UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2016
RED ROCK RESORTS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-37754 |
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47-5081182 |
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(State or other jurisdiction |
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(Commission |
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(IRS Employer |
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of incorporation) |
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File Number) |
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Identification No.) |
1505 South Pavilion Center Drive, Las Vegas, Nevada 89135
(Address of principal executive offices)
Registrant’s telephone number, including area code: (702) 495-3000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On May 2, 2016, Red Rock Resorts, Inc. (the “Company”) consummated its initial public offering (“IPO”) of its Class A common stock, $0.01 par value per share (the “Class A Common Stock”), at an offering price of $19.50 per share, pursuant to the Company’s registration statement on Form S-1 (File No. 333-207397), as amended (the “Registration Statement”). In connection with the consummation of the IPO, the Company entered into the following agreements previously filed as exhibits to the Registration Statement:
· a Tax Receivable Agreement, dated April 27, 2016, by and among the Company, Station Holdco LLC, a Delaware limited liability company (“Holdco”), and each of the Members (as defined therein) from time to time party thereto, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference;
· a Third Amended and Restated Limited Liability Company Agreement of Holdco, dated April 27, 2016, by and among Holdco and its Members (as defined therein), a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference; and
· an Exchange Agreement, dated April 27, 2016, by and among the Company, Holdco and the Company Unitholders (as defined therein), a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
The terms of these agreements are substantially the same as the terms set forth in the forms of such agreements filed as exhibits to the Registration Statement and as described therein.
Item 3.02. Unregistered Sales of Equity Securities.
In connection with the consummation off the IPO, the Company issued to the existing holders of Holdco’s membership interests (“Holdco Units”) 80,562,666 shares of Class B common stock of the Company, par value $0.00001 per share (the “Class B Common Stock”). The description in Item 5.03 below of the Amended and Restated Certificate of Incorporation is incorporated herein by reference. The issuance of the Class B Common Stock described in this paragraph were made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 2, 2016, the Company entered into employment agreements with Station Casinos LLC, a Nevada limited liability company and each of Frank J. Fertitta III, Stephen L. Cavallaro, Marc J. Falcone, Richard J. Haskins, and Daniel J. Roy. The terms of the employment agreements are substantially the same as the terms set forth in the forms of such agreements filed as exhibits to the Registration Statement and as described therein, which descriptions are incorporated herein by reference. Such descriptions do not purport to be complete and are subject to and qualified in their entirety by reference to the full texts of the agreements, which are filed herewith and incorporated herein by reference.
Stephen L. Cavallaro, Marc J. Falcone, Richard J. Haskins and Daniel J. Roy were also granted restricted stock and options under the Red Rock Resorts, Inc. 2016 Equity Incentive Plan. Subject to the terms of the option and restricted stock award agreements, the forms of which are filed as Exhibits 10.30 and 10.31, respectively, to the Registration Statement on Form S-1 (File No. 333-207397) filed with the Securities and Exchange Commission by the Company, Messrs. Haskins and Cavallaro received options to purchase 125,000 shares and 38,461 shares of restricted stock and Messrs. Falcone and Roy received 30, 769 shares of restricted stock and options to purchase 100,000 shares. The option awards issued to Stephen L. Cavallaro, Marc J. Falcone, Richard J. Haskins and Daniel J. Roy each vest 25% on each of the first four anniversaries of May 2, 2016, and the restricted stock awards issued to Stephen L. Cavallaro, Marc J. Falcone, Richard J. Haskins and Daniel J. Roy each vest 50% per year on each of the third and fourth anniversaries of May 2,
2016.
Item 5.03. Amendments to Certificate of Incorporation or Bylaws; Change in Fiscal Year.
Amended and Restated Certificate of Incorporation
On April 26, 2016, the Company amended and restated its certificate of incorporation (as amended and restated, the “Certificate of Incorporation”), which was filed with the Secretary of State of the State of Delaware on April 26, 2016. The Certificate of Incorporation amends and restates in its entirety the Company’s original certificate of incorporation, which was filed with the Secretary of State of the State of Delaware on September 9, 2015.
The Certificate of Incorporation, among other things: (i) authorizes 500,000,000 shares of Class A Common Stock and 100,000,000 shares of Class B Common Stock, respectively; (ii) authorizes 100,000,000 shares of preferred stock that may be issued from time to time by the Company’s board of directors in one or more series; (iii) establishes that each outstanding share of Class B Common Stock that is held by a holder that, together with its affiliates, owned Holdco Units (as defined in the Certificate of Incorporation) representing at least 30% of the outstanding Holdco Units immediately following the IPO and, at the applicable record date, maintains direct or indirect beneficial ownership of at least 10% of the outstanding shares of Class A Common Stock (determined on an as-exchanged basis assuming that all of the Holdco Units were exchanged for Class A Common Stock) will be entitled to ten votes; (iv) provides that no director will be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director except as required by applicable law and (v) designates, unless otherwise consented to by the Company, the Court of Chancery of the State of Delaware to be the sole and exclusive forum for certain actions, including, but not limited to, derivative actions or proceedings brought on behalf of the Company or actions asserting claims of breach of a fiduciary duty owed by, or other wrongdoing by, any of the Company’s directors, officers, employees or agents to the Company or the Company’s stockholders.
The foregoing description of the Certificate of Incorporation and the description contained in the Registration Statement are qualified in their entirety by reference to the full text of the Certificate of Incorporation, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Amended and Restated Bylaws
The Company Bylaws were amended and restated effective on April 26, 2016 (as amended and restated, the “Bylaws”). The Bylaws amend and restate the Company’s initial bylaws in their entirety to, among other things: (i) establish procedures relating to the presentation of stockholder proposals at stockholder meetings; (ii) establish procedures relating to the nomination of directors; and (iii) conform to the amended provisions of the Certificate of Incorporation.
The foregoing description and the description contained in the Registration Statement are qualified in their entirety by reference to the full text of the Bylaws, a copy of which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01. Other Events
On May 2, 2016, the Company completed its IPO by issuing 27,054,686 shares of its Class A Common Stock at a price to the public of $19.50 per share.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following material is being furnished as an exhibit to the Current Report on Form 8-K.
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Exhibit Number |
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Description |
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3.1 |
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Amended and Restated Certificate of Incorporation of Red Rock Resorts, Inc. |
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3.2 |
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Amended and Restated Bylaws of Red Rock Resorts, Inc. |
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10.1 |
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Tax Receivable Agreement, dated April 27, 2016, by and among Red Rock Resorts, Inc., Station Holdco LLC, and each of the Members (as defined therein). |
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10.2 |
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Third Amended and Restated Limited Liability Company Agreement of Station Holdco LLC, dated April 27, 2016, by and among Holdco and its Members (as defined therein). |
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10.3 |
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Exchange Agreement, dated as of April 27, 2016, by and among Red Rock Resorts, Inc., Station Holdco LLC, and the Company Unitholders (as defined therein). |
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10.4 |
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Employment Agreement dated as of May 2, 2016, by and among Red Rock Resorts, Inc., Station Casinos LLC and Frank J. Fertitta III (Incorporated herein by reference to Station Casino s LLC’s Current Report on Form 8-K filed May 2, 2016). |
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10.5 |
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Employment Agreement dated as of May 2, 2016, by and among Red Rock Resorts, Inc., Station Casinos LLC and Stephen L. Cavallaro (Incorporated herein by reference to Station Casino s LLC’s Current Report on Form 8-K filed May 2, 2016). |
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10.6 |
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Employment Agreement dated as of May 2, 2016, by and among Red Rock Resorts, Inc., Station Casinos LLC and Marc J. Falcone (Incorporated herein by reference to Station Casino s LLC’s Current Report on Form 8-K filed May 2, 2016). |
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10.7 |
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Employment Agreement dated as of May 2, 2016, by and among Red Rock Resorts, Inc., Station Casinos LLC and Richard J. Haskins (Incorporated herein by reference to Station Casino s LLC’s Current Report on Form 8-K filed May 2, 2016). |
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10.8 |
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Employment Agreement dated as of May 2, 2016, by and among Red Rock Resorts, Inc., Station Casinos LLC and Daniel J. Roy (Incorporated herein by reference to Station Casino s LLC’s Current Report on Form 8-K filed May 2, 2016). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Red Rock Resorts, Inc. | ||
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Date: |
May 2, 2016 |
By: |
/s/ Marc J. Falcone |
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Marc J. Falcone | |
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Executive Vice President, Chief Financial | |
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Officer and Treasurer | |
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
RED ROCK RESORTS, INC.
It is hereby certified that:
1. The name of the corporation is Red Rock Resorts, Inc.
2. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was September 9, 2015 under the original name of the corporation which was Station Casinos Corp.
3. The Corporation has not received any payment for any of its stock.
4. This Amended and Restated Certificate of Incorporation of the Corporation has been duly adopted by the board of directors of the Corporation in accordance with Sections 241 and 245 of the Delaware General Corporation Law.
5. The effective date (the “Effective Date”) of this Amended and Restated Certificate of Incorporation of the Corporation shall be the date it is filed with the Secretary of State of the State of Delaware.
6. The Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is Red Rock Resorts, Inc. (hereinafter referred to as the “Corporation”).
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, postal code 19801, County of New Castle. The name of the registered agent of the Corporation at that address is The Corporation Trust Company.
ARTICLE III
CORPORATE PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (the “DGCL”).
ARTICLE IV
AUTHORIZED CAPITAL STOCK
(1) Authorized Capital Stock. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 700,000,000 shares, consisting of 500,000,000 shares of Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), 100,000,000 shares of Class B Common Stock, par value $0.00001 per share (the “Class B Common Stock,” together with the Class A Common Stock, the “Common Stock”) and 100,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”).
(2) Common Stock. The powers, preferences, and rights and the qualifications, limitations, and restrictions of the Class A Common Stock and the Class B Common Stock are as follows:
(a) Voting Rights. Except as otherwise required by the DGCL or as provided by or pursuant to the provisions of this Amended and Restated Certificate of Incorporation:
(i) Each holder of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held of record by such holder. The holders of shares of Class A Common Stock shall not have cumulative voting rights.
(ii) Each holder of Class B Common Stock shall be entitled to one (1) vote for each share of Class B Common Stock held of record by such holder; provided that each holder that, together with its Affiliates (which, in the case of the Fertitta Family Entities, shall be deemed to include each other Fertitta Family Entity), (A) beneficially owns thirty percent (30%) or more of the units of membership interest (hereafter, a “Holdco Unit”) of Station Holdco LLC, a Delaware limited liability company (“Holdco LLC”), immediately following the consummation of the initial public offering of the Corporation’s Class A Common Stock and (B) as of the applicable record date or other date of determination maintains direct or indirect beneficial ownership of an aggregate of at least ten percent (10%) of the outstanding shares of Class A Common Stock (determined assuming that each unit of membership interest of Holdco LLC held by holders other than the Corporation were exchanged for Class A Common Stock in accordance with the terms and conditions of either (i) the Exchange Agreement (as defined below) or (ii) the LLC Agreement (as defined below)), shall be entitled to ten (10) votes for each share of Class B Stock held of record by such holder.
(iii) Except as otherwise required in this Amended and Restated Certificate of Incorporation or by applicable law, the holders of Class A Common Stock and Class B Common Stock shall vote together as a single class on all matters on which stockholders are generally entitled to vote (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with such holders of Preferred Stock).
(iv) In addition to any other vote required in this Amended and Restated Certificate of Incorporation or by applicable law, the holders of Class A Common Stock and Class B Common Stock shall each be entitled to vote separately as a class only with respect to amendments to this Amended and Restated Certificate of Incorporation that increase or decrease the par value of the shares of such class, or alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely.
(b) Dividends. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Class A Common Stock with respect to the payment of dividends and other distributions in cash, stock of any corporation or property of the Corporation, such dividends and other distributions may be declared and paid on the Class A Common Stock out of the assets of the Corporation that are by law available therefor at such times and in such amounts as the Board in its discretion shall determine. Except as provided in Section 2(d) of this Article IV, dividends and other distributions shall not be declared or paid on the Class B Common Stock.
(c) Liquidation, Dissolution, etc. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock shall be entitled, the holders of all outstanding shares of Class A Common Stock shall be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares held by each such stockholder. The holders of shares of Class B Common Stock, as such, shall not be entitled to receive any assets of the Corporation in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
(d) Reclassification. Neither the Class A Common Stock nor the Class B Common Stock may be subdivided, consolidated, reclassified, or otherwise changed unless contemporaneously therewith the other class of Common Stock and the Holdco Units are subdivided, consolidated, reclassified, or otherwise changed in the same proportion and in the same manner.
(e) Exchange. The holders of Holdco Units other than the Corporation shall, to the extent provided in the Exchange Agreement or the LLC Agreement and in accordance with the terms and conditions of the Exchange Agreement or the LLC Agreement, as applicable, have the right to exchange each such Holdco Unit, together with one share of Class B Common Stock, for one fully paid and nonassessable share of
Class A Common Stock. The Corporation shall at all times when any Holdco Units shall be outstanding, reserve and keep available out of its authorized but unissued Class A Common Stock such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Holdco Units in accordance with the terms of the Exchange Agreement or the LLC Agreement. If at any time the number of authorized but unissued shares of Class A Common Stock shall not be sufficient to effect the conversion of all outstanding Holdco Units, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized shares of Class A Common Stock to such number as shall be sufficient for such purpose. If at any time the number of authorized but unissued shares of Class B Common Stock shall not be sufficient to issue a share of Class B Common Stock for each Holdco Unit outstanding (other than Holdco Units held by the Corporation), the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized shares of Class B Common Stock to such number as shall be sufficient for such purpose.
(f) Automatic Transfer. In the event that any outstanding share of Class B Common Stock shall cease to be held by a holder of a Holdco Unit (including a transferee of a Holdco Unit), such share shall automatically and without further action on the part of the Corporation or any holder of Class B Common Stock be transferred to the Corporation and thereupon shall be retired.
(g) No Preemptive or Subscription Rights. No holder of shares of Common Stock shall be entitled to preemptive or subscription rights.
(3) Preferred Stock.
(a) The board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.
(b) There shall be no limitation or restriction on any variation between any of the different series of Preferred Stock as to the designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof; and the several series of Preferred Stock may, except as otherwise expressly provided in this Article IV, vary in any and all respects as fixed and determined by the resolution or resolutions of the board of directors, providing for the issuance of the various series; provided, however, that all shares of any one series of Preferred Stock
shall have the same designation, preferences and relative, participating, optional or other special rights and qualifications, limitations and restrictions.
ARTICLE V
STOCKHOLDER ACTION BY WRITTEN CONSENT
Until such time as the Fertitta Ownership Condition (as defined below) ceases to be satisfied, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with Section 228 of the DGCL. If at any time the Fertitta Ownership Condition shall not be satisfied, then any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied. For purposes of this Certificate of Incorporation, “Fertitta Ownership Condition” shall mean for so long as the Fertitta Family Entities (A) maintains direct or indirect beneficial ownership of an aggregate of at least ten percent (10%) of the outstanding shares of Class A Common Stock of the Corporation (determined assuming each Holdco Unit held by holders other than the Corporation were exchanged for Class A Common Stock in accordance with either the terms and conditions of (i) the Exchange Agreement or (ii) the LLC Agreement.
ARTICLE VI
CORPORATE GOVERNANCE
The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
(a) The business and affairs of the Corporation shall be managed by or under the direction of the board of directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the DGCL, this Certificate of Incorporation, and the bylaws of the Corporation.
(b) The directors of the Corporation need not be elected by written ballot unless the bylaws of the Corporation so provide.
(c) Special meetings of the stockholders, other than those required by statute, may be called at any time by (i) the Chairman of the Board, (ii) the Chief Executive Officer at the request in writing of (a) directors constituting a majority of the Whole Board (as defined below), (b) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power
to call such meetings or (c) until such time as the Fertitta Ownership Condition ceases to be satisfied, stockholders collectively holding a majority of the voting power of the shares entitled to vote in the election of directors of the Corporation. For purposes of this Certificate of Incorporation, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.
(d) An annual meeting of stockholders, for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the board of directors shall fix.
ARTICLE VII
THE BOARD OF DIRECTORS
(1) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the board of directors pursuant to a resolution adopted by a majority of the Whole Board. The directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be of one class and each director shall serve until his or her successor shall have been duly elected and qualified or, if earlier, until his or her death, resignation or removal. At each annual meeting of stockholders, (i) directors shall be elected for a term of office to expire at the succeeding annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified or, if earlier, until his or her death, resignation or removal; and (ii) if authorized by a resolution of the board of directors, directors may be elected to fill any vacancy on the board of directors, regardless of how such vacancy shall have been created.
(2) A majority of the Whole Board shall constitute a quorum for all purposes at any meeting of the board of directors, and, except as otherwise expressly required by law or by this Certificate of Incorporation, all matters shall be determined by the affirmative vote of a majority of the directors present at any meeting at which a quorum is present.
(3) Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the board of directors resulting from death, resignation, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the board of directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), or by a sole remaining director. Any director elected in accordance with this paragraph shall hold office for the remainder of the term of the director for whom the vacancy was created or occurred and until such director’s successor shall have been duly elected or qualified or, if earlier, such director’s death, resignation or removal. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
(4) Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the bylaws of the Corporation.
(5) Except as otherwise required by applicable law and subject to the rights of the holders of any series of Preferred Stock then outstanding directors may be removed from office with or without cause by the affirmative vote of holders of a majority of the voting power of the shares entitled to vote in connection with the election of the directors of the Corporation, voting together as a single class.
ARTICLE VIII
BYLAW AMENDMENTS
The board of directors is expressly authorized to adopt, amend and repeal the bylaws of the Corporation. Any adoption, amendment or repeal of the bylaws of the Corporation by the board of directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the bylaws of the Corporation; provided, that notwithstanding any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, the bylaws or any Preferred Stock:
A. So long as the Fertitta Ownership Condition is satisfied, the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the bylaws; and
B. Upon such time that the Fertitta Ownership Condition is not satisfied, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the bylaws.
ARTICLE IX
BUSINESS COMBINATIONS
The Corporation shall not be governed by Section 203 of the DGCL. Notwithstanding the foregoing, the Corporation shall not engage in any Business Combination (as defined below), at any point in time at which the Corporation’s Class A Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, with any Interested Stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an Interested Stockholder, unless:
(i) prior to such time, the board of directors approved either the Business Combination or the transaction which resulted in the stockholder becoming an Interested Stockholder, or
(ii) upon consummation of the transaction which resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of
determining the voting stock outstanding (but not the outstanding voting stock owned by the Interested Stockholder) those shares owned by (i) persons who are directors and also officers or (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or
(iii) at or subsequent to such time the Business Combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding voting stock of the Corporation which is not owned by the Interested Stockholder.
ARTICLE X
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for any act or omission not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. In the event that it is determined that Delaware law does not apply, the liability of a director of the Corporation to the company or its stockholders for monetary damages shall be eliminated to the fullest extent permissible under applicable law. Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE XI
EXCLUSIVE FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, all Internal Corporate Claims (as defined below) shall be brought solely and exclusively in the Court of Chancery of the State of Delaware (or, if such court does not have jurisdiction, the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware). “Internal Corporate Claims” means claims, including claims in the right of the Corporation, brought by a stockholder (including a beneficial owner) (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery of the State of Delaware.
ARTICLE XII
AMENDMENTS
The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all
rights conferred upon stockholders are granted subject to this reservation. Notwithstanding any other provisions of this Certificate or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law or this Certificate, amendments to this Certificate of Incorporation shall require the approval of the holders of a majority of the then outstanding shares of shares of capital stock entitled to vote generally in the election of directors, voting together as a single class; provided that:
A. So long as the Fertitta Ownership Condition is satisfied, the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required, to amend or repeal this Article XII, Article V, Article VI, Article VII, Article VIII, Article IX and Sections 2 and 4 of Article IV; and
B. Following such time that the Fertitta Ownership Condition is not satisfied, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal this Article XII, Article V, Article VI, Article VII, Article VIII, Article IX and Sections 2 and 4 of Article IV.
ARTICLE XIII
GAMING AND REGULATORY MATTERS
(1) The Affected Interests owned or controlled directly or indirectly by an Affected Equityholder shall be subject to redemption by the Corporation, out of funds legally available therefor, to the extent required by the Gaming Authority making the determination of unsuitability or reasonably deemed necessary or advisable by the Board of Directors. If the Gaming Authority or the Board of Directors making the determination of unsuitability requires or deems it reasonably necessary or advisable to redeem the Affected Interests, the Corporation shall give a Redemption Notice to the Affected Equityholder and shall thereafter proceed to purchase the Affected Interests on the Redemption Date for the Redemption Price, subject to any approvals, conditions or limitations under applicable Gaming Laws. The Affected Equityholder shall surrender any certificates representing the Affected Interests to be redeemed in accordance with the requirements of the Redemption Notice.
(2) Notwithstanding any other provision in this Agreement, commencing on the date that a stockholder becomes an Affected Equityholder, and until the Affected Interests of such Affected Equityholder are redeemed or are transferred to a Person who is not an Unsuitable Person in a transfer permitted by the terms of this Agreement, such Affected Equityholder: (i) shall not be entitled to receive any distributions with regard to such Affected Interests; (ii) shall not be entitled to exercise, directly or indirectly or through any proxy, trustee, or nominee, any voting or other right conferred by such Affected Interests, and Affected Interests shall not for any purposes be included in the Equity Securities of the Corporation entitled to vote; and (iii) shall not be entitled to receive any remuneration in any form from the Corporation or its Affiliates for services rendered or otherwise.
(3) In the event that shares of Class B Common Stock owned or controlled directly or indirectly by an Affected Equityholder are redeemed in accordance with this Article XIII, the Corporation shall purchase or, in its capacity as the managing member of Holdco LLC, cause Holdco LLC to concurrently redeem, any and all Holdco Units owned or controlled directly or indirectly by such Affected Equityholder; provided that, whether such Holdco Units are purchased or redeemed, the consideration per Holdco Unit payable to the Affected Equityholder shall be equal to the hypothetical Redemption Price (solely for purposes of this clause (3), as defined in the LLC Agreement, as in effect immediately following the IPO (also as defined in the LLC Agreement)) in respect of one Holdco Unit redeemed in accordance with the terms of the LLC Agreement at the same time as the applicable shares of Class B Common Stock are redeemed.
(4) Each Affected Equityholder shall indemnify and hold harmless the Corporation for any and all losses, costs and expenses, including attorneys’ fees, incurred by it as a result of, or arising out of, such Affected Equityholder’s refusal or failure to comply with the provisions of this Article or failure to promptly divest itself of any Affected Interests when required to do so by this Article XIII.
(5) The right of redemption provided in this Article shall not be exclusive of any other rights the Corporation may hereunder or under applicable law or rights that the Corporation may hereafter acquire under any agreement or otherwise.
(6) Nothing contained in this Article shall limit the authority of the Corporation to take such other action to the extent permitted by law as it deems necessary or advisable to protect the Corporation or its Affiliates from the denial or threatened denial or loss or threatened loss of any Gaming Licenses or as required by any Gaming Authority. Without limiting the generality of the foregoing, the Board of Directors may, to the extent permitted by law, from time to time establish, modify, amend or rescind regulations, and procedures of the Corporation not inconsistent with the express provisions of this Article for the purpose of determining whether any Person is an Unsuitable Person and, as applicable, for the orderly application, administration and implementation of the provisions of this Article.
(7) Except as may be required by any applicable Gaming Laws or a Gaming Authority, the Corporation may waive any of the rights of the Corporation or any restrictions contained in this Article in any instance in which the Board of Directors determines that a waiver would be in the best interests of the Corporation. Except as may be required by a Gaming Authority, nothing in this Article shall be deemed or construed to the Corporation to repurchase any Affected Interest of an Affected Equityholder.
ARTICLE XIV
DEFINITIONS
As used herein, the following terms shall have the meanings specified below:
(1) “beneficial ownerhsip” shall have the same meaning given to it in Section 13(d) under the Securities Exchange Act of 1934, as amended, and the rules thereunder,
except that a person will be deemed to have “beneficial ownership” of all securities that person has the right to acquire, whether the right is exercisable immediately, only after the passage of time or only after the satisfaction of conditions and notwithstanding any right to pay cash in lieu of such securities.
(2) “Affected Interests” means Equity Securities that are owned or controlled directly or indirectly by an Unsuitable Person or an Affiliate of an Unsuitable Person.
(3) “Affected Equityholder” means a holder of Equity Securities who is an Unsuitable Person or is an Affiliate of an Unsuitable Person.
(4) “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
(5) “Associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
(6) “Business Combination,” when used in reference to the Corporation and any Interested Stockholder of the Corporation, means:
(1) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the Interested Stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation the first sentence of this Article IX is not applicable to the surviving entity;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
(3) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the Interested Stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible
into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the Interested Stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this subsection (3) shall there be an increase in the Interested Stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);
(4) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the Interested Stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the Interested Stockholder; or
(5) any receipt by the Interested Stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (1)-(4) above and pursuant to Article X of the LLC Agreement) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
(7) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Article IX, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
(8) “Equity Securities” means all Common Stock of the Corporation and any and all securities of the Corporation or any of its direct or indirect subsidiaries, convertible into, or exchangeable or exercisable for, options, warrants or other rights to acquire, shares of Common Stock.
(9) “Exchange Agreement” means that certain Exchange Agreement, dated as of or about the date hereof, by and among the Corporation, Holdco LLC and the Company Unitholders party thereto (as the same may be amended, supplemented or modified from time to time in accordance with the terms thereof).
(10) “Family Group” means, for any individual, such individual’s current or former spouse, their respective parents, descendants of such parents (whether natural or adopted) and the spouses of such descendants, and any trust, limited partnership, corporation or limited liability company established solely for the benefit of such individual or such individual’s current or former spouse, their respective parents, descendants of such parents (whether natural or adopted) or the spouses of such descendants.
(11) “Fertitta Family Entities” means, collectively, (a) FI Station Investor LLC, a Delaware limited liability company, and each of its Affiliates, (b) Fertitta Business Management LLC, a Nevada limited liability company, and each of its Affiliates, (c) Frank J. Fertitta III, (d) Lorenzo J. Fertitta, and (e) each Affiliate or member of the Family Group of Frank J. Fertitta III or Lorenzo J. Fertitta, other than, in each case, the Corporation or its subsidiaries.
(12) “Gaming Authority” means all governmental authorities or agencies with regulatory control or jurisdiction over all or any portion of the gaming activities of the Corporation or any of its subsidiaries, or over ownership of an interest in an entity engaged in gaming activities, or any successor to any such authority, including, as applicable, (i) in the State of Nevada, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board, the Henderson City Council, the City of Las Vegas City Council and all other state and local regulatory and licensing agencies or bodies with authority over gaming, gaming activities and gaming devices, mobile gaming systems and associated equipment in the State of Nevada, the City of Henderson, the City of Las Vegas, the City of Reno, Clark County, Nevada or Washoe County, Nevada, and (ii) the National Indian Gaming Commission and the applicable gaming regulatory authority established by the Federated Indians of Graton Rancheria, the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians of Michigan and the North Fork Rancheria of Mono Indians.
(13) “Gaming Laws” means any federal, state, tribal, local or foreign statute, ordinance, rule, regulation, requirement, directive, judgment, order, decree, injunction or other authorization, and any Gaming License, governing or relating to casino and gaming activities and operations of the Corporation or any of its subsidiaries or the ownership of an interest therein.
(14) “Gaming License” shall mean all licenses, consents, permits, approvals, authorizations, registrations, findings of suitability, franchises, entitlements, exemptions, waivers and orders of registration approved or issued by any Gaming Authority under Gaming Laws
necessary for or relating to the conduct of activities or the ownership of an interest in an entity engaged in activities under the Gaming Laws, including any condition or limitation placed thereon.
(15) “Governmental Authority” means any governmental, regulatory or administrative authority, whether foreign, federal, state or local, or any agency or commission or any court, tribunal, or judicial or arbitral body (or any subdivision of any of the foregoing) having jurisdiction or authority with respect to the particular matter at issue in its context, including any Gaming Authority.
(16) “Interested Stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Stockholder, and the Affiliates and Associates of such person; provided, however, that the term “Interested Stockholder” shall not include (a) the Fertitta Family Entities, or (b) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation; provided, that such person specified in this clause (b) shall be an Interested Stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(17) “LLC Agreement” means that certain Third Amended and Restated Limited Liability Company Agreement of Holdco LLC, dated as of or about the date hereof, by and among the Corporation and the other members of Holdco LLC (as the same may be amended, supplemented or modified from time to time in accordance with the terms thereof).
(18) “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its Affiliates or Associates:
(1) beneficially owns such stock, directly or indirectly; or
(2) has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s Affiliates or Associates until such tendered stock is
accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or
(3) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (2) above), or disposing of such stock with any other person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, such stock.
(19) “Person” means any individual, corporation, partnership, unincorporated association or other entity.
(20) “Redemption Date” shall mean the date specified in a Redemption Notice as the date on which Affected Interests of an Affected Equityholder are to be redeemed by the Corporation, which Redemption Date shall be determined by the Board of Directors of such the Corporation and may be extended to the extent required in connection with any actions required to be taken under any Gaming Law; provided, that, unless otherwise directed by a Gaming Authority, in no event shall the Redemption Date be more than 180 days after the date such Affected Equityholder receives the Redemption Notice.
(21) “Redemption Notice” shall mean that notice of redemption given by the Corporation to an Affected Equityholder pursuant to Article XIII. Each Redemption Notice shall set forth (i) the Redemption Date; (ii) the Affected Interests to be redeemed; (iii) the Redemption Price and the manner of payment therefor; (iv) the place where certificates, if any, shall be surrendered for payment; and (v) any other requirements of surrender of the certificates, including how they are to be endorsed, if at all.
(22) “Redemption Price” shall mean the price specified in the Redemption Notice to be paid by the Corporation for the redemption of Affected Interests to be redeemed pursuant to Article XIII, which shall be that price (if any and to the extent applicable) required to be paid by the Gaming Authorities making the finding of unsuitability, or if the Gaming Authorities do not require a certain price to be paid, (x) $0.00001 per share of Class B Common Stock constituting Affected Interests and (y) in the case of shares of Class A Common Stock that constitute Affected Interests, the amount reasonably determined by the Board of Directors to be the fair value of the Affected Interests to be redeemed; provided, that unless a Gaming Authority requires otherwise, the Redemption Price per share of Class A Common Stock shall in no event be less than (i) the average VWAP per share of Class A Common Stock over the ten (10) consecutive Trading Day period ending on the Trading Day immediately preceding the date of the Redemption Notice, or (ii) if the VWAP is not available, then the market value per share of Class A Common Stock as determined in good faith and in the reasonable discretion of the Board of Directors. The Redemption Price may be paid in cash, by promissory note, or both, as required by the Gaming Authorities and, if not so required, as the Board of Directors reasonably
determines. Any promissory note shall contain such terms and conditions as the Board of Directors reasonably determines to be necessary or advisable to comply with any law or regulation then applicable to the Corporation or any Affiliate thereof, or to prevent a default under, or acceleration of, any loan, note, mortgage, indenture, line of credit or other debt or financing agreement to which the Corporation or any of its subsidiaries is a party. Subject to the foregoing, (i) the principal amount of the promissory note together with any unpaid interest shall be due and payable no later than the ten-year anniversary of the delivery of the note, (ii) interest on the unpaid principal thereof shall be payable at maturity at a rate per annum equal to the applicable federal rate within the meaning of Code section 1274(d) for debt with a maturity of over nine years, as in effect at the date of such issuance, compounded annually, until the Redemption Price has been paid in full and (iii) the promissory note shall provide that at any time prior to the 15-month anniversary of the date of issuance, if the promissory note is transferred to a Person that immediately after such transfer would not be an Unsuitable Person, such promissory note may, at the election of the holder thereof prior to such 15-month anniversary (but with such 15-month period being subject to reasonable extensions up to six months in the aggregate for all such extensions in order to procure any required Gaming Licenses or other regulatory approvals being diligently pursued in good faith), converted into the Equity Securities for which such promissory note was issued as the Redemption Price upon the cash payment by such holder to the Corporation in an amount equal to the sum of (x) all cash amounts paid to the original holder thereof as part of the Redemption Price and (y) all interest paid on such promissory note prior to such conversion. If the Redemption Price is being determined under clause (ii) with respect a redemption of at least 10% of the outstanding shares of Class A Common Stock (determined assuming that each unit of membership interest of Holdco LLC held by holders other than the Corporation were exchanged for Class A Common Stock in accordance with the terms and conditions of either (i) the Exchange Agreement or (ii) the LLC Agreement), the Redemption Price shall be at least equal to the value as determined by a valuation procured by the Corporation from a nationally recognized investment banking firm.
(23) “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(24) “Trading Day” means a day on which the Class A Common Stock: (a) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business; and (b) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.
(25) “Unsuitable Person” means a Person, including any member, shareholder, partner, manager, director, officer or employee of a Person (a) who is denied or disqualified from eligibility for a Gaming License by any applicable Gaming Authority or who is determined by any applicable Gaming Authority to be unsuitable to own or control an Equity Security in the Corporation or to be affiliated or connected with or in the gaming business of the Corporation, (b) whose ownership of an Equity Security in the Corporation or affiliation or involvement with or in the business of the Corporation in any capacity causes the Corporation to lose or to be threatened by any applicable Gaming Authority with the loss or denial of a Gaming License, (c) who is deemed likely, as determined in good faith by the Board of Directors based on verifiable information received from any applicable Gaming Authority or other Governmental
Authority having jurisdiction over the Corporation, to preclude or materially delay, impede or impair, or jeopardize or threaten the loss of, or result in the imposition of materially burdensome terms and conditions on, any Gaming License of the Corporation or on such Person’s application for, or right to the use of, entitlement to or ability to obtain or retain any Gaming License in any jurisdiction or (d) who is deemed likely, as determined in good faith by the Board of Directors without taking into account the votes of directors affiliated or associated with the Unsuitable Person, to result in the disapproval, cancellation, rescission, termination, material adverse modification or non-renewal of any material contract between the Corporation, on one hand, and a third party that is not an Affiliate of the Corporation or any stockholder, on the other hand.
(26) “voting stock” means stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of that entity.
(27) “VWAP” per share of Class A Common Stock on any Trading Day means the per share volume-weighted average price as displayed on Bloomberg page “RRR <Equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day. The “average VWAP” means the average of the VWAP for each Trading Day in the relevant period.
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
RED ROCK RESORTS, INC.
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
(1) An annual meeting of stockholders, for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall fix.
(2) Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s proxy materials with respect to such meeting, (b) by or at the direction of the Board of Directors, or (c) by any stockholder of record of the Corporation (the “Record Stockholder”) at the time of the giving of the notice required in the following paragraph, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this section. For the avoidance of doubt, the foregoing clause (c) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”)) at an annual meeting of stockholders.
(3) For nominations or business to be properly brought before an annual meeting by a Record Stockholder pursuant to clause (c) of the foregoing paragraph, (a) the Record Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, (b) any such business must be a proper matter for stockholder action under Delaware law and (c) the Record Stockholder and the beneficial owner, if any, on whose behalf any such proposal or nomination is made, must have acted in accordance with the representations set forth in the Solicitation Statement (as defined below) required by these Bylaws. To be timely, a Record Stockholder’s notice shall be received by the Secretary at the principal executive offices of the Corporation not less than 120 or more than 180 days prior to the one-year anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that, subject to the last sentence of this Section 1(3), if the meeting is convened more than 30 days prior to or delayed by more than 60 days after the anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, notice by the Record Stockholder to be timely must be so received not later than the close of business on the later of (i) the 90th day before such annual meeting or (ii) the 10th day following the day on which public announcement of the date of such meeting is first made. Notwithstanding anything in the preceding sentence to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there has been no public announcement naming all of the nominees for director or indicating the increase in the size of the Board of Directors made by the Corporation at least 10 days before the last day a Record Stockholder may deliver a notice of nomination in accordance with the preceding sentence, a Record Stockholder’s notice required by these Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such
increase, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. In no event shall an adjournment, or postponement of an annual meeting for which notice has been given, commence a new time period for the giving of a Record Stockholder’s notice.
(4) Such Record Stockholder’s notice shall set forth:
a. if such notice pertains to the nomination of directors, as to each person whom the Record Stockholder proposes to nominate for election or reelection as a director all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Exchange Act, and such person’s written consent to serve as a director if elected;
b. as to any business that the Record Stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such Record Stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and
c. as to (1) the Record Stockholder giving the notice and (2) the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “party”):
(i) the name and address of each such party;
(ii) (A) the class, series, and number of shares of the Corporation that are owned, directly or indirectly, beneficially and of record by each such party, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by each such party, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which each such party has a right to vote, directly or indirectly, any shares of any security of the Corporation, (D) any short interest in any security of the Corporation held by each such party (for purposes of this Section 1(4), a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially directly or indirectly by each such party that are separated or separable from the underlying
shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which each such party is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that each such party is directly or indirectly entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party’s immediate family sharing the same household (which information set forth in this paragraph shall be supplemented by such stockholder or such beneficial owner, as the case may be, not later than 10 days after the record date for determining the stockholders entitled to vote at the meeting; provided, that if such date is after the date of the meeting, not later than the day prior to the meeting);
(iii) any other information relating to each such party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or the election of directors in a contested election pursuant to Section 14 of the Exchange Act; and
(iv) a statement whether or not each such party will deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of voting power of all of the shares of capital stock of the Corporation required under applicable law to carry the proposal or, in the case of a nomination or nominations, at least the percentage of voting power of all of the shares of capital stock of the Corporation reasonably believed by the Record Stockholder or beneficial holder, as the case may be, to be sufficient to elect the nominee or nominees proposed to be nominated by the Record Stockholder (such statement, a “Solicitation Statement”).
(5) A person shall not be eligible for election or re-election as a director at an annual meeting unless (i) the person is nominated by a Record Stockholder in accordance with Section 1(2)(c) or (ii) the person is nominated by or at the direction of the Board of Directors. Only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this section. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defectively proposed business or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.
(6) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(7) Notwithstanding the foregoing provisions of this Section 1, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 1. Nothing in this Section 1 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2. Special Meetings.
(1) Special meetings of the stockholders, other than those required by statute, may be called at any time by (i) the Chairman of the Board, (ii) the Chief Executive Officer at the request in writing of (a) directors constituting a majority of the Whole Board (as defined in Article VI of the Amended and Restated Certificate of Incorporation of the Corporation), (b) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings or (c) until such time as the Fertitta Ownership Condition (as defined in Article V of the Amended and Restated Certificate of Incorporation of the Corporation) ceases to be satisfied, stockholders collectively holding a majority of the voting power of the shares entitled to vote in the election of directors of the Corporation. The Board of Directors may postpone or reschedule any previously scheduled special meeting called by the Board of Directors, the Chairman of the Board of Directors or the Chief Executive Officer.
(2) The notice of a special meeting shall include the purpose for which such meeting is called. Only such business shall be conducted at a special meeting of stockholders as shall have been specified in the notice of such special meeting (or any supplement thereto).
(3) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (a) by or at the direction of the Board of Directors or (b) by any Record Stockholder at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who delivers a written notice to the Secretary setting forth the information set forth in Section 1(4)(a) and 1(4)(c) of Article I. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders only if such Record Stockholder’s notice required by the preceding sentence shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall an adjournment, or postponement of a special meeting for which notice has been given, commence a new time period for the giving of a Record Stockholder’s notice. A person shall not be eligible for election or reelection as a director at a special meeting unless the person is nominated (i) by or at the direction of the Board of Directors or (ii) by a Record Stockholder in accordance with the notice procedures set forth in Article I. Notwithstanding anything in this Section 2(3) or otherwise in these Bylaws to the contrary, this Section 2(3) shall not apply to any special meetings of the stockholders called at the request of stockholders to the extent permitted Section 2(1).
(4) Notwithstanding the foregoing provisions of this Section 2, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to matters set forth in this Section 2. Nothing in this Section 2 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 3. Notice of Meetings.
Notice of the place, if any, date, and time of all meetings of the stockholders, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, shall be given, not less than 10 days nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or required by law.
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, shall be given to each stockholder in conformity herewith. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and, except as otherwise required by law, shall not be less than 10 nor more than 60 days before the date of such adjourned meeting, and shall give notice of the adjourned meeting to each Record Stockholder entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.
Section 4. Quorum.
At any meeting of the stockholders, the holders of a majority of the voting power of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law or by the rules of any stock exchange upon which the Corporation’s securities are listed. Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date, or time.
Section 5. Organization.
Such person as the Board of Directors may have designated or, in the absence of such a person, the Chairman of the Board or, in his or her absence, the Chief Executive Officer of the Corporation or, in his or her absence, such person as may be chosen by the holders of a majority of the voting power of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman of the meeting appoints.
Section 6. Conduct of Business.
The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order. The chairman shall have the power to adjourn the meeting to another place, if any, date and time. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.
All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law or the rules of any stock exchange upon which the Corporation’s securities are listed or as otherwise provided in these Bylaws or the Certificate of Incorporation, all other matters shall be determined by a majority of the votes cast affirmatively or negatively. The Stockholders do not have the right to cumulate their votes for the election of directors.
Section 8. Stock List.
The officer who has charge of the stock ledger of the Corporation shall, at least 10 days before every meeting of stockholders, prepare and make a complete list of stockholders entitled to vote at any meeting of stockholders, provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date, arranged in alphabetical order and showing the address of each such stockholder and the number of shares registered in his or her name. Such list shall be open to the examination of any stockholder for a period of at least 10 days prior to the meeting in the manner provided by law.
A stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine (a) the identity of the stockholders entitled to examine such stock list and to vote at the meeting and (b) the number of shares held by each of them.
ARTICLE II - BOARD OF DIRECTORS
Section 1. Number, Election and Term of Directors.
Subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. The directors, other than those who may be elected by the holders of any series of preferred stock under specified circumstances, shall be of one class and each director shall serve until his or her successor shall have been duly elected and qualified or, if earlier, until his or her death, resignation or removal.
Section 2. Newly Created Directorships and Vacancies.
Subject to the rights of the holders of any series of preferred stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), or by a sole remaining director. Any director elected in accordance with this Section 2 shall hold office for the remainder of the term of the director for whom the vacancy was created or occurred and until such director’s successor shall have been duly elected and qualified or, if earlier, such director’s death, resignation or removal. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer or by the Board of Directors and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mailing written notice not less than five days before the meeting or by telephone or by telegraphing or telexing or by facsimile or electronic transmission of the same not less than 24 hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.
Section 5. Quorum.
A majority of the Whole Board shall constitute a quorum for all purposes at any meeting of the Board of Directors. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and, except as otherwise expressly required by law or the Certificate of Incorporation, all matters shall be determined by the affirmative vote of a majority of the directors present at any meeting at which a quorum is present. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 8. Resignations and Removal of Directors.
Any director of the Corporation may resign from the Board of Directors or any committee thereof at any time, by giving notice in writing to the Chairman of the Board of Directors, if there be one, the Chief Executive Officer or the Secretary of the Corporation and, in the case of a committee, to the chairman of such committee, if there be one. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law and subject to the rights of the holders of any series of preferred stock then outstanding, directors may be removed from office with or without cause by the affirmative vote of holders of a majority of the voting power of the
shares entitled to vote in connection with the election of the directors of the Corporation, voting together as a single class. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.
Section 9. Compensation of Directors.
Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or paid a stated salary or paid other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed compensation for attending committee meetings
ARTICLE III- COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings. The presence of at least a majority of the members of the committee shall constitute a quorum for the transaction of business. All matters shall be determined by a majority vote of the members present at any meeting at which a quorum is present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
ARTICLE IV - OFFICERS
Section 1. Generally.
The Board of Directors, at its next meeting following each annual meeting of the stockholders, shall elect officers of the Corporation, including a Chief Executive Officer and a Secretary. The Board of Directors may also from time to time elect such other officers as it may deem proper or may delegate to any elected officer of the Corporation the power to appoint and remove any such other officers and to prescribe their respective terms of office, authorities and duties. Any Vice President may be designated Executive, Senior or Corporate, or may be given such other designation or combination of designations as the Board of Directors or the Chief Executive Officer may determine. Any two or more offices may be held by the same person. The Board may also elect or appoint a Chairman of the Board, who may or may not also be an officer of the Corporation.
Section 2. Terms of Office.
All officers of the Corporation elected by the Board of Directors shall hold office for such terms as may be determined by the Board or, except with respect to his or her own office, the Chief Executive Officer, or until their respective successors are chosen and qualified or until his or her earlier resignation or removal. Any officer may be removed from office at any time either with or without cause by affirmative vote of a majority of the members of the Board then in office, or, in the case of appointed officers, by any elected officer upon whom such power of removal shall have been conferred by the Board of Directors.
Section 3. Powers and Duties.
Each of the officers of the Corporation elected by the Board of Directors or appointed by an officer in accordance with these Bylaws shall have the powers and duties prescribed by law, by these Bylaws or by the Board and, in the case of appointed officers, the powers and duties prescribed by the appointing officer, and, unless otherwise prescribed by these Bylaws or by the Board of Directors or such appointing officer, shall have such further powers and duties as ordinarily pertain to that office. The Chief Executive Officer shall have authority over the general direction of the affairs of the Corporation.
Section 4. Delegation of Authority.
The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
Section 5. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation or entity in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation or entity.
ARTICLE V - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification.
Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 3 of this Article V with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation; provided, further, that no indemnification shall be made in respect of any proceeding by or in the right of the Corporation as to which such indemnitee has been adjudged to be liable to the Corporation unless and only to the extent that the court in which such proceeding is adjudicated determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such indemnitee is fairly and reasonably entitled to indemnity.
Section 2. Right to Advancement of Expenses.
In addition to the right to indemnification conferred in Section 1 of this Article V, an indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”) to the extent provided in an employment or indemnification agreement between the Corporation and such indemnitee or as otherwise determined by the Board of Directors; provided, however, that any such advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under Section 1, this Section 2 or otherwise.
Section 3. Right of Indemnitee to Bring Suit.
If a claim under Section 1 or 2 of this Article V is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law (the “DGCL”). Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article V or otherwise shall be on the Corporation.
Section 4. Non-Exclusivity of Rights.
The rights to indemnification and to the advancement of expenses conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, Bylaws, agreement, vote of stockholders or directors or otherwise.
Section 5. Insurance.
The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Section 6. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.
Section 7. Nature of Rights.
The rights conferred upon indemnitees in this Article V shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article V that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit, eliminate, or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
ARTICLE VI - STOCK
Section 1. Certificates of Stock.
Each holder of stock represented by certificates shall be entitled to a certificate signed by, or in the name of the Corporation by, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any or all of the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article VI of these Bylaws, an outstanding certificate for the number of shares involved, if one has been issued, shall be surrendered for cancellation before a new certificate, if any, is issued therefor.
Section 3. Record Date.
In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be less than 10 days nor more than 60 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 3 at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.
ARTICLE VII - NOTICES
Section 1. Notices.
If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.
Section 2. Waivers.
A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the express
purpose of objecting at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened.
ARTICLE VIII - MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member or officer reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 5. Time Periods.
In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
ARTICLE IX - AMENDMENTS
In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to adopt, amend and repeal these Bylaws subject to the power of the holders of capital stock of the Corporation to adopt, amend or repeal the Bylaws; provided, however, that, with respect to the power of holders of capital stock to adopt, amend and repeal Bylaws of the Corporation, notwithstanding any other provision of these Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, these Bylaws or any preferred stock:
(A) So long as the Fertitta Ownership Condition is satisfied, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of these Bylaws; and
(B) Upon such time that the Fertitta Ownership Condition is not satisfied, the affirmative vote of the holders of at least sixty six and two-thirds percent (66 2/3%) of the voting power of all of the then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of these Bylaws.
Exhibit 10.1
TAX RECEIVABLE AGREEMENT
TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of April 28, 2016 and effective as of immediately prior to the consummation of the IPO (as defined below) (the “Effective Time”), among Red Rock Resorts, Inc., a Delaware corporation (the “Corporation”), Station Holdco LLC, a Delaware limited liability company (the “Company”), and each of the undersigned parties hereto identified as “ Members.” Capitalized terms used but not otherwise defined are defined in or by reference to Section 1.01.
W I T N E S S E T H:
WHEREAS, the Members hold membership interests (“Units”) in the Company, which is treated as a partnership for U.S. federal income Tax purposes;
WHEREAS, the Corporation is the managing member of, and holds and will hold Units in, the Company;
WHEREAS, the Units, together with shares of the Corporation’s class B common stock, par value $0.00001 per share (“Class B Common Stock”), held by the Members are exchangeable for shares of the Corporation’s class A common stock, par value $0.01 per share (“Class A Common Stock”), or, at the option of the Corporation, cash, from time to time pursuant to the Exchange Agreement;
WHEREAS, the Corporation will apply a portion of the cash raised by the Corporation in the IPO to purchase Units from certain of the Members (the “IPO Sale”);
WHEREAS, the Company and each of its direct and indirect Subsidiaries that is treated as a partnership for U.S. federal income Tax purposes has or will have made a Section 754 Election, effective for each Taxable Year in which an exchange of Units and Class B Common Stock for shares of Class A Common Stock or cash occurs, which election is intended to result in an adjustment to the Tax basis (in an amount equal to the Basis Adjustment Amount) of the assets owned by the Company and such Subsidiaries (solely to the extent allocated to the Corporation or any Exchanging Subsidiary) at the time (each such time, an “Exchange Date”) of such an exchange, including the IPO Sale (each such exchange or acquisition, an “Exchange”), by reason of such Exchange and the payments under this Agreement;
WHEREAS, the income, gain, loss, expense and other Tax items of the Corporation or any Exchanging Subsidiary, as a member of the Company (and in respect of each of the Company’s direct and indirect Subsidiaries treated as a disregarded entity or a partnership for U.S. federal income Tax purposes), may be affected by the Basis Adjustment, and the income, gain, loss, expense and other Tax items of the Corporation or any Exchanging Subsidiary may be affected by the Imputed Interest; and
WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustment and the Imputed Interest on the actual liability for Taxes of the Corporation or any Exchanging Subsidiary;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following terms have the following meanings:
“Advisory Firm” means a law or accounting firm that is nationally recognized as being expert in Tax matters and that is appointed by the Board.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.
“Agreed Rate” means LIBOR plus 100 basis points.
“Agreement” is defined in the preamble.
“Amended Schedule” is defined in Section 2.03(b) of this Agreement.
“Applicable Member” means in respect of that portion of any Tax Benefit Payment that relates to an Exchange or a deemed Exchange pursuant to clause (5) of the definition of “Valuation Assumptions,” the Exchanging Member or Member deemed to Exchange, as applicable.
“Available Cash” means all cash and cash equivalents of the Corporation on hand, less the amount of cash reserves reasonably established in good faith by the Corporation to (i) provide for the proper conduct of business of the Corporation, or (ii) comply with applicable law or any Senior Obligations.
“Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as a result of (x) an Exchange or (y) the payments made pursuant to this Agreement, in each case, under the principles of Sections 732(b) and 1012 of the Code (in situations where, as a result of one or more Exchanges, the Company becomes an entity that is disregarded as separate from its owner for U.S. federal income tax purposes), or Sections 743(b) and 754 of the Code (in situations where, following an Exchange, the Company remains in existence as an entity for U.S. federal income tax purposes) and, in each case, comparable sections of state and local Tax laws, if any. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment (a “Basis Adjustment Amount”) resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred. Payments under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.
“Board” means the board of directors of the Corporation.
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City, New York are authorized by law to close.
“Change Notice” is defined in Section 6.01(b) of this Agreement.
A “Change of Control” shall be deemed to have occurred if or upon:
(i) both the stockholders of the Corporation and the Board approve, in accordance with the Corporation’s certificate of incorporation and applicable law, the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the Corporation’s assets (determined on a consolidated basis), including a sale of all of the equity interests in the Company, to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than to any, directly or indirectly, wholly owned Subsidiary of the Corporation, and such sale, lease or transfer is consummated;
(ii) both the stockholders of the Corporation and the Board approve, in accordance with the Corporation’s certificate of incorporation and applicable law, a merger or consolidation of the Corporation with any other Person, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50.01% of the total voting power represented by the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, and such merger or consolidation is consummated; or
(iii) the acquisition, directly or indirectly, by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than (a) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation; or (b) a corporation or other entity owned, directly or indirectly, by all of the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of at least 50.01% of the aggregate voting power of the Voting Securities of the Corporation; provided that the Board recommends or otherwise approves or determines that such acquisition is in the best interest of the Corporation and its stockholders.
“Class A Common Stock” is defined in the recitals.
“Class B Common Stock” is defined in the recitals.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” is defined in the preamble.
“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise; “Controlled” and “Controlling” shall have correlative meanings.
“Corporation” is defined in the preamble.
“Corporation Return” means each U.S. federal, state and local income Tax Return, as applicable, of the Corporation or any Exchanging Subsidiary filed with respect to Taxes for any Taxable Year.
“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount (but not less than zero) of Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.
“DB” means German American Capital Corporation and each Permitted Transferee (as such term is defined in the LLC Agreement) thereof, for so long as such Person (a) remains a Permitted Transferee (as such term is defined in the LLC Agreement) and (b) beneficially owns, directly or indirectly, one or more Company Units.
“Default Rate” means LIBOR plus 500 basis points.
“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state and local Tax law, as applicable, or any other event (including the execution of an IRS Form 870-AD or similar state or local Tax form) that finally and conclusively establishes the amount of any liability for Tax.
“Dispute” is defined in Section 7.08(a) of this Agreement.
“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.
“Early Termination Notice” is defined in Section 4.02 of this Agreement.
“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.
“Early Termination Rate” means LIBOR plus 100 basis points.
“Early Termination Schedule” is defined in Section 4.02 of this Agreement.
“Effective Time” is defined in the preamble.
“Eligible Member” means any Applicable Member that, on the date of the IPO, immediately following the purchase of Units by the Corporation using a portion of the net proceeds therefrom, held at least 10% of the Post-IPO Units; provided, that for purposes of Section 4.02, “Eligible Member” shall mean any Member that, on the date of the IPO, immediately following the purchase of Units by the Corporation using a portion of the net proceeds therefrom, held at least 10% of the Post-IPO Units.
“Excess Payment” is defined in Section 3.01(c) of this Agreement.
“Exchange” is defined in the recitals; “Exchanged” and “Exchanging” shall have correlative meanings.
“Exchange Act” means the Exchange Act of 1934, as amended.
“Exchange Agreement” means the exchange agreement, effective as of the Effective Time, among the Company, the Corporation and the Company Unitholders (as defined therein) from time to time party thereto, as amended.
“Exchange Asset” means each asset that is held by the Company, or by any of its direct or indirect Subsidiaries treated as a partnership or disregarded entity for the applicable Tax purposes but only if such indirect Subsidiaries are held only through Subsidiaries treated as partnerships or disregarded entities for the applicable Tax purposes, at the time of an Exchange. An Exchange Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to an Exchange Asset.
“Exchange Basis Schedule” is defined in Section 2.01 of this Agreement.
“Exchange Date” is defined in the recitals.
“Exchange Payment” is defined in Section 5.01 of this Agreement.
“Exchanging Subsidiary” means any Subsidiary of the Corporation that is a transferee in an Exchange pursuant to the Exchange Agreement.
“Expert” is defined in Section 7.09 of this Agreement.
“Fertitta Holders” means each of (a) FI Station Investor LLC and each Affiliate of FI Station Investor LLC that becomes a Member, (b) Fertitta Business Management LLC and each Affiliate of Fertitta Business Management LLC that becomes a Member, (c) Frank J. Fertitta III, (d) Lorenzo J. Fertitta, (e) each Affiliate or member of the Family Group (as such term is defined in the LLC Agreement) of Frank J. Fertitta III or Lorenzo J. Fertitta, and (f) each Permitted Transferee (as such term is defined in the LLC Agreement) thereof, for so long as such Person (a) remains a Permitted Transferee (as such term is defined in the LLC Agreement) and (b) beneficially owns, directly or indirectly, one or more Company Units.
“Fertitta Majority Holder” means the holder of a majority of the Company Units held by the Fertitta Holders.
“Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of the Corporation, any Exchanging Subsidiary or any member of an affiliated, combined or consolidated group of any of the foregoing (or, without duplication, the Company and the Company’s Subsidiaries, but only with respect to the Corporation’s or any Exchanging Subsidiary’s pro rata share of the Company’s and the Company’s Subsidiaries’ Tax liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year) as would be shown on its Tax Return but determined (i) using the Non-Stepped Up Tax Basis of the Exchange Assets as reflected on the Exchange Basis Schedule, including amendments thereto, for the Taxable Year
instead of the Tax basis of the Exchange Assets reflecting the Basis Adjustments and (ii) excluding any deduction attributable to Imputed Interest for the Taxable Year. Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to any Basis Adjustment or to the Imputed Interest.
“Imputed Interest” shall mean any interest imputed under Section 1272, Section 1274 or Section 483 or other provision of the Code and any similar provision of state and local Tax law applicable with respect to the Corporation’s payment obligations under this Agreement.
“Interest Amount” is defined in Section 3.01(b) of this Agreement.
“IPO” means the initial public offering of shares of Class A Common Stock by the Corporation.
“IPO Sale” is defined in the recitals.
“IRS” means the U.S. Internal Revenue Service.
“LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two calendar days prior to the first day of such month, on Reuters Screen LIBOR0l Page (or if such screen shall cease to be publicly available, as reported by any other publicly available source of such market rate) for London interbank offered rates for United States dollar deposits for such month (or portion thereof).
“LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of the Company, dated as of April 28, 2016, as amended.
“Market Value” means, with respect to the shares of Class A Common Stock, on any given date: (i) if the Class A Common Stock is listed for trading on the New York Stock Exchange, the closing sale price per share of Class A Common Stock on the New York Stock Exchange on that date (or, if no closing sale price is reported, the last reported sale price), (ii) if the Class A Common Stock is not listed for trading on the New York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to Section 6(g) of the Exchange Act of 1934, as amended, on which the Class A Common Stock is listed, (iii) if the Class A Common Stock is not so listed on the New York Stock Exchange or a national securities exchange, the last quoted bid price for the Class A Common Stock on that date in the over-the-counter market as reported by OTC Markets Group or a similar organization, or (iv) if the Class A Common Stock is not so listed or quoted by OTC Markets Group or a similar organization the cash consideration paid for the Class A Common Stock, or the fair market value of other property delivered for the Class A Common Stock, as the Board, in its sole discretion, shall determine in good faith.
“Members” means the parties hereto, other than the Corporation and the Company, and each other Person who from time to time executes a Joinder Agreement in the form attached hereto as Exhibit A.
“Net Tax Benefit” is defined in Section 3.01(b).
“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustments and no Pre-Exchange Transfers had been made with respect to such asset.
“Notice” is defined in Section 7.01.
“Objection Notice” is defined in Section 2.03(a).
“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.
“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.
“Post-IPO Units” means the number of Units outstanding after giving effect to the completion of the IPO (after taking into account the delivery of shares of Class A Common Stock to the underwriters in respect of any overallotment option) and the related issuance of Units to the Corporation by the Company in exchange for the proceeds therefrom, as such number of Units may be equitably adjusted to reflect any dividend, split, subdivision or combination of shares, or reclassification, recapitalization, merger, consolidation or other reorganization of or with respect to the Units occurring subsequent to such time.
“Pre-Exchange Transfer” means any transfer (including upon the death of a Member) of one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section 743(b) of the Code applies.
“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of the Corporation, any Exchanging Subsidiary or any member of an affiliated, combined or consolidated group of any of the foregoing (or, without duplication, the Company and the Company’s Subsidiaries, but only with respect to the Corporation’s or any Exchanging Subsidiary’s pro rata share of the Company’s and the Company’s Subsidiaries’ Tax liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year). If all or a portion of the actual liability for such Taxes for the Taxable Year is adjusted as a result of an audit by a Taxing Authority of such Taxable Year or any other Taxable Year, such adjustment shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.
“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the actual liability for Taxes of the Corporation, any Exchanging Subsidiary or any member of an affiliated, combined or consolidated group of any of the foregoing (or, without duplication, the Company and the Company’s Subsidiaries, but only with respect to the Corporation’s or any Exchanging Subsidiary’s pro rata share of the Company’s and the Company’s Subsidiaries’ Tax Liability for such Taxable Year determined using the same methods, elections, conventions and similar practices used on the Corporation Return for such Taxable Year) over the Hypothetical Tax
Liability for such Taxable Year. If all or a portion of the actual liability for such Taxes for the Taxable Year is adjusted as a result of an audit by a Taxing Authority of such Taxable Year or any other Taxable Year, such adjustment shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.
“Reconciliation Dispute” is defined in Section 7.09 of this Agreement.
“Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 of this Agreement.
“Schedule” means any of (i) an Exchange Basis Schedule, (ii) a Tax Benefit Schedule or (iii) an Early Termination Schedule.
“Section 754 Election” means an election under Section 754 of the Code and any comparable election under applicable state or local income Tax laws, if any.
“Senior Obligations” is defined in Section 5.01 of this Agreement.
“Shortfall” is defined in Section 3.01(c) of this Agreement.
“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests (including the general partner interests or managing member or similar interests) of such Person.
“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.
“Tax Benefit Schedule” is defined in Section 2.02 of this Agreement.
“Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to Taxes (including any attached schedules), including any information return, claim for refund, amended return and declaration of estimated Tax.
“Taxable Year” means a taxable year of the Corporation or any Exchanging Subsidiary as defined in Section 441(b) of the Code or comparable section of state or local Tax law, as applicable (and, therefore, may include a period of less than 12 months for which a Corporation Return is prepared).
“Taxes” means any and all U.S. federal, state and local taxes, assessments or similar charges that are based on or measured with respect to net income or profits and any interest related to such taxes.
“Taxing Authority” shall mean any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.
“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.
“Units” is defined in the recitals.
“Valuation Assumptions” shall mean, as of an Early Termination Date, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, (x) the Corporation, any Exchanging Subsidiary or any member of an affiliated, combined or consolidated group of any of the foregoing will have sufficient taxable income to utilize fully the deductions arising from the Basis Adjustments and the Imputed Interest, and (y) the U.S. federal income Tax rates and state and local income Tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other applicable laws as in effect on the Early Termination Date, (2) any loss carryovers attributable to any Basis Adjustment or Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by the Corporation, any Exchanging Subsidiary or any member of an affiliated, combined or consolidated group of any of the foregoing on a pro rata basis from the date of the Early Termination Schedule through the date that is the scheduled expiration date of such loss carryovers, (3) any non-amortizable assets (other than those treated as inventory or stock in trade of the Company for U.S. federal income Tax purposes) will be disposed of on the fifteenth anniversary of the earlier of (x) the Basis Adjustment and (y) the Early Termination Date and (4) if, at the Early Termination Date, there are Units that have not been Exchanged, then each such Unit shall be deemed to be Exchanged for the Market Value of the shares of Class A Common Stock and the amount of the cash payment to which the Applicable Member would be entitled under this Agreement if the Exchange occurred on the Early Termination Date.
“Voting Securities” means any equity securities of the Corporation that are entitled to vote generally in matters submitted for a vote of the Corporation’s stockholders or generally in the election of the Board.
Section 1.02. Other Definitional and Interpretative Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. Any capitalized term used in any Exhibit but not otherwise defined therein has the meaning ascribed to such term in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any and all applicable laws.
ARTICLE 2
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT
Section 2.01. Exchange Basis Schedule. Within 60 calendar days after the filing of the U.S. federal income Corporation Return for each Taxable Year, the Corporation shall deliver to each Member that participated in an Exchange for such Taxable Year, a schedule (the “Exchange Basis Schedule”) that shows in reasonable detail (i) the Non-Stepped Up Tax Basis of the Exchange Assets as of each applicable Exchange Date, (ii) the Basis Adjustment Amount with respect to the Exchanges effected in such Taxable Year, calculated in the aggregate, (iii) the period or periods, if any, over which the Exchange Assets are amortizable and/or depreciable and (iv) the period or periods, if any, over which each Basis Adjustment Amount is amortizable and/or depreciable (which, for non-amortizable assets, shall be based on the Valuation Assumptions).
Section 2.02. Tax Benefit Schedule. (a) Within 60 calendar days after the filing of the U.S. federal income Corporation Return for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to each Member that previously participated in an Exchange a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”). Each Tax Benefit Schedule will become final as provided in Section 2.03(a) and may be amended as provided in Section 2.03(b) (subject to the procedures set forth in Section 2.03(b)).
(b) Applicable Principles. Subject to Section 3.03, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporation or any Exchanging Subsidiary for such Taxable Year attributable to the Basis Adjustments and Imputed Interest determined using a “with and without” methodology. The actual liability for Taxes will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code based upon the characterization of Tax Benefit Payments as additional consideration payable by the Corporation for the Units acquired in an Exchange. Carryovers or carrybacks of any Tax item attributable to the Basis Adjustments and the Imputed Interest shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local income and franchise Tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Basis Adjustment or the Imputed Interest and another portion that is not, such portions shall be considered to be used in accordance with the “with and without” methodology. All Tax Benefit Payments (other than amounts accounted for as interest under the Code) will (A) be treated as subsequent upward purchase price adjustments that give rise to further Basis Adjustments to Exchange Assets for the Corporation and (B) have the effect of creating additional Basis Adjustments to Exchange Assets for the Corporation in the year of payment, and, as a result, such additional Basis Adjustments will be incorporated into the current year calculation and into future year calculations, as appropriate.
Section 2.03. Procedures, Amendments.
(a) Procedures. Each time the Corporation delivers to the Members a Schedule under this Agreement, including any Amended Schedule, but excluding any Early Termination Schedule or amended Early Termination Schedule, the Corporation also shall (x) deliver to each Eligible Member the Corporation Return, along with schedules and work papers, as determined by the Corporation or requested by such Eligible Member, providing reasonable detail regarding the preparation of such Schedule and (y) allow the Eligible Members reasonable access to the appropriate representatives of the Corporation and the Advisory Firm (if any) in connection with a review of such Schedule. Each party shall bear its own expenses associated with such review and investigation. The applicable Schedule shall become final and binding on all parties unless an Eligible Member, within 60 calendar days after an Exchange Basis Schedule or amendment thereto or a Tax Benefit Schedule or amendment thereto was provided to the Members, provides the Corporation with notice of an objection to such Schedule (“Objection Notice”) made in good faith. If the Corporation and such Eligible Member are unable to resolve the issues raised in such notice within 60 calendar days of receipt by the Corporation of an Objection Notice with respect to such Exchange Basis Schedule or Tax Benefit Schedule, the Corporation and such Eligible Member shall employ the reconciliation procedures as provided for in Section 7.09 of this Agreement.
(b) Amended Schedule. The applicable Schedule for any Taxable Year shall be amended from time to time by the Corporation (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information that was not previously taken into account, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change (relative to the amounts in the original Tax Benefit Schedule) in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carry forward of a loss or other Tax item to such Taxable Year, (v) to reflect a material change (relative to the amounts in the original Tax Benefit Schedule) in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this Agreement (any such Schedule, an “Amended Schedule”).
ARTICLE 3
TAX BENEFIT PAYMENTS
Section 3.01. Payments.
(a) Payments. Subject to Section 3.03, within five (5) Business Days of a Tax Benefit Schedule that was delivered to the Applicable Members becoming final in accordance with Section 2.03(a), the Corporation shall pay to the Applicable Members the applicable Tax Benefit Payment determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank accounts of the Applicable Members previously designated by each such Member to the Corporation; provided that no Tax Benefit Payment shall be made in respect of estimated Tax payments, including estimated U.S. federal income Tax payments.
(b) A “Tax Benefit Payment” means, with respect to an Applicable Member, an amount, not less than zero, equal to the sum of (A) the Net Tax Benefit allocable to such
Member and (B) the Interest Amount allocable to such Member. For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest but instead shall be treated as additional consideration for Units in Exchanges. The “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of (i) 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over (ii) the total amount of Tax Benefit Payments with respect to Net Tax Benefits previously made under this Section 3.01; provided, however, that no Member shall be required to return any portion of any previously received Tax Benefit Payment under any circumstances. The “Interest Amount” for a Taxable Year shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the due date (without extensions) for the filing of the Corporation Return with respect to Taxes for such Taxable Year until the Payment Date. The Net Tax Benefit shall be determined separately with respect to each separate Exchange on an individual basis by reference to the Exchange of a Unit and the resulting Basis Adjustments to the Corporation (as determined pursuant to Section 2.02(b)).
(c) Increase or Decrease in Future Payments.
(i) Within five (5) Business Days after the delivery of an Amended Schedule to the Applicable Members for any Taxable Year, the Corporation shall pay to the Applicable Members an amount equal to the excess, if any, of (x) the amount such Member is entitled to receive under this Agreement in respect of the relevant Taxable Year (based on such Amended Schedule) over (y) the cumulative amount such Member actually received in respect of such Taxable Year pursuant to this Agreement.
(ii) In the event that an Amended Schedule reflects a decrease in the Realized Tax Benefit (including by reason of net operating loss carryovers or carrybacks) and payments have previously been made based on the higher Realized Tax Benefit reflected in any prior Schedule (either such excess, an “Excess Payment”), future payments, if any, to be made under this Section 3.01 shall be reduced by the amount of the Excess Payment until such Excess Payment has effectively been repaid. For the avoidance of doubt, if future payments are insufficient to repay any Excess Payment (a “Shortfall”), the Members shall have no obligation to repay to the Corporation or any other Person any such Shortfall.
(d) Payment Covenant. The Corporation shall use best efforts to ensure that it has sufficient Available Cash to make all payments due under this Agreement without regard to the last sentence of Section 4.01(b), including using best efforts to cause the Company to make distributions to the Corporation to make such payments so long as there is not a continuing default or event of default under any credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation and such payment or incurrence of indebtedness would not give rise to a default under any such credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation.
Section 3.02. No Duplicative Payments. It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement, subject to
Article 4 and Section 7.14, will result in an amount equal to 85% of the Corporation’s Cumulative Net Realized Tax Benefit being paid over to the Members. The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.
Section 3.03. Pro Rata Payments. (a) Notwithstanding anything in Section 3.01 to the contrary, to the extent that (i) the Corporation’s or any Exchanging Subsidiary’s aggregate Tax benefit with respect to any Basis Adjustment or Imputed Interest is limited in a particular Taxable Year because the Corporation or any Exchanging Subsidiary does not have sufficient taxable income, the limitation on the Tax benefit for the Corporation or any Exchanging Subsidiary shall be allocated among the Exchanging Members in proportion to the respective amounts of Realized Tax Benefits that would have been determined under this Agreement in respect of each Exchanging Member if the Corporation or any Exchanging Subsidiary had sufficient taxable income so that there were no such limitation.
(b) If for any reason the Corporation does not fully satisfy its payment obligations to make all Tax Benefit Payments due under this Agreement in respect of a particular Taxable Year, then the Corporation and the Exchanging Members agree that (i) the Corporation shall pay the same proportion of each Tax Benefit Payment due under this Agreement in respect of such Taxable Year, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been made in full.
ARTICLE 4
TERMINATION
Section 4.01. Early Termination, Change of Control and Breach of Agreement. (a) The Corporation may terminate this Agreement at any time with respect to all of the Units held (or previously Exchanged) by all Members by paying to the Applicable Members the Early Termination Payment; provided, however, that this Agreement shall terminate only upon the receipt of the Early Termination Payment by all Applicable Members, and provided, further, that the Corporation may withdraw any Early Termination Notice prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payment by the Corporation, neither the Members nor the Corporation shall have any further payment obligations under this Agreement, other than for any (x) Tax Benefit Payment agreed to by the Corporation and the Applicable Member, acting in good faith, to be due and payable but unpaid as of the Early Termination Notice and (y) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in this clause (y) is included in the Early Termination Payment). If an Exchange occurs after the Corporation makes the Early Termination Payments with respect to all Applicable Members, the Corporation shall have no obligations under this Agreement with respect to such Exchange, and its only obligation under this Agreement in such case shall be its obligations under Section 4.03(a).
(b) Upon a Change of Control or if the Corporation breaches any of its material obligations under this Agreement, then all of the Corporation’s obligations hereunder shall be accelerated and calculated as if an Early Termination Notice had been delivered on the date of such Change of Control or breach and such obligations shall include, but shall not be limited to,
(1) the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of such acceleration, (2) any Tax Benefit Payment agreed to by the Corporation and any Applicable Member, acting in good faith, to be due and payable but unpaid as of the date of such acceleration and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of such acceleration (except to the extent that the amount described in this clause (3) is included in the amount described in clause (1)). Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement, the Members shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3) above or any other remedy available at law or in equity. The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement; provided that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due; provided, further that except as provided in Section 3.01(d), the failure to make any payment due pursuant to this Agreement as a result of (a) a prohibition, restriction or covenant under any credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation or (b) restrictions under applicable law, including the rules and regulations of applicable gaming authorities, shall not be considered to be a breach of a material obligation under this Agreement.
(c) The Corporation, the Company and each of the Members hereby acknowledge and agree that, as of the date of this Agreement and as of the date of each Exchange, the timing and aggregate value of the Tax Benefit Payments cannot reasonably be ascertained for U.S. federal income Tax or other applicable Tax purposes.
Section 4.02. Early Termination Notice. If the Corporation exercises its right of early termination under Section 4.01, the Corporation shall deliver to each Member notice of the exercise of such right (“Early Termination Notice”) and a schedule (the “Early Termination Schedule”) showing in reasonable detail the calculation of the Early Termination Payment with respect to such Member. At the time the Corporation delivers the Early Termination Notice to the Members, the Corporation shall (a) deliver to each Member schedules and work papers, as determined by the Corporation or requested by a Member, providing reasonable detail regarding the calculation of the Early Termination Payment and (b) allow each Member reasonable access to the appropriate representatives of the Corporation and the Advisory Firm (if any) in connection with its review of such calculation. Each party shall bear its own expenses associated with such review. The Early Termination Payment set forth in the Early Termination Schedule shall become final and binding on the parties unless any Eligible Member provides the Corporation with notice of an objection to the calculation of the Early Termination Payment made in good faith within 60 calendar days after the Early Termination Schedule was provided to the Members (or such shorter period as may be mutually agreed in writing by the parties). If any Eligible Member provides the Corporation with written notice of its objection to the calculation of the Early Termination Payment set forth in the Early Termination Schedule, and such Eligible Member and the Corporation, for any reason, cannot agree upon the amount of the Early Termination Payment within 60 calendar days following the Corporation’s receipt of such Eligible Member’s objection, the Corporation and such Eligible Member shall employ the Reconciliation Procedures as described in Section 7.09 of this Agreement.
Section 4.03. Payment upon Early Termination. (a) Within five (5) Business Days after the Early Termination Schedule has become final and binding, the Corporation shall pay to each Applicable Member an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to the bank account designated by the Applicable Member.
(b) The “Early Termination Payment” as of the date of the delivery of an Early Termination Schedule shall equal, with respect to the Applicable Member, the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by the Corporation to the Applicable Member beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied.
ARTICLE 5
SUBORDINATION AND LATE PAYMENTS
Section 5.01. Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the Corporation to the Members under this Agreement (an “Exchange Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of all obligations in respect of indebtedness for borrowed money of the Corporation (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of the Corporation that are not Senior Obligations.
Section 5.02. Late Payments by the Corporation. The amount of all or any portion of any Exchange Payment not made to any Member when due (without regard to Section 5.01) under the terms of this Agreement shall be payable together with interest thereon, computed at the Default Rate and commencing from the date on which such Exchange Payment was due and payable.
ARTICLE 6
NO DISPUTES; CONSISTENCY; COOPERATION
Section 6.01. Eligible Member Participation in the Corporation’s and the Company’s Tax Matters. (a) Except as otherwise provided herein or in the LLC Agreement, the Corporation shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporation, the Company and any Exchanging Subsidiary, including the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporation shall notify the applicable Eligible Member of, and keep the applicable Eligible Member reasonably informed with respect to, the portion of any audit of the Corporation, the Company and any Exchanging Subsidiary by a Taxing Authority the outcome of which is reasonably expected to affect the applicable Eligible Member’s rights and obligations under this Agreement, and shall provide such Eligible Member reasonable opportunity to provide information and other input to the Corporation, the Company, any Exchanging Subsidiary and their respective advisors concerning the conduct of any such portion of such audit; provided, however, that the Corporation, the Company and any Exchanging Subsidiary shall not be required to take any action that is inconsistent with any provision of the LLC Agreement. The Corporation and any Exchanging Subsidiary shall not settle or fail to
contest any issue pertaining to Taxes that is reasonably expected to adversely affect any Member’s rights and obligations under this Agreement without the consent of each such Member that is an Eligible Member, such consent not to be unreasonably withheld or delayed.
(b) If the Corporation, the Company, or any of their respective Subsidiaries receives a 30-day letter, a final audit report, a statutory notice of deficiency or similar written notice from any Taxing Authority with respect to the Tax treatment of any Exchange (a “Change Notice”), which, if sustained, would result in (i) a reduction in the amount of Realized Tax Benefit with respect to a Taxable Year preceding the Taxable Year in which the Change Notice is received or (ii) a reduction in the amount of Tax Benefit Payments the Corporation will be required to pay to any Member with respect to Taxable Years after and including the Taxable Year in which the Change Notice is received, the Corporation shall deliver prompt written notice of such Change Notice to such Member.
Section 6.02. Consistency. (a) Except upon the written advice of an Advisory Firm to the Corporation or as otherwise required by law, the Corporation, the Members and any Exchanging Subsidiary agree to report and cause to be reported for all purposes, including U.S. federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including items arising from the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified by the Corporation in any Schedule provided by or on behalf of the Corporation under this Agreement. Any Dispute concerning such advice shall be subject to Section 7.09; provided, however, that only the Eligible Members shall have the right to object to such advice pursuant to this Section 6.02.
(b) In the event that an Advisory Firm is replaced by the Corporation, such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with those used by the previous Advisory Firm, unless (a) otherwise required by law or upon the advice of the Corporation’s counsel or (b) the Corporation and each such affected Member that is an Eligible Member agree to the use of other procedures and methodologies.
Section 6.03. Cooperation. The Members shall (a) furnish to the Corporation in a timely manner such information, documents and other materials as the Corporation may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make themselves available to the Corporation and its representatives to provide explanations of documents and materials and such other information as the Corporation or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter described in clause (a) above. The Corporation shall reimburse the applicable Member for any reasonable third-party costs and expenses incurred pursuant to this Section 6.03.
Section 6.04. Section 754 Elections. If at any point the Company or any of its direct or indirect Subsidiaries that is a partnership for U.S. federal income tax purposes does not have a Section 754 Election in effect, the Corporation shall cause the Company or such Subsidiary, as
applicable, to make a Section 754 Election at the time that the Company or such Subsidiary, as applicable, files its next U.S. federal income Tax Return.
ARTICLE 7
MISCELLANEOUS
Section 7.01. Notices. All notices, requests, consents and other communications hereunder (each, a “Notice”) to any party shall be in writing and shall be delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 7.01) or nationally recognized overnight courier, addressed to such party at the address or facsimile number set forth in Exhibit B hereto, or below with respect to the Corporation, or such other address or facsimile number as may hereafter be designated in writing by such party to the other parties:
If to the Corporation, to:
Red Rock Resorts, Inc..
1505 South Pavilion Center Drive
Las Vegas, Nevada 89135
Attention: Richard J. Haskins, President
with a copies (which shall not constitute notice to the Corporation) to:
Milbank, Tweed, Hadley & McCloy, LLP
601 South Figueroa Street
30th Floor
Los Angeles, California 90017
Attention: Kenneth J. Baronsky
Deborah J. Conrad
Each Notice shall be deemed received on the date sent to the recipient thereof in accordance with this Section 7.01, if sent prior to 5:00 p.m. in the place of receipt and such day is a Business Day; otherwise, such Notice shall be deemed not to have been received until the next succeeding Business Day.
Section 7.02. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.
Section 7.03. Entire Agreement; No Third-Party Beneficiaries. Except as provided in Section 7.06, this Agreement, the Exchange Agreement and the LLC Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns in accordance with Section 7.06, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.04. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.
Section 7.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 7.06. Successors; Assignment; Amendments; Waivers. No Member may assign its rights under this Agreement to any person without the prior written consent of the Corporation; provided, however, that (i) to the extent Units are effectively transferred in accordance with the terms of the LLC Agreement, the transferring Member may assign to the transferee of such Units the transferring Member’s rights under this Agreement with respect to such transferred Units, as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a Joinder Agreement in the form attached hereto as Exhibit A (or such other joinder in form and substance reasonably satisfactory to the Corporation), agreeing to become a “Member” for all purposes of this Agreement, except as otherwise provided in such Joinder Agreement, and (ii) once an Exchange has occurred, any and all payments that may become payable to a Member pursuant to this Agreement with respect to the Exchanged Units may be assigned to any Person or Persons, as long as any such Person has executed and delivered, or, in connection with such assignment, executes and delivers, a Joinder Agreement in the form attached hereto as Exhibit A (or such other joinder in form and substance reasonably satisfactory to the Corporation), provided, further, however, that no such assignment or transfer shall relieve any party hereto of any of its obligations hereunder. Notwithstanding the foregoing provisions of this Section 7.06, no assignee described in clause (ii) of the immediately preceding paragraph shall have any rights under this Agreement except for the right to enforce its right to receive payments under this Agreement and under no circumstances shall the rights and privileges conferred upon Eligible Members hereunder be transferable. In the event an Eligible Member transfers its Units to a Permitted Transferee (as defined in the LLC Agreement), such Eligible Member shall have the right, on behalf of such transferee, to enforce such rights and privileges with respect to such transferred Units.
No provision of this Agreement may be amended unless such amendment is approved in writing by each of (i) the Corporation, (ii) the Company, (iii) the Members holding a majority of the then outstanding Units (excluding Units held by the Corporation or any Exchanging Subsidiary), and (iv) as long as DB or the Fertitta Holders hold a number of Units that is equal to or greater than ten percent (10%) of the Post-IPO Units, the consent of DB and/or the Fertitta Majority Holder, as applicable; provided, that no such amendment shall be effective if such
amendment would have a disproportionate effect on the payments certain Members will or may receive under this Agreement unless all such Members affected consent in writing to such amendment. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.
All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
Section 7.07. Titles and Subtitles. The titles of the articles, sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
Section 7.08. Resolution of Disputes. (a) Any and all disputes that are not governed by Section 7.09, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “Dispute”) shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect (except as may be modified by mutual agreement of the Corporation, the Company and each of the affected Members). If the parties to the Dispute fail to agree on the selection of an arbitrator within thirty (30) calendar days of the receipt of the request for arbitration, the American Arbitration Association shall make the appointment. The arbitrator shall be a lawyer admitted to the practice of law in the State of New York and shall conduct the proceedings in the English language. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings. In addition to monetary damages, the arbitrator shall be empowered to award equitable relief, including an injunction and specific performance of any obligation under this Agreement. The arbitrator is not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any right to recover punitive, consequential, exemplary or similar damages with respect to any Dispute. The award shall be final and binding upon the parties as from the date rendered, and shall be the sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or accounting presented to the arbitral tribunal. Judgment upon any award may be entered and enforced in any court having jurisdiction over a party or any of its assets.
(b) Notwithstanding the provisions of paragraph (a), the Corporation may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Member (i) expressly consents to the application of paragraph (c) of this Section 7.08 to any such action or proceeding and (ii) agrees that proof shall not be required that monetary damages for breach
of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate.
(c) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 7.08, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award. The parties acknowledge that the forums designated by this paragraph (c) have a reasonable relation to this Agreement, and to the parties’ relationship with one another. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in the first sentence of this Section 7.08(c) and such parties agree not to plead or claim otherwise.
Section 7.09. Reconciliation. In the event that the Corporation and the disputing Eligible Member are unable to resolve a disagreement with respect to a matter governed by Sections 2.03, 4.02, or 6.02 within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, unless otherwise agreed by the Corporation and such Eligible Member, have any material relationship with either the Corporation or such Eligible Member. If the parties are unable to agree on an Expert within thirty (30) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the American Arbitration Association. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in each case, after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on such date and such Tax Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon resolution. In the event that this reconciliation provision is utilized, the costs and expenses relating to the engagement of the Expert or amending any Tax Return shall be borne by the Corporation. The Corporation and each Eligible Member shall otherwise bear their own costs and expenses of such proceeding, unless an Eligible Member has a prevailing position that is more than 15% of the payment at issue, in which case the Corporation shall reimburse such Eligible Member for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this
Section 7.09 shall be (i) final and may be enforced as if it were the award of an arbitrator issued under and pursuant to the rules of the American Arbitration Association and (ii) binding on the Corporation and the Members and may be entered and enforced in any court having competent jurisdiction.
Section 7.10. Withholding. (a) The Corporation shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as the Corporation is required to deduct and withhold with respect to the making of such payment under the Code, the Treasury Regulations promulgated thereunder or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Member in respect of whom such withholding was made.
(b) If the Corporation determines that it is required to deduct and withhold taxes with respect to any payment payable to an Applicable Member pursuant to this Agreement, the Corporation shall use commercially reasonable efforts to promptly notify such Applicable Member and will consider in good faith any theories, positions or alternative arrangements that such Applicable Member raises (reasonably in advance of the date on which the Corporation believes withholding is required) as to why withholding is not required or that may avoid the need for such withholding, provided that the Corporation is not required to incur additional costs as a result of such obligation and this Section 7.10(b) shall not in any manner limit the authority of the Corporation to withhold Taxes with respect to an Applicable Member pursuant to Section 7.10(a) hereof.
Section 7.11. Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets. (a) If the Corporation becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Section 1501 et seq. of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Exchange Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.
(b) If the Corporation is obligated to make an Exchange Payment hereunder and the Corporation or any Exchanging Subsidiary transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. federal income Tax purposes) that is not a successor pursuant to Section 7.06 and with which the Corporation does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such transferor, for purposes of calculating the amount of any Exchange Payment (e.g., calculating the gross income of the transferor and determining the Realized Tax Benefit of such transferor) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such transfer. The consideration deemed to be received by such transferor shall be equal to the fair market value of the transferred asset, plus (i) the amount of debt to which such asset is subject, in the case of a transfer of an encumbered asset or (ii) the amount of debt allocated to the transferred partnership interest and the amount of debt to which such partnership interest is subject, in the case of a transfer of a partnership interest.
Section 7.12. Confidentiality. Each Member acknowledges and agrees that the information of the Corporation and of its Affiliates is confidential and, except in the course of performing any duties as necessary for the Corporation and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporation and its Affiliates and successors, concerning the Company and its Affiliates and successors or the other Members, learned by the Member heretofore or hereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by the Corporation or any of its Subsidiaries, becomes public knowledge (except as a result of an act of such Member in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for a Member to prepare and file his or her Tax Returns, to respond to any inquiries regarding the Exchange from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns. Notwithstanding anything to the contrary herein, each Member (and each employee, representative or other agent of such Member or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the Tax treatment and Tax structure of the Corporation, the Company, the Members and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other Tax analyses) that are provided to the Members relating to such Tax treatment and Tax structure.
If a Member commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, the Corporation shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to the Corporation or any of its Subsidiaries or the other Members and the accounts and funds managed by the Corporation and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
Section 7.13. LLC Agreement. This Agreement shall be treated as part of the partnership agreement of the Company as described in Section 761(c) of the Code and Sections 1.704-l(b)(2)(ii)(h) and 1.761-l(c) of the Treasury Regulations.
Section 7.14. Change in Tax Law. Notwithstanding anything herein to the contrary, if, in connection with an actual or proposed change in law, a Member reasonably believes that the existence of this Agreement could cause income (other than income arising from receipt or accrual of a payment under this Agreement) recognized by any Member or any direct or indirect owner of a Member upon the IPO or any Exchange to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for U.S. federal income Tax purposes or would have other material adverse Tax consequences to a Member or any direct or indirect owner of a Member, then (i) at the election of the Member and to the extent specified by the Member, this Agreement shall not apply with respect to an Exchange by the Member occurring after a date specified by the Member, (ii) at the election of the Member, this Agreement shall otherwise be amended in accordance with Section 7.06 in a manner determined by the Corporation and the Members, acting jointly, provided that such amendment shall not result in an increase in payments under this Agreement at any time as compared to the amounts and times of
payments that would have been due in the absence of such amendment or (iii) at the election of the Members, acting unanimously, this Agreement shall cease to have further effect. For the avoidance of doubt, any election pursuant to this Section 7.14 shall not be considered a breach of this Agreement and shall not trigger an Early Termination Payment under Section 4.01.
Section 7.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
[Signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized representatives as of the day and year first above written.
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Larney J. Bisbano |
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Signature Page to Tax Receivable Agreement
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OAKTREE SC INVESTMENTS CTB, LLC | |
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OCM FIE, LLC |
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Manager |
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Kaj Vazales |
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David Quick |
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Marc J. Falcone |
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Richard J. Haskins |
Signature Page to Tax Receivable Agreement
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Kevin L. Kelley |
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Thomas Friel Nevada Trust | |
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Thomas M. Friel |
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Scott M Nielson |
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CAVALLARO FAMILY TRUST | |
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Stephen L. Cavallaro |
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Signature Page to Tax Receivable Agreement
Exhibit A
JOINDER
This JOINDER to the Tax Receivable Agreement (as amended, the “Tax Receivable Agreement”), dated as of April 28, 2016, among Red Rock Resorts, Inc., a Delaware corporation (the “Corporation”), Station Holdco LLC, a Delaware limited liability company (the “Company”), and each of the undersigned parties thereto identified as “Members” constitutes the agreement and undertaking of (the “Permitted Transferee”) in favor of and for the benefit of the Corporation, the Company and the other parties to the Tax Receivable Agreement.
WHEREAS, on , 20 , the Permitted Transferee acquired (the “Acquisition”) Units in the Company and shares of Class B Common Stock of the Corporation (collectively, the “Interests” and, together with all other Interests hereinafter acquired by the Permitted Transferee from (the “Transferor”) and its Permitted Transferees, the “Acquired Interests”) from the Transferor; and
WHEREAS, the Transferor, in connection with the Acquisition, has required Permitted Transferee to execute and deliver this Joinder pursuant to Section 7.06 of the Tax Receivable Agreement.
NOW, THEREFORE, in consideration of the foregoing and the agreements contained herein, the Permitted Transferee hereby agrees as follows:
Section 1.1. Definitions. Capitalized words used but not defined in this Joinder are used as defined in the Tax Receivable Agreement.
Section 1.2. Joinder. The Permitted Transferee hereby acknowledges and agrees to become a “Member” for all purposes of the Tax Receivable Agreement, including but not limited to being bound by Section 2.03, Section 4.01, Section 6.01, Section 6.02, Section 6.03 and Section 7.12 of the Tax Receivable Agreement, with respect to the Acquired Interests, and any other Interests the Permitted Transferee acquires hereafter.
Section 1.3. Notice. All notices, requests, consents and other communications hereunder to the Permitted Transferee shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by facsimile (provided a copy is thereafter promptly delivered as provided in this Section 1.3) or nationally recognized overnight courier, addressed to the Permitted Transferee at the address or facsimile number set forth below or such other address or facsimile number as may hereafter be designated in writing by Permitted Transferee.
Section 1.4. Governing Law. This Joinder shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.
IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by the Permitted Transferee as of the date first above written.
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Exhibit B
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Member |
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Address and Facsimile Number of Member |
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FI Station Investor LLC |
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1505 S. Pavilion Center Drive |
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Fertitta Business Management LLC |
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1505 S. Pavilion Center Drive |
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German American Capital Corporation |
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60 Wall Street, 10th Floor |
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Oaktree SC Investments CTB, LLC |
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333 Grand Avenue, 28th Floor |
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Marc J. Falcone |
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1505 S. Pavilion Center Drive |
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Richard J. Haskins |
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1505 S. Pavilion Center Drive |
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Cavallaro Family Trust |
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1505 S. Pavilion Center Drive |
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Kevin Kelley |
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636 Canyon Greens Drive |
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Member |
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Address and Facsimile Number of Member |
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Thomas Friel Nevada Trust |
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1505 S. Pavilion Center Drive |
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Scott M Nielson |
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1505 S. Pavilion Center Drive |
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JPMorgan Chase Bank, N.A. |
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383 Madison Avenue, 31st Floor |
Exhibit 10.2
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STATION HOLDCO LLC
Dated as of April 28, 2016
THE UNITS REPRESENTED BY THIS THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND APPLICABLE LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STATION HOLDCO LLC
TABLE OF CONTENTS
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Page |
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ARTICLE 1. CONTINUATION OF THE COMPANY |
2 | |
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Section 1.1 |
Continuation of the Company |
2 |
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Section 1.2 |
Name |
2 |
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Section 1.3 |
Business of the Company |
2 |
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Section 1.4 |
Location of Principal Place of Business |
2 |
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Section 1.5 |
Registered Agent |
2 |
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Section 1.6 |
Term |
3 |
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ARTICLE 2. DEFINITIONS |
3 | |
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Section 2.1 |
Definitions |
3 |
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Section 2.2 |
Rules of Interpretation |
13 |
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ARTICLE 3. CAPITALIZATION |
14 | |
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Section 3.1 |
Units; Initial Capitalization; Schedule of Members |
14 |
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Section 3.2 |
Authorization and Issuance of Additional Units |
16 |
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Section 3.3 |
Repurchase or Redemption of Class A Common Stock |
17 |
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Section 3.4 |
Changes in Class A Common Stock |
17 |
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Section 3.5 |
Capital Contributions |
18 |
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Section 3.6 |
No Interest on Capital Contributions |
18 |
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Section 3.7 |
Withdrawal and Return of Capital Contributions |
18 |
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Section 3.8 |
Capital Accounts |
18 |
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ARTICLE 4. ALLOCATION OF NET INCOME AND NET LOSS |
19 | |
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Section 4.1 |
Allocations of Net Income and Net Losses |
19 |
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Section 4.2 |
Special Allocations |
19 |
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Section 4.3 |
Allocations for Income Tax Purposes |
20 |
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Section 4.4 |
Tax Withholding |
20 |
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Section 4.5 |
Allocations to Transferred Interests |
21 |
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ARTICLE 5. DISTRIBUTIONS |
21 | |
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Section 5.1 |
Distributions |
21 |
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Section 5.2 |
Successors |
21 |
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Section 5.3 |
Distributions In-Kind |
21 |
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Section 5.4 |
Tax Distributions |
21 |
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ARTICLE 6. BOOKS OF ACCOUNT, RECORDS AND REPORTS, FISCAL YEAR, TAX MATTERS |
22 | |
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Section 6.1 |
Books and Records |
22 |
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Section 6.2 |
Annual Reports |
22 |
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Section 6.3 |
Tax Elections |
22 |
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Section 6.4 |
Fiscal Year |
23 |
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Section 6.5 |
Tax Matters Partner |
23 |
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ARTICLE 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS |
23 | |
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Section 7.1 |
Limitations |
23 |
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Section 7.2 |
Liability |
24 |
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Section 7.3 |
Priority |
24 |
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Section 7.4 |
Member Standard of Care |
24 |
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ARTICLE 8. MANAGEMENT |
24 | |
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Section 8.1 |
The Managing Member; Delegation of Authority and Duties |
24 |
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Section 8.2 |
Officers |
25 |
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Section 8.3 |
Duties of Officers |
26 |
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Section 8.4 |
Existence and Good Standing |
26 |
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Section 8.5 |
Investment Company Act |
27 |
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Section 8.6 |
Indemnification of the Managing Member, Officers and Agents |
27 |
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Section 8.7 |
Certain Costs and Expenses |
27 |
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ARTICLE 9. TRANSFERS OF INTEREST BY MEMBERS |
28 | |
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Section 9.1 |
Restrictions on Transfers of Interests by Members |
28 |
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Section 9.2 |
Transfer of Interest of Members |
28 |
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Section 9.3 |
Further Requirements |
29 |
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Section 9.4 |
Exchange |
30 |
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Section 9.5 |
Consequences of Transfers Generally |
30 |
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Section 9.6 |
Capital Account; Percentage Interest |
31 |
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Section 9.7 |
Additional Filings |
31 |
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ARTICLE 10. REGISTRATION RIGHTS |
31 | |
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Section 10.1 |
Demand Registrations |
31 |
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Section 10.2 |
Piggyback Registrations |
34 |
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Section 10.3 |
[Reserved] |
35 |
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Section 10.4 |
Obligations of Station Corp. |
35 |
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Section 10.5 |
Obligations of Holder |
39 |
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Section 10.6 |
Expenses of Registration |
39 |
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Section 10.7 |
Indemnification |
40 |
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Section 10.8 |
Survival of Obligations |
42 |
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ARTICLE 11. CERTAIN COMPENSATION MATTERS |
42 | |
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Section 11.1 |
Non-Equity Compensation |
42 |
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Section 11.2 |
Equity Compensation |
43 |
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Section 11.3 |
Company and Managing Member Obligation |
43 |
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ARTICLE 12. RESIGNATION OF MEMBERS; TERMINATION OF COMPANY; LIQUIDATION AND DISTRIBUTION OF ASSETS |
44 | |
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Section 12.1 |
Resignation of Members |
44 |
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Section 12.2 |
Dissolution of Company |
44 |
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Section 12.3 |
Distribution in Liquidation |
45 |
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Section 12.4 |
Final Reports |
46 |
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Section 12.5 |
Rights of Members |
46 |
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Section 12.6 |
Deficit Restoration |
46 |
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Section 12.7 |
Termination |
46 |
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ARTICLE 13. NOTICES AND CONSENT OF MEMBERS |
46 | |
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Section 13.1 |
Notices |
46 |
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Section 13.2 |
Consents and Approvals |
47 |
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ARTICLE 14. AMENDMENT OF AGREEMENT |
47 | |
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Section 14.1 |
Amendments |
47 |
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Section 14.2 |
Amendment of Certificate |
47 |
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Section 14.3 |
Power of Attorney |
47 |
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ARTICLE 15. MISCELLANEOUS |
48 | |
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Section 15.1 |
Entire Agreement |
48 |
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Section 15.2 |
Governing Law |
48 |
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Section 15.3 |
Severability |
48 |
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Section 15.4 |
Effect |
48 |
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Section 15.5 |
Captions |
48 |
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Section 15.6 |
Counterparts |
49 |
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Section 15.7 |
Waiver of Partition |
49 |
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Section 15.8 |
Waiver of Judicial Dissolution |
49 |
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Section 15.9 |
Consent to Jurisdiction; Waiver of Trial by Jury |
49 |
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Section 15.10 |
Binding Arbitration |
49 |
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Section 15.11 |
Gaming Redemption |
49 |
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Section 15.12 |
Non-Occurrence of IPO |
51 |
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STATION HOLDCO LLC
This THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of STATION HOLDCO LLC (the “Company”), dated as of April 28, 2016, is adopted, executed and agreed to, for good and valuable consideration, by and among the members listed on the Schedule of Members (as defined below), and shall be effective as of the Effective Time (as defined below). Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Section 2.1.
RECITALS
WHEREAS, the Certificate of Formation of the Company was filed with the Office of the Secretary of State of Delaware on August 9, 2010 under the name “NP Propco Holdings LLC”;
WHEREAS, the Company filed a Certificate of Amendment to the Certificate of Formation with the Office of the Secretary of State of Delaware on November 12, 2010, changing the name of the Company to “Station Holdco LLC”;
WHEREAS, the Members previously entered into that certain Second Amended and Restated Limited Liability Company Agreement of the Company, dated as of July 1, 2012 and amended as of July 15, 2012, August 1, 2012, September 4, 2012, October 1, 2012, April 25, 2013, July 31, 2013, August 26, 2014, November 6, 2014, September 29, 2015 and April 1, 2016 (as amended, the “Prior Agreement”) on the terms and conditions therein set forth providing for the conduct of the Company’s business and affairs;
WHEREAS, Members holding the requisite percentage of the outstanding Units (as defined in the Prior Agreement) of the Company have duly consented to the execution and delivery of this Agreement, which shall amend and restate the Prior Agreement in its entirety;
WHEREAS, Red Rock Resorts, Inc., a Delaware corporation (“Station Corp.”), and the Company intend to enter into an underwriting agreement (i) to issue and sell to the several Underwriters named therein shares of Class A Common Stock, par value $0.01 per share, of Station Corp. (the “Class A Common Stock”) and (ii) to make a public offering of such shares of Class A Common Stock (collectively, the “IPO”);
WHEREAS, in connection with the IPO, the Members desire to amend and restate the Prior Agreement effective immediately prior to the consummation of the IPO (the “Effective Time”) to, among other things, reflect the designation of Station Corp. as the sole manager of the Company (the “Managing Member”);
WHEREAS, immediately after the consummation of the IPO, Station Corp. will purchase (a) newly-issued Units from the Company and (b) Units held by certain of the Members, in each case using the net proceeds from the IPO; and
WHEREAS, in connection with the IPO, each FE Senior Executive is expected to enter into an Executive Employment Agreement with Station Casinos LLC, a Nevada limited liability Company and wholly owned subsidiary of the Company (“Station Casinos”), and Station Corp., and the Members desire to impose certain limitations upon the compensation of the FE Senior Executives and the other executives and employees of Station Casinos.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and covenants contained herein, the parties hereto agree as follows:
ARTICLE 1. CONTINUATION OF THE COMPANY
Section 1.1 Continuation of the Company. The Company was previously formed as a limited liability company under the Act by the filing of the Certificate with the Office of the Secretary of State of Delaware on August 9, 2010. Each Member agrees to be bound by the terms and conditions of this Agreement. The Members hereby agree to continue the Company as a limited liability company under the Act for the purposes and upon the terms and conditions hereinafter set forth. To the extent that the rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.
Section 1.2 Name. The name of the Company is “Station Holdco LLC,” as such name may be modified from time to time by the Managing Member as it may deem advisable.
Section 1.3 Business of the Company. Subject to the limitations on the activities of the Company otherwise specified in this Agreement, the purpose and business of the Company shall be the conduct of any business or activity that may be conducted by a limited liability company organized pursuant to the Act, including the ownership of equity interests in Persons which conduct, operate and manage hotels and casinos.
Section 1.4 Location of Principal Place of Business. The location of the principal place of business of the Company is 1505 South Pavilion Center Drive, Las Vegas, Nevada, 89135 or such other location as may be determined by the Managing Member. In addition, the Company may maintain such other offices as the Managing Member may deem advisable at any other place or places within or without the State of Delaware.
Section 1.5 Registered Agent. The registered agent for the Company is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The Managing Member may change the registered agent from time to time as it deems appropriate.
Section 1.6 Term. The term of the Company commenced on the date of filing of the Certificate, and shall be perpetual unless the Company is earlier dissolved and terminated in accordance with the provisions of this Agreement.
ARTICLE 2. DEFINITIONS
Section 2.1 Definitions. The following terms used in this Agreement shall have the following meanings.
“AAA” has the meaning set forth in Section 15.10.
“Act” means the Delaware Limited Liability Company Act, 6 Del. Code §18-101 et seq., as in effect on the date hereof and as it may be amended hereafter from time to time.
“Adjusted Capital Account” means, with respect to any Member, the Member’s Capital Account at such time (x) increased by the sum of (A) the amount of the Member’s share of partnership minimum gain (as defined in Regulation section 1.704-2(g)(1) and (3)), (B) the amount of the Member’s share of partner nonrecourse debt minimum gain (as defined in Regulation section 1.704-2(i)(5)) and (C) any amount of the deficit balance in its Capital Account that the Member is treated as obligated to restore pursuant to Regulation section 1.704-1(b)(2)(ii)(c) and (y) decreased by reasonably expected adjustments, allocations and distributions described in Regulation sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition shall be interpreted consistently with Regulation section 1.704-1(b)(2)(ii)(d).
“Adverse Disclosure” has the meaning set forth in Section 10.1(f).
“Affected Interests” means Equity Securities that are owned or controlled directly or indirectly by an Unsuitable Person or an Affiliate of an Unsuitable Person.
“Affected Member” means a Member who is an Unsuitable Person or is an Affiliate of an Unsuitable Person.
“Affiliate” of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person. For the purpose of this definition, the term “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, either through the ownership of a majority of such Person’s voting stock, by contract or otherwise.
“Agreement” means this Third Amended and Restated Limited Liability Company Agreement, as amended, modified or supplemented from time to time.
“Assignees” has the meaning set forth in Section 9.2(d).
“Assumed Tax Rate” means a rate determined by the Managing Member for the applicable Fiscal Year, which shall not exceed the greater of the highest effective combined marginal U.S. federal, state and local income tax rate (taking into account the tax imposed by
Code section 1411) applicable during such Fiscal Year to a natural person residing in or corporation doing business in New York, New York (after giving effect to any differences in rates applicable to ordinary income and capital gains and any U.S. federal income tax deduction for such state and local income taxes).
“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks are authorized or required to close in New York City, New York.
“Capital Account” means, with respect to any Member, the account maintained by the Company with respect to such Member in accordance with Section 3.8.
“Capital Contribution” means any contribution (whether in cash, property or a combination thereof) to the capital of the Company.
“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all ownership interests in a limited liability company, partnership or other Person (other than a corporation), and any and all securities, warrants, options or other rights to purchase or acquire, or that are convertible into, any of the foregoing.
“Certificate” means the Certificate of Formation of the Company, as amended, modified or supplemented from time to time.
“Change of Control” has the meaning set forth for such term under the Exchange Agreement.
“Class A Common Stock” has the meaning set forth in the Recitals.
“Class B Common Stock” means the Class B Common Stock, par value $0.01 per share, of Station Corp.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the shares of Class A Common Stock, including any shares of capital stock into which Class A Common Stock may be converted (as a result of a recapitalization, share exchange or similar event) or that are issued with respect to Class A Common Stock (including, without limitation, with respect to any stock split or stock dividend, or a successor security).
“Company” has the meaning set forth in the preamble hereof.
“Company Minimum Gain” has the meaning set forth for the term “partnership minimum gain” in Regulations section 1.704-2(d).
“DB Holder” means (a) German American Capital Corporation, Deutsche Bank AG and each Affiliate of Deutsche Bank AG that becomes a Member and (b) any Person that receives or acquires any Units from a DB Holder to the extent that such Transferring DB Holder assigns rights pursuant to Article 10 hereof to such Person; provided, that such designation shall
not become effective until the delivery of notice of such assignment to the Company (it being understood that such Transferee shall be so deemed to be such a DB Holder only with respect to such Units so Transferred).
“DB Majority Holder” has the meaning set forth in the definition of “Major Holder”.
“Demand Registration” has the meaning set forth in Section 10.1(a).
“Depreciation” has the meaning set forth in the definition of “Net Income” or “Net Loss” under paragraph (e) therein.
“DEUCC” has the meaning set forth in Section 3.1(f).
“Distribution” means each distribution after the Effective Time made by the Company to a Member, whether in cash, property or securities of the Company, pursuant to, or in respect of, Article 5 or Article 10.
“Effective Time” has the meaning set forth in the Recitals.
“Equity Incentive Plan” means the Red Rock Resorts, Inc. 2016 Equity Incentive Plan.
“Equity Securities” means all Common Stock of Station Corp. and Units and any and all securities of the Company, Station Corp. or any of their respective subsidiaries, convertible into, or exchangeable or exercisable for, options, warrants or other rights to acquire, shares of Common Stock or Units.
“Exchange Agreement” means the Exchange Agreement, effective on or about the Effective Time, among the Company, Station Corp. and the Company Unitholders (as defined therein) from time to time party thereto, as the same may be amended, modified, supplemented or restated from time to time.
“Exercising Holders” has the meaning set forth in Section 10.1(a).
“Fair Market Value” means, except as otherwise provided for herein, as of any given date of determination, the cash price, as determined in good faith by the Managing Member using any reasonable method of valuation and taking into account any relevant facts and circumstances then prevailing and in accordance with this Agreement, at which a willing seller would sell, and a willing buyer would buy, each being apprised of all relevant facts and neither acting under compulsion, such assets or properties in an arm’s-length negotiated transaction with an unaffiliated third party without time constraints.
“Family Group” means, for any individual, such individual’s current or former spouse, their respective parents, descendants of such parents (whether natural or adopted) and the spouses of such descendants, and any trust, limited partnership, corporation or limited liability company established solely for the benefit of such individual or such individual’s current or
former spouse, their respective parents, descendants of such parents (whether natural or adopted) or the spouses of such descendants.
“FE Senior Executive” means each of Frank J. Fertitta III, Lorenzo Fertitta, Stephen L. Cavallaro, Marc J. Falcone and Richard J. Haskins.
“Fertitta Entertainment” has the meaning set forth in Section 11.1.
“Fertitta Holder” means each of (a) FI Station Investor LLC and each Affiliate of FI Station Investor LLC that becomes a Member, (b) Fertitta Business Management LLC and each Affiliate of Fertitta Business Management LLC that becomes a Member, (c) Frank J. Fertitta III, (d) Lorenzo J. Fertitta, (e) each Affiliate or member of the Family Group of Frank J. Fertitta III or Lorenzo J. Fertitta and (f) any Person that receives or acquires any Units from a Fertitta Holder to the extent that such Transferring Fertitta Holder assigns rights pursuant to Article 10 hereof to such Person; provided, that such designation shall not become effective until the delivery of notice of such assignment to the Company (it being understood that such Transferee shall be so deemed to be such a Fertitta Holder only with respect to such Units so Transferred).
“Fertitta Majority Holder” has the meaning set forth in the definition of “Major Holder”.
“Fiscal Year” has the meaning set forth in Section 6.4.
“Gaming Authority” means all governmental authorities or agencies with regulatory control or jurisdiction over all or any portion of the gaming activities of the Company or any of its subsidiaries, or over ownership of an interest in an entity engaged in gaming activities, or any successor to any such authority, including, as applicable, (i) in the State of Nevada, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board, the Henderson City Council, the City of Las Vegas City Council and all other state and local regulatory and licensing agencies or bodies with authority over gaming, gaming activities and gaming devices, mobile gaming systems and associated equipment in the State of Nevada, the City of Henderson, the City of Las Vegas, the City of Reno, Clark County, Nevada or Washoe County, Nevada, and (ii) the National Indian Gaming Commission and the applicable gaming regulatory authority established by the Federated Indians of Graton Rancheria, the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians of Michigan and the North Fork Rancheria of Mono Indians.
“Gaming Laws” means any federal, state, tribal, local or foreign statute, ordinance, rule, regulation, requirement, directive, judgment, order, decree, injunction or other authorization, and any Gaming License, governing or relating to casino and gaming activities and operations of the Company or any of its subsidiaries or the ownership of an interest therein.
“Gaming License” shall mean all licenses, consents, permits, approvals, authorizations, registrations, findings of suitability, franchises, entitlements, exemptions, waivers and orders of registration approved or issued by any Gaming Authority under Gaming Laws necessary for or relating to the conduct of activities or the ownership of an interest in an entity
engaged in activities under the Gaming Laws, including any condition or limitation placed thereon.
“Governmental Authority” means any governmental, regulatory or administrative authority, whether foreign, federal, state or local, or any agency or commission or any court, tribunal, or judicial or arbitral body (or any subdivision of any of the foregoing) having jurisdiction or authority with respect to the particular matter at issue in its context, including any Gaming Authority.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross Fair Market Value of such asset on the date of the contribution;
(b) the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross Fair Market Values as of the following times:
(i) the acquisition of an additional interest in the Company after the Effective Time by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Managing Member reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;
(ii) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company or any of its subsidiaries by an existing or a new Member acting in a “partner capacity,” or in anticipation of becoming a “partner” (in each case within the meaning of Regulations section 1.704-1(b)(2)(iv)(d));
(iii) the Distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company, if the Managing Member reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and
(iv) the liquidation of the Company within the meaning of Regulations section 1.704-1(b)(2)(ii)(g);
(c) the Gross Asset Value of any Company asset distributed to a Member shall be the gross Fair Market Value of such asset on the date of Distribution;
(d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code section 734(b) or Code section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the Managing Member determines that an adjustment
pursuant to subparagraph (b) of this definition of Gross Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d); and
(e) with respect to any asset that has a Gross Asset Value that differs from its adjusted tax basis, Gross Asset Value shall be adjusted by the amount of Depreciation rather than any other depreciation, amortization or other cost recovery method.
“Holder” means each holder of Registrable Securities.
“Indemnified Party” has the meaning set forth in Section 8.6(a).
“Interest” when used in reference to an interest in the Company, means the entire ownership interest of a Member in the Company at any particular time, including its interest in the capital, profits, losses and distributions of the Company.
“IPO” has the meaning set forth in the Recitals.
“Liquidator” has the meaning set forth in Section 12.2(b).
“Long-Form Registration” has the meaning set forth in Section 10.1(a).
“Major Holder” means any of (a) the holder of a majority of the Units held by the Fertitta Holders (the “Fertitta Majority Holder”) and (b) the holder of a majority of the Units held by the DB Holders (the “DB Majority Holder”).
“Managing Member” has the meaning set forth in the Recitals.
“Member” means each of the Persons listed on the Schedule of Members and each other Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act. The Members shall constitute the “members” (as such term is defined in the Act) of the Company. Any reference in this Agreement to any Member shall include a Substituted Member to the extent such Substituted Member was admitted to the Company in accordance with the provisions of this Agreement.
“Member Minimum Gain” means minimum gain attributable to Member Nonrecourse Debt determined in accordance with Regulations section 1.704-2(i).
“Member Nonrecourse Debt” has the meaning set forth for the term “partner nonrecourse debt” in Regulations section 1.704-2(b)(4).
“Membership Certificate” has the meaning set forth in Section 3.1(e).
“Net Income” or “Net Loss” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Code section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code section 703(a)(1) shall be included in such taxable income or loss), with the following adjustments:
(a) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;
(b) any expenditures of the Company described in Code section 705(a)(2)(B) or treated as Code section 705(a)(2)(B) expenditures pursuant to Regulations section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain (if the adjustment increases the Gross Asset Value of the asset) or loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset for purposes of computing Net Income or Net Loss;
(d) gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, with respect to a Company asset having a Gross Asset Value that differs from its adjusted basis for tax purposes, “Depreciation” with respect to such asset shall be computed by reference to the asset’s Gross Asset Value in accordance with Regulation section 1.704-1(b)(2)(iv)(g);
(f) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code section 734(b) or 743(b) is required pursuant to Regulations section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as a result of a Distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and
(g) any item of income, gain, credit, loss, deduction or expenditure allocated under Section 4.2 shall be excluded from the computation of Net Income and Net Loss.
“Non-Equity Compensation” means, with respect to any person, the aggregate amount of all salaries, bonuses, potential severance payments and perquisites directly or indirectly applicable to such person in its capacity as employee, officer, director or otherwise.
“Non-Equity Compensation Thresholds” has the meaning set forth in Section 11.1.
“Officer” and “Officers” have the meanings set forth in Section 8.2(a).
“Partnership Audit Adjustment” has the meaning set forth in Section 6.6.
“Percentage Interest” means, with respect to each Member, as of the applicable date of determination, a fraction (expressed as a percentage), the numerator of which is the number of Units held by such Member and the denominator of which is the total number of Units held by all Members.
“Permitted Transferee” means, with respect to any Member, (a) its Affiliates (including, in the case of any Member that is an entity, any distribution by such Member to its members, partners or shareholders (the “Member’s Owners”) or any redemption of the interests in such Member held by one or more of the Member’s Owners, and any related distributions or redemptions by the Member’s Owners to their respective members, partners or shareholders), (b) in the case of an individual, any member of its Family Group.
“Person” means any individual, partnership, limited liability company, association, corporation, trust or other entity.
“Prior Agreement” has the meaning set forth in the Recitals.
“Public Sale” means any sale of Registrable Securities to the public pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act.
“Quarterly Estimated Tax Periods” means the two, three, and four calendar month periods with respect to which Federal quarterly estimated tax payments are made. The first such period begins on January 1 and ends on March 31. The second such period begins on April 1 and ends on May 31. The third such period begins on June 1 and ends on August 31. The fourth such period begins on September 1 and ends on December 31.
“Redemption Date” shall mean the date specified in a Redemption Notice as the date on which Affected Interests of an Affected Member are to be redeemed by the Company, which Redemption Date shall be determined by the Managing Member and may be extended to the extent required in connection with any actions required to be taken under any Gaming Law; provided, that, unless otherwise directed by a Gaming Authority, in no event shall the Redemption Date be more than one hundred eighty (180) days after the date such Affected Member receives the Redemption Notice.
“Redemption Notice” shall mean that notice of redemption given by the Managing Member to an Affected Member pursuant to Section 15.11. Each Redemption Notice shall set forth (i) the Redemption Date; (ii) the Affected Interests to be redeemed; (iii) the Redemption Price and the manner of payment therefor; (iv) the place where certificates, if any, shall be surrendered for payment; and (v) any other requirements of surrender of the certificates, including how they are to be endorsed, if at all.
“Redemption Price” shall mean the price specified in the Redemption Notice to be paid by the Company for the redemption of Affected Interests to be redeemed pursuant to Section 15.11, which shall be that price (if any and to the extent applicable) required to be paid by the Gaming Authorities making the finding of unsuitability, or if the Gaming Authorities do not require a certain price to be paid, the amount reasonably determined by the Managing Member to be the fair value of the Affected Interests to be redeemed; provided that, unless a
Gaming Authority requires otherwise, the Redemption Price per Unit shall be equal to the product of (i) the Exchange Rate (as defined in the Exchange Agreement) and (ii) the hypothetical Redemption Price (solely for purposes of this clause (ii), as defined in the Amended and Restated Certificate of Incorporation of the Managing Member, as in effect immediately following the IPO (the “Charter”)) in respect of one share of Class A Common Stock redeemed in accordance with the terms of the Charter at the same time as the applicable Unit is redeemed. The Redemption Price may be paid in cash, by promissory note, or both, as required by the Gaming Authorities and, if not so required, as the Managing Member reasonably determines. Any promissory note shall contain such terms and conditions as the Managing Member reasonably determines to be necessary or advisable to comply with any law or regulation then applicable to the Company or any Affiliate thereof, or to prevent a default under, or acceleration of, any loan, note, mortgage, indenture, line of credit or other debt or financing agreement. Subject to the foregoing, (i) the principal amount of the promissory note together with any unpaid interest shall be due and payable no later than the ten-year anniversary of the delivery of the note, (ii) interest on the unpaid principal thereof shall be payable at maturity at a rate per annum equal to the applicable federal rate within the meaning of Code section 1274(d) for debt with a maturity of over nine years, as in effect at the date of such issuance, compounded annually, until the Redemption Price has been paid in full and (iii) the promissory note shall provide that at any time prior to the 15-month anniversary of the date of issuance, if the promissory note is Transferred to a Person that immediately after such Transfer would not be an Unsuitable Person, such promissory note may, at the election of the holder thereof prior to such 15-month anniversary (but with such 15-month period being subject to reasonable extensions up to six months in the aggregate for all such extensions in order to procure any required Gaming Licenses or other regulatory approvals being diligently pursued in good faith), converted into the Interests for which such promissory note was issued as the Redemption Price upon the cash payment by such holder to the Company in an amount equal to the sum of (x) all cash amounts paid to the original holder thereof as part of the Redemption Price and (y) all interest paid on such promissory note prior to such conversion. If the Redemption Price is being determined with respect to a redemption of at least 10% of the Units then outstanding, the Redemption Price shall be at least equal to the value as determined by a valuation procured by the Company from a nationally recognized investment banking firm.
“Registrable Securities” means any shares of Common Stock of Station Corp. issued or issuable upon the conversion or exchange of Units, including pursuant to the Exchange Agreement. As to any particular securities that are Registrable Securities, such securities shall cease to be Registrable Securities when they have been distributed to the public pursuant to a Public Sale.
“Registration Expenses” has the meaning set forth in Section 10.6.
“Registration Statement” means, in connection with the public offering and sale of Capital Stock of Station Corp., a registration statement (including pursuant to Rule 415 under the Securities Act) pursuant to the Securities Act.
“Regulation” means a Treasury Regulation promulgated under the Code.
“Regulatory Allocations” has the meaning set forth in Section 4.2(g).
“Schedule of Members” has the meaning set forth in Section 3.1(b).
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shelf Registration Statement” has the meaning set forth in Section 10.1(e)(i).
“Shelf Takedown Prospectus Supplement” has the meaning set forth in Section 10.1(e)(ii).
“Short-Form Registration” has the meaning set forth in Section 10.1(a).
“Station Casinos” has the meaning set forth in the Recitals.
“Station Corp.” has the meaning set forth in the Recitals.
“Substituted Member” means any Person admitted to the Company as a substituted Member pursuant to the provisions of Article 9.
“Tax Distribution” has the meaning set forth in Section 5.4.
“Tax Matters Partner” has the meaning set forth in Section 6.5.
“Tax Receivable Agreement” means the Tax Receivable Agreement, effective on or about the Effective Time, among the Company, Station Corp., and the Members (as defined therein) from time to time party thereto, as the same may be amended, modified, supplemented or restated from time to time.
“Transfer,” “Transferee” and “Transferor” have the respective meanings set forth in Section 9.1.
“True-Up Amount” means, in respect of a particular U.S. federal income tax year of the Company, an amount (but not less than zero) equal to (i) the product of (x) the taxable income of the Company for such tax year (determined by disregarding any adjustment to the taxable income of any Member that arises under Code section 743(b) and is attributable to the acquisition by such Member of an interest in the Company in a transaction described in Code section 743(a)) multiplied by (y) the Assumed Tax Rate minus (ii) the aggregate amount of distributions made in respect of such tax year (treating any Tax Distribution made with respect to income for such tax year, regardless of when made, and any distribution other than a Tax Distribution made during such tax year, as being made in respect of such tax year).
“Unit” has the meaning set forth in Section 3.1(a).
“Unsuitable Person” means a Person, including any member, shareholder, partner, manager, director, officer or employee of a Person (a) who is denied or disqualified from eligibility for a Gaming License by any applicable Gaming Authority or who is determined by any applicable Gaming Authority to be unsuitable to own or control an Equity Security in Station
Corp. or the Company or to be affiliated or connected with or in the gaming business of Station Corp. or the Company, (b) whose ownership of an Equity Security in Station Corp. or the Company or affiliation or involvement with or in the business of Station Corp. or the Company in any capacity causes Station Corp. or the Company to lose or to be threatened by any applicable Gaming Authority with the loss or denial of a Gaming License, (c) who is deemed likely, as determined in good faith by the Managing Member based on verifiable information received from any applicable Gaming Authority or other Governmental Authority having jurisdiction over Station Corp. or the Company, to preclude or materially delay, impede or impair, or jeopardize or threaten the loss of, or result in the imposition of materially burdensome terms and conditions on, any Gaming License of Station Corp. or the Company or on such Person’s application for, or right to the use of, entitlement to or ability to obtain or retain any Gaming License in any jurisdiction or (d) who is deemed likely, as determined in good faith by the Managing Member without taking into account the votes of directors affiliated or associated with the Unsuitable Person, to result in the disapproval, cancellation, rescission, termination, material adverse modification or non-renewal of any material contract between Station Corp. or the Company, on one hand, and a third party that is not an Affiliate of the Company or any Member, on the other hand.
“Violation” has the meaning set forth in Section 10.7(a).
“Void Transfer” has the meaning set forth in Section 9.1.
“Withdrawing Member” has the meaning set forth in Section 9.2(d).
Section 2.2 Rules of Interpretation. Unless the context otherwise clearly requires: (a) a term has the meaning assigned to it; (b) “or” is not exclusive; (c) wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or neuter shall include the masculine, feminine and neuter; (d) provisions apply to successive events and transactions; (e) all references in this Agreement to “include” or “including” or similar expressions shall be deemed to mean “including without limitation”; (f) all references in this Agreement to designated “Articles,” “Sections,” “paragraphs,” “clauses” and other subdivisions are to the designated Articles, Sections, paragraphs, clauses and other subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, paragraph, clause or other subdivision; and (g) any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). This Agreement is among financially sophisticated and knowledgeable parties and is entered into by the parties in reliance upon the economic and legal bargains contained herein and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party who prepared, or caused the preparation of, this Agreement or the relative bargaining power of the parties.
ARTICLE 3. CAPITALIZATION
Section 3.1 Units; Initial Capitalization; Schedule of Members.
(a) Each Member’s interest in the Company, including such Member’s interest, if any, in the capital, income, gains, losses, deductions and expenses of the Company, shall be represented by Units of limited liability company interest (each, a “Unit”). As of the Effective Time, the Company shall have one authorized class of Units. All Units shall have identical rights and privileges in all respects. The Company shall have the authority to issue an unlimited number of Units. Immediately following the IPO, the Company will issue Units to Station Corp. in exchange for a contribution of the net proceeds received by Station Corp. from the IPO (less any proceeds used to purchase Units from Members) to the Company, such that following the sale of Units by any Members and the issuance of Units by the Company the total number of Units held by Station Corp. will equal the total number of outstanding shares of Class A Common Stock. Following such purchase of Units by Station Corp. in connection with the IPO, Units shall only be issued to Station Corp. in accordance with Section 3.2(c) or Section 3.2(d).
(b) The aggregate number of outstanding Units and the aggregate amount of cash Capital Contributions that have been made by the Members and the Fair Market Value of Capital Contributions in the form of any property other than cash contributed by the Members with respect to the Units (including, if applicable, a description and the amount of any liability assumed by the Company or to which contributed property is subject) shall be set forth on a schedule maintained by the Company. The Company shall also maintain a schedule setting forth (i) the name and address of each Member, (ii) the number and class of Units owned by such Member, and (iii) with respect to each Transfer permitted under this Agreement, the date of such Transfer, the number of Units Transferred and the identity of the Transferor and Transferee(s) of such Units (such schedule, the “Schedule of Members”). The Schedule of Members shall be the definitive record of ownership of each Unit or other Capital Stock of the Company and all relevant information with respect to each Member. The Company shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units or other Capital Stock of the Company for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units or other Capital Stock of the Company on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act.
(c) At the Effective Time, (i) all of the Common Units (as defined in the Prior Agreement) held by each Member immediately prior to the Effective Time shall, at the Effective Time, be automatically reverse split at a rate of 4.3678 Units for each Common Unit outstanding immediately prior to the Effective Time, with the resulting number of Units held by each Member rounded up to the nearest whole Unit and set forth opposite such Member’s name on the Schedule of Members, (ii) each Member that holds Profit Units will be issued restricted Shares of Class A Common Stock of Station Corp. in substitution of such Profit Units and (iii) Station Corp will be issued a number of Units equal to the number of Shares of Class A Common Stock so issued to holders of Profit Units. Substantially concurrently therewith, each Member (other than the Managing Member) shall purchase for nominal consideration a number of shares of Class B Common Stock equal to the number of Units held by such Member.
(d) In the event of a dividend, split, recapitalization, reorganization, merger, consolidation, combination, exchange of all or any class of Units of the Company, liquidation, spin-off, or other change in organizational structure affecting the Units (including any conversion of the Company to a corporation, whether by merger, filing of a certificate of conversion or otherwise), the number and class of Units shall be appropriately adjusted for the benefit of Members by the Managing Member.
(e) The Company may, in the discretion of the Managing Member, issue one or more certificates to the Members to evidence the Units in the form attached as Annex I (a “Membership Certificate”). Each certificate representing a Unit shall (i) be signed on behalf of the Company by the Chief Executive Officer, President or Secretary of the Company and (ii) set forth the number of such Units represented thereby. In case the officer of the Company who has signed or whose facsimile signature has been placed on such Membership Certificate shall have ceased to be an officer of the Company before such Membership Certificate is issued, it may be issued by the Company with the same effect as if such person were an officer of the Company at the time of its issue. The Membership Certificate shall contain a legend with respect to any restrictions on transfer, as well as all required gaming legends.
(f) Each Unit in the Company shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code as in effect from time to time in the State of Delaware (the “DEUCC”) (including Section 8-102(a)(15)), and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Notwithstanding any provision of this Agreement to the contrary, to the extent that any provision of this Agreement is inconsistent with any non-waivable provision of Article 8 of the DEUCC, such provision of Article 8 of the DEUCC shall be controlling. Each Membership Certificate evidencing Units shall bear the following legend:
“This Certificate evidences a limited liability company interest in Station Holdco LLC and shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code as in effect from time to time in the State of Delaware (including Section 8-102(a)(15)), and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.”
No change to this provision shall be effective until all outstanding Membership Certificates have been surrendered for cancellation and any new certificates thereafter issued shall not bear the foregoing legend.
(g) The Company shall issue a new Membership Certificate in place of any Membership Certificate previously issued if the holder of the Units in the Company represented by such Membership Certificate, as reflected on the books and records of the Company:
(i) makes proof by affidavit, in form and substance satisfactory to the Company, that such previously issued Membership Certificate has been lost, stolen or destroyed;
(ii) requests the issuance of a new Membership Certificate before the Company has notice that such previously issued Membership Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;
(iii) if requested by the Company, delivers to the Company a bond, in form and substance satisfactory to the Company, with such surety or sureties as the Company may direct, to indemnify the Company against any claim that may be made on account of the alleged loss, destruction or theft of the previously issued Membership Certificate; and
(iv) satisfies any other reasonable requirements imposed by the Company.
Section 3.2 Authorization and Issuance of Additional Units.
(a) The Managing Member is authorized to (i) issue additional Units, including upon the exercise of warrants to purchase Units outstanding on the date hereof, (ii) create additional classes of Units, (iii) subdivide the Units of any such class into one or more series, (iv) fix the designations, powers, preferences and rights of the Units of each such class or series and any qualifications, limitations or restrictions thereof, and (v) subject to Article 12, amend this Agreement to reflect such actions and the resulting designations, powers, and relative preferences and rights of all the classes and series thereafter authorized under this Agreement.
(b) The authority of the Managing Member with respect to each such class and series created in accordance with this Section 3.2 shall include establishing the following: (i) the number of Units or securities constituting that class or series and the distinctive designation thereof, (ii) whether or not the Units or securities of such class or series shall be redeemable, and if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per Unit or security payable in case of redemption, which amount may vary under different conditions and at different redemption dates, (iii) the rights and preferences of the Units or securities of that class or series in the event of voluntary or involuntary liquidation, dissolution or winding—up of the Company, (iv) the relative rights of priority, if any, of allocations of income or loss or of payment with respect to Units or securities of that class or series and (v) any other relative rights, preferences and limitation of that class or series.
(c) If, following the IPO, Station Corp. issues shares of Class A Common Stock (other than an issuance of the type covered by Section 3.2(d) or pursuant to the Exchange Agreement), unless such net proceeds are used to purchase Units from Members, Station Corp. shall promptly contribute to the Company all the net proceeds and property (if any) received by
Station Corp. with respect to such Class A Common Stock. Upon the contribution by Station Corp. to the Company of all (but not less than all) of such net proceeds and property (if any) so received by Station Corp., the Managing Member shall cause the Company to issue a number of Units equal to the number of shares of Class A Common Stock so issued, registered in the name of Station Corp., such that, at all times, the number of Units held by Station Corp. equals the number of outstanding shares of Class A Common Stock.
(d) At any time that Station Corp. issues one or more shares of Class A Common Stock in connection with an equity incentive program, whether such share or shares are issued upon exercise (including cashless exercise) of an option, settlement of a restricted stock unit, as restricted stock or otherwise, the Managing Member shall cause the Company to issue to Station Corp. an equal number of Units, registered in the name of Station Corp.; provided that Station Corp. shall be required to contribute all (but not less than all) the net proceeds and property (if any) received by Station Corp. from or otherwise in connection with such issuance of one or more shares of Class A Common Stock, including the exercise price of any option exercised, to the Company. If any such shares of Class A Common Stock so issued by Station Corp. in connection with an equity incentive program are subject to vesting or forfeiture provisions, then the Units that are issued by the Company to Station Corp. in connection therewith in accordance with the preceding provisions of this Section 3.2(d) shall be subject to vesting or forfeiture on the same basis; if any of such shares of Class A Common Stock vest or are forfeited, then an equal number of Units issued by the Company in accordance with the preceding provisions of this Section 3.2(d) shall automatically vest or be forfeited. Any cash or property held by either Station Corp. or the Company or on either’s behalf in respect of dividends paid on restricted Class A Common Stock that fail to vest shall be returned to the Company upon the forfeiture of such restricted Class A Common Stock.
(e) For purposes of this Section 3.2, “net proceeds” means gross proceeds to Station Corp. from the issuance of Class A Common Stock or other securities less any underwriting or similar discounts or commissions and all bona fide out-of-pocket expenses of Station Corp., the Company and their respective subsidiaries in connection with such issuance.
(f) Notwithstanding anything to the contrary in this Section 3.2, the Company shall not, and the Managing Member shall cause it not to, issue any Capital Stock in the Company other than Units that (i) have rights and privileges identical to those of the Units outstanding at the Effective Time except for any vesting or forfeiture provisions established in accordance with Section 3.2(d) and (ii) are issued in accordance with Section 3.2(c) or (d).
Section 3.3 Repurchase or Redemption of Class A Common Stock. If, at any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, pursuant to an open market purchase, automatically or by means of another arrangement) by Station Corp. for cash or other consideration and subsequently cancelled, then the Managing Member shall cause the Company, immediately prior to such repurchase or redemption of Class A Common Stock, to redeem an equal number of Units held by Station Corp., at an aggregate redemption price equal to the aggregate purchase or redemption price of the Class A Common Stock being repurchased or redeemed by Station Corp. (plus any expenses related thereto) and upon such other terms as are the same for the Class A Common Stock being repurchased or redeemed by Station Corp.
Section 3.4 Changes in Class A Common Stock. Any subdivision (by stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) of Class A Common Stock shall be accompanied by an identical subdivision or combination, as applicable, of Units.
Section 3.5 Capital Contributions. Except as expressly provided in Section 3.2(c) and Section 3.2(d) with respect to the Managing Member and in the Exchange Agreement, no Member shall be required to make any Capital Contributions without such Member’s consent.
Section 3.6 No Interest on Capital Contributions. No Member shall be entitled to interest on or with respect to any Capital Contribution.
Section 3.7 Withdrawal and Return of Capital Contributions. Except as provided in this Agreement, no Member shall be entitled to withdraw any part of such Member’s Capital Contribution or to receive distributions from the Company.
Section 3.8 Capital Accounts.
(a) A separate Capital Account shall be maintained for each Member on the books of the Company, and adjustments to such Capital Accounts shall be made as follows:
(i) A Member’s Capital Account shall be credited with any amounts of cash contributed by the Member to the Company, the Fair Market Value of any other property contributed to the Company (net of liabilities secured by the property that the Company is considered to assume or take subject to under Code section 752), the amount of any Company liabilities assumed by the Member (other than liabilities that are secured by any Company property distributed to such Member), and the Member’s allocable share of any Net Income and items of income or gain allocated to that Member; and
(ii) A Member’s Capital Account shall be debited with the amount of cash distributed to the Member, the Fair Market Value of other Company property distributed to the Member (net of liabilities secured by such property that the Member is considered to assume or take subject to under Code section 752), the amount of any liabilities of the Member assumed by the Company (other than liabilities that are secured by property contributed by such Members), and the Member’s allocable share of Net Losses and items of loss, expense, or deduction allocated to that Member.
(b) The foregoing provisions of this Section 3.8 and Sections 4.1 through 4.2 are intended to comply with section 1.704-1(b)(2)(iv) of the Regulations and shall be interpreted and applied in a manner consistent with such Regulations. If the Managing Member, with the advice of the Company’s tax advisors, shall determine that it is prudent to modify the manner in which the Capital Accounts are computed in order to comply with section 1.704-1(b)(2)(iv) of the Regulations, the Managing Member may make such modification to the minimum extent necessary; provided that the Members are notified in writing of such modification prior to its effective date; provided, further, that the Managing Member shall have no liability to any Member for any exercise of or failure to exercise any such discretion to make any modifications permitted under this Section 3.8.
ARTICLE 4. ALLOCATION OF NET INCOME AND NET LOSS
Section 4.1 Allocations of Net Income and Net Losses. Except as otherwise provided in Section 4.2, Net Income and Net Losses (and items thereof) for any Fiscal Year (or other applicable period) shall be allocated among the Members in a manner such that the Capital Account of each Member, immediately after giving effect to such allocation, is, as nearly as possible, equal (proportionately) to the amount of the distributions that would be made to such Member during such Fiscal Year (or other applicable period) pursuant to Section 5.1, based on the assumptions that (i) the Company is dissolved and terminated, (ii) its affairs are wound-up and each asset of the Company is sold for cash equal to its Fair Market Value, (iii) all Company liabilities are satisfied (limited with respect to each nonrecourse liability to the book value of the asset(s) securing such liability), and (iv) the net assets of the Company are distributed in accordance with Section 5.1 to the Members immediately after giving effect to such allocation (taking into account distributions made during such Fiscal Year or other applicable period).
Section 4.2 Special Allocations.
(a) Losses, deduction and expenditures attributable to Member Nonrecourse Debt shall be allocated in the manner required by Regulations section 1.704-2(i). If there is a net decrease during a taxable year in Member Minimum Gain, income and gain for such taxable year (and, if necessary, for subsequent taxable years) shall be allocated to the Members in the amounts and of such character as is determined according to Regulations section 1.704-2(i)(4). This Section 4.2(a) is intended to be a “partner nonrecourse debt minimum gain chargeback” provision that complies with the requirements of Regulations section 1.704-2(i)(4), and shall be interpreted in a manner consistent therewith.
(b) Except as otherwise provided in Section 4.2(a), if there is a net decrease in Company Minimum Gain during any taxable year, each Member shall be allocated income and gain for such taxable year (and, if necessary, for subsequent taxable years) in the amounts and of such character as is determined according to Regulations section 1.704-2(f). This Section 4.2(b) is intended to be a “minimum gain chargeback” provision that complies with the requirements of Regulations section 1.704-2(f), and shall be interpreted in a manner consistent therewith.
(c) If any Member that unexpectedly receives an adjustment, allocation or distribution described in Regulations section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) has a deficit balance in its Adjusted Capital Account as of the end of any taxable year, computed after the application of Section 4.2(a) and Section 4.2(b) but before the application of any other provision of Section 4.1, Section 4.2 and Section 4.3, then income for such taxable year shall be allocated to such Member in proportion to, and to the extent of, such deficit balance. This Section 4.2(c) is intended to be a “qualified income offset” provision as described in Regulations section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.
(d) “Nonrecourse deductions” (as defined in Regulation sections 1.704-2(b)(1) and (c)) shall be allocated among the Members pro rata in accordance with their respective Percentage Interests.
(e) No Net Loss (or items thereof) shall be allocated to a Member to the extent such allocation would cause or increase a deficit balance in the Adjusted Capital Account of such Member. Instead, such Net Loss (and items thereof) shall be allocated among the other Members that have positive account balances in the same ratios that such other Members are allocated Net Loss for such year under Section 4.1 until all such positive balances have been reduced to zero.
(f) The adjustments described in clause (d) of the definition of Gross Asset Value shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Regulations section 1.704-1(b)(2)(iv)(m).
(g) The allocations set forth in Section 4.2(a) through Section 4.2(f) inclusive (the “Regulatory Allocations”) are intended to comply with certain requirements of section 1.704-1(b) and 1.704-2 of the Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Net Income and Net Loss of the Company or to make Distributions. Accordingly, notwithstanding the other provisions of Section 4.1, Section 4.2 and Section 4.3, but subject to the Regulatory Allocations, items of Net Income and Net Loss of the Company shall be allocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Account balances of the Members to be in the amounts (or as close thereto as possible) they would have been if Net Income and Net Loss had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this shall be accomplished by specially allocating other Net Income and Net Loss among the Members so that the net amount of Regulatory Allocations and such special allocations to each such Member is zero.
Section 4.3 Allocations for Income Tax Purposes. The income, gains, losses, deductions and credits of the Company for any Fiscal Year shall be allocated to the Members in the same manner as Net Income and Net Loss were allocated to the Members for such Fiscal Year pursuant to Sections 4.1 and 4.2; provided, however, that solely for Federal, state and local income and franchise tax purposes and not for book or Capital Account purposes, income, gain, loss and deduction with respect to any Company asset properly carried on the Company’s books at a value other than the tax basis of such Company asset shall be allocated for Federal, state and local income tax purposes in accordance with the “traditional method” described in section 1.704-3(b) of the Regulations.
Section 4.4 Tax Withholding and Entity-Level Taxes. To the extent the Company is required by applicable law to withhold or to make tax payments on behalf of or with respect to any Member, the Managing Member is hereby authorized to withhold such amounts and make such tax payments as so required. All amounts withheld pursuant to applicable law with respect to any Member or payable by the Company pursuant to Code section 6225 (or any similar provision of state, local or foreign law) that (as reasonably determined in good faith by the Managing Member based upon this Agreement) are attributable to or allocable to any Member (and, in each case, not paid to the Company by such Member pursuant to the immediately following sentence) shall be treated as distributed to such Member pursuant to Section 5.1 or Section 5.4, as reasonably determined by the Managing Member, for all purposes of this Agreement and shall reduce amounts such Member would otherwise be entitled to receive under Section 5.1 or Section 5.4, as applicable. To the extent that at any time any such withheld
or paid amounts exceeds the distributions that such Member would have received but for such withholding or payment, such Member shall, upon demand by the Company, as determined by the Managing Member, promptly pay to the Company the amount of such excess. Each Member hereby agrees, severally and not jointly, to indemnify and hold harmless the Company and the other Members from and against any liability (including any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Member.
Section 4.5 Allocations to Transferred Interests. If any Units in the Company are Transferred, increased or decreased during a Fiscal Year, all items of income, gain, loss, deduction and credit recognized by the Company for such Fiscal Year shall be allocated among the Members to take into account their varying interests during the Fiscal Year in any manner approved by the Managing Member, as then permitted by the Code.
ARTICLE 5. DISTRIBUTIONS
Section 5.1 Distributions. Distributions shall be made to the Members, as and when determined by the Managing Member, pro rata in accordance with their respective Percentage Interests. Except (i) for pro rata distributions to its Members in accordance with Sections 5.1 through 5.3, (b) for tax distributions in accordance with Section 5.4 or (iii) as authorized by written consent of each Member, the Company shall not make, and shall cause its subsidiaries not to make, any distributions (in cash or in kind), dividend payments or asset transfers to any Member or any direct or indirect equity holder of any Member.
Section 5.2 Successors. For purposes of determining the amount of Distributions, each Member shall be treated as having made the Capital Contributions and as having received the Distributions made to or received by its predecessors in respect of any of such Member’s Units.
Section 5.3 Distributions In-Kind. To the extent that the Company makes pro rata distributions of property in-kind to the Members, the Company shall be treated as making a Distribution equal to the Fair Market Value of such property for purposes of Section 5.1 and such property shall be treated as if it were sold for an amount equal to its Fair Market Value. Any resulting gain or loss shall be allocated to the Members’ Capital Accounts in accordance with Article 4.
Section 5.4 Tax Distributions.
(a) Subject to the limitations set forth in any indenture or other credit, or other financing and warehousing or similar agreement governing indebtedness or other liabilities of the Company or any of its subsidiaries, no later than the tenth (10th) day following the end of each Quarterly Estimated Tax Period of each Fiscal Year, the Company shall, to the extent of available cash of the Company, make a distribution in cash (each, a “Tax Distribution”), pro rata in accordance with the Percentage Interests in effect on the date of such Tax Distribution, in an amount equal to the excess of (i) the product of (x) the taxable income of the Company attributable to such period and all prior quarterly periods in such Fiscal Year, based upon (I) the information returns filed by the Company, as amended or adjusted to date, and (II) estimated
amounts, in the case of periods for which the Company has not yet filed information returns (determined by disregarding any adjustment to the taxable income of any Member that arises under Code section 743(b) and is attributable to the acquisition by such Member of an interest in the Company in a transaction described in Code section 743(a)), multiplied by (y) the Assumed Tax Rate, over (ii) the aggregate amount of distributions made by the Company with respect to such Fiscal Year (treating any Tax Distribution made with respect to income for such Fiscal Year, regardless of when made, and any distribution other than a Tax Distribution made during such Fiscal Year, as being made with respect to such Fiscal Year).
(b) If, at any time after the end of a U.S. federal income tax year of the Company, the Company has a True-Up Amount, then subject to the limitations set forth in any indenture or other credit, or other financing and warehousing or similar agreement governing indebtedness or other liabilities of the Company or any of its subsidiaries, the Company shall, to the extent of available cash of the Company, make a Tax Distribution in an amount equal to the True-Up Amount pro rata in accordance with the Percentage Interests in effect on the date of such Tax Distribution.
ARTICLE 6. BOOKS OF ACCOUNT, RECORDS
AND REPORTS, FISCAL YEAR, TAX MATTERS
Section 6.1 Books and Records. Proper and complete records and books of account shall be kept by the Company in which shall be entered fully and accurately all transactions and other matters relative to the Company’s business as are usually entered into records and books of account maintained by Persons engaged in businesses of a like character, including the Capital Account established for each Member. The Company’s books and records shall be kept in a manner determined by the Managing Member in its sole discretion to be most beneficial for the Company. The books and records shall at all times be maintained at the principal office of the Company and shall be open to the inspection and examination of the Members or their duly authorized representatives for a proper purpose as set forth in Section 18-305 of the Act during reasonable business hours and at the sole cost and expense of the inspecting or examining Member.
Section 6.2 Annual Reports. The Company shall prepare or cause to be prepared all Federal, state and local tax returns that the Company is required to file. The Company shall use its best efforts to send to each Person who was a Member at any time during each Fiscal Year a copy of Schedule K-1 to Internal Revenue Service Form 1065 (or any successor form) indicating such Member’s share of the Company’s income, loss, gain, expense and other items relevant for Federal income tax purposes and corresponding analogous state and local tax forms within ninety (90) days after the end of such Fiscal Year.
Section 6.3 Tax Elections. The Company shall make on the first U.S. federal income tax return due after the date hereof, and keep in effect, a valid election under Code section 754. The Managing Member shall have the authority to make any and all other tax elections and other decisions relating to tax matters for Federal, state and local purposes.
Section 6.4 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the calendar year; provided, however, that the last Fiscal Year of the Company shall end on the date on which the Company is terminated.
Section 6.5 Tax Matters Partner. For purposes of Code section 6231(a)(7) as in effect prior to the enactment of the Bipartisan Budget Act of 2015 and Code section 6223(a) as amended by the Bipartisan Budget Act of 2015, the Company and each Member hereby designate Station Corp. as the “tax matters partner” and the “partnership representative,” respectively (collectively, the “Tax Matters Partner”). The Managing Member may remove or replace the Tax Matters Partner at any time and from time to time. The Tax Matters Partner is specifically directed and authorized to take whatever steps may be necessary or desirable to perfect such designation, including filing any forms or documents with the Internal Revenue Service and taking such other action as may from time to time be required under the Regulations. The Company shall indemnify and reimburse, to the fullest extent permitted by law, the Tax Matters Partner for all expenses (including legal and accounting fees) incurred as Tax Matters Partner while acting in good faith pursuant to this Section 6.5.
Section 6.6 Amended Returns. In the event of an adjustment by the Internal Revenue Service of any item of income, gain, loss, deduction or credit of the Company for a taxable year of the Company beginning after December 31, 2017 under Code section 6225(a) (a “Partnership Audit Adjustment”) that results, or would with the passing of time result, in a final assessment under Code section 6232, unless the Managing Member elects not to apply the provisions of this Section 6.6, upon the receipt of an amended Schedule K-1 from the Partnership (other than pursuant to Code section 6226), each Member (and each former Member) agrees to file an amended return as provided under Code section 6225(c)(2) taking into account all Partnership Audit Adjustments allocated to such Member (or former Member) as proposed in the Partnership Audit Adjustment (or, for the avoidance of doubt, as otherwise allocated pursuant to this Agreement if not allocated in the Partnership Audit Adjustment), and to pay the amount of any tax (including any interest and penalties thereon) due with respect to such amended return in such a manner and in such amount that the amount of any “imputed underpayment” of the Company, within the meaning of Code section 6225(a)(1), otherwise resulting from the Member’s (or former Member’s) allocable share of the Partnership Audit Adjustment is determined without regard to the portion of the Partnership Audit Adjustment taken into account by such Member (or former Member) on such amended return.
ARTICLE 7. POWERS, RIGHTS AND DUTIES OF THE MEMBERS
Section 7.1 Limitations. Other than as set forth in this Agreement, the Members shall not participate in the management or control of the Company’s business nor shall they transact any business for the Company, nor shall they have the power to act for or bind the Company, said powers being vested solely and exclusively in the Managing Member. The Managing Member shall constitute the “Manager” of the Company within the meaning of the Act. The Members shall have no interest in the properties or assets of the Managing Member, or any equity therein, or in any proceeds of any sales thereof (which sales shall not be restricted in any respect), by virtue of acquiring or owning an Interest in the Company.
Section 7.2 Liability. Subject to the provisions of the Act, no Member shall be liable for the repayment, satisfaction or discharge of any Company liabilities in excess of the balance of such Member’s Capital Account. No Member shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of any other Member.
Section 7.3 Priority. Except as otherwise provided in this Agreement, no Member shall have priority over any other Member as to Company allocations or distributions.
Section 7.4 Member Standard of Care. To the fullest extent permitted by law, no Member other than the Managing Member, but solely in its capacity as Managing Member, shall, in its capacity as a Member, have any fiduciary or other duties to the Company or to any other Member, other than any duties expressly set forth in this Agreement. To the extent that any Member, other than the Managing Member in its capacity as such, has any liabilities or duties at law or in equity in its capacity as a Member, including fiduciary duties or other standards of care, such liabilities and duties are hereby expressly eliminated and disclaimed by the Company and the Members to the fullest extent permitted by law.
ARTICLE 8. MANAGEMENT
Section 8.1 The Managing Member; Delegation of Authority and Duties.
(a) Authority of Managing Member. Subject to the provisions of this Agreement, the business, property and affairs of the Company shall be managed under the sole, absolute and exclusive direction of the Managing Member. Without limiting the foregoing provisions of this Section 8.1(a) and subject to the provisions of this Agreement, the Managing Member shall have the sole power to manage or cause the management of the Company, including, without limitation, the power and authority to effectuate the sale, lease, transfer, exchange or other disposition of any, all or substantially all of the assets of the Company (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Company) or the merger, consolidation, reorganization or other combination of the Company with or into another entity.
(b) Other Members. No Member who is not also a Managing Member, in his or her or its capacity as such, shall participate in or have any control over the business of the Company. Except as expressly provided herein, the Units, other Capital Stock in the Company, or the fact of a Member’s admission as a member of the Company do not confer any rights upon the Members to participate in the management of the affairs of the Company. Except as expressly provided herein, no Member other than the Managing Member shall have any right to approve or otherwise consent to any matter involving the Company, including with respect to any merger, consolidation, combination or conversion of the Company, or any other matter that a Member might otherwise have the ability to vote or consent with respect to under the Act, at law, in equity or otherwise. The conduct, control and management of the Company shall be vested exclusively in the Managing Member. In all matters relating to or arising out of the conduct of the operation of the Company, the decision of the Managing Member shall be the decision of the Company. Except as required by law or by separate agreement with the Company, no Member who is not also a Managing Member (and acting in such capacity) shall take any part in the
management or control of the operation or business of the Company in its capacity as a Member, nor shall any Member who is not also a Managing Member (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the Company in his or her or its capacity as a Member in any respect or assume any obligation or responsibility of the Company or of any other Member.
(c) Delegation by Managing Member. The Managing Member shall have the power and authority to delegate to one or more other Persons the Managing Member’s rights and powers to manage and control the business and affairs of the Company, including to delegate to agents and employees of the Member or the Company, and to delegate by a management agreement or another agreement with, or otherwise to, other Persons. The Managing Member may authorize any Person (including any Member or Officer of the Company or the Managing Member) to enter into and perform any document on behalf of the Company.
(d) Fiduciary Obligations. The Managing Member shall owe the same fiduciary duties to the Members and the Company and, as applicable, the creditors of the Company, as are owed by directors of a Delaware corporation to such corporation and the stockholders and, as applicable, the creditors of such corporation; provided, however, that the Managing Member shall not be liable to the Company or the Members or such creditors for monetary damages for breach of fiduciary duty as the Managing Member, except for liability (A) for any breach of such member’s duty of loyalty to the Company or the Members or such creditors, (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (C) under Section 174 of the General Corporation Law of the State of Delaware, or (D) for any transaction from which such member derived any improper personal benefit. In furtherance of the foregoing, creditors of the Company shall have the express right to bring claims directly or on behalf of the Company for breach of the fiduciary duties of the Managing Member to the same extent such creditors would have such right if the Company were a Delaware corporation (and if creditors of a Delaware corporation would not have the right to bring any such claim, the creditors of the Company will have no right to bring such claim against the Company).
Section 8.2 Officers.
(a) Designation and Appointment. Subject to applicable Gaming Laws, the Managing Member may, from time to time, employ and retain Persons as may be necessary or appropriate for the conduct of the Company’s business, including employees, agents and other Persons (any of whom may be a Member) who may be designated as officers of the Company (each, an “Officer” and, collectively, “Officers”), with such titles as and to the extent authorized by the Managing Member. Any number of offices may be held by the same Person. In its discretion, the Managing Member may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any Officers so designated shall have such authority and perform such duties as the Managing Member may from time to time delegate to them. The Managing Member may assign titles to particular Officers. Each Officer shall hold office until his successor shall be duly designated and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. The salaries or other compensation, if any, of the Officers of the
Company shall be fixed from time to time by the Managing Member. Designation of an Officer shall not of itself create any contractual or employment rights.
(b) Resignation and Removal. Any Officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Managing Member. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause at any time by the Managing Member.
(c) Standard of Care.
(i) The officers of the Company shall owe the same fiduciary duties to the Members and the Company and, as applicable, the creditors of the Company, as are owed by officers of a Delaware corporation to such corporation and the stockholders and, as applicable, the creditors of such corporation; provided, however, that an officer of the Company shall not be personally liable to the Company or the Members or such creditors for monetary damages for breach of fiduciary duty as an officer of the Company, except for liability (A) subject to paragraph (ii) below, for any breach of such officer’s duty of loyalty to the Company or the Members or such creditors, (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (C) for any transaction from which such officer derived any improper personal benefit. In furtherance of the foregoing, creditors of the Company shall have the express right to bring claims directly or on behalf of the Company for breach of the fiduciary duties of the officers of the Company to the same extent such creditors would have such right if the Company were a Delaware corporation (and if creditors of a Delaware corporation would not have the right to bring any such claim, the creditors of the Company will have no right to bring such claim against the Company).
(ii) Notwithstanding anything to the contrary set forth in this Agreement, to the extent that officers of the Company have any fiduciary or similar duties to the Company pursuant to the laws of the State of Nevada or the State of Delaware, whether in law or in equity, that result solely from the fact that such individual is an officer of the Company and that are more expansive than those contemplated by this Section 8.4(c), such duties are hereby modified to the extent permitted under the Act to those contemplated by this Section 8.4(c).
Section 8.3 Duties of Officers. The Officers, in the performance of their duties as such, shall owe to the Company duties of loyalty and due care of the type owed by officers of a Delaware corporation pursuant to the laws of the State of Delaware.
Section 8.4 Existence and Good Standing. The Managing Member may take all action which may be necessary or appropriate (i) for the continuation of the Company’s valid existence as a limited liability company under the laws of the State of Delaware (and of each other jurisdiction in which such existence is necessary to enable the Company to conduct the business in which it is engaged) and (ii) for the maintenance, preservation and operation of the business of the Company in accordance with the provisions of this Agreement and applicable
laws and regulations. The Managing Member may file or cause to be filed for recordation in the office of the appropriate authorities of the State of Delaware, and in the proper office or offices in each other jurisdiction in which the Company is formed or qualified, such certificates (including certificates of limited liability companies and fictitious name certificates) and other documents as are required by the applicable statutes, rules or regulations of any such jurisdiction or as are required to reflect the identity of the Members and the amounts of their respective capital contributions.
Section 8.5 Investment Company Act. The Managing Member shall use its best efforts to assure that the Company shall not be subject to registration as an investment company pursuant to the Investment Company Act of 1940, as amended.
Section 8.6 Indemnification of the Managing Member, Officers and Agents.
(a) The Company shall indemnify and hold harmless the Managing Member and its Affiliates, and the former and current officers, agents and employees of the Company, the Managing Member and each such Affiliate (each, an “Indemnified Party”), from and against any loss, expense, damage or injury suffered or sustained by them, by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Company or in furtherance of the interests of the Company, including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim if the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claims are based were not a result of fraud, gross negligence or willful misconduct by such Indemnified Party. Any indemnification pursuant to this Section 8.6 shall only be from the assets of the Company.
(b) Expenses (including reasonable attorneys’ fees) incurred by an Indemnified Party in a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding; provided that if an Indemnified Party is advanced such expenses and it is later determined that such Indemnified Party was not entitled to indemnification with respect to such action, suit or proceeding, then such Indemnified Party shall reimburse the Company for such advances.
(c) No amendment, modification or deletion of this Section 8.6 shall apply to or have any effect on the right of any Indemnified Party to indemnification for or with respect to any acts or omissions of such Indemnified Party occurring prior to such amendment, modification or deletion.
Section 8.7 Certain Costs and Expenses. The Company shall (i) pay, or cause to be paid, all costs, fees, operating expenses and other expenses of the Company (including the costs, fees and expenses of attorneys, accountants or other professionals and the compensation of all personnel providing services to the Company) incurred in pursuing and conducting, or otherwise related to, the activities of the Company and (ii) to the extent that such payments may be made in compliance with the terms of the agreements governing the Company’s debt obligations and applicable law, the Company shall pay or reimburse the Managing Member for (A) all costs, fees or expenses incurred by the Managing Member in connection with the IPO, other than the payment obligations of the Managing Member under the Tax Receivable
Agreement and the income, franchise (except as provided in this Section 8.7) or similar tax obligations of the Managing Member, and (B) all costs, fees or expenses incurred by the Managing Member in connection with serving as the Managing Member. To the extent that the Managing Member determines in good faith that such expenses are related to the business and affairs of the Company or any of its subsidiaries (including expenses that relate to the business and affairs of the Company or any of its subsidiaries and that also relate to other activities of the Managing Member), the Managing Member may cause the Company to pay or bear all expenses of the Managing Member, including costs of securities offerings not borne directly by Members, compensation and meeting costs of the board of directors of the Managing Member, costs relating to periodic reports to stockholders of the Managing Member, litigation costs and damages arising from litigation, accounting and legal costs incurred by the Managing Member and franchise taxes arising from the existing or business activities of the Managing Member, provided that the Company shall not pay or bear any income or similar tax obligations of the Managing Member.
ARTICLE 9. TRANSFERS OF INTEREST BY MEMBERS
Section 9.1 Restrictions on Transfers of Interests by Members. No Member may sell, assign, pledge or in any manner dispose of or create or suffer the creation of a security interest in or any encumbrance (it being agreed that no provision under the Exchange Agreement shall constitute an encumbrance for purposes hereof) on all or a portion of its Interest in the Company (the commission of any such act being referred to as a “Transfer,” any person who effects a Transfer being referred to as a “Transferor” and any person to whom a Transfer is effected being referred to as a “Transferee”) except in accordance with the terms and conditions set forth in this Article 9. No Transfer of an Interest in the Company shall be effective until such time as all requirements of this Article 9 in respect thereof have been satisfied and, if consents, approvals or waivers are required under this Agreement by the Managing Member, all of the same shall have been confirmed in writing by the Managing Member. Any Transfer or purported Transfer of an Interest in the Company not made in accordance with this Agreement (a “Void Transfer”) shall be null and void and of no force or effect whatsoever. Any amounts otherwise distributable under Article 5 or Article 10 in respect of an Interest in the Company that has been the subject of a Void Transfer may be withheld by the Company until the Void Transfer has been rescinded, whereupon the amount withheld (after reduction by any damages suffered by the Company attributable to such Void Transfer) shall be distributed without interest to the rightful holder of such Interest.
Section 9.2 Transfer of Interest of Members.
(a) A Member may not Transfer all or any portion of its Interest in the Company to any Person without the consent of the Managing Member (which consent shall not be unreasonably withheld, conditioned or delayed); provided that, subject to Section 9.3, a Member may, without the consent of the Managing Member or any other Member, Transfer all or a portion of its Interest in the Company (i) to one or more of its Permitted Transferees or (ii) pursuant to the Exchange Agreement.
(b) The Transferee of a Member’s Interest in the Company may be admitted to the Company as a Substituted Member upon the prior written consent of the Managing
Member (which consent shall not be unreasonably withheld, conditioned or delayed). Unless a Transferee of a Member’s Interest in the Company is admitted as a Substituted Member under this Section 9.2(b), it shall have none of the powers of a Member hereunder and shall have only such rights of an assignee under the Act as are consistent with this Agreement. No Transferee of a Member’s Interest shall become a Substituted Member unless such Transfer shall be made in compliance with Sections 9.2(a) and 9.3.
(c) Upon the Transfer of the entire Interest in the Company of a Member and effective upon the admission of its Transferee as a Member, the Transferor shall be deemed to have withdrawn from the Company as a Member.
(d) Upon the death, dissolution, resignation or withdrawal in contravention of Section 12.1, or the bankruptcy of a Member (the “Withdrawing Member”), the Company shall have the right to treat such Member’s successor(s)-in-interest as assignee(s) of such Member’s Interest in the Company, with none of the powers of a Member hereunder and with only such rights of an assignee under the Act as are consistent with this Agreement. For purposes of this Section 9.2(d), if a Withdrawing Member’s Interest in the Company is held by more than one Person (for purposes of this clause (d), the “Assignees”), the Assignees shall appoint one Person with full authority to accept notices and distributions with respect to such Interest in the Company on behalf of the Assignees and to bind them with respect to all matters in connection with the Company or this Agreement.
(e) Upon request of the Company, each Member agrees to provide to the Company information regarding its adjusted tax basis in its Interests along with documentation substantiating such amount, and any other information, documentation and certification necessary for the Company to comply with Code section 743 and the Regulations thereunder.
(f) The Company shall reflect each Transfer and admission of a Member authorized under this Article 9 by amending the Schedule of Members maintained pursuant to Section 3.1.
(g) To the extent that any Units are Transferred in accordance with this Article 9 by any Member (other than the Managing Member), the Transferor shall Transfer to the Transferee an equal number of shares of Class B Common Stock. No Member (other than the Managing Member) shall Transfer any such shares except to a Transferee of an equal number of Units pursuant to a Transfer made in accordance with this Article 9.
Section 9.3 Further Requirements. In addition to the other requirements of Section 9.2, and unless waived in whole or in part by the Managing Member, no Transfer of all or any portion of an Interest in the Company may be made unless the following conditions are met:
(a) The Transferor or Transferee shall have paid all reasonable costs and expenses, including attorneys’ fees and disbursements and the cost of the preparation, filing and publishing of any joinder or amendment to this Agreement or the Certificate, incurred by the Company in connection with the Transfer;
(b) The Transferor shall have delivered to the Company a fully executed copy of all documents relating to the Transfer, executed by both the Transferor and the Transferee, and the agreement of the Transferee in writing and otherwise in form and substance reasonably acceptable to the Managing Member to:
(i) be bound by the terms imposed upon such Transfer by the terms of this Agreement; and
(ii) assume all obligations of the Transferor under this Agreement relating to the Interest in the Company that is the subject of such Transfer;
(c) The Managing Member shall have been reasonably satisfied, including, at its option, having received an opinion of counsel to the Company reasonably acceptable to the Managing Member, that:
(i) the Transfer will not cause the Company to be treated as an association taxable as a corporation for Federal income tax purposes;
(ii) the Transfer will not cause the Company to be treated as a “publicly traded partnership” within the meaning of Code section 7704;
(iii) any such Transfer that does not constitute an exchange pursuant to the Exchange Agreement will not cause a termination of the Company under Code Section 708; and
(iv) the Transfer does not require registration under the Securities Act or any rules or regulations thereunder.
Any waivers from the Managing Member under this Section 9.3 shall be given or denied as reasonably determined by the Managing Member.
Section 9.4 Exchange.
(a) Each Member, other than Station Corp., that is not party to the Exchange Agreement shall be entitled to exchange Units and shares of Class B Common Stock on the terms and conditions set forth in the Exchange Agreement as if such Member were party thereto.
(b) The Managing Member may require all Members (other than the Managing Member) holding Units to exchange all such Units and shares of Class B Common Stock held by them subject to the terms and conditions of the Exchange Agreement or, if such Member is not a party to the Exchange Agreement, on terms substantially similar to the Exchange Agreement, in connection with a Change of Control.
Section 9.5 Consequences of Transfers Generally.
(a) In the event of any Transfer or Transfers permitted under this Article 9, the Transferor and the Interest in the Company that is the subject of such Transfer shall remain subject to this Agreement, and the Transferee shall hold such Interest in the Company subject to
all unperformed obligations of the Transferor. Any successor or Transferee hereunder shall be subject to and bound by this Agreement as if originally a party to this Agreement.
(b) Unless a Transferee of a Member’s Interest becomes a Substituted Member, such Transferee shall have no right to obtain or require any information or account of Company transactions, or to inspect the Company’s books or to exercise any rights of approval reserved only to admitted Members of the Company with respect to Company matters. Such a Transfer shall, subject to the last sentence of Section 9.1, merely entitle the Transferee to receive the share of distributions, Net Income, Net Loss and items of income, gain, deduction and loss to which the Transferor otherwise would have been entitled. Each Member agrees that such Member will, upon request of the Managing Member, execute such certificates or other documents and perform such acts as the Managing Member deems appropriate after a Transfer of such Member’s Interest in the Company (whether or not the Transferee becomes a Substituted Member) to preserve the limited liability of the Members under the laws of the jurisdictions in which the Company is doing business.
(c) The Transfer of a Member’s Interest in the Company and the admission of a Substituted Member shall not be cause for dissolution of the Company.
Section 9.6 Capital Account; Percentage Interest. Any Transferee of a Member under this Article 9 shall, subject to the last sentence of Section 9.1, succeed to the portion of the Capital Account and Percentage Interest so Transferred to such Transferee.
Section 9.7 Additional Filings. Upon the admission of a Substituted Member under Section 9.2, the Company shall cause to be executed, filed and recorded with the appropriate governmental agencies such documents (including amendments to this Agreement) as are required to accomplish such substitution.
ARTICLE 10. REGISTRATION RIGHTS
Section 10.1 Demand Registrations.
(a) Timing of Demand Registrations. Subject to the obligations of Station Corp. and the Company under Section 5(h) of the Underwriting Agreement dated on or about the date hereof and applicable Gaming Laws, any Major Holder, acting alone or jointly with other Major Holders (the “Exercising Holders”), may request registration under the Securities Act (a “Demand Registration”) of the offer and sale of all or any portion of such Major Holders’ Registrable Securities on Form S-1 or any similar long-form registration (a “Long-Form Registration”) or, if available, on Form S-3 or any similar short-form registration (a “Short-Form Registration”) or pursuant to a Shelf Takedown Prospectus Supplement.
(b) Numbers and Allocation of Demand Registrations.
(i) Long-Form Registrations. Each of the Fertitta Majority Holder and the DB Majority Holder shall be entitled to request three Long-Form Registrations pursuant to this Section 10.1.
(ii) Short-Form Registrations. The Major Holders shall be entitled to request an unlimited number of Short-Form Registrations and Shelf Takedown Prospectus Supplements pursuant to this Section 10.1. Demand Registrations will be Short-Form Registrations whenever Station Corp. is permitted to use any applicable short form and Shelf Takedown Prospectus Supplements whenever Station Corp. has a Shelf Registration Statement filed pursuant to Section 10.1(e) that is effective.
(c) Participation. Within five (5) days of the receipt of any request for a Demand Registration (including any Shelf Takedown Prospectus Supplement with respect to an underwritten offering), Station Corp. shall give written notice of such request to all Holders. Subject to the provisions of this Section 10.1 (including Section 10.1(d)), Station Corp. shall include in such Demand Registration all Registrable Securities that the Holders request to be registered in a written request from such Holders received by Station Corp. within (x) five (5) days following the mailing of Station Corp.’s notice pursuant to this Section 10.1(c) with respect to any Shelf Takedown Prospectus Supplement with respect to an underwritten offering and (y) thirty (30) days of the mailing of Station Corp.’s notice pursuant to this Section 10.1(c) with respect to any other registration. Subject to Section 10.1(d), Station Corp. may include in such Demand Registration securities for sale for its own account or for the account of other security holders. Notwithstanding the foregoing, Station Corp. shall not be required under this Section 10.1(c) to include any Holder’s Registrable Securities in any underwritten offering made pursuant to this Section 10.1(c) unless such Holder accepts the terms of the underwriting as agreed upon between the Major Holders and the underwriters selected by them and enters into an underwriting agreement in customary form with an underwriter or underwriters selected by the Major Holders.
(d) Priority on Demand Registrations. Station Corp. shall not include in any Demand Registration any securities which are not Registrable Securities of a Holder without the prior written consent of the Exercising Holder(s). If a Demand Registration is an underwritten offering and the managing underwriters advise Station Corp. in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the Exercising Holder(s), Station Corp. shall include in such Demand Registration (i) first, the Registrable Securities of the Holders on a pro rata basis based on the number of Registrable Securities requested to be included by such Holders in such Demand Registration; (ii) second, shares of Class A Common Stock or other shares of capital stock proposed to be sold by Station Corp.; and (iii) third, if permitted hereunder, any other securities requested to be included in such Demand Registration which securities, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering; provided, that, in the event the Holders are not permitted as a result of such underwriter’s advice to include at least 90% of the Registrable Securities requested to be included in such registration by such Holders, then such request and related registration shall not count towards the number of Demand Registrations which the Major Holders are entitled to request pursuant to Section 10.1(b).
(e) Shelf Registration. (i) As promptly as practicable following the expiration of the period set forth in Section 5(h) of the Underwriting Agreement, and provided that the Company is then eligible to file a registration statement in accordance with Rule 415
under the Securities Act or any similar rule that may be adopted by the SEC (a “Shelf Registration Statement”), the Company shall file a Shelf Registration Statement registering the sale of all Registrable Securities of each Holder with respect to which the Company receives a written request for inclusion therein (together with all duly completed and executed questionnaires and other documents reasonably requested by the Company and necessary to enable it to include such Holder as a selling stockholder) within thirty (30) days after the date that the Company delivers notice to each Holder of Registrable Securities of its intention to file such Shelf Registration Statement, which notice the Company shall deliver no less than thirty (30) days prior to the expiration of the period set forth in Section 5(h) of the Underwriting Agreement. The Company shall use its best efforts to have such Shelf Registration Statement declared effective by the SEC as soon as practicable thereafter and shall, notwithstanding Sections 10.4(a) and 10.4(k), keep such Shelf Registration Statement continuously effective (and supplemented and amended as required by the provisions of Section 10.4) to the extent necessary to ensure that it is available for resales of Registrable Securities included in such registration, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the SEC as announced from time to time, from the effective date of such Shelf Registration Statement until the earlier of (i) the date all Registrable Securities covered by such Shelf Registration Statement have been sold in the manner set forth and as contemplated in such Shelf Registration Statement and (ii) the Registrable Securities held by the Major Holders have been sold pursuant to Rule 144 of the Securities Act.
(ii) Subject to the provisions of Section 10.1(f), the Major Holders may, at any time and from time to time, request in writing (which request shall specify the Registrable Securities intended to be disposed of by such Major Holders and the intended method of distribution thereof) to sell pursuant to a prospectus supplement (a “Shelf Takedown Prospectus Supplement”) Registrable Securities of such Major Holders available for sale pursuant to such Shelf Registration Statement. The Company shall use its commercially reasonable efforts to, not later than the seventh (7th) Business Day after the receipt of the initial request to file a Shelf Takedown Prospectus Supplement from the applicable Major Holder, cause to be filed the Shelf Takedown Prospectus Supplement.
(iii) Notwithstanding the foregoing, the Company may, for valid business reasons, including that the continued use of the Shelf Registration Statement or Shelf Takedown Prospectus Supplement at any time would require Station Corp. to make an Adverse Disclosure, notify Holders that the Shelf Registration Statement or any Prospectus included therein, including a Shelf Takedown Prospectus Supplement, is not effective or useable for offers or resales of Registrable Securities; provided, however, that Station Corp. shall not be permitted to exercise such a suspension in the event of an Adverse Disclosure (i) more than two times during any twelve (12)-month period, or (ii) for a period exceeding forty-five (45) days on any one occasion. Each Holder agrees that upon receipt of any such notice pursuant to this Section 10.1(e)(iii), it will discontinue use of the Prospectus contained in the Shelf Registration Statement until receipt of copies of the amended Prospectus relating thereto or until advised in writing by the Company that the use of the Prospectus may be resumed.
(f) Restrictions on Demand Registrations. Station Corp. shall not be obligated to effect any Demand Registration pursuant to this Section 10.1 (including filing a
Registration Statement or any Shelf Takedown Prospectus Supplement) within three months after the effective date of a previous Demand Registration or Shelf Takedown Prospectus Supplement pursuant to this Section 10.1 or a previous registration under which the Holders had piggyback rights pursuant to Section 10.2 hereof (irrespective of whether such rights were exercised). Station Corp. may postpone for up to two months the filing or the effectiveness of a Registration Statement for a Demand Registration (including any Shelf Takedown Prospectus Supplement) if, based on the good-faith judgment of Station Corp.’s Board of Directors (after consultation with its legal and financial advisors), such Demand Registration would reasonably be expected to have a material adverse effect on any proposal or plan by Station Corp. or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization, joint venture or other transaction material to the business of Station Corp., as determined by the Board of Directors of Station Corp. in its good-faith reasonable judgment (an “Adverse Disclosure”); provided, that in such event, the Exercising Holders(s) initially requesting such Demand Registration shall be entitled to withdraw such request and, if such request is withdrawn, such Exercising Holder(s) shall retain their rights pursuant to this Section 10.1 as if the request for such Demand Registration was not made and any related registration shall not count as one of the permitted Demand Registrations of the Major Holders under this Section 10.1 and Station Corp. shall pay all Registration Expenses in connection with such registration; provided, further, that, following the postponement of a filing or the effectiveness of a Registration Statement pursuant to this sentence (whether or not the request for the applicable Demand Registration is subsequently withdrawn), Station Corp. may not, in the same calendar year, postpone the filing or effectiveness of any other Registration Statement under this sentence other than in respect of any requests for Demand Registrations made within two months of the initial request that was subject to the postponement. Station Corp. shall provide written notice to the Holders of (x) any postponement or withdrawal of the filing or effectiveness of a Registration Statement pursuant to this Section 10.1(f), (y) Station Corp.’s decision to file or seek effectiveness of such Registration Statement following such withdrawal or postponement and (z) the effectiveness of such Registration Statement.
(g) Selection of Underwriters. The Major Holders participating in any underwritten offering pursuant to this Section 10.1 shall collectively select the managing underwriter or underwriters to administer the corresponding offering with the consent of the Company, which shall not be unreasonably withheld.
Section 10.2 Piggyback Registrations.
(a) Piggyback Rights. If (but without any obligation to do so) Station Corp. proposes to register, whether or not for its own account, any Capital Stock in Station Corp. in connection with the public offering for cash of such securities (but excluding any (i) registration made pursuant to Section 10.1, (ii) registration relating solely to the sale of securities to participants in a Company sponsored benefit plan on Form S-1 or Form S-8 under the Securities Act or similar forms that may be promulgated under the Securities Act in the future and (iii) registration relating to a corporate reorganization, acquisition or other transaction under Rule 145 of the Securities Act on Form S-4 under the Securities Act or similar forms that may be promulgated under the Securities Act in the future), Station Corp. shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder
given in writing to Station Corp. within fifteen (15) days after receipt of such notice by Station Corp., Station Corp. shall, subject to the provisions of this Section 10.2, include in the Registration Statement all of the Registrable Securities that each such Holder has requested to be registered.
(b) Right to Terminate Registration. Station Corp. shall have the right to terminate or withdraw any registration initiated by it under this Section 10.2 prior to the effectiveness of such registration and the commencement of the public offer of the securities covered by such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by Station Corp. in accordance with Section 10.5 hereof. Any such withdrawal shall be without prejudice to the rights of any Holder to request that a registration be effected under Section 10.1 or to be included in subsequent registrations under Section 10.2(a).
(c) Underwriting Requirements. In connection with any offering involving an underwriting of shares of common stock for the benefit of Station Corp. or any security holder of Station Corp., Station Corp. shall not be required under this Section 10.2 to include any of the Holders’ Registrable Securities in such underwriting pursuant to this Section 10.2 unless they accept the terms of the underwriting as agreed upon between Station Corp. and the underwriters selected by it and enter into an underwriting agreement in customary form with an underwriter or underwriters selected by Station Corp. Notwithstanding any other provision of this Section 10.2, if the managing underwriters with respect to the proposed offering advise Station Corp. in writing that in their opinion the number of securities requested to be included in such registration exceeds the number of securities which can be sold in such offering without being likely to have a material adverse effect on the offering of securities as then contemplated (including a material adverse effect on the price at which it is proposed to sell the securities), then Station Corp. shall so advise all holders of securities that would otherwise be included in such registration, and the number of shares that may be included in the registration shall be allocated: (i) first, to securities being sold for the account of Station Corp., (ii) second, pro rata among the Holders electing to participate in such registration in accordance with this Section 10.2 according to the total amount of Registrable Securities requested to be included in such registration, and (iii) last, pro rata among the other selling security holders of Station Corp. according to the total amount of securities requested to be included in such registration.
(d) Selection of Underwriters. Station Corp. shall have the right to select the managing underwriter or underwriters to administer any offering pursuant to this Section 10.2.
Section 10.3 [Reserved.]
Section 10.4 Obligations of Station Corp. Whenever required under this Article 5 to effect the registration of any Registrable Securities, Station Corp. shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its best efforts to cause such Registration Statement to become effective, and, subject to Section 10.1(e), keep such Registration Statement effective for
a period of up to one hundred eighty (180) days or, if earlier, until the distribution contemplated in the Registration Statement has been completed;
(b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such registration as may be necessary to comply with the provisions of the Securities Act with respect to disposition of all securities covered by such Registration Statement for the period set forth in paragraph (a) above or Section 10.1(e), as applicable;
(c) furnish to each selling Holder and their counsel selected in accordance with Section 10.6 copies of all documents proposed to be filed with the SEC in connection with such registration, which documents will be provided to such counsel and each selling Holder prior to the filing thereof;
(d) furnish to the selling Holders, without charge, such number of (i) conformed copies of the Registration Statement and of each amendment or supplement thereto (in each case including all exhibits and documents filed therewith), and (ii) copies of the prospectus included in such Registration Statement, including each preliminary prospectus and any summary prospectus, in conformity with the requirements of the Securities Act, and such other documents, in each case, as they may reasonably request in order to facilitate the disposition of Registrable Securities held by them in accordance with the intended method or methods of such disposition;
(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement or placement agreement, as applicable, in usual and customary form, with the managing underwriters or placement agent, as applicable, of such offering and enter into such other agreements and take such other actions in order to expedite or facilitate the disposition of such Registrable Securities, including preparing for, and participating in, “road shows” and all other customary selling efforts, all as the underwriters reasonably request;
(f) notify each selling Holder covered by such Registration Statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the issuance or, to its knowledge, threatened issuance of any stop order by the SEC in respect of such Registration Statement (and use every reasonable effort to prevent the entry of such stop order or obtain the lifting of any such stop order at the earliest possible moment), (ii) any period when the Registration Statement ceases to be effective, or (iii) the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and, as promptly as is practicable, prepare and furnish to such selling Holder a reasonable number of copies of any supplement to or amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(g) cause all such Registrable Securities registered hereunder to be listed on each securities exchange or any automated quotation system on which similar securities issued by Station Corp. are then listed or, if not so listed, use its commercially reasonable efforts to cause such Registrable Securities registered hereunder to be listed on a securities exchange or any automated quotation system selected by the Board of Directors;
(h) enter into reasonable “lock-up” agreements restricting Station Corp.’s right to issue or sell the Equity Securities or any rights or derivative contracts with respect thereto for a period not to exceed one hundred eighty (180) days from the effective date of the Registration Statement relating to the IPO, plus any applicable extension of such period as may be provided for in a customary “booster shot” provision provided for in such lock-up agreement, which extends such time period under certain circumstances; provided, that for any subsequent underwritten offerings, the lock-up period shall be reduced to be a maximum of ninety (90) days, plus any applicable extension of such period as may be provided for in a customary “booster shot” provision provided for in such lock-up agreement, which extends such time period under certain circumstances;
(i) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(j) use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions in the United States as shall be reasonably requested by the selling Holders and such other jurisdictions as shall be reasonably requested by the managing underwriters (or obtain an exemption from registration or qualification under such laws) and do any and all other acts and things which may be necessary or advisable to enable such selling Holders to consummate the disposition of the Registrable Securities in such jurisdictions in accordance with the intended method or methods of distribution thereof; provided, however, that Station Corp. shall not be required in connection therewith or as a condition thereto to qualify to do business, where not otherwise required, or to file a general consent to service of process or become subject to taxation in any such states or jurisdictions;
(k) use its best efforts to cause all Registrable Securities covered by such Registration Statement to be registered with or approved by such other Governmental Authorities, including the Gaming Authorities, as may be necessary by virtue of the business and operations of Station Corp. and its subsidiaries to enable each selling Holder thereof to consummate the disposition of such Registrable Securities in accordance with the intended method or methods of disposition thereof;
(l) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement of Station Corp. (in form complying with the provisions of Rule 158 under the Securities Act) covering, subject to Section 10.1(e), the period of at least 12 months, but not more than 18 months, beginning with the first month after the effective date of the Registration Statement;
(m) use its best efforts to take all other reasonable and customary steps typically taken by issuers to effect the registration and disposition of such Registrable Securities as contemplated hereby;
(n) during the period of time referred to in Section 10.4(a) above, use its commercially reasonable efforts to avoid the issuance of, or if issued, to obtain the withdrawal of, any order enjoining or suspending the use or effectiveness of a Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as promptly as practicable;
(o) enter into customary agreements and take all other action in connection therewith in order to expedite or facilitate the distribution of the Registrable Securities included in such Registration Statement;
(p) in connection with any sale or transfer of the Registrable Securities (whether or not pursuant to a Registration Statement) that will result in the securities being delivered no longer constituting Registrable Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold, which certificates shall not bear any transfer restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as the Holders may request at least three Business Days prior to any sale of the Registrable Securities;
(q) in connection with any underwritten offering, use its best efforts to obtain a “comfort” letter from the independent public accountants for Station Corp. and any acquisition target of Station Corp. whose financial statements are required to be included or incorporated by reference in any Registration Statement, in form and substance customarily given by independent certified public accountants in an underwritten public offering, addressed to the underwriters, if any, and to the Holders of the Registrable Securities being sold pursuant to each Registration Statement;
(r) execute and deliver all instruments and documents (including an underwriting agreement or placement agent agreement, as applicable in customary form) and take such other actions and obtain such certificates and opinions as sellers of the Registrable Securities being sold reasonably request in order to effect a public offering of such Registrable Securities and in such connection, if the offering is an underwritten offering, (i) make such representations and warranties to the holders of such Registrable Securities and the underwriters, if any, with respect to the business of Station Corp. and its subsidiaries, and the Registration Statement and documents, if any, incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, and (ii) use its reasonable best efforts to furnish to the selling holders and underwriters of such Registrable Securities opinions and negative assurance letters of counsel to Station Corp. and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any ), covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and any such underwriters; and
(s) upon reasonable request by a Holder, Station Corp. shall file an amendment to any applicable Registration Statement (or Prospectus supplement, as applicable), to name additional Holders of Registrable Securities or otherwise update the information provided by any such Holder in connection with such Holder’s disposition of Registrable Securities.
Section 10.5 Obligations of Holder.
(a) Information from Holder. It shall be a condition precedent to the obligations of Station Corp. to take any action pursuant to this Article 10 with respect to the Registrable Securities of any selling Holder that such Holder shall, within ten (10) Business Days of a request by Station Corp., furnish to Station Corp. such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably required by Station Corp. to effect the registration of such Holder’s Registrable Securities.
(b) Participation in Underwritten Registrations. No Holder may participate in any registration hereunder which is underwritten unless such Holder (a) agrees to sell such Holder’s securities on the basis provided in any customary underwriting arrangements approved by the Person(s) entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
(c) Each Holder shall enter into reasonable “lock-up” agreements restricting such Holder’s right to transfer the Equity Securities or any rights or derivative contracts with respect thereto for a period not to exceed one hundred eighty (180) days from the effective date of the Registration Statement relating to the IPO, plus any applicable extension of such period as may be provided for in a customary “booster shot” provision provided for in such lock-up agreement, which extends such time period under certain circumstances; provided, that for any subsequent offerings, the lock-up period shall be reduced to be a maximum of ninety (90) days, plus any applicable extension of such period as may be provided for in a customary “booster shot” provision provided for in such lock-up agreement, which extends such time period under certain circumstances.
Section 10.6 Expenses of Registration. All expenses (other than underwriting discounts and commissions) incurred in connection with registrations pursuant to Sections 10.1 and 10.2, including all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for Station Corp., all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by Station Corp. and the reasonable fees and disbursements of one counsel for the selling Holders selected by Holders holding a majority of the Registrable Securities being sold in such offering included in such registration (collectively, “Registration Expenses”), shall be borne by Station Corp.; provided that, in the event that both a Fertitta Major Holder and a DB Major Holder participates in an offering, each of them shall be entitled to separate counsel, whose reasonable fees and disbursements shall be borne by Station Corp.; provided, further, that the selection of such counsel shall be subject to the consent of Station Corp., not to be unreasonably withheld, conditioned or delayed.
Section 10.7 Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Article 10:
(a) To the fullest extent permitted by law, Station Corp. will indemnify and hold harmless each Holder, the partners, members, managers, officers and directors of each Holder, each Observer, any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or underwriter, within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, expenses or liabilities (joint or several) (or actions, proceedings or settlements in respect thereof), to which they may become subject under the Securities Act, the Exchange Act or other federal, state or foreign securities laws, or common law, insofar as such losses, claims, damages, expenses or liabilities (or actions proceeding or settlements in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”) by Station Corp.: (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus (or similar offering documents) contained therein or any amendments or supplements thereto, or any other document required in connection therewith or any qualification or compliance associated therewith; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation of the Securities Act, the Exchange Act, any state or foreign securities laws or any rule or regulation promulgated under the Securities Act, the Exchange Act or other federal, state or foreign securities laws or common law; and Station Corp. will reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending or settling any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 10.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of Station Corp. (which consent shall not be unreasonably withheld, delayed or conditioned), nor shall Station Corp. be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, underwriter or controlling Person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Person seeking indemnity and shall survive the transfer of such securities by any such Person.
(b) To the extent permitted by law, each selling Holder, on a several and not joint basis, will indemnify and hold harmless Station Corp., each of its directors, each of its officers who signed the Registration Statement, each Person, if any, who controls Station Corp. within the meaning of the Securities Act, and any underwriter against any losses, claims, damages, expenses or liabilities (joint or several) (or actions, proceedings or settlements in respect thereof) to which any of the foregoing Persons may become subject, under the Securities Act, the Exchange Act or other federal, state or foreign securities laws, or common law, insofar as such losses, claims, damages or liabilities (or actions proceedings or settlements in respect thereto) arise out of or are based upon any Violation (but excluding clause (iii) of the definition thereof), in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any Person intended to
be indemnified pursuant to this Section 10.7(b) for any legal or other expenses reasonably incurred by such Person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 10.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld, delayed or conditioned); provided, further that in no event shall any indemnity under this Section 10.7(b) exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 10.7 of written notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 10.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict, together with one local counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 10.7 only to the extent of such material prejudice, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 10.7. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party, (iii) does not include any undertaking or obligation to act or to refrain from acting by the indemnified party and (iv) is for monetary damages only.
(d) If the indemnification provided for in this Section 10.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of and, except as to Station Corp. where Station Corp. does not participate in the offering, the relative benefits received by the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, that no Person guilty of fraud shall be entitled to contribution. The relative fault of the indemnifying party and of the indemnified party
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. The relative benefits received by the indemnifying party and the indemnified party shall be determined by reference to the net proceeds and underwriting discounts and commissions from the offering received by each such party. In no event shall any contribution of any Holder under this Section 10.7(d) exceed the net proceeds from the offering received by such Holder, less any amounts paid under Section 10.7(b).
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into by Station Corp. and a Holder in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control with respect to Station Corp. and such Holder.
(f) The obligations of Station Corp. and Holders under this Section 10.7 shall survive the completion of any offering of Registrable Securities in a Registration Statement under this Article 10and the termination of this Agreement.
(g) The obligations of the parties under this Section 10.7 shall be in addition to any liability which any party may otherwise have to any other party.
Section 10.8 Survival of Obligations. The obligations of Station Corp. pursuant to this Article 10 shall apply to Registrable Securities held by any Person who was a Member pursuant to the Prior Agreement and to Registrable Securities issued upon an Exchange and shall be enforceable by the Holder thereof even if such Holder is not a Member or party to this Agreement.
ARTICLE 11. CERTAIN COMPENSATION MATTERS
Section 11.1 Non-Equity Compensation. The Company and the Members agree with respect to the employment of the FE Senior Executives, other executives and employees of Station Casinos (a) the aggregate Non-Equity Compensation of Frank J. Fertitta III shall remain unchanged for two (2) years following the consummation of the IPO; (b) the aggregate Non-Equity Compensation of Lorenzo J. Fertitta shall be fixed for two (2) years following the consummation of the IPO at Five Hundred Thousand Dollars ($500,000.00) per year; and (c) for so long as the DB Holder(s) and their Affiliates shall collectively beneficially own at least five percent (5%) of the outstanding Class A Common Stock (determined assuming that all of the outstanding Units, other than those held by Station Corp., were exchanged (together with an equivalent number of shares of Class B Common Stock) for shares of Class A Common Stock in accordance with the terms and conditions of the Exchange Agreement), the aggregate Non-Equity Compensation payable to all other executives and employees (including, but not limited to, the FE Senior Executives other than Frank Fertitta and Lorenzo Fertitta) employed by Fertitta Entertainment LLC, a Delaware limited liability company (“Fertitta Entertainment”), immediately prior to the IPO, (i) shall remain unchanged for the first year following the consummation of the IPO and (ii) for the second year following the consummation of the IPO,
shall not exceed 105% of the aggregate Non-Equity Compensation received by all such individuals, taken in the aggregate, during the first year following the consummation of the IPO (collectively, the “Non-Equity Compensation Thresholds”); provided, however, that the Non-Equity Compensation Thresholds shall not apply to any employees hired for new business or strategic opportunities that are outside of the ordinary course of the existing business of Station Casinos. Following the expiration of such two (2) year period, the foregoing restrictions shall cease to apply and all matters of Non-Equity Compensation shall be subject to the discretion and oversight of the Compensation Committee of the Board of Directors of Station Corp.
Section 11.2 Equity Compensation.
(a) Subject to Section 11.2(b), the Company and the Members agree that, for a period of one (1) year following the consummation of the IPO, no form of equity compensation shall be granted by Station Casinos or any of its Affiliates to any executives or employees employed by Fertitta Entertainment (including, without limitation, the FE Senior Executives) immediately prior to the IPO other than the initial grants that become effective upon the consummation of the IPO; provided, that no initial grants shall be made to either of Frank J. Fertitta III or Lorenzo J. Fertitta. Following the expiration of such one (1) year period, the foregoing restrictions shall cease to apply and, subject to Section 11.2(b), all matters of equity compensation with respect to executives or employees employed by Fertitta Entertainment (including, without limitation, the FE Senior Executives) immediately prior to the IPO shall be subject to the discretion and oversight of the Compensation Committee of the Board of Directors of Station Corp.
(b) The Company and the Members agree that, for a period of two (2) years following the consummation of the IPO, no form of equity compensation shall be granted by Station Casinos or any of its Affiliates to either of Frank J. Fertitta III or Lorenzo J. Fertitta. Following the expiration of such two (2) year period, the foregoing restrictions shall cease to apply and all matters of equity compensation with respect to Frank J. Fertitta III and Lorenzo J. Fertitta shall be subject to the discretion and oversight of the Compensation Committee of the Board of Directors of Station Corp.
(c) The Company and the Members agree that, for a period of two (2) years following the consummation of the IPO, the aggregate number of shares of Class A Common Stock issued or issuable in connection with awards made pursuant to the Equity Incentive Plan, any successor plan thereto, or otherwise (including, for the avoidance of doubt, any initial grants referenced in Section 11.2(a)) shall not exceed fifty percent (50%) of the total number of shares of Class A Common Stock reserved for issuance pursuant to the Equity Incentive Plan. Following the expiration of such two (2) year period, the foregoing restrictions shall cease to apply and all matters of equity compensation shall be subject to the discretion and oversight of the Compensation Committee of the Board of Directors of Station Corp.
Section 11.3 Company and Managing Member Obligation Notwithstanding anything to the contrary in Article VIII hereof, each of the Company and the Managing Member shall comply with, and cause Station Casinos and any of their other Affiliates to comply with, the terms and provisions of the preceding Sections 11.1 and 11.2.
ARTICLE 12. RESIGNATION OF MEMBERS;
TERMINATION OF COMPANY; LIQUIDATION
AND DISTRIBUTION OF ASSETS
Section 12.1 Resignation of Members. Except as otherwise specifically permitted in this Agreement, a Member may not resign or withdraw from the Company unless unanimously agreed to in writing by all other Members. The Managing Member shall reflect any such resignation or withdrawal by amending the Schedule of Members maintained pursuant to Section 3.1(b), dated as of the date of such resignation or withdrawal, and the resigning or withdrawing Member (or such Member’s successors-in-interest) shall have none of the powers of a Member hereunder and shall only have such rights of an assignee of a limited liability company interest under the Act as are consistent with the other terms and provisions of this Agreement and with no other rights under this Agreement. The remaining Members may, in their sole discretion, cause the Company to distribute to the resigning or withdrawing Member the balance in its Capital Account on the date of such resignation or withdrawal. Upon the distribution to the resigning or withdrawing Member of the balance in his Capital Account, the resigning or withdrawing Member shall have no further rights with respect to the Company. Any Member resigning or withdrawing in contravention of this Section 12.1 shall indemnify, defend and hold harmless the Company, the Managing Member and all other Members from and against any losses, expenses, judgments, fines, settlements or damages suffered or incurred by the Company or any such other Member arising out of or resulting from such resignation or withdrawal.
Section 12.2 Dissolution of Company.
(a) The Company shall be dissolved, wound up and terminated as provided herein upon the first to occur of the following:
(i) a decree of dissolution of the Court of Chancery of the State of Delaware pursuant to Section 18-802 of the Act;
(ii) the determination of the Managing Member to dissolve the Company; or
(iii) the occurrence of any other event that would make it unlawful for the business of the Company to be continued.
Except as expressly provided herein or as otherwise required by the Act, the Members shall have no power to dissolve the Company.
(b) In the event of the dissolution of the Company for any reason, the Managing Member or a liquidating agent or committee appointed by the Managing Member shall act as a liquidating agent (the Managing Member or such liquidating agent or committee, in such capacity, is hereinafter referred to as the “Liquidator”) and shall commence to wind up the affairs of the Company and to liquidate the Company assets. The Members shall continue to share all income, losses and distributions during the period of liquidation in accordance with Articles 4 and 5. The Liquidator shall have full right and unlimited discretion to determine the time, manner and terms of any sale or sales of Company assets pursuant to such liquidation,
giving due regard to the activity and condition of the relevant market and general financial and economic conditions.
(c) The Liquidator shall have all of the rights and powers with respect to the assets and liabilities of the Company in connection with the liquidation and termination of the Company that the Managing Member would have with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any Company assets.
(d) Notwithstanding the foregoing, a Liquidator which is not a Member shall not be deemed a Member and shall not have any of the economic interests in the Company of a Member; and such Liquidator shall be compensated for its services to the Company at normal, customary and competitive rates for its services to the Company, as reasonably determined by the Managing Member.
Section 12.3 Distribution in Liquidation. The Company’s assets shall be applied in the following order of priority:
(a) first, to pay the costs and expenses of the winding—up, liquidation and termination of the Company;
(b) second, to creditors of the Company, in the order of priority provided by law, including fees, indemnification payments and reimbursements payable to the Members or their Affiliates, but not including those liabilities (other than liabilities to the Members for any expenses of the Company paid by the Members or their Affiliates, to the extent the Members are entitled to reimbursement hereunder) to the Members in their capacity as Members;
(c) third, to establish reserves reasonably adequate to meet any and all contingent or unforeseen liabilities or obligations of the Company; provided, however, that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided; and
(d) fourth, the remainder to the Members in accordance with Section 5.1.
If the Liquidator, in its sole discretion, determines that Company assets other than cash are to be distributed, then the Liquidator shall cause the Fair Market Value of the assets not so liquidated to be determined (with any such determination normally made by the Managing Member in accordance with the definition of “Fair Market Value” being made instead by the Liquidator). Such assets shall be retained or distributed by the Liquidator as follows:
(i) the Liquidator shall retain assets having a value, net of any liability related thereto, equal to the amount by which the cash net proceeds of liquidated assets are insufficient to satisfy the requirements of clauses (a), (b), and (c) of this Section 12.3; and
(ii) the remaining assets shall be distributed to the Members in the manner specified in clause (d) of this Section 12.3.
(e) If the Liquidator, in its sole discretion, deems it not feasible or desirable to distribute to each Member its allocable share of each asset, the Liquidator may allocate and distribute specific assets to one or more Members as the Liquidator shall reasonably determine to be fair and equitable, taking into consideration, inter alia, the Fair Market Value of such assets and the tax consequences of the proposed distribution upon each of the Members (including both distributees and others, if any). Any distributions in-kind shall be subject to such conditions relating to the disposition and management thereof as the Liquidator deems reasonable and equitable.
Section 12.4 Final Reports. Within a reasonable time following the completion of the liquidation of the Company’s assets, the Liquidator shall deliver to each of the Members a statement which shall set forth the assets and liabilities of the Company as of the date of complete liquidation and each Member’s portion of distributions pursuant to Section 12.3.
Section 12.5 Rights of Members. Each Member shall look solely to the Company’s assets for all distributions with respect to the Company and such Member’s Capital Contribution (including return thereof), and such Member’s share of profits or losses thereon, and shall have no recourse therefor (upon dissolution or otherwise) against any other Member or the Managing Member.
Section 12.6 Deficit Restoration. Notwithstanding any other provision of this Agreement to the contrary, upon liquidation of a Member’s Interest in the Company (whether or not in connection with a liquidation of the Company), no Member shall have any liability to restore any deficit in its Capital Account. In addition, no allocation to any Member of any loss, whether attributable to depreciation or otherwise, shall create any asset of or obligation to the Company, even if such allocation reduces the Capital Account of any Member or creates or increases a deficit in such Capital Account; it is also the intent of the Members that no Member shall be obligated to pay any such amount to or for the account of the Company or any creditor of the Company. No creditor of the Company is intended as a third-party beneficiary of this Agreement nor shall any such creditor have any rights hereunder.
Section 12.7 Termination. The Company shall terminate when all property owned by the Company shall have been disposed of and the assets shall have been distributed as provided in Section 12.3. The Liquidator shall then execute and cause to be filed a Certificate of Cancellation of the Company.
ARTICLE 13. NOTICES AND CONSENT OF MEMBERS
Section 13.1 Notices. All notices, demands or requests required or permitted under this Agreement must be in writing, and shall be made by hand delivery, certified mail, overnight courier service, electronic mail or facsimile to the address, electronic mail address or facsimile number set forth in the Schedule of Members, but any party may designate a different address, electronic mail address or facsimile number by a notice similarly given to the Company. Any such notice or communication shall be deemed given when delivered by hand, if delivered
on a Business Day, the next Business Day after delivery by hand if delivered by hand on a day that is not a Business Day; four (4) Business Days after being deposited in the United States mail, postage prepaid, return receipt requested, if mailed; on the next Business Day after being deposited for next day delivery with Federal Express or a similar overnight courier; when receipt is acknowledged, whether by facsimile confirmation or return electronic mail, if sent by facsimile or electronic mail on a Business Day; and the next Business Day following the day on which receipt is acknowledged whether by facsimile confirmation or return electronic mail, if sent by facsimile or electronic mail on a day that is not a Business Day.
Section 13.2 Consents and Approvals. Any action requiring the consent or approval of Members under this Agreement, unless otherwise specified herein, may be taken at a meeting of Members or, in lieu thereof, by written consent of Members holding the requisite Percentage Interest or, where expressly required by this Agreement or by applicable law, by all of the Members.
ARTICLE 14. AMENDMENT OF AGREEMENT
Section 14.1 Amendments. This Agreement may be amended, supplemented, waived or modified by the written consent of the Managing Member in its sole discretion without the approval of any other Member or other Person; provided, that to the extent that any such amendment, supplement, waiver or modification would adversely affect the rights of the holders of any given class of Units (other than the Managing Member), such amendment shall require the consent of the holders of a majority of the then outstanding Units of each such class held by Members (other than, and, for purposes of determining whether holders of a majority of the then outstanding Units have consented, excluding any Units that are held by the Managing Member); provided, further, that (x) Articles X and XI, and any other provisions governing the rights or obligations of any DB Holder or DB Majority Holder in its capacity as such shall not be amended, supplemented, modified or waived, nor shall any other modifications to this Agreement be made that would have a similar effect, without the prior written consent of the DB Majority Holder and (y) Article X and any other provisions governing the rights or obligations of any Fertitta Holder or Fertitta Majority Holder in its capacity as such shall not be amended, supplemented, modified or waived, nor shall any other modifications to this Agreement be made that would have a similar effect, without the prior written consent of the Fertitta Majority Holder.
Section 14.2 Amendment of Certificate. In the event that this Agreement shall be amended, supplemented or modified pursuant to this Article 14, the Managing Member shall amend, supplement or modify the Certificate to reflect such change if the Managing Member deems such amendment, supplement or modification of the Certificate to be necessary or appropriate.
Section 14.3 Power of Attorney. Each Member hereby irrevocably constitutes and appoints the Managing Member as its true and lawful attorney-in-fact, with full power of substitution, in its name, place and stead to make, execute, sign, acknowledge (including swearing to), verify, deliver, record and file, on its behalf, the following: (i) any amendment, supplement or modification to this Agreement which complies with the provisions of Section 14.1 of this Agreement; and (ii) the Certificate and any amendment, supplement or modification thereof required because this Agreement is amended, including an amendment, supplement or
modification to effectuate any change in the membership of the Company or in the Capital Contributions of the Members. This power-of-attorney is a special power-of-attorney and is coupled with an interest in favor of the Managing Member and, as such: (A) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of any party granting this power-of-attorney, regardless of whether the Company or the Managing Member shall have had notice thereof; (B) may be exercised for a Member by facsimile signature of the Managing Member or, after listing all of the Members, including such Member, by a single signature of the Managing Member acting as attorney-in-fact for all of them; and (C) shall survive the delivery of an assignment by a Member of the whole or any portion of its Interest in the Company, except that where the assignee thereof has been approved by the Managing Member for admission to the Company as a Substituted Member, this power-of-attorney given by the assignor shall survive the delivery of such assignment for the sole purpose of enabling the Managing Member to execute, acknowledge and file any instrument necessary to effect such substitution.
ARTICLE 15. MISCELLANEOUS
Section 15.1 Entire Agreement. This Agreement, together with the Exchange Agreement, the Tax Receivable Agreement and the Registration Rights Agreement, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any prior agreement or understandings among them with respect to the subject matter hereof (including the Prior Agreement), and it may not be modified or amended in any manner other than as set forth herein.
Section 15.2 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by, and interpreted in accordance with, the law of the State of Delaware.
Section 15.3 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced as a result of any rule of law or public policy, all other terms and other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the greatest extent possible.
Section 15.4 Effect. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, successors and permitted assigns.
Section 15.5 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof.
Section 15.6 Counterparts. This Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of the signatures of each of the Members, which may be delivered via facsimile or .pdf, to one of such counterpart signature pages. All of such counterpart signatures pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.
Section 15.7 Waiver of Partition. The Members hereby agree that the Company assets are not and will not be suitable for partition. Accordingly, each of the Members hereby irrevocably waives any and all rights (if any) that such Member may have to maintain any action for partition of any of such assets.
Section 15.8 Waiver of Judicial Dissolution. Each Member agrees that irreparable damage would occur if any Member should bring or have brought on its behalf an action for judicial dissolution of the Company. Accordingly, each Member accepts the provisions under this Agreement as such Member’s sole entitlement on dissolution of the Company and waives and renounces all rights to seek or have sought for such Member a court decree of dissolution or to seek the appointment by a court of a liquidator for the Company.
Section 15.9 Consent to Jurisdiction; Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
Section 15.10 Binding Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement that cannot be resolved amicably by the parties, including the scope or applicability of this agreement to arbitrate, shall be determined by binding arbitration pursuant to Section 349 of the Rules of the Court of Chancery of the State of Delaware if it is eligible for such arbitration. If the dispute claim or controversy is not eligible for such arbitration, it shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in accordance with its commercial rules and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any AAA arbitration proceeding shall be conducted in the State of Delaware. The AAA arbitrator shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including the issuance of an injunction or other equitable relief. However, any party may, without inconsistency with this arbitration provision, apply to any court having jurisdiction hereof and seek interim provisional, injunctive or other equitable relief until the arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.
Section 15.11 Gaming Redemption.
(a) The Affected Interests owned or controlled directly or indirectly by an Unsuitable Person or an Affiliate of an Unsuitable Person (the “Affected Member”) shall be
subject to redemption by the Company, out of funds legally available therefor, to the extent required by the Gaming Authority making the determination of unsuitability or reasonably deemed necessary or advisable by the Managing Member. If the Gaming Authority or the Managing Member making the determination of unsuitability requires or deems it reasonably necessary or advisable to redeem the Affected Interests, the Managing Member shall give a Redemption Notice to the Affected Member and shall thereafter proceed to purchase the Affected Interests on the Redemption Date for the Redemption Price, subject to any approvals, conditions or limitations under applicable Gaming Laws. The Affected Member shall surrender any certificates representing the Affected Interests to be redeemed in accordance with the requirements of the Redemption Notice.
(b) Notwithstanding any other provision in this Agreement, commencing on the date that a Member becomes an Affected Member, and until the Affected Interests of such Affected Member are redeemed or are transferred to a Person who is not an Unsuitable Person in a transfer permitted by the terms of this Agreement, such Affected Member: (i) shall not be entitled to receive any distributions with regard to such Affected Interests; (ii) shall not be entitled to exercise, directly or indirectly or through any proxy, trustee, or nominee, any voting or other right conferred by such Affected Interests, and Affected Interests shall not for any purposes be included in the Equity Securities of the Company entitled to vote; (iii) shall not be entitled to receive any remuneration in any form from the Company, the Members or any Affiliate of any of them for services rendered or otherwise; and (iv) to the extent not treated as a partner for federal income tax purposes under applicable law, shall not be allocated any Net Income or Net Loss with respect to such Affected Member’s Affected Interests other than, to the extent permitted under applicable law, special allocations of Net Loss (or items of deduction or loss) up to an amount equal to the Net Income (or items of income or gain) allocated to the Affected Member during the period beginning on the date immediately following the close of the period to which the most recent distribution under Section 5.4 relates and ending on the date on which the Member becomes an Affected Member.
(c) All notices given pursuant to this Section, including Redemption Notices, shall be in writing and shall be given in accordance with Section 13.1.
(d) Each Affected Member shall indemnify and hold harmless the Company, the Members and their respective Affiliates for any and all losses, costs and expenses, including attorneys’ fees, incurred by them as a result of, or arising out of, such Affected Member’s refusal or failure to comply with the provisions of this Section, or failure to promptly divest itself of any Affected Interests when required to do so by this Section 15.11.
(e) The right of redemption provided in this Section shall not be exclusive of any other rights the Company or its members or their respective Affiliates may have under this Agreement or hereafter acquire under any other agreement or otherwise.
(f) Nothing contained in this Section shall limit the authority of the Company to take such other action to the extent permitted by law as it deems necessary or advisable to protect the Company or its Affiliates from the denial or threatened denial or loss or threatened loss of any Gaming Licenses or as required by any Gaming Authority. Without limiting the generality of the foregoing the Managing Member may, to the extent permitted by law, from
time to time establish, modify, amend or rescind regulations, and procedures of the Company not inconsistent with the express provisions of this Section for the purpose of determining whether any Person is an Unsuitable Person and, as applicable, for the orderly application, administration and implementation of the provisions of this Section.
(g) Except as may be required by any applicable Gaming Laws or a Gaming Authority, the Company may waive any of the rights or any restrictions contained in this Section in any instance in which the Managing Member determines that a waiver would be in the best interests of the Company. Except as may be required by a Gaming Authority, nothing in this Section shall be deemed or construed to require the Company to repurchase any Affected Interest of an Affected Member.
Section 15.12 Non-Occurrence of IPO. Notwithstanding any other provision of this Agreement (including Section 14.1), in the event that the IPO is not consummated prior to the date that is fifteen (15) Business Days after the date of this Agreement, then this Agreement shall automatically, with no action required by any Member, on such date be amended and restated in its entirety back to the Prior Agreement and, upon such automatic amendment and restatement of this Agreement, this Agreement shall be of no force and effect.
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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RED ROCK RESORTS, INC. | ||||
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Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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GERMAN AMERICAN CAPITAL CORPORATION | |||
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Jeffrey T. Welch | |
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Larney J. Bisbano | |
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Director | |
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e-mail: |
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THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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FI STATION INVESTOR LLC | |||
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Marc J. Falcone | |
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Title: |
Executive Vice President, Chief | |
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Financial Officer and Treasurer | |
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Address for Notices: | |||
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1505 South Pavilion Center Drive | |||
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Las Vegas, Nevada 89135 | |||
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Attn: |
Richard J. Haskins, President | ||
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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FERTITTA BUSINESS MANAGEMENT LLC | |||
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Frank J. Fertitta III | |
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General Manager | |
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Name: |
Lorenzo J. Fertitta | |
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General Manager | |
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Address for Notices: | |||
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1505 South Pavilion Center Drive | |||
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Las Vegas, Nevada 89135 | |||
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Attn: |
Frank J. Fertitta III | ||
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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OAKTREE SC INVESTMENTS CTB, LLC | ||
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By: |
OCM FIE, LLC | |
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Manager | |
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Kaj Vazales |
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Authorized Signatory |
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Name: |
David Quick |
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Authorized Signatory |
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Address for Notices: | ||
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Attn: | ||
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Fax: | ||
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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/s/ |
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Marc J. Falcone |
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Address for Notices: |
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c/o Red Rock Resorts, Inc. |
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1505 South Pavilion Center Drive |
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Las Vegas, Nevada 89135 |
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Attn: Frank J. Fertitta III |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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/s/ |
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Richard J. Haskins |
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Address for Notices: |
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c/o Red Rock Resorts, Inc. |
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1505 South Pavilion Center Drive |
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Las Vegas, Nevada 89135 |
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Attn: Frank J. Fertitta III |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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/s/ | |
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Kevin L. Kelley | |
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Address for Notices: | |
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636 Canyon Greens Drive | |
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Las Vegas, NV 89144 | |
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Attn: |
Kevin L. Kelley |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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Thomas Friel Nevada Trust | ||
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Thomas M. Friel |
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Trustee |
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: Thomas M. Friel | ||
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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/s/ |
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Scott M Nielson |
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Address for Notices: |
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c/o Red Rock Resorts, Inc. |
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1505 South Pavilion Center Drive |
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Las Vegas, Nevada 89135 |
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Attn: Frank J. Fertitta III |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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CAVALLARO FAMILY TRUST | ||
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Name: Stephen L. Cavallaro | |
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Title: Trustee | |
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: |
Stephen L. Cavallaro | |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER I, LLC | |
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By: |
Red Rock Resorts, Inc. |
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Its: |
Member |
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By: |
/s/ |
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Name: Marc J. Falcone | |
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Title: Executive Vice President, Chief Financial Officer and Treasurer | |
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Address for Notices: | |
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c/o Red Rock Resorts, Inc. | |
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1505 South Pavilion Center Drive | |
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Las Vegas, Nevada 89135 | |
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Attn: Marc J. Falcone | |
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER II, LLC | |
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By: |
Red Rock Resorts, Inc. |
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Its: |
Member |
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By: |
/s/ |
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Name: Marc J. Falcone | |
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Title: Executive Vice President, Chief Financial Officer and Treasurer | |
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Address for Notices: | |
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c/o Red Rock Resorts, Inc. | |
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1505 South Pavilion Center Drive | |
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Las Vegas, Nevada 89135 | |
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Attn: Marc J. Falcone | |
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER III, LLC | |
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By: |
Red Rock Resorts, Inc. |
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Its: |
Member |
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By: |
/s/ |
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Name: Marc J. Falcone | |
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Title: Executive Vice President, Chief Financial Officer and Treasurer | |
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Address for Notices: | |
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c/o Red Rock Resorts, Inc. | |
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1505 South Pavilion Center Drive | |
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Las Vegas, Nevada 89135 | |
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Attn: Marc J. Falcone | |
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER IV, LLC | ||
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By: |
Red Rock Resorts, Inc. | |
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Member | |
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By: |
/s/ | |
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Name: Marc J. Falcone | ||
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Title: Executive Vice President, Chief Financial Officer and Treasurer | ||
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: |
Marc J. Falcone | |
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER V, LLC | |||
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By: |
Red Rock Resorts, Inc. | ||
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Member | ||
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By: |
/s/ | ||
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Name: |
Marc J. Falcone | ||
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Title: |
Executive Vice President, Chief | ||
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Financial Officer and Treasurer | |||
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Address for Notices: | |||
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c/o Red Rock Resorts, Inc. | |||
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1505 South Pavilion Center Drive | |||
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Las Vegas, Nevada 89135 | |||
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Attn: Marc J. Falcone | |||
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER VI, LLC | ||
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By: |
Red Rock Resorts, Inc. | |
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Its: |
Member | |
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By: |
/s/ | |
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Name: |
Marc J. Falcone | |
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Title: |
Executive Vice President, Chief | |
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Financial Officer and Treasurer | ||
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: Marc J. Falcone | ||
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER VII, LLC | ||
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By: |
Red Rock Resorts, Inc. | |
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Member | |
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By: |
/s/ | |
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Name: |
Marc J. Falcone | |
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Title: |
Executive Vice President, Chief | |
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Financial Officer and Treasurer | ||
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: Marc J. Falcone | ||
Signature Page to Third Amended and Restated LLC Agreement of Station Holdco LLC
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
STATION HOLDCO LLC
IN WITNESS WHEREOF, the undersigned Member has caused this counterpart signature page to the Third Amended and Restated Limited Liability Company Agreement of STATION HOLDCO LLC, dated as of April 28, 2016, to be duly executed as of the date first above written.
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STATION CASINOS BLOCKER VIII, LLC | ||
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By: Red Rock Resorts, Inc. | ||
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Its: Member | ||
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By: |
/s/ | |
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Name: |
Marc J. Falcone | |
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Title: |
Executive Vice President, | |
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Chief Financial Officer and Treasurer | ||
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Address for Notices: | ||
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c/o Red Rock Resorts, Inc. | ||
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1505 South Pavilion Center Drive | ||
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Las Vegas, Nevada 89135 | ||
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Attn: |
Marc J. Falcone | |
ANNEX I
Form of Certificate
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VOTING AGREEMENTS, TRANSFER RESTRICTIONS AND OTHER TERMS CONTAINED IN AN EQUITYHOLDERS AGREEMENT, DATED AS OF JUNE , 2011 (AS AMENDED FROM TIME TO TIME), AMONG THE COMPANY, CERTAIN OF ITS AFFILIATES AND CERTAIN HOLDERS OF UNITS OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE COMPANY’S PRINCIPAL EXECUTIVE OFFICES.
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Number of Units: |
Certificate Number: |
CERTIFICATE OF LIMITED LIABILITY COMPANY INTEREST
Station Holdco LLC, a Delaware limited liability company (the “Company”), hereby certifies that (the “Holder”) is the registered owner of [ ] Units representing limited liability company interests in the Company (the “Interests”). The rights, powers, preferences, restrictions and limitations of the Interests are set forth in, and this Certificate and the Interests represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Third Amended and Restated Limited Liability Company Agreement of the Company dated as of , 2015, as the same may be amended or modified from time to time (the “LLC Agreement”). By acceptance of this Certificate, and as a condition to being entitled to any rights and/or benefits with respect to the Interests evidenced hereby, the Holder is deemed to have agreed to comply with and be bound by all the terms and conditions of the LLC Agreement. The Company will furnish a copy of the LLC Agreement to the Holder without charge upon written request to the Company at its principal place of business.
The member’s interests represented by this Certificate are transferable only on the books of the Company by the holder hereof in person or by power of attorney upon surrender of this Certificate properly endorsed.
This Certificate shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed and signed this day of , 20 .
Station Holdco LLC
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Name: |
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THIS CERTIFICATE EVIDENCES A MEMBER’S INTEREST IN STATION HOLDCO LLC AND SHALL CONSTITUTE A “SECURITY” WITHIN THE MEANING OF, AND GOVERNED BY, (I) ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT FROM TIME TO TIME IN THE STATE OF DELAWARE (INCLUDING SECTION 8-102(A)(15)), AND (II) ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF ANY OTHER APPLICABLE JURISDICTION THAT NOW OR HEREAFTER SUBSTANTIALLY INCLUDES THE 1994 REVISIONS TO ARTICLE 8 THEREOF AS ADOPTED BY THE AMERICAN LAW INSTITUTE AND THE NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND APPROVED BY THE AMERICAN BAR ASSOCIATION ON FEBRUARY 14, 1995.
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR EXERCISE OF ANY OPTION TO PURCHASE OR OTHER DISPOSITION OF AN INTEREST IN THIS LIMITED LIABILITY COMPANY IS INEFFECTIVE UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION (THE “COMMISSION”). IF AT ANY TIME THE COMMISSION FINDS THAT A MEMBER IS UNSUITABLE TO HOLD AN INTEREST IN THIS COMPANY, SUCH OWNER MUST DISPOSE OF SUCH INTEREST AS PROVIDED BY THE GAMING LAWS OF THE STATE OF NEVADA AND THE REGULATIONS PROMULGATED THEREUNDER, OR, IF THE COMMISSION CONSENTS, IN ACCORDANCE WITH THE COMPANY’S ARTICLES OR OPERATING AGREEMENT. BEGINNING ON THE DATE WHEN THE COMMISSION SERVES NOTICE OR A DETERMINATION OF UNSUITABILITY PURSUANT TO APPLICABLE LAW, IT IS UNLAWFUL FOR THE UNSUITABLE MEMBER (A) TO RECEIVE ANY DIVIDEND OR INTEREST OR ANY PAYMENT OR DISTRIBUTION OF ANY KIND, INCLUDING OF ANY SHARE OF THE DISTRIBUTION OF PROFITS OR CASH OR ANY OTHER PROPERTY, OR PAYMENTS UPON DISSOLUTION, FROM THE COMPANY, OTHER THAN A RETURN OF CAPITAL; (B) TO EXERCISE DIRECTLY OR THROUGH ANY PROXY, TRUSTEE OR NOMINEE ANY VOTING RIGHT CONFERRED BY THE MEMBER’S INTEREST IN THE COMPANY; OR (C) TO RECEIVE ANY REMUNERATION IN ANY FORM FROM THE COMPANY OR FROM ANY COMPANY HOLDING A GAMING LICENSE FOR SERVICES RENDERED OR OTHERWISE.
Exhibit 10.3
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this “Agreement”), dated as of April 28, 2016 and effective as of immediately prior to the consummation of the IPO (as defined below) (the “Effective Time”), among Red Rock Resorts, Inc., a Delaware corporation (the “Corporation”), Station Holdco LLC, a Delaware limited liability company (the “Company”), and the Company Unitholders (as defined herein).
WHEREAS, in connection with the closing of its initial public offering (the “IPO”) of Class A Common Stock (as defined herein), the Corporation intends to consummate the transactions described in the Registration Statement on Form S-1, as amended (Registration No. 333-207397); and
WHEREAS, the parties hereto desire to provide for the exchange of Company Units (as defined herein) for shares of Class A Common Stock, on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Section 1.1 Definitions. The following capitalized terms shall have the meanings specified in this Section 1.1. Other terms are defined in the text of this Agreement and those terms shall have the meanings respectively ascribed to them.
“Advisory Firm” means a law or accounting firm that is nationally recognized as being expert in tax matters.
“Affiliate” of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person. For the purpose of this definition, the term “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, either through the ownership of a majority of such Person’s voting stock, by contract or otherwise.
“Agreement” has the meaning set forth in the Preamble.
“Business Day” means any day, other than a Saturday, Sunday or any other day on which commercial banks located in the State of New York are authorized or obligated by law or executive order to close.
“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Company Unitholder in an Exchange pursuant to Section 2.1, times
(y) the arithmetic average of the volume weighted average prices for a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by Bloomberg, L.P., or its successor, for each of the three (3) consecutive full Trading Days ending on and including the last full Trading Day immediately prior to the Exchange Date, subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then the amount specified in clause (y) shall be determined in good faith a majority of the directors of the Corporation that do not have an interest in the Company Units and shares of Class B Common Stock being Exchanged.
A “Change of Control” shall be deemed to have occurred if or upon:
(i) both the stockholders of the Corporation and the Board of Directors of the Corporation approve, in accordance with the Corporation’s certificate of incorporation and applicable law, the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the Corporation’s assets (determined on a consolidated basis), including a sale of all of the equity interests in the Company, to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than to any directly or indirectly wholly owned subsidiary of the Corporation, and such sale, lease or transfer is consummated;
(ii) both the stockholders of the Corporation and the Board of Directors of the Corporation approve, in accordance with the Corporation’s certificate of incorporation and applicable law, a merger or consolidation of the Corporation with any other Person, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50.01% of the total voting power represented by the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, and such merger or consolidation is consummated; or
(iii) the acquisition, directly or indirectly, by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than (a) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, or (b) a corporation or other entity owned, directly or indirectly, by all of the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of at least 50.01% of the aggregate voting power of the Voting Securities of the Corporation; provided, that the Board of Directors of the Corporation recommends or otherwise approves or determines that such acquisition is in the best interests of the Corporation and its stockholders.
“Change of Control Exchange” has the meaning set forth in Section 2.1(b)(i).
“Change of Control Exchange Date” has the meaning set forth in Section 2.1(b)(iii).
“Class A Common Stock” means the Class A Common Stock, par value $0.01 per share, of the Corporation.
“Class B Common Stock” means the Class B Common Stock, par value $0.00001 per share, of the Corporation.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the Preamble.
“Company Unit” means (i) each Unit (as such term is defined in the LLC Agreement) issued as of the Effective Time and (ii) each Unit or other interest in the Company that may be issued by the Company in the future that is designated by the Company as a “Company Unit,” including any interest converted into or exchanged for a Company Unit.
“Company Unitholder” means each holder of one or more Company Units that is a party hereto as of the date hereof or which becomes a party to this Agreement pursuant to Section 4.1.
“Contribution Notice” has the meaning set forth in Section 2.1(a)(iii).
“Corporation” has the meaning set forth in the Preamble.
“DB” means German American Capital Corporation and each Permitted Transferee (as such term is defined in the LLC Agreement) thereof, for so long as such Person (a) remains a Permitted Transferee (as such term is defined in the LLC Agreement) and (b) beneficially owns, directly or indirectly, one or more Company Units.
“Effective Time” has the meaning set forth in the Preamble.
“Exchange” has the meaning set forth in Section 2.1(a)(i).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Date” has the meaning set forth in Section 2.1(a)(ii).
“Exchange Notice” has the meaning set forth in Section 2.1(a)(ii).
“Exchange Rate” means, in respect of any Exchange, a ratio, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately prior to the Exchange and the denominator of which shall be the number of Company Units owned by the Corporation and its Subsidiaries immediately prior to the Exchange. As of the Effective Time, the Exchange Rate shall be 1, subject to adjustment pursuant to Section 2.2.
“Fertitta Holders” means each of (a) FI Station Investor LLC and each Affiliate of FI Station Investor LLC that becomes a Member, (b) Fertitta Business Management LLC and each Affiliate of Fertitta Business Management LLC that becomes a Member, (c) Frank J. Fertitta III, (d) Lorenzo J. Fertitta, (e) each Affiliate or member of the Family Group (as such
term is defined in the LLC Agreement) of Frank J. Fertitta III or Lorenzo J. Fertitta, and (f) each Permitted Transferee (as such term is defined in the LLC Agreement) thereof, for so long as such Person (a) remains a Permitted Transferee (as such term is defined in the LLC Agreement) and (b) beneficially owns, directly or indirectly, one or more Company Units.
“Fertitta Majority Holder” means the holder of a majority of the Company Units held by the Fertitta Holders.
“IPO” has the meaning set forth in the Preamble.
“LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of the Company, dated as of the date hereof, as the same may be further amended or restated from time to time in accordance with the terms thereof.
“Managing Member” has the meaning set forth in the LLC Agreement.
“Member” has the meaning set forth in the LLC Agreement.
“notice” has the meaning set forth in Section 4.2.
“Permitted Transferee” has the meaning set forth in Section 4.1.
“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.
“Post-IPO Company Units” means the number of Company Units outstanding after giving effect to the completion of the IPO (after taking into account the delivery of shares of Class A Common Stock to the underwriters in respect of any overallotment option) and the related issuance of Company Units to the Corporation by the Company in exchange for a portion of the proceeds therefrom, as such number of Company Units may be equitably adjusted to reflect any dividend, split, subdivision or combination of shares, or reclassification, recapitalization, merger, consolidation or other reorganization of or with respect to the Company Units occurring subsequent to such time.
“Retraction Notice” has the meaning set forth in Section 2.1(a)(iii).
“SEC” means the Securities and Exchange Commission.
“Subsidiary” means a direct or indirect, wholly owned subsidiary of the Corporation.
“Takeover Laws” has the meaning set forth in Section 3.1.
“Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated on or about the date hereof, among the Corporation, the Company and the Members (as
defined therein), as the same may be further amended or restated from time to time in accordance with the terms thereof.
“Trading Day” means a day on which the principal U.S. securities exchange on which the Class A Common Stock is listed or admitted to trading is open for the transaction of business (unless such trading shall have been suspended for the entire day).
“Voting Securities” means any equity securities of the Corporation that are entitled to vote generally in matters submitted for a vote of the Corporation’s stockholders or generally in the election of the Corporation’s Board of Directors.
ARTICLE II
Section 2.1 Exchange of Company Units for Class A Common Stock.
(a) Elective Exchanges.
(i) Subject to Section 2.1(d), each Company Unitholder shall be entitled at any time and from time to time, upon the terms and subject to the conditions hereof and the LLC Agreement, to surrender Company Units and a corresponding number of shares of Class B Common Stock (in each case, free and clear of all liens, encumbrances, rights of first refusal and the like) to the Company in exchange for the delivery to such Company Unitholder (or its designee) of either, at the option of the Corporation, (x) a number of shares of Class A Common Stock that is equal to the product of the number of Company Units surrendered multiplied by the Exchange Rate or (y) the Cash Settlement (an exchange of Company Units and Class B Common Stock for Class A Common Stock or the Cash Settlement, an “Exchange”), provided that any such Exchange is for a minimum of the lesser of (A) one hundred (100) Company Units and (B) all of the Company Units then held by such Company Unitholder and its Affiliates, except that such minimum shall not apply if such Exchange is in connection with the exercise of any incidental registration rights pursuant to the LLC Agreement; provided that, notwithstanding anything to the contrary contained herein, a Company Unitholder shall not be entitled to Exchange Company Units and Class B Common Stock, and the Corporation and Company shall have the right to refuse to honor any request for an Exchange, at any time or during any period if the Corporation or the Company determines based on the advice of counsel that such Exchange (x) would be prohibited by law or regulation (including, without limitation, the unavailability of a registration of such Exchange under the Securities Act of 1933, as amended, or an exemption from the registration requirements thereof) or (y) would not be permitted under any agreement with the Corporation, the Company or any of their subsidiaries to which the applicable Company Unitholder is party (including, without limitation, the LLC Agreement) or (solely in the case of an Exchange requested by an officer, director or other personnel of the Corporation, the Company or any of their subsidiaries) any written policies of the Corporation related to restrictions on trading applicable to its officers, directors or other personnel.
(ii) A Company Unitholder shall exercise its right to Exchange Company Units and a corresponding number of shares of Class B Common Stock as set forth in Section 2.1(a) by delivering to the Company, with a contemporaneous copy delivered to the
Corporation, in each case during normal business hours at the principal executive offices of the Company and the Corporation, respectively, (A) a written election of exchange in respect of the Company Units to be exchanged substantially in the form of Exhibit A hereto (an “Exchange Notice”), duly executed by such Company Unitholder, (B) any certificates in such Company Unitholder’s possession representing such Company Units, (C) any stock certificates in such Company Unitholder’s possession representing such shares of Class B Common Stock and (D) if the Corporation, the Company or any exchanging Subsidiary requires the delivery of the certification contemplated by Section 2.4(b), such certification or written notice from such Company Unitholder that it is unable to provide such certification. Unless such Company Unitholder timely has delivered a Retraction Notice pursuant to Section 2.1(a)(iii), an Exchange pursuant to this Section 2.1(a) shall be effected on the fifth Business Day following the Business Day on which the Corporation and the Company have received the items specified in clauses (A)-(D) of the first sentence of this Section 2.1(a)(ii) or such later date that is a Business Day specified in the Exchange Notice (such Business Day, the “Exchange Date”). On the Exchange Date, all rights of the exchanging Company Unitholder as a holder of the Company Units and shares of Class B Common Stock that are subject to the Exchange shall cease, and unless the Corporation has elected Cash Settlement, such Company Unitholder (or its designee) shall be treated for all purposes as having become the record holder of the shares of Class A Common Stock to be received by the exchanging Company Unitholder in respect of such Exchange.
(iii) Within two (2) Business Days following the Business Day on which the Corporation and the Company have received the Exchange Notice, the Corporation shall give written notice (the “Contribution Notice”) to the Company (with a copy to the exchanging Company Unitholder) of its intended settlement method; provided that if the Corporation does not timely deliver a Contribution Notice, the Corporation shall be deemed to have not elected the Cash Settlement method.
Notwithstanding anything herein to the contrary, (x) a Company Unitholder may withdraw or amend its Exchange Notice, in whole or in part, at any time prior to 5:00p.m. New York City time, on the Business Day immediately prior to the Exchange Date by giving written notice (the “Retraction Notice”) to the Company (with a copy to the Corporation) specifying (A) the number of withdrawn Company Units and corresponding number of shares of Class B Common Stock, (B) if any, the number of Company Units and corresponding number of shares of Class B Common Stock as to which the Exchange Notice remains in effect and (C) if the Company Unitholder so determines, a new Exchange Date or any other new or revised information permitted in the Exchange Notice, and (y) a Company Unitholder may specify, in an applicable Exchange Notice, that the Exchange is to be contingent (including as to timing) upon the occurrence of any transaction or event, including the consummation of a purchase by another Person (whether in a tender or exchange offer, an underwritten offering, Change of Control transaction or otherwise) of shares of Class A Common Stock or any merger, consolidation or other business combination. The timely delivery of a Retraction Notice indicating an entire withdrawal of the Exchange Notice pursuant to clause (x) above and, in respect of clause (y) above, the termination of the transaction or event prior to the consummation thereof, shall, in either case, terminate all of the exchanging Company Unitholder’s, Company’s and
Corporation’s rights and obligations under this Section 2.1(a) arising from that particular Exchange Notice.
(b) Change of Control. In connection with a Change of Control, and subject to any approval of the Change of Control by the holders of Class A Common Stock and Class B Common Stock that may be required:
(i) The Corporation shall have the right to require each Company Unitholder to Exchange some or all of such Company Unitholder’s Company Units and a corresponding number of shares of Class B Common Stock (in each case, free and clear of all liens, encumbrances, rights of first refusal and the like) with the Corporation or, at the option of the Corporation, any Subsidiary in exchange for the delivery to the exchanging Company Unitholder (or its designee) of a number of shares of Class A Common Stock that is equal to the product of the number of Company Units surrendered multiplied by the Exchange Rate (a “Change of Control Exchange”); provided that, if the Corporation requires the Company Unitholders to Exchange less than all of their outstanding Company Units and corresponding number of shares of Class B Common Stock, each Company Unitholder’s participation in the required Exchange shall be reduced pro rata. For the avoidance of doubt, any Company Units and a corresponding number of shares of Class B Common Stock held by a Company Unitholder that are not Exchanged pursuant to a Change of Control Exchange may be Exchanged by such Company Unitholder pursuant to Section 2.1(a) subject to and in accordance with the terms thereof.
(ii) The election of the Corporation pursuant to this Section 2.1(b) shall be at the sole discretion of the Corporation upon the approval thereof by a majority of the Board of Directors of the Corporation.
(iii) Any Exchange pursuant to this Section 2.1(b) shall be effective immediately prior to the consummation of the Change of Control (and, for the avoidance of doubt, shall not be effective if such Change of Control is not consummated) (the “Change of Control Exchange Date”). From and after the Change of Control Exchange Date, (x) the Company Units and shares of Class B Common Stock Exchanged pursuant to this Section 2.1(b) shall be deemed to be transferred to the Corporation or the exchanging Subsidiary, as applicable, on the Change of Control Exchange Date and (y) the exchanging Company Unitholder shall cease to have any rights with respect to the Company Units and shares of Class B Common Stock Exchanged pursuant to this Section 2.1(b) (other than the right to receive shares of Class A Common Stock pursuant to Section 2.1(b)(i) upon compliance with its obligations under Section 2.1(c)).
(iv) The Corporation shall provide written notice of an expected Change of Control to all Company Unitholders within the earlier of (x) five (5) Business Days following the execution of the agreement with respect to such Change of Control and (y) ten (10) Business Days before the proposed date upon which the contemplated Change of Control is to be effected, indicating in such notice such information as may reasonably describe the Change of Control transaction, subject to applicable law, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid
for Company Units and shares of Class B Common Stock or shares of Class A Common Stock, as applicable, in the Change of Control (which consideration shall be equivalent whether paid for Company Units and shares of Class B Common Stock or shares of Class A Common Stock), any election with respect to types of consideration that a holder of Company Units and shares of Class B Common Stock or shares of Class A Common Stock, as applicable, shall be entitled to make in connection with the Change of Control, the percentage of total Company Units and shares of Class B Common Stock or shares of Class A Common Stock, as applicable, to be transferred to the acquirer by all shareholders in the Change of Control, and the number of Company Units and shares of Class B Common Stock held by each Company Unitholder that the Corporation intends to require to be Exchanged for shares of Class A Common Stock in connection with the Change of Control. The Corporation shall update such notice from time to time to reflect any material changes to such notice. The Corporation may satisfy any such notice and update requirements described in the preceding two sentences by providing such information on a Form 8-K, Schedule TO, Schedule 14D-9 or similar form filed with the SEC.
(c) Exchange Procedure on Change of Control Exchange. On or prior to the Change of Control Exchange Date, the Company Unitholder shall deliver to the Corporation or the exchanging Subsidiary, as applicable, with a contemporaneous copy delivered to the Company, in each case during normal business hours at the principal executive offices of the Company and the Corporation, respectively: (A) an Exchange Notice, duly executed by such Company Unitholder, (B) any certificates in such Company Unitholder’s possession representing all Company Units being surrendered by the Company Unitholder, (C) any stock certificates in such Company Unitholder’s possession representing all shares of Class B Common Stock being surrendered by the Company Unitholder and (D) if the Corporation, the Company or the exchanging Subsidiary requires the delivery of the certification contemplated by Section 2.4(b), such certification or written notice from such Company Unitholder that it is unable to provide such certification.
(d) Exchange Consideration. On the Exchange Date or Change of Control Exchange Date, as applicable, provided the Company Unitholder has satisfied its obligations under Section 2.1(a)(ii) or Section 2.1(c), as applicable, the Company or the Corporation, as applicable, shall deliver or cause to be delivered to such Company Unitholder (or its designee), at the address set forth on Schedule A to the LLC Agreement (or at such other address as such party may designate to the Company), either certificates representing the number of shares of Class A Common Stock deliverable upon the applicable Exchange, registered in the name of the relevant exchanging Company Unitholder (or its designee) or, if the Corporation has so elected, the Cash Settlement, as applicable. Notwithstanding the foregoing, the Corporation shall have the right but not the obligation (in lieu of the Company) to have either the Corporation or, at the option of the Corporation, any Subsidiary acquire the Company Units any Company Unitholder is requesting to be exchanged pursuant to Section 2.1(a) or the Corporation is requiring to be exchanged pursuant to Section 2.1(b) directly from such Company Unitholder in exchange for shares of Class A Common Stock or, in the case of an exchange pursuant to Section 2.1(a), at the option of the Corporation, the Cash Settlement. If an exchanging Company Unitholder receives the shares of Class A Common Stock or the Cash Settlement that it is entitled to receive in connection with an Exchange pursuant to Section 2.1(a) from the Corporation or any Subsidiary pursuant to this Section 2.1(d), the Company Unitholder shall have no further right to receive
shares of Class A Common Stock from the Company in connection with that Exchange. Notwithstanding anything set forth in this Section 2.1(d) to the contrary, to the extent the Class A Common Stock is settled through the facilities of The Depository Trust Company, the Company, the Corporation or the exchanging Subsidiary will, upon the written instruction of an exchanging Company Unitholder, deliver the shares of Class A Common Stock deliverable to such exchanging Company Unitholder through the facilities of The Depository Trust Company to the account of the participant of The Depository Trust Company designated by such exchanging Company Unitholder in the Exchange Notice. Upon a Company Unitholder exercising its right to Exchange or the occurrence of a Change of Control Exchange, the Company, the Corporation or the exchanging Subsidiary, as applicable, shall take such actions as (A) may be required to ensure that such Company Unitholder receives the shares of Class A Common Stock or the Cash Settlement that such exchanging Company Unitholder is entitled to receive in connection with such Exchange pursuant to this Section 2.1, and (B) may be reasonably within its control that would cause such Exchange to be treated for purposes of the Tax Receivable Agreement as an “Exchange” (as such term is defined in the Tax Receivable Agreement).
(e) Cancellation of Class B Common Stock. Any shares of Class B Common Stock surrendered in an Exchange shall automatically be deemed cancelled without any action on the part of any Person, including the Corporation. Any such cancelled shares of Class B Common Stock shall no longer be outstanding, and all rights with respect to such shares shall automatically cease and terminate.
(f) Expenses. Subject to any other arrangement or agreement among the Company and an applicable Unitholder, the Corporation, the Company, any exchanging Subsidiary and each exchanging Company Unitholder shall bear their own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated, except that the Corporation shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange; provided, however, that if any shares of Class A Common Stock are to be delivered in a name other than that of the Company Unitholder that requested the Exchange (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Company Unitholder) or the Cash Settlement is to be paid to a Person other than the Company Unitholder that requested the Exchange, then such Company Unitholder or the Person in whose name such shares are to be delivered or to whom the Cash Settlement is to be paid shall pay to the Corporation the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of the Corporation that such tax has been paid or is not payable.
(g) Publicly Traded Partnership. Notwithstanding anything to the contrary herein, if the Board of Directors of the Corporation or the Managing Member of the Company, as applicable, obtains a written opinion from an Advisory Firm that interests in the Company do not meet the requirements of Treasury Regulation Section 1.7704-1(h), the Corporation or the Company, as applicable, may impose such restrictions on Exchanges as the Corporation or the Company, as applicable, may reasonably determine to be necessary or advisable so that the Company is not treated as a “publicly traded partnership” under Section 7704 of the Code.
Notwithstanding anything to the contrary herein, no Exchange shall be permitted (and, if attempted, shall be void ab initio) if the Corporation or the Company obtains a written opinion from an Advisory Firm that such an Exchange would pose a material risk that the Company would be a “publicly traded partnership” under Section 7704 of the Code.
(h) Other Prohibitions on Exchange. For the avoidance of doubt, and notwithstanding anything to the contrary herein, a Company Unitholder shall not be entitled or required to Exchange Company Units and shares of Class B Common Stock to the extent that the Corporation or the Company (or in the case of clause (A) below, the Company Unitholder) reasonably determines in good faith that such Exchange (A) would be prohibited by law or regulation or (B) would not be permitted under any other agreement with the Corporation, the Company or their respective subsidiaries to which such Company Unitholder is then subject.
Section 2.2 Adjustment. To the extent not reflected in an adjustment to the Exchange Rate, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, then upon any subsequent Exchange, an exchanging Company Unitholder shall be entitled to receive the amount of such security, securities or other property that such exchanging Company Unitholder would have received if such Exchange had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, this Section 2.2 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.
Section 2.3 Class A Common Stock to be Issued. (a) The Corporation shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon an Exchange, such number of shares of Class A Common Stock as shall be deliverable upon any such Exchange; provided, however, that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of any such Exchange by delivery of unencumbered purchased shares of Class A Common Stock (which may or may not be held in the treasury of the Corporation or any subsidiary thereof).
(b) The Corporation has taken and will take all such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions or dispositions of equity securities of the Corporation (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of the Corporation for such purposes that result from the transactions contemplated by this Agreement, by each director or officer of the Corporation (including directors-by-deputization)
who may reasonably be expected to be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Corporation upon the registration of any class of equity security of the Corporation pursuant to Section 12 of the Exchange Act (with the authorizing resolutions specifying the name of each such officer or director whose acquisition or disposition of securities is to be exempted and the number of securities that may be acquired and disposed of by each such Person pursuant to this Agreement).
(c) If any Takeover Law or other similar law or regulation becomes or is deemed to become applicable to this Agreement or any of the transactions contemplated hereby, the Corporation shall use its reasonable best efforts to render such law or regulation inapplicable to all of the foregoing.
(d) The Corporation covenants that all shares of Class A Common Stock issued upon an Exchange will, upon issuance, be validly issued, fully paid and non-assessable and not subject to any preemptive right of stockholders of the Corporation or to any right of first refusal or other right in favor of any Person.
Section 2.4 Withholding; Certification of Non-Foreign Status. (a) If the Corporation, the Company or any exchanging Subsidiary shall be required to withhold any amounts by reason of any federal, state, local or foreign tax rules or regulations in respect of any Exchange, the Corporation, the Company or such Subsidiary, as the case may be, shall be entitled to take such action as it deems appropriate in order to ensure compliance with such withholding requirements, including, at its option, withholding shares of Class A Common Stock with a fair market value equal to the minimum amount of any taxes that the Corporation, the Company or such Subsidiary, as the case may be, may be required to withhold with respect to such Exchange. To the extent that amounts are (or property is) so withheld and paid over to the appropriate taxing authority, such withheld amounts (or property) shall be treated for all purposes of this Agreement as having been paid (or delivered) to the applicable Company Unitholder.
(b) Notwithstanding anything to the contrary herein, each of the Corporation, the Company and any exchanging Subsidiary may, in its discretion, require that an exchanging Company Unitholder deliver to the Corporation, the Company or such Subsidiary, as the case may be, a certification of non-foreign status in accordance with Treasury Regulation Section 1.1445-2(b) prior to an Exchange. In the event the Corporation, the Company or such Subsidiary has required delivery of such certification but an exchanging Company Unitholder does not provide such certification to the Corporation, the Company or such Subsidiary, the Corporation, the Company or such Subsidiary, as the case may be, shall nevertheless deliver or cause to be delivered to the exchanging Company Unitholder the Class A Common Stock or the Cash Settlement in accordance with Section 2.1, but subject to withholding as provided in Section 2.4(a).
(c) If the Corporation, the Company or any exchanging Subsidiary determines that any amounts by reason of any federal, state, local or foreign tax rules or regulations are required to be withheld in respect of any Exchange, the Corporation, the Company or such Subsidiary, as the case may be, shall use commercially reasonable efforts to promptly notify the
exchanging Company Unitholder and shall consider in good faith any theories, positions or alternative arrangements that such Company Unitholder raises (reasonably in advance of the date on which the Corporation, the Company or such Subsidiary believes withholding is required) as to why withholding is not required or that may avoid the need for such withholding, provided that none of the Corporation, the Company or such Subsidiary is required to incur additional costs as a result of such obligation and this Section 2.4(c) shall not in any manner limit the authority of the Corporation, the Company or such Subsidiary to withhold taxes with respect to an exchanging Company Unitholder pursuant to Section 2.4(a).
Section 2.5 Tax Treatment. Unless otherwise required by applicable law, the parties hereto acknowledge and agree that an Exchange with the Company or the Corporation shall be treated as a direct exchange between the Corporation and the Company Unitholder, and an Exchange with an exchanging Subsidiary shall be treated as a direct exchange between such exchanging Subsidiary and the Company Unitholder, in each case for U.S. federal and applicable state and local income tax purposes. The parties hereto intend to treat any Exchange consummated hereunder as a taxable exchange for U.S. federal and applicable state and local income tax purposes except as otherwise agreed to in writing by the exchanging Company Unitholder and the Corporation.
Section 2.6 Contribution of the Corporation. In connection with any Exchange between a Company Unitholder and the Company, the Corporation shall contribute to the Company the shares of Class A Common Stock or Cash Settlement that the Company Unitholder is entitled to receive in such Exchange. Unless the Company Unitholder has timely delivered a Retraction Notice as provided in Section 2.1(a)(iii), on the Exchange Date (to be effective immediately prior to the close of business on the Exchange Date) (i) the Corporation shall make a capital contribution to the Company (in the form of the shares of Class A Common Stock or the Cash Settlement that the Company Unitholder is entitled to receive in such Exchange) required under this Section 2.6 and (ii) the Company shall issue to the Corporation a number of Company Units equal to the number of Company Units surrendered by the Company Unitholder. The timely delivery of a Retraction Notice shall terminate all of the Company’s and the Corporation’s rights and obligations under this Section 2.6 arising from the Exchange Notice.
Section 2.7 Distributions. No Exchange will impair the right of an exchanging Company Unitholder to receive any distribution for periods ending on or prior to the Exchange Date for such Exchange (but for which payment had not yet been made with respect to the Company Units in question at the time the Exchange is consummated); provided that, for purposes of this Section 2.7, the exchanging Company Unitholder’s right to receive its pro rata portion of any distribution by the Company in respect of such periods shall not be deemed impaired to the extent that the Company has not paid the Corporation its pro rata portion of such distribution prior to the consummation of the applicable Exchange.
ARTICLE III
Section 3.1 Representations and Warranties of the Corporation. The Corporation represents and warrants that (i) it is a corporation duly incorporated and is existing and in good standing under the laws of the State of Delaware, (ii) it has all requisite corporate
power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and to issue the Class A Common Stock in accordance with the terms hereof, (iii) the execution and delivery of this Agreement by the Corporation and the consummation by it of the transactions contemplated hereby (including the issuance of the Class A Common Stock) have been duly authorized by all necessary corporate action on the part of the Corporation, including all actions necessary to ensure that the acquisition of shares of Class A Common Stock pursuant to the transactions contemplated hereby, to the fullest extent of the Corporation’s Board of Directors’ power and authority and to the extent permitted by law, shall not be subject to any “moratorium,” “control share acquisition,” “business combination,” “fair price” or other form of anti-takeover laws and regulations of any jurisdiction that may purport to be applicable to this Agreement or the transactions contemplated hereby (collectively, “Takeover Laws”), (iv) this Agreement constitutes a legal, valid and binding obligation of the Corporation enforceable against the Corporation in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally, and (v) the execution, delivery and performance of this Agreement by the Corporation and the consummation by the Corporation of the transactions contemplated hereby will not (A) result in a violation of the certificate of incorporation of the Corporation or the bylaws of the Corporation or (B) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Corporation is a party, or (C) based on the representations to be made by each Company Unitholder pursuant to the written election in the form of Exhibit A attached hereto in connection with Exchanges made pursuant to the terms of the Agreement, result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Corporation or by which any property or asset of the Corporation is bound or affected, except with respect to clause (B) or (C) for any conflicts, defaults, accelerations, terminations, cancellations or violations that would not reasonably be expected to have a material adverse effect on the Corporation or its business, financial condition or results of operations.
Section 3.2 Representations and Warranties of the Company. The Company represents and warrants that (i) it is a limited liability company duly formed and is existing and in good standing under the laws of the State of Delaware, (ii) it has all requisite power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby, (iii) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company, (iv) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally, (v) it is an entity treated as a partnership for U.S. federal income tax purposes and is not classified as a “publicly traded partnership” as defined under Section 7704 of the Code, and (vi) the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (A) result in a violation of the certificate of formation of the Company or the LLC Agreement or (B) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or (C) result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Company or by which any property or asset of the Company is bound or affected, except with respect to clause (B) or (C) for any conflicts, defaults, accelerations, terminations, cancellations or violations that would not reasonably be expected to have a material adverse effect on the Company or its business, financial condition or results of operations.
Section 3.3 Representations and Warranties of the Company Unitholders. Each Company Unitholder, severally and not jointly, represents and warrants that (i) if it is not a natural person, that it is duly incorporated or formed and, to the extent such concept exists in its jurisdiction of organization, is existing and in good standing under the laws of such jurisdiction, (ii) it has all requisite legal capacity and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby, (iii) if it is not a natural person, the execution and delivery of this Agreement by it and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate or other entity action on the part of such Company Unitholder, (iv) this Agreement constitutes a legal, valid and binding obligation of such Company Unitholder enforceable against it in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally and (v) the execution, delivery and performance of this Agreement by such Company Unitholder and the consummation by such Company Unitholder of the transactions contemplated hereby will not (A) if it is not a natural person, result in a violation of the certificate of incorporation, bylaws or other organizational documents of such Company Unitholder, (B) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Company Unitholder is a party or by which any property or asset of such Company Unitholder is bound or affected, or (C) result in a violation of any law, rule, regulation, order, judgment or decree applicable to such Company Unitholder, except with respect to clause (B) or (C) for any conflicts, defaults, accelerations, terminations, cancellations or violations that would not in any material respect result in the unenforceability against such Company Unitholder of this Agreement.
ARTICLE IV
Section 4.1 Additional Company Unitholders. To the extent a Company Unitholder validly transfers any or all of such holder’s Company Units and shares of Class B Common Stock to another Person in a transaction in accordance with, and not in contravention of, the LLC Agreement, then such transferee (each, a “Permitted Transferee”) shall have the right to execute and deliver a joinder to this Agreement, substantially in the form of Exhibit B hereto, whereupon such Permitted Transferee shall become a Company Unitholder hereunder. To the extent the Company issues Company Units in the future, then the holder of such Company Units shall have the right to execute and deliver a joinder to this Agreement, substantially in the form of Exhibit B hereto, whereupon such holder shall become a Company Unitholder hereunder. Except as set forth in this Section 4.1, a Company Unitholder may not assign or transfer any of its rights or obligations under this Agreement.
Section 4.2 Notifications. Any notice, demand, consent, election, approval, request, or other communication (collectively, a “notice”) required or permitted under this Agreement must be in writing and either delivered personally, sent by certified or registered mail, postage prepaid, return receipt requested or sent by recognized overnight delivery service, electronic mail (e-mail) or by facsimile transmittal. A notice must be addressed:
If to the Corporation or the Company at:
1505 South Pavilion Center Drive
Las Vegas, Nevada 89135
Telephone:
Facsimile:
Attention: Richard J. Haskins, President
with a copy (which shall not constitute notice to the Corporation or the Company) to:
Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
Telephone:
Facsimile:
Attention: Deborah J. Conrad
If to any Company Unitholder, to the address and other contact information set forth in the records of the Company from time to time.
A notice delivered personally will be deemed given only when accepted or refused by the Person to whom it is delivered. A notice that is sent by mail will be deemed given: (i) three (3) Business Days after such notice is mailed to an address within the United States of America or (ii) seven (7) Business Days after such notice is mailed to an address outside of the United States of America. A notice sent by recognized overnight delivery service will be deemed given when received or refused. A notice sent by e-mail or facsimile shall be deemed given upon receipt of a confirmation of such transmission, unless such receipt occurs after normal business hours, in which case such notice shall be deemed given as of the next Business Day. The Company or the Corporation may designate, by notice to all of the Company Unitholders, substitute addresses or addressees for notices; thereafter, notices are to be directed to those substitute addresses or addressees. Company Unitholders may designate, by notice to the Company and the Corporation, substitute addresses or addressees for notices; thereafter, notices are to be directed to those substitute addresses or addressees.
Section 4.3 Complete Agreement. This Agreement, together with the LLC Agreement, constitutes the entire agreement and understanding among the parties with respect to the subject matter hereof and thereof, and supersedes all prior agreements or arrangements (written and oral), including any prior representation, statement, condition or warranty between the parties relating to the subject matter hereof and thereof.
Section 4.4 Applicable Law; Venue; Waiver of Jury Trial. (a) The parties hereto hereby agree that all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without giving effect to any choice of law or conflict of law provision or rule, notwithstanding that public policy in Delaware or any other forum jurisdiction might indicate that the laws of that or any other jurisdiction should otherwise apply based on contacts with such state or otherwise.
(b) Each of the parties hereto submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party hereto also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party hereto with respect thereto. The parties hereto each agree that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding on it and may be enforced in any court to the jurisdiction of which it is subject by a suit upon such judgment.
(c) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.4.
Section 4.5 References to this Agreement; Headings. Unless otherwise indicated, “Sections,” “clauses” and “Exhibits” mean and refer to designated Sections, clauses, and Exhibits of this Agreement. Words such as “herein,” “hereby,” “hereinafter,” “hereof,” “hereto,” and “hereunder” refer to this Agreement as a whole, unless the context indicates otherwise. All headings in this Agreement are for convenience of reference only and are not intended to define or limit the scope or intent of this Agreement. All exhibits and schedules referred to herein, and as the same may be amended from time to time, are by this reference made a part hereof as though fully set forth herein.
Section 4.6 Binding Provisions. This Agreement is binding upon, and inures to the benefit of, the parties hereto and their respective personal and legal representatives, heirs, executors, successors and Permitted Transferees.
Section 4.7 Construction. Common nouns and pronouns and any variations thereof shall be deemed to refer to masculine, feminine, or neuter, singular or plural, as the identity of the Person, Persons or other reference in the context requires. Every covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party hereto. Any reference to any statute, law, or regulation, form or schedule shall include any amendments, modifications, or replacements thereof. Any reference to any agreement, contract or schedule, unless otherwise stated, shall include any amendments, modifications, or replacements thereof. Whenever used herein, “or” shall include both the conjunctive and disjunctive unless the context requires otherwise, “any” shall mean “one or more,” and “including” shall mean “including, without limitation.”
Section 4.8 Severability. It is expressly understood and agreed that if any provision of this Agreement or the application of any such provision to any party or circumstance shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to any party or circumstance other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law so long as the economic or legal substance of the matters contemplated by this Agreement is not affected in any manner materially adverse to any party. If the final judgment of a court of competent jurisdiction declares or finds that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or portion of the term or provision, or to delete specific words or phrases, and to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. If such court of competent jurisdiction does not so replace an invalid or unenforceable term or provision, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the matters contemplated hereby are fulfilled to the fullest extent possible.
Section 4.9 Counterparts. This Agreement and any amendments may be executed simultaneously in two or more counterparts and delivered via facsimile or .pdf, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same document. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.
Section 4.10 No Third-Party Beneficiaries. This Agreement is not intended to, and does not, provide or create any rights or benefits of any Person other than the parties specified in Section 4.6 and any exchanging Subsidiary selected by the Corporation.
Section 4.11 Mutual Drafting. The parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.
Section 4.12 Rights and Remedies Cumulative. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies. Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.
Section 4.13 Amendment. The provisions of this Agreement may be amended only by the affirmative vote or written consent of each of (i) the Corporation, (ii) the Company, (iii) Company Unitholders holding a majority of the then outstanding Company Units (excluding Company Units held by the Corporation) and (iv) as long as DB or the Fertitta Holders hold a number of Company Units that is equal to or greater than ten percent (10%) of the Post-IPO Company Units, the consent of DB and/or the Fertitta Majority Holder, as applicable; provided that no amendment may disproportionately affect the rights of a Company Unitholder (compared to Company Unitholders of Company Units of the same class) without the consent of such Company Unitholder.
Section 4.14 Tax Treatment. This Agreement shall be treated as part of the partnership agreement of the Company as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations promulgated thereunder.
Section 4.15 Specific Performance. The parties recognize that irreparable injury will result from a breach of any provision of this Agreement and that money damages would be inadequate to fully remedy the injury. Accordingly, in the event of a breach or threatened breach of one or more of the provisions of this Agreement, any party that may be injured (in addition to any other remedies that may be available to that party) shall be entitled (without the need to post any bond, surety, or other security) to one or more preliminary or permanent orders (a) restraining and enjoining any act that would constitute a breach or (b) compelling the performance of any obligation that, if not performed, would constitute a breach.
Section 4.16 Independent Nature of Company Unitholders’ Rights and Obligations. The obligations of each Company Unitholder hereunder are several and not joint with the obligations of any other Company Unitholder, and no Company Unitholder shall be responsible in any way for the performance of, or failure to perform, the obligations of any other Company Unitholder hereunder. The decision of each Company Unitholder to enter into this Agreement has been made by such Company Unitholder independently of any other Company
Unitholder. Nothing contained herein, and no action taken by any Company Unitholder pursuant hereto, shall be deemed to constitute the Company Unitholders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Company Unitholders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby and the Corporation acknowledges that the Company Unitholders are not acting in concert or as a group, and the Corporation will not assert any such claim, with respect to such obligations or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.
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RED ROCK RESORTS, INC. | ||
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Marc J. Falcone | |
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Executive Vice President, Chief Financial | |
Signature Page to Exchange Agreement
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STATION HOLDCO LLC | ||
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Red Rock Resorts, Inc. | |
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Managing Member | |
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Marc J. Falcone | |
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Executive Vice President, Chief Financial Officer and Treasurer | |
Signature Page to Exchange Agreement
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FI STATION INVESTOR LLC | ||
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Marc J. Falcone | |
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Executive Vice President, Chief Financial Officer and Treasurer | |
Signature Page to Exchange Agreement
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FERTITTA BUSINESS MANAGEMENT LLC | ||
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Frank J. Fertitta III | |
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General Manager | |
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Lorenzo J. Fertitta | |
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General Manager | |
Signature Page to Exchange Agreement
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GERMAN AMERICAN CAPITAL CORPORATION | ||
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Jeffrey T. Welch |
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Managing Director |
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Larney J. Bisbano |
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Director |
Signature Page to Exchange Agreement
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OAKTREE SC INVESTMENTS CTB, LLC | ||
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OCM FIE, LLC | |
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Kaj Vazales | |
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David Quick | |
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Authorized Signatory | |
Signature Page to Exchange Agreement
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Marc J. Falcone |
Signature Page to Exchange Agreement
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Richard J. Haskins |
Signature Page to Exchange Agreement
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Kevin L. Kelley |
Signature Page to Exchange Agreement
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Thomas Friel Nevada Trust | ||
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Thomas M. Friel | |
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Trustee | |
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Scott M Nielson |
Signature Page to Exchange Agreement
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CAVALLARO FAMILY TRUST | ||
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Stephen L. Cavallaro | |
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Signature Page to Exchange Agreement
EXHIBIT A
[FORM OF]
EXCHANGE NOTICE
Red Rock Resorts, Inc.
1505 South Pavilion Center Drive
Las Vegas, Nevada 89135
Telephone:
Facsimile:
Attention: Richard J. Haskins, President
Station Holdco LLC
% Red Rock Resorts, Inc.
1505 South Pavilion Center Drive
Las Vegas, Nevada 89135
Telephone:
Facsimile:
Attention: Richard J. Haskins, President
Reference is hereby made to the Exchange Agreement, dated as of April 28, 2016 (the “Exchange Agreement”), among Red Rock Resorts, Inc., a Delaware corporation, Station Holdco LLC, a Delaware limited liability company (the “Company”), and the Company Unitholders (as defined therein) from time to time party thereto. Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.
The undersigned Company Unitholder hereby transfers to the Company, the Corporation or the exchanging Subsidiary, as applicable, the number of Company Units and shares of Class B Common Stock set forth below in Exchange for either shares of Class A Common Stock to be issued in its name (or the name of its designee) as set forth below or, at the option of the Corporation, the Cash Settlement payable to the account set forth below, in accordance with the terms of the Exchange Agreement.
Legal Name of Company Unitholder:
Desired Exchange Date (if applicable):
[Maximum](1) Number of Company Units and shares of Class B Common Stock to be Exchanged:
(1) In connection with any underwritten offering of Class A Common Stock that includes an option granted to the underwriters to acquire additional shares of Class A Common Stock, the Company Unitholder shall specify the maximum number of Company Units and shares of Class B Common Stock desired to be exchanged assuming such option is exercised and the amount of Company Units and Class B Common Stock exchanged in connection with such offering will be limited to the amount necessary to fulfill the delivery obligation upon exercise of the option.
If the Company Unitholder desires the shares of Class A Common Stock be settled through the facilities of The Depositary Trust Company (“DTC”), please indicate the account of the DTC participant below.
If the Company Unitholder desires the shares of Class A Common Stock be settled through the delivery of certificates to the Company Unitholder or its designee, please indicate the following:
Legal Name for Certificates:
Address for Delivery of Certificates:
If the Corporation elects Cash Settlement:
Account Number:
Legal Name of Account Holder:
The undersigned Company Unitholder hereby represents and warrants that (i) the Company Unitholder has all requisite legal capacity and authority to execute and deliver this Exchange Notice and to perform the undersigned’s obligations hereunder; (ii) the execution and delivery of this Exchange Notice and the consummation of the Exchange have been duly authorized by all necessary corporate or other entity action on the part of the Company Unitholder; (iii) this Exchange Notice constitutes a legal, valid and binding obligation of the undersigned Company Unitholder enforceable against it in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally; (iv) the Company Units and shares of Class B Common Stock subject to this Exchange Notice are being transferred to the Company, the Corporation or the exchanging Subsidiary, as applicable, free and clear of any pledge, lien, security interest, encumbrance, equities or claim; (v) no consent, approval, authorization, order, registration or qualification of any third party or with any court or governmental agency or body having jurisdiction over the undersigned or the Company Units and shares of Class B Common Stock subject to this Exchange Notice is required to be obtained by the undersigned for the transfer of such Company Units and shares of Class B Common Stock to the Company, the Corporation or the exchanging Subsidiary, as applicable; and (vi) the Company Unitholder is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended, and is not acquiring the shares of Class A Common Stock with the intent to distribute them in violation of the Securities Act of 1933, as amended.
The undersigned hereby irrevocably constitutes and appoints any officer of the Company as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, to do any and all things and to take any and all actions that may be necessary to
transfer the Company Units subject to this Exchange Notice and to deliver to the undersigned the shares of Class A Common Stock or the Cash Settlement to be delivered in Exchange therefor.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Exchange Notice to be executed and delivered by the undersigned or by its duly authorized attorney.
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EXHIBIT B
[FORM OF]
JOINDER AGREEMENT
This Joinder Agreement (“Joinder Agreement”) is a joinder to the Exchange Agreement, dated as of April 28, 2016 (the “Agreement”), among Red Rock Resorts, Inc., a Delaware corporation (the “Corporation”), Station Holdco LLC, a Delaware limited liability company (the “Company”), and each of the Company Unitholders from time to time party thereto. Capitalized terms used but not defined in this Joinder Agreement shall have the meanings given to them in the Agreement. The Company, the Corporation and the undersigned agree that all questions concerning the construction, validity and interpretation of this Joinder Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without giving effect to any choice or conflict of law provision or rule, notwithstanding that public policy in Delaware or any other forum jurisdiction might indicate that the laws of that or any other jurisdiction should otherwise apply based on contacts with such state or otherwise. In the event of any conflict between this Joinder Agreement and the Agreement, the terms of this Joinder Agreement shall control.
The undersigned, having acquired shares of Class B Common Stock and Company Units, hereby joins and enters into the Agreement. By signing and returning this Joinder Agreement to the Company and the Corporation, the undersigned (i) accepts and agrees to be bound by and subject to all of the terms and conditions of and agreements of a Company Unitholder contained in the Agreement, with all attendant rights, duties and obligations of a Company Unitholder thereunder and (ii) makes each of the representations and warranties of a Company Unitholder set forth in Section 3.3 of the Agreement as fully as if such representations and warranties were set forth herein. The parties to the Agreement shall treat the execution and delivery hereof by the undersigned as the execution and delivery of the Agreement by the undersigned and, upon receipt of this Joinder Agreement by the Company and the Corporation, the signature of the undersigned set forth below shall constitute a counterpart signature to the signature page of the Agreement.
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Address for Notices:
With copies to: