Common use of Adjustments to the Exchange Ratio Clause in Contracts

Adjustments to the Exchange Ratio. During the fourteen (14) day period beginning on the date, as soon as reasonably practicable following the date hereof, on which each Party has received written confirmation from the other Party that it and its Representatives have received the information required by Section 3.1(d) (such period, as it may be extended in writing by the Parties, the “Adjustment Period”), the CAC Special Committee, on behalf of CAC, and the CEC Special Committee, on behalf of CEC, shall negotiate in good faith and shall use their reasonable best efforts to determine whether and to what extent it is necessary, appropriate and advisable to adjust the Exchange Ratio (including, for the avoidance of doubt, the percentage set forth in the definition of Exchange Ratio as of the date hereof) solely (except as otherwise provided herein) to take into account (A) anticipated Tax costs to be incurred by CEC or its Affiliates or CAC or its Affiliates with respect to the transactions related to the Restructuring, (B) Tax costs incurred, and anticipated Tax costs to be incurred, by CEC or its Affiliates with respect to the recognition of income from the discharge of indebtedness under Section 108(i) of the Code that was not, or cannot be, fully offset with net operating losses, and (C) anticipated reductions of cash Taxes otherwise payable by CEC or CAC, including such reductions due to (1) the utilization after the Closing of net operating losses that remain available after all Tax consequences of the Restructuring transactions are taken into account, and (2) the recognition after Closing of built-in loss upon the sale of certain assets of the Debtors as identified and mutually agreed upon by the Parties and based on assumptions mutually agreed upon by the Parties. For the avoidance of doubt, for purposes of this Section 3.1(a), Tax costs shall include, but not be limited to, any Tax costs resulting from or attributable to (I) CEC or any of its Affiliates or CAC or any of its Affiliates, as the case may be, having undergone an “ownership change” within the meaning of Section 382 of the Code prior to the Effective Time that would reduce or eliminate the availability of any then currently available net operating losses or other applicable Tax attributes of CEC or its Affiliates or CAC or its Affiliates, as the case may be, (II) any cancellation of indebtedness income recognized by CEC or its Affiliates, or CAC or its Affiliates, to the extent not reduced by available net operating losses or other applicable tax attributes of CEC or its Affiliates, or CAC or its Affiliates, as applicable; provided, however, that for the avoidance of doubt, in no event shall any reduction to the net operating losses of CEC or any of its Subsidiaries as a result of the application of Section 108(b) of the Code in connection with the discharge of indebtedness pursuant to the Restructuring itself be considered a Tax cost for purposes of this Section 3.1(a), (III) the failure of any of the transactions related to the Restructuring to qualify for non-recognition treatment under applicable provisions of the Code and Treasury Regulations, and (IV) the anticipated current or future recognition of income or gain with respect to assets transferred directly or indirectly by CEOC in connection with the Restructuring to any entity treated as a partnership for U.S. federal Tax purposes. Notwithstanding the foregoing limitations, if, at any time during the Adjustment Period, either the CEC Special Committee, on behalf of CEC, or the CAC Special Committee, on behalf of CAC, (x) reasonably and in good faith determines that it cannot obtain a CEC Fairness Opinion or a CAC Fairness Opinion, as the case may be, as a result of an adjustment to the Exchange Ratio based solely on consideration of the foregoing factors or (y) determines in good faith, after consultation with outside legal counsel, that an adjustment to the Exchange Ratio based solely on the foregoing factors would not be appropriate or advisable in consideration of, or would otherwise be reasonably likely to be inconsistent with, the directors’ fiduciaries duties under applicable Law, either Party may give notice of such determination to the other Party and, following delivery of such notice, the foregoing limitations on the factors that may be considered in determining an adjustment to the Exchange Ratio shall no longer apply and instead the CAC Special Committee, on behalf of CAC, and the CEC Special Committee, on behalf of CEC, shall take into account, in addition to the foregoing factors, all other relevant facts and circumstances impacting the intrinsic value of CEC and CAC as of such time in determining the extent of any such adjustment to the Exchange Ratio.

Adjustments to the Exchange Ratio. During the fourteen (14) day period beginning on the date, as soon as reasonably practicable following later of (i) the Confirmation Date and (ii) the date hereof, on which each Party has received written confirmation from the other Party that it and its Representatives have received the information required by Section 3.1(d) (such period, as it may be extended in writing by the Parties, the “Adjustment Period”), the CAC Special Committee, on behalf of CAC, and the CEC Special Committee, on behalf of CEC, shall negotiate in good faith and shall use their reasonable best efforts to determine whether and an adjustment to what extent it the Exchange Ratio is necessary, appropriate and advisable to adjust advisable, and the Exchange Ratio (includingamount of any such adjustment, for in any case taking into account all relevant facts and circumstances impacting the avoidance intrinsic value of doubt, the percentage set forth in the definition of Exchange Ratio CEC and CAC as of the date hereof) solely (except as otherwise provided herein) to take into account such time, including: (A) anticipated any value of the CIE Earn-Out; (B) any value of any additional contributions by CEC to the Restructuring that are not reflected in the RSA; (C) any Tax costs to be incurred by CEC or its Affiliates or CAC or its Affiliates with respect to the transactions related to the Restructuring, (B) Tax costs incurred, and anticipated Tax costs to be incurred, by CEC or its Affiliates with respect to the recognition of income from the any deferred discharge of indebtedness income under Section 108(i) of the Code that was not, or cannot be, be currently fully offset with net operating losses, losses and other tax attributes; and (CD) anticipated reductions of cash Taxes otherwise payable by CEC or CAC, including such reductions due to (1) the utilization after the Closing of net operating losses that remain available after all Tax consequences of the Restructuring transactions are taken into account, and (2) the recognition after Closing of built-in loss upon the sale of certain assets of the Debtors as identified and mutually agreed upon by the Parties and based on assumptions mutually agreed upon by the Parties. For the avoidance of doubt, for purposes of this Section 3.1(a), Tax costs shall include, but not be limited to, any Tax costs resulting from or attributable to (I) CEC or any of its Affiliates or CAC or any of its Affiliates, as the case may be, having undergone an “ownership change” within the meaning of Section 382 of the Code prior to the Effective Time that would reduce or eliminate the availability of any then currently available net operating losses or other applicable Tax attributes of CEC or its Affiliates or CAC or its Affiliates, as the case may be, (II) any cancellation of indebtedness income recognized by CEC or its Affiliates, or CAC or its Affiliates, related to the extent not reduced by available net operating losses or other applicable tax attributes of CEC or its AffiliatesRestructuring, or CAC or its Affiliates, as applicable; provided, however, that for the avoidance of doubt, in no event shall including any reduction to the net operating losses of CEC or any of its Subsidiaries as a result of the application of Section 108(b) of the Code transactions in connection with the discharge formation of indebtedness pursuant OpCo and PropCo, that cannot be currently fully offset with net operating losses and other tax attributes. In addition to any facts and circumstances impacting intrinsic value, the Exchange Ratio may be further adjusted during the Adjustment Period as necessary, appropriate and advisable to reflect any value properly allocable to CAC in respect of any CEC contributions to the Restructuring itself be considered a Tax cost that reflect consideration for purposes of this Section 3.1(a), (III) the failure of any releases for the benefit of the transactions related Released Parties described in Section 6.3(e)(i) pursuant to the Restructuring to qualify for non-recognition treatment under applicable provisions of the Code and Treasury Regulations, and (IV) the anticipated current or future recognition of income or gain with respect to assets transferred directly or indirectly by CEOC in connection with the Restructuring to any entity treated as a partnership for U.S. federal Tax purposes. Notwithstanding the foregoing limitations, if, at any time during the Adjustment Period, either the CEC Special Committee, on behalf of CEC, or the CAC Special Committee, on behalf of CAC, (x) reasonably and in good faith determines that it cannot obtain a CEC Fairness Opinion or a CAC Fairness Opinion, as the case may be, as a result of an adjustment to the Exchange Ratio based solely on consideration of the foregoing factors or (y) determines in good faith, after consultation with outside legal counsel, that an adjustment to the Exchange Ratio based solely on the foregoing factors would not be appropriate or advisable in consideration of, or would otherwise be reasonably likely procedure to be inconsistent with, the directors’ fiduciaries duties under applicable Law, either Party may give notice of such determination to the other Party and, following delivery of such notice, the foregoing limitations on the factors that may be considered in determining an adjustment to the Exchange Ratio shall no longer apply and instead mutually agreed by the CAC Special Committee, on behalf of CAC, and the CEC Special Committee, on behalf of CEC, as promptly as reasonably practicable following the Commencement Date. During the Adjustment Period, CEC shall take into accountprovide to CAC a list of all Tax costs it believes are described in clauses (C) and (D) of this Section 3.1(a) (the “Initial Tax Adjustment Schedule”), and the Parties shall attempt in addition good faith to agree in writing to the foregoing factorsTax costs on the Initial Tax Adjustment Schedule, all other relevant facts and circumstances impacting the intrinsic value together with any additional potential Tax costs identified by CAC, to be used for purposes of CEC and CAC as of such time in determining the extent of any such adjustment to adjusting the Exchange RatioRatio pursuant to this Section 3.1(a). Only such Tax costs that have been so agreed in writing shall be included on and deemed part of the “Tax Adjustment Schedule”.