Exhibit 10.1

TRANSACTION AGREEMENT

by and among

CAESARS ENTERTAINMENT CORPORATION,

HIE HOLDINGS, INC.,

HARRAH’S BC, INC.,

PHW LAS VEGAS, LLC,

PHW MANAGER, LLC,

CAESARS BALTIMORE ACQUISITION COMPANY, LLC,

CAESARS BALTIMORE MANAGEMENT COMPANY, LLC,

CAESARS ACQUISITION COMPANY and

CAESARS GROWTH PARTNERS, LLC

Dated as of October 21, 2013

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TABLE OF CONTENTS

 

ARTICLE I DEFINED TERMS; INTERPRETATION

     3     

Section 1.1

 

Certain Definitions

     3     

Section 1.2

 

Rules of Construction

     14   

ARTICLE II RIGHTS OFFERING

     14     

Section 2.1

 

Effectiveness of the Registration Statement

     14     

Section 2.2

 

Distribution of the Subscription Rights and Prospectus

     15   

ARTICLE III CONTRIBUTIONS

     16     

Section 3.1

 

Election of Bifurcated Closing

     16     

Section 3.2

 

Contributions By CAC

     17     

Section 3.3

 

Contributions By Certain Caesars Parties

     18     

Section 3.4

 

Admittance and Joinder

     18   

ARTICLE IV SALE AND PURCHASE OF ASSETS

     19     

Section 4.1

 

PHWLV Equity

     19     

Section 4.2

 

PH Fee Stream

     19     

Section 4.3

 

CBIC Equity

     19     

Section 4.4

 

Baltimore Fee Stream

     19   

ARTICLE V PURCHASE PRICE; ADJUSTMENTS; RESTORATION

     20     

Section 5.1

 

Purchase Price; Holdback; Settlement Agent

     20     

Section 5.2

 

CIE Deal Protection

     20     

Section 5.3

 

Earn-Out Payment

     21     

Section 5.4

 

Restoration of Fair Market Value of the Subscription Rights

     22     

Section 5.5

 

Dispute Resolution

     22     

Section 5.6

 

Withholding

     22   

ARTICLE VI CLOSING; DEFERRED CLOSING

     23     

Section 6.1

 

Closing

     23     

Section 6.2

 

Deferred Closings

     23   

ARTICLE VII REPRESENTATIONS OF THE CAESARS PARTIES

     25     

Section 7.1

 

Organization and Qualification; Subsidiaries

     25     

Section 7.2

 

Power and Authority

     26     

Section 7.3

 

Due Execution and Enforceability

     26     

Section 7.4

 

Ownership

     26     

Section 7.5

 

Consents and Approvals; No Violations

     27     

Section 7.6

 

Gaming Licenses

     27     

Section 7.7

 

Compliance with Law; Gaming Licenses; No Default

     27     

Section 7.8

 

Brokers

     27     

Section 7.9

 

Financial Statements

     28     

Section 7.10

 

Indebtedness; CBAC Funding

     28     

Section 7.11

 

Litigation

     28     

Section 7.12

 

Accuracy

     28     

Section 7.13

 

Taxes

     28   

ARTICLE VIII REPRESENTATIONS OF CAC AND GROWTH PARTNERS

     29     

Section 8.1

 

Organization and Qualification; Subsidiaries

     30   

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Section 8.2

 

Power and Authority

     30     

Section 8.3

 

Due Execution and Enforceability

     30     

Section 8.4

 

Consent and Approvals; No Violations

     30     

Section 8.5

 

Independent Investigation; No Other Representations or Warranties

     31     

Section 8.6

 

Compliance with Law

     31     

Section 8.7

 

Provision for Call and Liquidation Rights

     31     

Section 8.8

 

Brokers

     31   

ARTICLE IX ADDITIONAL AGREEMENTS

     31     

Section 9.1

 

Gaming Licenses

     31     

Section 9.2

 

Conduct of Business

     32     

Section 9.3

 

Access to Information

     32     

Section 9.4

 

Further Assurances

     32     

Section 9.5

 

Provision for Call and Liquidation Rights

     33     

Section 9.6

 

Public Announcements

     33     

Section 9.7

 

Payment of Expenses

     33     

Section 9.8

 

CVPR Sale

     33   

ARTICLE X CONDITIONS TO CLOSING

     34     

Section 10.1

 

Conditions to Obligations of Each Party to Close

     34     

Section 10.2

 

Conditions to the Obligations of the Caesars Parties

     34     

Section 10.3

 

Conditions to the Obligations of CAC and Growth Partners

     35     

Section 10.4

 

Conditions to Rights Offering Closing and Deferred Closings

     37     

Section 10.5

 

Frustration of Closing Conditions

     37   

ARTICLE XI TERMINATION

     38     

Section 11.1

 

Termination

     38     

Section 11.2

 

Notice of Termination

     39     

Section 11.3

 

Effect of Termination

     39   

ARTICLE XII INDEMNIFICATION

     39     

Section 12.1

 

Survival and Time Limitations

     39     

Section 12.2

 

Indemnification in Favor of CAC and Growth Partners

     40     

Section 12.3

 

Indemnification in Favor of the Caesars Parties

     40     

Section 12.4

 

Procedure for Indemnification

     41     

Section 12.5

 

Indemnification Principles and Limitations

     43     

Section 12.6

 

Exclusive Remedy

     44   

ARTICLE XIII GENERAL

     44     

Section 13.1

 

Entire Agreement

     44     

Section 13.2

 

Amendment and Waivers

     45     

Section 13.3

 

Successors and Assigns

     45     

Section 13.4

 

No Third Party Beneficiaries

     45     

Section 13.5

 

Governing Law; Jurisdiction and Forum; Waiver of Jury Trial

     45     

Section 13.6

 

Expenses

     46     

Section 13.7

 

Notices

     46     

Section 13.8

 

Counterparts; Effectiveness

     47     

Section 13.9

 

Severability

     47     

Section 13.10

 

Specific Performance

     48   

 

3

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This TRANSACTION AGREEMENT, dated as of October 21, 2013 (this “Agreement”), is
entered into by and among Caesars Entertainment Corporation, a Delaware
corporation (“CEC”), HIE Holdings, Inc., a Delaware corporation (“HIE
Holdings”), Harrah’s BC, Inc., a Delaware corporation (“BondCo”), PHW Las Vegas,
LLC, a Nevada limited liability company (“PHW Las Vegas”), PHW Manager, LLC, a
Nevada limited liability company (“PHW Manager”), Caesars Baltimore Acquisition
Company, LLC, a Delaware limited liability company (“CBAC”), Caesars Baltimore
Management Company, LLC, a Delaware limited liability company (“Baltimore
Manager”, together with CEC, HIE Holdings, BondCo, PHW Las Vegas, PHW Manager
and CBAC, the “Caesars Parties”), Caesars Acquisition Company, a Delaware
corporation (“CAC”) and Caesars Growth Partners, LLC, a Delaware limited
liability company (“Growth Partners”).

WHEREAS, CEC desires to form Growth Partners, a new growth-oriented entity to be
owned by certain of CEC’s Subsidiaries and participating CEC stockholders, with
such CEC stockholders owning their interests in Growth Partners indirectly
through CAC, a newly-formed corporation anticipated to be listed on the NASDAQ
Capital Market;

WHEREAS, CEC will obtain and distribute non-transferable subscription rights at
no charge (the “Subscription Rights”) on a pro rata basis to each holder of
CEC’s common stock as of the Record Date that include (i) a basic subscription
right and an over-subscription privilege to purchase for cash voting Class A
common stock, par value $0.001 per share, of CAC (the “CAC Class A Common
Stock”) and (ii) the other rights and obligations set forth in the Prospectus
(the “Rights Offering”);

WHEREAS, each Sponsor has committed to purchase CAC Class A Common Stock in an
aggregate amount up to $250,000,000 either prior or pursuant to the Rights
Offering (the “Sponsor Commitment”), in either case on the same terms as are
available to Persons other than the Sponsors in the Rights Offering;

WHEREAS, the cash proceeds from the Rights Offering (and, if applicable, from
the earlier consummation of the Sponsor Commitment) will be received by CAC and,
subject to CAC’s obligation in Section 2.2(d) to reimburse CEC for certain
withholding taxes paid by CEC in connection with the Rights Offering, used to
acquire all of the Class A Voting Units in Growth Partners;

WHEREAS, subject to the conditions set forth herein, HIE Holdings will
contribute approximately 119,047 shares of common stock of Caesars Interactive
Entertainment, Inc., a Delaware corporation (“CIE”), par value $0.001 per share,
constituting all of the shares of common stock of CIE held by it (the “CIE
Shares”), with an ascribed value of $525,000,000 (the “Initial CIE Valuation”),
to Growth Partners (or its designated direct or indirect Subsidiary) in exchange
for Class B Non-Voting Units in Growth Partners (the “CIE Contribution”);

WHEREAS, subject to the conditions set forth herein, BondCo will contribute the
senior notes previously issued by Caesars Entertainment Operating Company, Inc.,
a Delaware corporation (“CEOC”), and set forth on Annex A attached hereto
(collectively, the “CEOC Notes”, together with the CIE Shares, the “Contributed
Assets”), with an ascribed value of $750,000,000 calculated using the CEOC Notes
Initial Valuation Methodology (the “Initial

 

1

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CEOC Notes Valuation”), to Growth Partners (or its designated direct or indirect
Subsidiary) in exchange for Class B Non-Voting Units in Growth Partners, subject
to adjustment on and after the Closing Date (the “CEOC Notes Contribution”,
together with the CIE Contribution, the “Contribution Transaction”);

WHEREAS, the agreed aggregate value of the Contributed Assets is $1,275,000,000,
subject to certain valuation and other potential adjustments as described below;

WHEREAS, the Contribution Transaction will include the following Closing and
post-Closing value-related adjustments: (i) the Initial CEOC Notes Valuation
will be recalculated at Closing based on the CEOC Notes Closing Valuation
Methodology, and the ownership percentages of CAC, HIE Holdings and BondCo in
Growth Partners will be recalculated accordingly, (ii) the aggregate fair market
value, if any, of the Subscription Rights will be restored to CEC (through its
ownership in BondCo) in the form of CEOC Notes with an aggregate value equal to
the Rights FMV, (iii) the amount of withholding taxes (including backup
withholding taxes) paid by CEC in connection with the Rights Offering, to the
extent not otherwise reimbursed by CAC with cash received from affected CEC
stockholders participating in the Rights Offering, will be reimbursed to CEC
(through BondCo) by Growth Partners, in the form of CEOC Notes valued using the
CEOC Notes Reimbursement Valuation Methodology and (iv) the Initial CIE
Valuation may be increased by up to $225,000,000 if earnings from CIE’s social
and mobile games business exceed a specified amount in 2015, in which case HIE
Holdings will receive additional Class B Non-Voting Units in Growth Partners, in
each case as set forth in this Agreement;

WHEREAS, prior to the Closing, PHW Las Vegas will contribute and assign to
PHWLV, LLC, a Nevada limited liability company and wholly-owned Subsidiary of
PHW Las Vegas (“PHWLV”), and PHWLV will accept and assume from PHW Las Vegas,
all of its assets and liabilities pursuant to one or more bills of sale and
assignment and assumption agreements as reasonably agreed to between CAC and
CEC;

WHEREAS, prior to the Closing, the existing outstanding debt of PHW Las Vegas
(in the approximate amount of $513,200,000), will be assumed by PHWLV, subject
to lender consent;

WHEREAS, subject to the conditions set forth herein, including receipt of the
Gaming Licenses required therefor, Growth Partners will use up to $360,000,000
of proceeds from its issuance of Class A Voting Units (subject to adjustment on
the Closing Date) to purchase for cash the following assets from Subsidiaries of
CEC (the “Purchased Assets”, together with the Contributed Assets, the
“Transferred Assets”): (i) from PHW Las Vegas, the PHWLV Equity, (ii) from PHW
Manager, the PH Fee Stream, (iii) from CBAC, the CBIC Equity and (iv) from
Baltimore Manager, the Baltimore Fee Stream (the “Purchase Transaction”,
together with the Contribution Transaction, the “Transactions”);

WHEREAS, upon consummation of the Transactions, CAC and Growth Partners will
(i) enter into a management services agreement substantially in the form
attached hereto as Exhibit A (the “Management Services Agreement”) pursuant to
which CEOC shall provide certain corporate services and back office support and
business advisory services to CAC, Growth Partners and its Subsidiaries and
(ii) work together with CEC to develop future projects as further described in
the Growth Partners Operating Agreement;

 

2

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WHEREAS, as further detailed in the Growth Partners Operating Agreement and the
Registration Rights Agreement, following the fifth (5th) anniversary of the
Closing, HIE Holdings and BondCo may exchange their Class B Non-Voting Units in
Growth Partners for non-voting CAC Class B Common Stock with equivalent terms,
and will receive registration rights pursuant to the Registration Rights
Agreement in respect of such non-voting CAC Class B Common Stock;

WHEREAS, as further described in the CAC Charter and Growth Partners Operating
Agreement, after the third (3rd) anniversary of the Closing, CEC and/or its
Subsidiaries will have the right to acquire the Class A Voting Units in Growth
Partners, or at the election of CAC, the CAC Class A Common Stock that
corresponds to such Class A Voting Units in Growth Partners (the “Call Right”);

WHEREAS, as further described in the Growth Partners Operating Agreement,
following the fifth (5th) anniversary of the Closing and until the eight-year
six-month anniversary of the Closing, the Managing Member will have the right to
cause a Liquidation of Growth Partners (with the consent of the board of
directors of CAC) (the “Liquidation Right”); and

WHEREAS, if the Liquidation Right is not exercised before the eight-year
six-month anniversary of the Closing, Growth Partners will be required to
liquidate on the date thereof pursuant to the terms set forth in the Growth
Partners Operating Agreement.

NOW, THEREFORE, in consideration of the foregoing promises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

ARTICLE I

DEFINED TERMS; INTERPRETATION

Section 1.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings:

“2015 CIE Adjusted EBITDA” means, with respect to the fiscal year ended
December 31, 2015, the Adjusted EBITDA reflected on the audited consolidated
financial statements for CAC for the CIE “Social and Mobile Games” and “Buffalo
Studios” businesses (in existence as of April 23, 2013 and expressly excluding
the earnings of any subsequent acquisitions) to include only those businesses
incorporated in, and to be calculated on a basis consistent with, the
calculation in CIE management’s presentation of the 2013 pro-forma budget for
Playtika and Buffalo Studios to the CEC Board of Directors on February 21, 2013,
which showed expected 2013 Adjusted EBITDA for Playtika and Buffalo Studios as
set forth on Schedule 1.1(a).

 

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“Actions” means any action, claim, demand, arbitration, charge, complaint,
indictment, litigation, suit or other civil, criminal, administrative or
investigative proceedings.

“Affiliate” means, with respect to any Person, any other Person that directly,
or through one or more intermediaries, controls or is controlled by or is under
common control with such Person.

“Agreed Earn-Out Adjustments” has the meaning set forth in Section 5.3(c).

“Agreement” has the meaning set forth in the preamble.

“Ancillary Agreements” means this Agreement, including all Annexes, Schedules
and Exhibits attached hereto, the Management Services Agreement, the
Registration Rights Agreement, the Voting Agreement, the Settlement Agreement
and all other documents, agreements and instruments executed and delivered in
connection herewith and therewith, in each case, as amended, modified or
supplemented from time to time.

“Baltimore Fee Stream” means an amount equal to fifty percent (50%) of (a) the
ongoing Baltimore Management Fees receivable by Baltimore Manager under the
Baltimore Management Agreement in connection with the management of the
Baltimore JV and (b) any termination fee payable to the Baltimore Manager upon
the termination of the Baltimore Management Agreement.

“Baltimore JV” means CBAC Borrower, LLC, a Delaware limited liability company
and a joint venture which has been conditionally awarded a license to operate a
casino in the City of Baltimore by the State of Maryland.

“Baltimore Management Agreement” means that certain Management Agreement, dated
as of October 23, 2012, by and between Baltimore JV and Baltimore Manager, as
may be amended from time to time.

“Baltimore Management Fees” means any “Management Fees” as defined in the
Baltimore Management Agreement and any termination fees payable to the Baltimore
Manager pursuant to the Baltimore Management Agreement upon the termination of
the Baltimore Management Agreement.

“Baltimore Manager” has the meaning set forth in the preamble.

“Bifurcated Closing” has the meaning set forth in Section 3.1(a).

“BondCo” has the meaning set forth in the preamble.

“BondCo Percentage Interest” means (a) 100 multiplied by the quotient of (i) the
Closing CEOC Notes Valuation divided by (ii) the Closing CEOC Notes Valuation
plus the Initial CIE Valuation plus the Contributed Proceeds plus (b) three
percent (3%).

 

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

“CAC” has the meaning set forth in the preamble.

“CAC Charter” means the amended and restated certificate of incorporation of CAC
to be effective on the date of the closing of the Rights Offering, and in
substantially the form attached hereto as Exhibit B.

“CAC Class A Common Stock” has the meaning set forth in the recitals.

“CAC Class B Common Stock” means non-voting Class B common stock, par value
$0.001 per share, of CAC.

“CAC Fees and Expenses” means the third-party fees and expenses incurred by CAC
in connection with the Transaction. For the avoidance of doubt, “CAC Fees and
Expenses” shall not include any withholding taxes paid by CEC and reimbursed by
CAC pursuant to Section 2.2(d).

“CAC Percentage Interest” means (a) 100 multiplied by the quotient of (i) the
Contributed Proceeds divided by (ii) the Closing CEOC Notes Valuation plus the
Initial CIE Valuation plus the Contributed Proceeds minus (b) five percent (5%).

“Caesars Disclosure Schedule” has the meaning set forth in Article VII.

“Caesars Indemnified Persons” has the meaning set forth in Section 12.3.

“Caesars Parties” has the meaning set forth in the preamble.

“Call Right” has the meaning set forth in the recitals.

“CBAC” has the meaning set forth in the preamble.

“CBIC Equity” means one hundred percent (100%) of the limited liability
interests of Caesars Baltimore Investment Company, LLC, a Delaware limited
liability company, which owns an indirect interest in the Baltimore JV.

“CEC” has the meaning set forth in the preamble.

“CEC Common Stock” means the common stock (other than shares of restricted stock
or options issued pursuant to CEC equity plans), $0.01 par value per share, of
CEC.

“CEC Stockholder” means each holder of CEC Common Stock as of the Record Date.

“CEOC” has the meaning set forth in the recitals.

“CEOC Notes” has the meaning set forth in the recitals.

 

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“CEOC Notes Closing Valuation Methodology” means the ninety (90) trading day
average closing price (as published by Advantage Data under “ADI pricing”) for
each tranche of the CEOC Notes for the period ended one (1) Business Day prior
to the Closing Date, net of transaction costs and trading commissions (including
a discount equivalent to an underwriting fee of 2%) and a 200 bps yield
discount.

“CEOC Notes Contribution” has the meaning set forth in the recitals.

“CEOC Notes Initial Valuation Methodology” means the 90 trading day average
closing price (as published by Advantage Data under “ADI pricing”) for each
tranche of the CEOC Notes for the period ended April 3, 2013, net of transaction
costs and trading commissions (including a discount equivalent to an
underwriting fee of 2%) and a 200 bps yield discount.

“CEOC Notes Reimbursement Valuation Methodology” means the 90 trading day
average closing price (as published by Advantage Data under “ADI pricing”) for
each tranche of the CEOC Notes for the period ended on the date preceding the
day of reimbursement as provided for in Section 2.2(d), net of transaction costs
and trading commissions (including a discount equivalent to an underwriting fee
of 2%) and a 200 bps yield discount.

“CEOC Notes Restoration Amount” has the meaning set forth in Section 5.4.

“Chosen Court” has the meaning set forth in Section 13.5(b).

“CIE” has the meaning set forth in the recitals.

“CIE Contribution” has the meaning set forth in the recitals.

“CIE Make-Whole” means the positive number, if any, of Class B Non-Voting Units
equal to (i) the number of Class B Non-Voting Units that would have been
issuable to HIE Holdings on the Closing Date if the value of CIE (or any of its
component parts) as of the Closing was increased by the difference between the
applicable Third Party Sale Price and the applicable CIE Valuation Price minus
(ii) the number of Class B Non-Voting Units actually issued to HIE Holdings on
the Closing Date.

“CIE Shares” has the meaning set forth in the recitals.

“CIE Valuation Price” means $525,000,000 as it relates to a sale of all of the
CIE Shares; and shall mean, in the case of a sale of a Material Component, the
price that such Material Component constituted in the valuation used to
determine the $525,000,000 valuation of the CIE Shares contributed to Growth
Partners as mutually agreed upon by the Valuation Committee of CEC and Growth
Partners in good faith; and if the parties cannot agree, then as determined
pursuant to the dispute resolution procedures set forth in Section 5.5.

“Class A Voting Units” means the class A voting membership interests in Growth
Partners, with the corresponding rights and obligations set forth in the Growth
Partners Operating Agreement.

 

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“Class B Non-Voting Units” means the class B non-voting membership interests in
Growth Partners, with the corresponding rights and obligations set forth in the
Growth Partners Operating Agreement.

“Class B Unit Closing Value” means a quotient, the numerator of which is equal
to the Closing CEOC Notes Valuation plus the Initial CIE Valuation, and the
denominator of which is equal to the aggregate number of Class B Non-Voting
Units issued on the Closing Date to HIE Holdings and BondCo pursuant to Sections
3.3(b) and 3.3(d), respectively or Section 5.4.

“Closing” has the meaning set forth in Section 6.1.

“Closing CEOC Notes Valuation” means the Initial CEOC Notes Valuation, as
adjusted using the CEOC Notes Closing Valuation Methodology.

“Closing Date” has the meaning set forth in Section 6.1.

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

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

“Consents” means any consents, waivers, approvals, requirements, allowances,
novations, authorizations, declarations, filings, registrations and
notifications.

“Contract” means any agreement, contract, indenture, note, bond, lease,
sublease, conditional sales contract, mortgage, license, sublicense, franchise
agreement, undertaking, commitment or other binding arrangement (in each case,
whether written or oral).

“Contributed Assets” has the meaning set forth in the recitals.

“Contributed Proceeds” has the meaning set forth in Section 3.2(a).

“Contribution Transaction” has the meaning set forth in the recitals.

“control” shall mean, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise (and the terms
“controlled by” and “under common control with” shall have correlative
meanings).

“CVPR Sale” has the meaning set forth in Section 9.8.

“Damages” means any loss, liability, prosecution, claim, demand, damage, fine,
Tax, cost or expense (including reasonable costs of investigation and defense
and legal and other professional expenses, interest, penalties and amounts paid
in settlement), but excluding any consequential, punitive, special, incidental,
indirect or multiple-based damages (other than any such damages that are paid to
a third party in connection with a Third Party Claim).

“Deferred Asset” has the meaning set forth in Section 6.2(a).

“Deferred Closing” has the meaning set forth in Section 6.2(a).

 

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“Deferred Closing Date” has the meaning set forth in Section 6.2(a).

“Deferred Closing Outside Date” has the meaning set forth in Section 6.2(c).

“Direct Claim” has the meaning set forth in Section 12.4(a).

“Earn-Out Objection” has the meaning set forth in Section 5.3(b).

“Earn-Out Payment” means an amount equal to 3.5x the amount by which the 2015
CIE Adjusted EBITDA exceeds $103,397,000; provided that in no event shall the
Earn-Out Payment exceed $225,000,000 (for the avoidance of doubt, it being
understood that the Earn-Out Payment shall be payable in Class B Non-Voting
Units valued at the Class B Unit Closing Value).

“Earn-Out Statement” has the meaning set forth in Section 5.3(a).

“EBITDA” means earnings before interest income/expense, income taxes,
depreciation and amortization.

“Escrow Account” has the meaning set forth in Section 5.1(b).

“Evercore Opinions” means the opinions referenced in the engagement letter,
dated April 17, 2013, by and between Evercore Group L.L.C. and CEC (which, for
the avoidance of doubt, does not include the Restoration Opinion).

“Financial Statements” has the meaning set forth in Section 7.9.

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

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

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

“Gaming Laws” means all laws, statutes and ordinances pursuant to which any
Gaming Authority possesses regulatory, permit and licensing authority over the
conduct of

 

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Gaming Activities, or the ownership or control of an interest in an entity which
conducts Gaming Activities, in any Gaming Jurisdiction, all Orders, rules and
regulations promulgated thereunder, all written and unwritten policies of the
Gaming Authorities and all written and unwritten interpretations by the Gaming
Authorities of such laws, statutes, ordinances, Orders, rules, regulations and
policies.

“Gaming Licenses” shall mean all licenses, permits, approvals, Orders,
authorizations, registrations, findings of suitability, determinations of
qualification, franchises, exemptions, waivers, concessions and entitlements
issued by any Gaming Authority or under any Gaming Laws which are necessary to
permit the consummation of the Transactions.

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

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

“Growth Indemnified Persons” has the meaning set forth in Section 12.2.

“Growth Partners” has the meaning set forth in the preamble.

“Growth Partners Operating Agreement” means the amended and restated limited
liability company agreement of Growth Partners, dated as of the Closing Date,
and in substantially the form attached hereto as Exhibit C.

“HIE Holdings” has the meaning set forth in the preamble.

“Holdback Amount” has the meaning set forth in Section 5.1(b).

“Indemnified Person” means a Person whom the Caesars Parties, on the one hand,
or CAC and Growth Partners, on the other hand, are required to indemnify under
Article XII, as applicable.

“Indemnifying Person” means, in relation to an Indemnified Person, the Party to
this Agreement that is required to indemnify such Indemnified Person under
Article XII.

“Initial CAC Percentage Interest” means (a) 100 multiplied by the quotient of
(i) the Initial Proceeds divided by (ii) the Closing CEOC Notes Valuation plus
the Initial CIE Valuation plus the Initial Proceeds minus (b) five percent (5%).

 

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“Initial CEOC Notes Valuation” has the meaning set forth in the recitals.

“Initial CIE Valuation” has the meaning set forth in the recitals.

“Initial Earn-Out Amount” has the meaning set forth in Section 5.3(a).

“Initial HIE Percentage Interest” means (a) 100 multiplied by the quotient of
(i) the Initial CIE Valuation divided by (ii) the Initial CIE Valuation plus the
Closing CEOC Notes Valuation plus the Contributed Proceeds plus (b) two percent
(2%).

“Initial Proceeds” has the meaning set forth in Section 3.2(a).

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

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge.

“Liquidation” means the sale or winding up of Growth Partners, or other
monetization of all of its assets and the distribution of the proceeds remaining
after satisfaction of all liabilities of Growth Partners to the holders of
Growth Partners’ units.

“Liquidation Right” has the meaning set forth in the recitals.

“Management Services Agreement” has the meaning set forth in the recitals.

“Managing Member” has the meaning set forth in the Growth Partners Operating
Agreement.

“Material Component” means one or more operating business units of CIE,
excluding any assets that do not constitute an operating business unit of CIE.

“Offering Fees and Expenses” means the amount designated as “Total” in Item 13
of Part II of the Registration Statement, unless otherwise agreed by CAC and
CEC.

“Operating Fees” means any “Operating Fees” as defined in the PH Management
Agreement.

“Order” means any outstanding order, decision, judgment, writ, injunction,
stipulation, award or decree.

“Outside Date” has the meaning set forth in Section 11.1(b)(iii).

“Party” means any party hereto, and “Parties” means all parties hereto.

“Permit” means all Consents, licenses, permits, certificates, authorizations,
registrations, waivers, variances, exemptions, franchises and other approvals
issued, granted, given, required or otherwise made available by any Governmental
Entity.

 

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“Permitted Lien” means, with respect to any Person, Liens (a) for Taxes,
assessments and other governmental charges, if such Taxes, assessments or
charges are not yet due and payable; (b) for inchoate workmen’s, repairmen’s or
other similar Liens arising or incurred in the ordinary course of business in
respect of obligations which are not overdue; (c) for minor title defects,
recorded easements, and zoning, entitlement or other land use or environmental
regulation, which minor title defects, recorded easements and regulations do
not, individually or in the aggregate, impair the continued use, occupancy,
value or marketability of title of the property to which they relate or the
business, assuming that the property is used on substantially the same basis as
such property is currently being used by the respective Caesars Party or its
Subsidiaries; or (d) that are set forth in Schedule 1.1(a).

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

“PH Fee Stream” means an amount equal to fifty percent (50%) of the ongoing
Operating Fees receivable by PHW Manager under the PH Management Agreement in
connection with the management of Planet Hollywood.

“PH Management Agreement” means that certain Hotel and Casino Management
Agreement, dated as of February 19, 2010, by and between PHW Las Vegas and PHW
Manager, as may be amended from time to time, to be assigned by PHW Las Vegas to
PHWLV prior to the Closing.

“PHWLV” has the meaning set forth in the recitals.

“PHWLV Equity” means one hundred percent (100%) of the member’s interests of
PHWLV.

“PHW Las Vegas” has the meaning set forth in the preamble.

“PHW Manager” has the meaning set forth in the preamble.

“Planet Hollywood” means the resort, casino and entertainment complex known as
the Planet Hollywood Resort and Casino, located in Las Vegas, Nevada.

“Prospectus” means the prospectus, which forms a part of the Registration
Statement, to be sent to each CEC Stockholder in connection with the
Transactions, as such Prospectus may be amended or supplemented from time to
time.

“Proxy” means the irrevocable proxy made and granted by the Sponsors and the
co-investment entities party thereto vesting voting and dispositive control over
the CAC Class A Common Stock held by such Parties in favor of Hamlet Holdings
LLC, a Delaware limited liability company.

“Purchase Price” has the meaning set forth in Section 5.1(a).

“Purchase Transaction” has the meaning set forth in the recitals.

 

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“Purchased Assets” has the meaning set forth in the recitals.

“Record Date” means the close of business on the date to be determined by the
CEC board of directors as the record date for determining the shares of CEC
common stock in respect of which Subscription Rights will be distributed
pursuant to the Rights Offering.

“Registration Rights Agreement” means that certain registration rights
agreement, dated as of the Closing Date, and in substantially the form attached
hereto as Exhibit D.

“Registration Statement” means the registration statement on Form S-1 filed by
CAC with the Commission to effect the registration of the Subscription Rights
and CAC Class A Common Stock pursuant to the Securities Act in connection with
the Transactions, as such registration statement may be amended or supplemented
from time to time.

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

“Restoration Opinion” means the opinions referenced in the engagement letter to
be entered into by and between Valuation Research Corporation and CEC.

“Rights Distribution Date” has the meaning set forth in Section 2.2(c).

“Rights FMV” means the aggregate fair market value of the Subscription Rights as
set forth in the Restoration Opinion.

“Rights Offering” has the meaning set forth in the recitals.

“Rights Offering Closing” has the meaning set forth in Section 6.1.

“Rights Offering Closing Date” has the meaning set forth in Section 6.1.

“Rights Offering Proceeds” has the meaning set forth in Section 3.2(a).

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

“Seller” means any of PHW Las Vegas, PHW Manager, CBAC and Baltimore Manager,
and “Sellers” shall mean all of the foregoing entities.

“Settlement Agent” has the meaning set forth in Section 5.1(c).

“Settlement Agreement” has the meaning set forth in Section 5.1(c).

“Sponsor” means either (i) collectively, Apollo Hamlet Holdings, LLC, a Delaware
limited liability company, and Apollo Hamlet Holdings B, LLC, a Delaware limited
liability company, or (ii) collectively, TPG Hamlet Holdings, LLC, a Delaware
limited liability company, and TPG Hamlet Holdings B, LLC, a Delaware limited
liability company, and “Sponsors” shall mean all of the foregoing entities.

 

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“Sponsor Commitment” has the meaning set forth in the recitals.

“Subscription Price” means the subscription price per share of CAC Class A
Common Stock set forth in the Registration Statement and the Prospectus.

“Subscription Rights” has the meaning set forth in the recitals.

“Subsequent CAC Percentage Interest” means the CAC Percentage Interest minus the
Initial CAC Percentage Interest.

“Subsidiary” means, with respect to any Person, any corporation, entity or other
organization whether incorporated or unincorporated, of which (a) such first
Person, directly or indirectly, owns or controls at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions or (b) such first Person is a general partner or managing member.

“Tax” or “Taxes” means (a) all taxes, charges, fees, levies, imposts, duties and
other similar assessments, including any income, alternative minimum or add-on
tax, estimated, gross income, gross receipts, sales, use, transfer,
transactions, intangibles, ad valorem, value-added, escheat, franchise,
registration, title, license, capital, paid-up capital, profits, withholding,
employee withholding, payroll, worker’s compensation, unemployment insurance,
social security, employment, excise, severance, stamp, transfer occupation,
premium, recording, real property, personal property, federal highway use,
commercial rent, environmental (including taxes under section 59A of the Code)
or windfall profit tax, custom, duty or other tax, fee or other like assessment
or charge, together with any interest, penalties, fines or additions to tax that
may become payable in respect thereof imposed by any country, any state, county,
provincial or local Governmental Entity or subdivision or agency thereof,
(b) any liability for the payment of any amounts of the type described in clause
(a) of this sentence as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any taxable period, and
(c) any liability for the payment of any amounts of the type described in clause
(a) or (b) of this sentence as a result of being a transferee of or successor to
any Person or as a result of any express or implied obligation to assume such
Taxes or to indemnify any other Person.

“Third Party Claim” has the meaning set forth in Section 12.4(a).

“Third Party Sale Price” means the proceeds actually received by or on behalf of
Growth Partners (or a subsidiary thereof) from a third party purchaser of CIE’s
business or a Material Component thereof in respect of such sale. The fair
market value of any non-cash proceeds shall be determined between CEC and CAC,
with any disputed amount to be subject to the dispute resolution procedures set
forth in Section 5.5.

“Transactions” has the meaning set forth in the recitals.

“Transferred Assets” has the meaning set forth in the recitals.

“Valuation Firm” has the meaning set forth in Section 5.5.

“Valuation Firm Decision” has the meaning set forth in Section 5.5.

 

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“Voting Agreement” means the omnibus voting agreement dated as of the Closing
Date, between Hamlet Holdings LLC, the Sponsors, the co-investment entities
party thereto, CEC and CAC, in substantially the form attached hereto as Exhibit
E.

“VRC Opinions” means, collectively, the opinions referenced in the
(i) engagement letter by and between Valuation Research Corporation and CEC (and
the Valuation Committee of the Board of Directors of CEC) and (ii) engagement
letter by and between Valuation Research Corporation and CEC (and the Board of
Directors of CEC).

“Withholding Stockholder” has the meaning set forth in Section 2.2(d)(i).

Section 1.2 Rules of Construction. For the purposes of this Agreement, (a) words
in the singular shall be held to include the plural and vice versa, and words of
one gender shall be held to include the other gender as the context requires;
(b) references to the terms Article, Section, paragraph, Annex, Exhibit and
Schedule are references to the Articles, Sections, paragraphs, Annexes, Exhibits
and Schedules to this Agreement unless otherwise specified; (c) the terms
“hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to
this entire Agreement, including the Schedules and Exhibits hereto;
(d) references to “$” shall mean U.S. dollars; (e) the word “including” and
words of similar import when used in this Agreement shall mean “including
without limitation,” unless otherwise specified; (f) the word “or” shall not be
exclusive; (g) references to “written” or “in writing” include in electronic
form; (h) the headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement; (i) the Parties have each participated in the negotiation and
drafting of this Agreement and if an ambiguity or question of interpretation
should arise, this Agreement shall be construed as if drafted jointly by the
Parties thereto and no presumption or burden of proof shall arise favoring or
burdening either Party by virtue of the authorship of any of the provisions in
this Agreement or the Ancillary Agreements; (j) a reference to any Person
includes such Person’s successors and permitted assigns; (k) any reference to
“days” means calendar days unless Business Days are expressly specified; and
(l) when calculating the period of time before which, within which or following
which any act is to be done or step taken pursuant to this Agreement, the date
that is the reference date in calculating such period shall be excluded and if
the last day of such period is not a Business Day, the period shall end at the
close of business on the next succeeding Business Day.

ARTICLE II

RIGHTS OFFERING

Section 2.1 Effectiveness of the Registration Statement. CAC shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective by the Commission on or prior to the date hereof, including
by responding in a timely manner to all comments of the Commission relating to
the Registration Statement. The Caesars Parties shall provide commercially
reasonable cooperation to CAC in connection with such efforts, including by
providing access to management of CEC and CEOC and its and their Subsidiaries
and such information about the Caesars Parties or the Transferred Assets as is
reasonably necessary for CAC to adequately respond to any comments from the
Commission or to prepare any ancillary materials.

 

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Section 2.2 Distribution of the Subscription Rights and Prospectus; Withholding.

(a) To the extent not previously distributed prior to or on the date hereof, CAC
shall, promptly following its receipt of a written request for the same from
CEC, contribute to Growth Partners, and Growth Partners shall receive and accept
from CAC, the Subscription Rights.

(b) To the extent not previously distributed prior to or on the date hereof,
Growth Partners shall, upon its receipt of the Subscription Rights from CAC and
in accordance with the limited liability company agreement of Growth Partners in
effect immediately prior to the Closing Date, distribute to CEC (through one or
more of CEC’s wholly-owned Subsidiaries), and CEC shall receive and accept from
Growth Partners (through one or more of CEC’s wholly-owned Subsidiaries), the
Subscription Rights.

(c) To the extent not previously distributed prior to or on the date hereof,
following its receipt of the Subscription Rights from Growth Partners, but
subject to (i) effectiveness of required Gaming Licenses and (ii) the fiduciary
duties of the board of directors of CEC, in each case in respect of the
declaration and payment of a dividend in the form of the Subscription Rights,
CEC shall (x) declare and distribute the Subscription Rights to CEC Stockholders
as of the Record Date in the manner described in the Registration Statement
(such distribution date, the “Rights Distribution Date”) and (y) as soon as
available, make the Prospectus available to the CEC Stockholders to which the
Subscription Rights were distributed.

(d) Withholding.

(i) For any CEC Stockholder for which CEC is the withholding agent (a
“Withholding Stockholder”), CEC shall remit out of CEC’s own funds any
withholding tax (including backup withholding tax) that CEC is required to remit
pursuant to the Code or any provision of state, local or foreign Tax law with
respect to the Rights Offering to the Internal Revenue Service or other
applicable Governmental Entity. CEC and the Sponsors shall use their
commercially reasonable efforts to minimize the amount of any such withholding
obligations.

(ii) If a Withholding Stockholder exercises any Subscription Rights, the cash
exercise price from such Withholding Stockholder shall first be used by CAC to
reimburse CEC for any withholding tax (including backup withholding tax) that
CEC paid on behalf of such Withholding Stockholder. Such reimbursement payment
shall be made by CAC to CEC promptly after the receipt of such cash from such
Withholding Stockholder, and shall be paid to an account or accounts designated
by CEC.

(iii) CAC shall apply the net amount of exercise proceeds remaining after
deduction of such reimbursement payment towards the purchase of CAC Class A
Common Stock. For the avoidance of doubt, pursuant to the Registration Statement
and the Prospectus, each Withholding Stockholder that desires to purchase an
amount of CAC Class A

 

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Common Stock equal to its respective pro rata interest in CEC (without reduction
due to the use of a portion of the applicable exercise price to reimburse CEC
for the withholding obligation as aforesaid) shall have the right to pay to CAC,
in addition to the applicable exercise price for the Subscription Rights being
exercised, an amount equal to the withholding tax (including backup withholding
tax) paid by CEC on behalf of such Withholding Stockholder.

(iv) To the extent CEC is not reimbursed in cash pursuant to this Section 2.2(d)
for any withholding tax (including backup withholding tax) CEC paid on behalf of
Withholding Stockholders, (i) Growth Partners shall promptly reimburse CEC for
such unreimbursed amount by causing the transfer to BondCo of an amount of CEOC
Notes, valued using the CEOC Notes Reimbursement Valuation Methodology, equal to
the aggregate unreimbursed amount and (ii) CAC’s Capital Account and Class A
Unit Net Capital (both as defined in the Growth Partners Operating Agreement)
shall be reduced by a corresponding amount pursuant to the terms of the Growth
Partners Operating Agreement.

(e) The closing of the sale and purchase of CAC Class A Common Stock pursuant to
the Rights Offering shall take place in the manner, and subject to the terms and
conditions, described in “The Rights Offering” section of the Registration
Statement and/or the Prospectus.

ARTICLE III

CONTRIBUTIONS

Section 3.1 Election of Bifurcated Closing.

(a) Generally. Notwithstanding anything herein to the contrary, at the election
of the Sponsors, the Sponsors may elect to waive the exercise period, exercise
their basic Subscription Rights in full prior to the expiration of the Rights
Offering and consummate such portion of the Sponsor Commitment prior to the
closing of the Rights Offering, such that the contribution to Growth Partners of
the Contributed Assets, and the purchase by and sale to Growth Partners of the
Purchased Assets, each as further described below, may be effected prior to the
closing of the Rights Offering. Such elective two-stage closing is referred to
herein as a “Bifurcated Closing.” In the event of a Bifurcated Closing, the
distribution of the Subscription Rights shall occur on the date of the initial
Sponsor closing, with the result that the Rights Distribution Date and the
Closing Date shall be the same. For the avoidance of doubt, a Bifurcated Closing
is elective, and neither Sponsor shall be required to proceed with a Bifurcated
Closing absent the express agreement of each Sponsor.

(b) Consummation of the Sponsor Commitment. In the event of a Bifurcated
Closing, upon the exercise of their basic Subscription Rights and payment of the
subscription price on the Closing Date, each Sponsor shall receive a number of
shares of CAC Class A Common Stock equal to (i) the aggregate amount paid by
such Sponsor divided by (ii) the Subscription Price. Upon the closing of the
Rights Offering and subject to availability, each Sponsor shall, if necessary,
exercise their oversubscription privilege to purchase an additional amount of
Shares equal to not less than the number of Shares obtained by dividing (i) the
remainder of $250,000,000 less the amount previously paid to purchase Shares by
such Sponsor

 

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on the Closing Date by (ii) the Subscription Price, such that subscription
rights of at least $500,000,000 in total are exercised in the rights offering.
The Sponsors will also be eligible to exercise their over-subscription
privileges, if any, pursuant to the terms of the Registration Statement and the
Prospectus.

(c) Closing Date. For the avoidance of doubt, the consummation of the initial
closing of a Bifurcated Closing may take place on the date hereof.

Section 3.2 Contributions By CAC.

(a) Bifurcated Closing.

(i) Initial Proceeds. In the event of a Bifurcated Closing, on the Closing Date,
following the receipt by CAC of the aggregate proceeds from the Sponsors (the
“Initial Proceeds”):

(1) CAC shall contribute, transfer, convey, assign and deliver to Growth
Partners, and Growth Partners shall receive and accept from CAC, the Initial
Proceeds, which shall be made by one or more wire transfers in immediately
available funds to an account or accounts previously identified by Growth
Partners; and

(2) Growth Partners shall issue to CAC, and CAC shall receive and accept from
Growth Partners, free and clear of any Liens (other than those under any
Ancillary Agreements), a total number of Class A Voting Units representing an
aggregate economic interest in Growth Partners equal to the Initial CAC
Percentage Interest, in consideration for the contribution by CAC to Growth
Partners of the Initial Proceeds as set forth above.

(ii) Subsequent Proceeds. In the event of a Bifurcated Closing, on the Rights
Offering Closing Date, following the receipt by CAC of the total proceeds from
the Rights Offering (including any additional proceeds from the Sponsors as set
forth in Section 3.1(b)), subject to Section 2.2(d) (such amount, the “Rights
Offering Proceeds;” the Initial Proceeds and the Rights Offering Proceeds
collectively, the “Contributed Proceeds”):

(1) CAC shall contribute, transfer, convey, assign and deliver to Growth
Partners, and Growth Partners shall receive and accept from CAC, the Rights
Offering Proceeds, which shall be made by one or more wire transfers in
immediately available funds to an account or accounts previously identified by
Growth Partners; and

(2) Growth Partners shall issue to CAC, and CAC shall receive and accept from
Growth Partners, free and clear of any Liens (other than those under any
Ancillary Agreements), a total number of Class A Voting Units representing an
aggregate economic interest in Growth Partners equal to the Subsequent CAC
Percentage Interest, in consideration for the contribution by CAC to Growth
Partners of the Rights Offering Proceeds as set forth above. For the avoidance
of doubt, the sum of the Initial CAC Percentage Interest and the Subsequent CAC
Percentage Interest shall equal the CAC Percentage Interest.

 

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(b) Non-Bifurcated Closing. In the event a Bifurcated Closing is not elected, on
the Closing Date, following the receipt by CAC of the Rights Offering Proceeds
(for the avoidance of doubt, including in such scenario proceeds from the
Sponsor Commitment):

(i) CAC shall contribute, transfer, convey, assign and deliver to Growth
Partners, and Growth Partners shall receive and accept from CAC, the Rights
Offering Proceeds, subject to Section 2.2(d), which shall be made by one or more
wire transfers in immediately available funds to an account or accounts
previously identified by Growth Partners; and

(ii) Growth Partners shall issue to CAC, and CAC shall receive and accept from
Growth Partners, free and clear of any Liens (other than those under any
Ancillary Agreements), a total number of Class A Voting Units representing an
aggregate economic interest in Growth Partners equal to the CAC Percentage
Interest, in consideration for the contribution by CAC to Growth Partners of the
Rights Offering Proceeds as set forth above.

Section 3.3 Contributions By Certain Caesars Parties. On the Closing Date,
substantially simultaneously with the transactions set forth in Section 3.2
above:

(a) HIE Holdings shall contribute, transfer, convey, assign and deliver to
Growth Partners or its designated direct or indirect Subsidiary, and Growth
Partners or its designated direct or indirect Subsidiary shall receive and
accept from HIE Holdings, all of HIE Holdings’ right, title and interest in and
to the CIE Shares;

(b) Growth Partners shall issue to HIE Holdings, and HIE Holdings shall receive
and accept from Growth Partners, free and clear of any Liens (other than those
under any Ancillary Agreements), a total number of Class B Non-Voting Units
representing an aggregate economic interest in Growth Partners equal to the
Initial HIE Percentage Interest, in consideration for the contribution by HIE
Holdings to Growth Partners or its designated direct or indirect Subsidiary of
the CIE Shares as set forth above. For the avoidance of doubt, the Initial HIE
Percentage Interest is subject to potential increase following the Closing in
accordance with Sections 5.2 and 5.3;

(c) BondCo shall contribute, transfer, convey, assign and deliver to Growth
Partners or its designated direct or indirect Subsidiary, and Growth Partners or
its designated direct or indirect Subsidiary shall receive and accept from
BondCo, all of BondCo’s right, title and interest in and to the CEOC Notes;
provided that, for administrative convenience, BondCo shall withhold an amount
of the CEOC Notes otherwise subject to contribution at Closing in accordance
with Section 5.4 (if any); and

(d) Growth Partners shall issue to BondCo, and BondCo shall receive and accept
from Growth Partners, free and clear of any Liens (other than those under any
Ancillary Agreements), a total number of Class B Non-Voting Units representing
an aggregate economic interest in Growth Partners equal to the BondCo Percentage
Interest, in consideration for the contribution by BondCo to Growth Partners or
its designated direct or indirect Subsidiary of the CEOC Notes as set forth
above.

 

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Section 3.4 Admittance and Joinder. On the Closing Date, Growth Partners shall
admit (to the extent not already a member) each of CAC, CEC (if applicable), HIE
Holdings and BondCo as a member thereof, and shall effect the appropriate
recordation in the Growth Partners Operating Agreement and any other applicable
books and records of Growth Partners to evidence the issuance to each of CAC,
CEC (if applicable), HIE Holdings and BondCo of the respective Class A Voting
Units or Class B Non-Voting Units, as applicable, as set forth above. Each of
CAC, CEC (if applicable), HIE Holdings and BondCo shall join and agree to be
bound by and subject to the applicable terms and conditions of the Growth
Partners Operating Agreement.

ARTICLE IV

SALE AND PURCHASE OF ASSETS

Section 4.1 PHWLV Equity. Upon the terms and subject to the conditions of this
Agreement, including the receipt of all Gaming Licenses, on the Closing Date,
PHW Las Vegas shall sell, transfer, convey, assign and deliver to Growth
Partners or its designated direct or indirect Subsidiary, and Growth Partners or
its designated direct or indirect Subsidiary shall purchase and acquire from PHW
Las Vegas, all of PHW Las Vegas’s right, title and interest in and to the PHWLV
Equity, in partial consideration for the payment by Growth Partners of the
Purchase Price as set forth below.

Section 4.2 PH Fee Stream.

(a) Upon the terms and subject to the conditions of this Agreement, including
the receipt of all Gaming Licenses, on the Closing Date, PHW Manager shall sell,
transfer, convey, assign and deliver to Growth Partners, and Growth Partners
shall purchase and acquire from PHW Manager, all of PHW Manager’s right, title
and interest in and to the PH Fee Stream, and Growth Partners’ designated direct
Subsidiary shall accept such transfer pursuant to a duly executed agreement
delivered in accordance with Section 10.3(f)(vi), in partial consideration for
the payment by Growth Partners of the Purchase Price as set forth below.

(b) Growth Partners irrevocably covenants and agrees that neither Growth
Partners nor any of its Subsidiaries or Affiliates shall attempt to recover or
shall recover from PHW Manager any amounts of the PH Fee Stream unless such
amounts have actually been earned and received by PHW Manager.

Section 4.3 CBIC Equity. Upon the terms and subject to the conditions of this
Agreement, including the receipt of all Gaming Licenses, on the Closing Date,
CBAC shall sell, transfer, convey, assign and deliver to Growth Partners or its
designated direct or indirect Subsidiary, and Growth Partners or its designated
direct or indirect Subsidiary shall purchase and acquire from CBAC, all of
CBAC’s right, title and interest in and to the CBIC Equity, in partial
consideration for the payment by Growth Partners of the Purchase Price as set
forth below.

Section 4.4 Baltimore Fee Stream.

(a) Upon the terms and subject to the conditions of this Agreement, including
the receipt of all Gaming Licenses, on the Closing Date, Baltimore Manager shall
sell,

 

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transfer, convey, assign and deliver to Growth Partners, and Growth Partners
shall purchase and acquire from Baltimore Manager, all of Baltimore Manager’s
right, title and interest in and to the Baltimore Fee Stream, and Growth
Partners’ designated direct Subsidiary shall accept such transfer pursuant to a
duly executed agreement delivered in accordance with Section 10.3(f)(vi), in
partial consideration for the payment by Growth Partners of the Purchase Price
as set forth below.

(b) Growth Partners irrevocably covenants and agrees that neither Growth
Partners nor any of its Subsidiaries or Affiliates shall attempt to recover or
shall recover from Baltimore Manager any amounts of the Baltimore Fee Stream
unless such amounts have actually been earned and received by Baltimore Manager.

ARTICLE V

PURCHASE PRICE; ADJUSTMENTS; RESTORATION

Section 5.1 Purchase Price; Holdback; Settlement Agent.

(a) Purchase Price. In consideration for the Purchased Assets, at the Closing,
Growth Partners shall pay or cause to be paid to the Settlement Agent, on behalf
of and in its capacity as agent for the Sellers, by wire transfer of immediately
available funds, an aggregate amount equal to $360,000,000 (the “Purchase
Price”). The Settlement Agent shall, in its capacity as agent for Sellers,
allocate the Purchase Price as set forth on Annex B and pay the Purchase Price
to CEOC, by direction of the Sellers.

(b) Cash Consideration Holdback. Notwithstanding the foregoing, at the Closing,
only in the event that a Deferred Closing is required, a portion of the cash
consideration shall be withheld from the Purchase Price (the “Holdback Amount”),
in respect of the Deferred Assets, and shall be deposited into an escrow account
(the “Escrow Account”) with the Settlement Agent (as defined below) in the
amount allocable to such Deferred Assets as set forth on Annex B. The Escrow
Account shall be held and disbursed by the Settlement Agent in accordance with
the terms of this Agreement (including Section 6.2) and the Settlement
Agreement. The respective Seller shall be treated as the owner of the funds
deposited in the Escrow Account for all Tax purposes.

(c) Settlement Agent. Prior to the Closing Date, Growth Partners, CEOC and the
Sellers shall enter into a settlement and escrow agreement (the “Settlement
Agreement”) with a bank, trust company or other financial institution as may be
designated by CEC and reasonably acceptable to Growth Partners (the “Settlement
Agent”), which shall appoint the Settlement Agent as the agent to receive and/or
hold, in separate accounts, (i) the Purchase Price, for the benefit of the
Sellers and to be paid to CEOC at the Closing by direction of the Sellers and
(ii) the Holdback Amount, if any, in accordance with the terms of this Agreement
and the Settlement Agreement.

Section 5.2 CIE Deal Protection. If, prior to the date that is nine (9) months
following the Closing Date, Growth Partners or any subsidiary thereof agrees to
sell, or sells, all of the CIE Shares or all or a Material Component of the
business of CIE (whether through the

 

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sale of equity interests or assets, merger, consolidation or otherwise) to any
Person other than CEC or its Affiliates, then, substantially concurrent with the
closing of such sale, Growth Partners shall issue to HIE Holdings a number of
Class B Non-Voting Units equal to the CIE Make-Whole (by properly reflecting it
in Growth Partners’ books and records in accordance with the Growth Partners
Operating Agreement). Growth Partners shall notify CEC not less than three
(3) Business Days (i) following entry into an agreement to effect any such sale
(and shall provide CEC copies of all agreements) and (ii) prior to the
anticipated closing thereof.

Section 5.3 Earn-Out Payment.

(a) No later than March 15, 2016, Growth Partners shall deliver to HIE Holdings
a reasonably detailed statement (the “Earn-Out Statement”) that sets forth
Growth Partners’ good faith calculation of the Earn-Out Payment, if any (the
“Initial Earn-Out Amount”).

(b) The Earn-Out Statement shall become final and binding upon Growth Partners
and HIE Holdings not later than the thirtieth (30th) day following the date on
which the Earn-Out Statement is delivered to HIE Holdings, unless HIE Holdings,
within such thirty (30) day period, notifies Growth Partners in writing of any
objections thereto (the “Earn-Out Objection”). If (i) HIE Holdings accepts the
Earn-Out Statement within such thirty (30) days or (ii) no Earn-Out Objection is
delivered by HIE Holdings within such thirty (30) days, then the Earn-Out
Statement shall be final and binding upon Growth Partners and HIE Holdings, and
Growth Partners shall, within five (5) Business Days after the acceptance or
deemed acceptance of the Earn-Out Statement by HIE Holdings, issue to HIE
Holdings additional Class B Non-Voting Units (by reflection on Growth Partners’
books and records) equal to the Initial Earn-Out Amount in accordance with the
Growth Partners Operating Agreement. HIE Holdings’ receipt of the benefit of the
Initial Earn-Out Amount shall be treated as an adjustment to the amount of HIE
Holdings’ capital contribution for U.S. federal, state and local income tax
purposes.

(c) If the Earn-Out Objection is delivered within such thirty (30) days, then
promptly following Growth Partner’s receipt of the Earn-Out Objection, Growth
Partners and HIE Holdings shall negotiate in good faith in an effort to resolve
any objections made by HIE Holdings with respect to the Earn-Out Statement
and/or the Initial Earn-Out Amount, and in the event and to the extent that HIE
Holdings and Growth Partners resolve such proposed revisions (the “Agreed
Earn-Out Adjustments”), the Agreed Earn-Out Adjustments shall be, to the extent
of such resolutions, final and binding on Growth Partners and HIE Holdings. If
all of HIE Holdings’ objections are resolved by the Parties, Growth Partners
shall within five (5) Business Days thereafter issue to HIE Holdings additional
Class B Non-Voting Units (by reflection on Growth Partners’ books and records)
equal to the sum of the Initial Earn-Out Amount and the Agreed Earn-Out
Adjustments in accordance with the Growth Partners Operating Agreement. HIE
Holdings’ receipt of the benefit of the Initial Earn-Out Amount and the Agreed
Earn-Out Adjustments shall be treated as an adjustment to the amount of HIE
Holdings’ capital contribution for U.S. federal, state and local income tax
purposes.

(d) If there remain any unresolved objections to the Earn-Out Statement and/or
the Initial Earn-Out Amount after thirty (30) days of Growth Partner’s receipt

 

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of the Earn-Out Objection, then Growth Partners shall, within five (5) Business
Days thereafter, issue to HIE Holdings additional Class B Non-Voting Units (by
reflection on Growth Partners’ books and records) equal to the portion of the
Initial Earn-Out Amount with respect to which there is no dispute, and the
disputed portion shall be subject to the dispute resolution procedures set forth
in Section 5.5 below.

(e) Subsequent to the Closing and through and including December 31, 2015,
Growth Partners shall not take, or omit to take, any action intended primarily
to avoid or reduce the Earn-Out Payment that would otherwise be payable
hereunder.

Section 5.4 Restoration of Fair Market Value of the Subscription Rights. It is
the express intention of the Parties that the aggregate fair market value of the
Subscription Rights be restored to CEC by CAC. Accordingly, for administrative
convenience, BondCo shall withhold from its contribution to Growth Partners (or
its designated direct or indirect Subsidiary), and shall not contribute, an
amount of CEOC Notes (otherwise subject to contribution as set forth in
Section 3.2) with an aggregate value (determined in accordance with the CEOC
Notes Closing Valuation Methodology) equal to the Rights FMV (the “CEOC Notes
Restoration Amount”). For the avoidance of doubt, and in accordance with the
Growth Partners Operating Agreement, such CEOC Notes withheld by BondCo pursuant
to the previous sentence shall nonetheless be treated as having been contributed
by BondCo to Growth Partners (or its designated direct or indirect Subsidiary)
and the number of Class B Non-Voting Units held by CEC or its Subsidiaries
and/or the Class A Voting Units held by CAC shall not be reduced by such
withholding by BondCo, but CAC’s Capital Account and Class A Unit Net Capital
(both as defined in the Growth Partners Operating Agreement) shall be reduced by
an amount equal to the CEOC Notes Restoration Amount pursuant to the terms of
the Growth Partners Operating Agreement.

Section 5.5 Dispute Resolution. In the event of a dispute with respect to the
CIE Make-Whole and/or the Earn-Out Statement, if the involved Parties are unable
to come to mutual agreement, CAC shall promptly nominate three (3) New York, New
York offices of nationally recognized firms of independent certified public
accountants from which CEC shall then promptly select the designated firm (such
selected firm, the “Valuation Firm”). The Valuation Firm shall be directed to
render its determination within thirty (30) days of the dispute being submitted
to it. Judgment may be entered upon the determination of the Valuation Firm
(such determination, if any, the “Valuation Firm Decision”) in a Chosen Court or
any other court having jurisdiction over the Party against which the Valuation
Firm Decision is to be enforced. No later than five (5) Business Days after the
final determination of the Valuation Firm Decision, Growth Partners shall cause
to be reflected on Growth Partners’ books and records such adjustment, if any,
as is necessary to appropriately account for the Valuation Firm Decision. Growth
Partners shall be responsible for the costs and expenses of the Valuation Firm.

Section 5.6 Withholding. Growth Partners shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as Growth Partners is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign Tax law. To the extent that such amounts are so withheld and paid
over to the proper Governmental Entity by Growth Partners, such withheld and
deducted amounts will be treated for all purposes of this Agreement as having

 

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been paid to the respective Seller or other Person in respect of which such
deduction and withholding was made by Growth Partners. Growth Partners shall
deliver to such Seller or other Person, upon request, a receipt evidencing the
payment of any such withheld and deducted amounts to the appropriate
Governmental Entity.

ARTICLE VI

CLOSING; DEFERRED CLOSING

Section 6.1 Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New
York, 10019, or such other place as the Parties may mutually agree, on the third
(3rd) Business Day (or on such other date as is agreed to among the Parties,
which may include the date hereof) following the satisfaction or waiver of the
conditions set forth in Article X (other than any conditions that by their terms
are to be satisfied or waived at the Closing, but subject to the satisfaction or
waiver of such conditions) (the “Closing Date”). Notwithstanding the foregoing,
in the event of a Bifurcated Closing, (x) “Closing” shall mean the distribution
of the Subscription Rights pursuant to Section 2.2, consummation of all or a
part of the Sponsor Commitment, the contribution of the Contributed Assets
pursuant to Section 3.3 and the purchase and sale of the Purchased Assets
pursuant to Article IV, (y) “Closing Date” shall mean the date on which the
foregoing transactions are consummated and (z) “Rights Offering Closing” and
“Rights Offering Closing Date” shall mean the consummation of the Rights
Offering and the date on which the consummation of the Rights Offering occurs.

Section 6.2 Deferred Closings.

(a) If, as of the Closing Date, (i) there is an applicable Law then in effect or
a Governmental Entity shall have issued or entered an Order that is then in
effect, either or both of which has the effect of restraining, enjoining, or
making illegal the Purchase Transaction or otherwise prohibiting the
consummation of the purchase by Growth Partners of a Purchased Asset, (ii) any
material Permit or Gaming License that is required to consummate the purchase by
Growth Partners of a Purchased Asset or the contribution to Growth Partners of a
Contributed Asset shall not have been obtained or (iii) any consent listed on
Schedule 10.3(d) shall not have been obtained with respect to a Purchased Asset
specified therein, then the closing of the transactions contemplated hereby (the
“Deferred Closing”) with respect to such Purchased Asset (each, a “Deferred
Asset”) shall be deferred until (but shall occur on) the third (3rd) Business
Day (a “Deferred Closing Date”) following the satisfaction or waiver (other than
those conditions that by their nature can only be satisfied or waived at the
Closing, but subject to the satisfaction or waiver of those conditions) of the
conditions described in Section 10.4 with respect to such Deferred Asset.

(b) Until the Deferred Closing Outside Date (as defined below), the respective
Seller and Growth Partners shall, to the extent consistent with any applicable
legal or fiduciary obligation under applicable Law (including, for the avoidance
of doubt, any Gaming Laws and Gaming Licenses), take all actions as are
necessary such that Growth Partners will, in compliance with applicable Law,
obtain the benefits and assume the obligations and bear the

 

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economic burdens associated with owning and operating a Deferred Asset for the
period between the Closing and the Deferred Closing with respect to such
Deferred Asset, subject, in each case, to the actual occurrence, if at all, of
the Deferred Closing with respect to such Deferred Asset. Notwithstanding the
foregoing, during the period beginning on the Closing Date and ending on the
earlier of the Deferred Closing Date and the Deferred Closing Outside Date,
except as Growth Partners may consent in writing, the respective Seller shall
conduct the operations of the Deferred Asset in the ordinary course consistent
with past practice; provided that the respective Seller shall not, and shall not
permit the Deferred Asset to: (i) except in the ordinary course of business,
incur or assume any liabilities, obligations or indebtedness for borrowed money;
(ii) make or pay any dividend or distribution, whether of cash or other assets
on a non pro rata basis (such dividends or distributions to be paid to Growth
Partners upon the applicable Deferred Closing Date); or (iii) sell, lease,
license or otherwise dispose of any asset of the Deferred Asset to any Person
except for sales of inventory or product in the ordinary course of business.

(c) At each Deferred Closing, if any, Growth Partners and the respective Seller
shall execute and deliver joint written instructions to the Settlement Agent
instructing the Settlement Agent to release from the Escrow Account to the
Settlement Agent, on behalf of and in its capacity as agent for the respective
Seller, by wire transfer to an account or accounts designated by the respective
Seller (or by such designee), the portion of the Holdback Amount attributed to
such Deferred Asset (as set forth in Annex B hereto). As promptly as practicable
following the first (1st) anniversary of the date of this Agreement (as may be
extended pursuant to the following proviso, the “Deferred Closing Outside
Date”), Growth Partners and CEC shall execute and deliver joint written
instructions to the Settlement Agent instructing the Settlement Agent to release
any remaining Holdback Amount then held in the Escrow Account (or right or claim
thereto) to Growth Partners, and the Purchase Price shall be adjusted downward
to reflect any such relinquishment to Growth Partners (and the respective Seller
shall have no further obligation to transfer any remaining Deferred Assets to
Growth Partners); provided, however, that, as long as the respective Sellers are
using their reasonable efforts to secure all requisite approvals, such Deferred
Closing Outside Date shall be extended to the earlier of (i) the third
(3rd) Business Day after the date on which all approvals from a Governmental
Entity required to complete the applicable Deferred Closings are received and
(ii) the third (3rd) anniversary of the date of this Agreement.

(d) At each Deferred Closing, if any, (i) CAC and Growth Partners shall deliver
to the relevant Seller any of the documents or other deliverables required to be
delivered pursuant to Section 10.2 to the extent related to the Deferred Asset
and not previously delivered to the relevant Seller at the Closing, and (ii) the
relevant Seller shall deliver to CAC and Growth Partners any of the documents or
other deliverables required to be delivered pursuant to Section 10.3, to the
extent related to the Deferred Asset and not previously delivered to CAC and/or
Growth Partners at the Closing, provided that in the case of any Deferred
Closing occurring more than thirty (30) days after the Closing Date, the
relevant Seller shall deliver the certificate described in Section 10.3(f)(v) at
such Deferred Closing (even if such Seller previously delivered such a
certificate at the Closing).

(e) In respect of each Deferred Asset, the respective Seller and Growth Partners
shall continue to comply through the applicable Deferred Closing Date (or
Deferred Closing Outside Date) with all covenants and agreements contained in
this Agreement that are required by their terms to be performed prior to the
Closing, including the covenants of the Parties contained in Article IX.

 

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(f) For the avoidance of doubt, a Deferred Closing may apply to a Bifurcated
Closing.

(g) Unless otherwise required by applicable Law, for U.S. federal and applicable
state income tax purposes, the Parties shall treat each Deferred Asset as having
been transferred to Growth Partners on the Closing Date.

ARTICLE VII

REPRESENTATIONS OF THE CAESARS PARTIES

Except as set forth in the disclosure schedule delivered to CAC and Growth
Partners prior to the execution of this Agreement (the “Caesars Disclosure
Schedule”) (provided that disclosure in any section of the Caesars Disclosure
Schedule shall apply to any other section to the extent that the relevance of
such disclosure to such other section is readily apparent on its face), each of
the Caesars Parties, jointly and severally, represents and warrants to CAC and
Growth Partners as of the date hereof and as of the Closing Date (if different)
as follows:

Section 7.1 Organization and Qualification; Subsidiaries.

(a) Each Caesars Party is duly organized, validly existing and in good standing
under the Laws of its respective jurisdiction of organization, and has all
requisite corporate or limited liability company power and authority to own,
lease and operate its properties and to carry on its businesses as presently
conducted. Each Caesars Party is duly licensed or qualified to do business and
is in good standing in each jurisdiction where the conduct of its business
requires such licensure or qualification, except where the failure to be so
licensed or qualified or in good standing or to have such power or authority has
not had or would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Transferred Assets taken as a whole.
CEC has made available to Growth Partners prior to the date hereof, as
applicable, complete and accurate copies of the Governing Documents of each
Transferred Asset comprised of equity and, to the extent in existence, the stock
or interest record book, the minute book and other corporate or similar
organizational records of each such Transferred Asset.

(b) At the Closing, PHWLV will be duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization, and will have all
requisite corporate or limited liability power and authority to own, lease and
operate its respective properties and to carry on its businesses as presently
conducted. At the Closing, PHWLV will be duly licensed or qualified to do
business and will be in good standing in each jurisdiction where the conduct of
its business requires such licensure or qualification, except where the failure
to be so licensed or qualified or in good standing or to have such power or
authority has not had or would not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the Transferred Assets taken
as a whole. PHWLV shall have engaged in no business other than holding the
assets and liabilities owned by PHW Las

 

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Vegas immediately prior to the contribution and assignment referred to in
Section 10.3(c), and shall at the Closing have good and marketable title to such
assets and liabilities, free and clear of any Liens, other than Permitted Liens.

Section 7.2 Power and Authority. Each Caesars Party has all requisite power and
authority, and has taken all action necessary, to execute, deliver and perform
this Agreement and the other Ancillary Agreements to which such Caesars Party is
or will be a party, and to consummate the transactions contemplated by this
Agreement and the other Ancillary Agreements to which such Caesars Party is or
will be a party.

Section 7.3 Due Execution and Enforceability. This Agreement and each other
Ancillary Agreement to which each Caesars Party is or will be a party has been
duly and validly executed and delivered by such Caesars Party and, assuming the
due authorization, execution and delivery of this Agreement and each respective
Ancillary Agreement by CAC and Growth Partners, respectively, constitutes the
legal, valid and binding obligation of each such Caesars Party, enforceable
against each of them in accordance with its terms, subject to the effect of any
applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or preferential transfers, or similar Laws relating to or
affecting creditors’ rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at Law).

Section 7.4 Ownership; Title; Capitalization.

(a) Each Caesars Party (other than CEC) has good and marketable title to its
respective Transferred Asset, free and clear of any Liens, other than Permitted
Liens. At the Closing, each Caesars Party (other than CEC) will transfer to
Growth Partners good and marketable title to its respective Transferred Assets,
free and clear of any Liens, other than Permitted Liens.

(b) Section 7.4(b) of the Caesars Disclosure Schedule sets forth the entire
respective authorized and issued and outstanding equity interests of each of
CIE, PHWLV and CBIC. All of such issued and outstanding equity interests of each
of CIE, PHWLV and CBIC have been duly authorized and validly issued and, with
respect to CIE, are fully paid and non-assessable. No equity interests of CIE,
PHWLV or CIBC have been issued in violation of any applicable federal, state or
foreign securities Laws or any preemptive or similar rights. There are no
options, warrants, conversion privileges, subscription or purchase rights or
other rights presently outstanding to purchase or otherwise acquire any equity
interests in CIE, PHWLV or CBIC or any right to participate in the profits or
other proceeds of CIE, PHWLV or CBIC, and there are no commitments, contracts,
agreements, arrangements or understandings by any Caesars Party to issue any
equity interests of CIE, PHWLV or CBIC. There are no outstanding or authorized
stock-appreciation, phantom stock or similar rights with respect to CIE, PHWLV
or CBIC. There are no voting trusts, proxies or any other agreements or
understandings with respect to the voting of the equity interests in CIE, PHWLV
or CBIC. There are no Contracts between HIE Holdings, PHW Las Vegas and CBAC,
respectively, and any other Person with respect to the acquisition, disposition
or voting of, or any other matters pertaining to, any of the equity interests of
CIE, PHWLV or CIBC, respectively.

(c) Each Caesars Party and their respective Subsidiaries own good title to, or
hold pursuant to valid and enforceable leases, all of the assets shown to be
owned by them on the Financial Statements (except for such property sold or
disposed of subsequent to the date thereof in the ordinary course of business).

 

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Section 7.5 Consents and Approvals; No Violations. No material Consent from any
Governmental Entity, including any Gaming Authority, is required to be made or
obtained by any of the Caesars Parties in connection with the execution,
delivery and performance by the Caesars Parties of their respective obligations
under this Agreement and the other Ancillary Agreements to which such Caesars
Party is or will be a party, or the consummation by the Caesars Parties of the
transactions contemplated hereby and thereby. Neither the execution and delivery
of this Agreement and the Ancillary Agreements by the Caesars Parties nor the
performance by the Caesars Parties of their obligations nor the consummation of
the transactions contemplated hereby or thereby will (a) violate, result in a
breach of, or constitute a default under their respective Governing Documents or
the Governing Documents of their respective Subsidiaries, (b) violate, result in
a breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to the creation of any Lien, except for Permitted Liens,
or any right of termination, amendment, cancellation or acceleration) under, any
of the terms, conditions or provisions of any material Contract or (c) violate
or infringe any Law (including Gaming Laws) or Order applicable to any Caesars
Party or any of the Transferred Assets, except in the case of clause (b) for
violations, breaches, defaults, Liens or other rights that have not had or would
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Transferred Assets taken as a whole, or on the ability of
any Caesars Party to perform its obligations under this Agreement and each
Ancillary Agreement to which it is a party or to consummate the transactions
contemplated hereby or thereby.

Section 7.6 Gaming Licenses. There have been no proceedings to rescind or
suspend the Gaming Licenses applicable to the business of any Caesars Party that
owns a Transferred Asset or PHWLV since January 1, 2011, and to the actual
knowledge of any senior executive officer of any of the Caesars Parties, no
Gaming Authority is investigating or has concluded that any Caesars Party that
owns a Transferred Asset or PHWLV has breached any relevant Gaming Law or any
applicable conduct restriction.

Section 7.7 Compliance with Law; Gaming Licenses; No Default. None of the
Caesars Parties or PHWLV is or since January 1, 2011 has been in default with
respect to or in violation of any Laws or Orders (including Gaming Laws)
applicable to a Transferred Asset, in each case in any material respect. The
Caesars Parties and PHWLV have all material Permits applicable to a Transferred
Asset (including all Permits, findings of suitability, exemptions and waivers
under Gaming Laws) required to own, lease and operate their properties, and
conduct their businesses as currently conducted (or, in the case of PHWLV, as
contemplated to be conducted). Since January 1, 2011, there has occurred no
violation of, suspension, reconsideration, imposition of material penalties or
fines, imposition of adverse conditions or requirements or default (with or
without notice or lapse of time or both) under any such Permit applicable to a
Transferred Asset other than expirations of Permits in the ordinary course of
business that would not be, individually or in the aggregate, material to the
business. The Caesars Parties and PHWLV are in compliance with the terms of all
Permits applicable to a Transferred Asset in all material respects.

 

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Section 7.8 Brokers. No agent, broker, investment banker, financial advisor or
other firm or Person is or shall be entitled, as a result of any action,
agreement or commitment of the Caesars Parties to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated hereby.

Section 7.9 Financial Statements. CEC has furnished CAC and Growth Partners with
true, correct and complete copies of the financial statements set forth on
Section 7.9 of the Caesars Disclosure Schedule (the “Financial Statements”).
Such Financial Statements have been based upon the information concerning the
Transferred Assets contained in the books and records of the Caesars Parties and
their respective Subsidiaries, and present fairly in all material respects the
financial condition and results of operations of the relevant Caesars Parties
and their respective Subsidiaries as of the times and for the periods referred
to therein in accordance with GAAP (subject, in the case of unaudited financial
statements, to normal year-end audit adjustments, absence of footnotes and other
presentation items).

Section 7.10 Indebtedness; CBAC Funding.

(a) As of the date hereof, PHW Las Vegas has no indebtedness for borrowed money.
At the Closing, PHWLV will have no indebtedness for borrowed money.

(b) Prior to April 23, 2013, CBAC has indirectly invested an aggregate amount of
not less than $18,000,000 in the Baltimore JV.

Section 7.11 Litigation. There are no material grievances, actions, suits or
proceedings, at law or in equity, by any Person nor any arbitrations, or
administrative or other proceedings by or before any Governmental Authority
pending, or, to the knowledge of the Caesars Parties, threatened against or
adversely affecting any of the Transferred Assets. None of the Transferred
Assets, nor any of the Caesars Parties in respect of the Transferred Assets is
subject to any outstanding material Order entered in any lawsuit or proceeding.

Section 7.12 Accuracy. The sections of the Registration Statement and the
Prospectus that describe the Transferred Assets contain no untrue statement of a
material fact, or omit to state any material fact necessary in order to make the
statements contained therein not misleading.

Section 7.13 Taxes.

(a) All income and other material Tax returns required to be filed by or with
respect to CIE and PHWLV have been timely filed in accordance with applicable
Law, and all such Tax returns are true, correct and complete in all material
respects. Neither CIE nor PHWLV is currently the beneficiary of any extension of
time within which to file any income or other material Tax return. CIE and PHWLV
have timely paid all material Taxes required to be paid by them in accordance
with applicable Law.

 

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(b) There are no Tax audits, assessments, disputes or other proceedings
currently pending or, to the knowledge of the Caesars Parties, threatened in
writing against CIE or PHWLV. No claim has been made or threatened in writing in
a jurisdiction where CIE or PHWLV does not file Tax returns that CIE or PHWLV is
or may be subject to taxation in that jurisdiction.

(c) There are no Liens for Taxes on the assets of CIE or PHWLV other than
statutory Liens for current Taxes not yet due and payable.

(d) Neither CIE nor PHWLV is party to any Contract relating to the sharing,
allocation or indemnification of Taxes other than a Contract entered into in the
ordinary course of business that does not relate primarily to Taxes, and neither
CIE nor PHWLV has any liability for Taxes of any Person as a transferee or
successor, by any such Contract or by applicable Law.

(e) None of the Transferred Assets and none of the assets of CIE and PHWLV
(i) are property required to be treated as owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (ii) constitute “tax-exempt use property” within the meaning of
Section 168(h) of the Code, (iii) are “tax-exempt bond financed property” within
the meaning of Section 168(g) of the Code, (iv) secure any debt the interest of
which is tax-exempt under Section 103(a) of the Code or (v) are subject to a
“section 467 rental agreement” within the meanings of Section 467 of the Code.

(f) Neither CIE nor PHWLV will be required to include any material item of
income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) deferred intercompany transaction or excess
loss account under Section 1502 of the Code and the regulations promulgated
thereunder (or any corresponding or similar provision of state, local or
non-U.S. Law), (iii) installment sale made or open transaction entered into on
or prior to the Closing Date, (iv) prepaid amount received on or prior to the
Closing Date or (v) election made pursuant to Section 108(i) of the Code.

(g) Neither CIE nor PHWLV has entered into any “reportable transaction” within
the meaning of Treasury Regulation Section 1.6011-4(b)(1) or any analogous
provision of state, local or non-U.S. Law. CIE has not been party within the
last two (2) years to any transaction intended to qualify under Section 355 of
the Code or so much of Section 356 of the Code as relates to Section 355 of the
Code.

(h) PHWLV is, and since its inception has always been, properly classified as a
disregarded entity for U.S. federal and relevant state income tax purposes.

 

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ARTICLE VIII

REPRESENTATIONS OF CAC AND GROWTH PARTNERS

Each of CAC and Growth Partners, jointly and severally, represents and warrants
to the Caesars Parties as of the date hereof and as of the Closing Date (if
different) as follows:

Section 8.1 Organization and Qualification; Subsidiaries. Each of CAC and Growth
Partners is duly organized, validly existing and in good standing under the Laws
of the State of Delaware, and has all requisite corporate or limited liability
company power and authority to own, lease and operate its properties and to
carry on its businesses as presently conducted. Each of CAC and Growth Partners
is duly licensed or qualified to do business and is in good standing in each
jurisdiction where the conduct of its business requires such licensure or
qualification. Growth Partners is a wholly-owned Subsidiary of CAC.

Section 8.2 Power and Authority. Each of CAC and Growth Partners has all
requisite corporate or limited liability company power and authority, and has
taken all action necessary, to execute, deliver and perform its obligations
under this Agreement and the other Ancillary Agreements to which it is or will
be a party, and to consummate the transactions contemplated by this Agreement
and the other Ancillary Agreements to which such Caesars Party is or will be a
party.

Section 8.3 Due Execution and Enforceability. This Agreement and each other
Ancillary Agreement to which each of CAC and Growth Partners is or will be a
party has been duly and validly executed and delivered by such Party and,
assuming the due authorization, execution and delivery of this Agreement and
each respective Ancillary Agreement by the Caesars Parties, respectively,
constitutes the legal, valid and binding obligation of each of CAC and Growth
Partners, enforceable against each of them in accordance with its terms, subject
to the effect of any applicable Laws relating to bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or preferential transfers, or
similar Laws relating to or affecting creditors’ rights generally and subject,
as to enforceability, to the effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding at equity or at
Law).

Section 8.4 Consent and Approvals; No Violations. No material Consent from any
Governmental Entity, including any Gaming Authority, is required to be made or
obtained by CAC or Growth Partners in connection with the execution, delivery
and performance by it of its obligations under this Agreement and the other
Ancillary Agreements to which it is or will be a party, or the consummation by
it of the transactions contemplated hereby and thereby, except applicable Gaming
Licenses. Neither the execution and delivery of this Agreement and the Ancillary
Agreements by CAC or Growth Partners nor the performance by such Party of its
obligations nor the consummation of the transactions contemplated hereby or
thereby will (a) violate, result in a breach of, or constitute a default under
their respective Governing Documents, (b) violate, result in a breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to the creation of any Lien, except for Permitted Liens, or any right
of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any material Contract to which either CAC or
Growth Partners is a party, except in

 

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the case of clause (b) for violations, breaches, defaults, Liens or other rights
that have not had or would not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the ability of CAC and Growth
Partners to perform their respective obligations under this Agreement and each
Ancillary Agreement to which they are a party or to consummate the transactions
contemplated hereby or thereby, or (c) violate or infringe any Law or Order
applicable to CAC or Growth Partners.

Section 8.5 Independent Investigation; No Other Representations or Warranties.
Each of CAC and Growth Partners agrees that neither the Caesars Parties nor any
of their Affiliates or advisors has made and shall not be deemed to have made,
nor has CAC or Growth Partners nor any of their Affiliates relied on, any
representation or warranty, express or implied, with respect to the Caesars
Parties, their Subsidiaries, their business or the transactions contemplated by
this Agreement, other than those representations and warranties explicitly set
forth in Article VII of this Agreement. Each of CAC and Growth Partners further
covenants, acknowledges and agrees that it (a) has made its own investigation
into, and based thereon has formed an independent judgment concerning, the
Caesars Parties, their Subsidiaries and their businesses and (b) has been given
adequate access to such information about the Caesars Parties, their
Subsidiaries and their businesses as CAC and Growth Partners have reasonably
requested.

Section 8.6 Compliance with Law. Neither CAC nor Growth Partners is or since its
respective formation has been in default with respect to or in violation of any
Laws or Orders (including Gaming Laws) applicable to it.

Section 8.7 Provision for Call and Liquidation Rights. From and after the
Closing Date, the CAC Charter, the Growth Partners Operating Agreement and/or
any other Governing Documents of either of CAC and Growth Partners will contain
provisions sufficient to provide for the full exercise (together with the Voting
Agreement) of each of the Call Right and the Liquidation Right for the full
duration of each thereof, in each case as described in the Prospectus.

Section 8.8 Brokers. No agent, broker, investment banker, financial advisor or
other firm or Person is or shall be entitled, as a result of any action,
agreement or commitment of CAC or Growth Partners to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated hereby.

ARTICLE IX

ADDITIONAL AGREEMENTS

Section 9.1 Gaming Licenses. CEC, CAC and their respective Subsidiaries, as
necessary, have previously prepared and caused to be filed all required initial
applications and documents in connection with obtaining and maintaining the
Gaming Licenses (including where appropriate indications of further information
to come by supplementary filing) required in connection with the Transactions.
CAC and Growth Partners, on the one hand, and the Caesars Parties, on the other
hand, agree to comply with the terms and conditions of all such Gaming Licenses
(including the maintenance of any existing Gaming Licenses) and to promptly and
in

 

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good faith respond to, and to cause their respective officers, managers,
directors, members, stockholders and Affiliates to promptly and in good faith
respond to, all requests for information by any Gaming Authority in connection
with such applications and otherwise cooperate in good faith with each other and
such Gaming Authorities. Each Party will notify the other promptly of receipt of
material comments or material requests from any Gaming Authority that relate to
Gaming Licenses. CAC and Growth Partners, on the one hand, and the Caesars
Parties, on the other hand, agree to promptly advise each other upon receiving
any communication from any Gaming Authority that causes such Party to believe
that there is a reasonable likelihood that any Gaming Licenses required from
such Gaming Authority will not be obtained or that the receipt of any such
approval will be materially delayed. For the avoidance of doubt, notwithstanding
the foregoing, in no event shall any Caesars Party in its reasonable judgment be
required to take any action, or to refrain from taking any action, that would be
reasonably likely to interfere with or be adverse or damaging to CEC’s ongoing
relationship with any Gaming Authority.

Section 9.2 Conduct of Business. Except to the extent required by this Agreement
or any Ancillary Agreement, during the period from the date of this Agreement to
the Closing or the date on which this Agreement is terminated pursuant to
Section 11.1, each of the Caesars Parties shall, and will cause each of its
Subsidiaries to, conduct their respective businesses with respect to the
Transferred Assets and the properties and businesses underlying such Transferred
Assets in the ordinary course consistent with past practice and in compliance
with Law, in each case in all material respects.

Section 9.3 Access to Information.

(a) During the period from the date of this Agreement to the earlier of the
Closing or the date on which this Agreement is terminated pursuant to
Section 11.1, upon reasonable notice and subject to applicable Laws relating to
the exchange of information, each Party shall, and shall cause each of its
Subsidiaries to, afford to the other Parties and their Representatives
reasonable access during normal business hours to all of its and its
Subsidiaries’ properties, books and records, Contracts and authorized
Representatives with respect to the Transferred Assets and the properties and
businesses underlying the Transferred Assets. Each Party shall, and shall cause
its Subsidiaries and their respective Representatives to, use reasonable efforts
to prevent such access and inspection from materially interfering with the
business operations of the other Parties.

(b) During the period from the Closing Date to the fourth (4th) anniversary of a
Liquidation Event (each as defined in the Growth Partners Operating Agreement)
or for such longer period as may be required by applicable Law, the Caesars
Parties shall retain all original accounting books and records relating to the
Transferred Assets and the businesses underlying the Transferred Assets for the
period prior to the Closing Date. CAC, Growth Partners and their Representatives
shall have the reasonable right to inspect and to make copies (at their own
expense) of them at any time upon reasonable request during normal business
hours and upon reasonable notice for any proper purpose and without undue
interference to the business operations of the Caesars Parties. Caesars Parties
shall provide reasonable cooperation in connection with any such inspection and,
if requested by CAC, the relevant Caesars Party shall provide access to such
employees with knowledge of the books and records to assist in such
investigations.

 

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Section 9.4 Further Assurances. In addition to the actions specifically provided
for elsewhere in this Agreement, at any time and from time to time after the
execution of this Agreement and/or following the Closing, (a) at Growth
Partners’ reasonable request, the Caesars Parties shall do, execute, acknowledge
and deliver, or will cause its Subsidiaries or Affiliates to do, execute,
acknowledge and deliver, all and every such further acts and assurances as
Growth Partners reasonably may require to convey, transfer and vest in Growth
Partners (or its designated direct or indirect Subsidiary) the Transferred
Assets and to confirm Growth Partners’ (or its designated direct or indirect
Subsidiary’s) title to all the Transferred Assets and (b) the Parties shall do,
execute, acknowledge and deliver, or will cause its Subsidiaries or Affiliates
to do, execute, acknowledge and deliver, all and every such further acts and
assurances as reasonably required to carry out the provisions hereof and the
Transactions, including all necessary steps to effect the Call Right and/or the
Liquidation Right.

Section 9.5 Provision for Call and Liquidation Rights. From and after the
Closing Date, each of CAC and Growth Partners shall maintain in their respective
Governing Documents provisions sufficient to provide for the full exercise
(together with the Voting Agreement) of each of the Call Right and the
Liquidation Right for the full duration of each thereof, in each case as
described in the Prospectus. For the avoidance of doubt, any shares of common
stock of CEC received by the Sponsors in connection with the Call Right will be
covered by resale registration rights as provided in that certain CEC
Stockholders Agreement, dated as of January 28, 2008 (as it may be amended from
time to time in accordance with its terms).

Section 9.6 Public Announcements. No Party to this Agreement nor any Affiliate
or Representative of such Party shall issue or cause the publication of any
press release or public announcement in respect of this Agreement or the
transactions contemplated by this Agreement without the prior written consent of
the other Parties (which consent shall not be unreasonably withheld, conditioned
or delayed), except as may be required by applicable Law or stock exchange rules
(upon the advice of counsel) in which case the Party required to publish such
press release or public announcement shall use reasonable efforts to provide the
other Party a reasonable opportunity to comment on such press release or public
announcement in advance of such publication. The foregoing shall not restrict
communications between CEC and its investors in the ordinary course of business
consistent with past practice.

Section 9.7 Payment of Expenses. At or promptly following the Closing, Growth
Partners shall pay, or cause to be paid, to (i) CEC, the Offering Fees and
Expenses and (ii) CAC, the CAC Fees and Expenses, in each case, by wire transfer
of immediately available funds to an account or accounts previously designated
by such recipient. For U.S. federal income tax purposes, the parties agree that
such payments shall be treated as “guaranteed payments” within the meaning of
Section 707(c) of the Code made by Growth Partners to CEC and CAC.

Section 9.8 CVPR Sale. The members of the Baltimore JV have an agreement in
principle to sell approximately eighteen percent (18%) of the equity interest in
the Baltimore JV to CVPR Gaming Holdings, LLC, an existing member of the
Baltimore JV (the “CVPR Sale”). The CVPR Sale is subject to regulatory approval.
At or promptly following the closing of the CVPR Sale, Growth Partners shall
pay, or cause to be paid, to CEC, without offset, any

 

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and all proceeds received in connection with the CVPR Sale. The Parties agree
that none of the benefits and burdens of ownership of the equity interest in the
Baltimore JV that is to be transferred pursuant to the CVPR Sale shall transfer
to Growth Partners pursuant to this Agreement, and therefore, the Parties agree
to treat CEC as the owner of such equity interest for U.S. federal, state and
local income tax purposes.

ARTICLE X

CONDITIONS TO CLOSING

Section 10.1 Conditions to Obligations of Each Party to Close. The respective
obligations of each Party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver, at or prior to the
Closing Date, of each of the following conditions:

(a) No Injunctions, Illegality or Litigation. No Law or Order issued by any
Governmental Entity (including any Gaming Authority) shall have been adopted,
promulgated or issued that would prohibit, restrain, enjoin or render unlawful
the consummation of the transactions contemplated by this Agreement.

(b) Gaming Licenses. Any and all Gaming Licenses shall have been obtained, which
Gaming Licenses shall have been granted without the imposition of limitations,
restrictions or conditions materially adverse to CEC, CAC or Growth Partners,
and such Gaming Licenses shall be in full force and effect.

(c) Opinions. Each of the Evercore Opinions and the VRC Opinions shall have been
delivered by the respective provider thereof.

(d) Rights Distribution Date and Effectiveness of the Registration Statement.
Solely in the event of a Bifurcated Closing, the distribution of the
Subscription Rights, effectiveness of the Registration Statement and the Closing
shall occur on the same date.

Section 10.2 Conditions to the Obligations of the Caesars Parties. The
respective obligations of the Caesars Parties to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver,
at or prior to the Closing Date, of each of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of
CAC and Growth Partners set forth in Section 8.1 (Organization and
Qualification; Subsidiaries), Section 8.2 (Power and Authority), Section 8.3
(Due Execution and Enforceability) and Section 8.8 (Brokers) shall be true and
correct in all but de minimis respects as of the date of this Agreement and as
of the Closing Date as if made on and as of the Closing Date, and (ii) each of
the other representations and warranties of CAC and Growth Partners contained in
this Agreement shall be true and correct as of the Closing Date as if made on
and as of the Closing Date except (x) in each case of each of clauses (i) and
(ii), representations and warranties that are made as of a specific date shall
be tested only on and as of such date, and (y) in the case of clause (ii) only,
where the failure of such representations and warranties to be so true and
correct (without giving regard to any “material”, or “material adverse effect”
or any

 

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other materiality qualifications set forth therein) does not have, and would not
reasonably be expected to have individually or in the aggregate, a material
adverse effect on the ability of CAC and Growth Partners to perform their
respective obligations under this Agreement and each Ancillary Agreement to
which they are a party or to consummate the transactions contemplated hereby or
thereby.

(b) Covenants and Agreements. The covenants and agreements of each of CAC and
Growth Partners to be performed or complied with on or before the Closing Date
in accordance with this Agreement shall have been performed and complied with in
all material respects.

(c) Voting Agreement and Proxy. Each of the Voting Agreement and Proxy shall
have been executed by all parties thereto and be in full force and effect.

(d) Closing Deliverables. At the Closing, CAC and Growth Partners shall deliver,
or cause to be delivered, to the Caesars Parties:

(i) a certificate, dated as of the Closing Date and signed on behalf of CAC and
Growth Partners by an executive officer of each of CAC and Growth Partners (or
executive officer of its managing member), stating that the conditions specified
in Section 10.2(a) and Section 10.2(b) have been satisfied;

(ii) the Registration Rights Agreement;

(iii) the Ancillary Agreements intended to be executed at or in connection with
the Closing, duly executed by the parties thereto (other than the Caesars
Parties);

(iv) (1) to HIE Holdings, confirmations of book-entry transfer with respect to
the Class B Non-Voting Units issued pursuant to Section 3.3(d) and (2) to
BondCo, confirmations of book-entry transfer with respect to the Class B
Non-Voting Units issued pursuant to Section 3.3(d);

(v) payment to the Settlement Agent, on behalf of and in its capacity as agent
for each Seller, by wire transfer, to an account or accounts designated by the
Settlement Agent prior to the Closing Date, in immediately available funds, of
an aggregate amount equal to (i) the Purchase Price less the Holdback Amount, if
any, and (2) the Holdback Amount, if any; and

(vi) to CEC, payment of the Offering Fees and Expenses.

(e) Contributed Proceeds. The Contributed Proceeds shall not be less than
$500,000,000; and

(f) Restoration. The Restoration Opinion shall have been delivered by Valuation
Research Corporation.

 

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Section 10.3 Conditions to the Obligations of CAC and Growth Partners. The
respective obligations of CAC and Growth Partners to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver,
at or prior to the Closing Date, of each of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of
the Caesars Parties set forth in Section 7.1 (Organization and Qualification;
Subsidiaries), Section 7.2 (Power and Authority), Section 7.3 (Due Execution and
Enforceability), Section 7.4 (Ownership; Title; Capitalization) and Section 7.8
(Brokers) shall be true and correct in all but de minimis respects as of the
date of this Agreement and as of the Closing Date as if made on and as of the
Closing Date, and (ii) each of the other representations and warranties of the
Caesars Parties contained in this Agreement shall be true and correct as of the
Closing Date as if made on and as of the Closing Date except (x) in each case of
each of clauses (i) and (ii), representations and warranties that are made as of
a specific date shall be tested only on and as of such date, and (y) in the case
of clause (ii) only, where the failure of such representations and warranties to
be so true and correct (without giving regard to any “material”, or “material
adverse effect” or any other materiality qualifications set forth therein) does
not have, and would not reasonably be expected to have individually or in the
aggregate, a material adverse effect on the Transferred Assets taken as a whole.

(b) Covenants and Agreements. The covenants and agreements of each of the
Caesars Parties to be performed or complied with on or before the Closing Date
in accordance with this Agreement shall have been performed and complied with in
all material respects.

(c) Planet Hollywood Contribution. To the extent the PHWLV Equity is not a
Deferred Asset, PHW Las Vegas shall have contributed and assigned all of its
assets and liabilities to PHWLV.

(d) Third Party Consents and Notices. All of the Consents set forth on Schedule
10.3(d) shall have been obtained.

(e) Restoration. The Restoration Opinion shall have been delivered by Valuation
Research Corporation, and the CEOC Notes Restoration Amount indicated thereby
shall be reasonably acceptable to CAC.

(f) Closing Deliverables. At the Closing, the Caesars Parties shall deliver, or
cause to be delivered, to CAC and Growth Partners:

(i) a certificate, dated as of the Closing Date and signed on behalf of the
Caesars Parties by an executive officer of each Caesars Party, stating that the
conditions specified in Section 10.3(a) and Section 10.3(b) have been satisfied;

(ii) the Management Services Agreement;

(iii) the Settlement Agreement;

 

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(iv) the other Ancillary Agreements intended to be executed at or in connection
with the Closing to which any of the Caesars Parties is a party, duly executed
by such Person, as applicable;

(v) a duly executed certificate from each of HIE Holdings and CEOC, prepared in
accordance with Treasury Regulation Section 1.1445-2(b)(2)(iv), in form and
substance reasonably acceptable to CAC and Growth Partners and on the basis of
which Growth Partners shall not be required to deduct or withhold any amounts
under Section 1445 of the Code from any amounts payable pursuant to this
Agreement;

(vi) fee stream agreements in respect of the Baltimore Fee Stream and the PH Fee
Stream, each in a form reasonably acceptable to CAC;

(vii) (1) certificates evidencing the CIE Shares, duly endorsed in blank or with
stock powers duly executed in proper form for transfer, and with any required
stock transfer stamps affixed thereto and (2) to the extent such Transferred
Asset is not a Deferred Asset, confirmations of book-entry transfer with respect
to the PHWLV Equity and the CBIC Equity;

(viii) evidence of registration of the transfer of the CEOC Notes to Growth
Partners in accordance with the respective indentures; and

(ix) such other appropriately executed instruments of sale, assignment, transfer
and conveyance as may be necessary to evidence and effect the transfer of the
Transferred Assets to Growth Partners or its designees, in a form reasonably
acceptable to CAC.

Section 10.4 Conditions to Rights Offering Closing and Deferred Closings. The
obligations of the Caesars Parties on the one hand, and CAC and Growth Partners
on the other hand, to consummate (x) the Rights Offering Closing (solely in the
event of a Bifurcated Closing) and (y) any Deferred Closing with respect to a
Deferred Asset (whether or not a Bifurcated Closing shall apply) shall be
subject to the fulfillment, at or prior to such Rights Offering Closing Date or
Deferred Closing Date, as applicable, of each of the following conditions:

(a) No Injunctions, Illegality or Litigation. No Law or Order issued by any
Governmental Entity shall have been adopted, promulgated or issued that would
prohibit, restrain, enjoin or render unlawful the Deferred Closing.

(b) Gaming Licenses.

(i) Rights Offering Closing. No Gaming Licenses shall have been revoked or shall
fail to be in full force and effect.

(ii) Deferred Closings. Any and all Deferred Closing Gaming Licenses shall have
been obtained, which Deferred Closing Gaming Licenses shall have been granted
without the imposition of limitations, restrictions or conditions materially
adverse to CEC, CAC or Growth Partners, and such Deferred Closing Gaming
Licenses shall be in full force and effect.

 

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Section 10.5 Frustration of Closing Conditions. None of the Parties may rely on
the failure of any condition set forth in Section 10.1, 10.2, 10.3 or 10.4, as
the case may be, if such failure was caused by such Party’s failure to comply
with any provision of this Agreement.

ARTICLE XI

TERMINATION

Section 11.1 Termination. This Agreement may be terminated at any time, prior to
the Closing:

(a) by mutual written consent of the Parties;

(b) by either CAC or CEC:

(i) if the Contributed Proceeds condition set forth in Section 10.2(e) will not
be satisfied;

(ii) five (5) Business Days following the date on which the provider of the
Evercore Opinions has delivered notice to the board of directors of CEC that
such opinions cannot be rendered;

(iii) the Closing shall not have occurred on or before the 180th day after the
date of this Agreement (the “Outside Date”); provided that the right to
terminate this Agreement under this Section 11.1(b)(iii) shall not be available
to any Party to this Agreement whose breach or failure (or whose Affiliate’s
breach or failure) to perform any material covenant or obligation under this
Agreement has been the cause of or has resulted in the failure of the
transactions contemplated by this Agreement to occur on or before such date;

(iv) if any Order issued, or Law adopted, promulgated or issued by a
Governmental Entity (including any Gaming Authority) permanently restrains,
enjoins or prohibits or makes illegal the consummation of the transactions
contemplated by this Agreement in a manner that would give rise to the failure
of a condition set forth in Section 10.1(a), and such Order becomes effective
(and final and nonappealable) (except for Orders relating to Gaming Laws, which
shall be governed by Section 10.1(b)); or

(v) if any Gaming Authority that must grant a Gaming License required by
Section 10.1(b) shall have denied such grant in a manner that would give rise to
the failure of a condition set forth in Section 10.1(b) and such denial shall
have become final and nonappealable.

(c) by CEC if either CAC or Growth Partners shall have breached or failed to
perform in any material respect any of its respective representations,
warranties, covenants or other agreements contained in this Agreement, and such
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 10.2(a) or Section 10.2(b)

 

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and (ii) (x) cannot be cured prior to the Outside Date or (y) has not been cured
prior to the date that is thirty (30) days from the date that CEC or CAC, as
applicable, is notified by the other of such breach or failure to perform;
provided that CEC shall not have the right to terminate this Agreement pursuant
to this Section 11.1(c) if the Caesars Parties are then in material breach of
any of their representations, warranties, covenants or other agreement set forth
herein in a manner that would cause any condition set forth in Section 10.3(a)
or Section 10.3(b) not to be satisfied;

(d) by CAC if any of the Caesars Parties shall have breached or failed to
perform in any material respect any of its respective representations,
warranties, covenants or other agreements contained in this Agreement, and such
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 10.3(a) or Section 10.3(b) and (ii) (x) cannot be cured
prior to the Outside Date or (y) has not been cured prior to the date that is
thirty (30) days from the date that CEC or CAC, as applicable, is notified by
the other of such breach or failure to perform; provided that CAC shall not have
the right to terminate this Agreement pursuant to this Section 11.1(d) if CAC or
Growth Partners are then in material breach of any of their representations,
warranties, covenants or other agreement set forth herein in a manner that would
cause any condition set forth in Section 10.2(a) or Section 10.2(b) not to be
satisfied.

(e) By CAC if there shall have occurred a material adverse effect on the
Transferred Assets, taken as a whole.

Section 11.2 Notice of Termination. In the event of termination of this
Agreement by any of the Parties pursuant to Section 11.1, written notice of such
termination shall be given by the terminating Party to the other Parties to this
Agreement.

Section 11.3 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall terminate and become
void and have no effect, without any liability or obligation on the part of any
Party hereto or their respective Affiliates or Representatives in respect
thereof, except (a) as set forth in Section 9.7, this Section 11.3, and Article
XIII, each of which shall survive the termination of this Agreement, and
(b) that nothing herein will relieve any Party from liability for any fraud or
intentional misconduct with respect to this Agreement.

ARTICLE XII

INDEMNIFICATION

Section 12.1 Survival and Time Limitations.

(a) The representations and warranties of the Caesars Parties contained in this
Agreement or any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing and shall continue for a period of
eighteen (18) months after the Closing Date and any claim in respect thereof
shall be made in writing during such time period, except that:

(i) The representations and warranties set out in Sections 7.1, 7.2, 7.3, 7.4
and 7.8 shall survive and continue in full force and effect forever;

 

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(ii) The representations and warranties set out in Sections 7.5, 7.6 and 7.13
shall survive and continue in full force and effect until sixty (60) days have
elapsed after the expiration of the applicable statutes of limitations (taking
into account any extensions thereof); and

(iii) A claim for any breach by the Caesars Parties of any of their
representations and warranties contained in this Agreement involving fraud may
be made at any time subject to applicable limitation periods imposed by Law.

(b) The representations and warranties of CAC and Growth Partners contained in
this Agreement or any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive the Closing and shall continue for a period
of eighteen (18) months after the Closing Date and any claim in respect thereof
shall be made in writing during such time period, except that:

(i) The representations and warranties set out in Sections 8.1, 8.2, 8.3 and 8.8
shall survive and continue in full force and effect forever; and

(ii) A claim for any breach by CAC or Growth Partners of any of their
representations and warranties contained in this Agreement involving fraud may
be made at any time subject only to applicable periods imposed by Law.

(c) Each covenant of the Parties contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive for the time period contemplated for performance.

Section 12.2 Indemnification in Favor of CAC and Growth Partners. From and after
the Closing, the Caesars Parties, jointly and severally, shall indemnify and
save CAC, Growth Partners, CIE and PHWLV and their respective directors,
officers, employees, representatives and agents (collectively, the “Growth
Indemnified Persons”) harmless of and from any Damages suffered or paid,
directly or indirectly, by any of the Growth Indemnified Persons as a result of,
in respect of, or arising out of, under, or pursuant to:

(a) any failure of the Caesars Parties to perform or fulfill any covenant of the
Caesars Parties under this Agreement;

(b) any breach or inaccuracy of any representation or warranty given by the
Caesars Parties contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith; and

(c) (i) any Taxes for which the Caesars Parties are liable in respect of any
taxable period, and (ii) any Taxes arising from the Transferred Assets (for the
avoidance of doubt, including any Taxes for which CIE and PHW Growth are liable)
in respect of any taxable period (or portion thereof) ending on or prior to the
Closing Date excluding, in the case of this clause (ii) only, any such Taxes
(other than U.S. federal and other income Taxes of any consolidated, combined or
unitary group that includes one or more Caesars Parties) that were incurred in
the ordinary course of business consistent with past practice and are not yet
due and payable on or prior to the Closing Date.

 

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Section 12.3 Indemnification in Favor of the Caesars Parties. From and after the
Closing, CAC and Growth Partners, jointly and severally, shall indemnify and
save the Caesars Parties, their respective directors, officers, employees,
representatives and agents (collectively, the “Caesars Indemnified Persons”)
harmless of and from any Damages suffered or paid, directly or indirectly, by
any of the Caesars Indemnified Persons as a result of, in respect of, or arising
out of, under or pursuant to:

(a) any failure of CAC or Growth Partners to perform or fulfill any covenant of
CAC or Growth Partners under this Agreement;

(b) any breach or inaccuracy of any representation or warranty given by CAC or
Growth Partners contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith; and

(c) any amounts paid or owing and payable by CEC pursuant to the (1) Irrevocable
Transferable Standby Letter of Credit established in CEC’s favor, dated July 12,
2013 and issuable by Keybank National Banking Association and (2) Guaranty
Agreement, dated as of February 19, 2010 executed by CEC in favor of Wells Fargo
Bank, N.A.

Section 12.4 Procedure for Indemnification.

(a) Notice of Claims.

(i) If an Indemnified Person becomes aware of any act, omission or state of
facts that may give rise to Damages in respect of which a right of
indemnification is provided for under this Article XII, the Indemnified Person
must notify the Indemnifying Person, which notice shall specify whether the
potential Damages arise as a result of:

(1) a claim directly by the Indemnified Person against the Indemnifying Person
(a “Direct Claim”); or

(2) a claim made by a Person against the Indemnified Person (a “Third Party
Claim”);

as soon as reasonably practicable, provided that the failure to provide such
notice as soon as reasonably practicable to the Indemnifying Person shall not
relieve the Indemnifying Person of liability except to the extent that the
Indemnifying Person is actually adversely prejudiced by such failure or delay.

(ii) The Indemnified Person must include in a notice given under clause
(i) relevant details then known to the Indemnified Person of the Direct Claim or
Third Party Claim, and the events, matters or circumstances giving rise to the
Direct Claim or Third Party Claim and an extract of any document that identifies
the liability or amount to which the Direct Claim or Third Party Claim relates
or other evidence of the amount of the Direct Claim or Third Party Claim, and
must after giving such notice keep the Indemnifying Person reasonably informed
of all developments in relation to the Direct Claim or Third Party Claim.

(iii) If the Indemnifying Person has timely disputed its indemnity obligations
for any Damages with respect to such Direct Claim, the Parties shall proceed in
good faith to negotiate a resolution of such dispute and, if not resolved
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of jurisdiction determined pursuant to Section 13.5.

 

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(b) Third Party Claims.

(i) In the case of a Third Party Claim, the Indemnifying Person shall have the
right in its sole discretion to conduct the defense of such Third Party Claim
and to compromise or settle such Third Party Claim; provided, however, that in
no event shall the Indemnifying Person compromise or settle such Third Party
Claim without the prior written consent of the Indemnified Person if (1) such
compromise or settlement does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Person of a full
release from all liability in respect to such Third Party Claim, (2) as a result
of such consent or settlement, injunctive or other equitable relief would be
imposed against the Indemnified Person, (3) such compromise or settlement
includes (A) any admission or statement suggesting any wrongdoing or liability
on behalf of the Indemnified Person or (B) any term that in any manner affects,
restrains or interferes with the business of the Indemnified Person or any of
its Affiliates or (4) such settlement or compromise imposes liability on the
part of the Indemnified Person that is not indemnified by the Indemnifying
Person hereunder; provided further that the Indemnifying Person shall reimburse
the Indemnified Person for the reasonable costs of the Indemnified Person
relating to such Third Party Claim and the conduct of any defense of such Third
Party Claim.

(ii) If requested by the Indemnified Person, the Indemnifying Person will
provide to the Indemnified Person copies of all pleadings, notices,
communications, documentary or other evidence with respect to such Third Party
Claim, except where receipt of such documents would waive any claim of privilege
by the Indemnifying Person or its legal representative.

(iii) The Indemnified Person is entitled to, at its own cost and expense, liaise
with the Indemnifying Person in relation to the defense of such Third Party
Claim, and participate in, but not to determine or conduct, any defense of a
Third Party Claim or settlement negotiations with respect to a Third Party Claim
unless the Indemnifying Person has in its sole discretion determined to permit
the Indemnified Person to defend such Third Party Claim, in which event the
Indemnifying Person shall have the right to participate in, but not to determine
or conduct, any defense of a Third Party Claim or settlement negotiations with
respect to such Third Party Claim.

(iv) No settlement, resolution or compromise of such Third Party Claim by the
Indemnified Person is determinative of the existence or amount of any Damages in
respect of such Third Party Claim, unless the Indemnifying Person consents in
writing to such settlement, resolution or compromise, which consent must not be
unreasonably withheld, delayed or conditioned, and shall be deemed to have been
given by the Indemnifying Person to the Indemnified Person unless the
Indemnifying Person notifies the Indemnified Person in writing within ten
(10) Business Days of a request by the Indemnified Person that it

 

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does not give its consent. In addition, notwithstanding anything else to the
contrary, the Indemnifying Person shall not settle or compromise any Third Party
Claim in respect of Taxes without the prior written consent of the relevant
Indemnified Person, not to be unreasonably withheld, conditioned or delayed.

Section 12.5 Indemnification Principles and Limitations.

(a) Notwithstanding anything in this Agreement to the contrary:

(i) Except in the case of fraud, in no event shall the aggregate obligation of
(A) the Caesars Parties to indemnify Growth Indemnified Persons under
Section 12.2(b), or (B) CAC and Growth Partners to indemnify Caesars Indemnified
Persons under Section 12.3(b), respectively, exceed $163,500,000.

(ii) No claims for indemnification pursuant to Section 12.2(b) (other than any
such claim in respect of the representations and warranties set forth in
Section 7.13) or Section 12.3(b) hereof may be made by any Growth Indemnified
Person or any Caesars Indemnified Person, respectively, (x) for any Damages from
any single loss or series of related losses not in excess of $500,000 and
(y) until the aggregate amount of all Damages for which claims may be made
thereunder exceeds $24,525,000 (it being understood that any Damages that do not
exceed the amount set forth in clause (x) shall not count toward satisfaction of
such threshold), and once such threshold amount has been reached,
indemnification shall be made from dollar one.

(b) Each Growth Indemnified Person or Caesars Indemnified Person, as applicable,
will take all commercially reasonable steps to mitigate all Damages
indemnifiable under this Article XII, which steps shall include availing itself
of any defenses, limitations, rights of contribution, claims against third
Persons and other rights at law or equity and the reasonable costs associated
with such steps shall be included in the calculation of Damages in respect of
the relevant claim.

(c) Solely for purposes of calculating any Damages subject to indemnification
pursuant to this Article XII, from and after the Closing, the representations
and warranties made herein shall be deemed to have been made without the
inclusion of limitations or qualifications as to materiality, such as the words
“material”, “in all material respects”, “material adverse effect” or words of
similar import and, accordingly, all references in such representations and
warranties to materiality shall be deemed to be deleted therefrom for such
purpose only.

(d) With respect to each indemnification obligation contained in this Article
XII, all Damages shall be net of any third-party insurance and indemnity
proceeds actually recovered by the Indemnified Person under applicable insurance
policies or from any other Person alleged to be responsible therefor. The
Indemnified Person shall use, and cause its Affiliates to use, commercially
reasonable efforts to seek recovery under all insurance and indemnity provisions
covering any Damages for which it is seeking indemnification hereunder to the
same extent as it would if such Damage were not subject to indemnification
hereunder. Upon making any payment to the Indemnified Person for any
indemnification claim pursuant to this

 

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Article XII, the Indemnifying Person shall be subrogated, to the extent of such
payment, to any rights which the Indemnified Person may have against any third
parties with respect to the subject matter underlying such indemnification
claim, and the Indemnified Person shall assign any such rights to the
Indemnifying Person.

(e) Notwithstanding anything contained in this Agreement, (i) any amounts
payable pursuant this Agreement shall be paid without duplication, and in no
event shall any Party be entitled to recover under different provisions of this
Agreement (including, for the avoidance of doubt, Sections 5.2, 5.3 and 5.4
hereof) for the same amounts; and (ii) any Damages payable under this Article
XII (A) with respect to the Purchased Assets shall be payable in immediately
available funds to an account or accounts designated in writing by the relevant
Indemnified Person, and (B) with respect to the Contributed Assets shall be
payable in Class B Non-Voting Units valued at the Class B Unit Closing Value (by
properly reflecting it in Growth Partners’ books and records in accordance with
the Growth Partners Operating Agreement).

(f) In the event the Caesars Parties make an indemnification payment to the
Growth Indemnified Persons in accordance with Section 12.2, the parties agree
that the actual net value of the relevant Transferred Asset or Transferred
Assets as of the Closing Date was in fact less than the Gross Asset Values (as
defined in the Growth Partners Operating Agreement) of such Transferred Asset or
Transferred Assets, as determined on the Closing Date, and, to the extent
consistent with applicable Law, (i) in the case of an indemnification payment
made to Growth Partners, CIE or PHWLV with respect to a Contributed Asset, such
payment shall be treated as a capital contribution by the relevant Caesars Party
or Caesars Parties to Growth Partners (and the original capital contribution
made by such Caesars Party or Caesars Parties to Growth Partners shall be
reduced by a corresponding amount), (ii) in the case of an indemnification
payment made to Growth Partners, CIE or PHWLV with respect to a Purchased Asset,
such payment shall be treated as an adjustment to the Purchase Price, and
(iii) in the case of an indemnification payment made to CAC, the amount of such
payment shall be deemed to have been contributed by the relevant Caesars Party
or Caesars Parties to Growth Partners as a capital contribution (and the
original capital contribution made by such Caesars Party or Caesars Parties to
Growth Partners shall be reduced by the amount of the relevant Damages) and
shall be deemed to have been distributed immediately thereafter by Growth
Partners to CAC, such that the capital accounts of the members of Growth
Partners shall be in the same relative proportion to one another that the
capital accounts would have been if no such indemnification payment had been
required to be made.

Section 12.6 Exclusive Remedy. Notwithstanding anything contained herein to the
contrary, following the Closing, the indemnification provisions of this Article
XII shall be the sole and exclusive remedy (other than in the case of fraud) for
the Parties and their respective Affiliates for any misrepresentation or breach
of any warranty, covenant or any other provision contained in this Agreement or
in any certificate delivered pursuant hereto.

 

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ARTICLE XIII

GENERAL

Section 13.1 Entire Agreement. This Agreement, together with the Ancillary
Agreements and the Exhibits and Schedules hereto, contains all of the
agreements, covenants, terms, conditions and representations and warranties
agreed upon by the Parties relating to the subject matter hereof, and supersedes
all prior and contemporaneous agreements, negotiations, correspondence,
undertakings, representations, warranties and communications of any kind between
the Parties and their Representatives, whether oral and written, regarding such
subject matter.

Section 13.2 Amendment and Waivers. This Agreement may be modified, supplemented
or amended only by a written instrument executed by each of the Parties. Waiver
by a Party of any breach of or a failure to comply with any provision of this
Agreement by another Party shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement. No waiver of any
such breach or failure of any term of this Agreement shall be effective unless
in a written notice signed by the waiving Party and delivered to the affected
Party in accordance with Section 13.7. For the avoidance of doubt, no term or
provision of the Registration Statement or Prospectus shall be deemed to amend
any term or provision of this Agreement, and in the event of a conflict between
the terms and provisions of the Registration Statement or Prospectus and this
Agreement, the terms and provisions of this Agreement shall control.

Section 13.3 Successors and Assigns. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the Parties hereto and their
respective legal representatives, successors and assigns; provided, however,
that no Party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of each other
Party hereto; provided, further, that prior to the Closing, any Caesars Party
may assign its rights under this Agreement to any wholly-owned Subsidiary. Any
conveyance, assignment or transfer made in violation of this Section 13.3 will
be void ab initio.

Section 13.4 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any Person other than the Parties hereto and their
respective heirs, successors and permitted assigns.

Section 13.5 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.

(a) This Agreement and any claim or controversy arising out of or relating to
the transactions contemplated hereby shall be governed by and interpreted and
construed in accordance with the Laws of the State of Delaware applicable to
contracts executed and to be performed wholly within the State of Delaware and
without reference to the choice-of-law principles or rules of conflict of laws
that would result in, require or permit the application of the Laws of a
different jurisdiction or direct a matter to another jurisdiction.

(b) Each Party irrevocably and unconditionally submits to the jurisdiction of
the Court of Chancery of the State of Delaware (or, solely if such courts
decline

 

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jurisdiction, in any federal court located in the State of Delaware) (any such
court, a “Chosen Court”) any Action arising out of or relating to this
Agreement, and hereby irrevocably and unconditionally agrees that all claims in
respect of such Action may be heard and determined in a Chosen Court. Each Party
hereby irrevocably and unconditionally waives, to the fullest extent that it may
effectively do so, any defense of an inconvenient forum which such Party may now
or hereafter have to the maintenance of such Action. The Parties further agree,
(i) to the extent permitted by Law, that final and nonappealable judgment
against any of them in any Action contemplated above shall be conclusive and may
be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified copy of which shall be conclusive evidence of
the fact and amount of such judgment and (ii) that service of process upon such
Party in any such action or proceeding shall be effective if notice is given in
accordance with Section 13.7.

(c) EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST THE OTHER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY OTHER AGREEMENTS EXECUTED
IN CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN. NO PARTY TO THIS AGREEMENT SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE
BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED INSTRUMENTS OR THE
RELATIONSHIP BETWEEN THE PARTIES. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EACH PARTY TO THIS AGREEMENT
CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN
THIS SECTION 13.5. NO PARTY (OR ITS REPRESENTATIVE) HAS IN ANY WAY AGREED WITH
OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 13.5 WILL
NOT BE FULLY ENFORCED IN ALL INSTANCES.

Section 13.6 Expenses. Except as otherwise set forth in this Agreement, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the respective Party incurring such fees
and expenses.

Section 13.7 Notices. All notices and other communications to be given to any
Party hereunder shall be sufficiently given for all purposes hereunder if in
writing and upon delivery if delivered by hand, one (1) Business Day after being
sent by courier or overnight delivery service, three (3) Business Days after
being mailed by certified or registered mail, return receipt requested, with
appropriate postage prepaid, or when sent in the form of a facsimile and receipt
confirmation is received, and shall be directed to the address or facsimile
number set forth below (or at such other address or facsimile number as such
Party shall designate by like notice):

(a) If to the Caesars Parties:

c/o Caesars Entertainment Corporation

One Caesars Palace Drive

Las Vegas, Nevada 89109

Facsimile:      (702) 407-6418 Attention:      General Counsel

 

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with a copy (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Facsimile:      (212) 492-0574 Attention:      John Scott, Esq.

(b) If to CAC or Growth Partners:

c/o Apollo Management, L.P.

9 W 57th Street, 43rd Floor

New York, New York 10019

Facsimile:      (646) 607-0528 Attention:      Laurie Medley

and

c/o TPG Capital, L.P.

345 California Street, Suite 3300

San Francisco, California 94104

Facsimile:      (415) 438-1349 Attention:      Ron Cami (General Counsel)

With a copy (which shall not constitute notice) to:

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Facsimile:      (212) 751-4864 Attention:      Raymond Y. Lin, Esq.

Section 13.8 Counterparts; Effectiveness. This Agreement may be executed and
delivered (including by electronic or facsimile transmission) in one or more
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

Section 13.9 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this

 

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Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party hereto. Upon such a determination, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

Section 13.10 Specific Performance. The Parties hereto agree that irreparable
damage, for which monetary damages (even if available) would not be an adequate
remedy, would occur in the event that the Parties hereto do not perform any
provision of this Agreement in accordance with its specified terms or otherwise
breach such provisions. Accordingly, the Parties acknowledge and agree that the
Parties shall be entitled to an injunction, specific performance and other
equitable relief to prevent breaches or threatened breaches of this Agreement
and to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which they are entitled in Law or in equity. Each of the Parties
agrees that it will not oppose the granting of an injunction, specific
performance and other equitable relief on the basis that any other Party has an
adequate remedy at Law or that any award of specific performance is not an
appropriate remedy for any reason at Law or in equity. Any Party seeking an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement shall not be required to
provide any bond or other security in connection with such order or injunction.
The foregoing is in addition to any other remedy to which any party is entitled
at law, in equity or otherwise. The Parties further agree that nothing set forth
in this Section 13.10 shall require any party hereto to institute any Action for
(or limit any party’s right to institute any Action for) specific performance
under this Section 13.10 prior or as a condition to exercising any termination
right under Article XI (and pursuing damages after such termination).

* * * *

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

 

CAESARS PARTIES:

CAESARS ENTERTAINMENT CORPORATION,

a Delaware corporation

By:  

/s/ Eric Hession

  Name:    Eric Hession   Title:      Senior Vice President and Treasurer

HIE HOLDINGS, INC.,

a Delaware corporation

By:  

/s/ Eric Hession

  Name:    Eric Hession   Title:      Treasurer

HARRAH’S BC, INC.,

a Delaware corporation

By:  

/s/ Michael D. Cohen

  Name:    Michael D. Cohen   Title:      Secretary

PHW LAS VEGAS, LLC,

a Nevada limited liability company

By:  

/s/ Eric Hession

  Name:    Eric Hession   Title:      President and Treasurer

PHW MANAGER, LLC,

a Nevada limited liability company

By:  

/s/ Eric Hession

  Name:    Eric Hession   Title:      President and Treasurer

 

[Transaction Agreement - Signature Page]

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CAESARS BALTIMORE ACQUISITION COMPANY, LLC, a Delaware limited liability company
By:  

/s/ Michael D. Cohen

 

Name:  Michael D. Cohen

 

Title:    Secretary

CAESARS BALTIMORE MANAGEMENT COMPANY, LLC,

a Delaware limited liability company

By:  

/s/ Michael D. Cohen

 

Name:  Michael D. Cohen

 

Title:    Secretary

CAC:

CAESARS ACQUISITION COMPANY,

a Delaware corporation

By:  

/s/ Craig Abrahams

 

Name:  Craig Abrahams

 

Title:    Secretary and Chief Financial Officer

GROWTH PARTNERS:

CAESARS GROWTH PARTNERS, LLC,

a Delaware limited liability company

By:   Caesars Acquisition Company, its managing   member By:  

/s/ Craig Abrahams

 

Name:  Craig Abrahams

 

Title:    Secretary and Chief Financial Officer

 

[Transaction Agreement - Signature Page]

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Annex A

CEOC Notes

 

Issuance

   Face Amount      CUSIP  

5.625% senior notes due 2015

   $ 94,789,000         413627AU4       $ 332,530,000         413627BN9      

 

 

    

Total:

   $ 427,319,000      

6.50% senior notes due 2016

   $ 116,037,000         413627AX8       $ 208,483,000         413627BP4      

 

 

    

Total:

   $ 324,520,000      

5.75% senior notes due 2017

   $ 96,596,000         413627AW0       $ 294,358,000         413627BQ      

 

 

    

Total:

   $ 390,927,000      

10.75% senior toggle notes due 2018

   $ 3,447,102         413627BF6      

 

 

    

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Annex B

Purchase Price Allocations

 

Seller

   Allocation of Purchase Price  

PHW Las Vegas

   $ 210,000,000   

PHW Manager

   $ 70,000,000   

CBAC and Baltimore Manager

   $ 80,000,000      

 

 

 

Total

   $ 360,000,000