which the Company or such Restricted Subsidiary controls the
day-to-day
operations of such entity;
(4) transactions with a Person (other than an Unrestricted Subsidiary of the Issuer) that is an Affiliate of the Issuer solely
because the Issuer owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(5)
payment of reasonable and customary fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of officers, directors, employees or consultants of the Issuer or any of its Restricted Subsidiaries;
(6) any issuance of Equity Interests (other than Disqualified Stock) of the Issuer to Affiliates of the Issuer;
(7) Permitted Investments and Restricted Payments that do not violate the provisions of the Indenture described above under the
caption “—Restricted payments”;
52
(8) loans or advances to employees in the ordinary course of business not to
exceed $1.0 million in the aggregate at any one time outstanding;
(9) so long as no Event of Default has occurred and
is continuing, (x) the payment of any management, consulting or other fees for similar services for the management of the Issuer or any of its Subsidiaries due under any management agreement in an aggregate amount not to exceed $1.5 million per
fiscal year and (y) any consulting agreements with any Person that is an Affiliate of the Issuer or any of its Subsidiaries; that any such consulting agreement includes fair and reasonable terms no less favorable to the Issuer or such
Subsidiary, as the case may be, than the Issuer or such Subsidiary would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate;
(10) any transaction pursuant to any contract or arrangement in existence on the date the Notes were first issued, including
the Merger Agreement, or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) or by any renewal, replacement, supplement or modification thereof so long as any such amendment, renewal,
replacement, supplement or modification is not more disadvantageous to the holders in any material respect taken as a whole as compared to the original agreement or arrangement as in effect on the date the Notes are first issued as determined in
good faith by the Board of Directors of the Issuer;
(11) transactions with persons who have entered into an agreement,
contract or arrangement with the Issuer or any of its Restricted Subsidiaries to manage, own or operate a Gaming Facility because the Issuer and its Restricted Subsidiaries have not received the requisite approvals of the Gaming Authorities or are
otherwise not permitted to manage, own or operate such Gaming Facility under applicable Gaming Laws;
provided
that such transactions shall have been approved by a majority of the disinterested members of the Issuer’s Board of Directors
(or by the audit committee or any committee of the Board of Directors consisting of disinterested members of the Board of Directors) and determined by them to be in the best interests of the Issuer;
(12) transactions with customers, clients, suppliers, contractors, landlords, lessors, lessees, licensors, licensees, joint
venture or development partners or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to the Issuer and its Restricted Subsidiaries
taken as a whole, in the determination of the Issuer’s Board of Directors (or by the audit committee or any committee of the Board of Directors) or management, or are on terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party;
(13) transactions with joint ventures and Subsidiaries thereof and Unrestricted
Subsidiaries relating to the provision of management services, overhead, sharing of customer lists and customer loyalty programs or that are approved by a majority of the disinterested members of the Issuer’s Board of Directors (or by the audit
committee or any committee of the Board of Directors consisting of disinterested members of the Board of Directors) (a director shall be disinterested if he or she has no interest in such joint venture or Unrestricted Subsidiary other than through
the Issuer and its Restricted Subsidiaries);
provided
that no Affiliate of the Issuer (other than the Issuer’s Restricted Subsidiaries) has an interest (other than indirectly through the Issuer and other than Unrestricted Subsidiaries or
such joint ventures) in any such joint venture or Unrestricted Subsidiary;
(14) any transaction with respect to which the
Issuer or any of its Restricted Subsidiaries obtains an opinion as to the fairness to the Issuer or such Restricted Subsidiary, as applicable, of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing;
(15) any investments in and other customary transactions with (a) Capri
Insurance Company to the extent the same pertain to the provision of insurance coverage, historical practice, are required by applicable law or prudent insurance underwriting principles or (b) IOC-PA, L.L.C. consistent with historical practice;
and
53
(16) transactions between the Issuer or any Restricted Subsidiary and any Person,
which is an Affiliate solely due to a director or directors of such Person (or a parent company of such Person) also being a director of the Issuer;
provided, however
, that any such director abstains from voting as a director of the Issuer on
any matter involving such other Person.
Business activities
The Issuer will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Issuer and its Restricted Subsidiaries taken as a whole.
No layering
The Issuer will not, and will not permit any Guarantor to, incur or suffer to exist Indebtedness that is contractually subordinated in right of
payment to any other Indebtedness of the Issuer or such Guarantor, as the case may be, unless such Indebtedness is also contractually subordinated in right of payment to the Notes or such Guarantor’s Note Guarantee, as the case may be.
Additional Note guarantees
If the
Issuer or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary after the date of the Indenture, then that newly acquired or created Domestic Subsidiary will become a Guarantor and execute a supplemental indenture in
form satisfactory to the trustee within 15 business days after the date on which it was acquired or created (or such longer period of time as may be required to obtain any necessary approvals under applicable Gaming Laws or other regulatory
requirements). The Issuer shall use commercially reasonable efforts to obtain all approvals of any Gaming Authority necessary to permit a Domestic Subsidiary to become a Guarantor as promptly as practicable.
Designation of restricted and unrestricted subsidiaries
The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not
cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as an
Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “—Restricted payments”
or under one or more clauses of the definition of “Permitted Investments,” as determined by the Issuer. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Issuer may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default.
Reports
Whether or not required
by the SEC, so long as any Notes are outstanding, the Issuer will furnish to the trustee:
(1) within 90 days after
the end of each fiscal year, annual reports of the Issuer containing the information that would have been required to be contained in an Annual Report on
Form 10-K
under the Exchange Act if the Issuer had
been a reporting company under the Exchange Act, including (A) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (B) audited financial statements prepared in accordance with GAAP;
54
(2) within 45 days after the end of each of the first three fiscal quarters
of each fiscal year, quarterly reports of the Issuer containing the information that would have been required to be contained in a Quarterly Report on
Form 10-Q
under the Exchange Act if the Issuer had
been a reporting company under the Exchange Act, including (A) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (B) unaudited quarterly financial statements prepared in accordance
with GAAP and reviewed pursuant to Statement on Auditing Standards No. 100 (or any successor provision); and
(3)
within five business days after the occurrence of each event that would have been required to be reported in a Current Report on
Form 8-K
under the Exchange Act if the Issuer had been a reporting company
under the Exchange Act, current reports containing substantially all of the information that would have been required to be contained in a Current Report on
Form 8-K
under the Exchange Act if the Issuer
had been a reporting company under the Exchange Act;
provided
,
however
, that no such current report will be required to be furnished if the Issuer determines in its good faith judgment that such event is not material to noteholders or
the business, assets, operations, financial positions or prospects of the Issuer and its Restricted Subsidiaries, taken as a whole;
provided
, that
such distribution requirements shall be deemed to have been satisfied if the Issuer files all such information meeting the above requirements within the applicable time periods with the SEC through the SEC’s Electronic Data Gathering, Analysis,
and Retrieval System (EDGAR) (or any successor system);
provided further
,
however
, that all such reports (A) will not be required to
comply with Section 302 or Section 404 of the
Sarbanes-Oxley
Act of 2002, or related Items 307 and 308 of
Regulation S-K
promulgated by the SEC, or
Item 10(e) of
Regulation S-K
(with respect to any
non-GAAP
financial measures contained therein), (B) will not be required to contain the separate
financial information for Guarantors contemplated by
Rule 3-10
or
Rule 3-16
of
Regulation S-X
promulgated by the
SEC, (C) will only be required to include limited executive compensation disclosure consisting of a summary compensation table (including any equity awards), a description of employment agreements with officers and a description of any
incentive plans and (D) will not be required to include exhibits that would otherwise be required to be filed pursuant to Item 601 of
Regulation S-K.
Events of default and remedies
Each of
the following is an “Event of Default”:
(1) default for 30 days in the payment when due of interest
(including Additional Interest) on the Notes;
(2) default in the payment when due (at maturity, upon redemption or
otherwise) of the principal of, or premium, if any, on, the Notes;
(3) failure by the Issuer or any of its Restricted
Subsidiaries to comply with the provisions described under the caption “—Certain covenants—Merger, consolidation or sale of assets”;
(4) subject to the last paragraph of this covenant, failure by the Issuer or any of its Restricted Subsidiaries for
60 days after notice to the Issuer by the trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding (with a copy to the trustee if given by the holders) voting as a single class to comply with any of the
other agreements in the Indenture;
(5) default under any mortgage, Indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Issuer or any of its Restricted
55
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or
(b)
results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $50.0 million or more;
(6) failure by the Issuer
or any of its Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction in an uninsured aggregate amount in excess of $50.0 million, which judgments are not paid, waived, satisfied, discharged or
stayed for a period of 60 days;
(7) except as permitted by the Indenture, any Note Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee; and
(8) certain events of bankruptcy or insolvency described in the Indenture with respect to the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of its Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.
In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Issuer, any Restricted
Subsidiary of the Issuer that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without
further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes (with a copy to the trustee if given by the holders) may declare
all the Notes to be due and payable immediately.
Subject to certain limitations, holders of a majority in aggregate principal amount of
the then outstanding Notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their
interest, except a Default or Event of Default relating to the payment of principal, interest or premium, if any.
Subject to the
provisions of the Indenture relating to the duties of the trustee, in case an Event of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction
of any holders of Notes unless such holders have offered to the trustee indemnity or security satisfactory to the trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or
interest when due, no holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless:
(1) such
holder has previously given the trustee notice that an Event of Default is continuing;
(2) holders of at least 25% in
aggregate principal amount of the then outstanding Notes have requested the trustee to pursue the remedy;
(3) such holders
have offered the trustee reasonable security or indemnity against any loss, liability or expense;
(4) the trustee has not
complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and
56
(5) holders of a majority in aggregate principal amount of the then-outstanding
Notes have not given the trustee a direction inconsistent with such request within such
60-day
period.
The holders of a majority in aggregate principal amount of the then-outstanding Notes by notice to the trustee may, on behalf of the holders
of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the
principal of, the Notes.
The Issuer is required to deliver to the trustee annually a statement regarding compliance with the Indenture.
Upon becoming aware of any Default or Event of Default, the Issuer is required to deliver to the trustee a statement specifying such Default or Event of Default.
Notwithstanding clause (4) of the first paragraph of this covenant, except as provided in the second to last sentence of this paragraph,
the sole remedy for any failure to comply by the Issuer with the covenant described under the caption “—Reports” shall be the payment of liquidated damages as described in the following sentence, such failure to comply shall not
constitute an Event of Default, and Holders of the Notes shall not have any right under the Indenture to accelerate the maturity of the Notes as a result of any such failure to comply. If a failure to comply by the Issuer with the covenant described
under the caption “—Reports” continues for 60 days after the Issuer receives notice of such failure to comply in accordance with clause (4) of the first paragraph of this covenant (such notice, the “Reports Default
Notice”), and is continuing on the 60th day following the Issuer’s receipt of the Reports Default Notice, the Issuer will pay liquidated damages to all Holders of Notes at a rate per annum equal to 0.25% of the principal amount of the
Notes from the 60th day following the Issuer’s receipt of the Reports Default Notice to but not including the earlier of (x) the 121st day following the Issuer’s receipt of the Reports Default Notice and (y) the date on which the
failure to comply by the Issuer with the covenant described under the caption “—Reports” shall have been cured or waived. On the earlier of the dates specified in the immediately preceding clauses (x) and (y), such liquidated
damages will cease to accrue. If the failure to comply by the Issuer with the covenant described under the caption “—Reports” shall not have been cured or waived on or before the 121st day following the Issuer’s receipt of the
Reports Default Notice, then the failure to comply by the Issuer with the covenant described under the caption “—Reports” shall on such 121st day constitute an Event of Default. A failure to comply with the covenant described under
the caption “—Reports” automatically shall cease to be continuing and shall be deemed cured at such time as the Issuer furnishes to the trustee the applicable information or report (it being understood that the availability of such
information or report on the Commission’s EDGAR service (or any successor thereto) shall be deemed to satisfy the Issuer’s obligation to furnish such information or report to the trustee);
provided, however
, that the trustee shall
have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR service (or its successor).
No personal liability of directors, partners, members, officers, employees and stockholders
No director, partner, member, officer, employee, incorporator or stockholder of the Issuer or any Guarantor, as such, will have any liability
for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
Legal Defeasance and Covenant Defeasance
The Issuer may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an Officer’s Certificate, elect
to have all of its obligations discharged with respect to the outstanding Notes
57
and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”) except for:
(1) the rights of holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium, if
any, on, such Notes when such payments are due from the trust referred to below;
(2) the Issuer’s obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and the Issuer’s and the Guarantors’
obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released with
respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not
constitute a Default or Event of Default with respect to the Notes. In the event of a Covenant Defeasance, all Events of Default described under “—Events of Default and Remedies” above (except those relating to payments on the Notes
or bankruptcy, receivership, rehabilitation or insolvency events) will no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuer must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the Notes, cash in U.S.
dollars,
non-callable
Government Securities, or a combination of cash in U.S. dollars and
non-callable
Government Securities, in amounts as will be sufficient, in the
opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium, if any, on, the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;
(2) in the case of Legal Defeasance, the Issuer must deliver to the trustee an opinion of counsel who is reasonably acceptable
to the trustee confirming that (a) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer must deliver to the trustee an opinion of counsel who is reasonably
acceptable to the trustee confirming that the holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of
Default resulting from transactions occurring substantially contemporaneously with the borrowing of funds, or from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the
granting of Liens to secure such borrowings);
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture and the
58
agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Issuer or any of the Guarantors is a party or by which the Issuer or any of the Guarantors is
bound;
(6) the Issuer must deliver to the trustee an Officer’s Certificate stating that the deposit was not made by
the Issuer with the intent of preferring the holders of Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or others; and
(7) the Issuer must deliver to the trustee an Officer’s Certificate and an opinion of counsel, each stating that all
conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
Amendment, supplement and waiver
Except as provided in the next two succeeding paragraphs, the Indenture or the Notes or the Note Guarantees may be amended or supplemented with
the consent of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any
existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the holders of a majority in aggregate principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each holder of Notes affected, an amendment, supplement or waiver may not (with respect to any Notes held by a
non-consenting
holder):
(1) reduce the principal amount of Notes whose holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or the
premium payable in connection with a redemption of the Notes;
(3) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(4) waive a Default or Event of Default in the payment of principal of,
or interest or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from
such acceleration);
(5) make any Note payable in money other than that stated in the Notes;
(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of, or interest or premium, if any, on, the Notes;
(7) waive a redemption payment with
respect to any Note (other than a payment required by one of the covenants described above under the caption “—Repurchase at the option of holders”);
(8) contractually subordinate the Notes or the Guarantees to any other Indebtedness; or
(9) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any holder of Notes, the Issuer, the Guarantors and the trustee may amend or supplement
the Indenture, the Notes or the Note Guarantees:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;
59
(3) to provide for the assumption of the Issuer’s or a Guarantor’s
obligations to holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Guarantor’s assets, as applicable;
(4) to comply with the rules of any applicable securities depository;
(5) to make any change that would provide any additional rights or benefits to the holders of Notes and, in each case, the
release, suspension or termination thereof, or that does not adversely affect the legal rights under the Indenture of any such holder;
(6) to conform the text of the Indenture, the Notes or the Note Guarantees to any provision of the Description of the Notes
contained in the Final Offering Memorandum dated as March 15, 2017 delivered in connection with the Existing Notes to the extent that such provision in such Description of the Notes was intended to be a verbatim recitation of a provision of the
Indenture, the Notes or the Note Guarantees which intent may be evidenced by an Officer’s Certificate to that effect;
(7) to release the Note Guarantee of a Guarantor in accordance with the terms of the Indenture;
(8) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes;
(9) to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of the
date of the Indenture;
(10) to comply with requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA;
(11) to comply with requirements of applicable Gaming Laws or to provide for requirements imposed
by applicable Gaming Authorities; or
(12) to provide for the acceptance or appointment of a successor trustee.
Satisfaction and discharge
The Indenture
will be discharged and will cease to be of further effect as to all Notes issued thereunder when:
(1) either:
(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes
for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to the trustee for cancellation; or
(b) all Notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing
of a notice of redemption or otherwise or will become due and payable within one year (or are to be irrevocably called for redemption within one year) and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the
trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars,
non-callable
Government Securities, or a combination of cash in U.S. dollars and
non-callable
Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the
trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
(2)
any Issuer has or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and
(3) the
Issuer has delivered irrevocable instructions to the trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.
60
In addition, the Issuer must deliver an Officer’s Certificate and an opinion of counsel to
the trustee stating that all conditions precedent to satisfaction and discharge have been complied with.
The satisfaction and discharge
will be effective on the day on which all the applicable conditions above have been satisfied. Upon compliance with the foregoing, the trustee shall execute proper instrument(s) acknowledging the satisfaction and discharge of all of the
Issuer’s obligations under the Notes and the Indenture.
Concerning the trustee
If the trustee becomes a creditor of the Issuer or any Guarantor, the Indenture limits the right of the trustee to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee under the Indenture (if the Indenture has been qualified under the TIA) or resign.
The holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of
Notes, unless such holder has offered to the trustee security and indemnity satisfactory to the trustee against any loss, liability or expense.
The trustee shall not be responsible for, and makes no representation as to any Gaming Law or any Gaming Authority, whether any holder or
beneficial owner of Notes could be licensed, qualified or found suitable under any Gaming Law or by any Gaming Authority, and any consequence to any holder or beneficial owner of Notes under any Gaming Law or by any Gaming Authority.
Book-entry,
delivery and form
The Exchange Notes will be represented by one or more global notes in registered form without interest coupons attached (collectively, the
“Global Notes”). The Global Notes representing the Notes will be deposited with a custodian for DTC, and registered in the name of Cede & Co., as nominee of DTC.
Ownership of interests in the Global Notes
(“Book-Entry
Interests”) will be limited to
persons that have accounts with DTC, or persons that hold interests through such participants.
Book-Entry
Interests will be shown on, and transfers thereof will be done only through, records
maintained in
book-entry
form by DTC and its participants. The laws of some jurisdictions, including certain states of the U.S., may require that certain purchasers of securities take physical delivery of such
securities in definitive form. The foregoing limitations may impair your ability to own, transfer or pledge
Book-Entry
Interests. In addition, while the notes are in global form, holders of
Book-Entry
Interests are not considered the owners or “holders” of Notes for any purpose.
So
long as the Notes are held in global form, DTC (or its nominees) will be considered the sole holders of Global Notes for all purposes under the Indenture. In addition, participants in DTC must rely on the procedures of DTC and indirect participants
must rely on the procedures of DTC and the participants through which they own
Book-Entry
Interests, to transfer their interests or to exercise any rights of holders under the Indenture.
61
Neither the Company nor the Trustee has any responsibility or liability for any aspect of the
records relating to the
Book-Entry
Interests.
Depository procedures
The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Issuer takes no responsibility for these operations and procedures and urges investors to contact the system
or their participants directly to discuss these matters.
DTC has advised the Issuer that DTC is a
limited-purpose
trust company created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those
securities between the Participants through electronic
book-entry
changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Issuer that, pursuant to procedures established by it, ownership of these interests in the Global Notes will be shown
on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial
interest in the Global Notes).
Except as described below, owners of interests in the Global Notes will not have Notes registered in
their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or “holders” thereof under the Indenture for any purpose
.
Payments in respect of the principal of, and interest and premium, if any, on, a Global Note registered in the name of DTC or its nominee will
be payable to DTC in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Issuer and the trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners of
the Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuer, the trustee nor any agent of the Issuer or the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments
made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants.
DTC has advised the Issuer that its current practice, upon receipt of any payment in respect of
securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each
relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the
62
Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants
or the Indirect Participants and will not be the responsibility of DTC, the trustee or the Issuer. Neither the Issuer nor the trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the
beneficial owners of the Notes, and the Issuer and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
Subject to the transfer restrictions applicable to the Existing Notes described herein, transfers between the Participants will be effected in
accordance with DTC’s procedures, and will be settled in
same-day
funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and
operating procedures.
Subject to compliance with the transfer restrictions applicable to the Existing Notes described herein,
cross-market
transfers between the Participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear
or Clearstream, as the case may be, by their respective depositaries; however, such
cross-market
transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the
counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures
for
same-day
funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.
DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more
Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such Notes to its Participants.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes if:
(1) DTC (a) notifies the Issuer that it is unwilling or unable to continue as depositary for the Global Notes or
(b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Issuer fails to appoint a successor depositary;
(2) the Issuer, at its option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes;
or
(3) there has occurred and is continuing a Default or Event of Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by
or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary procedures).
Same-day settlement and payment
The Issuer will make payments in respect of the Notes represented by the Global Notes, including principal, premium, if any, and interest, by
wire transfer of immediately available funds to the accounts
63
specified by DTC or its nominee. The Issuer will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds
to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder’s registered address. The Notes represented by the Global Notes are expected to be eligible to trade
in DTC’s
Same-Day
Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Issuer
expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.
Because of time zone
differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant,
during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised the Issuer that cash received in Euroclear or Clearstream as a result of
sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as
of the business day for Euroclear or Clearstream following DTC’s settlement date.
Certain definitions
Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms
used therein, as well as any other capitalized terms used herein for which no definition is provided.
“
7% Notes
” means
the 7% Senior Notes Due 2023 issued by the Company under the 7% Notes Indenture.
“
7% Notes Indenture
” means that certain
Indenture dated as of July 23, 2015, among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee, as amended from time to time.
“
Acquired Debt
” means, with respect to any specified Person, (1) Indebtedness, Disqualified Stock or preferred stock of
any other Person existing at the time such other Person is merged, acquired, consolidated, liquidated or amalgamated with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness, Disqualified Stock or
preferred stock is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person;
provided
that, for the avoidance of doubt, if such Indebtedness, Disqualified Stock, or preferred stock is redeemed, retired, or defeased (whether by covenant or legal defeasance), repurchased, discharged or
otherwise repaid or acquired (or if irrevocable deposit has been made for the purpose of such repurchase, redemption, retirement, defeasance (whether covenant or legal), discharge or repayment or other acquisition) at the time, or substantially
concurrently with the consummation, of the transaction by which such Person is merged, acquired, consolidated, liquidated or amalgamated with or into or became a Restricted Subsidiary (including by designation) of such specified Person, then such
Indebtedness, Disqualified Stock, or preferred stock shall not constitute Acquired Debt.
“
Additional Interest
” means all
amounts, if any, payable pursuant to the provisions relating to Additional Interest described in the Registration Rights Agreement. The trustee shall have no obligation to determine whether Additional Interest is payable or the amount of Additional
Interest payable.
“
Affiliate
” of any specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to
64
direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise;
provided
that beneficial
ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“
Applicable Premium
” means, with respect to any Note on any redemption date, the greater of: (1) 1.0% of the
principal amount of the Note; or (2) the excess of: (a) the present value at such redemption date of (i) the redemption price of the Note at April 1, 2020 (such redemption price being set forth in the table appearing above under
the caption “—Optional redemption”),
plus
(ii) all required interest payments due on the Note through April 1, 2020 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal
to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of such Note. The trustee shall have no duty to calculate or verify the calculation of the Applicable Premium.
“
Asset Sale
” means:
(1) the sale, lease, conveyance or other disposition of any assets or rights by the Issuer or any of the Issuer’s
Restricted Subsidiaries; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture
described above under the caption “—Repurchase at the option of holders—Change of control” and/or the provisions described above under the caption “—Certain covenants—Merger, consolidation or sale of assets”
and not by the provisions of the covenant described above under the caption “—Repurchase at the option of holders—Asset sales”; and
(2) the issuance of Equity Interests by any of the Issuer’s Restricted Subsidiaries or the sale by the Issuer or any of
the Issuer’s Restricted Subsidiaries of Equity Interests in any of the Issuer’s Subsidiaries (other than preferred stock issued in compliance with the covenant described above under the caption “—Certain covenants—Incurrence
of indebtedness and issuance of preferred stock”).
Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:
(1) any single transaction or series of related transactions that involves assets having a Fair Market
Value of less than $20.0 million;
(2) any transaction that is consummated in accordance with the provisions described
under the caption “—Certain covenants—Merger, consolidation or sale of assets”;
(3) a transfer of
assets between or among the Issuer and its Restricted Subsidiaries;
(4) an issuance of Equity Interests by a Restricted
Subsidiary of the Issuer to the Issuer or to a Restricted Subsidiary of the Issuer;
(5) the sale, disposition, exchange
for replacement items or other items used or useful in a Permitted Business, lease or other transfer of inventory, products, services or accounts receivable in the ordinary course of business or in bankruptcy or similar proceedings;
(6) any sale or other disposition of damaged,
worn-out
or obsolete assets in the
ordinary course of business (including the abandonment or other disposition of intellectual property that is, in the reasonable judgment of the Issuer, no longer economically practicable to maintain or useful in the conduct of the business of the
Issuer and its Restricted Subsidiaries taken as whole);
(7) licenses and sublicenses by the Issuer or any of its
Restricted Subsidiaries of software or intellectual property in the ordinary course of business;
(8) any surrender or
waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims in the ordinary course of business;
65
(9) the granting of Liens not prohibited by the covenant described above under
the caption “—Certain covenants—Liens”;
(10) the sale or other disposition of cash or Cash
Equivalents;
(11) a Restricted Payment that does not violate the covenant described above under the caption
“—Certain covenants—Restricted payments” or a Permitted Investment;
(12) any exchange of property
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for use in a related business;
(13)
foreclosures, condemnations or any similar action on assets;
(14) any leases of retail, restaurant or entertainment venues
and other similar spaces in the ordinary course of business;
(15) terminations of Hedging Obligations;
(16) any settlement, release, waiver or surrender of contract rights or contract, tort or other litigation claims, or voluntary
terminations of other contracts or assets, in the ordinary course of business;
(17) any disposition of Equity Interests of
a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Issuer or any of its Restricted Subsidiaries) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary
acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;
(18) any financing transaction with respect to property constructed, acquired, replaced, repaired or improved (including any
reconstruction, refurbishment, renovation and/or development of real property) by the Issuer or any of its Restricted Subsidiaries, including sale and leaseback transactions and asset securitizations, permitted by the Indenture;
(19) sales of Unrestricted Subsidiaries or joint ventures or other development ventures, or issuances or sales of Equity
Interests, Indebtedness, other securities or other Investments therein, or assets thereof;
(20) the transactions
contemplated by the Paid-Up Oil and Gas Leases and other sales or leases of oil, gas or mineral rights; and
(21) the sale
or other disposition of Non-Core Land.
In the event that a transaction (or a portion thereof) meets the criteria of more than one
category of an Asset Sale, the Issuer, in its sole discretion, will be entitled to divide and classify or reclassify such transaction (or a portion thereof) between or among such categories.
“
Attributable Debt
” in respect of a sale and leaseback transaction means, at the time of determination, the present value of
the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended.
Such present value will be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP;
provided
,
however
, that if such sale and leaseback transaction results in a
Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”
“
Beneficial Owner
” has the meaning assigned to such term in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such
“person” will be deemed to have beneficial ownership of
66
all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the
passage of time. The terms “
Beneficially Owns
,” “
Beneficially Owning
” and “
Beneficially Owned
” have a corresponding meaning.
“
Board of Directors
” means:
(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on
behalf of such board;
(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;
(3) with respect to a limited liability company, the board of managers of such limited liability company or any committee
thereof duly authorized to act on behalf of such board or the managing member or members or any controlling committee of managing members thereof, as applicable, and
(4) with respect to any other Person, the board or committee of such Person serving a similar function.
“
Capital Lease Obligation
” means, at the time any determination is to be made, the amount of the liability in respect of a
capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be prepaid by the lessee without payment of a penalty
provided
,
however
, that for the avoidance of doubt, any lease that is accounted for by any Person as an operating lease as of the Issue Date
and any similar lease entered into after the Issue Date by any Person may, in the sole discretion of the Issuer, be accounted for as an operating lease and not as a Capital Lease Obligation.
“
Capital Stock
” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(4) any other interest or participation
that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person;
but excluding from
all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
“
Cash Equivalents
” means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or
instrumentality of the United States government (
provided
that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition;
(3) money market deposits, certificates of deposit and Eurodollar time deposits with maturities of six months or less from the
date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any lender party to the ERI Credit Facility or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;
67
(4) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing
within two years after the date of acquisition;
(6) marketable short term money market and similar securities having the
highest rating obtainable from Moody’s and S&P (or, if neither S&P nor Moody’s shall be rating such securities, then from another nationally recognized rating service) at the time of acquisition and in each case maturing within two
years after the date of acquisition;
(7) other dollar denominated securities issued by any Person incorporated in the
United States and that at the time of acquisition have an investment grade rating from Moody’s or S&P (or, if neither S&P nor Moody’s shall be rating such securities, then from another nationally recognized rating service) and
maturing not more than two years after the date of acquisition; and
(8) money market funds that invest primarily in Cash
Equivalents of the kinds described in clauses (1) through (7) of this definition.
“
Change of Control
” means
the occurrence of any of the following:
(1) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person (including any “person”
(as that term is used in Section 13(d)(3) of the Exchange Act)) other than a Principal or a Related Party of a Principal; or
(2) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is
that any Person (including any “person” (as defined above)), other than the Principals and their Related Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer, measured by voting
power rather than number of shares.
“
Change of Control Offer
” has the meaning assigned to that term in the Indenture.
“
Change of Control Payment
” has the meaning assigned to that term in the Indenture.
“
Change of Control Payment Date
” has the meaning assigned to that term in the Indenture.
“
Consolidated EBITDA
” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person
for such period
plus
(without duplication):
(a) in each case to the extent deducted in calculating such Consolidated Net Income:
(1) provisions for taxes, either payable or reasonably estimated to be payable, based on income, profits, margin or
capital gains, plus franchise or similar taxes, of such Person and its Restricted Subsidiaries for such period;
(2)
consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including any amortization or write-off of deferred financing costs or debt issuance costs,
original issue discount, non-cash interest payments, the interest component of any deferred payment obligations and the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to Hedging Obligations related to interest rates;
68
(3) any cost, charge, fee or expense (including discounts and commissions,
premiums and penalties, original issue discount, debt issuance costs and deferred financing costs and fees and charges incurred in respect of letters of credit or bankers’ acceptance financings) (or any amortization or write-off of the
foregoing) associated with any Transaction Activity, to the extent deducted in computing such Consolidated Net Income;
(4)
depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges or expenses, including any write-off or write-down,
reducing Consolidated Net Income for such period (excluding (x) any amortization of a prepaid cash expense that was paid in a prior period and (y) any such non-cash charges and expenses that result in an accrual of or reserve for cash
charges or expenses in any future period on or prior to the final Stated Maturity of the Notes and that such Person elects not to add back in the current period) of such Person and its Restricted Subsidiaries for such period;
provided
that if
any such non-cash charges or expenses represent an accrual of a reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to the extent such Person
elected to previously add back such amounts to Consolidated EBITDA;
(5) any Pre-Opening Expenses;
(6) the amount of any restructuring charges or reserve (including those relating to severance, relocation costs and one-time
compensation charges), costs incurred in connection with any non-recurring strategic initiatives, other business optimization expense (including incentive costs and expenses relating to business optimization programs and signing, retention and
completion bonuses) and any unusual or non-recurring charges or items of loss or expense (including losses on asset sales (other than asset sales in the ordinary course of business));
(7) the amount of any expense consisting of Restricted Subsidiary income attributable to non-controlling interests of third
parties in any Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary except to the extent of any cash distributions in respect thereof;
(8) the amount of insurance proceeds received during such period or after such period and on or prior to the date the
calculation is made with respect to such period, attributable to any property which has been closed or had operations curtailed for any period;
provided
that such amount of insurance proceeds shall only be included pursuant to this clause
(8) to the extent that such amount of insurance proceeds plus Consolidated EBITDA attributable to such property for such period (without giving effect to this clause (8)) does not exceed Consolidated EBITDA attributable to such property
during the most recently completed four fiscal quarter period for which financial results are available that such property was fully operational (or if such property has not been fully operational for four consecutive fiscal quarters for which
financial results are available prior to such closure or curtailment, the Consolidated EBITDA attributable to such property during the period prior to such closure or curtailment (for which financial results are available) annualized over four
fiscal quarters);
(9) any losses resulting from mark-to-market accounting of Hedging Obligations or other derivative
instruments;
(10) any charges, fees and expenses (or any amortization thereof) (including, without limitation, all legal,
accounting, advisory or other transaction-related fees, charges, costs and expenses and any bonuses or success fee payments) related to any acquisition, Investment or disposition not prohibited by the Indenture (or any such proposed acquisition,
Investment or disposition) (including amortization or write offs of debt issuance or deferred financing costs, premiums and prepayment penalties), in each case, whether or not successful, and in each case not already excluded from Consolidated Net
Income pursuant to clause (10) of the definition thereof; and
(11) cash receipts (or any netting arrangements
resulting in reduced cash expenditures) not representing Consolidated EBITDA or Consolidated Net Income in any period to the extent non-cash
69
gains relating to such income were deducted in the calculation of Consolidated EBITDA for any previous period and not added back;
(12) the amount of any restructuring, rebranding or similar charge or reserve in such period, including costs incurred in
connection with (A) any acquisition, disposition, Investment or similar transaction occurring after the Issue Date or (B) severance and the consolidation or closing of any facilities after the Issue Date (or are reasonably expected to be
initiated within twelve (12) months of the closing date of the applicable transaction);
(b) minus (without duplication) in each case
to the extent included in calculating such Consolidated Net Income:
(1) non-cash items increasing such Consolidated Net
Income for such period, other than the accrual of revenue in the ordinary course of business, and other than any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges for any prior period subsequent to
the Issue Date, which was not added back to Consolidated EBITDA when accrued;
(2) the amount of non-cash gains resulting
from mark-to-market accounting of Hedging Obligations or other derivative instruments; and
(3) any unusual or
non-recurring items of income or gain (including, without limitation, gains on asset sales (other than asset sales in the ordinary course of business)) to the extent increasing Consolidated Net Income for such Period.
Consolidated EBITDA for any period shall be further adjusted as follows:
(A) acquisitions of any Person, property, business, operations or asset (including a management agreement or similar agreement)
or investments that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to
such reference period and on or prior to the Calculation Date, and the change in Consolidated EBITDA resulting therefrom, will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, and Consolidated
EBITDA for such reference period shall include the Consolidated EBITDA of the acquired Person (or attributable to the acquired property, business, operations or asset) or applicable to such investments, and related transactions, and subject to
clause (C) below shall otherwise be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act;
(B) any Person, property, business, operations or asset (including a management agreement or similar agreement) or investments
that have been disposed of by the specified Person or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, and the change in Consolidated EBITDA
resulting therefrom, and any discontinued operations (as determined in accordance with GAAP), will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, and Consolidated EBITDA for such reference
period shall exclude the Consolidated EBITDA of the disposed of Person (or attributable to the disposed of property, business, operations or asset or discontinued operations) or applicable to such disposed of investments and subject to clause
(C) below shall otherwise be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act;
(C) Pro Forma Cost Savings shall be given effect;
(D) (a) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted
Subsidiary at all times during the applicable four-quarter reference period, and (b) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during the
applicable four-quarter reference period; and
(E) in any fiscal quarter during which a purchase of property that prior to
such purchase was subject to any operating lease that will be terminated in connection with such purchase shall occur and during the
70
three following fiscal quarters, there shall be added to Consolidated EBITDA an amount equal to the quarterly payment in respect of such lease (as if such purchase did not occur) times (a) 4
(in the case of the quarter in which such purchase occurs), (b) 3 (in the case of the quarter following such purchase), (c) 2 (in the case of the second quarter following such purchase) and (d) 1 (in the case of the third quarter
following such purchase), all as determined on a consolidated basis for such Person and its Restricted Subsidiaries.
“
Consolidated Leverage Ratio
” means, with respect to any Person, as of any date of determination, the ratio of
(x) (i) Consolidated Total Indebtedness of such Person as of such date of determination (the “Calculation Date”), after giving effect to all transactions to occur on the Calculation Date, including, without limitation, giving pro
forma effect to any transactions with respect to Indebtedness consistent with clause (1) of the definition of “Fixed Charge Coverage Ratio,”
minus
(ii) cash and Cash Equivalents (in each case, free and clear of Liens other
than Permitted Liens) in an amount not to exceed $100.0 million (but excluding cage cash) as of such date that would be required to be reflected on a consolidated balance sheet in accordance with GAAP to (y) Consolidated EBITDA of such Person
for the most recently ended four full fiscal quarters for which internal financial statements are available (the “reference period”) immediately preceding the Calculation Date. For the avoidance of doubt, for purposes of this definition,
“Consolidated EBITDA” shall be calculated after giving effect on a pro forma basis, without duplication, to the items in clauses (A) — (E) of the definition thereof.
“
Consolidated Net Income
” means, with respect to any specified Person for any period, the aggregate of the net income (loss)
of such Person and its Restricted Subsidiaries (on the applicable date of determination) for such period, on a consolidated basis, determined in accordance with GAAP and without any reduction in respect of preferred stock dividends;
provided
that, without duplication:
(1) any gain or loss (together with any related provision for taxes thereon), realized in
connection with (a) any Asset Sale (other than asset sales in the ordinary course of business) or (b) any disposition of any securities (other than dispositions in the ordinary course of business) by such Person or any of its Restricted
Subsidiaries, and any extraordinary gain or loss (together with any related provision for taxes thereon) shall be excluded;
(2) the net income (but not loss) of any Person that (i) is not a Restricted Subsidiary, (ii) is accounted for by the
equity method of accounting or (iii) is an Unrestricted Subsidiary shall be excluded;
provided
that Consolidated Net Income of such Person and its Restricted Subsidiaries shall be increased by the amount of dividends or distributions or
other payments (including management fees) that are actually paid or payable in cash to such Person or a Restricted Subsidiary thereof in respect of such period (or to the extent converted into cash) (including by any Person referred to in clauses
(i)-(iii));
(3) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(3)(a)
of “Certain covenants—Restricted payments,” the net income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net
income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders unless such restriction with respect to the payment of dividends or similar distributions has been waived; provided that such exclusions shall not
apply with respect to limitations imposed either (x) pursuant to Acquired Debt which has been irrevocably called for redemption, repurchase or other acquisition or repayment or in respect of which the required steps have been taken to have such
Acquired Debt defeased (whether by covenant or legal defeasance) or discharged, or a deposit has been made for such purpose or (y) by Gaming Laws of general applicability within the jurisdiction in which such Restricted Subsidiary operates or
applicable to all Persons operating a business similar to that of such Restricted Subsidiary within such jurisdiction;
provided, further
, that Consolidated Net Income of such Restricted Subsidiary will be included to the
71
extent of dividends or other distributions or other payments actually paid or permitted to be paid in cash (or to the extent converted into cash) by such Restricted Subsidiary in respect of such
period, to the extent not already included therein;
(4) any goodwill or other asset impairment charges or other asset
write-offs or write-downs, including any resulting from the application of Accounting Standards Codification Nos. 350 and 360, and any expenses or charges relating to the amortization of intangibles as a result of the application of Accounting
Standards Codification No. 805, shall be excluded;
(5) any non-cash charges or expenses related to the repurchase of
stock options to the extent not prohibited by the Indenture, and any non-cash charges or expenses related to the grant, issuance or repricing of, or any amendment or substitution with respect to, stock appreciation or similar rights, stock options,
restricted stock, or other Equity Interests or other equity-based awards or rights or equivalent instruments, shall be excluded;
(6) the cumulative effect of a change in accounting principles shall be excluded;
(7) any expenses or reserves for liabilities shall be excluded to the extent that such Person or any of its Restricted
Subsidiary is entitled to indemnification therefor under binding agreements;
provided
, that any such liabilities for which such Person or such Restricted Subsidiaries is not actually indemnified shall reduce Consolidated Net Income for the
period in which it is determined that such Person or such Restricted Subsidiary will not be indemnified (to the extent such liabilities would otherwise reduce Consolidated Net Income without giving effect to this clause (7));
(8) losses, to the extent covered by insurance and actually reimbursed, or, so long as the Issuer has made a determination that
there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not denied by the applicable carrier in writing within 180 days and (b) in fact reimbursed within
365 days of the final settlement of the applicable claim (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption shall be
excluded;
(9) gains and losses resulting solely from fluctuations in currency values and the related tax effects shall be
excluded, and charges relating to Accounting Standards Codification Nos. 815 and 820 shall be excluded; and
(10) any
non-recurring charges or expenses of such Person or its Restricted Subsidiaries or of a company or business acquired by such Person or its Restricted Subsidiaries (in each case, including those relating to severance, relocation costs and one time
compensation charges and any charges or expenses in connection with conforming accounting policies or reaudited, combining or restating financial information), in each case, incurred in connection with the purchase or acquisition of such acquired
company or business by such Person or its Restricted Subsidiaries shall be excluded.
“
Consolidated Tangible Assets
” of
any Person as of any date means the total assets of such Person and its Restricted Subsidiaries as of the most recent fiscal quarter end for which a consolidated balance sheet of such Person and its Restricted Subsidiaries is available, minus total
goodwill and other intangible assets of such Person and its Restricted Subsidiaries reflected on such balance sheet, all calculated on a consolidated basis in accordance with GAAP.
“
Consolidated Total Indebtedness
” means, with respect to any Person as at any date of determination, (a) an amount equal
to the aggregate amount of all outstanding Indebtedness of such Person and its Restricted Subsidiaries as of such date determined on a consolidated basis in accordance with GAAP, excluding (i) Indebtedness which has been repaid, discharged,
defeased (whether by covenant or legal defeasance), retired, repurchased or redeemed on or prior to such date or which a Person has irrevocably made a deposit to repay, defease (whether by covenant or legal defeasance), discharge, repurchase, retire
or redeem or which a Person has called for redemption, defeasance (whether by covenant or legal defeasance), discharge, repurchase
72
or retirement, on or prior to such date, (ii) Indebtedness of the type described in clause (5) of the definition thereof or any guarantee thereof and Indebtedness constituting
banker’s acceptances, letters of credit and Hedging Obligations, and (iii) in the case of Indebtedness of a non-Wholly-Owned Restricted Subsidiary, to the extent Consolidated EBITDA (including through the calculation of Consolidated Net
Income or due to non-controlling interests in such Restricted Subsidiary owned by a Person other than the Issuer or any of its Restricted Subsidiaries) did not include all of the net income of such Restricted Subsidiary, an amount of Indebtedness of
such Restricted Subsidiary (provided that such Indebtedness is not otherwise guaranteed by the Issuer or another Restricted Subsidiary, if any, that guarantees the notes) directly proportional to the amount of net income of such Restricted
Subsidiary not so included in Consolidated EBITDA (including through the calculation of Consolidated Net Income),
less
(b) cash and Cash Equivalents of such Person and its Restricted Subsidiaries in an amount not to exceed $100.0
million.
“
continuing
” means, with respect to any Default or Event of Default, that such Default or Event of Default has
not been cured or waived.
“
Credit Facility
,” or “
Credit Facilities
” means, one or more debt facilities
(including, without limitation, the ERI Credit Facility), indentures or commercial paper facilities, in each case, with banks or other institutional lenders or accredited investors or institutional investors providing for revolving credit loans,
term loans, term debt, debt securities, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case,
as amended, restated, modified, renewed, extended, increased, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in
part from time to time.
“
Default
” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.
“
Designated Asset Sales
” means the Asset Sales of each of the Lake Charles Gaming
Facilities and the Marquette Gaming Facilities.
“
Designated Non-Cash Consideration
” means the fair market value of
non-cash consideration received by the Issuer or any of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to an officer’s certificate setting forth the basis of such
valuation, executed by a financial officer of the Issuer, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-Cash Consideration.
“
Disqualified Stock
” means any Capital Stock that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute
Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control, an asset sale or an event of loss will not constitute Disqualified
Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption
“—Certain covenants—Restricted payments.” The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the Indenture will be the maximum amount that the Issuer and its Restricted Subsidiaries may become
obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. Disqualified Stock shall not include any shares of Capital Stock, which, after the issuance
thereof, become subject to mandatory
73
redemption due to the actions or requirements of any Gaming Authority, to the extent that such issuance was made in compliance with applicable laws and, at the time of such issuance, such Capital
Stock did not constitute Disqualified Stock.
“
Domestic Subsidiary
” means any Restricted Subsidiary of the Issuer
(a) that was formed under the laws of the United States or any state of the United States or the District of Columbia and does not constitute an Immaterial Subsidiary or (b) that directly or indirectly, guarantees, or pledges any property
or assets to secure Indebtedness incurred under a Credit Facility.
“
Equity Interests
” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“
Equity Offering
” means a public or private sale of Equity Interests of the Issuer by Issuer (other than Disqualified Stock
and other than to a Subsidiary of the Issuer).
“
ERI Credit Facility
” means the revolving credit facility and term loan
facility under that certain Credit Agreement, dated as of April 17, 2017, by and among Issuer (as successor to Escrow Issuer), the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, swingline
lender and issuing lender, and J.P. Morgan Securities LLC, Macquarie Capital (USA) Inc., Credit Suisse Securities (USA) LLC, U.S. Bank National Association, and KeyBank National Association, as joint lead arrangers, joint bookrunners and
co-syndication agents, providing for up to $300.0 million of revolving credit borrowings and up to $1,450.0 million of term loan borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional
investors) in whole or in part from time to time.
“
Exchange Notes
” means the Notes issued in this offering.
“
Existing Indebtedness
” means all Indebtedness of the Issuer and its Subsidiaries (other than Indebtedness under the Credit
Agreement) in existence on the date of the Indenture, until such amounts are repaid.
“
Fair Market Value
” means the value
that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, which shall be determined in good faith by the Board of Directors of the Issuer if expected to be greater
than $20.0 million.
“
FF&E
” means furniture, fixtures and equipment used in the ordinary course of business in the
operation of a Permitted Business.
“
FF&E Financing
” means Indebtedness, the proceeds of which will be used solely to
finance or refinance the acquisition or lease by the Issuer or a Restricted Subsidiary of the Issuer of FF&E.
“
Fixed Charge
Coverage Ratio
” means with respect to any specified Person for any period, the ratio of the Consolidated EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or
any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “
Calculation
Date
”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect (in accordance with
Regulation S-X
under the Securities Act) to such incurrence, assumption, Guarantee,
repayment, repurchase, redemption,
74
defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning
of the applicable
four-quarter
reference period.
In addition, for purposes of calculating the
Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including all related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the
four-quarter
reference period or subsequent to such reference period and on or prior to the Calculation Date, or that are to be made on the
Calculation Date, will be given pro forma effect (in accordance with
Regulation S-X
under the Securities Act) as if they had occurred on the first day of the
four-quarter
reference period;
(2) the Consolidated EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;
(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or
businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date;
(4) any Person that is a Restricted Subsidiary on the Calculation
Date will be deemed to have been a Restricted Subsidiary at all times during such
four-quarter
period;
(5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted
Subsidiary at any time during such
four-quarter
period; and
(6) if any
Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging
Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).
“
Fixed Charges
” means, with respect to any specified Person for any period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of original issue discount or premium, non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Hedging Obligations or other
derivative instruments pursuant to Accounting Standards Codification Nos. 815 and 820), the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging
Obligations in respect of interest rates but excluding any amortization or write-off of deferred financing costs or debt issuance costs and excluding commitment fees, underwriting fees, assignment fees, debt issuance costs or fees, redemption or
prepayment premiums, and other transaction expenses or costs or fees consisting of Transaction Activities associated with undertaking, or proposing to undertake, any Transaction Activity;
plus
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period;
plus
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(3) any interest expense on Indebtedness of another Person that is guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock
of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Issuer (other than Disqualified Stock) or to the Issuer or a Restricted Subsidiary of the Issuer,
times
(b) a fraction, the numerator of which is one minus the then current combined, federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case determined on a consolidated basis in accordance with GAAP.
“
GAAP
” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of the Indenture.
“
Gaming Authorities
” means, in any
jurisdiction in which the Issuer or any of its Subsidiaries manages or conducts any racing, riverboat and/or casino gaming operations or activities, the applicable gaming board, commission or other governmental authority responsible for
interpreting, administering and enforcing Gaming Laws, including, but not limited to, the Colorado Limited Gaming Control Commission, the Florida Dept. of Business and Prof. Regulation, Division of Pari-Mutuel Wagering, Iowa Racing and Gaming
Commission, the Nevada Gaming Commission, the Nevada Gaming Control Board, the Louisiana Gaming Control Board, the Mississippi Gaming Commission, the Missouri Gaming Commission, the Pennsylvania Gaming Control Board, the Pennsylvania State Horse
Racing Commission, the Pennsylvania Liquor Control Board, the Ohio Lottery Commission, the Ohio State Racing Commission, the West Virginia Lottery Commission, and the West Virginia Racing Commission.
“
Gaming Facility
” means any gaming or pari-mutuel wagering establishment and other Property or assets directly ancillary
thereto or used in connection therewith, including any building, restaurant, hotel, theater, parking facilities, retail shops, spa, land, golf courses and other recreation and entertainment facilities, vessel, barge, ship, equipment, kennels or
stables owned or operated by the Issuer or its Subsidiaries.
“
Gaming Laws
” means all laws, rules, regulations, orders,
resolutions and other enactments applicable to racing, riverboat and/or casino gaming operations or activities, as in effect from time to time, including the policies, interpretations and administration thereof by the applicable Gaming Authorities,
the Colorado Limited Gaming Act of 1991 (C.R.S. 12-47.1-101 et. seq.), the Florida Pari-mutuel Wagering Act (§ 550-551, Fla. Stat.), the Iowa Code Chapters 99D and 99F, the Nevada Gaming Control Act (codified at Chapter 463 of the Nev. Rev.
Statutes), the Louisiana Gaming Control Law (codified at La. R.S. 27:1, et seq.), the Mississippi Gaming Control Act (codified at Miss. Code Ann. Section 75-76-1 et seq.), the Ohio Racing Law (codified at Chapter 3769 of the Ohio Revised Code
and Chapter 3769 of the Ohio Administrative Code), the Ohio Lottery Law (codified at Chapter 3770 of the Ohio Revised Code and Chapters 3770:1 and 3770:2 of the Ohio Administrative Code), the Pennsylvania Race Horse Development and Gaming Act, the
West Virginia Lottery Racetrack Table Games Act, the West Virginia Racetrack Video Lottery Act and Chapter 19, Article 23 (Horse and Dog Racing) of the West Virginia Code, in each case, together with any rules or regulations promulgated thereunder
or related thereto.
“
Government Securities
” means securities that are direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged.
“
Guarantee
” means a guarantee other than by
endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge
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of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by
agreements to
keep-well,
to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).
“
Guarantors
” means any Subsidiary of the Issuer that executes a Note Guarantee in accordance with the provisions of the
Indenture, and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of the Indenture.
“
Hedging Obligations
” of any Person means the obligations of such Person pursuant to (1) any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in interest rates, (2) agreements or arrangements designed to protect such
Person against fluctuations in foreign currency exchange rates in the conduct of its operations, or (3) any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect
such Person against fluctuations in commodity prices, in each case entered into in the ordinary course of business for bona fide hedging purposes and not for purposes of speculation.
“
Immaterial Subsidiary
” means any Restricted Subsidiary that is designated by the Issuer as an “Immaterial
Subsidiary” if and for so long as such Restricted Subsidiary has (i) total assets at such time (x) individually, not exceeding $10.0 million and (y) together with all other Immaterial Subsidiaries, 5.0% of the Issuer’s
consolidated assets as of the last day of the most recently ended fiscal quarter for which internal financial statements are available and (ii) total revenues and operating income (x) individually, not exceeding $10.0 million and
(y) together with all other Immaterial Subsidiaries, 5.0% of the Issuer’s consolidated revenues and operating income, in each case, as of the most recently ended fiscal quarter for which internal financial statements are available;
provided
that such Restricted Subsidiary will be deemed to be an Immaterial Subsidiary only to the extent that, and for so long as, all of the above requirements are satisfied.
“
Indebtedness
” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and
trade payables) whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, Notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect
thereof) other than obligations with respect to letters of credit to the extent such letters of credit have not been drawn upon or, if and to the extent drawn upon, are reimbursed no later than the third business day following receipt by such Person
of a demand for reimbursement following payment on such letter of credit;
(3) in respect of banker’s acceptances;
(4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;
(5) representing the balance deferred and unpaid of the purchase price of any property or services (other than accounts payable
or trade payables and other accrued liabilities arising in the ordinary course of business); or
(6) representing any
Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would
appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien, other than a Permitted Lien described in
clause (27) of the definition thereof, on any asset of the specified Person
77
(whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.
Indebtedness shall be calculated without giving effect to the effects of Statement of Financial Accounting Standards No. 133 and related interpretations, as amended from time to time, to the extent such effects would otherwise increase or
decrease an amount of Indebtedness for any purpose under the Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.
“
insolvency or liquidation proceeding
” means:
(1) any case commenced by or against any Issuer or any Guarantor under Title 11, U.S. Code or any similar federal or state law
for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Issuer or any other grantor, any receivership or assignment for the benefit of creditors
relating to the Issuer or any other grantor or any similar case or proceeding relative to the Issuer or any other grantor or its creditors, as such, in each case whether or not voluntary;
(2) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Issuer or any
other grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or
(3) any
other proceeding of any type or nature in which substantially all claims of creditors of the Issuer or any other grantor are determined and any payment or distribution is or may be made on account of such claims.
“
Internal Revenue Code
” means the Internal Revenue Code of 1986, as amended.
“
Investments
” means, with respect to any Person, all direct or indirect investments by such Person in other Persons
(including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuer or any
Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Restricted Subsidiary that were not sold or
disposed of in an amount determined as provided in the penultimate paragraph of the covenant described above under the caption “—Certain covenants—Restricted payments.” The acquisition by the Issuer or any Restricted Subsidiary
of the Issuer of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Issuer or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the
acquired Person in such third Person in an amount determined as provided in the penultimate paragraph of the covenant described above under the caption “—Certain covenants—Restricted payments.” Except as otherwise provided in the
Indenture, the amount of an Investment will be the original cost of such Investment, plus the cost of all additions thereto and minus the amount of any portion of such Investment repaid to the Person making such Investment in cash as a repayment of
principal or return of capital, as the case may be, but without giving effect to subsequent changes in value.
“
Issue
Date
” means March 29, 2017.
“
Lake Charles Gaming Facilities
” means the Gaming Facilities owned, leased,
operated or used by the Company or its Restricted Subsidiaries in Westlake (near Lake Charles), Louisiana, including the vessel Grand Palais having Official No. 1028318.
78
“
Lien
” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, or any lease in the nature thereof.
“
Limited Condition Acquisition
” means any acquisition or other Investment, including by way of merger, amalgamation or
consolidation or similar transaction, by the Issuer or one or more of its Restricted Subsidiaries, with respect to which the Issuer or any such Restricted Subsidiaries have entered into an agreement or is otherwise contractually committed to
consummate and the consummation of which is not expressly conditioned upon the availability of, or on obtaining, third party financing.
“
Marquette Gaming Facilities
” means the Gaming Facilities in Marquette, Iowa, including the vessel Miss Marquette having
Official No. 950558.
“
Moody’s
” means Moody’s Investors Service, Inc.
“
Net Proceeds
” means the aggregate cash proceeds and Cash Equivalents received by the Issuer or any of its Restricted
Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (i) the direct costs relating
to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (ii) taxes paid or payable as a result of the Asset
Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (iii) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility,
secured by a Lien on the asset or assets that were the subject of such Asset Sale, (iv) all distributions to other holders of Equity Interests in Restricted Subsidiaries contractually required to be made as a result of such Asset Sale,
(v) any reserve for adjustment or indemnification obligations in respect of the sale price of such asset or assets established in accordance with GAAP and (vi) amounts reserved, in accordance with GAAP, against any liabilities associated
with the Asset Sale and related thereto, including pension and other retirement benefit liabilities, purchase price adjustments, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such
Asset Sale;
provided
that Net Proceeds shall include any cash payments received upon the reversal (without the satisfaction of any applicable liabilities in cash in a corresponding amount) of any reserve described in clause (vi) or, if
such liabilities have not been satisfied in cash and such reserve is not reversed within eighteen (18) months after such Asset Sale, the amount of such reserve.
“
Non-Core
Land
” means each of the following parcels of land, each of which is
immaterial to the Issuer’s gaming operations and as to which the Issuer has no intention to develop:
(1) the 244.69
acre parcel of land known as the “Quarry Parcel” in Hancock, West Virginia;
(2) the 162.79 acre parcel of land
known as the “Woodview Golf Course” in Hancock, West Virginia;
(3) the 387.12 acre portion of the land known as
the “Original Mountaineer Parcel” which is located to the east of State Route 2 site in Hancock, West Virginia;
(4) the 97.706 acre parcel of land known as the “Coldwell Parcel” in Hancock, West Virginia;
(5) the 37.85 acre parcel of land known as the “Hazel Parcel” in Hancock, West Virginia;
(6) the 1.755 acre parcel of land known as the “Glover/Daily Double Parcel” in Hancock, West Virginia;
(7) the 5.78 acre parcel of land known as the “J&T Parcel” in Hancock, West Virginia;
(8) the 109.01 acre parcel of land known as the “LSW Sanitation Parcel” in Hancock, West Virginia;
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(9) the 0.92 acre parcel of land known as the “Craig/Smith Parcel” in
Hancock, West Virginia;
(10) the 70.213 acre parcel of land known as the “Watson Parcel” site in Hancock, West
Virginia;
(11) the 6.65 acre parcel of land known as the “Phillips Parcel” in Hancock, West Virginia;
(12) the approximately 0.955 acre parcel of land known as the “Jefferson School Parcel” in Hancock, West Virginia;
(13) the 234.99 acre parcel of land known as the “Logan/Realm Parcel” in Hancock, West Virginia;
(14) the 38.017 acre parcel of land known as the “BOC Gas Parcel” in Hancock, West Virginia;
(15) the 37.11 acre parcel of land known as the “Mara Parcel” in Franklin County, Ohio;
(16) 5.596 acres in Summit Township, Erie County, Pennsylvania;
(17) the 272 acre parcel in Summit Township, Erie County, Pennsylvania;
(18) the 213.35 acre parcel of land located in McKean Township, Pennsylvania;
(19) the following parcels of undeveloped land in the Cripple Creek, County of Teller, Colorado:
(a) 4005.134110080; 4005.134110090; 4005.134110220; 4005.134080230; 4005.134080240; and 4005.134090180;
(20) the following parcels of undeveloped land in Kimmswick, Jefferson County, Missouri:
(a) 19-7.0-25.0-001.02; 19-7.0-36.0-001.01; 20-9.0-31.0-004.02; and 20-9.0-31.0-005;
(21) the parcel of undeveloped land located at the address 1600 Lady Luck Parkway, Bettendorf, Iowa;
(22) the parcel of undeveloped land located at the address 100 Miner Street, Central City, Colorado.
“
Non-Recourse
Debt
” means Indebtedness as to which neither the Issuer nor any of its
Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise. Notwithstanding
the foregoing, the Issuer and its Restricted Subsidiaries may enter into customary “completion guaranties” or “support agreements” in respect of construction projects undertaken by Unrestricted Subsidiaries so long as such
“completion guaranties” or “support agreements”: (i) are unsecured or secured only by cash deposits; (ii) are subject to a fixed liability cap stated in United States dollars; and (iii) the aggregate amount of
capped liability of such “completion guaranties” or “support agreements” shall not exceed $100.0 million at any one time outstanding. For avoidance of doubt, any such “completion guaranties” or “support
agreements” that satisfy the requirements of the preceding sentence shall constitute “Non-Recourse Debt” for purposes of the definition of “Unrestricted Subsidiary.”
“
Note Guarantee
” means the Guarantee by each Guarantor of the Issuer’s obligations under the Indenture and the Notes,
executed pursuant to the provisions of the Indenture.
“
Notes
” means the Existing Notes and the Exchange Notes.
“
Obligations
” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness (including, without limitation, interest accruing at the then applicable rate provided in such documentation after the maturity of such Indebtedness and interest accruing at the then
applicable rate provided in such documentation after the filing of a petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any debtor under such documentation, whether or not a claim for
post-filing
or
post-petition
interest is allowed in such proceeding).
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“
Officer
” means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Senior Vice President, any Vice President or any Assistant Vice President of
such Person.
“
Officer’s Certificate
” means a certificate signed on behalf of the Issuer by an Officer of the
Issuer.
“
Paid-Up
Oil and Gas Leases
” means those certain
Paid-Up
Oil and Gas Leases entered into as of May 10, 2011 by and among Mountaineer Park, Inc. and Chesapeake Appalachian, L.L.C, as the same may be amended, supplemented, modified, extended, replaced,
renewed or restated from time to time.
“
Pari Passu Debt
” means any Indebtedness of the Issuer or any Guarantor that
ranks equally in right of payment with the Notes or the Note Guarantee of such Guarantor, as applicable (without giving effect to collateral arrangements).
“
Permitted Business
” means any business that is the same as, or reasonably related, ancillary or complementary to, any of the
businesses in which the Issuer and its Restricted Subsidiaries are engaged on the date of the Indenture, including any gaming business and other business or activity that is incidental, related or complementary thereto, including without limitation
any related hotel, hospitality, food, beverage, entertainment or transportation activities.
“
Permitted Investments
”
means:
(1) any Investment in the Issuer or in a Restricted Subsidiary of the Issuer;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Issuer; or
(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, the Issuer or a Restricted Subsidiary of the Issuer;
(4) any Investment made as a result of the
receipt of
non-cash
consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the option of holders—Asset
sales”;
(5) any Investment the payment of which consists of Equity Interests (other than Disqualified Stock) of the
Issuer or proceeds from the sale of such Equity Interests;
provided
that such Equity Interests will not increase the amount available for Investments under clause (c) of the second paragraph under the covenant described in “Certain
covenants—Restricted payments;”
(6) receivables owing to the Issuer or its Restricted Subsidiaries, if created
or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, including without limitation credit extended to customers;
(7) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were
incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or
(B) litigation, arbitration or other disputes;
(8) Investments represented by Hedging Obligations;
81
(9) loans and advances to officers, directors and employees for payroll,
business-related travel expenses, moving or relocation expenses, drawing accounts and other similar expenses, in each case, made in the ordinary course of business;
(10) other loans or advances to officers, directors and employees in an aggregate principal amount not to exceed $600,000 at
any one time outstanding;
(11) repurchases of the Notes;
(12) any guarantee of Indebtedness permitted to be incurred by the covenant entitled “—Certain
covenants—Incurrence of indebtedness and issuance of preferred stock” other than a guarantee of Indebtedness of an Affiliate of the Issuer that is not a Restricted Subsidiary of the Issuer;
(13) any Investment existing on, or made pursuant to binding commitments existing on, the date of the Indenture and any
Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the date of the Indenture;
provided
that the amount of any such Investment may be increased
(a) as required by the terms of such Investment as in existence on the date of the Indenture or (b) as otherwise permitted under the Indenture;
(14) Investments acquired after the date of the Indenture as a result of the acquisition by the Issuer or any Restricted
Subsidiary of the Issuer of another Person, including by way of a merger, amalgamation or consolidation with or into the Issuer or any of its Restricted Subsidiaries in a transaction that is not prohibited by the covenant described above under the
caption “—Certain covenants —Merger, consolidation or sale of assets” after the date of the Indenture to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation
and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(15) Investments resulting
from the acquisition of a Restricted Subsidiary that was otherwise permitted by the Indenture, which Investments were held by such Restricted Subsidiary at the time of such acquisition and were not acquired in contemplation of such acquisition;
(16) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements
with other Persons in the ordinary course of business;
(17) Investments required by a Gaming Authority or made in lieu of
payment of a tax or in consideration of a reduction in tax;
(18) Investments in sales of Non-Core Land by the Issuer or
any of its Restricted Subsidiaries in an amount not to exceed (x) $10.0 million and (y) Designated Non-Cash Consideration received under clause (2)(c) under the caption “Repurchase at the option of holders—Asset sales”;
(19) Investments in joint ventures formed for the purpose of developing hotels or other facilities that constitute
Permitted Businesses that are adjacent to or ancillary to any casino or gaming facility owned by the Issuer or a Restricted Subsidiary of the Issuer in an amount not to exceed $5.0 million;
(20) Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (20) that are at the time outstanding not to exceed $300.0 million;
provided, however
, that if an
Investment made pursuant to this clause (20) is made in any Person that is not a Restricted Subsidiary as of the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall
thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (20) for so long as such Person continues to be a Restricted Subsidiary; and
(21) any Investment so long as, at the time the Investment is made and after giving effect thereto, (i) no Event of
Default has occurred and is continuing and (y) the Consolidated Leverage Ratio of the Issuer is less than or equal to 4.0 to 1.0 on a pro forma basis.
82
“
Permitted Liens
” means:
(1) Liens securing Permitted Debt incurred pursuant to and outstanding under clause (1) of the second paragraph of the
covenant described above under the caption “—Certain covenants—Incurrence of indebtedness and issuance of preferred stock”;
(2) (a) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (b) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of insurance
or social security or premiums with respect thereto (and Liens on proceeds of related policies); (c) Liens imposed by Gaming Laws or Gaming Authorities, and Liens on deposits made to secure gaming license applications or to secure the
performance of surety or other bonds; and (d) Liens securing obligations with respect to letters of credit issued in connection with any of the items referred to in this clause (2);
(3) Liens in favor of the Issuer or the Guarantors;
(4) Liens on property or assets (including Capital Stock) of a Person (or its Subsidiaries) existing at the time such Person is
merged with or into or consolidated with the Issuer or any Subsidiary of the Issuer or otherwise becomes a Subsidiary of the Issuer and amendments or modifications thereto and replacements or refinancings thereof;
provided
that such Liens
were not granted in connection with, or in anticipation of, such merger or consolidation or acquisition (except for Liens securing Indebtedness incurred pursuant to clause (15) of the second paragraph of the covenant entitled
“—Certain covenants—Incurrence of indebtedness and issuance of preferred stock”) and do not extend to any assets other than those of such Person (and its Subsidiaries) merged into or consolidated with the Issuer or the Subsidiary
or which becomes a Subsidiary of the Issuer;
(5) Liens (including extensions, renewals or replacements thereof) on
property existing at the time of acquisition of the property by the Issuer or any Subsidiary of the Issuer;
provided
that (except for Liens securing Indebtedness incurred pursuant to clause (15) of the second paragraph of the covenant
entitled “—Certain covenants—Incurrence of indebtedness and issuance of preferred stock”) such Liens were in existence prior to, or not incurred in contemplation of, such acquisition;
(6) Liens to secure Indebtedness (including Capital Lease Obligations and FF&E Financing) permitted by clause (4) of
the second paragraph of the covenant entitled “—Certain covenants—Incurrence of indebtedness and issuance of preferred stock” covering only the assets acquired with or financed by such Indebtedness (and directly related assets,
including proceeds (including insurance proceeds) and replacements thereof or assets which were financed with Indebtedness permitted by such clause that has been refinanced (including successive refinancings));
(7) Liens existing on the date of the Indenture;
(8) Liens for taxes, assessments or governmental charges, levies or claims that are not yet due and payable or delinquent or
that are being contested in good faith by appropriate proceedings;
provided
that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;
(9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ liens, in each case,
incurred in the ordinary course of business;
(10) survey exceptions, easements, encroachments, subdivisions or
reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection
with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(11) Liens created for the benefit of (or to secure) the Notes (or the Note Guarantees);
83
(12) Liens to secure any Permitted Refinancing Indebtedness (and customary
obligations related thereto);
provided, however
, that the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original
Lien (plus improvements and accessions to, such property or proceeds or distributions thereof);
(13) Liens on insurance
policies and proceeds thereof, or other deposits, to secure insurance premium financings;
(14) filing of Uniform
Commercial Code financing statements as a precautionary measure in connection with operating leases;
(15) bankers’
Liens, rights of setoff, Liens arising out of judgments or awards not constituting an Event of Default and notices of
lis pendens
and associated rights related to litigation being contested in good faith by appropriate proceedings and for
which adequate reserves have been made;
(16) Liens on cash, Cash Equivalents or other property arising in connection with
the defeasance, discharge or redemption of Indebtedness;
(17) Liens on specific items of inventory or other goods (and the
proceeds thereof) of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;
(18) grants of software and other technology licenses in the ordinary course of business;
(19) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods
entered into in the ordinary course of business;
(20) other Liens incidental to the conduct of the business of the Issuer
and its Subsidiaries or the ownership of their Properties which were not created in connection with the incurrence of Indebtedness and do not in the aggregate materially detract from the value of such Properties or materially impair the use thereof,
including without limitation leases, subleases, licenses and sublicenses and Liens imposed pursuant to the Paid-Up Oil and Gas Leases;
(21) Liens securing obligations to the trustee pursuant to the compensation and indemnity provisions of the Indenture and Liens
owing to an Indenture trustee in respect of any other Indebtedness permitted to be incurred under the covenant entitled “—Certain covenants —Incurrence of indebtedness and issuance of preferred stock”;
(22) pledges or deposits made in connection with any letter of intent or purchase agreement;
(23) Liens to secure Indebtedness permitted by clause (12) of the second paragraph of the covenant entitled
“—Certain covenants—Incurrence of indebtedness and issuance of preferred stock”;
(24) Liens securing
Hedging Obligations that are incurred in the ordinary course of business (and not for speculative purposes);
(25) Liens in
favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
(26) Liens securing customary cash management obligations not otherwise prohibited by the Indenture;
(27) Liens solely on any cash earnest money deposits made by the Issuer or any of its Restricted Subsidiaries in connection
with any letter of intent or purchase agreement permitted under the Indenture;
(28) Liens on Equity Interests in an
Unrestricted Subsidiary to the extent that such Liens secure Non-Recourse Debt or other Indebtedness of an Unrestricted Subsidiary or joint venture;
(29) Permitted Vessel Liens; and
84
(30) Liens securing Indebtedness;
provided
, that the principal amount of
such Indebtedness secured pursuant to this clause (30) together with all other Indebtedness then outstanding and incurred under this clause (30) does not to exceed the greater of (i) $75.0 million and (ii) 4.5% of Consolidated
Tangible Assets.
“
Permitted Refinancing Indebtedness
” means any Indebtedness of the Issuer or any of its Restricted
Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness, Disqualified Stock or preferred stock of the Issuer or any of its Restricted Subsidiaries
(other than intercompany Indebtedness);
provided
that:
(1) the principal amount (or accreted value, if applicable)
of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) (or, if greater, the committed amount (only to the extent the committed amount could have been incurred or issued on the date of
initial incurrence or issuance and was deemed incurred or issued at such time for the purposes of the covenant under the caption “—Certain covenants—Incurrence of indebtedness and issuance of preferred stock”)) of the
Indebtedness, Disqualified Stock or preferred stock renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness, all accrued or accumulated dividends on the Disqualified Stock or preferred stock,
and the amount of all penalties, fees, expenses, costs, discounts and premiums incurred in connection therewith and any original issue discount or debt issuance costs with respect thereto);
(2) other than in connection with a refinancing of the Notes (including any redemption or repurchase) that is financed with
Indebtedness under a Credit Facility, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity that is (a) equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness, Disqualified Stock or preferred stock being renewed, refunded, refinanced, replaced, defeased or discharged or (b) more than 90 days after the final maturity date of the Notes;
(3) to the extent the Permitted Refinancing Indebtedness refinances (a) Indebtedness that is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole, to the Holders of Notes as those contained in the documentation governing the
Indebtedness being refinanced or (b) Disqualified Stock or preferred stock, such Permitted Refinancing Indebtedness is Disqualified Stock or preferred stock, as applicable; and
(4) if the indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is unsecured, such Permitted
Refinancing Indebtedness is unsecured;
provided
,
however
, that, unless otherwise permitted by the Indenture, Permitted Refinancing
Indebtedness shall not include Indebtedness of the Issuer or any Restricted Subsidiary that refinances debt of a Subsidiary that is not a Guarantor.
“
Permitted Vessel Liens
” means maritime Liens on ships, barges or other vessels for damages arising out of a maritime tort,
wages of a stevedore, when employed directly by a person listed in 46 U.S.C. Section 31341, crew’s wages, salvage and general average, whether now existing or hereafter arising and other maritime Liens which arise by operation of law
during normal operations of such ships, barges or other vessels
“
Person
” means any individual, corporation, partnership,
joint venture, association,
joint-stock
company, trust, unincorporated organization, limited liability company or government or other entity.
“
Pre-Opening Expenses
” means, with respect to any fiscal period, the amount of expenses (including Fixed Charges) incurred
with respect to capital projects which are classified as “pre-opening expenses” on the applicable financial statements of the Issuer and its Restricted Subsidiaries for such period, prepared in accordance with GAAP.
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“
Principals
” means (a) Donald L. Carano, Gene R. Carano, Gregg R. Carano,
Gary L. Carano, Cindy L. Carano and Glenn T. Carano, (b) their respective spouses, (c) their respective descendants and any member of their respective immediate families, including in each case stepchildren and family members by adoption,
(d) their heirs at law and their estates and the beneficiaries thereof, (e) any charitable foundation created by any of them, and (f) any trust, corporation, limited liability company, partnership or other entity, the beneficiaries,
stockholders, members, general partners, owners or Persons Beneficially Owning a majority of the interests of which consist of any one or more of the Persons referred to in the immediately preceding clauses (a) through (e).
“
Pro Forma Cost Savings
” means the amount of cost savings, operating expense reductions and synergies projected by Issuer in
good faith to be realized as a result of specified actions taken or with respect to which steps have been initiated (in the good faith determination of Issuer) during the Issuer’s most recently ended four full fiscal quarters for which internal
financial statements are available as of the date of determination (or are reasonably expected to be initiated within twelve (12) months of the closing date of such specified transaction), including in connection with any acquisition,
disposition, Investment or similar transaction (calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized during the entirety of the Issuer’s most recently ended four full fiscal
quarters for which internal financial statements are available as of the date of determination), net of the amount of actual benefits realized during the Issuer’s most recently ended four full fiscal quarters for which internal financial
statements are available as of the date of determination from such actions;
provided
that (i) such actions are to be taken within twelve (12) months after the consummation of the applicable transaction, restructuring or
implementation of an initiative that is expected to result in such cost savings, expense reductions or synergies, (ii) no cost savings, operating expense reductions and synergies shall be added pursuant to this definition to the extent
duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for the Issuer’s most recently ended four full fiscal quarters for which internal financial statements are
available as of the date of determination, and (iii) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this definition to the extent more than twelve (12) months have elapsed
after the specified action taken in order to realize such projected cost savings, operating expense reductions and synergies;
provided further
, that the aggregate amount of additions made to Consolidated EBITDA for any during the
Issuer’s most recently ended four full fiscal quarters for which internal financial statements are available as of the date of determination pursuant to this definition shall not (i) exceed 15.0% of Consolidated EBITDA for the
Issuer’s most recently ended four full fiscal quarters for which internal financial statements are available as of the date of determination (after giving effect to this definition) or (ii) be duplicative of one another.
“
Property
” means, with respect to any Person, any interest of such Person in any land, property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other Person.
“
Qualifying
Equity Interests
” means Equity Interests of the Issuer other than Disqualified Stock.
“
Registration Rights
Agreement
” means the registration rights agreement among the Issuer, the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time and, with respect
to any Additional Notes, one or more registration rights agreements among the Issuer, the Guarantors and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the
Issuer to the purchasers of Additional Notes to register such Additional Notes under the Securities Act.
“
Related Party
”
means:
(1) any controlling stockholder, majority owned Subsidiary, or immediate family member, including, without
limitation, present, former and future spouses,
sons-in-law
and
daughters-in-law
(in the
case of an individual) of any Principal; or
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(2) any trust, corporation, partnership, limited liability company or other
entity, the beneficiaries, stockholders, partners, members, owners or Persons beneficially holding a majority (and controlling) interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately
preceding clause (1).
“
Restricted Investment
” means an Investment other than a Permitted Investment.
“
Restricted Subsidiary
” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.
“
S&P
” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, and its successors.
“
SEC
” means the U.S. Securities and Exchange Commission.
“
Significant Subsidiary
” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in
Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the Indenture.
“
Stated Maturity
” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on
which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of the Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
“
Subsidiary
” means, with respect to any
specified Person:
(1) any corporation, association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of
directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof);
and
(2) any partnership or limited liability company of which (a) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof,
whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“
Transaction Activity
” means any of the following (and, in each case, whether or not successful): (a) the actual or
attempted incurrence of any Indebtedness or the issuance of any Equity Interests by the Issuer or any Restricted Subsidiary, activities related to any such actual or attempted incurrence or issuance, or the issuance of commitments in respect
thereof, (b) amending or modifying, or redeeming, refinancing, tendering for, refunding, defeasing (whether by covenant or legal defeasance), discharging, repaying, retiring or otherwise acquiring for value, any Indebtedness prior to the Stated
Maturity thereof or any Equity Interests (including any premium, penalty, commissions or fees), (c) the termination of any Hedging Obligations or other derivative instruments or any fees paid to enter into any Hedging Obligations or other
derivative instruments or (d) any acquisition or disposition of any Person, property or assets permitted pursuant to the terms of the Indenture, including the Isle Acquisition.
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“
Treasury Rate
” means, as of any redemption date, the yield to maturity as of
such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior
to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 1, 2020,
provided, however
, that if
the period from the redemption date to April 1, 2020, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“
Unrestricted Subsidiary
” means any Subsidiary of the Issuer that is designated by the Board of Directors of the Issuer as an
Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that as of the time of such designation:
(1) has no Indebtedness other than Non-Recourse Debt (other than “completion guaranties” or “support
agreements” that constitute Non-Recourse Debt); and
(2) such Subsidiary does not own Capital Stock or Indebtedness of
or hold any Lien on any Property of the Issuer or any Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary so designated.
“
Voting Stock
” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to
vote in the election of the Board of Directors of such Person.
“
Weighted Average Life to Maturity
” means, when applied
to any Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years
(calculated to the nearest
one-twelfth)
that will elapse between such date and the making of such payment;
by
(2) the then outstanding principal amount of such Indebtedness.
“
Wholly-Owned
Restricted Subsidiary
” of any specified Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) will at the time be owned by such Person or by one or more
Wholly-Owned
Restricted Subsidiaries of such Person.
88