CAESARS ENTERTAINMENT CORPORATION, as Issuer 5.00% Convertible Senior Notes due 2024 INDENTURE Dated as of [ ], 2017 [ ]Delaware Trust Company, as Trustee 1 1 Second Lien Noteholders to appoint Trustee
TABLE OF CONTENTS Article I. DEFINITIONS AND INCORPORATION BY REFERENCE 1 SECTION 1.01 Definitions 1 SECTION 1.02 Other Definitions 3133 SECTION 1.03 Incorporation by Reference of Trust Indenture Act 3234 SECTION 1.04 Rules of Construction 3234 Article II. THE NOTES 3335 SECTION 2.01 Amount of Notes 3335 SECTION 2.02 Form and Dating 3436 SECTION 2.03 Execution and Authentication 3436 SECTION 2.04 Registrar, Paying Agent and Conversion Agent 3537 SECTION 2.05 Paying Agent to Hold Money in Trust 3537 SECTION 2.06 Holder Lists 3638 SECTION 2.07 Transfer and Exchange 3638 SECTION 2.08 Replacement Notes 3638 SECTION 2.09 Outstanding Notes 3739 SECTION 2.10 [Reserved.] 3739 SECTION 2.11 Cancellation 3739 SECTION 2.12 Defaulted Interest 3739 SECTION 2.13 CUSIP Numbers, ISINs, Etc 3840 SECTION 2.14 Calculation of Principal Amount of Notes 3840 SECTION 2.15 Mandatory Disposition Pursuant to Gaming Laws 3840 Article III. NO REDEMPTION 3941 SECTION 3.01 No Redemption 3941 Article IV. COVENANTS 3941 SECTION 4.01 Payment of Notes 3941 SECTION 4.02 Reports and Other Information 3941 SECTION 4.03 Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock 4143 Page SECTION 4.04 Limitation on Restricted Payments 4547 SECTION 4.05 Dividend and Other Payment Restrictions Affecting Subsidiaries 4850 SECTION 4.06 Asset Sales 5052 SECTION 4.07 Transactions with Affiliates 5254 SECTION 4.08 [Reserved] 5557 SECTION 4.09 Compliance Certificate 5557 SECTION 4.10 Further Instruments and Acts 5557 SECTION 4.11 [Reserved] 5557 SECTION 4.12 Liens 5557 SECTION 4.13 Business Activities 5658 SECTION 4.14 Maintenance of Office or Agency 5658 -i-
Page SECTION 4.15 Payments for Consents 5659 SECTION 4.16 Covenant Suspension 5659 SECTION 4.17 Taxes 5760 SECTION 4.18 Designation of Restricted and Unrestricted Subsidiaries 5760 Article V. SUCCESSOR ISSUER 5861 SECTION 5.01 When Issuer May Merge or Transfer Assets 5861 Article VI. DEFAULTS AND REMEDIES 6062 SECTION 6.01 Events of Default 6062 SECTION 6.02 Acceleration 6264 SECTION 6.03 Other Remedies 6265 SECTION 6.04 Waiver of Past Defaults 6265 SECTION 6.05 Control by Majority 6365 SECTION 6.06 Limitation on Suits 6365 SECTION 6.07 Rights of the Holders to Receive Payment 6366 SECTION 6.08 Collection Suit by Trustee 6366 SECTION 6.09 Trustee May File Proofs of Claim 6366 SECTION 6.10 Priorities 6466 SECTION 6.11 Undertaking for Costs 6467 SECTION 6.12 Waiver of Stay or Extension Laws 6467 Article VII. TRUSTEE 6567 SECTION 7.01 Duties of Trustee 6567 SECTION 7.02 Rights of Trustee 6668 SECTION 7.03 Individual Rights of Trustee 6770 SECTION 7.04 Trustee s Disclaimer 6870 SECTION 7.05 Notice of Defaults 6870 SECTION 7.06 Reports by Trustee to the Holders 6870 SECTION 7.07 Compensation and Indemnity 6871 SECTION 7.08 Replacement of Trustee 6971 SECTION 7.09 Successor Trustee by Merger 7072 SECTION 7.10 Eligibility; Disqualification 7072 SECTION 7.11 Preferential Collection of Claims Against the Issuer 7072 Article VIII. DISCHARGE OF INDENTURE 7073 SECTION 8.01 Discharge of Liability on Notes 7073 SECTION 8.02 [Reserved] 7173 SECTION 8.03 Application of Trust Money 7173 SECTION 8.04 Repayment to Issuer 7173 SECTION 8.05 [Reserved] 7174 SECTION 8.06 Reinstatement 7174 Article IX. AMENDMENTS AND WAIVERS 7274 SECTION 9.01 Without Consent of the Holders 7274 SECTION 9.02 With Consent of the Holders 7375 SECTION 9.03 Compliance with Trust Indenture Act 7376 -ii-
Page SECTION 9.04 Revocation and Effect of Consents and Waivers 7476 SECTION 9.05 Notation on or Exchange of Notes 7476 SECTION 9.06 Trustee to Sign Amendments 7476 SECTION 9.07 Additional Voting Terms; Calculation of Principal Amount 7477 Article X. CONVERSION 7577 SECTION 10.01 Conversion Rights 7577 SECTION 10.02 Conversion Procedures 7577 SECTION 10.03 Settlement Upon Conversion 7679 SECTION 10.04 Common Stock Issued Upon Conversion 7880 SECTION 10.05 Adjustment of Conversion Rate 7880 SECTION 10.06 Discretionary and Voluntary Adjustments 8688 SECTION 10.07 Adjustments Upon Certain Fundamental Changes 8688 SECTION 10.08 Effect of Reclassification, Consolidation, Merger or Sale 8991 SECTION 10.09 Responsibility of Trustee 9092 SECTION 10.10 Notice of Adjustment 9193 SECTION 10.11 Notice of Certain Transactions 9193 SECTION 10.12 Exchange in Lieu of Conversion 9294 SECTION 10.13 Mandatory Conversion 9294 Article XI. REPURCHASE OF NOTES AT OPTION OF HOLDERS 9496 SECTION 11.01 Purchase at Option of Holders upon a Fundamental Change 9496 SECTION 11.02 Fundamental Change Notice 9597 SECTION 11.03 Repurchase Procedures 9698 SECTION 11.04 Withdrawal of Fundamental Change Purchase Notice 9799 SECTION 11.05 Payment of Fundamental Change Purchase Price 97100 SECTION 11.06 Notes Purchased in Whole or in Part 98100 SECTION 11.07 Covenant to Comply with Applicable Laws upon Purchase of Notes 98100 SECTION 11.08 Conversion of Notes Subject to Purchase Notice 98100 Article XII. [RESERVED] 99101 Article XIII. MISCELLANEOUS 99101 SECTION 13.01 Trust Indenture Act Controls 99101 SECTION 13.02 Notices 99101 SECTION 13.03 Communication by the Holders with Other Holders 99101 SECTION 13.04 Certificate and Opinion as to Conditions Precedent 100102 SECTION 13.05 Statements Required in Certificate or Opinion 100102 SECTION 13.06 When Notes Disregarded 100102 SECTION 13.07 Rules by Trustee, Paying Agent, Conversion Agent and Registrar 100102 SECTION 13.08 Legal Holidays 100102 SECTION 13.09 GOVERNING LAW 100102 SECTION 13.10 No Recourse Against Others 101103 -iii-
Page SECTION 13.11 Successors 101103 SECTION 13.12 Multiple Originals 101103 SECTION 13.13 Table of Contents; Headings 101103 SECTION 13.14 Indenture Controls 102104 SECTION 13.15 Severability 102104 SECTION 13.16 Waiver of Jury Trial 102104 SECTION 13.17 Acts of Holders 102104 SECTION 13.18 Patriot Act 103105 Appendix A Provisions Relating to the Notes EXHIBIT INDEXEXHIBITS AND SCHEDULES Exhibit A Form of Note Schedule I Restricted Subsidiaries -iv-
TIA Section CROSS-REFERENCE TABLE Indenture Section 310 (a)(1) 7.10 (a)(2) 7.10 (a)(3) N.A. (a)(4) N.A. (b) 7.08; 7.10 (c) N.A. 311 (a) 7.11 (b) 7.11 312 (a) 2.06 (b) 13.03 (c) 13.03 313 (a) 7.06 (b)(1) 7.06 (b)(2) 7.06 (c) 7.06 (d) 4.02; 4.09; 7.06 314 (a) 4.02; 4.09 (b) N.A. (c)(1) 13.04 (c)(2) 13.04 (c)(3) N.A. (d) N.A. (e) 13.05 (f) 4.10 315 (a) 7.01 (b) 7.05 (c) 7.01 (d) 7.01 (e) 6.11 316 (a)(last sentence) 13.06 (a)(1)(a) 6.05 (a)(1)(b) 6.04 (a)(2) N.A. (b) 6.07 317 (a)(1) 6.08 (a)(2) 6.09 (b) 2.05 318 (a) 13.01 N.A. Means Not Applicable. Note: This Cross-Reference Table shall not, for any purposes, be deemed to be part of this Indenture. -v-
INDENTURE, dated as of [ ], 2017, between CAESARS ENTERTAINMENT CORPORATION, a Delaware corporation (together with its successors and assigns, the Issuer ), and [ ]Delaware Trust Company, as trustee (the Trustee ). The Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the holders of (i) $[1,119,060,000] aggregate principal amount of the Issuer s 5.00% Convertible Senior Notes due 2024 issued on the date hereof (the Original Notes ) and (ii) any Additional Notes issued from time to time (together with the Original Notes, the Notes ): Article I. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions. Subsidiaries: Acquired Indebtedness means, with respect to the Issuer or its Restricted (1) Indebtedness of any other Person existing at the time such other Person is merged, consolidated or amalgamated with or into the Issuer or its Restricted Subsidiaries or became a Restricted Subsidiary of the Issuer, and (2) Indebtedness secured by a Lien encumbering any asset that is acquired by the Issuer or any Restricted Subsidiary. Acquired Indebtedness will be deemed to have been Incurred, with respect to clause (1) of the preceding sentence, on the date such Person merges, consolidates or amalgamates with or into the Issuer or a Restricted Subsidiary or becomes a Restricted Subsidiary and, with respect to clause (2) of the preceding sentence, on the date of consummation of any such acquisition of such assets. the Issue Date. Additional Notes means Notes issued under the terms of this Indenture subsequent to 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 (including, with correlative meanings, the terms controlling, controlled by and under common control with ), as used with respect to any Person, means the possession, directly or indirectly, of the power to 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 (1) beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to give rise to control with respect to the Issuer and (2) each of the Restricted Holders will be deemed to constitute an Affiliate of the Issuer and each Restricted Subsidiary for all purposes of this Indenture, provided that this clause (2) shall not apply, with respect to any Restricted Holder, at any time at which (a) such Restricted Holder does not beneficially own, directly or indirectly, any Equity Interests of the Issuer or any Restricted Subsidiary and (b) no employee, appointee, director, managing member or other agent or representative of such Restricted Holder serves as a director, or has the right to designate a director, on the board of directors of the Issuer or any Restricted Subsidiary.
Applicable Procedures means, with respect to any matter at any time, the policies and procedures of a Depository, if any, that are applicable to such matter at such time. Asset Sale means: (1) the sale, lease, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) by the Issuer or any Restricted Subsidiary, including by means of a merger, consolidation, amalgamation or similar transaction (each referred to in this definition as a disposition ) or (2) the issuance or sale of Equity Interests (other than directors qualifying shares and shares issued to foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary of the Issuer, whether in a single transaction or a series of related transactions, other than to the Issuer or a Wholly-OwnedWholly Owned Restricted Subsidiary of the Issuer, provided that no such issuance or sale to the Issuer or a Wholly Owned Restricted Subsidiary of the Issuer shall alter the status of any Subsidiary as a First-Tier Subsidiary of the Issuer if such Subsidiary would have been a First-Tier Subsidiary of the Issuer in the absence of such issuance or sale, in each case other than: (a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete, damaged or worn out property or equipment, in each case, in the ordinary course of business; (b) the disposition of all or substantially all of the assets of the Issuer in a manner permitted pursuant to Section 5.01 or any disposition that constitutes a Fundamental Change and with respect to which the Issuer complies with Article XI; (c) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.04; (d) any disposition (in a transaction or series of related transactions) of assets of the Issuer or any Restricted Subsidiary or any issuance or sale of Equity Interests of any Restricted Subsidiary, which assets or Equity Interests so disposed or issued, as applicable, have an aggregate Fair Market Value of less than $25.0 million; (e) any disposition of property or assets, or the issuance of Equity Interests, by (i) a Restricted Subsidiary to the Issuer, or (ii) by a Restricted Subsidiary to a Wholly-Owneda Wholly Owned Restricted Subsidiary of the Issuer; (f) any exchange (other than with a Person that is an Affiliate of the Issuer) of assets (including a combination of assets and Cash Equivalents) for assets related to a Similar Business or services (including in connection with any outsourcing arrangements), in each case of comparable or greater market value or usefulness to the business of the Issuer and its Restricted Subsidiaries as a whole and, as an additional condition, the Issuer shall have determined that the requirements of this clause (f) have been satisfied; (g) foreclosure or any similar action with respect to any property or other asset of the Issuer or any Restricted Subsidiary; -2-
(h) any sales or other dispositions of inventory in the ordinary course of business and consistent with past practice; (i) (i) any grant of any non-exclusive license or sublicense of patents, trademarks, know-how or any other intellectual property in the ordinary course of business or (ii) any grant of any exclusive license or sublicense of patents, trademarks, know-how or any other intellectual property in the ordinary course of business for which the Issuer or a Restricted Subsidiary receives Fair Market Value and which would not materially impair or degrade the value or goodwill of such patents, trademarks, know-how or other intellectual property; (j) any disposition deemed to arise or occur in connection with any grant of a Permitted Lien; (k) any disposition of property pursuant to the Call Right Agreements; (l) any disposition deemed to arise or occur in connection with performance of obligations under an Operations Management Agreement; (m) [Reserved]; (n) dispositions of accounts receivablesreceivable in connection with the compromise, settlement or collection thereof in the ordinary course of business (exclusive of factoring or similar arrangements); (o) any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims of any kind that occur, with respect to this clause (o), in the ordinary course of business; (p) any disposition expressly contemplated by the Transactions; and (q) any leases, subleases, easements (including grants of declarations of covenants, conditions and restrictions and/or easements with respect to common area spaces and similar instruments benefitting tenants), rights of way, rights of access, dedications of space or other dispositions of property (including in connection with and in furtherance of constructing structures or improvements reasonably related to the development, construction and operation of a Project (collectively, Venue Easements )), licenses or sublicenses with respect to any real or personal property entered into by the Issuer or a Restricted Subsidiary, provided that (A) the Issuer or a Restricted Subsidiary of the Issuer shall be required, as applicable, to maintain control (which may be through required contractual standards) over the primary aesthetics and standards of service and quality of the business being operated or conducted in connection with any such leased, subleased or licensed space, to the extent applicable, and (B) such transaction, lease, sublease, easement, license or sublicense (i) is in the ordinary course of business and consistent with past practice and (ii) would not reasonably be expected to materially interfere with, or materially impact or detract from, the operation of any Project or the business of the Issuer and its Restricted Subsidiaries, taken as a whole. With respect to clause (f) above (with respect to the determination of whether assets or services of comparable or greater value or usefulness are to be received) above, prior to entering into any such exchange to be recorded under such clause (f), and as a condition to the making of any such exchange, the Issuer will deliver to the Trustee an Officer s Certificate stating that the disinterested members of the Board of Directors of the Issuer have determined, based upon an opinion or appraisal -3-
issued by an accounting, appraisal or investment banking firm of national standing if the value of any such exchange exceeds $75.0 million, that such exchange is permitted, setting forth the basis upon which the calculations required by such clause (f) were computed, together with a copy of any required resolutions of the Board of Directors and of any fairness opinion or appraisal required by this Indenture. Bank Indebtedness means any and all amounts payable under or in respect of any Credit Agreement Documents, (including after termination of any such Credit Agreement), including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuer whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof, including, without limitation, amounts pursuant to letters of credit. 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 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 own and beneficially owned have a corresponding meaning. Bid Solicitation Agent means the Person appointed by the Issuer, from time to time, to solicit secondary market bid quotations for the Trading Price of the Notes in accordance with Section 10.01(b)(ii) hereof. The Trustee will be the initial Bid Solicitation Agent. The Issuer may appoint another person (other than an Affiliate) as the Bid Solicitation Agent without prior notice to holders. Board of Directors means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof. Unless otherwise indicated in this Indenture, all references to Board of Directors shall mean the Board of Directors of the Issuer. Board Resolution means, with respect to any Person, a copy of a resolution certified by the Secretary, the General Counsel or an Officer of such Person to have been duly adopted by the board of directorsboard of Directors of such Person and to be in full force and effect on the date of such certification. Business Day means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law, regulation or executive order to close in New York City or in the city where the Corporate Trust Office of the Trustee is located. Call Right Agreements means each of (i) the Call Right Agreement among [ ] and Caesars Entertainment Corporation relating to Harrah s Atlantic City, (ii) the Call Right Agreement among [ ] and Caesars Entertainment Corporation relating to Harrah s Laughlin and (iii) the Call Right Agreement among [ ] and Caesars Entertainment Corporation relating to Harrah s New Orleans, in each case, as amended, restated, supplemented or otherwise modified from time to time, provided that any such amendment, restatement, supplement or other modification is not less favorable than the -4-
terms of such agreements as in effect on the Issue Date, taken as a whole, to the Issuer and its Restricted Subsidiaries. Capital Markets Indebtedness means any Indebtedness consisting of (i) Bank Indebtedness, other Indebtedness Incurred under any Credit Agreement or any other credit facility Indebtedness or (ii) bonds, debentures, notes or any other similar debt securities. Capital Stock means: (1) in the case of a corporation, any and all shares of corporate stock (however designated); (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 or membership interests (whether general or limited); 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. Capitalized Lease Obligation means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that obligations of the Issuer or its Restricted Subsidiaries, or of a special purpose or other entity not consolidated with the Issuer and its Restricted Subsidiaries, either existing on the Issue Date or created thereafter that (a) initially were not included on the consolidated balance sheet of the Issuer as capital lease obligations and were subsequently recharacterized as capital lease obligations or, in the case of such a special purpose or other entity becoming consolidated with the Issuer and its Restricted Subsidiaries were required to be characterized as capital lease obligations upon such consolidation, in either case, due to a change in accounting treatment, or (b) did not exist on the Issue Date and were required to be characterized as capital lease obligations but would not have been required to be treated as capital lease obligations or long-term financial obligations on the Issue Date had they existed at that time, shall for all purposes not be treated as Capitalized Lease Obligations or Indebtedness. Capitalized Software Expenditures means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Issuer and its Restricted Subsidiaries during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in conformity with GAAP, are required to be reflected as capitalized costs on the consolidated balance sheet of the Issuer and its Restricted Subsidiaries. Cash Equivalents means: (1) U.S. dollars and, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, pounds sterling, euros, the national currency of any member state in the European Union (other than Greece, Spain, Portugal or Italy) or such local currencies held by it from time to time in the ordinary course of business; (2) (i) securities issued or directly and fully guaranteed or insured by the U.S. government or (ii) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, -5-
securities issued or directly and fully guaranteed or insured by any country that is a member of the European Union (other than Greece, Spain, Portugal or Italy) or, with respect to clauses (i) and (ii), any agency or instrumentality thereof in each case maturing not more than one year from the date of acquisition; (3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers acceptances, in each case with maturities not exceeding one year from the date of acquisition and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million and whose long-term debt is rated A or the equivalent thereof by Moody s or S&P (or reasonably equivalent ratings of another Nationally Recognized Statistical Rating Organization (as defined in Section 3(a)(62) of the Exchange Act) or any international Affiliate thereof); (4) repurchase obligations 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 issued by a corporation (other than an Affiliate of the Issuer) rated at least A1 or the equivalent thereof by Moody s or S&P (or reasonably equivalent ratings of another Nationally Recognized Statistical Rating Organization (as defined in Section 3(a)(62) of the Exchange Act) or any international Affiliate thereof) and, in each case, maturing within one year after the date of acquisition; (6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agencynationally Recognized Statistical Rating Organization (as defined in Section 3(a)(62) of the Exchange Act) or any international Affiliate thereof) in each case with maturities not exceeding one year from the date of acquisition; and (7) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (6) above. Close of Business means 5:00 p.m., New York City time. CEOC means Caesars Entertainment Operating Company, LLC, a Delaware limited liability company, as successor to Caesars Entertainment Operating Company, Inc. upon consummation of the Plan. CERP means [XXX]. CGP means [XXX]. Code means the Internal Revenue Code of 1986, as amended. Common Stock means, subject to Section 10.08, the shares of common stock, par value $0.01 per share, of the Issuer authorized at the date of this Indenture as originally executed or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of Notes shall include shares of all such classes, and the shares of -6-
each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. Consolidated Depreciation and Amortization Expense means, with respect to the Issuer and its Restricted Subsidiaries, on a consolidated basis, for any period, the total amount of depreciation and amortization expense, including the amortization of intangible assets, deferred financing fees and Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits, of the Issuer and its Restricted Subsidiaries for such period on a consolidated basis and determined in accordance with GAAP. Consolidated Interest Expense means, with respect to the Issuer and its Restricted Subsidiaries, on a consolidated basis, for any period, the sum, without duplication, of: (1) consolidated interest expense of the Issuer and its Restricted Subsidiaries, determined in accordance with GAAP, to the extent such expense was deducted in computing Consolidated Net Income, including, without duplication, (i) amortization of original issue discount and debt issuance costs, (ii) the interest component of Capitalized Lease Obligations, the lease payments under the Master Lease Agreements, (iii) net payments and receipts (if any) pursuant to interest rate Hedging Obligations (including the amortization of fees), (iv) any non-cash interest payments, (v) interest expense attributable to the actual or implied Indebtedness Incurred in connection with any Sale/Leaseback Transaction, (vi) commissions, discounts and other fees and charges incurred in respect of any financing, letter of credit or bankers acceptances; plus (vii) any of the foregoing interest expense on Indebtedness of another Person that is guaranteed by the Issuer or one of its Restricted Subsidiaries or secured by a Lien on assets of the Issuer or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (viii) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of the Issuer 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 and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal; plus (2) consolidated capitalized interest of the Issuer and the Restricted Subsidiaries for such period, whether paid or accrued; minus (3) interest income for such period. For purposes of this definition, (i) interest on a Capitalized Lease Obligation shall be deemed to accrue at the interest rate implicit in such Capitalized Lease Obligation in accordance with GAAP and (ii) lease payments under the Master Leases shall not be included as part of Consolidated Interest Expense. Consolidated Leverage Ratio means, with respect to the Issuer and its Restricted Subsidiaries on a consolidated basis, at any date, the ratio of (i) Consolidated Total Indebtedness of the Issuer and the Restricted Subsidiaries as of such date of calculation (determined on a consolidated basis in accordance with GAAP) less the aggregate amount of cash and Cash Equivalents in excess of all Restricted Cash that would be stated on the consolidated balance sheet of the Issuer and the Restricted Subsidiaries and held by the Issuer and its Restricted Subsidiaries as of such date of -7-
determination to (ii) EBITDA of the Issuer and its Restricted Subsidiaries for the four full fiscal quarters for which internal financial statements are available immediately preceding such date on which such additional Indebtedness is Incurred. In the event that the Issuer or any Restricted Subsidiary Incurs, repays, repurchases or redeems any Indebtedness subsequent to the commencement of the period for which the Consolidated Leverage Ratio is being calculated but prior to the event for which the calculation of the Consolidated Leverage Ratio is made (the Consolidated Leverage Calculation Date ), then the Consolidated Leverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuer may elect pursuant to an Officer s Certificate delivered to the Trustee to treat all or any portion of the commitment under any Indebtedness as being Incurred at such time, in which case any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an Incurrence at such subsequent time. For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations (including the Transactions) and discontinued operations (as determined in accordance with GAAP), in each case, with respect to an operating unit of a business that the Issuer or any Restricted Subsidiary has made during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Consolidated Leverage Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations (including the Transactions) or discontinued operations (and the change of any associated Indebtedness and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation, amalgamation or discontinued operation, in each case, with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Consolidated Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, amalgamation or consolidation had occurred at the beginning of the applicable four-quarter period. If since the beginning of such period any Restricted Subsidiary is designated an Unrestricted Subsidiary or any Unrestricted Subsidiary is designated a Restricted Subsidiary, then the Consolidated Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such designation had occurred at the beginning of the applicable fourquarter period. For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in accordance with Regulation S-X of the SEC. For purposes of this definition, any amount in a currency other than U.S. dollars will be converted to U.S. dollars based on the average exchange rate for such currency for the most recent twelve month period immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period. Solely for the purpose of calculating the Consolidated Leverage Ratio under this Indenture, (i) Obligations under Third Party Master Leases (including, for the avoidance of doubt, the guarantee of such Obligations) shall be deemed not to be included as Consolidated Total Indebtedness and (ii) lease payments under such Third Party Master Leases shall not be included as part of Consolidated Interest Expense. -8-
Consolidated Net Income means, with respect to the Issuer and its Restricted Subsidiaries for any period, the aggregate of the consolidated Net Income of the Issuer and its Restricted Subsidiaries for such period, on a consolidated basis in accordance with GAAP; provided, however, that, without duplication: (1) any net after-tax extraordinary, nonrecurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses or charges, including one timeone-time costs and expenses relating to, (a) curtailments or modifications to pension and post-retirement employee benefit plans, (b) reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternate uses and facilities closing costs, (c) acquisition integration costs, (d) facilities opening costs, (e) project start-up costs, (f) business optimization costs, (g) the hiring of professionals in connection with IT, accounting and systems optimization programs or the implementation of programs for efficiency gains, and (h) the Transactions, in each case, shall be excluded up to a maximum of (i) $20.0 million for fiscal year 2017, and (ii) the greater of (x) $10.0 million and (y) [ ]% of Consolidated Net Income [clause (ii)(y) will initially be set to reflect $10.0 million] per year thereafter. (2) effects of purchase accounting adjustments (including the effects of such adjustments pushed down to the Issuer and its Restricted Subsidiaries) in amounts required or permitted by GAAP, resulting from the application of purchase accounting or the amortization or write-off of any amounts thereof, net of taxes, or charges resulting from the adoption of fresh start accounting (including reorganization charges and election of push-down accounting principles), shall be excluded; (3) the cumulative effect of a change in accounting principles shall be excluded; (4) any net after-tax income or loss from abandoned, closed or discontinued operations and any net after-tax gains or losses on disposal of abandoned, closed or discontinued operations shall be excluded; (5) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business shall be excluded; (6) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness, Hedging Obligations or other derivative instruments shall be excluded; (7) the Net Income for such period of any Person that is not a Subsidiary of the Issuer, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments actually paid in cash (or to the extent converted into cash) to the Issuer or a Restricted Subsidiary thereof in respect of such period; (8) solely for the purpose of determining the amount available for Restricted Payments under clause (1) of the definition of Cumulative Credit, the Net Income for such period of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation -9-
applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided that (without duplication) the Consolidated Net Income of such Person shall be increased by the amount of dividends or other distributions or other payments actually paid in cash (or converted into cash) by any such Restricted Subsidiary to such Person, to the extent not already included therein; (9) [Reserved]; (10) any impairment charges or asset write-offs, and the amortization of intangibles, in each case arising pursuant to the application of GAAP shall be excluded; (11) any non-cash compensation charge or expense realized or resulting from stock option plans, employee benefit plans or post-employment benefit plans, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other rights shall be excluded; (12) [Reserved]; (13) accruals and reserves that are established or adjusted within 12 months after the Issue Date and that are so required to be established or adjusted as a result of the Transactions in accordance with GAAP or changes in accruals and reserves as a result of adoption or modification of accounting policies shall be excluded; (14) solely for purposes of calculating EBITDA, (a) the Net Income of the Issuer and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non- Wholly Owned Restricted Subsidiary except to the extent of dividends declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties and (b) any ordinary course dividend, distribution or other payment paid in cash and received from any Person in excess of amounts included in clause (7) above shall be included; (15) (a)(i) the non-cash portion of straight-line rent expense shall be excluded and (ii) the cash portion of straight-line rent expense which exceeds the amount expensed in respect of such rent expense shall be included and (b) non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations shall be excluded; (16) any currency translation gains and losses related to currency remeasurements of Indebtedness, and any net loss or gain resulting from hedging transactions for currency exchange risk, shall be excluded; (17) (a) 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 (i) not denied by the applicable carrier in writing within 180 days and (ii) in fact reimbursed within 365 days of the date of such evidence (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 and (b) amounts estimated in good faith to be received from insurance in respect of lost revenues or earnings in respect of liability or casualty events -10-
or business interruption shall be included (with a deduction for amounts actually received up to such estimated amount to the extent included in Net Income in a future period), provided that any amounts included based on this clause (b) of this paragraph (17) that exceed $25.0 million shall be approved by the Board of Directors for purposes of compliance with clause (b) of this paragraph (17); and (18) non-cash charges for deferred tax asset valuation allowances shall be excluded (except to the extent reversing a previously recognized increase to Net Income). Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from the Issuer s Subsidiaries (both Restricted Subsidiaries and Unrestricted Subsidiaries) to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such Section 4.04 pursuant to clauses (4) of the definition of Cumulative Credit. Consolidated Non-Cash Charges means, with respect to the Issuer and its Restricted Subsidiaries, on a consolidated basis, for any period, the non-cash expenses (other than Consolidated Depreciation and Amortization Expense) of the Issuer and the Restricted Subsidiaries reducing Consolidated Net Income of the Issuer for such period on a consolidated basis and otherwise determined in accordance with GAAP, provided that if any such non-cash expenses represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from EBITDA in such future period to the extent paid, but excluding from this proviso, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period. Consolidated Taxes means, with respect to the Issuer and its Restricted Subsidiaries, on a consolidated basis, for any period, the provision for taxes based on income, profits or capital, including, without limitation, federal, state, franchise, property, excise and similar taxes, foreign withholding taxes (including penalties and interest related to such taxes or arising from tax examinations). Consolidated Total Indebtedness means, with respect to the Issuer and its Restricted Subsidiaries, on a consolidated basis, as of any date of determination, an amount equal to the sum (without duplication) of (1) the aggregate principal amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries (excluding any Hedging Obligations, undrawn letters of credit and the deferred and unpaid purchase price of any property or services), plus (2) the aggregate amount of all outstanding Disqualified Stock of the Issuer and its Restricted Subsidiaries and all Preferred Stock of its Restricted Subsidiaries, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences, in each case determined on a consolidated basis in accordance with GAAP. Contingent Obligations means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness ( primary obligations ) of any other Person (the primary obligor ) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent: (1) to purchase any such primary obligation or any property constituting direct or indirect security therefor; -11-
(2) to advance or supply funds: (a) for the purchase or payment of any such primary obligation; or (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or (3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. Continuing Director means a director who either was a member of the Board of Directors of the Issuer on the Issue Date or who becomes a member of the Board of Directors of the Issuer subsequent to that date and whose election, appointment or nomination for election by the stockholders of the Issuer is duly approved by a majority of the Continuing Directors on the Board of Directors of the Issuer at the time of such approval, either by a specific vote or by approval of the proxy statement issued by the Issuer on behalf of the entire Board of Directors of the Issuer in which such individual is named as nominee for director. Conversion Price means, in respect of each Note, as of any date, $1,000 divided by the Conversion Rate in effect on such date. Conversion Rate means initially 20.40554 1 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as set forth herein. Corporate Trust Office means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of the execution of this Indenture is located at [ ]251 Little Falls Drive, Wilmington, DE 19808, or such other address as the Trustee may designate from time to time by notice to the CompanyIssuer, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the CompanyIssuer). Conversion Price means, in respect of each Note, as of any date, $1,000 divided by the Conversion Rate in effect on such date. Conversion Rate means initially 20.40554 2 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as set forth herein. Credit Agreement means (i) (A) the credit agreement, dated as of the Issue Date, among CEOC, LLC, the guarantors named therein, the financial institutions named therein, and [ ]Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent (the OpCoCEOC Credit Agreement ), (B) the First Lien Credit Agreement, dated as of October 11, 2013, 1 Based on (i) the assumptions reflected in the Summary of Principal Economic Terms in Exhibit B to Exhibit 99.1 of the Current Report on Form 8-K of Caesars Entertainment Corp. dated September 27, 2016, (ii) an assumed 100 million shares outstanding, prior to giving effect to the conversion of any Notes and (iii) the assumption that the Issuer repurchases $1,200 million shares of Common Stock in connection with the Plan. To be updated based on actual share count. 2 Based on (i) the assumptions reflected in the Summary of Principal Economic Terms in Exhibit B to Exhibit 99.1 of the Current Report on Form 8-K of Caesars Entertainment Corp. dated September 27, 2016, (ii) an assumed 100 million shares outstanding, prior to giving effect to the conversion of any Notes and (iii) the assumption that the Issuer repurchases $1,200 million shares of Common Stock in connection with the Plan. To be updated based on actual share count. -12-
among Caesars Entertainment Resort Properties, LLC and the other borrowers named therein, the institutions named therein and Citicorp North America, Inc., as Administrative Agent and (C) First Lien Credit Agreement, dated as of May 8, 2014, among Caesars Growth Properties Parent, LLC, Caesars Growth Properties Holdings, LLC, the institutions named therein and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent, in each case, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof and (ii) whether or not the credit agreements referred to in clause (i) remain outstanding, if designated by the Issuer in connection with a concurrent refinancing of Bank Indebtedness to be included in the definition of Credit Agreement, one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers acceptances), or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time. Credit Agreement Documents means the collective reference to any Credit Agreement, any notes issued pursuant thereto and the guarantees thereof, and the collateral documents relating thereto, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified, in whole or in part, from time to time. Cumulative Credit means the sum of (without duplication): (1) 50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period), from the first day of the fiscal quarter in which the Issue Date occurs 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, in the case of such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus (2) 100% of the aggregate net cash proceeds received by the Issuer after the Issue Date from the issue or sale of Equity Interests of the Issuer (excluding Refunding Capital Stock and Disqualified Stock), including Equity Interests issued upon exercise of warrants or options (other than an issuance or sale to a Restricted Subsidiary of the Issuer or to an employee stock ownership plan or trust established by the Issuer or any of its Restricted Subsidiaries), plus (3) 100% of the aggregate amount of contributions to the capital of the Issuer received in cash after the Issue Date (other than Refunding Capital Stock and Disqualified Stock), plus (4) 100% of the aggregate amount received by the Issuer or any of its Restricted Subsidiaries in cash received by the Issuer or any of its Restricted Subsidiaries after the Issue Date from: (a) the sale or other disposition (other than to the Issuer or any of its Restricted Subsidiaries) of Restricted Investments made by the Issuer and its Restricted -13-