Exhibit 10.1

EXECUTION VERSION

 

JPMORGAN CHASE BANK, N.A.

383 Madison Avenue

New York, New York 10179

  

CREDIT SUISSE AG

CREDIT SUISSE SECURITIES (USA) LLC

Eleven Madison Avenue

New York, New York 10010

MACQUARIE CAPITAL (USA) INC.

MACQUARIE CAPITAL FUNDING LLC

125 West 55th Street

New York, New York 10019

  

MORGAN STANLEY

SENIOR FUNDING, INC.

1585 Broadway

New York, New York 10036

June 10, 2017

Golden Entertainment, Inc.

6595 S Jones Blvd

Las Vegas, Nevada 89118

Attention: Charles Protell

Project Padre

Commitment Letter

Ladies and Gentlemen:

You have advised JPMorgan Chase Bank, N.A. (“JPMorgan”), Credit Suisse AG
(acting through such affiliates or branches as it deems appropriate (“CS”)),
Credit Suisse Securities (USA) LLC (“CS Securities” and, together with CS and
their respective affiliates, “Credit Suisse”), Macquarie Capital (USA) Inc.
(“Macquarie Capital”), Macquarie Capital Funding LLC (“Macquarie Lender”), and
Morgan Stanley Senior Funding, Inc. (“MSSF” and, together with JPMorgan, Credit
Suisse, Macquarie Capital and Macquarie Lender, the “Commitment Parties”, “we”
or “us”) that Golden Entertainment, Inc. (“Golden” or “you”) intends to acquire
(the “Acquisition”) directly or indirectly, an entity identified to us as
“Padre” (the “Target”) through the acquisition of all of the ownership interests
in the Target. The Borrower, the Target and their respective subsidiaries are
sometimes collectively referred to herein as the “Companies.”

In connection with the Acquisition, you have advised us that you intend to
(i) pay consideration in connection with the Acquisition and (ii) refinance the
indebtedness described below (collectively, the “Refinancing”):

(a) that certain Credit Agreement, dated as of July 31, 2015, as amended,
supplemented or otherwise modified to the date hereof, by and among Golden, the
several banks and other financial institutions and lenders from time to time
party thereto and Capital One, National Association, in its capacity as
administrative agent for such lenders; and

(b) that certain Credit and Guaranty Agreement, dated as of July 7, 2015, as
amended, supplemented or otherwise modified to the date hereof, by and among the
Target, certain subsidiaries of the Target, the several banks and other
financial institutions and lenders from time to time party thereto and Deutsche
Bank AG New York Branch, in its capacity as administrative agent and collateral
agent for such lenders;

in each case, with the proceeds of (x) $900.0 million in senior secured first
lien credit facilities of the Borrower (collectively, the “First Lien Credit
Facilities”) comprised of (i) a term loan B facility of $800.0 million (the
“First Lien Term Loan Facility”) and (ii) a revolving credit facility of
$100.0 million (the “First Lien Revolving Credit Facility”) and (y) a second
lien term loan facility of the Borrower of $200.0 million (the “Second Lien Term
Loan Facility” and, collectively with the First Lien Credit Facilities, the
“Facilities”). The Acquisition, the Refinancing, the entering into and initial
funding of the Facilities and all related transactions are hereinafter
collectively referred to as the “Transaction.” The date of consummation of the
Acquisition is referred to herein as the “Closing Date.”

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1. Commitments. In connection with the foregoing, (a) JPMorgan is pleased to
hereby commit to you, severally, but not jointly, to provide 40.0% of the
principal amount of each of the Facilities, (b) Credit Suisse is pleased to
hereby commit to you, severally, but not jointly, to provide 22.5% of the
principal amount of each of the Facilities, (c) Macquarie Lender is pleased to
hereby commit to you, severally, but not jointly, to provide 20.0% of the
principal amount of each of the Facilities, and (d) MSSF (together with
JPMorgan, CS and Macquarie Lender, the “Initial Lenders”) is pleased to hereby
commit to you, severally, but not jointly, to provide 17.5% of the principal
amount of each of the Facilities, in each case, upon the terms and subject to
the conditions set forth in this Commitment Letter (as defined below).

It is agreed that (a) JPMorgan will act as the sole and exclusive administrative
and collateral agent (in such capacity, the “First Lien Administrative Agent”)
for the First Lien Credit Facilities (in each case on the terms set forth herein
and subject only to the satisfaction of the conditions set forth in paragraph 5
below and the conditions in Annex III hereto); (b) CS will act as the sole and
exclusive administrative and collateral agent (in such capacity, the “Second
Lien Administrative Agent” and together with the First Lien Administrative
Agent, the “Administrative Agents”) for the Second Lien Term Loan Facility (in
each case on the terms set forth herein and subject only to the satisfaction of
the conditions set forth in paragraph 5 below and the conditions in Annex III
hereto); (c) each of JPMorgan, CS Securities, Macquarie Capital and MSSF will
act as a joint lead arranger and bookrunning manager (each, in such capacity, a
“Lead Arranger” and, collectively, the “Lead Arrangers”) for the Facilities, and
in connection therewith to form a syndicate of lenders for the Facilities
(collectively, the “Lenders”) approved by you (such approval not to be
unreasonably withheld (it being understood and agreed that the Lead Arrangers
will not syndicate to any (a) banks, financial institutions, other institutions
or persons identified in writing to the Lead Arrangers by the Borrower on or
prior to the date hereof as a disqualified lender, (b) competitors or suppliers
of the Companies identified in writing to the Lead Arrangers by the Borrower
from time to time (a “Competitor”), or (c) any affiliate of such person
identified pursuant to clauses (a) or (b) that is clearly identifiable solely on
the basis of the similarity of its name or identified in writing to the Lead
Arrangers by the Borrower from time to time (other than any bona fide debt fund,
investment vehicle, regulated bank entity or unregulated lending entity that is
(x) engaged in making, purchasing, holding or otherwise investing in commercial
loans or similar extensions of credit in the ordinary course of business and
(y) managed, sponsored or advised by any person controlling, controlled by or
under common control with a Competitor or affiliate thereof, as applicable, but
only to the extent that no personnel involved with the investment in such
Competitor or affiliate thereof, as applicable makes (or has the right to make
or participate with others in making) investment decisions on behalf of such
debt fund, investment vehicle, regulated bank entity or unregulated lending
entity) (clauses (a), (b) and (c), collectively, the “Disqualified Lenders”);
provided, that (i) any subsequent designation of a Disqualified Lender will not
become effective until three business days after such designation is provided,
it being understood that no such subsequent designation shall apply to any
entity that is currently a lender or party to a pending trade and (ii) the
foregoing shall not apply retroactively to disqualify any parties that have
previously been allocated a portion of the Facilities or acquired an assignment
or participation interest in the Facilities to the extent such party was not a
Disqualified Lender at the time of the applicable allocation, assignment or
participation, as the case may be)). You agree that JPMorgan may perform its
responsibilities hereunder through its affiliate, J.P. Morgan Securities
LLC. All capitalized terms used and not otherwise defined in this letter
agreement shall have the same meanings as specified therefor in Annex I (the
“First Lien Facilities Summary of Terms”) or Annex II (the “Second Lien Term
Loan Facility Summary of Terms” and, together with the First Lien Facilities
Summary of Terms, the “Summaries of Terms”) hereto, as applicable.

You agree that no other agents, co-agents, arrangers or bookrunners will be
appointed, no other titles will be awarded and no compensation (other than
compensation expressly contemplated by this letter agreement (this letter
agreement, together with Annexes I, II and III hereto, the “Commitment Letter “)
and the Fee Letter referred to below) will be paid to any Lender in order to
obtain its commitment to participate in any of the Facilities unless you and we
shall so agree. You further agree that JPMorgan shall have “lead left placement”
on all marketing materials relating to each of the Facilities.

2. Syndication. The Lead Arrangers in consultation with you intend to commence
syndication of the Facilities promptly after your acceptance of the terms of
this Commitment Letter and the Fee Letter (as defined below); provided that
notwithstanding each Lead Arranger’s right to syndicate the Facilities and
receive commitments with respect thereto, (a) except as you may otherwise agree
in writing, the Initial Lenders shall not be relieved, released or novated from
their obligations hereunder (including the obligation to fund the Facilities

 

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on the Closing Date) in connection with any syndication, assignment or
participation of the Facilities, including their commitments in respect thereof,
until after the initial funding under the Facilities on the Closing Date has
occurred, (b) no such syndication, assignment or novation shall become effective
with respect to all or any portion of the Initial Lenders’ commitments in
respect of the Facilities until the initial funding of the Facilities has
occurred, and (c) the Initial Lenders shall retain exclusive control over all
rights with respect to their commitments hereunder with respect to consents,
modifications, supplements, waivers and amendments, until the initial funding of
the Facilities has occurred.

You agree to actively assist the Lead Arrangers, and to use your commercially
reasonable efforts to cause, to the extent not in contravention of the terms of
the Acquisition Agreement (as defined below) as in effect on the date hereof,
the Target and its subsidiaries to actively assist, the Lead Arrangers until the
earlier to occur of (i) a Successful Syndication (as defined in the Fee Letter)
and (ii) 45 days after the Closing Date (the “Syndication Period”) in achieving,
a syndication of each of the Facilities that is reasonably satisfactory to the
Lead Arrangers and to you. Such assistance shall include (a) your providing and
causing your advisors to provide, and using your commercially reasonable
efforts, to the extent not in contravention of the terms of the Acquisition
Agreement as in effect on the date hereof, to cause the Target, its subsidiaries
and its advisors to provide, the Lead Arrangers and the Lenders upon request
with all information reasonably deemed necessary by the Lead Arrangers to
complete such syndication, including, but not limited to, (x) information and
evaluations prepared by you, the Target and your and its advisors, or on your or
their behalf, relating to the Acquisition (including the Projections (as defined
below)) and (y) customary forecasts prepared by your management of balance
sheets, income statements and cash flow statements for each fiscal quarter
through the fiscal quarter ending December 31, 2018 and for each year commencing
with the first fiscal year following the Closing Date and for each of the
succeeding five fiscal years thereafter, (b) your assisting in the preparation
of an information memorandum with respect to each of the Facilities in form and
substance customary for transactions of this type (each, an “Information
Memorandum”) and other customary materials to be used in connection with the
syndication of each such Facility (collectively with the Summaries of Terms and
any additional summary of terms prepared for distribution to Public Lenders (as
defined below), the “Information Materials”), (c) your using your commercially
reasonable efforts to ensure that the syndication efforts of the Lead Arrangers
benefits from your existing lending relationships and the existing banking
relationships of the Target, (d) your using commercially reasonable efforts to
obtain, prior to the launch of the general syndication of the Facilities,
monitored public corporate credit or corporate family ratings of the Borrower
after giving effect to the Transaction and ratings of the Facilities from
Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s, a division of
The McGraw-Hill Companies, Inc. (“S&P”) (collectively, the “Ratings”), (e) until
the later of the Closing Date and a Successful Syndication, you shall not, and
shall use your commercially reasonable efforts, to the extent not in
contravention of the terms of the Acquisition Agreement as in effect on the date
hereof, to ensure that none of the Companies shall, have syndicated or issued,
attempted to syndicate or issue, announced or authorized the announcement of the
syndication or issuance of, or engaged in discussions concerning the syndication
or issuance of, any debt securities or credit facilities of the Companies (other
than the Facilities and any vendor financing, commercial paper facilities,
capital leases, purchase money debt or similar facilities, each in the ordinary
course of business) that would reasonably be expected to materially interfere
with the primary syndication of the Facilities, without the prior written
consent (not to be unreasonably withheld) of the Lead Arrangers (it being
understood that borrowings under the existing revolving credit facilities of the
Companies and any debt permitted to be incurred under the Acquisition Agreement
shall be permitted) and (f) your otherwise assisting the Lead Arrangers in their
syndication efforts, including by making your officers and advisors, and, to the
extent not in contravention of the terms of the Acquisition Agreement as in
effect on the date hereof, using your commercially reasonable efforts to make
the officers and advisors of the Target, available from time to time during
regular business hours and upon reasonable advance notice to attend and make
presentations regarding the business and prospects of the Companies and the
Transaction at one or more meetings of prospective Lenders. Notwithstanding our
right to syndicate the Facilities and receive commitments with respect thereto
and without limiting your obligations to assist with the syndication efforts as
set forth herein, the Initial Lenders’ commitments hereunder are not conditioned
upon the syndication of, or receipt of commitments or participations in respect
of, all or any portion of the Facilities. Notwithstanding anything to the
contrary contained in this Commitment Letter or the Fee Letter or any other
letter agreement or undertaking concerning the financing of the Transactions to
the contrary, none of the obtaining of the Ratings or the compliance with any of
the other provisions set forth in this paragraph, shall constitute a condition
to the commitments hereunder or the funding of the Facilities on the Closing
Date. For the avoidance of doubt, you will not be required to provide (x) any
presentations of strategic information and analysis to the Companies’ boards of
directors in connection with their evaluation of the

 

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Transaction or (y) any information, evaluations or trade secrets in
contravention of the terms of the Acquisition Agreement as in effect on the date
hereof or to the extent that the provision thereof would violate any law, rule
or regulation, or any obligation of confidentiality binding upon (so long as
such obligations are not entered into in contemplation of this Commitment
Letter), or waive any privilege that may be asserted by, you, the Target or any
of your or their respective subsidiaries or affiliates; provided, that in the
event that you do not provide information in reliance on clause (y) of this
sentence, to the extent practicable, (i) you will describe the nature of the
information being withheld, (ii) you shall use commercially reasonable efforts
to provide notice to the Lead Arrangers upon obtaining knowledge that such
information is being withheld (but solely if providing such notice would not
violate the terms of the Acquisition Agreement or such obligation of
confidentiality), and (iii) the representation and warranty made by you with
respect to the Information (as defined below) in Section 3 shall not be affected
in any way by your decision not to provide such information.

It is understood and agreed that the Lead Arrangers will manage and control all
aspects of the syndication of the Facilities in consultation with you, including
decisions as to the selection of prospective Lenders (subject to your consent
rights set forth in Section 1 above) and any titles offered to proposed Lenders,
when commitments will be accepted and the final allocations of the commitments
among the Lenders. It is understood that no Lender participating in the
Facilities will receive compensation from you in order to obtain its commitment,
except on the terms contained herein and in the Summaries of Terms, the Fee
Letter or as otherwise agreed between you and us. It is also understood and
agreed that the amount and distribution of the fees among the Lenders will be at
the absolute discretion of the Lead Arrangers.

3. Information Requirements. You hereby represent and warrant (but the accuracy
of such representations and warranties shall not be a condition to the
commitments hereunder or the funding of the Facilities on the Closing Date) that
(a) all written information and data other than (i) the Projections (as defined
below), (ii) other forward-looking information and (iii) information of a
general economic or industry specific nature (such written information and data,
the “Information”) (in the case of Information regarding the Target and its
subsidiaries and its and their respective businesses, to your knowledge), that
has been or will be made available to the Commitment Parties directly or
indirectly by you, the Target or by any of your or its subsidiaries or
representatives, in each case, on your behalf in connection with the
transactions contemplated hereby is or will be, when furnished, correct in all
material respects and does not and will not, when furnished, taken as a whole,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements are made (after giving
effect to all supplements and updates thereto from time to time) and (b) all
financial projections concerning the Companies that have been or will be made
available to the Commitment Parties by you or by any of your subsidiaries or
representatives (the “Projections”), in each case, on your behalf in connection
with the transactions contemplated hereby have been, or will be, prepared in
good faith based upon assumptions that you believe to be reasonable at the time
of such preparation (it being understood that the Projections are as to future
events and are not to be viewed as facts, the Projections are subject to
significant uncertainties and contingencies, many of which are beyond your
control, that no assurance can be given that any particular Projections will be
realized and that actual results during the period or periods covered by any
such Projections may differ significantly from the projected results and such
differences may be material). You agree that if at any time prior to the later
of (i) the Closing Date and (ii) the expiration of the Syndication Period, any
of the representations in the preceding sentence would be incorrect in any
material respect if the Information and the Projections were being furnished,
and such representations were being made, at such time, then you will promptly
supplement, or cause to be supplemented, the Information and the Projections so
that such representations will be correct in all material respects at such time
(it being understood that such supplementation is not a condition to the
commitments hereunder or the funding of the Facilities on the Closing Date). In
issuing this commitment and in arranging and syndicating each of the Facilities,
the Commitment Parties are and will be using and relying on the Information and
the Projections without independent verification thereof. The Information and
Projections provided to the Lead Arrangers prior to the date hereof are
hereinafter referred to as the “Pre-Commitment Information”.

You acknowledge that (a) the Lead Arrangers on your behalf will make available
Information Materials to the proposed syndicate of Lenders by posting the
Information Materials on IntraLinks or another similar electronic system (the
“Platform”) and (b) certain prospective Lenders (such Lenders, “Public Lenders”;
all other Lenders, “Private Lenders”) may have personnel that do not wish to
receive material non-public information (within the meaning of the United States
federal securities laws, “MNPI”) with respect to the Companies, their respective

 

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affiliates or any other entity, or the respective securities of any of the
foregoing, and who may be engaged in investment and other market-related
activities with respect to such entities’ securities. If requested, you will
assist (and use commercially reasonable efforts to cause, to the extent not in
contravention of the terms of the Acquisition Agreement as in effect on the date
hereof, the Target to assist) us in preparing an additional version of the
Information Materials to be used in connection with the syndication of the
Facilities not containing MNPI (the “Public Information Materials”) to be
distributed to prospective Public Lenders.

Before distribution of any Information Materials to prospective Public Lenders,
you shall provide us with a customary letter in form and substance reasonably
satisfactory to both you and us authorizing the dissemination of the Public
Information Materials and containing a customary representation as to the
absence of MNPI therefrom, in each case, exculpating you and the Commitment
Parties and their respective affiliates with respect to liability related to the
use of the contents of the Information Materials by the recipients thereof. In
addition, you hereby agree that (x) you will use commercially reasonable efforts
to identify (and, at the request of the Lead Arrangers or any Administrative
Agent (or their respective affiliates), shall identify) that portion of the
Information Materials that may be distributed to the Public Lenders; (y) all
Information Materials identified as “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor” and (z) the Lead
Arrangers and the Administrative Agents (and their respective affiliates) shall
be entitled to treat any Information Materials that are not identified as
“PUBLIC” as being suitable only for posting on a portion of the Platform not
designated “Public Investor.”

Notwithstanding the foregoing, you agree that the Lead Arrangers on your behalf
may distribute the following documents to all prospective Lenders regardless of
whether identified as “PUBLIC”, unless you advise the Lead Arrangers in writing
(including by email) within a reasonable time prior to its intended
distributions that such material should only be distributed to prospective
Private Lenders (and the Lead Arrangers shall provide such documents to you for
review in a reasonable period of time prior to distribution): (a) administrative
materials for prospective Lenders such as lender meeting invitations and funding
and closing memoranda, (b) notifications of changes to the terms of the
Facilities, (c) customary marketing term sheets related to the Facilities and
(d) drafts and final versions of definitive documents with respect to the
Facilities. If you advise us that any of the foregoing items should be
distributed only to Private Lenders, then the Lead Arrangers will not distribute
such materials to Public Lenders without further discussions with you.

4. Fees and Indemnities.

(a) You agree to pay the fees set forth in the separate fee letter addressed to
you dated the date hereof from the Commitment Parties (the “Fee Letter”). You
also agree to reimburse the Commitment Parties from time to time on demand for
all reasonable out-of-pocket fees and expenses (including, but not limited to,
the reasonable fees, disbursements and other charges of one primary counsel to
the Lead Arrangers and the Administrative Agents, taken as a whole, and of one
special gaming and local counsel to the Lead Arrangers and the Administrative
Agents, taken as a whole, in Nevada, and due diligence expenses) in connection
with the Facilities, the syndication thereof, the preparation of the Credit
Documentation (as defined below) therefor and the other transactions
contemplated hereby, whether or not the Closing Date occurs or any Credit
Documentation is executed and delivered or any extensions of credit are made
under any of the Facilities. You acknowledge that we may receive a benefit,
including without limitation, a discount, credit or other accommodation, from
any of such counsel based on the fees such counsel may receive on account of
their relationship with us including, without limitation, fees paid pursuant
hereto.

(b) You also agree to indemnify and hold harmless each of the Commitment
Parties, each other Lender and each of their affiliates, successors and assigns
and their respective officers, directors, employees, agents, advisors and other
representatives (each, an “Indemnified Party”) from and against (and will
reimburse each Indemnified Party as the same are incurred for) any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, the reasonable fees, disbursements and other charges of one counsel
to the Indemnified Parties taken as a whole, plus one special gaming counsel and
local counsel for each applicable jurisdiction for all Indemnified Parties taken
as a whole (and solely in the case of a conflict of interest, one additional of
each such counsel for each group of similarly situated Indemnified Parties))
that may be incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation or
proceeding or preparation of a defense in connection therewith) (a) any aspect
of the Transaction or any related transaction and any of the other

 

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transactions contemplated thereby or (b) the Facilities, or any use made or
proposed to be made with the proceeds thereof (in all cases, whether or not
caused or arising, in whole or in part, out of the comparative, contributory or
sole negligence of the Indemnified Party but excluding allocated costs of
in-house counsel), except to the extent such claim, damage, loss, liability or
expense (i) is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from (x) such Indemnified Party’s bad faith, gross
negligence or willful misconduct or the bad faith, gross negligence or willful
misconduct of such Indemnified Party’s controlled affiliates or its or their
respective directors, officers, employees, principals, agents, advisors and
other representatives (collectively, “Related Parties”) or (y) a material breach
of this Commitment Letter or the Fee Letter by such Indemnified Party or its
Related Parties or (ii) arises from a dispute among Indemnified Parties other
than any claims (x) arising out of any act or omission of you, the Target or
their respective subsidiaries or (y) against a Commitment Party in its capacity
as an arranger, administrative agent or similar capacity. In the case of any
claim, litigation, investigation or proceeding (any of the foregoing, a
“Proceeding”) to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such Proceeding is brought by you, your equity
holders or creditors or an Indemnified Party, whether or not an Indemnified
Party is otherwise a party thereto and whether or not any aspect of the
Transaction is consummated. None of you or any Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) arising
out of, related to or in connection with this Commitment Letter or the Fee
Letter, except to the extent of direct (as opposed to special, indirect,
consequential or punitive) damages; provided that nothing contained in this
paragraph shall limit your indemnity and reimbursement obligations to the extent
set forth in this Section 4. It is further agreed that the Commitment Parties
shall be severally liable solely in respect of their respective commitments to
the Facilities on a several, and not joint, basis with any other Initial Lender.

Notwithstanding any other provision of this Commitment Letter, no Indemnified
Party shall be liable for any damages arising from the use by others of
information or other materials obtained through electronic telecommunications or
other information transmission systems, other than for direct, actual damages as
determined by a final, non-appealable judgment of a court of competent
jurisdiction resulting from (i) the bad faith, gross negligence or willful
misconduct of such Indemnified Party or (ii) a material breach of this
Commitment Letter or the Fee Letter by such Indemnified Party or its Related
Parties.

You shall not, without the prior written consent of an Indemnified Party, effect
any settlement of any pending or threatened Proceeding against an Indemnified
Party in respect of which indemnity could have been sought hereunder by such
Indemnified Party unless (i) such settlement includes an unconditional release
of such Indemnified Party from all liability or claims that are the subject
matter of such Proceeding and (ii) does not include any statement as to any
admission.

5. Conditions to Financing.

The commitment of the Lenders in respect of the Facilities (including the
funding thereof) and the undertaking of the Lead Arrangers to provide the
services described herein, in each case, are subject only to (i) the
satisfaction (or waiver) of each of the conditions set forth in Annex III hereto
and (ii) the execution and delivery by the Borrower and the Guarantors of
definitive documentation with respect to each such Facility consistent with this
Commitment Letter (including the Funds Certain Provisions), the Fee Letter and
the Facilities Documentation Principles (as defined in the Summaries of Terms)
(the “Credit Documentation”) prior to such initial funding on the Closing
Date. There are no conditions (implied or otherwise) to the commitments
hereunder, and there will be no conditions (implied or otherwise) under the
Credit Documentation to the funding of the Facilities, other than those that are
expressly referred to in the immediately preceding sentence. For the avoidance
of doubt, your compliance with your obligations under this Commitment Letter
and/or the Fee Letter, other than your satisfaction (or procurement of a waiver
of) the conditions set forth in this Section 5 and in Annex III hereto, is not a
condition to the availability of the Facilities on the Closing Date.

Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit
Documentation or any other letter agreement or other undertaking concerning the
financing of the Transaction to the contrary, (1) the only representations the
accuracy of which shall be a condition to the availability of the Facilities on
the Closing Date shall be (i) the representations made by or with respect to the
Target and its subsidiaries in the Acquisition Agreement as are material to the
interests of the Lenders, but only to the extent that you (or your affiliate)
have the right to terminate your (and/or its) obligations under the Acquisition
Agreement or decline to consummate the

 

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Acquisition (in each case, in accordance with the terms thereof) as a result of
a breach of such representations in the Acquisition Agreement (the “Acquisition
Agreement Representations”) and (ii) the Specified Representations (as defined
below) and (2) the terms of the Credit Documentation shall be in a form such
that they do not impair the availability of the Facilities on the Closing Date
if the conditions set forth in this Section 5 and in Annex III hereto are
satisfied (it being understood that to the extent any security interest in the
intended collateral (other than any collateral the security interest in which
may be perfected by the filing of a UCC financing statement, the filing of short
form security agreements with the United States Patent and Trademark Office or
the United States Copyright Office or the delivery of certificates evidencing
equity interests of the Companies’ material domestic subsidiaries (to the extent
certificated), other than equity interests in any of the Companies for which
prior approval of liens under applicable gaming law is required but has not been
obtained; provided that any such certificated equity securities of the Target
and/or its subsidiaries will only be required to be delivered on the Closing
Date to the extent received from the Target provided you have used commercially
reasonable efforts to obtain such securities on or prior to the Closing Date) is
not provided or perfected after your use of commercially reasonable efforts to
do so, then the provision and/or perfection of a security interest in such
Collateral shall not constitute a condition precedent to the availability of the
Facilities on the Closing Date, but instead shall be required to be delivered
after the Closing Date pursuant to arrangements and timing to be mutually agreed
by the Lead Arrangers and the Borrower but no later than 90 days after the
Closing Date (or such longer period as the applicable Administrative Agent may
determine in its reasonable discretion). For purposes hereof, “Specified
Representations” means the representations and warranties of the Loan Parties
relating to organizational status, organizational power and authority to enter
into the Credit Documentation, due authorization, execution, delivery and
enforceability of the Credit Documentation, no conflicts with or consents
required under charter documents, solvency of the Borrower and its subsidiaries
on a consolidated basis after giving effect to the Transactions (and defined in
a manner consistent with the Solvency Certificate attached as Annex IV hereto),
Federal Reserve margin regulations, the use of proceeds not violating OFAC or
FCPA, the USA Patriot Act, anti-money laundering laws, the Investment Company
Act, the creation, validity, priority and perfection of the security interests
granted in the intended collateral, subject to permitted liens as set forth in
the Credit Documentation and the terms of this Section 5. This Section 5 shall
be referred to as the “Funds Certain Provisions.”

6. Confidentiality and Other Obligations. This Commitment Letter and the Fee
Letter and the contents hereof and thereof are confidential and, may not be
disclosed in whole or in part to any person or entity without our prior written
consent except (i) on a confidential basis to your officers, directors,
employees, agents, accountants, attorneys and other professional advisors and
representatives in connection with the Transaction, (ii) pursuant to the order
of any court or administrative agency in any pending legal or administrative
proceeding, or otherwise as required by or advisable pursuant to applicable law
or compulsory legal process (in which case you agree to inform us promptly
thereof to the extent practicable and not prohibited by law), (iii) this
Commitment Letter and the Fee Letter (redacted in a manner reasonably
satisfactory to us) may be disclosed on a confidential basis to the respective
officers, boards of directors, employees, agents and advisors and
representatives of the Target in connection with their consideration of the
Transaction, (iv) this Commitment Letter (but not the Fee Letter) and its
contents may be disclosed in any proxy or other public filing relating to the
Transaction and in any filings with the Securities and Exchange Commission and
other applicable regulatory authorities and stock exchanges, (v) the fees
contained in the Fee Letter may be disclosed as part of generic disclosure of
aggregate sources and uses related to fee amounts in marketing materials, rating
agency presentations and any proxy or other public filing or prospectus, (vi) in
connection with the enforcement of the Commitment Letter and this Fee Letter and
(vii) to gaming regulatory authorities in connection with their review of the
Transactions or other regulatory oversight of the Companies. This paragraph (as
it applies to the Commitment Letter but not the Fee Letter) shall terminate on
the earlier of (a) the initial funding under the Facilities and (b) the second
anniversary of the date hereof.

The Commitment Parties shall use all confidential information provided to them
by or on behalf of you hereunder solely for the purpose of providing the
services which are the subject of this letter agreement and otherwise in
connection with the Transaction and shall treat confidentially all such
information; provided, however, that nothing herein shall prevent the Commitment
Parties from disclosing any such information (i) pursuant to the order of any
court or administrative agency or in any pending legal or administrative
proceeding, or otherwise as required by applicable law or compulsory legal
process (in which case the Commitment Parties agree to inform you promptly
thereof to the extent permitted by law and other than in the case of ordinary
course audits or examinations by bank regulatory authorities), (ii) upon the
request or demand of any regulatory authority having jurisdiction over

 

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the Commitment Parties or any of their respective affiliates, (iii) to the
extent that such information becomes publicly available other than by reason of
disclosure in violation of this agreement by the Commitment Parties, (iv) to the
Commitment Parties’ affiliates, employees, legal counsel, independent auditors
and other experts or agents who need to know such information in connection with
the Transaction and are informed of the confidential nature of such information
(it being understood that the applicable Commitment Party shall be responsible
for such person’s compliance with this paragraph), (v) for purposes of
establishing a “due diligence” defense, (vi) to the extent that such information
is received by the Commitment Parties from a third party that is not to the
Commitment Parties’ knowledge subject to confidentiality obligations to you,
(vii) to the extent that such information is independently developed by the
Commitment Parties, (viii) to the applicable rating agencies in connection with
any rating of the Facilities, (ix) to potential Lenders, participants or
assignees or any direct or indirect contractual counterparties to any swap or
derivative transaction relating to you or your obligations under the Facilities,
in each case, who agree to be bound by the terms of this paragraph (or language
substantially similar to this paragraph or as otherwise reasonably acceptable to
you and the Commitment Parties, including as may be agreed in any confidential
information memorandum or other marketing material), (x) to Moody’s and S&P and
to Bloomberg, LSTA and similar market data collectors with respect to the
syndicated lending industry; provided that such information is limited to
Annex I and Annex II and is supplied only on a confidential basis or (xi) with
your prior written consent. This paragraph shall terminate on the second
anniversary of the date hereof.

You acknowledge that the Commitment Parties or their affiliates may be providing
financing or other services to parties whose interests may conflict with
yours. The Commitment Parties agree that they will not furnish confidential
information obtained from you to any of their other customers and will treat
confidential information relating to the Companies and their respective
affiliates with the same degree of care as they treat their own confidential
information. The Commitment Parties further advise you that they will not make
available to you confidential information that they have obtained or may obtain
from any other customer. In connection with the services and transactions
contemplated hereby, you agree that the Commitment Parties are permitted to
access, use and share with any of their bank or non-bank affiliates, agents,
advisors (legal or otherwise) or representatives any information concerning the
Companies or any of their respective affiliates that is or may come into the
possession of the Commitment Parties or any of such affiliates.

In connection with all aspects of each transaction contemplated by this
Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’
understanding, that: (i) each of the Facilities and any related arranging or
other services described in this Commitment Letter is an arm’s-length commercial
transaction between you and your affiliates, on the one hand, and the Commitment
Parties, on the other hand, (ii) the Commitment Parties have not provided any
legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby and you have consulted your own legal,
accounting, regulatory and tax advisors to the extent you have deemed
appropriate, (iii) you are capable of evaluating, and understand and accept, the
terms, risks and conditions of the transactions contemplated hereby, (iv) in
connection with each transaction contemplated hereby and the process leading to
such transaction, each Commitment Party has been, is, and will be acting solely
as a principal and has not been, is not, and will not be acting as an advisor,
agent or fiduciary, for you or any of your affiliates, stockholders, creditors
or employees or any other party, (v) the Commitment Parties have not assumed and
will not assume an advisory, agency or fiduciary responsibility in your or your
affiliates’ favor with respect to any of the transactions contemplated hereby or
the process leading thereto (irrespective of whether any of the Commitment
Parties has advised or is currently advising you or your affiliates on other
matters) and the Commitment Parties have no obligation to you or your affiliates
with respect to the transactions contemplated hereby except those obligations
expressly set forth in this Commitment Letter and (vi) the Commitment Parties
and their respective affiliates may be engaged in a broad range of transactions
that involve interests that differ from yours and those of your affiliates, and
the Commitment Parties have no obligation to disclose any of such interests to
you or your affiliates. To the fullest extent permitted by law, you hereby waive
and release any claims that you may have against the Commitment Parties with
respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated by this Commitment
Letter.

The Commitment Parties hereby notify the Companies that pursuant to the
requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into
law October 26, 2001) (the “U.S.A. Patriot Act”), each of them is required to
obtain, verify and record information that identifies the Borrower and the
Guarantors, which information includes your name and address and other
information that will allow the Commitment Parties, as applicable, to identify
the Borrower and the Guarantors in accordance with the U.S.A. Patriot Act.

 

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7. Survival of Obligations. The provisions of Sections 2, 3, 4, 6 (except as
provided in Section 6) and 8 shall remain in full force and effect regardless of
whether any Credit Documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or any commitment or
undertaking of the Commitment Parties hereunder, except that the provisions of
Sections 2 and 3 shall not survive if the commitments and undertakings of the
Commitment Parties with respect thereto are terminated prior to the
effectiveness of the Facilities and funding thereof; provided, however, that
your obligations under this Commitment Letter (other than your obligations with
respect to assistance to be provided in connection with the syndication thereof
(including supplementing and/or correcting information and Projections) prior to
the expiration of the Syndication Period) shall automatically terminate and be
superseded by the provisions of the Credit Documentation upon the initial
funding thereunder, and you shall automatically be released from all liability
in connection therewith at such time.

8. Miscellaneous. This Commitment Letter and the Fee Letter may be executed in
multiple counterparts and by different parties hereto in separate counterparts,
all of which, taken together, shall constitute an original. Delivery of an
executed counterpart of a signature page to this Commitment Letter or the Fee
Letter by telecopier, facsimile or other electronic transmission (e.g., a “pdf”
or “tiff”) shall be effective as delivery of a manually executed counterpart
thereof. Headings are for convenience of reference only and shall not affect the
construction of, or be taken into consideration when interpreting, this
Commitment Letter or the Fee Letter.

This Commitment Letter and the Fee Letter and any claim, controversy or dispute
arising out of relating to this Commitment Letter or the Fee Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York. Each party hereto hereby irrevocably waives any and all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Commitment Letter, the Fee
Letter, the Transaction and the other transactions contemplated hereby and
thereby or the actions of the Commitment Parties in the negotiation, performance
or enforcement hereof. Each party hereto hereby irrevocably and unconditionally
submits to the exclusive jurisdiction of any New York State court or Federal
court of the United States of America sitting in the Borough of Manhattan in New
York City in respect of any suit, action or proceeding arising out of or
relating to the provisions of this Commitment Letter, the Fee Letter, the
Transaction and the other transactions contemplated hereby and thereby and
irrevocably agrees that all claims in respect of any such suit, action or
proceeding shall be heard and determined in any such court. The parties hereto
agree that service of any process, summons, notice or document by registered
mail addressed to you shall be effective service of process against you for any
suit, action or proceeding relating to any such dispute. Each party hereto
waives, to the fullest extent permitted by applicable law, any objection that it
may now or hereafter have to the laying of the venue of any such suit, action or
proceedings brought in any such court, and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. A final judgment in any such suit, action or proceeding brought in any
such court may be enforced in any other courts to whose jurisdiction you are or
may be subject by suit upon judgment.

Each of the parties hereto agrees that (i) this Commitment Letter is a binding
and enforceable agreement (subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or
affecting creditors’ rights generally and general principles of equity (whether
considered in a proceeding in equity or law)) of the parties hereto with respect
to the subject matter contained herein, including an agreement to negotiate in
good faith the Credit Documentation by the parties hereto in a manner consistent
with this Commitment Letter (it being acknowledged and agreed that the initial
funding of the Facilities is subject only to the satisfaction (or waiver) of the
conditions precedent set forth in Section 5 and Annex III hereto) and (ii) the
Fee Letter is a binding and enforceable agreement (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar
laws relating to or affecting creditors’ rights generally and general principles
of equity (whether considered in a proceeding in equity or law)) of the parties
thereto with respect to the subject matter contained therein.

This Commitment Letter, together with the Fee Letter, embodies the entire
agreement and understanding among the parties hereto and your affiliates with
respect to the Facilities and supersedes all prior agreements and understandings
relating to the subject matter hereof. No party has been authorized by the
Commitment Parties to make any oral or written statements that are inconsistent
with this Commitment Letter. Neither this Commitment Letter (including the
attachments hereto) nor the Fee Letter may be amended or

 

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any term or provision hereof or thereof waived or modified except by an
instrument in writing signed by each of the parties hereto.

This Commitment Letter may not be assigned by you without our prior written
consent (and any purported assignment without such consent will be null and
void), is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and the Indemnified Parties). Each
Commitment Party may assign its commitment hereunder, in whole or in part, to
any of its affiliates (provided that such Commitment Party shall not be released
from the portion of its commitment hereunder so assigned to the extent such
assignee fails to fund the portion of the commitment assigned to it on the
Closing Date notwithstanding the satisfaction of the conditions to such funding
set forth herein) or, subject to the provisions of this Commitment Letter, to
any Lender.

Please indicate your acceptance of the terms of the Facilities set forth in this
Commitment Letter and the Fee Letter by returning to us executed counterparts of
this Commitment Letter and the Fee Letter with respect to the Facilities not
later than 5:00 p.m. (New York City time) on June 10, 2017, whereupon the
undertakings of the parties with respect to the Facilities shall become
effective to the extent and in the manner provided hereby. This offer shall
terminate if not so accepted by you at or prior to that time. Upon your
acceptance of this offer, thereafter the commitments and undertakings of the
Commitment Parties hereunder will expire on the earliest of (a) five business
days after the Termination Date (as defined in the Acquisition Agreement (as in
effect as of the date hereof)), as may be extended pursuant to Section 5.1(c) of
the Acquisition Agreement (as in effect as of the date hereof), unless the
Closing Date occurs on or prior thereto, (b) the termination of the Acquisition
Agreement prior to the Closing Date in accordance with its terms, and (c) the
closing of the Acquisition without the use of the Facilities.

[The remainder of this page intentionally left blank.]

 

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We are pleased to have the opportunity to work with you in connection with this
important financing.

 

Very truly yours, JPMORGAN CHASE BANK, N.A. By:  

/s/ Chiara Carter

  Name:   Chiara Carter   Title:   Executive Director

[Signature Page to Commitment Letter]

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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH By:  

/s/ John Toronto

  Name:   John Toronto   Title:   Authorized Signatory By:  

/s/ Whitney Gaston

  Name:   Whitney Gaston   Title:   Authorized Signatory CREDIT SUISSE
SECURITIES (USA) LLC By:  

/s/ Joseph Palombini

  Name:   Joseph Palombini   Title:   Director

[Signature Page to Commitment Letter]

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MACQUARIE CAPITAL (USA) INC. By:  

/s/ Lisa Grushkin

  Name:   Lisa Grushkin   Title:   Managing Director By:  

/s/ Michael Barrish

  Name:   Michael Barrish   Title:   Managing Director MACQUARIE CAPITAL FUNDING
LLC By:  

/s/ Lisa Grushkin

  Name:   Lisa Grushkin   Title:   Authorized Signatory By:  

/s/ Michael Barrish

  Name:   Michael Barrish   Title:   Authorized Signatory

[Signature Page to Commitment Letter]

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MORGAN STANLEY SENIOR FUNDING, INC. By:  

/s/ Michael Guttilla Jr.

  Name:   Michael Guttilla Jr.   Title:   Authorized Signatory

[Signature Page to Commitment Letter]

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The provisions of this Commitment Letter are accepted and agreed to as of the
date first written above: GOLDEN ENTERTAINMENT, INC. By:  

/s/ Charles H. Protell

  Name:   Charles H. Protell   Title:   Chief Financial Officer

[Signature Page to Commitment Letter]

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ANNEX I

Project Padre

Summary of Terms and Conditions

$800.0 Million First Lien Term Loan Facility

$100.0 Million First Lien Revolving Credit Facility

Set forth below in this term sheet (the “First Lien Term Sheet”) is a summary of
the principal terms and conditions for the First Lien Facilities (as defined
below). Capitalized terms used but not defined in this First Lien Term Sheet
shall have the meanings set forth in the commitment letter to which this First
Lien Term Sheet is attached (the “Commitment Letter”).

 

Borrower:   Golden Entertainment, Inc., a Minnesota corporation (the
“Borrower”). Guarantors:   Subject to applicable gaming laws, all obligations of
the Borrower under the First Lien Facilities and, at the Borrower’s option,
under any interest rate protection or other hedging arrangements entered into
with, or cash management obligations owing to, any First Lien Lender (as defined
below), any First Lien Arranger (as defined below), the First Lien Agent (as
defined below) or any person that is an affiliate of a First Lien Lender, a
First Lien Arranger or the First Lien Agent at the time the relevant transaction
is entered into, shall be fully and unconditionally guaranteed by each of the
Borrower’s existing and future wholly-owned domestic Restricted Subsidiaries (as
defined below) (the “Guarantors”; and together with the Borrower, the “Loan
Parties”) on a senior secured basis, subject to agreed upon exceptions,
including, without limitation, for (i) any foreign subsidiary, (ii) any domestic
subsidiary that has no material assets other than equity interests (or equity
interests and indebtedness) of one or more subsidiaries of the Borrower that are
“controlled foreign corporations,” as defined in Section 957 of the Internal
Revenue Code (“CFCs”) (a “CFC Holdco”), (iii) any subsidiary of a foreign
subsidiary of the Borrower that is a CFC or of a CFC Holdco, (v) special purpose
entities, (vi) Unrestricted Subsidiaries (as defined below) and immaterial
subsidiaries which meet certain to be agreed upon thresholds, (vii) any
subsidiary that is prohibited by law or contractual obligation (to the extent in
existence on the Closing Date or at the time of acquisition of the relevant
subsidiary and, in each case, not entered into or created in contemplation
hereof and only for so long as such prohibition or restriction exists) from
providing a guaranty, (viii) not-for-profit subsidiaries, (ix) captive insurance
subsidiaries, and (x) any other subsidiary to the extent the First Lien Agent
and the Borrower mutually determine the cost or burden of obtaining the guaranty
(including any adverse tax consequences) outweigh the benefit to the First Lien
Lenders (any such entity described in clauses (i) through (x), an “Excluded
Subsidiary”).   Subject to limitations on investments therein, the Borrower will
be permitted to designate any existing or subsequently acquired or organized
subsidiary as an “unrestricted subsidiary” (any subsidiary so designated, an
“Unrestricted Subsidiary”); provided that no event of default shall have
occurred and be continuing or would result from any such designation and the
Borrower shall be in pro forma compliance with the Financial Covenant
(regardless of whether then applicable). Unrestricted Subsidiaries (and the sale
of equity interests therein or assets thereof) will not be subject to the
mandatory prepayment, representation and warranty, affirmative or negative
covenant or event of default provisions of the First Lien Loan Documents (as
defined

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  below) and the cash held by, and results of operations, indebtedness and
interest expense of, Unrestricted Subsidiaries will not be taken into account
for purposes of determining any financial ratio or covenant contained in the
First Lien Loan Documents. “Restricted Subsidiary” shall mean any existing or
future direct or indirect subsidiary of the Borrower other than any Unrestricted
Subsidiary.   The designation of any Restricted Subsidiary as an Unrestricted
Subsidiary shall constitute an Investment by the Borrower or its applicable
Restricted Subsidiary at the date of designation in an amount equal to the
portion of the fair market value of the net assets of such Restricted Subsidiary
attributable to the Borrower’s or its applicable Restricted Subsidiary’s equity
interest therein as reasonably estimated by the Borrower (and such designation
shall only be permitted to the extent such Investment is otherwise permitted).
The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall
constitute the incurrence or making, as applicable, at the time of designation
of any then-existing Investment, Indebtedness or Lien of such Restricted
Subsidiary, as applicable, and shall be subject to no event of default having
occurred and be continuing or would result from such designation and the
Borrower shall be in pro forma compliance with the Financial Covenant
(regardless of whether then applicable). First Lien Administrative and
Collateral Agent:   JPMorgan (in such capacity, the “First Lien Agent”). First
Lien Joint Lead Arrangers and Joint Bookrunners:   JPMorgan, CS Securities,
Macquarie Capital and MSSF (collectively, the “First Lien Arrangers”). First
Lien Lenders:   A syndicate of financial institutions (including JPMorgan,
Credit Suisse, Macquarie Lender and MSSF, but excluding Disqualified Lenders)
arranged by the First Lien Arrangers and reasonably acceptable to the Borrower
(collectively, the “First Lien Lenders”). First Lien Facilities:  
$900.0 million of senior secured first lien credit facilities (the “First Lien
Facilities” and each individually, a “First Lien Facility”), which shall each
rank pari passu with each other First Lien Facility, consisting of:   a)   A
term loan facility in an aggregate principal amount of $800.0 million (the
“First Lien Term Facility”; and the loans under the First Lien Term Facility,
the “First Lien Term Loans”; and the First Lien Lenders providing such First
Lien Term Loans, the “First Lien Term Lenders”).   b)   A revolving credit
facility in an aggregate principal amount of $100.0 million (the “Revolving
Facility” and the loans under the Revolving Facility, the “Revolving Loans”; the
First Lien Term Loans and the Revolving Loans, each a “First Lien Loan” and
collectively, the “First Lien Loans”; and the First Lien Lenders under the
Revolving Facility, the “Revolving Lenders”), of which (i) an amount to be
agreed will be available for the issuance of letters of credit (“Letters of
Credit”) and (ii) an amount to be agreed will be available for swingline loans
(the “Swingline Loans”).

 

Annex I-2

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Incremental First Lien Facilities:   On or before the maturity date of the
applicable First Lien Facility, the Borrower shall have the right, but not the
obligation, to increase the aggregate amount of the First Lien Facilities by
(i) increasing the size of the First Lien Term Facility and/or adding one or
more incremental term loan facilities (each, an “Incremental First Lien Term
Facility”) and/or (ii) adding one or more incremental revolving facilities
and/or increasing the commitments under the Revolving Facility (each an
“Incremental Revolving Facility”; and together with any Incremental First Lien
Term Facility, the “Incremental First Lien Facilities”) in an aggregate amount
of such Incremental First Lien Facilities not to exceed the sum of (A) the
greater of (x) $170.0 million and (y) 100% of Consolidated EBITDA for the most
recent four-quarter period for which financial statements are available (the
“Shared Fixed Incremental Amount”) (minus the aggregate outstanding principal of
(i) Incremental Second Lien Facilities (as defined in Annex II) incurred under
the Shared Fixed Incremental Amount) and (ii) without duplication, debt incurred
under clause (a) of the Ratio Debt Basket (as defined below)) plus (B)(I) in the
case of an Incremental First Lien Facility that serves to effectively extend the
maturity of the First Lien Term Facility and/or the Revolving Facility, an
amount equal to the reductions in the First Lien Term Facility and/or the
Revolving Facility to be replaced with such Incremental First Lien Facility and
(II) in the case of an Incremental First Lien Facility that effectively replaces
any commitment under the Revolving Facility terminated under the “yank-a-bank”
provisions, an amount equal to the portion of the relevant terminated
commitments under the Revolving Facility plus (C) the amount of any voluntary
prepayment or repurchase of the First Lien Term Loans or any Incremental First
Lien Term Facility and/or any permanent reduction of the commitments under the
Revolving Facility or any Incremental Revolving Facility; provided that the
relevant prepayment (I) is not funded with long term indebtedness and (II) shall
not include any prepayment that is funded with the proceeds of an Incremental
First Lien Facility incurred in reliance on clause (B) above (the amounts under
clauses (B) and (C) together, the “Incremental First Lien Prepayment Amount”)
(minus the aggregate outstanding principal of debt incurred under clause (b) of
the Ratio Debt Basket), plus (D) an unlimited amount (the “Incremental First
Lien Incurrence-Based Amount”) at any time so long as in the case of this clause
(D), after giving effect to the relevant Incremental First Lien Facility, the
First Lien Net Leverage Ratio (as defined below) does not exceed the First Lien
Net Leverage Ratio on the Closing Date calculated on a pro forma basis after
giving effect to such Incremental First Lien Facility, including the application
of the proceeds thereof ((x) assuming, in the case of any Incremental Revolving
Facility, that all commitments under such Incremental Revolving Facility were
fully drawn and (y) without “netting” the cash proceeds of any borrowing under
any such Incremental First Lien Facility); provided that:   a)   no event of
default exists or would exist after giving effect thereto and the
representations and warranties in the First Lien Loan Documents shall be true
and correct in all material respects; provided that the lenders providing the
applicable Incremental First Lien Facility in connection with a Limited
Condition Transaction (as defined below) may agree to waive these conditions
(other than events of default related to payment or

 

Annex I-3

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    bankruptcy and customary specified representations and warranties);   b)  
the loans under any Incremental Revolving Facility will mature no earlier than
the Revolving Loan Maturity Date (as defined below) and the Incremental
Revolving Facility and the Revolving Facility shall be subject to customary pro
rata borrowing, letter of credit and swingline participation, commitment
reduction, payment and repayment provisions;   c)   other than customary
“bridge” facilities (so long as the long term debt into which any such customary
“bridge” facility is to be automatically converted satisfies such requirements),
the stated maturity date applicable to any Incremental First Lien Term Facility
will not be earlier than the First Lien Term Loan Maturity Date (as defined
below) and the weighted average life to maturity of any loans under such
Incremental First Lien Term Facility shall not be shorter than the remaining
weighted average life to maturity of the initial First Lien Term Loans under the
First Lien Term Facility;   d)   the interest margins for any Incremental First
Lien Facility shall be determined by the Borrower and the lenders under such
Incremental First Lien Facility; provided that with respect to any Incremental
First Lien Term Facility that is entered into within 12 months of the Closing
Date, in the event that the interest margins for any such Incremental First Lien
Term Facility are greater than the corresponding interest margins for the
existing First Lien Term Facility by more than 50 basis points, then the
interest margins for the existing First Lien Term Facility shall be increased to
be equal to the interest margins for such Incremental First Lien Term Facility
minus 50 basis points; provided, further, that for purposes of determining such
interest margins, (w) original issue discount (based on an assumed four-year
life to maturity), interest rate floors, and upfront and similar fees payable by
the Borrower shall be included, (x) any amendments to the interest margin on the
relevant existing facility that became effective subsequent to the Closing Date
but prior to the time of the addition of such Incremental First Lien Facility
shall be included, (y) if such Incremental First Lien Facility includes any
“LIBOR” interest rate floor greater than that applicable to the First Lien Term
Facility and such floor is applicable to the First Lien Term Facility on the
date of determination, such excess amount shall be equated to interest margin
for determining the increase (and, at the option of the Borrower, such increase
will be reflected solely as an increase to the applicable “LIBOR” interest rate
floor) and (z) customary arrangement, commitment, structuring, underwriting and
similar fees (regardless of whether any such fees are paid to or shared in whole
or in part with any lenders providing such Incremental First Lien Facility)
shall be excluded; provided, further, that any Incremental First Lien Term
Facility that is fixed rate debt shall, at the Borrower’s option, be swapped to
a floating rate on a customary matched maturity basis;   e)   any Incremental
First Lien Facility (A) shall rank pari passu in right of payment and/or with
respect to security with the other

 

Annex I-4

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    First Lien Facilities, (B) shall not be secured by any assets other than the
Collateral (as defined below) and (C) shall not be guaranteed by any person
other than a Guarantor; and   f)   except as otherwise provided above with
respect to pricing, margin, maturity and/or fees, the terms of any Incremental
First Lien Facility shall be substantially identical to the terms of the First
Lien Facilities (except to the extent such terms (A) at the option of the
Borrower (1) reflect market terms and conditions (taken as a whole) at the time
of incurrence or issuance (as determined by the Borrower); provided that, if any
financial maintenance covenant is added for the benefit of any Incremental First
Lien Term Facility, such financial maintenance covenant shall also be applicable
to the First Lien Term Facility (except to the extent such financial maintenance
covenant applies only to periods after the First Lien Term Loan Maturity Date),
or (2) are not materially more restrictive to the Borrower (as determined by the
Borrower), when taken as a whole, than the terms of the First Lien Term Facility
or the Revolving Facility, as the case may be (except for covenants or other
provisions applicable only to periods after the First Lien Term Loan Maturity
Date or the Revolving Loan Maturity Date, as applicable) (it being understood
that any Incremental First Lien Facility may provide for the ability to
participate (i) with respect to any voluntary prepayments, on a pro rata basis,
greater than pro rata basis or less than pro rata basis with the applicable
First Lien Facility and (ii) with respect to any mandatory prepayments, on a pro
rata basis or less than pro rata basis with the applicable First Lien Facility
(and on a greater than pro rata basis with respect to prepayments of any such
Incremental First Lien Facility with the proceeds of First Lien Refinancing
Facilities or First Lien Refinancing Notes) or (B) are (i) reasonably
satisfactory to the First Lien Agent, (ii) added for the benefit of the First
Lien Term Facility or Revolving Facility, as applicable or (iii) applicable only
after the First Lien Term Loan Maturity Date or the Revolving Loan Maturity
Date, as applicable).   Such increased amounts will be provided by existing
First Lien Lenders or new entities reasonably acceptable to the Borrower and the
First Lien Agent; provided that no existing First Lien Lender will be obligated
to provide any such Incremental First Lien Facility.   For purposes of the
foregoing, (I) the Borrower may elect to use the Incremental First Lien
Incurrence-Based Amount prior to the Shared Fixed Incremental Amount or the
Incremental First Lien Prepayment Amount and regardless of whether there is
capacity under the Shared Fixed Incremental Amount or the Incremental First Lien
Prepayment Amount, and if the Shared Fixed Incremental Amount, the Incremental
First Lien Prepayment Amount and the Incremental First Lien Incurrence-Based
Amount are each available and the Borrower does not make an election, the
Borrower will be deemed to have elected to use the Incremental First Lien
Incurrence-Based Amount; (II) any portion of any First Lien Incremental
Facilities incurred in reliance on the Shared Fixed Incremental Amount or the
Incremental First Lien Prepayment Amount shall be reclassified, as the Borrower
may elect from time to time, as incurred under the Incremental First Lien

 

Annex I-5

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  Incurrence-Based Amount if the Borrower meets the applicable First Lien Net
Leverage Ratio under the Incremental First Lien Incurrence-Based Amount at such
time on a pro forma basis (this clause (II), the “First Lien Incremental
Reclassification”); and (III) any amounts incurred under the Shared Fixed
Incremental Amount and the Incremental First Lien Prepayment Amount and/or under
other applicable fixed dollar baskets (including any grower components thereto),
in each case, together with any amounts incurred to fund original issue discount
and upfront fees, that is concurrently incurred with, or incurred in a single
transaction or series of related transactions with, amounts incurred under the
Incremental First Lien Incurrence-Based Amount, will not count as indebtedness
for the purposes of calculating the applicable ratio under the Incremental First
Lien Incurrence-Based Amount. This paragraph shall apply in an equivalent manner
to amounts incurred under the Ratio Debt Basket (as defined below).   The
proceeds of any Incremental First Lien Facility may be used by the Borrower and
its subsidiaries for working capital and other general corporate purposes,
including the financing of Permitted Acquisitions, other permitted Investments
and Restricted Payments (as defined below) and any other use not prohibited by
the First Lien Loan Documents.   In the event any Incremental First Lien
Facility is being used to finance a Limited Condition Transaction, the
availability thereof shall, if agreed by the lenders providing such Incremental
First Lien Facility, be subject to customary “SunGard” or “certain funds”
conditionality provisions; provided that the amount of any Incremental First
Lien Facility under the Incremental First Lien Incurrence-Based Amount
determined at the time of signing of definitive documentation with respect to,
or giving of notice with respect to, a Limited Condition Transaction may be
recalculated, at the option of the Borrower, at the time of funding).   As used
herein:   “Consolidated EBITDA” will be defined giving effect to the Facilities
Documentation Principles (as defined below) (including add-backs and other
adjustments consistent therewith), and will include, among others, add-backs and
adjustments for (i) pro forma “run rate” expected cost savings, operating
expense reductions, other operating improvements and other synergies that are
reasonably identifiable and factually supportable (in the good faith
determination of the Borrower) and that are reasonably expected to be realized
within 18 months of the event giving rise thereto, (ii) costs, charges,
accruals, reserves or expenses incurred as a result of the undertaking and/or
implementation of the items listed in clause (i) above (provided that add-backs
and adjustments listed in clauses (i) and (ii) above shall not exceed 20% of
Consolidated EBITDA), (iii) annualization of any operations that have been
organically developed by the Loan Parties and operated for at least one full
fiscal quarter during the relevant period (but otherwise not operated during the
entire relevant period), (iv) any extraordinary or unusual costs, charges,
accruals, reserves or expenses and those in connection with any non-recurring
events, (v) any non-cash charges and (vi) other add-backs to be agreed and
adjustments reflected in the

 

Annex I-6

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  quality of earnings report, dated as of May 22, 2017 and delivered to the
First Lien Arrangers prior to the date hereof in connection with the Acquisition
and in the Model.   “First Lien Net Leverage Ratio” will be defined as the ratio
of (i) consolidated debt for borrowed money, purchase money indebtedness and
capital leases of the Borrower and its Restricted Subsidiaries (“Consolidated
Total Debt”) that are secured on a first-priority basis net of (x) unrestricted
cash and cash equivalents of the Borrower and its Restricted Subsidiaries
whether or not held in a pledged account and in excess of $40.0 million and
(y) cash and cash equivalents of the Borrower and its Restricted Subsidiaries
restricted in favor of the First Lien Facilities (which may also include cash
and cash equivalents securing other indebtedness secured by a lien on the
Collateral along with the First Lien Facilities, in each case, such unrestricted
cash and restricted cash and cash equivalents to be determined in accordance
with generally accepted accounting principles) (the amounts in clauses (x) and
(y), collectively, “Unrestricted Cash”) to (ii) trailing four fiscal quarter
Consolidated EBITDA.   “Total Net Leverage Ratio” will be defined as the ratio
of (i) Consolidated Total Debt net of Unrestricted Cash, to (ii) trailing four
fiscal quarter Consolidated EBITDA.   “Total Secured Net Leverage Ratio” will be
defined as the ratio of (i) Consolidated Total Debt that is secured net of
Unrestricted Cash, to (ii) trailing four fiscal quarter Consolidated EBITDA.
Limited Condition Transactions:   For purposes of (i) determining compliance
with any provision of the First Lien Loan Documents which requires the
calculation of the First Lien Net Leverage Ratio, the Total Secured Net Leverage
Ratio or the Total Net Leverage Ratio, (ii) determining compliance with
representations, warranties, defaults or events of default or (iii) testing
availability under baskets set forth in the First Lien Loan Documents, in each
case, in connection with a “limited condition” transaction (including any
applicable Permitted Acquisition, permitted Investment or unconditional
repayment or redemption of, or offer to purchase, any indebtedness) (any such
transaction, a “Limited Condition Transaction”), at the option of the Borrower
(the Borrower’s election to exercise such option in connection with any Limited
Condition Transaction, an “LCT Election”), the date of determination of whether
any such action is permitted under the First Lien Loan Documents shall be deemed
to be the date the definitive agreements for such Limited Condition Transaction
are entered into (the “LCT Test Date”), and if, after giving pro forma effect to
the Limited Condition Transaction and the other transactions to be entered into
in connection therewith as if they had occurred at the beginning of the most
recent test period ending prior to the LCT Test Date, the Borrower could have
taken such action on the relevant LCT Test Date in compliance with such
representation, warranty, ratio or basket, such representation, warranty, ratio
or basket shall be deemed to have been complied with.   For the avoidance of
doubt, if the Borrower has made an LCT Election and any of the ratios or baskets
for which compliance was determined or tested as of the LCT Test Date are
exceeded as a result of fluctuations in any such ratio or basket (including due
to fluctuations of

 

Annex I-7

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  the target of any Limited Condition Transaction) at or prior to the
consummation of the relevant transaction or action, such baskets or ratios will
not be deemed to have been exceeded as a result of such fluctuations. If the
Borrower has made an LCT Election for any Limited Condition Transaction, then in
connection with any subsequent calculation of such ratios or baskets on or
following the relevant LCT Test Date and prior to the earlier of (i) the date on
which such Limited Condition Transaction is consummated or (ii) the date that
the definitive agreement for such Limited Condition Transaction is terminated or
expires without consummation of such Limited Condition Transaction, any such
ratio or basket shall be calculated (x) on a pro forma basis assuming such
Limited Condition Transaction and other transactions in connection therewith
(including any incurrence of debt and the use of proceeds thereof) have been
consummated and (y) in the case of any such ratio or basket related to
Restricted Debt Payments or Restricted Payments (in each case as defined below),
without giving effect to such Limited Condition Transaction and other
transactions in connection therewith (including any incurrence of debt and the
use of proceeds thereof). Refinancing Facilities:   Subject to the provisions
set forth under “Prepayment Fee” below, the First Lien Loan Documents will
contain customary provisions permitting the Borrower to refinance on a dollar
for dollar basis and/or replace (i) the Revolving Facility, in whole or in part,
with one or more revolving credit facilities (each a “First Lien Refinancing
Revolving Facility”) and (ii) the First Lien Term Facility, in whole or in part,
with one or more term loan facilities (each, a “First Lien Refinancing Term Loan
Facility” and together with each First Lien Refinancing Revolving Facility,
collectively, the “First Lien Refinancing Facilities”)) with the consent of, to
the extent such First Lien Refinancing Facility is consummated under the First
Lien Loan Documents, the First Lien Agent (not to be unreasonably withheld,
delayed or conditioned) or, in the case of the First Lien Term Facility, with
one or more additional series of notes or loans, in each case, that may be pari
passu with or junior to the remaining portion of the First Lien Facilities in
right of payment and/or security and/or be unsecured (such notes or loans,
collectively, the “First Lien Refinancing Notes”) which, to the extent secured
by a lien on the Collateral, will be subject to the Intercreditor Agreement or
other intercreditor arrangements to be agreed in the First Lien Loan Documents
(with such immaterial changes as are reasonably acceptable to the First Lien
Agent and posted to the First Lien Lenders for five business days); provided
that (i) other than customary “bridge” facilities (so long as the long term debt
into which any such customary “bridge” facility is to be automatically converted
satisfies such requirements), any First Lien Refinancing Term Loan Facility or
First Lien Refinancing Notes do not mature prior to the maturity date of, or
have a shorter weighted average life than, loans under the First Lien Term
Facility being refinanced, (ii) any First Lien Refinancing Revolving Facility
does not mature prior to the maturity date of the Revolving Facility being
refinanced, (iii) such First Lien Refinancing Facility or First Lien Refinancing
Notes shall have pricing (including interest, fees and premiums), optional
prepayment and redemption terms as may be agreed by the Borrower and the other
parties thereto, (iv) the other terms and conditions of such First Lien
Refinancing Facility or First Lien Refinancing Notes (excluding maturity,
pricing and optional prepayment or redemption terms) are

 

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  substantially identical to, or no more favorable to the investors providing
such First Lien Refinancing Facility or First Lien Refinancing Notes, as
applicable, than, those applicable to the First Lien Term Facility or Revolving
Facility being refinanced or replaced (except to the extent such terms (A) at
the option of the Borrower are not materially more restrictive to the Borrower
(as reasonably determined by the Borrower in good faith), when taken as a whole,
than the terms of the First Lien Term Facility or the Revolving Facility, as the
case may be (except for covenants or other provisions applicable only to periods
after the First Lien Term Loan Maturity Date or the Revolving Loan Maturity
Date, as applicable) (it being understood that any First Lien Refinancing
Facilities or First Lien Refinancing Notes may provide for the ability to
participate (i) with respect to any voluntary prepayments, on a pro rata basis,
greater than pro rata basis or less than pro rata basis with the applicable
First Lien Facility and (ii) with respect to any mandatory prepayments, on a pro
rata basis (only in respect of a First Lien Refinancing Facility or First Lien
Refinancing Notes that rank pari passu with the applicable First Lien Facility)
or less than pro rata basis with the applicable First Lien Facility (and on a
greater than a pro rata basis with respect to prepayments of any such First Lien
Refinancing Facility or First Lien Refinancing Notes with the proceeds of
additional First Lien Refinancing Facilities or First Lien Refinancing Notes) or
(B) are (i) reasonably satisfactory to the First Lien Agent, (ii) added for the
benefit of the First Lien Term Facility or Revolving Facility, as applicable or
(iii) applicable only after the First Lien Term Loan Maturity Date or the
Revolving Loan Maturity Date, as applicable), (v) if any such First Lien
Refinancing Facility or First Lien Refinancing Notes is secured, it shall not be
secured by any assets other than the Collateral, (vi) if any such First Lien
Refinancing Facility or issuance of First Lien Refinancing Notes is unsecured or
is secured on a junior lien basis, it shall not require any scheduled
amortization or scheduled payments of principal until, and shall mature, at
least 91 days after the First Lien Term Loan Maturity Date, (vii) if any such
First Lien Refinancing Facility or issuance of First Lien Refinancing Notes is
guaranteed, it shall not be guaranteed by any person other than a Guarantor,
(viii) the aggregate principal amount of any First Lien Refinancing Facility or
any First Lien Refinancing Notes shall not exceed the aggregate principal amount
of indebtedness and commitments being refinanced or replaced therewith, plus
interest, premiums, fees and expenses or to the extent otherwise permitted under
the First Lien Loan Documents and (ix) in the case of any First Lien Refinancing
Revolving Facility, the definitive documentation shall include provisions to
govern pro rata payment, repayment, borrowings, letter of credit participation
and commitment reductions. Letters of Credit:   Letters of Credit will be issued
for the account of the Borrower and its subsidiaries by JPMorgan and any other
Revolving Lenders acceptable to the Borrower that agree to issue Letters of
Credit (each, an “L/C Issuer”). Letters of Credit shall be subject to the
customary procedures of the applicable L/C Issuer. Each Letter of Credit will
reduce availability under the Revolving Facility on a dollar-for-dollar basis.  
Letters of Credit shall be subject to the customary procedures of the applicable
L/C Issuer. Each Letter of Credit will reduce availability under the Revolving
Facility on a dollar-for-dollar basis.

 

Annex I-9

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  Each Letter of Credit shall expire on or before the earlier of (a) twelve
months after the original date of issuance unless consented to by the applicable
L/C Issuer and (b) the fifth business day prior to the Revolving Loan Maturity
Date unless arrangements (including cash collateralization of such Letters of
Credit) reasonably satisfactory to the applicable L/C Issuer have been entered
into; provided that any Letter of Credit may provide for automatic renewal for
additional one-year periods (which may not extend beyond the date that is the
fifth business day prior to the Revolving Loan Maturity Date unless arrangements
(including cash collateralization of such Letters of Credit) reasonably
satisfactory to the applicable L/C Issuer have been entered into).   Drawings
under any Letter of Credit shall be reimbursed by the Borrower (which can be
made with the proceeds of Revolving Loans) by the first business day after
notice of such drawing is received by the Borrower from the applicable L/C
Issuer. Each Revolving Lender will acquire an irrevocable and unconditional pro
rata participation in each Letter of Credit and, upon the failure of the
Borrower to so reimburse the applicable L/C Issuer, each such Revolving Lender
shall be irrevocably and unconditionally required to fund such pro rata
participation of such unreimbursed drawing to such L/C Issuer.   Letters of
Credit may be issued on the Closing Date in the ordinary course of business
and/or to replace or provide credit support for any existing letters of credit
(including by “grandfathering” such existing letters of credit into the
Revolving Facility to the extent such existing letters of credit are issued by a
Revolving Lender). Swingline Loans:   Swingline Loans will be made available
from JPMorgan Chase Bank, N.A. (in such capacity, the “Swingline Lender”) on
same-day notice and will reduce availability under the Revolving Facility on a
dollar-for-dollar basis. Each Revolving Lender will acquire an irrevocable and
unconditional pro rata participation in each Swingline Loan, and shall, promptly
upon request by the Swingline Lender, be irrevocably and unconditionally
required to fund such pro rata participation (which can be made in the form of
Revolving Loans to the Borrower). Maturity and Amortization:   First Lien Term
Facility: The First Lien Term Facility shall mature on the seventh anniversary
of the Closing Date (the “First Lien Term Loan Maturity Date”).   The First Lien
Term Loans shall be repayable in equal consecutive quarterly installments of
0.25% of the original principal amount of the First Lien Term Loans commencing
on the last business day of the first full fiscal quarter beginning after the
Closing Date, with the then remaining balance payable on the First Lien Term
Loan Maturity Date.   Revolving Facility: The Revolving Facility shall mature on
the fifth anniversary of the Closing Date (the “Revolving Loan Maturity Date”).
There shall be no amortization of Revolving Loans under the Revolving Facility.
  The First Lien Loan Documents shall provide the right for the Borrower to
extend the maturity date of commitments and/or the payment dates of First Lien
Loans outstanding with only the consent of

 

Annex I-10

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  the respective extending First Lien Lenders as further described under
“Amendments” below. Purpose and Availability:   The First Lien Term Loans shall
be drawn in full on the Closing Date.   The Revolving Loans (including Letters
of Credit) shall be available on and after the Closing Date; provided that
Revolving Loans made on the Closing Date may not exceed the sum of (i) amounts
to fund working capital and refinance outstanding revolving borrowings of the
Target and its subsidiaries in an amount not to exceed $15.0 million plus (ii)
an amount equal to the increase in fees paid on the Closing Date resulting from
any exercise of “flex” plus (iii) amounts required to replace, backstop or cash
collateralize existing letters of credit.   The proceeds of the First Lien Term
Loans and Revolving Loans shall be used (a) to finance a portion of the
Transactions and (b) for the Borrower’s and its subsidiaries’ ongoing working
capital requirements and other general corporate purposes (including capital
expenditures, Permitted Acquisitions and permitted Investments).   Once repaid,
the First Lien Term Loans may not be reborrowed.   Revolving Loans will be
available at any time prior to the final maturity of the Revolving Facility in
minimum principal amounts consistent with the Facilities Documentation
Principles. Revolving Loans may be borrowed, repaid and reborrowed. Interest:  
The First Lien Loans will bear interest based on the Base Rate (as defined
below) (“Base Rate Loans”) or LIBOR (as defined below) (“LIBOR Loans”), at the
Borrower’s option (subject to certain customary exceptions), except that all
Swingline Loans will bear interest based only on the Base Rate.   Base Rate
Loans: Interest on Base Rate Loans will accrue at the Base Rate plus the
applicable Interest Margin referred to below. Such interest will be calculated
on the basis of the actual number of days elapsed in a 365-day year (or a
366-day year in a leap year) and payable quarterly in arrears.   “Base Rate”
means a per annum rate equal to the greatest of (a) the Federal Funds Effective
Rate plus  1⁄2 of 1.00%, (b) the rate of interest publicly announced by the
First Lien Agent as its prime rate in effect at its principal office in New York
City, (c) one-month LIBOR plus 1.00% and (d) (i) in respect of First Lien Term
Loans only, 1.75% and (ii) in respect of Revolving Loans only, 1.00%.   Base
Rate Loans may be borrowed with same day notice in minimum amounts to be agreed
consistent with the Facilities Documentation Principles.   LIBOR Loans: Interest
on LIBOR Loans will accrue at the LIBOR Rate plus the applicable Interest Margin
referred to below.   “LIBOR Rate” means the higher of (a) the annual rate for
deposits in U.S. dollars equal to the London Interbank Offered Rate determined
by

 

Annex I-11

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  reference to a customary source to be agreed (“LIBOR”) for the periods
selected by the Borrower (“Interest Periods”) of one, two, three or six months
(or, if available, to the applicable First Lien Lenders, twelve months or a
shorter period (as selected by the Borrower)) and (b) (i) in respect of the
First Lien Term Loans only, 0.75% and (ii) in respect of Revolving Loans only,
0.00%.   LIBOR borrowings will require three business days’ prior notice and
will be in minimum amounts to be agreed consistent with the Facilities
Documentation Principles. Interest will be paid at the end of each Interest
Period or, for Interest Periods longer than three months, quarterly, and will be
calculated on the basis of the actual number of days elapsed in a 360-day year.
  Interest Margins: The applicable interest margin (the “Interest Margin”) will
be the following percentages:

 

Facility

   Base Rate Loans     LIBOR Loans  

First Lien Term Facility

     2.00 %      3.00 % 

Revolving Facility

     2.00 %      3.00 % 

 

  Following delivery of financial statements for the first full fiscal quarter
ending after the Closing Date, the Interest Margin for the Revolving Loans shall
be subject to two stepdowns of 0.25% at Total Net Leverage Ratio levels that are
0.50:1.00 times and 1.00:1.00 times, less than the Total Net Leverage Ratio on
the Closing Date, respectively.   At any time when a payment event of default
(with respect to any principal, interest or fees) or a bankruptcy event of
default exists, the relevant overdue amounts of principal and interest under the
First Lien Facilities shall bear interest at 2% above the otherwise applicable
rate then borne by such borrowings (or in the case of interest, the borrowings
to which such overdue amount relates) and overdue fees shall bear interest at 2%
above the rate applicable to Base Rate Loans. Other Fees:   Commitment Fee: The
Borrower shall pay a commitment fee on the daily unused amount of the
commitments under the Revolving Facility (reduced by the face amount of
outstanding Letters of Credit), payable quarterly in arrears, from the Closing
Date until the termination or expiration of the Revolving Facility, equal to
0.50% per annum and stepping down to 0.375% at a Total Net Leverage Ratio level
that is 0.50:1.00 times less than the Total Net Leverage Ratio on the Closing
Date. Swingline Loans shall, for purposes of the commitment fee calculations
only, not be deemed to be a utilization of the Revolving Facility. Such fee
shall be shared ratably among the Revolving Lenders.   Letter of Credit Fees:
The Borrower shall pay a fee on all outstanding Letters of Credit at a per annum
rate equal to the Interest Margin then in effect for Revolving Loans that are
LIBOR Loans on the face

 

Annex I-12

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  amount of each undrawn Letter of Credit. Such fee shall be shared ratably
among the Revolving Lenders and shall be payable quarterly in arrears.   The
Borrower shall pay a fronting fee in an amount to be agreed (but not to exceed
0.125% per annum) on the face amount of each Letter of Credit to the applicable
L/C Issuer for its own account, payable quarterly in arrears, together with
customary administration and issuance fees.   The forgoing fees shall be
calculated based on the actual number of days elapsed in a 360-day year and
shall be paid quarterly in arrears. Voluntary Prepayments and Commitment
Reductions:   First Lien Loans may be prepaid and commitments may be reduced, in
whole or in part without premium or penalty, in minimum amounts to be agreed
consistent with the Facilities Documentation Principles, at the option of the
Borrower at any time upon customary notice requirements, subject to
reimbursement of the First Lien Lenders’ breakage costs in the case of a
prepayment of LIBOR Loans prior to the last day of the relevant Interest Period
and, if applicable, the “Prepayment Fee” below.   Optional prepayments of the
First Lien Term Loans shall be applied as directed by the Borrower. Prepayment
Fee:   Any Repricing Transaction (as defined below) (and any “yank-a-bank”
assignment in connection therewith) that is consummated prior to the date that
is six months after the Closing Date will be subject to a 1.00% prepayment
premium (expressed as a percentage of the outstanding principal amount of the
First Lien Term Loans that are being prepaid or, in the case of an amendment,
that are subject to the relevant Repricing Transaction).   For purposes of the
First Lien Loan Documents, “Repricing Transaction” means the refinancing or
repricing (including by way of amendment) by the Borrower of all or any portion
of the First Lien Term Loans the primary purpose of which is to reduce the
all-in-yield applicable to the First Lien Term Loans (x) with the proceeds of
any secured term loans incurred by the Borrower or any Guarantor or (y) in
connection with any amendment to the First Lien Loan Documents, in either case,
(i) having or resulting in an effective interest rate (to be calculated in a
manner consistent with that set forth above in clause (d) of the proviso under
the heading “Incremental First Lien Facilities” above) as of the date of such
refinancing or repricing that is (and not by virtue of any fluctuation in any
“base” rate) less than the effective interest rate applicable to the First Lien
Term Loans as of the date of such refinancing or repricing and (ii) in the case
of a refinancing of the First Lien Term Loans, the proceeds of which are used to
repay, in whole or in part, the principal of outstanding First Lien Term Loans,
but excluding, in any such case, any refinancing or repricing of First Lien Term
Loans in connection with Significant Acquisitions (as defined below) or a Change
of Control (as defined below).   “Significant Acquisitions” shall mean
acquisitions that, individually or in the aggregate, are either not permitted
under the First Lien Loan

 

Annex I-13

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  Documents or which result in Consolidated EBITDA, determined on a pro forma
basis after giving effect thereto, being equal to or greater than 135% of
Consolidated EBITDA immediately prior to the consummation of such acquisitions
(such percentage, the “Significant Acquisition Threshold”). Mandatory
Prepayments and Commitment Reductions:   The following amounts shall be applied
to prepay the First Lien Loans, in each case with carveouts and exceptions
consistent with the Facilities Documentation Principles:   a)   100% of the net
cash proceeds of certain non-ordinary course asset sales or other dispositions
of property by the Borrower or any of its Restricted Subsidiaries (including
insurance and condemnation proceeds) after the Closing Date (subject to
exceptions consistent with the Facilities Documentation Principles) in excess of
an amount to be agreed in any single transaction or series of related
transactions, subject to the right of the Borrower to reinvest such proceeds if
reinvested (or committed to be reinvested) within 12 months (and, if so
committed to be reinvested within such 12 month period, so long as such
reinvestment is actually completed within 6 months thereafter; provided that the
Borrower may elect to deem expenditures that otherwise would be permissible
reinvestments that occur prior to receipt of the proceeds of an asset sale to
have been reinvested in accordance with the provisions hereof, so long as such
deemed expenditure shall have been made no earlier than the earlier of execution
of a definitive agreement for such asset sale and consummation of such asset
sale;   b)   100% of the net cash proceeds received by the Borrower or any of
its Restricted Subsidiaries from the issuance of debt after the Closing Date
(other than permitted debt but including First Lien Refinancing Facilities and
First Lien Refinancing Notes); and   c)   in each fiscal year following the
first full fiscal year of the Borrower to occur after the Closing Date, 50% of
Excess Cash Flow (to be defined in a manner consistent with the Facilities
Documentation Principles, but in any event (i) (x) voluntary prepayments of the
First Lien Term Loans or any Incremental First Lien Term Facility or any first
lien indebtedness incurred under the Ratio Debt Basket, (y) reductions in the
outstanding principal amount of any First Lien Facility resulting from
assignments to (and purchases by) the Borrower or its affiliates and
(z) voluntary prepayments of the Revolving Loans and loans under any Incremental
Revolving Facility and any first lien revolving facility incurred under the
Ratio Debt Basket (to the extent in the case of this clause (z), accompanied by
a permanent reduction of the corresponding commitment), in each case under this
clause (i), made during such fiscal year or (without duplication) after year-end
and prior to the time such Excess Cash Flow prepayment is due, will reduce the
amount of Excess Cash Flow prepayments required for such fiscal year on a
dollar-for-dollar basis (it being understood that any such reduction in respect
of prepayments or assignments made at a discount to par will only reduce Excess
Cash Flow by the amount of cash actually paid) and (ii) Excess Cash Flow shall
be reduced for, among other things, (x) cash used

 

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    for capital expenditures, certain customary permitted Investments, Permitted
Acquisitions and certain Restricted Payments and Restricted Debt Payments to be
agreed made during such fiscal year or (without duplication) after year-end and
prior to the time such Excess Cash Flow prepayment is due, in each case, except
to the extent financed with long-term indebtedness (other than revolving
indebtedness) and (y) any other cash expenditure made during such period that
does not reduce consolidated net income) subject to reductions to 25% and 0%
based upon the achievement of Total Net Leverage Ratio levels that are 0.50:1.00
and 1.00:1.00 times less than the Total Net Leverage Ratio on the Closing Date,
respectively.   Mandatory prepayments shall be applied as directed by the
Borrower; provided that (i) mandatory prepayments may not be directed to a later
maturing class of First Lien Term Loans without at least pro rata repayment of
any related earlier maturing class and (ii) in the case of mandatory prepayments
pursuant to clauses (a) and (c) above, a ratable portion of such mandatory
prepayment may be applied to redeem, prepay or offer to purchase any Incremental
First Lien Facilities or debt incurred under the Ratio Debt Basket that is
secured on a pari passu basis with the First Lien Facilities, in each case if
required under the terms of the applicable documents governing such Incremental
First Lien Facilities or other debt.   Any First Lien Lender may elect not to
accept any mandatory prepayment made pursuant to clause (a) or (c) above (such
declined payment, the “First Lien Declined Proceeds”). Any such First Lien
Declined Proceeds shall be applied to any mandatory prepayments required under
the Second Lien Facility. In the event that any Second Lien Lender (as defined
in Annex II) elects not to accept its pro rata share of any mandatory prepayment
from such First Lien Declined Proceeds, such amounts may be retained by the
Borrower (such declined payment, the “Declined Proceeds”). Any such Declined
Proceeds may, subject to the requirements of the Second Lien Loan Documents (as
defined in Annex II), be retained by the Borrower and will increase the
Available Amount (as defined below).   Mandatory prepayments, to the extent
attributable to foreign subsidiaries, will be subject to permissibility under
local law (e.g., financial assistance, corporate benefit, thin capitalization,
capital maintenance, and similar legal principles, restrictions on upstreaming
of cash intra group and the fiduciary and statutory duties of the directors of
the relevant subsidiaries); provided that the Borrower shall take all
commercially reasonable actions required by applicable law to permit the
repatriation of the relevant amounts. Further, if the Borrower determines in
good faith that it or its Restricted Subsidiaries would incur a material adverse
tax liability (including any material withholding tax), if all or a portion of
the funds required to make a mandatory prepayment attributable to foreign
subsidiaries were upstreamed or transferred as a distribution or dividend (a
“Restricted Amount”), the amount the Borrower will be required to mandatorily
prepay shall be reduced by the Restricted Amount until such time as it may
upstream or transfer such Restricted Amount without incurring such tax
liability.

 

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Collateral:   Subject to the limitations set forth in this section, the Funds
Certain Provisions and applicable gaming laws (it being understood that
applicable gaming law (i) requires prior approval of liens on certain of the
pledged equity, which approval will not be obtained prior to the Closing Date,
(ii) requires all certificates evidencing certain of the pledged equity to be
kept within the State of Nevada, and (iii) prohibits liens on cage cash and
certain mandated gaming reserves and (iv) requires certain approvals prior to
enforcement), the First Lien Facilities and any interest rate protection or
other hedging arrangements entered into with, or cash management obligations
owing to, any First Lien Lender or any affiliate of a First Lien Lender and
designated by the Borrower as a bank product obligation pursuant to the terms of
the First Lien Loan Documents will be secured by a valid and perfected first
priority lien (subject to permitted liens and other exceptions to be set forth
in the First Lien Loan Documents, including, without limitation, liens expressly
permitted to exist after the Closing Date pursuant to the Acquisition Agreement
and otherwise set forth below) on substantially all assets of the Borrower and
each Guarantor (in each case, other than Excluded Assets (as defined below)),
whether owned on the Closing Date or thereafter acquired (collectively, the
“Collateral”), including, without limitation:   a)   all equity interests held
directly by the Borrower or any Guarantor (which, in the case of equity
interests of any foreign subsidiary that is a CFC or of any CFC Holdco, shall be
limited to 100% of non-voting stock and 65% of the voting capital stock of such
subsidiary);   b)   substantially all tangible and intangible assets of the
Borrower and the other Loan Parties; and   c)   all proceeds and products of the
foregoing.   Notwithstanding the foregoing, the following assets will be
excluded from Collateral (collectively, the “Excluded Assets”): (i) all
leasehold interests in real property that has a value less than an amount to be
agreed (in each case, with all required mortgages being permitted to be
delivered after the Closing Date in accordance with the Funds Certain Provisions
and such mortgages only being required if after the exercise of commercially
reasonable efforts by the Borrower (which shall not include the payment of
consideration) the landlord under such lease has consented to the granting of a
mortgage thereon; provided that in no case shall landlord lien waivers,
estoppels and collateral access letters be required), (ii) all motor vehicles
and other assets subject to certificates of title, letter of credit rights
(except to the extent perfected by the filing of Uniform Commercial Code
financing statements) below a threshold to be agreed and commercial tort claims
below a threshold to be agreed, (iii) all fee-owned real property (x) located
outside the United States and (y) that has a value less than an amount to be
agreed (in each case, with all required mortgages being permitted to be
delivered after the Closing Date in accordance with the Funds Certain
Provisions), (iv) any assets to the extent the grant of a security interest
therein is prohibited or restricted by applicable law, rule or regulation or
that would require the consent of any governmental authority or third party to
such pledge or security interest, unless such consent has been obtained, in each
case except to the extent such prohibition or

 

Annex I-16

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  restriction is ineffective under the Uniform Commercial Code or other
applicable laws (other than proceeds of such assets, the assignment of which is
expressly deemed effective under the Uniform Commercial Code notwithstanding
such prohibition), (v) any leases, contracts, agreements, licenses, franchises
and permits to the extent the grant of a security interest therein is prohibited
or is restricted by applicable law or by the terms thereof or that would require
the consent of any governmental authority or third party to such pledge or
security interest, unless such consent has been obtained, in each case except to
the extent such prohibition or restriction is ineffective under the Uniform
Commercial Code or other applicable laws (other than proceeds thereof, the
assignment of which is expressly deemed effective under the Uniform Commercial
Code notwithstanding such prohibition) and so long as no such prohibition,
restriction or third party consent requirement was created in contemplation
hereof, (vi) equipment and assets that are subject to a lien securing a purchase
money or capital lease obligation permitted to be incurred under the First Lien
Loan Documents, if the underlying contract or other agreement associated
therewith prohibits or restricts the creation of any other lien on such
equipment (including any requirement to obtain the consent of a third party or
the granting of a lien on such assets would trigger the termination (or a right
of termination) of any such purchase money or capital lease agreement pursuant
to any “change of control” or similar provision or the ability for any third
party to amend in a materially adverse manner any rights, benefits and/or
obligations of the Loan Parties in respect of those assets or which require any
Loan Party or any subsidiary of any Loan Party to take any action materially
adverse to the interests of that subsidiary or any Loan Party), except to the
extent such prohibition or restriction is ineffective under the Uniform
Commercial Code or other applicable laws (other than proceeds thereof, the
assignment of which is expressly deemed effective under the Uniform Commercial
Code or other applicable laws notwithstanding such prohibition) and so long as
no such contractual provision was entered into in contemplation hereof,
(vii) equity interests in (a) non-wholly owned partnerships, joint ventures and
any non-wholly owned subsidiary, in each case, to the extent that the
organizational documents or other agreements with other equity holders do not
permit or restrict the pledge of such equity interests or would require the
consent of any third party to such pledge or security interest, unless such
consent has been obtained, except to the extent such prohibition or restriction
is ineffective under the Uniform Commercial Code or other applicable law, and
(b) immaterial subsidiaries, captive insurance subsidiaries, not-for-profit
subsidiaries, special purpose entities used for permitted securitization
facilities and Unrestricted Subsidiaries, (viii) any “intent to use” trademark
applications prior to the filing of statement of use, (ix) payroll, petty cash,
withholding and trust, and other deposit and securities accounts with a de
minimis average balance (including zero balance accounts) and other accounts to
be agreed upon, (x) margin stock, (xi) any assets or indebtedness of any
Excluded Subsidiary and (xii) other exceptions to be mutually agreed upon
consistent with the Facilities Documentation Principles.   Notwithstanding
anything to the contrary contained herein, (a) the Loan Parties shall not be
required to grant a security interest in any asset or perfect a security
interest in any Collateral to the extent the cost, burden or consequences
(including material adverse tax consequences) of

 

Annex I-17

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  obtaining or perfecting a security interest in such assets exceeds the
practical benefit of such collateral to the First Lien Lenders as reasonably
determined by the Borrower and the First Lien Agent, and (b) (i) control
agreements or other control arrangements shall not be required, including in
respect of any deposit, securities or commodities accounts (other than control
of pledged capital stock and material intercompany notes to the extent otherwise
required in the First Lien Loan Documents) or (ii) no action outside the United
States shall be required for any asset located outside of the United States and
no foreign law security or pledge agreements or foreign intellectual property
filing or search shall be required.   The lien priority, relative rights and
other creditors’ rights issues in respect of the First Lien Facilities and the
Second Lien Facility will be set forth in an intercreditor agreement (the
“Intercreditor Agreement”) to be agreed upon. For the avoidance of doubt, the
Intercreditor Agreement will, among other things, and to the extent the same is
permitted to be incurred and secured under the First Lien Loan Documents and the
Second Lien Loan Documents (a) permit additional first lien indebtedness
permitted to be incurred pursuant to the Incremental First Lien Facilities
and/or otherwise in accordance with the terms of the First Lien Loan Documents,
(b) permit additional second lien indebtedness permitted to be incurred pursuant
to the Incremental Second Lien Facilities and/or otherwise in accordance with
the terms of the Second Lien Loan Documents, (c) permit refinancing indebtedness
in respect of any of the foregoing (including, in the case of the First Lien
Facilities and the Second Lien Facility, in the form of First Lien Refinancing
Facilities, First Lien Refinancing Notes and the equivalent under the Second
Lien Facility) and (d) not impose any restrictions on amendments of the First
Lien Loan Documents or the Second Lien Loan Documents. First Lien Loan
Documents:   Initial drafts of the primary definitive loan documentation for the
First Lien Facilities (the “First Lien Loan Documents”) shall be drafted by
Latham & Watkins LLP, counsel to the Borrower, and shall contain the terms and
conditions set forth herein and in the Commitment Letter and such other terms as
the Borrower and the First Lien Arrangers may agree, which will be negotiated in
good faith (giving effect to the Funds Certain Provisions) so that the First
Lien Loan Documents are finalized in a timely manner in light of the expected
Closing Date; it being understood and agreed that the First Lien Loan Documents
shall (a) give due regard to the operational and strategic requirements of the
Borrower, the Target and their respective subsidiaries in light of their
consolidated size, industries, practices and proposed business plan (including,
without limitation, the leverage profile and projected free cash flow generation
of the Borrower, the Target and their respective subsidiaries), in each case,
after giving effect to the transactions contemplated herein, (b) be based on
that certain Credit Agreement dated as of June 8, 2016 among Station Casinos
LLC, as Borrower, the guarantors party thereto, Deutsche Bank AG Cayman Islands
Branch, as agent, and the lenders from time to time party thereto, as amended
through the date hereof but give due regard to flexibilities provided to
borrowers in recent leveraged financings for diversified gaming companies,
(c) give due regard to the Projections and the model to be delivered by the
Borrower to the First Lien Arrangers in form and substance consistent with the
model, dated as of June 1, 2017, received

 

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  by the First Lien Arrangers (the “Model”) (as adjusted for the Facilities and
changes set forth in any Flex Provisions (as defined in the Fee Letter)), and
including other relevant exceptions to be agreed, (d) not contain any conditions
to the availability and initial funding of the First Lien Facilities on the
Closing Date other than as set forth on Annex III to the Commitment Letter,
(e) include the First Lien Agent’s customary agency provisions and certain
mechanical provisions (consistent and reflective of the First Lien Agent’s
customary requirements and practices) and (f) take into account any changes in
law or accounting standards or to cure any mistakes or defects (collectively,
the “Facilities Documentation Principles”). The terms “customary” and “to be
agreed” and similar terms will be interpreted in light of the Facilities
Documentation Principles.   Subject to the right to exercise the Flex
Provisions, the First Lien Loan Documents shall contain only those mandatory
prepayments, representations and warranties, affirmative, financial and negative
covenants and events of default expressly set forth in this First Lien Term
Sheet, in each case, applicable to the Borrower and its Restricted Subsidiaries,
which shall be subject to standards, qualifications, thresholds, exceptions for
materiality and/or otherwise and “baskets,” grace and cure periods, in each
case, consistent (where applicable) with the Facilities Documentation Principles
(it being understood that certain exceptions to be agreed upon that are subject
to a monetary cap shall also include a “builder” component based on a percentage
of the Consolidated EBITDA of the Borrower that corresponds to the applicable
initial monetary cap).   All ratios in the First Lien Loan Documents shall be
automatically adjusted to account for increases in fees paid on the Closing Date
as a result of any exercise of “flex”. Conditions Precedent to Initial
Borrowing:   The effectiveness of the First Lien Loan Documents and funding the
initial First Lien Loans on the Closing Date shall be subject only to the
conditions set forth on Annex III to the Commitment Letter. Conditions Precedent
to all Borrowings after the Closing Date:   Each extension of credit under the
First Lien Facilities after the Closing Date shall be subject to:   a)   receipt
of a notice of borrowing or letter of credit request, as applicable;   b)  
absence of any default or event of default before or after giving effect to such
extension of credit; and   c)   the accuracy in all material respects of the
representations and warranties of the Borrower and the other Loan Parties.
Representations and Warranties:   Representations and warranties shall be
limited to the following (to be applicable to the Borrower and the Restricted
Subsidiaries) (subject to thresholds and/or exceptions to be agreed consistent
with the Facilities Documentation Principles): organization and existence; power
and authority; authorization; execution, delivery and enforceability of the

 

Annex I-19

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  First Lien Loan Documents; no conflicts with law, organizational documents or
material contractual obligations; accuracy of disclosure as of the Closing Date;
financial statements and pro formal financial information; no material adverse
effect (after the Closing Date); compliance with applicable laws and regulations
(including environmental laws and gaming laws); licenses and permits, material
consents and approvals (including with respect to the Acquisition); ownership of
property; intellectual property; capitalization of subsidiaries as of the
Closing Date; insurance; ERISA and labor matters; no material litigation; margin
regulations; anti-terrorism laws (including money laundering rules and
regulations and laws applicable to sanctioned persons (including OFAC, FCPA and
the PATRIOT Act); inapplicability of the Investment Company Act of 1940;
solvency on a consolidated basis on the Closing Date after giving effect to the
Transactions (consistent with the solvency certificate attached as Annex IV to
the Commitment Letter); payment of taxes; and validity, priority and perfection
of liens and security interests in the Collateral; but in all respects limited
on the Closing Date to the accuracy of the Specified Representations and the
Acquisition Agreement Representations. Affirmative Covenants:   Affirmative
covenants shall be limited to the following (to be applicable to the Borrower
and the Restricted Subsidiaries) (subject to thresholds and/or exceptions to be
agreed consistent with the Facilities Documentation Principles): delivery of
annual audited financial statements within 90 days of the close of each fiscal
year (or, with respect to the first such delivery after the Closing Date, 120
days), in each case, accompanied by an opinion of either Piercy Bowler Taylor &
Kern, Grant Thornton or another independent accounting firm of national
recognition, that is not subject to (i) a “going concern” qualification (other
than a “going concern” qualification that is due to the maturity within twelve
months of any indebtedness or any prospective or actual default or event of
default of any financial covenant), or (ii) a qualification as to the scope of
the relevant audit, quarterly unaudited financial statements (for each of the
first 3 fiscal quarters of each fiscal year) within 45 days (or, with respect to
such delivery after the Closing Date, 60 days) of each fiscal quarter end
(limited to the first three fiscal quarters of any fiscal year), in each case of
clause (i) and (ii) above, accompanied by customary management’s discussion and
analysis (provided that the foregoing delivery may be satisfied by furnishing
the applicable financial statements in the Borrower’s Form 10-K, 10-Q, as
applicable, filed with the Securities Exchange Commission), and with annual
financial projections (showing financial projections for each fiscal quarter in
the fiscal year covered thereby) within 90 days of the close of each fiscal
year; delivery of certificates, notices and other material information
(including notices of default, litigation, ERISA events and material adverse
change and the identification of information as suitable for distribution to
Public Lenders upon reasonable request therefor by the First Lien Agent);
compliance with applicable laws and regulations; commercially reasonable efforts
to maintain public corporate credit and public corporate family ratings for the
Borrower and public ratings for the First Lien Term Facility by each of S&P and
Moody’s (but not to maintain a specific rating); to the extent reasonably
requested by the First Lien Agent, hold an annual conference call with lenders
at a time to be mutually agreed after the delivery of applicable audited
financial

 

Annex I-20

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  statements; payment of taxes; use of proceeds; preservation of existence;
visitation and inspection rights; keeping of books and records; maintenance of
properties and insurance coverage; covenants to guarantee obligations and give
security; and further assurances. Negative Covenants:   Limited to the following
(to be applicable to the Borrower, the Restricted Subsidiaries, subject to
exceptions and baskets to be agreed consistent with the Facilities Documentation
Principles):   a)   Limitations on indebtedness, with exceptions for, among
other things:     A.   additional senior, senior subordinated or subordinated
debt in the amount of (a) the greater of (x) $170.0 million and (y) 100% of
Consolidated EBITDA for the most recent four-quarter period for which financial
statements are available (minus the aggregate outstanding principal of
Incremental First Lien Facilities and Incremental Second Lien Facilities
incurred under the Shared Fixed Incremental Amount) plus (b) the amount of any
voluntary prepayment of the First Lien Term Loans, any Incremental First Lien
Term Facility or any amounts incurred under the Ratio Debt Basket and/or any
permanent reduction of the commitments under the Revolving Facility, the
commitments under any Incremental Revolving Facility or the commitments incurred
under the Ratio Debt Basket; provided that the relevant prepayment is not funded
with long term indebtedness (minus the aggregate outstanding principal of
Incremental First Lien Facilities incurred under the Incremental First Lien
Prepayment Amount) plus (c) an additional amount, so long as after giving effect
thereto, (1) if such debt is secured by a lien on the Collateral that is pari
passu with the lien securing the First Lien Facilities, the First Lien Net
Leverage Ratio does not exceed the First Lien Net Leverage Ratio on the Closing
Date and the Borrower shall be in compliance with the Financial Covenant
(regardless of whether then applicable), (2) if such debt is secured by a lien
on the Collateral that is junior to the lien securing the First Lien Facilities,
the Total Secured Net Leverage Ratio does not exceed Total Secured Net Leverage
Ratio on the Closing Date and the Borrower shall be in compliance with the
Financial Covenant (regardless of whether then applicable) and (3) if such debt
is unsecured, the Total Net Leverage Ratio does not exceed Total Net Leverage
Ratio on the Closing Date and the Borrower shall be compliance with the
Financial Covenant (regardless of whether then applicable), in each case
described in clauses (1), (2) and (3) calculated on a pro forma basis, including
the application of the proceeds thereof ((x) assuming all commitments under any
such debt were fully drawn and (y) without “netting” the cash proceeds of such
debt), no event of default exists or would result therefrom (provided that the
lenders providing such debt in connection with a Limited Condition Transaction
may

 

Annex I-21

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      agree to waive this condition (other than with respect to payment or
bankruptcy events of default)) and (I) if such debt is incurred pursuant to
clause (1) above, the conditions set forth in clauses (c), (e) and (f) of the
proviso set forth under the heading “Incremental First Lien Facilities” above
are satisfied and, if in the form of a term loan, the condition set forth in
clause (d) of the proviso set forth under the heading “Incremental First Lien
Facilities” above is satisfied, (II) if such debt is incurred pursuant to
clause (2) above, any such debt shall not have a shorter weighted average life
to maturity than the remaining weighted average life to maturity of the Term
Loans and shall not mature prior to the date that is 91 days after the
then-existing Term Loan Maturity Date and (III) if such debt is incurred
pursuant to clause (3) above, such debt shall not require any scheduled
amortization or scheduled payment of principal until, and shall not mature prior
to, the date that is 91 days after the then-existing Term Loan Maturity Date
(this clause A, the “Ratio Debt Basket”);     B.   a general indebtedness basket
in an amount not to exceed the greater of $35.0 million and an equivalent
percentage of Consolidated EBITDA;     C.   purchase money indebtedness, capital
leases and mortgages in an aggregate outstanding principal amount not to exceed
the greater of an amount to be agreed and an equivalent percentage of
Consolidated EBITDA (this clause C, the “Purchase Money Debt Basket”);     D.  
indebtedness of foreign subsidiaries in an amount not to exceed the greater of
an amount to be agreed and an equivalent percentage of Consolidated EBITDA (this
clause E, the “Foreign Subsidiaries Debt Basket”);     E.   indebtedness in an
amount equal to 100% of any qualified cash equity contribution (other than in
connection with a Specified Equity Contribution (as defined below)) received by
the Borrower to the extent not utilized to increase other covenant exceptions;
and     F.   indebtedness of joint ventures in an amount not to exceed the
greater of an amount to be agreed and an equivalent percentage of Consolidated
EBITDA (this clause G, the “Joint Venture Debt Basket”).   In addition, the
Borrower and its Restricted Subsidiaries shall be permitted to incur up to
$75.0 million of Development Debt. As used herein, “Development Debt” means up
to $75.0 million of Indebtedness (which may be secured) used to finance
expansion capital expenditures, joint ventures, development projects and the
construction of full service casino resorts and casinos, distributed gaming
applications and taverns, in each case where the Borrower or a Restricted
Subsidiary will directly manage the development in the case of wholly owned
developments or enter into a management agreement with respect to less than
wholly

 

Annex I-22

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  owned developments; provided, that (A) the completion thereof is being
diligently pursued and construction has not ceased for a period of 90
consecutive days (other than as a result of a force majeure event or inability
to obtain requisite governmental authorizations, so long as such governmental
authorizations are being diligently pursued) and (B) no such Indebtedness shall
constitute Development Debt from and after the end of the first full fiscal
quarter after the earlier of (x) opening for business, and (y) completion of
construction of the applicable expansion capital expenditure, joint venture,
development project or full service casino resort or casino. Development Debt
and interest paid in respect thereof shall not be included in the calculation of
relevant ratios except for purposes of the restricted payment covenant and
prepayment of unsecured and junior indebtedness covenant.   Any indebtedness
that is incurred by Restricted Subsidiaries that are not Loan Parties under
paragraphs (a)A., B. and D. above shall be subject to a cap to be agreed.   Any
indebtedness that is secured by all or a portion of the Collateral shall be
subject to the Intercreditor Agreement or other customary intercreditor
arrangements reasonably satisfactory to the First Lien Agent and the Borrower.
For the avoidance of doubt, the permitted debt covenant will not restrict
operating leases that are recharacterized as capital leases under new accounting
rules.   b)   Limitations on liens, with exceptions for, among other things:    
A.   liens securing debt incurred in reliance on the applicable provisions of
the Ratio Debt Basket and/or Development Debt (so long as, in the case of
Development Debt other than to the extent incurred under the First Lien
Facilities, such liens are limited to the assets financed by such Development
Debt);     B.   liens on Collateral securing First Lien Refinancing Facilities
and First Lien Refinancing Notes, and other refinancing debt in respect of
permitted secured debt;     C.   other liens in an amount not to exceed the
greater of $35.0 million and an equivalent percentage of Consolidated EBITDA;  
  D.   liens securing debt incurred in reliance on the Foreign Subsidiaries Debt
Basket (limited to the assets of and equity interests in foreign subsidiaries),
the Joint Venture Debt Basket (limited to the assets of and equity interests in
joint ventures), and the Purchase Money Debt Basket (limited to the assets
acquired);     E.   liens on assets of non-Guarantor entities so long as such
liens secure obligations of non-Guarantor entities that are otherwise permitted
and such liens only encumber assets of the non-Guarantor entities; and

 

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    F.   liens in respect of taxes not yet due and payable or being contested in
good faith if appropriate reserves are provided in accordance with GAAP.   c)  
Limitations on burdensome agreements (negative pledge clauses with respect to
the Collateral) and limitations on dividend restrictions on Restricted
Subsidiaries.   d)   Limitations on voluntary prepayments and redemptions or
repurchases of material subordinated and junior lien debt (other than permitted
refinancings) (“Restricted Debt Payments”), with exceptions for, among other
things, Restricted Debt Payments made with allowances provided for Restricted
Payments (as defined below).   e)   Limitations on mergers, consolidations and
other fundamental changes.   f)   Limitations on sales, transfers and other
dispositions of assets, with exceptions for, among other things, subject to
compliance with the mandatory prepayment requirements, asset sales and other
dispositions of property (subject to customary exceptions) on an unlimited basis
for fair market value as long as no event of default exists and such sales are
for at least 75% cash consideration (subject to customary exceptions to the cash
consideration requirement, including threshold amounts and a basket for non-cash
consideration that may be designated as cash consideration equal to the greater
of an amount to be agreed and an equivalent percentage of Consolidated EBITDA);
provided that asset sales for a consideration no greater than an amount to be
agreed shall not be subject to such restrictions.   g)   Limitations on loans
and investments (“Investments”), with exceptions for, among other things:     A.
  acquisitions of all or substantially all of the assets of any person or any
line of business or division thereof, or of a majority of the equity interests
of any person (including any Investment which serves to increase the Borrower’s
equity ownership in any Restricted Subsidiary or in any joint venture) (each, a
“Permitted Acquisition”) shall be permitted so long as no event of default
exists or would result therefrom at the time such acquisition is committed;
provided that acquisitions of entities that do not become Guarantors shall be
permitted in an aggregate amount not to exceed an amount to be agreed upon;    
B.   Investments by the Borrower or any of its Restricted Subsidiaries in the
Borrower or any of its Restricted Subsidiaries; provided that investments by the
Borrower or any Guarantor in Restricted Subsidiaries that are not Guarantors
shall not exceed an amount to be agreed upon;

 

Annex I-24

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    C.   a general Investments basket in an aggregate amount not to exceed
$100.0 million and an equivalent percentage of Consolidated EBITDA;     D.  
loans or advances to officers, directors, managers and employees of any Loan
Party (or any direct or indirect parent thereof) or any of its subsidiaries
(i) for reasonable and customary business-related travel, entertainment,
relocation and analogous ordinary business purposes, (ii) in connection with
such person’s purchase of equity interests of the Borrower directly from the
Borrower (provided that the amount of such loans and advances shall be
contributed to the Borrower in cash as common equity) and (iii) for any other
purposes not described in the foregoing clauses (i) and (ii); provided, further,
that the aggregate principal amount outstanding at any time under clauses
(ii) and (iii) above shall not exceed an amount to be agreed;     E.   an
Investment basket for joint ventures or non-wholly owned Subsidiaries in an
aggregate amount not to exceed the greater of an amount to be agreed and an
equivalent percentage of Consolidated EBITDA;     F.   an Investment basket for
Investments in Unrestricted Subsidiaries in an aggregate amount not to exceed
the greater of an amount to be agreed and an equivalent percentage of
Consolidated EBITDA;     G.   a basket for Investments in an unlimited amount
subject to pro forma compliance with a maximum Total Net Leverage Ratio
0.75:1.00 times less than the Total Net Leverage Ratio on the Closing Date and
the Financial Covenant (regardless of whether then applicable); and     H.  
Investments with parcels of land identified on or prior to the Closing Date
which are immaterial to the Borrower’s gaming operations as of the Closing Date.
  h)   Limitations on dividends or distributions on, or redemptions or
repurchases of, the capital stock of the Borrower (“Restricted Payments”), with
exceptions for, among other things:     A.   a basket for Restricted Payments
(which may also be used for Restricted Debt Payments) in an unlimited amount
subject to no event of default occurring and continuing (or would result
therefrom) and pro forma compliance with a maximum Total Net Leverage Ratio
1.25:1.00 times less than the Total Net Leverage Ratio on the Closing Date and
the Financial Covenant (regardless of whether then applicable);     B.   from
the proceeds of any equity offerings (other than disqualified stock) and other
qualified equity contributions that are not used as part of a Specified Equity
Contribution (“Excluded Contributions”), and do

 

Annex I-25

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      not increase the Available Amount (which may also be used for Restricted
Debt Payments);     C.   Restricted Payments to repurchase, redeem, retire or
otherwise acquire capital stock of the Borrower held by future, present or
former employees, officers, directors, members of management, managers or
consultants (or any immediate family member of the foregoing) in an aggregate
amount not to exceed the greater of an amount to be agreed and an equivalent
percentage of Consolidated EBITDA (such percentage, the “Equity Repurchases
Grower”) per year with unused amounts permitted to be carried forward to the
next succeeding fiscal year or years; and     D.   a general Restricted Payment
basket equal to the greater of $35.0 million and an equivalent percentage of
Consolidated EBITDA (such percentage, the “General RP Grower”) (which may also
be used for Restricted Debt Payments).   i)   Limitations on transactions with
affiliates in excess of an amount to be agreed, with exceptions for, among other
things:     A.   transactions among the Borrower and its Restricted
Subsidiaries;     B.   certain existing transactions to be agreed upon; and    
C.   transactions in excess of amounts to be agreed upon on terms substantially
as favorable as would be obtainable in a comparable arm’s length transaction
with a non-affiliate.   j)   Limitations on change in (i) nature of business or
(ii) fiscal year.   k)   No modification or waiver of charter documents or any
material junior debt documents in a manner materially adverse to the First Lien
Lenders.   The limitations on Investments, Restricted Payments and Restricted
Debt Payments referenced above in the First Lien Loan Documents shall be subject
to a carve-out in the amount of a building basket (the “Available Amount”),
which will equal the sum of (i) the greater of $35.0 million and 20% of
Consolidated EBITDA, plus (ii) at the election of the Borrower prior to the
launch of syndication, a growth amount based on either (x) the retained portion
of Excess Cash Flow (i.e. the portion of Excess Cash Flow that is not required
to be applied to repay the First Lien Term Loans) and (y) 50% of cumulative
consolidated net income commencing from the first day of the fiscal quarter when
the Closing Date occurs, which amount, in each case, shall not be negative (the
“Growth Amount”), plus (iii) the amount of proceeds of equity investments in the
Borrower after the Closing Date, the proceeds of which are contributed to
Borrower and which consist of common equity or other qualified equity on terms
to be agreed in the

 

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  First Lien Loan Documents (but excluding any Specified Equity Contribution or
Excluded Contributions) (“Permitted Equity”), plus (iv) the fair market value of
capital contributions after the Closing Date in respect of Permitted Equity of
the Borrower and the fair market value of contributed assets, plus (v) debt and
disqualified stock issued after the Closing Date that have been exchanged or
converted into Permitted Equity, together with the fair market value of any
property received upon such exchange or conversion, plus (vi) returns, profits,
distributions and similar amounts received on Investments made using the
Available Amount, plus (vii) the amount of any Investment made by the Borrower
and/or any of its Restricted Subsidiaries in reliance on the Available Amount
(up to the amount of the original Investment) in any Unrestricted Subsidiary
that has been re-designated as a Restricted Subsidiary or that has been merged
or consolidated into the Borrower or any of its Restricted Subsidiaries or the
fair market value of the assets of any Unrestricted Subsidiary that have been
transferred to the Borrower or any of its Restricted Subsidiaries, plus
(viii) Declined Proceeds; provided that in the case of any usage of the
Available Amount, as of the date of declaration or giving irrevocable notice
(which may be a condition) thereof, (A) no event of default may be continuing,
(B) except with respect to clauses (iii) and (iv) above, the Borrower shall be
in pro forma compliance with the Financial Covenant (regardless of whether then
applicable) and (C) except with respect to clauses (iii) and (iv) above, solely
with respect to Restricted Payments and Restricted Debt Payments made in
reliance thereon, the Total Net Leverage Ratio shall not exceed a Total Net
Leverage Ratio 0.50:1.00 times less than on the Closing Date calculated on a pro
forma basis.   Each covenant shall also (i) permit classification and
reclassification from time to time by the Borrower among one or more available
baskets and exceptions and (ii) permit reliance on one or more available
exceptions and baskets at the Borrower’s option, and if such exceptions and
baskets include a combination of fixed amounts (including any related builder or
grower component) and amounts permitted under incurrence-based ratio tests in
concurrent transactions, a single transaction or a series of related
transactions, any incurrence-based ratio tests shall be calculated without
giving effect to the utilization of such fixed amounts (collectively, the
“Negative Covenant Reclassification”). For the avoidance of doubt, all debt
substantially contemporaneously incurred will be included for purposes of
determining compliance with incurrence-based ratio tests outside of the debt and
liens covenants. Financial Covenant:   The financial covenant applicable to the
Borrower and its Restricted Subsidiaries shall be limited to a Total Net
Leverage Ratio of 8.85:1.00, with step-downs to be based on Total Net Leverage
Ratio levels to be agreed, and shall be applicable to the Revolving Facility
only (the “Financial Covenant”). The Financial Covenant shall be automatically
increased to account for increases in fees paid on the Closing Date as a result
of any exercise of “flex”.   The Financial Covenant shall be tested only in the
event that on the last day of any fiscal quarter of the Borrower, the aggregate
amount of all outstanding Revolving Loans (including Swingline Loans, but
excluding, for the avoidance of doubt, (i) issued and outstanding

 

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  undrawn Letters of Credit up to an aggregate face amount to be agreed upon and
(ii) for the first two full fiscal quarters ending after the Closing Date,
amounts drawn under the Revolving Facility on the Closing Date to fund any flex
to original issue discount and upfront fees) exceed 30% of the revolving
commitments (with measurement to commence, if applicable, as of the last day of
the first full fiscal quarter after the Closing Date).   For purposes of
determining compliance with the Financial Covenant, any cash capital
contribution or cash common equity investment made in the Borrower after the
first day of the applicable fiscal quarter and not later than 15 business days
after the date financial statements are required to be delivered for the
applicable fiscal quarter (the “Cure Date”) will, at the request of the
Borrower, be included in the calculation of Consolidated EBITDA (as such term
shall be defined in the First Lien Loan Documents) solely for purposes of
determining compliance with such financial covenant at the end of such fiscal
quarter and subsequent periods that include such fiscal quarter (each a
“Specified Equity Contribution”); provided that (a) in each four consecutive
fiscal quarter period there shall be at least two fiscal quarters in which no
Specified Equity Contribution is made and (b) there shall be a maximum of five
Specified Equity Contributions made during the term of the First Lien
Facilities, (c) the amount of any Specified Equity Contribution shall not exceed
the amount required to comply with the Financial Covenant, (d) Specified Equity
Contributions shall not be included for purposes of determining pricing,
financial ratio-based conditions or any basket or exception with respect to the
covenants in the definitive documentation of the First Lien Facilities and
(e) there shall be no pro forma or other reduction of the amount of indebtedness
(or cash netting) by the amount of any Specified Equity Contribution for
purposes of determining compliance with the Financial Covenant for the fiscal
quarter with respect to which such Specified Equity Contribution is made.   The
First Lien Loan Documents will contain a standstill provision prohibiting the
exercise of remedies related to any breach of the Financial Covenant during the
period in which any Specified Equity Contribution will be made after delivery of
written notice to the First Lien Agent of the Borrower’s intention to cure the
Financial Covenant with the proceeds of the Specified Equity Contribution;
provided that such standstill shall apply solely in respect of the breach (or
prospective breach) of the Financial Covenant giving rise thereto and to the
extent the applicable Specified Equity Contribution has not been made prior to
the applicable Cure Date, such standstill shall end when such Specified Equity
Contribution may no longer be timely made in respect of such fiscal quarter. No
Revolving Lender, Swingline Lender or L/C Issuer, as applicable, shall be
required to fund any Revolving Loans or Swingline Loans, or issue any Letters of
Credit, as applicable, at any time during such standstill period. Events of
Default:   Events of default shall be limited to the following (subject to grace
periods, thresholds and exceptions to be agreed consistent with the Facilities
Documentation Principles): failure to pay principal (including amortization)
when due; failure to pay interest or other amounts within five business days
when due; inaccuracy of representations or warranties in any material respect
when made; breach of covenants

 

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  (subject, in the case of affirmative covenants (other than notices of default
and the covenant to maintain the existence of the Borrower) to a grace period of
30 days after the earlier of (i) Borrower’s knowledge and (ii) receipt of
written notice from the First Lien Agent); cross event of default and
cross-acceleration to all debt above an amount to be agreed; bankruptcy and
insolvency events with respect to the Borrower or any material Restricted
Subsidiary; monetary judgment defaults above an amount to be agreed; actual (or
asserted in writing by a Loan Party) invalidity or impairment of any material
guarantees or security documents; lien subordination provisions; a Change of
Control; and customary ERISA defaults (subject to a material adverse effect
qualifier).   “Change of Control” shall mean, at any time, (a) any “person” or
“group,” other than any employee benefit plan or the Permitted Holders, shall
beneficially own capital stock of the Borrower representing more than 50% of the
aggregate ordinary voting power of the Borrower, or (b) a “change of control”
shall occur under the documentation governing any indebtedness in excess of an
amount to be agreed.   “Permitted Holders” will be defined to include
(a) Mr. Blake Sartini, Mr. Lyle Berman and Mr. Neil Sell and, in each case,
their immediate family members, lineal descendants, heirs, estates, trusts and
entities related thereto, associated therewith or for the benefit thereof and
(b) any person or entity with which the persons described in clause (a) above
form a “group” (within the meaning of federal securities laws) so long as, in
the case of this clause (b), the persons described in clause (a) above
beneficially own more than 50% of the relevant voting stock beneficially owned
by that group.   Notwithstanding the foregoing, a breach of the Financial
Covenant shall not constitute a default or event of default for purposes of the
First Lien Term Facility unless the Revolving Lenders have accelerated the loans
under the Revolving Facility and terminated the commitments in respect thereof
as a result of such breach. Amendments:   Amendments and waivers of the
provisions of the First Lien Loan Documents shall require the approval of First
Lien Lenders holding more than 50% of the aggregate principal amount of the
First Lien Loans and unused commitments under the First Lien Facilities (the
“Required First Lien Lenders”); provided that (a) the consent of each directly
and adversely affected First Lien Lender (but without requiring the consent of
the Required First Lien Lenders) shall be required for (i) increases in the
commitment of such First Lien Lender; (ii) reductions of principal, interest or
fees of such First Lien Lender; (iii) extensions or reductions of scheduled
amortization, the due date of any interest or fee payment, or the final maturity
date of the First Lien Loans or commitments of such First Lien Lender;
(iv) modifications to voting percentages or pro rata treatment; and (v) changes
to the application of the payments waterfall provided for in the First Lien Loan
Documents; (b) the consent of Revolving Lenders holding commitments under the
Revolving Facility in excess of 50% of the aggregate commitments under the
Revolving Facility may waive the Financial Covenant (or any component definition
thereof to the extent applicable thereto) without the consent of any other First
Lien Lender (including, for the avoidance

 

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  of doubt, the Required First Lien Lenders); and (c) customary protections for
the First Lien Agent, the Swingline Lender and each L/C Issuer will be provided.
  Notwithstanding anything to the contrary set forth herein, the First Lien Loan
Documents will provide that at any time (i) the scheduled maturity dates of part
or all of any First Lien Loans or commitments of any First Lien Lender may be
extended solely with the consent of such First Lien Lender, (ii) the scheduled
amortization payment of any First Lien Loan of any First Lien Lender may be
reduced solely with the consent of such First Lien Lender, (iii) any tranche of
First Lien Term Loans may be refinanced with a replacement tranche of term
loans, or modified with a lower rate of interest with the consent of each First
Lien Lender holding First Lien Term Loans subject thereto, or (iv) all or
substantially all of the Collateral or all or substantially all of the value of
the guarantees (except as provided in the First Lien Loan Documents) may be
released with the consent of each Lender under the First Lien Loan Documents.  
The First Lien Loan Documents shall contain customary provisions for replacing
(i) non-consenting First Lien Lenders in connection with amendments and waivers
requiring the consent of all (or all affected) First Lien Lenders, so long as
First Lien Lenders holding more than 50% of the aggregate amount of the First
Lien Loans and unused commitments have consented thereto, (ii) Defaulting First
Lien Lenders (to be defined on terms reasonably satisfactory to the First Lien
Agent and the Borrower consistent with the Facilities Documentation Principles)
or insolvent First Lien Lenders and (iii) First Lien Lenders in connection with
increased costs or taxes or the inability to provide LIBOR Loans.  
Notwithstanding the foregoing, modifications to customary provisions in
connection with “amend and extend” transactions shall be permitted on customary
terms and shall only require approval of the affected First Lien Lenders.   The
First Lien Loan Documents will permit the First Lien Agent and the Borrower to
enter into one or more amendments thereto to incorporate the provisions of any
Incremental First Lien Facility made available without any First Lien Lender’s
consent, so long as the purpose of such amendment is solely to incorporate the
appropriate provisions for such Incremental First Lien Facility in the First
Lien Loan Documents.   In addition, if the First Lien Agent and the Borrower
shall have jointly identified an obvious error or any error or omission of a
technical nature in the First Lien Loan Documents, then the First Lien Agent and
the Borrower shall, upon five business days’ prior written notice to the
Lenders, be permitted to amend such provision without any further action or
consent of any other party, unless any First Lien Lender shall have objected
within such five business day period. Defaulting First Lien Lenders:   The First
Lien Loan Documents shall contain customary provisions relating to Defaulting
First Lien Lenders, including, without limitation, (a) reduction, termination or
assignment of commitments or First Lien Loans of such First Lien Lenders,
including non-pro rata removal or

 

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  replacement, (b) provisions relating to providing cash collateral to support
Swingline Loans or Letters of Credit, (c) the suspension of voting rights and
(d) limitation on rights to receive certain fees.   If any Revolving Lender
becomes a Defaulting First Lien Lender, then the swingline exposure or Letter of
Credit exposure of such Defaulting First Lien Lender will automatically be
reallocated among the non-defaulting Revolving Lenders pro rata in accordance
with their commitments under the Revolving Facility up to an amount such that
the revolving credit exposure of such non-defaulting Revolving Lender does not
exceed its commitments under the Revolving Facility. In the event such
reallocation does not fully cover the exposure of such Defaulting First Lien
Lender, the Swingline Lender may require the Borrower to repay such “uncovered”
exposure in respect of the Swingline Loans and/or the First Lien Agent may
require certain protections regarding outstanding Letters of Credit. Assignments
and Participations:   Subject to the second succeeding paragraph and applicable
gaming laws, each First Lien Lender may assign all or part (subject to minimum
amounts to be agreed consistent with the Facilities Documentation Principles) of
its First Lien Loans and commitments to eligible assignees (to be defined
consistent with the Facilities Documentation Principles but to exclude any
person that (x) has failed to timely file pursuant to applicable gaming laws
(1) any application requested or required of such person by any gaming
authorities in connection with any licensing required of such person as a lender
to the Borrower pursuant to applicable gaming laws or (2) any application or
other papers, in each case, requested or required by any gaming authority in
connection with a determination by such gaming authority of the suitability of
such person as a lender to the Borrower, (y) has withdrawn (except where
requested or permitted by the applicable gaming authority) any such application
or other requested or required papers or (z) has been determined by any final
determination by a gaming authority pursuant to applicable gaming laws (1) that
such person is “unsuitable” as a lender to the Borrower, (2) that such person
shall be “disqualified” as a lender to the Borrower or (3) denying the issuance
to such person of a license or finding of suitability or other approval) with
the consent of (a) the Borrower unless, (1) a payment or bankruptcy (with
respect to the Borrower) event of default has occurred and is continuing or
(2) such assignment is to a First Lien Lender, an affiliate of a First Lien
Lender or an approved fund of a First Lien Lender (but if in respect of the
Revolving Facility, only to another Revolving Lender or lending affiliate
thereof that is engaged in providing revolving loan financing in the ordinary
course of business), (b) the First Lien Agent, and (c) in the case of
assignments of Revolving Loans or commitments, each L/C Issuer and the Swingline
Lender (each such consent not to be unreasonably withheld or delayed); provided
that solely with respect to Term Loans, the consent of the Borrower shall have
been deemed to have been given if the Borrower has not responded within ten
(10) business days of written request for such consent.   Subject to the next
succeeding paragraph, each First Lien Lender may sell participations in all or
part of its First Lien Loans and commitments under one or more of the First Lien
Facilities; provided that no participant shall have direct or indirect voting
rights under the First

 

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  Lien Facilities except for certain unanimous or all affected First Lien Lender
voting issues. Participants shall have the same benefits as the First Lien
Lenders with respect to yield protection and increased cost provisions; provided
that a participant will not be entitled to receive a greater payment than the
applicable First Lien Lender would have been entitled to receive, except to the
extent such entitlement to a greater payment results from a change in law after
the Participant became a Participant.   No assignment or participation may be
made to Disqualified Lenders; provided that the schedule of Disqualified Lenders
shall be made available by the First Lien Agent to any First Lien Lender that
specifically requests a copy thereof.   The First Lien Agent shall not be
responsible or have any liability for, or have any duty to ascertain, inquire
into, monitor or enforce, compliance with the provisions hereof relating to
Disqualified Lenders. Without limiting the generality of the foregoing, the
First Lien Agent shall not (x) be obligated to ascertain, monitor or inquire as
to whether any Lender or participant or prospective Lender or participant is a
Disqualified Lender or (y) have any liability with respect to or arising out of
any assignment or participation of Loans, or disclosure of confidential
information, to any Disqualified Lender.   Notwithstanding anything to the
contrary set forth herein, the First Lien Loan Documents will provide that First
Lien Term Loans may be purchased by and assigned to the Borrower and its
subsidiaries without any consent on a non-pro rata basis through a Dutch auction
and/or similar procedures to be agreed and/or through open market purchases;
provided that (i) in the case of Dutch auctions, the option to sell First Lien
Term Loans is offered to all applicable First Lien Lenders on a pro rata basis
in accordance with customary procedures and subject to customary terms and
conditions to be agreed, (ii) at the time of purchase, the First Lien Loan
Documents will expressly provide that there will be no requirement for any
representation and warranty to the selling First Lien Lenders regarding
possession of material non-public information with respect to the Borrower and
its subsidiaries or any of their respective securities, (iii) any such First
Lien Term Loans acquired by the Borrower or any of their subsidiaries shall be
retired and promptly cancelled, (iv) any purchase of First Lien Term Loans by
the Borrower or any of their subsidiaries shall be subject to there being no
event of default and (v) the proceeds from Revolving Loans may not be used to
acquire First Lien Term Loans. Additionally, the First Lien Loan Documents will
include customary provisions allowing affiliates of the Borrower (other than the
Borrower or its subsidiaries) to purchase First Lien Term Loans subject to
customary qualifications and conditions. Expenses and Indemnification:   The
Borrower and each of the Guarantors, on a joint and several basis, shall pay
(a) all reasonable and documented out-of-pocket expenses of the First Lien Agent
and the First Lien Arrangers incurred in connection with the syndication of the
First Lien Facilities and the preparation, execution, delivery, administration,
amendment or waiver of the First Lien Loan Documents (but limited to, in the
case of legal fees and expenses, the reasonable and documented out of pocket
fees, disbursements and other charges of one primary counsel to the First

 

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  Lien Agent and the First Lien Arrangers, taken as a whole, and of one special
gaming and local counsel to the First Lien Agent and the First Lien Arrangers,
taken as a whole, in Nevada); and (b) all reasonable out-of-pocket expenses of
the First Lien Agent and the First Lien Lenders (but limited, in the case of
legal fees and expenses, to the reasonable and documented out of pocket fees,
disbursements and other charges of one counsel to the First Lien Agent and the
First Lien Lenders taken as a whole, plus one special gaming counsel and local
counsel for each applicable jurisdiction for the First Lien Agent and the First
Lien Lenders taken as a whole (and solely in the case of a conflict of interest,
one additional of each such counsel for each group of similarly situated First
Lien Lenders taken as a whole) in connection with the enforcement of the First
Lien Loan Documents, including in connection with workouts or restructurings.  
The Borrower and each of the Guarantors will, on a joint and several basis,
indemnify and hold harmless the First Lien Agent, the First Lien Arrangers and
the First Lien Lenders (and their affiliates and their respective officers,
directors, employees, advisors and agents) against any loss, liability, cost or
expense (but limited, in the case of legal fees and expenses, to the reasonable
and documented out of pocket fees, disbursements and other charges of one
counsel to the First Lien Agent, the First Lien Arrangers and the First Lien
Lenders taken as a whole, plus one special gaming counsel and local counsel for
each applicable jurisdiction for the First Lien Agent, the First Lien Arrangers
and the First Lien Lenders taken as a whole (and solely in the case of a
conflict of interest, one additional of each such counsel for each group of
similarly affected persons taken as a whole) incurred in connection with the
financing contemplated hereby or the use of proceeds of the First Lien
Facilities, except to the extent resulting from such indemnified person’s (or
any Related Person’s (as defined below)) gross negligence, bad faith, willful
misconduct or material breach of the First Lien Loan Documents, in each case as
determined by a final, non-appealable judgment of a court of competent
jurisdiction or in the case of a dispute solely among the indemnified persons
(or their respective Related Persons) (other than any claims against the First
Lien Agent or a First Lien Arranger in its respective capacity as such under the
First Lien Facilities and other than any claims arising out of any act or
omission of the Borrower or any of its affiliates); provided that the Borrower
and each of the Guarantors shall not be liable for any indirect, special,
punitive or consequential damages (other than in respect of any such damages
incurred or paid by an indemnified person to a third party). A “Related Person”
of an indemnified person means any of such indemnified person’s affiliates, or
any of its or their respective partners, trustees, directors, officers,
employees, agents, advisors, controlling persons or other representatives.
Taxes, Yield Protection and Increased Costs:   The First Lien Loan Documents
will contain customary provisions for facilities of this kind, including,
without limitation, in respect of breakage and redeployment costs, increased
costs, funding losses, capital adequacy and illegality; provided that requests
for additional payments due to increased costs from market disruption shall be
limited to circumstances generally affecting the banking market and for which it
is the general policy or practice of such requesting First Lien Lender to demand
such compensation in similar circumstances under

 

Annex I-33

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  comparable provisions of other similar agreements. The First Lien Loan
Documents will contain provisions regarding the timing for asserting a claim
under these provisions and permitting the Borrower to replace a Lender who
asserts such claim without premium or penalty. The First Lien Loan Documents
will contain customary provisions relating to the EU Bail-In regime. The First
Lien Loan Documents will contain customary tax gross-up provisions (subject to
customary limitations and exclusions). Governing Law and Forum:   State of New
York. Counsel to the First Lien Arrangers and the First Lien Agent:   Cahill
Gordon & Reindel LLP.

 

Annex I-34

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ANNEX II

Project Padre

Summary of Terms and Conditions

$200.0 Million Senior Secured Second Lien Facility

Set forth below in this term sheet (the “Second Lien Term Sheet”) is a summary
of the principal terms and conditions for the Second Lien Facility (as defined
below). Capitalized terms used but not defined in this Second Lien Term Sheet
shall have the meanings set forth in the commitment letter to which this Second
Lien Term Sheet is attached (the “Commitment Letter”).

 

Borrower:   Same as under the First Lien Facilities. Guarantors:   Same as under
the First Lien Facilities. Second Lien Administrative and Collateral Agent:   CS
(in such capacity, the “Second Lien Agent”). Second Lien Joint Lead Arrangers
and Joint Bookrunners:   JPMorgan, CS Securities, Macquarie Capital and MSSF
(collectively, the “Second Lien Arrangers”). Second Lien Lenders:   A syndicate
of financial institutions (including JPMorgan, Credit Suisse, Macquarie Lender
and MSSF, but excluding Disqualified Lenders) arranged by the Second Lien
Arrangers and reasonably acceptable to the Borrower (collectively, the “Second
Lien Lenders”). Second Lien Facilities:   A term loan facility in an aggregate
principal amount of $200.0 million (the “Second Lien Facility”; together with
the First Lien Term Facility, collectively, the “Term Facilities”; and the loans
under the Second Lien Facility, the “Second Lien Loans”). Incremental Second
Lien Facilities:   On or before the maturity date of the applicable Second Lien
Facility, the Borrower shall have the right, but not the obligation, to increase
the aggregate amount of the Second Lien Facility by increasing the size of the
Second Lien Facility and/or adding one or more incremental term loan facilities
(each, an “Incremental Second Lien Facility”) in an aggregate amount of such
Incremental Second Lien Facilities not to exceed the sum of (A) the greater of
(x) $170.0 million and (y) 100% of Consolidated EBITDA for the most recent
four-quarter period for which financial statements are available (the “Shared
Fixed Incremental Amount”) (minus the aggregate outstanding principal of
(i) Incremental First Lien Facilities (as defined in Annex I to the Commitment
Letter) incurred under the Shared Fixed Incremental Amount and (ii) without
duplication, debt incurred under clause (a) of the Ratio Debt Basket (as defined
in Annex I to the Commitment Letter) with respect to the First Lien Facilities
(the “First Lien Ratio Debt Basket”)) plus (B) in the case of an Incremental
Second Lien Facility that serves to effectively extend the maturity of the
Second Lien Facility, an amount equal to the reductions in the Second Lien
Facility to be replaced with such Incremental Second Lien Facility plus (C) the
amount of any voluntary prepayment or repurchase of the Second Lien Loans or any
Incremental Second Lien Facility; provided that the relevant prepayment (I) is
not funded with long term

 

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  indebtedness and (II) shall not include any prepayment that is funded with the
proceeds of an Incremental Second Lien Facility incurred in reliance on clause
(B) above (the “Incremental Second Lien Prepayment Amount”) plus (D) an
unlimited amount (the “Incremental Second Lien Incurrence-Based Amount”) at any
time so long as in the case of this clause (D), after giving effect to the
relevant Incremental Second Lien Facility, the Total Secured Net Leverage Ratio
does not exceed the Total Secured Net Leverage Ratio on the Closing Date case
calculated on a pro forma basis after giving effect to such Incremental Second
Lien Facility, including the application of the proceeds thereof (without
“netting” the cash proceeds of any borrowing under any such Incremental Second
Lien Facility); provided that:   a.   no event of default exists or would exist
after giving effect thereto and the representations and warranties in the Second
Lien Loan Documents shall be true and correct in all material respects; provided
that the lenders providing the applicable Incremental Second Lien Facility in
connection with a Limited Condition Transaction (as defined in Annex I to the
Commitment Letter)) may agree to waive these conditions (other than events of
default related to payment or bankruptcy and customary specified representations
and warranties);   b.   other than customary “bridge” facilities (so long as the
long term debt into which any such customary “bridge” facility is to be
automatically converted satisfies such requirements), the stated maturity date
applicable to any Incremental Second Lien Facility will not be earlier than the
Second Lien Maturity Date (as defined below) and the weighted average life to
maturity of any loans under such Incremental Second Lien Facility shall not be
shorter than the remaining weighted average life to maturity of the initial
Second Lien Loans under the Second Lien Facility;   c.   the interest margins
for any Incremental Second Lien Facility shall be determined by the Borrower and
the lenders under such Incremental Second Lien Facility; provided that with
respect to any Incremental Second Lien Facility that is entered into within 12
months of the Closing Date, in the event that the interest margins for any
Incremental Second Lien Facility are greater than the corresponding interest
margins for the existing Second Lien Facility by more than 50 basis points, then
the interest margins for the existing Second Lien Facility shall be increased to
be equal to the interest margins for such Incremental Second Lien Facility minus
50 basis points; provided, further, that for purposes of determining such
interest margins, (w) original issue discount (based on an assumed four-year
life to maturity), interest rate floors, and upfront and similar fees payable by
the Borrower shall be included, (x) any amendments to the interest margin on the
relevant existing facility that became effective subsequent to the Closing Date
but prior to the time of the addition of such Incremental Second Lien Facility
shall be included, (y) if such Incremental Second Lien Facility includes any
“LIBOR” interest rate floor greater than that applicable to the Second Lien
Facility and such floor is applicable to the Second Lien Facility on the date of
determination, such excess amount shall be equated to interest margin for
determining the increase (and, at the option of

 

Annex II-2

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    the Borrower, such increase will be reflected solely as an increase to the
applicable “LIBOR” interest rate floor) and (z) customary arrangement,
commitment, structuring, underwriting and similar fees (regardless of whether
any such fees are paid to or shared in whole or in part with any lenders
providing such Incremental Second Lien Facility) shall be excluded; provided,
further, that any Incremental Second Lien Facility that is fixed rate debt
shall, at the Borrower’s option, be swapped to a floating rate on a customary
matched maturity basis;   d.   any Incremental Second Lien Facility (A) shall
rank pari passu in right of payment and/or with respect to security with the
Second Lien Facility, (B) shall not be secured by any assets other than the
Collateral and (C) shall not be guaranteed by any person other than a Guarantor;
and   e.   except as otherwise provided above with respect to pricing, margin,
maturity and/or fees, the terms of any Incremental Second Lien Facility shall be
substantially identical to the terms of the Second Lien Facility (except to the
extent such terms (A) at the option of the Borrower (1) reflect market terms and
conditions (taken as a whole) at the time of incurrence or issuance (as
determined by the Borrower); provided that, if any financial maintenance
covenant is added for the benefit of any Incremental Second Lien Facility, such
financial maintenance covenant shall also be applicable to the Second Lien
Facility (except to the extent such financial maintenance covenant applies only
to periods after the Second Lien Maturity Date), or (2) are not materially more
restrictive to the Borrower (as determined by the Borrower), when taken as a
whole, than the terms of the Second Lien Facility (except for covenants or other
provisions applicable only to periods after the Second Lien Maturity Date) (it
being understood that any Incremental Second Lien Facility may provide for the
ability to participate (i) with respect to any voluntary prepayments, on a pro
rata basis, greater than pro rata basis or less than pro rata basis with the
Second Lien Facility and (ii) with respect to any mandatory prepayments, on a
pro rata basis or less than pro rata basis with the Second Lien Facility (and on
a greater than pro rata basis with respect to prepayments of any such Second
Lien Incremental Facility with the proceeds of Second Lien Refinancing Debt) or
(B) are (i) reasonably satisfactory to the Second Lien Agent, (ii) added for the
benefit of the Second Lien Facility or (iii) applicable only after the Second
Lien Maturity Date.   Such increased amounts will be provided by existing Second
Lien Lenders or new entities acceptable to the Borrower and the Second Lien
Agent; provided that no existing Second Lien Lender will be obligated to provide
any such Incremental Second Lien Facility.   For purposes of the foregoing,
(I) the Borrower may elect to use the Incremental Second Lien Incurrence-Based
Amount prior to the Shared Fixed Incremental Amount or the Incremental Second
Lien Prepayment Amount and regardless of whether there is capacity under Shared
Fixed Incremental Amount or the Incremental Second Lien Prepayment Amount, and
if the Shared Incremental Amount, the Incremental

 

Annex II-3

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  Second Lien Prepayment Amount and the Incremental Second Lien Incurrence-Based
Amount are each available and the Borrower does not make an election, the
Borrower will be deemed to have elected to use the Incremental Second Lien
Incurrence-Based Amount; (II) any portion of any Second Lien Incremental
Facilities incurred in reliance on the Shared Fixed Incremental Amount or the
Incremental Second Lien Prepayment Amount shall be reclassified, as the Borrower
may elect from time to time, as incurred under the Incremental Second Lien
Incurrence-Based Amount if the Borrower meets the applicable Total Secured Net
Leverage Ratio under the Incremental Second Lien Incurrence-Based Amount at such
time on a pro forma basis (this clause (II), the “Second Lien Incremental
Reclassification”); and (III) any amounts incurred under the Shared Fixed
Incremental Amount and the Incremental Second Lien Prepayment Amount and/or
under other applicable fixed dollar baskets (including any grower components
thereto), in each case, together with any amounts incurred to fund original
issue discount and upfront fees, that is concurrently incurred with, or incurred
in a single transaction or series of related transactions with, amounts incurred
under the Incremental Second Lien Incurrence-Based Amount will not count as
indebtedness for the purposes of calculating the applicable ratio under the
Incremental Second Lien Incurrence-Based Amount. This paragraph shall apply in
an equivalent manner to amounts incurred under the Ratio Debt Basket (as defined
in Annex I to the Commitment Letter) in respect of the Second Lien Facility.  
The proceeds of any Incremental Second Lien Facility may be used by the Borrower
and its subsidiaries for working capital and other general corporate purposes,
including the financing of Permitted Acquisitions, other permitted Investments
(as defined in Annex I to the Commitment Letter) and Restricted Payments (as
defined in Annex I to the Commitment Letter) and any other use not prohibited by
the Second Lien Loan Documents.   In the event any Incremental Second Lien
Facility is being used to finance a Limited Condition Transaction, the
availability thereof shall, if agreed by the lenders providing such Incremental
Second Lien Facility, be subject to customary “SunGard” or “certain funds”
conditionality provisions; provided that the amount of any Incremental Second
Lien Facility under the Incremental Second Lien Incurrence-Based Amount
determined at the time of signing of definitive documentation with respect to,
or giving of notice with respect to, a Limited Condition Transaction may be
recalculated, at the option of the Borrower, at the time of funding). Limited
Condition Transactions:   Substantially similar to the First Lien Facilities.
Refinancing Facilities:   Substantially similar to the First Lien Facilities
(the facilities thereunder, collectively, “Second Lien Refinancing Debt”).
Maturity and Amortization:   The Second Lien Facility shall mature on the eighth
anniversary of the Closing Date (the “Second Lien Maturity Date”). Purpose and
Availability:   The Second Lien Loans shall be drawn in full on the Closing
Date.

 

Annex II-4

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  The proceeds of the Second Lien Loans shall be used to finance a portion of
the Transactions and for general corporate purposes.   Once repaid, the Second
Lien Loans may not be reborrowed. Interest:   The Second Lien Loans will bear
interest based on the Base Rate (as defined below) (“Base Rate Loans”) or LIBOR
(as defined below) (“LIBOR Loans”), at the Borrower’s option (subject to certain
customary exceptions).   Base Rate Loans: Interest on Base Rate Loans will
accrue at the Base Rate plus the applicable Interest Margin referred to below.
Such interest will be calculated on the basis of the actual number of days
elapsed in a 365-day year (or a 366-day year in a leap year) and payable
quarterly in arrears.   “Base Rate” means a per annum rate equal to the greatest
of (a) the Federal Funds Effective Rate plus  1⁄2 of 1.00%, (b) the rate of
interest publicly announced by the Second Lien Agent as its prime rate in effect
at its principal office in New York City, (c) one-month LIBOR plus 1.00% and (d)
1.75%.   Base Rate Loans may be borrowed with same day notice in minimum amounts
to be agreed consistent with the Facilities Documentation Principles (as defined
in Exhibit B).   LIBOR Loans: Interest on LIBOR Loans will accrue at the LIBOR
Rate plus the applicable Interest Margin referred to below.   “LIBOR Rate” means
the higher of (a) the annual rate for deposits in U.S. dollars equal to the
London Interbank Offered Rate determined by reference to a customary source to
be agreed (“LIBOR”) for the periods selected by the Borrower (“Interest
Periods”) of one, two, three or six months (or, if available to the applicable
Second Lien Lenders, twelve months or a shorter period (as selected by the
Borrower)) and (b) 0.75%.   LIBOR borrowings will require three business days’
prior notice and will be in minimum amounts to be agreed consistent with the
Facilities Documentation Principles. Interest will be paid at the end of each
Interest Period or, for Interest Periods longer than three months, quarterly,
and will be calculated on the basis of the actual number of days elapsed in a
360-day year.   Interest Margins: The applicable interest margin (the “Interest
Margin”) will be the following percentages:

 

Base Rate Loans

   

LIBOR Loans

    6.00 %      7.00 % 

 

  At any time when a payment event of default (with respect to any principal,
interest or fees) or a bankruptcy event of default exists, the relevant overdue
amounts of principal and interest under the Second Lien Facility shall bear
interest at 2% above the otherwise applicable

 

Annex II-5

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  rate then borne by such borrowings (or in the case of interest, the borrowings
to which such overdue amount relates) and overdue fees shall bear interest at 2%
above the rate applicable to Base Rate Loans. Voluntary Prepayments and
Commitment Reductions:   Subject to the provisions of the First Lien Facilities
and the Intercreditor Agreement (as defined in Annex I to the Commitment
Letter), Second Lien Loans may be prepaid and commitments may be reduced, in
whole or in part, in minimum amounts to be agreed consistent with the Facilities
Documentation Principles, at the option of the Borrower at any time upon
customary notice requirements, subject to reimbursement of the Second Lien
Lenders’ breakage costs in the case of a prepayment of LIBOR Loans prior to the
last day of the relevant Interest Period.   Any optional prepayments of the
Second Lien Loans shall be subject to the “Prepayment Fee” set forth below.
Prepayment Fee:   Any (a) Repricing Transaction (to be defined consistently with
the definition of such term in the First Lien Loan Documents (as defined in
Annex I to the Commitment Letter)) (and any “yank-a-bank” assignment in
connection therewith), (b) optional prepayment of the Second Lien Loans,
(c) mandatory prepayment of the Second Lien Loans with the proceeds of
indebtedness (other than indebtedness otherwise permitted under the Second Lien
Loan Documents (other than indebtedness incurred pursuant to a Second Lien
Refinancing Debt to refinance or replace the Second Lien Loans or loans under an
Incremental Second Lien Facility)) and (d) “yank-a-bank” assignment made in
connection with an amendment, will be subject to the following prepayment
premiums (expressed as a percentage of the outstanding principal amount of the
Second Lien Loans that are being prepaid) as set forth opposite the relevant
period from the Closing Date as indicated below):

 

Year

   Call Premium  

Year 1:

     2.00 % 

Year 2:

     1.00 % 

Thereafter:

     No premium  

 

Mandatory Prepayments:   Subject to the provisions of the First Lien Loan
Documents and the Intercreditor Agreement, substantially similar to the
provisions set forth in the First Lien Loan Documents; provided that no
mandatory prepayments of Second Lien Loans shall be required until amounts
outstanding under the First Lien Facilities, any Incremental First Lien
Facilities, any First Lien Refinancing Facilities and any debt incurred under
the First Lien Ratio Debt Basket that are secured on a first priority basis have
been paid in full and all commitments thereunder have been terminated (except to
the extent of any First Lien Declined Proceeds (as defined in Annex I to the
Commitment Letter). Collateral:   Same as under the First Lien Facilities.

 

Annex II-6

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Second Lien Loan Documents:   Initial drafts of the material definitive loan
documentation for the Second Lien Facility (the “Second Lien Loan Documents” and
together with the First Lien Loan Documents, the “Loan Documents”) shall be
drafted by Latham & Watkins LLP, counsel to the Borrower, and shall be based on
and consistent with the First Lien Loan Documents (as modified to reflect the
second lien status of the Second Lien Loans and the terms of this Second Lien
Term Sheet). Conditions Precedent to Initial Borrowing:   The effectiveness of
the Second Lien Loan Documents and funding the initial Second Lien Loans on the
Closing Date shall be subject only to the conditions set forth on Annex III to
the Commitment Letter. Representations and Warranties:   The representations and
warranties shall be substantially similar to (and limited to) those
representations and warranties contained in the First Lien Loan Documents, with
appropriate modifications (including to any relevant component definitions) to
reflect the second lien status of the Second Lien Loans but in all respects
limited on the Closing Date to the Specified Representations and the Acquisition
Agreement Representations. Affirmative Covenants:   The affirmative covenants
shall be substantially similar to (and limited to) those affirmative covenants
contained in the First Lien Loan Documents, with appropriate modifications
(including to any relevant component definitions) to reflect the second lien
status of the Second Lien Loans. Negative Covenants:   The negative covenants
shall be substantially similar to (and limited to) those negative covenants
contained in the First Lien Loan Documents, except that (a) appropriate
modifications (including to any relevant component definitions) will be made to
reflect the second lien status of the Second Lien Loans, including modifications
to the First Lien Ratio Debt Basket such that the incurrence of loans under the
Ratio Debt Basket that are secured by the Collateral on a second lien basis will
be subject to the satisfaction of the condition set forth in clause (c) of the
proviso set forth above under “Incremental Second Lien Facilities”, and (b) the
dollar-based “baskets” and dollar-based thresholds for the negative covenants
under the Second Lien Loan Documents will be sized to be at least 20% greater
than the corresponding dollar-based “baskets” and dollar-based thresholds under
the First Lien Loan Documents. Financial Covenants:   None. Events of Default:  
The events of default shall be substantially similar to (and limited to) those
in the First Lien Loan Documents; provided that (a) materiality thresholds shall
be sized to be at least 20% greater than the corresponding thresholds under the
First Lien Loan Documents and (b) the events of default will include a “cross
default” to material indebtedness (limited to payment default at maturity in the
case of the First Lien Facilities) and cross acceleration to the First Lien
Facilities. Amendments:   Substantially similar to the First Lien Facilities.
Defaulting Second Lien Lenders:   Substantially similar to the First Lien
Facilities.

 

Annex II-7

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Assignments and Participations:   Substantially similar to the First Lien
Facilities. Expenses and Indemnification:   Substantially similar to the First
Lien Facilities. Taxes, Yield Protection and Increased Costs:   Substantially
similar to the First Lien Facilities. Governing Law and Forum:   State of New
York. Counsel to the Second Lien Arrangers and the Second Lien Agent:   Cahill
Gordon & Reindel LLP.

 

Annex II-8

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ANNEX III

CONDITIONS PRECEDENT TO CLOSING

Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Annex III is attached.

The funding of the loans under the Facilities will be subject solely to the
following conditions precedent and the conditions precedent set forth in
Section 5 of the Commitment Letter:

(i) The Acquisition shall have been, or shall substantially concurrently with
the funding of the Facilities be, consummated in all material respects in
accordance with the terms of the Membership Interest Purchase Agreement among
Target, an affiliate of Target (the “Seller”) and you, dated June 10, 2017
(including all schedules and exhibits thereto) (the “Acquisition Agreement”),
and the Acquisition Agreement shall not have been altered, amended or otherwise
changed or supplemented or any provision waived or consented to (including any
change in the purchase price) in any manner that is materially adverse to the
interests of the Lenders or the Lead Arrangers without the prior written consent
(not to be unreasonably withheld, delayed or conditioned) of the Initial Lenders
(it being understood that (x) any reduction of the purchase price in respect of
the Acquisition will be materially adverse to the Lenders and the Lead
Arrangers, unless there is a concurrent reduction in an amount equal to such
reduction in, on a pro rata basis, (A) the equity received by the Seller in the
Borrower, on the one hand, and (B) the aggregate principal amount of the
commitments in respect of the First Lien Term Loan Facility and the Second Lien
Term Loan Facility, on the other hand (and on a pro rata basis across the First
Lien Term Loan Facility and the Second Lien Term Loan Facility); provided that,
notwithstanding the foregoing, (I) in the event that the Consolidated EBITDA for
the four fiscal quarters ending on the last day of the most recent fiscal
quarter covered by the financial statements set forth in clauses (A) and (B) of
clause (ii) below, determined on a pro forma basis as of the Closing Date, is
greater than or equal to $165.0 million, up to $10.0 million of any reduction
may, at the direction of the Borrower, be applied solely to reduce the equity
received by the Seller in the Borrower and (II) up to $10.0 million of any
reduction in respect of the First Lien Term Loan Facility and the Second Lien
Term Loan Facility may, at the direction of the Borrower, be applied solely to
reduce the Second Lien Term Loan Facility and (y) any increase in the purchase
price in respect of the Acquisition will not be deemed to be materially adverse
to the interests of the Lenders or the Lead Arrangers to the extent that cash on
hand (including as a result of borrowings under the First Lien Revolving Credit
Facility; provided that, for purposes of clarification, in no event shall
aggregate borrowings under the First Lien Revolving Credit Facility on the
Closing Date exceed the amount permitted under the First Lien Facilities Summary
of Terms) and/or an increase in the equity received by the Seller in the
Borrower is used to fund any such increase). With respect to a funding on the
Closing Date only, the Acquisition Agreement Representations shall be true and
correct in all material respects, but only to the extent the failure of any
Acquisition Agreement Representation to be true and correct in all material
respects gives you the right to terminate your obligations under the Acquisition
Agreement, or to decline to consummate the Acquisition pursuant to the
Acquisition Agreement, and the Specified Representations shall be true and
correct in all material respects.

(ii) Since the date of the Acquisition Agreement, there shall not have occurred
any change, event, circumstances or development that, individually or in the
aggregate, has had, or is reasonably likely to have, a Company Material Adverse
Effect (as defined in the Acquisition Agreement as in effect on the date
hereof).

(iii) The Lead Arrangers shall have received: (A) the audited consolidated
balance sheets and related consolidated statements of operations, cash flows and
shareholders’ equity of each of the Borrower and the Target for the three most
recently completed fiscal years of the Borrower and the Target ended at least 90
days before the Closing Date; (B) the unaudited consolidated balance sheets and
related statements of operations and cash flows of each of the Borrower and the
Target for each fiscal quarter (other than the last fiscal quarter of a fiscal
year) of the Borrower and the Target ended after December 31, 2016 and at least
45 days before the Closing Date; and (C) a pro forma balance sheet and related
statement of

 

Annex III-1

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operations of the Borrower and its subsidiaries (including the Target) as of and
for the twelve-month period ending with the latest quarterly or annual period of
the Borrower covered by the financial statements set forth in clauses (A) and
(B) above, in each case after giving effect to the Transaction (the “Pro Forma
Financial Statements”). The Lead Arrangers acknowledge that they have received
the financial statements referred to in clause (A) for the Borrower and the
Target for each of 2014, 2015 and 2016 and the financial statements referred to
in clause (B) for the Borrower and the Target for the quarter ended March 31,
2017.

(iv) With respect to the Facilities, the Lead Arrangers shall have received from
the Borrower the financial statements described in clauses (A) and (B) of
paragraph (iii) above not later than 15 consecutive business days prior to the
Closing Date (the “Marketing Period”); provided that (a) July 3, 2017 and
July 4, 2017 will not be business days for purposes of the Marketing Period,
(b) the Marketing Period must either end on or prior to August 18, 2017, or if
such period has not ended on or prior to August 18, 2017, then the Marketing
Period may not commence until after September 5, 2017, (c) November 23, 2017 and
November 24, 2017 will not be business days for purposes of the Marketing Period
and (d) the Marketing Period must either end on or prior to December 18, 2017,
or if such period has not ended on or prior to December 18, 2017, then the
Marketing Period may not commence until after January 4, 2018. If at any time
you shall in good faith believe that you have provided the complete deliverables
required under this clause (iv), you may deliver to the Lead Arrangers written
notice to that effect (stating when you believe you completed any such
delivery), in which case you shall be deemed to have delivered the deliveries
required under this clause (iv) on the date specified in such notice and the
Marketing Period shall be deemed to have commenced on the date specified in such
notice, in each case unless the Lead Arrangers in good faith reasonably believe
that you have not completed delivery under this clause (iv) and, within two
business days after their receipt of such notice from you, the Lead Arrangers
deliver a written notice to you to that effect (stating with specificity which
information you have not delivered for purposes of compliance with this
condition only) (provided that it is understood that the delivery of such
written notice from the Lead Arrangers to you will not prejudice your right to
assert that the deliverables required under this clause (iv) have in fact been
delivered).

(v) All fees due to the Administrative Agents, the Lead Arrangers and the
Lenders on the Closing Date pursuant to the Fee Letter shall have been, or shall
substantially concurrently with the initial funding of the Facilities be, paid,
and all expenses to be paid or reimbursed to the Administrative Agents and the
Lead Arrangers that have been invoiced a reasonable period of time prior (and at
least two business days prior, unless you otherwise agree) to the Closing Date
shall have been, or shall substantially concurrent with the initial funding of
the Facilities be, paid.

(vi) The Refinancing shall have been, or shall substantially concurrently with
the funding of the Facilities on the Closing Date be, consummated.

(vii) Each of the Borrowers and each of the applicable Guarantors under each
Facility shall have provided at least three business days prior to the Closing
Date all of the documentation and other information to the applicable
Administrative Agent that are required by regulatory authorities under
applicable “know-your-customer” rules and regulations, including the Patriot Act
that has been requested in writing by the Lead Arrangers at least 10 business
days prior to the Closing Date.

(viii) On or prior to the Closing Date, the Initial Lenders shall have received
certification as to the solvency of the Borrower and its subsidiaries on a
consolidated basis after giving effect to the Transaction (in the form of the
Solvency Certificate attached as Annex IV hereto), from the chief financial
officer or other equivalent officer of the Borrower.

(ix) On or prior to the Closing Date, the Lenders shall have received
(a) customary opinions of counsel to the Borrower and the Guarantors and
customary corporate resolutions, customary officer’s certificates, good standing
certificates, customary borrowing notices, life of loan flood zone
determinations and other customary documents required by regulation relative to
flood matters for any mortgaged real estate and (b) subject to the Funds Certain
Provisions, reasonably satisfactory evidence that (x) the First Lien
Administrative Agent with respect to the First Lien Credit Facilities (on behalf
of the Lenders with respect to the First Lien Credit Facilities) shall have a
valid and perfected first priority (subject to certain

 

Annex III-2

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exceptions to be set forth in the Credit Documentation) lien and security
interest in the Collateral in a manner consistent with the Facilities
Documentation Principles and (y) the Second Lien Administrative Agent with
respect to the Second Lien Term Loan Facility (on behalf of the Lenders with
respect to the Second Lien Term Loan Facility) shall have a valid and perfected
second priority (subject to certain exceptions to be set forth in the Credit
Documentation) lien and security interest in the Collateral in a manner
consistent with the Facilities Documentation Principles.

 

Annex III-3

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ANNEX IV

FORM OF SOLVENCY CERTIFICATE

[●],            

This Solvency Certificate is being executed and delivered pursuant to Section
[●] of that certain [●]1 (the “Credit Agreement”); the terms defined therein
being used herein as therein defined.

I, [●], the [chief financial officer/equivalent officer] of the Borrower, solely
in such capacity and not in an individual capacity, hereby certify that I am the
[chief financial officer/equivalent officer] of the Borrower and that I am
generally familiar with the businesses and assets of the Borrower and its
Subsidiaries (taken as a whole), and I am duly authorized to execute this
Solvency Certificate on behalf of the Borrower pursuant to the Credit Agreement.

I further certify, solely in my capacity as [chief financial officer/equivalent
officer] of the Borrower, and not in my individual capacity, as of the date
hereof and after giving effect to the Transactions and the incurrence of the
indebtedness and obligations being incurred in connection with the Credit
Agreement and the Transactions on the date hereof, that, (i) the sum of the debt
(including contingent liabilities) of the Borrower and its subsidiaries, taken
as a whole, does not exceed the fair saleable value (on a going concern basis)
of the assets of the Borrower and its subsidiaries, taken as a whole; (ii) the
capital of the Borrower and its subsidiaries, taken as a whole, is not
unreasonably small in relation to the business of the Borrower or its
subsidiaries, taken as a whole, contemplated as of the date hereof; and
(iii) the Borrower and its subsidiaries, taken as a whole, do not intend to
incur, or believe that they will incur, debts (including current obligations)
beyond their ability to pay such debt as they mature in the ordinary course of
business. For the purposes hereof, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first
written above.

 

GOLDEN ENTERTAINMENT, INC.

 

By:

 

 

 

  Name:   Title:

 

1  Describe Credit Agreements.

 

Annex IV-1