Sample Business Contracts

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Managing Director,

Head of Debt Products

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The Macau based gaming businesses jointly conducted by the Sponsors, and to initially comprise:

(a)     Mocha Slots electronic gaming machine lounges currently managed by Mocha Slot Group Limited and its subsidiaries (which business, under the brand name "Mocha Slot Club", the premises leases², the gaming equipment and other assets thereof will, after the completion of the acquisition of the Subconcession and approval of the Macau SAR, be transferred to PBL Macau pursuant to the Corporate Restructuring);

(b)     Crown Macau owned by Great Wonders, Investments, Limited ("Great Wonders"); and

(c)     City of Dreams owned by Melco Hotels and Resorts (Macau) Limited ("Melco Hotels", which, together with Great Wonders, will also be transferred to and become a subsidiary of PBL Macau as part of the Corporate Restructuring).

The existing ownership of PBL Macau and other companies referred to above and the proposed steps in the Corporate Restructuring are set out in the attached corporate restructuring memorandum.

The Sponsors have also announced their intention to build and operate a third casino project in Macau to be held by a third casino company which will be a direct or indirect, wholly owned subsidiary of Melco PBL Entertainment (Macau) Limited ("Melco PBL Entertainment") but not a subsidiary of Melco PBL International Limited ("Melco PBL International") and so outside the Primary Obligor group (the "Third Casino Company").

The CLAs understand that:³

(a)     gaming business of existing and future Macanese projects will be operated by PBL Macau in premises leased by it under lease agreements (each a "Lease Agreement") from sister companies which are (save in the case of Crown Macau and City of Dreams) direct or indirect, wholly owned subsidiaries of Melco PBL Entertainment outside the Primary Obligor group or, potentially, third parties outside the Melco PBL Entertainment group (each, together with Great Wonders and Melco Hotels, a "Lessor" and each such project, other than City of Dreams, an "Excluded Project" but, in relation to Crown Macau, see footnote 10);⁴

(b)     the Lease Agreements will be on terms which have been notified to the Lenders in advance and which:

[(i)    provide that the Lessor will be responsible for (and indemnify PBL Macau in relation to) all costs and liabilities in respect of the ownership, development, fit out and operation of each project;

(ii)     ensure compliance by PBL Macau with all relevant Subconcession requirements insofar as such Subconcession requirements are relevant to the Lease Agreement or Excluded Project of such Lessor;

(iii)   limit any recourse against PBL Macau or its assets to otherwise unappropriated gaming revenues derived from the project to which the Lease Agreement relates;

(iv)    provide for a rental payment, after deduction of gaming tax, other monthly contributions and similar amounts such as premia payable under the Subconcession⁵ and any undischarged Lessor costs, liability or indemnity obligation, of a percentage of gaming revenues from the project (the "Revenue Split Percentage") which is, in the case of the Crown Macau project, equal to the balance of gaming revenues remaining (after further deduction of a licence fee payable to PBL Macau) equivalent to a percentage of gross gaming revenues to be agreed (but, in any event, to be not less than (x) 13% of gross gaming revenue generated from gaming tables plus (y) 29% of all other gross gaming revenues following termination of the SJM Agreements and, in the case of each other project, such amount as may be agreed between the Lessor and PBL Macau and which is, from PBL Macau's perspective, commercially reasonable; and

(v)     are otherwise on an arm's length, commercially reasonable basis,

or have been approved by the Lenders;

(c)     as Project Documents, waiver, amendment and termination of executed Lease Agreements will be subject to certain terms to be agreed during documentation, including Lender notification and approval rights;

(d)     all revenues from these operations will be paid into PBL Macau's Gaming Receipts Account and held, pending application, in separate sub-accounts thereof for each project;

(e)     gaming tax, other monthly contributions and similar amounts such as premia payable under the Subconcession will be transferred monthly from the Gaming Receipts Account to PBL Macau's Taxation Account;

(f)      thereafter, remaining revenues from each project will, subject to the discharge of project cost, liability and indemnity obligations assumed by the relevant Lessor in favour of PBL Macau, be shared between PBL Macau and that project in accordance with PBL Macau's contractual obligation to pay the Revenue Split Percentages under the project Lease Agreement;

(g)     the Gaming Receipts Account and the Taxation Account will be secured in favour of the Lenders (and, subject to terms to be agreed during documentation, such security over Gaming Receipts Account sub-accounts can be shared with other Excluded Project lenders) but, prior to an Event of Default and subject to compliance with the Finance Documents, will allow PBL Macau to make withdrawals for the release of funds for each project;

(h)     save for PBL Macau's obligations under the Lease Agreements (recourse in respect of which shall be limited as set out above), each Excluded Project will be developed and financed on terms which do not involve any recourse to PBL Macau or any other member of the Primary Obligor group; and

(i)      any holdco guarantees which may be required in connection with such a project will be provided by entities outside the Primary Obligor group.]

or otherwise are entered into on terms which adequately protect the interests of Lenders whilst allowing PBL Macau to enter into arrangements on arms length commercially reasonable market terms, as approved by the CLAs (acting reasonably).

Subconcession Facility: Australia and New Zealand Banking Group Limited

Project Facilities: TBD

Subconcession Facility: ANZ Fiduciary Services Pty Limited

Project Facilities: TBD

Gaming market consultant - The Innovation Group

Environmental consultant (and Independent Technical Consultant) -

Franklin + Andrews (Hong Kong) Ltd.

Insurance consultant - [Jardine Lloyd Thompson]

Hotel market consultant - HVS International

Project appraisor - [HVS International]

Financial Model auditor - [Deloitte Touche Tohmatsu]

Local legal counsel - Henrique Saldanha, Avogados & Notarios

International legal counsel - Clifford Chance

(a)     Hotel - four hotel developments (two of at least five star international standard), comprising approximately 1,600 rooms

(b)     Gaming - approximately 39,300m² of gaming area over three levels including not less than 50 VIP tables, 400 non-VIP tables and 2,500 slot machines

(c)     Retail and Food and Beverage - retail space of approximately 4,700m² and food and beverage space of approximately 17,000m²

(d)     Leisure and Entertainment - leisure and entertainment facilities including a 2,500 seat theatre, health club, spa and signature facilities

(e)     Other Facilities - such other facilities as are necessary and incidental to facilitate customer access and service

to be completed in two stages, with stage 1 including at least two of the hotels (being Crown and Hard Rock), all of the gaming area and at least 50% of the retail and food and beverage space and stage 2 the remainder of the Project not comprised in stage 1.

(A)    a US$500 million Subconcession Facility; and

(B)    a Non-Gaming Facility and General Project Facility⁶ in an aggregate amount of not less than US$1,100 million, plus an additional US$500 million, subject to the utilization of these Facilities for the repayment in full of the Subconcession Facility (together, the "Project Facilities")

subject to the audited financial model having a debt to equity ratio of no more than 70:30 (equity for these purposes not including High Yield Bond proceeds) and showing an average debt service coverage ratio (determined on the basis set out in Financial Covenants below) of not less than 1.65x. If the outstanding amount of the Subconcession Facility is less than US$500 million upon utilisation of the Project Facilities in repayment of the Project Facilities, the remaining amount of the Non-Gaming Facility and General Project Facility shall be increased by the shortfall.

(a)     subject to satisfaction of conditions precedent applicable to the Facility of which it forms part (including a drawdown minimum amount of US$10 million and the receipt of credit ratings from Standard & Poor's Rating Group and Moody's Investor Services), each such tranche will be available for drawdown during the 12 month period immediately after the Agreement Date in respect of that Facility;

(b)     each such tranche will be drawn ahead of any non-institutional portion of the Facility of which it forms part;

(c)     the Subconcession Facility will initially be made available by non-institutional Lenders and, thereafter, shall be refinanced by drawings on any other available US institutional tranche of any other Facility (and the available commitment under that Facility will increase by the amount repaid from such drawings);

(d)     if, at the end of the availability period referred to in paragraph (a) above, any US institutional tranche has not been fully drawn, it shall thereupon be drawn in full and, pending application under the Facility of which it forms part, deposited in a separate interest bearing disbursement account secured in favour of the Lenders; and

(e)     proceeds of the drawing will be available for disbursement from the account upon satisfaction of the same conditions precedent and notice requirements as the Facility of which they form part.

Quarter

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17

(a)     100% (or, in the case of any public offering subsequent to and other than the Permitted Public Offering, 75%) of net proceeds of any permitted (to be agreed in the facility documentation) equity or debt issuance to any person by any Primary Obligor (other than the Permitted Public Offering (to the extent it is completed prior to any drawing under the Non-Gaming Facility or the General Project Facility), any equity injection or shareholder/Sponsor group loans required for the construction or operation of the Project, equity of US$128 million committed and cost overrun (if any) for the construction or operation of the Crown Macau project equity for the acquisition of the Subconcession or other permitted indebtedness);

(b)     100% of net proceeds of any asset sale, subject to reinvestment rights and other exceptions to be agreed upon;

(c)     100% of net termination proceeds paid under the Subconcession, any Lease Agreement, the Hotel Management Agreements or any other material contracts or agreements subject to exceptions to be agreed upon;

(d)     100% of net proceeds or liquidated damages paid pursuant to obligation, default or breach under the Project Documents subject to reinvestment rights and other exceptions to be agreed upon;

(e)     100% of insurance proceeds net of expenses incurred to obtain such proceeds subject to reinstatement rights and other exceptions to be agreed upon; and

(f)      Excess Cashflow:

(i)      100% of excess cashflow (to be defined) (after providing for items (a) – (d) in the Licensee Proceeds Account waterfall) for each financial year commencing with the financial year in which the Construction Completion Date is achieved;

(ii)     such amount to be reduced to 50% of excess cashflow for each financial year in which the ratio of Total Debt to EBITDA is less than 3:1 but equal to or more than 2:1; and

(iii)   such amount to be reduced to 25% of excess cashflow for each financial year in which the ratio of Total Debt to EBITDA is less than 2:1.

PBL Macau will establish the following accounts:

1.       a receipts account in Macau, which will be secured in favour of the Security Agent (the "Gaming Receipts Account");

2.       a Taxation Account in Macau, which will be secured in favour of the Security Agent (the "Taxation Account"); and

3.       a Payment Account in [Hong Kong/Macau], which will be secured in favour of the Security Agent (the "PBL Macau Payment Account").

1.       payments into the Taxation Account, the amount of gaming tax and all contributions and similar amounts such as premia payable by PBL Macau, in each case under the Subconcession on gross gaming revenue for that month;

2.       subject to the transfer to the Disbursement Account prior to the Construction Completion Date for stage 1 of the Project as mentioned in the last paragraph of this "Receipt" section below, payment into the PBL Macau Payment Account, in an amount equal to the balance of the relevant gaming revenue (less, after deduction of Revenue Split Percentages and such other amounts as may be required, the amount payable to the Lessors under their respective Lease Agreements); and

3.       the balance to be paid to the Lessors in accordance with their respective entitlements under the Lease Agreements (and, in the case of Melco Hotels, to a "Lessor Proceeds Account" established by it (and secured in favour of the Security Agent)).

(a)     payment of construction costs, budgeted operating expenditure, capital costs and income taxes;

(b)     payment of any fees and expenses owing to Lenders, including the Facility Agent's and Security Agent's fees and costs;

(c)     payments to the DSAA of interest due under the Facility Agreements and scheduled interest swap payments;¹³

(d)     payments to the High Yield Bond DSAA of scheduled interest¹⁴ due under the High Yield Bond;

(e)     payments to the DSAA of principal due under the Facility Agreements and non-scheduled interest or other swap payments and any amount outstanding under any Pari Passu Revolving Credit Facility (to the extent not rolled-over in relevant period);

(f)      payment to DSRA up to the required balance (to cover all interest and principal due under the Facility Agreement over the next six month period);

(g)     payment to the High Yield Bond DSRA (to cover scheduled interest under the High Yield Bond over the next six month period);

(h)     payment to a reserve account (the "Mandatory Prepayment Account") to meet payments required under paragraphs (f) and (g) of the Mandatory Prepayment provisions;

(i)      payment to a reserve account (the "Mandatory Prepayment Account") to meet payments required under paragraphs (f) and (g) of the Mandatory Prepayment provisions;

(j)      payment to a reserve account (the "Mandatory Prepayment Account") to meet payments required under paragraphs (f) and (g) of the Mandatory Prepayment provisions;

(k)     payment to a reserve account (the "Mandatory Prepayment Account") to meet payments required under paragraphs (f) and (g) of the Mandatory Prepayment provisions;

(l)      in the case of PBL Macau, payment to Distribution Account; and

(m)    in the case of City of Dreams, payment to the PBL Macau Payment Account.

(1)     Melco and PBL to undertake no "Change of Control Event" occurs (see Events of Default below); and

(2)     Melco and PBL will provide, on a 50:50 several basis, corporate or bank guarantees with a rating of A- or above by S&P (or equivalent rating by Moody’s) to cover Contingent Equity of US$[282] million and Deferred Equity of US$100 million to be contributed by the Sponsors.

The corporate and/or bank guarantees in respect of Contingent Equity and Deferred Equity shall be reduced to the extent such additional equity is injected into Melco Hotels (for the City of Dreams project) and shall be released upon satisfaction of the following conditions (such release date, the "Sponsor Support Release Date"):

(a)     the Construction Completion Date has occurred;

(b)     all Accounts are funded to the required balance; and

(c)     no Event of Default or potential Event of Default has occurred which is continuing,

or, in the case of Deferred Equity, if earlier, the demonstrated availability of not less than US$[200] million accumulated by PBL Macau from net receipts from Crown Macau dividends or licence fees or Mocha Slots cashflow which has not been spent and is available to meet Project costs (the "Net Operating Cashflow Amount").

(3)     Melco and PBL will provide, on a 50:50 several basis, corporate and/or bank guarantees with a rating of (and maintained at) A- or above by S&P (or equivalent rating by Moody’s) for amounts payable under the Subconcession Facility, such guarantee to be released on the earlier of:

(i)      satisfaction of conditions precedent to the initial utilisation under the Non-Gaming Facility and General Project Facility prior to the end of the Availability Period for such Facilities; and

(ii)     the date on which the following conditions are satisfied:

(A)    the ratio of Total Debt to EBITDA (determined on the basis set out in Financial Covenants below) at the end of two consecutive quarterly dates is less than 4.00:1;

(B)    the guarantees referred to in "Guarantors" above and the Security (except any such guarantees and Security that relate to assets of the Project which did not come into existence in circumstances where the conditions precedent to the initial Utilisation under the Non-Gaming Facility and General Project Facility have not been satisfied) (or equivalent satisfactory to the Lenders) have been put in place and perfected (and customary legal opinions obtained); and

(C)    the parties have agreed and implemented such amendments, supplements and further acts and other things as the Lenders reasonably consider consequential upon the failure to satisfy the conditions precedent referred to in sub-paragraph (i) above (including without limitation to ensure satisfaction of the Investment Plans under the Subconcession) and the implementation (except any such guarantees and Security that relate to assets of the Project which did not come into existence in circumstances where the conditions precedent to the initial Utilisation under the Non-Gaming Facility and General Project Facility have not been satisfied) of the acts, matters and other things contemplated by this Term Sheet (including the entry into Finance Documents on terms (including financial and other covenants reasonably satisfactory to the Lenders) contemplated therein and the adjustment of certain provisions of the Subconcession Facility Agreement as PBL Macau may reasonably require and the Agent under the Subconcession Facility, acting reasonably may agree, taking into account, in addition to the matters specified above, the consequence and effect of the failure to satisfy the conditions precedent referred to in sub-paragraph (i) above) on the operations of PBL Macau and its subsidiaries thereafter; and

(D)    any conditions subsequent to Drawdown under the Subconcession Facility have been met (including the Macanese legal opinions in relation to the Subconcession being updated at such time),

(a)     first priority mortgage on each Primary Obligors' land and all present and future buildings on and fixtures to such land, and assignment of land use rights under each Land Concession Agreement or equivalent (the "Land Agreements");

(b)     assignment of the Primary Obligors' rights under the Project Documents;

(c)     the corporate and bank guarantees referred to in "Sponsors' Support" above;

(d)     charge over all of the Accounts, except for (i) the capital contribution account/disbursement account for the holding or payment of equity for the Crown Macau project; (ii) any cash deposit of up to MOP$2.29M of Melco Hotels set aside as guarantee money in favour of the Macanese Government guaranteeing the performance of Melco Hotel's obligations under the City of Dreams' land grant and (iii) the security to be created in favour of the trustee for the High Yield bonds over the High Yield Bond DSAA;

(e)     assignment of the Primary Obligors' rights under all insurance policies (including those in relation to the Project);

(f)      assignment of insurer's rights under and/or to the reinsurance proceeds;¹⁶

(g)     first priority security over the Primary Obligors' chattels, receivables and other assets (other than shares in Great Wonders) which are not subject to any security under any other security documentation;

(h)     assignment of the Primary Obligors' rights under the Hedge Agreements;

(i)      pledge over equipment and tools used in the gaming business by PBL Macau;

(j)      charge over intellectual property rights (if any);¹⁷

(k)     first priority charges over issued shares capital of the Borrowers and each Guarantor (other than shares held in PBL Macau by PBL Asia) and assignment of Intermediate Holdco's rights and interests arising under the PBL Asia Call Option;

(l)      Subordination Deed and/or Intercreditor Agreement providing for subordination and an assignment of all shareholder and other Sponsor, Sponsor group or other third party loans (except for such loans to Excluded Subsidiaries) to the Security Agent;

(m)    Intercreditor Agreement or other instrument for the appointment of the Security Agent and providing for the priority and ranking of and the sharing of security as between the Lenders and hedging counterparties (as providers of first ranking indebtedness), trustee for the High Yield Bond (in respect of guarantees to be provided by Melco PBL International, MPBL Investments, PBL Macau and Melco Hotels and pledges over the shares in MPBL Investments, PBL Macau and Melco Hotels)¹⁸, the Subconcession performance bond provider (which provides a reducing performance bond/bank guarantee up to an initial amount of MOP 500 million to the Macau SAR to guarantee PBL Macau's obligations under the Subconcession)¹⁹ and the Lessor project lenders for the sharing of security over Gaming Receipts Account sub-accounts;

(n)     Macanese power(s) of attorney, in customary form;

(o)     notices and acknowledgments of assignment, tripartite agreements and/or similar collateral security agreements with counterparties to Project Documents (including the Macau SAR in respect of the Subconcession and Land Agreements) including step-in-rights (if, in the case of the Subconcession, permitted by the Macau SAR) acceptable to the CLAs; and

(p)     in addition to PBL Asia Call Option and PBL Asia Undertaking, Sponsor undertakings concerning, amongst others, compliance with Subconcession by PBL Macau direct and indirect shareholders (and, where relevant in the case of future projects, compliance with Subconcession and Lease Agreements by other affiliates), change of control, and, in the case of PBL, preserving ownership and non-trading nature of PBL Asia and negative pledge on assets of PBL Asia.

Save as mentioned below for the Subconcession Facility, as customary for a facility of this nature, including inter alia:

(a)     delivery of the Project feasibility study (including market study report), plans, budgets, timetable and projected results and audited financial model;

(b)     satisfaction with third party construction, completion and completion support arrangements as the Lenders may reasonably consider appropriate for international limited recourse project financing of projects of this nature in Macau;

(c)     execution of Project Documents (including the execution of the Subconcession and Macau SAR approval and adoption thereof), Land Agreements and termination of SJM Lease Agreement with respect to Mocha Slots and any other SJM or SJM affiliate agreements (including any claims or any other liabilities in respect thereof) (the "SJM Agreements");

(d)     independent consultant reports (including technical, insurance, environmental, market consultants and others to be appointed to act on behalf of the Lenders) typical for this type of facility in form and substance satisfactory to the CLAs;

(e)     legal, tax and accounting due diligence satisfactorily concluded;

(f)      satisfaction with the proposed management structure and operating standards to be applied by PBL Macau and Great Wonders in connection with Crown Macau (and proposed to be applied in respect of City of Dreams and other projects);

(g)     relevant Macau Government and other authority approvals having been obtained for all Project Documents and Finance Documents, including material permits and approvals in respect of the Corporate Restructuring and the Project;

(h)     the full Base Equity amount (including the amount of the High Yield Bond, but not including the Crown Macau equity) has been injected into the Borrowers and, if utilised, fully utilised on the purchase of the Subconcession, the refinancing of the Subconcession Facility and/or meeting Project costs;

(i)      execution of all Finance Documents and evidence of all required registrations, filings, etc, required to carry out the transactions contemplated by Finance Documents and perfection of the security package;

(j)      each of the corporate and bank guarantees referred to in Sponsor Support;

(k)     the scheduled Construction Completion Date is no later than [á] for stage 1 of the Project and [á] for the Project as a whole, as verified by the Independent Technical Consultant;

(l)      except as otherwise included in paragraph (g) above, evidence of receipt of permits, etc, land registrations (including approval, classification and registration of gaming zones)²⁰ and compliance with procedural and other regulatory requirements to be determined;

(m)    receipt of most recent (and not earlier than the last financial year to which audited reports have been prepared) audited and, if more recent, most recent unaudited management or other financial statements for Melco Hotels, PBL Macau and Melco PBL International Limited, and compliance and other certificates;

(n)     evidence that the required insurances are in place;

(o)     the Accounts have been established;

(p)     no forecast funding shortfall, as verified by the Independent Technical Consultant;

(q)     certification by the Independent Technical Consultant as to the reasonableness of the construction budget and the construction timetable;

(r)      execution of Hedging Letter and Hedging Agreements;

(s)     completion of Corporate Restructuring; and

(t)      satisfactory legal opinions.

(a)     drawdown certificate setting out details of sources and uses of proposed drawdown, funds expended or payable since last drawdown, updated Project costs, variances and funds available since the then latest periodic report relating to the Project including certification of no forecast funding shortfall;

(b)     in relation to drawdowns the proceeds of which are to be used to meet costs for the gaming or non-gaming portions of the Project, as applicable, incurred or to be incurred under the relevant Construction Contract, a certificate from the Independent Technical Consultant confirming such costs have been paid and should be reimbursed or are due and payable under that Construction Contract;

(c)     the Independent Technical Consultant has certified that it has no reason to believe that the then current construction budget and the then current construction schedule are not accurate, in each case, in all material respects [(and each demonstrates the Construction Completion Date for stage 1 of the Project will be achieved on or before [•] and on or before [•] for the Project as a whole)]; a

(d)     the ratio of Total Debt (including the High Yield Bond and the amount of the proposed drawing but excluding any liabilities in respect of the agreements to be entered into with the Subconcession performance bond provider or City of Dreams land concession bond provider) to equity (excluding the High Yield Bond but not including the Net Operating Cashflow Amount, if any) injected into the Borrowers and utilized on the purchase of the Subconcession or meeting Project costs, does not exceed 70:30; and

(a)     comply with obligations under, and not to waive any rights or amend, the Subconcession acquisition documents, the Project Documents or (without Majority Lender approval) enter into further material Project Documents other than the entering into of any new Lease Agreement in accordance with the criteria mentioned above under "Lessors and Lease Arrangements";

(b)     maintain insurance cover in accordance with the Insurance Programme;

(c)     provision of construction progress reports at monthly intervals prior to the Construction Completion Date and notification to the Lenders of any event that may adversely affect the completion of the Project as scheduled;

(d)     not agree to material²¹ Project change orders or, unless funded by additional equity, other change orders, without Majority Lenders approval;

(e)     provision of quarterly management accounts, and annual audited financial statements, in each case, for Melco Hotels, PBL Macau and Melco PBL International Limited, and annual budgets to establish agreed operating expenditures for the waterfall;

(f)      compliance with proposed management structure and operating standards;

(g)     compliance with the Hedging Letter;

(h)     make payments in accordance with the waterfall;

(i)      implement Corporate Restructuring (including the termination of all SJM Agreements) as soon as practicable and, in any event, within four months of acquisition of the Subconcession;

(j)      From the end of the quarter falling immediately after the date falling 6 months after the Construction Completion Date for stage 1 of the Project and tested quarterly thereafter on a 12 month rolling basis, comply with financial covenants including but not limited to the following ("Financial Covenants"):

Quarterly Date

First to Fourth Quarterly Dates

Fifth to Eighth Quarterly Dates

Ninth to Eleventh Quarterly Dates

Thereafter

Total Debt to EBITDA

[5.25:1]

[4.75:1]

[3.75:1]

[3.50:1]

Minimum Debt Service Coverage ratio ("DSCR"):

Quarterly Date

First to Second Quarterly Dates

Third to Fourth Quarterly Dates

Thereafter

DSCR

[1.10:1]

[1.15:1]

[1.25:1]

Minimum interest coverage ratio:

Quarterly Date

First eight Quarterly Dates

Thereafter

Interest Coverage Ratio

[2.00:1]

[3.00:1]

(k)     not, without the prior written consent of the Majority Lenders:

(a)     create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest upon the whole or any part of the undertaking, assets, property or revenues of the Primary Obligors, present or future, to secure any debt or any guarantee of or indemnity in respect of any debt other than the second ranking security over shares in Intermediate Holdco and PBL Macau and each of its subsidiaries (other than any Excluded Subsidiaries) securing the High Yield Bond and other agreed permitted encumbrances including the cash deposit of MOP 2.29M securing performance of Melco Hotels under the City of Dreams land concession, any pledge over shares in Great Wonders in favour of the Crown Macau Lenders and any shared security agreed in respect of the Gaming Receipts Account sub-account;

(b)     sell, lease, transfer or otherwise dispose of any of its assets except where such sale is conducted on an arm's length basis at a fair market value and provided that proceeds from such sale will be credited to the PBL Macau Payment Account or the Lessor Proceeds Account (as required) or otherwise used to prepay the Facilities pro rata and, as to each Facility, in inverse order of maturity subject to reinvestment rights and other agreed exceptions;

(c)     make any payment of fees under any agreement with the Sponsors (or their affiliates) other than fees approved by the Majority Lenders or (after the last day of the first full financial quarter beginning on or after the Construction Completion Date) in accordance with the waterfall or enter into agreements with the Sponsors or their affiliates except in certain limited circumstances;

(d)     make investments other than within agreed upon limitations;²²

(e)     make any loan or advance or guarantee indebtedness other than the issue of the High Yield Bond, the second ranking subordinated guarantees in respect of the High Yield Bond from Intermediate Holdco and PBL Macau and each of its subsidiaries (other than any Excluded Subsidiaries) and the guarantee reimbursement obligations to Subconcession performance bond provider, the arrangements for the cash deposit of MOP 2.29M securing the City of Dreams land concession and the Subconcession or within certain other agreed limitations;

(f)      incur additional indebtedness other than under the Pari Passu Revolving Credit Facility, trade credits or within certain other agreed limitations and exceptions;

(g)     pay, make or declare any dividend or other distribution in respect of any financial year except where the Distribution Tests are met;

(h)     create any subsidiaries other than (x) any Excluded Subsidiaries and (y) any other subsidiary incorporated for the carrying out of all or any part of the Project as notified to the Lenders from time to time with appropriate security, undertaking and accession arrangements (to be agreed) or required for the implementation of the Corporate Restructuring with (in each of the latter cases) the approval of the Majority Lenders;

(i)      procure that Crown Macau maintains its assets, including insurances over its assets;

(j)      procure that Crown Macau does not incur additional financial indebtedness in addition to its existing HK$1.28 billion facility, save within agreed limitations;²³ and

(k)     preserve non-trading nature of Intermediate Holdco.

(a)     the Financial Covenants are being complied with;

(b)     all Accounts are funded to the required level;

(c)     the DSCR as at the most recent test date is greater than 1.25x;

(d)     the Sponsor Support Release Date has occurred;

(e)     the first Repayment has been made; and

(f)      no Event of Default or potential Event of Default is continuing or is likely to occur as a result of making the Distribution.

(a)     Non-payment of principal, interest, fees or other amounts when due; misrepresentations; breach of Financial Covenants; breach of other covenants; breach of Sponsor support and other obligations (including rating downgrade below BBB+ (stable) by S&P (or equivalent by Moody’s) and failure to replace within 30 days with guarantee rated A- or above by S&P (or equivalent by Moody’s)); cross default; insolvency/bankruptcy events; judgments; actual or asserted invalidity of any Finance Document; termination, cancellation or invalidity of Project Documents; breach of Project Documents (including but not limited to the Subconcession (including any administrative intervention), the Land Agreements, the tripartite agreements, the Lease Agreements, the Construction Contracts, the Hotel Management Agreements, any material facilities managements contracts; termination, sequestration or suspension (or any formal steps therefor) of the Subconcession or Land Agreements; violation of or failure to hold permits/licences including until the Sponsor Support Release Date a home country gaming licence of a Sponsor; failure to commence construction by a certain specified date; completion of construction of the Project does not occur by certain specified dates (or Independent Technical Adviser reasonably determines unlikely to occur); abandonment of all or any material part of the Project; forecast funding shortfall not cured within a grace period to be agreed; cessation, avoidance or unavailability of insurance; expropriation; change in law which deprives any Primary Obligor of the use of its property, prevents it from conducting its business as previously conducted or might otherwise reasonably be expected to have a material adverse effect; force majeure; material adverse change.

(b)    Any of the following "Change of Control Events" occurs:

(i)      change in the group shareholding structure prior to the Construction Completion Date except for changes contemplated by the Corporate Restructuring or (provided always the Sponsors continue not to breach sub-paragraphs (ii)(y) or (iv) below) the Permitted Public Offering;

[(ii)   Sponsors cease collectively to beneficially own, directly or indirectly in the aggregate, (x) at any time prior to the Sponsor Support Release Date, at least 90% or, following the Permitted Public Offering, 65% (measured by voting power) and 90% or, following the Permitted Public Offering, 65% (measured by size of equity interest) of the outstanding Capital Stock of PBL Macau, (y) after the Sponsor Support Release Date, at least 51% (measured by voting power) and at least 51% (measured by size of equity interest) of the outstanding Capital Stock of PBL Macau, or (z) at any time PBL ceases to own at least 50% of the Sponsors' combined percentage of the outstanding Capital Stock of the PBL Macau;]

(iii)   prior to any Permitted Public Offering, the Sponsors cease collectively to have, directly or indirectly, the power to direct the management and operations of PBL Macau, including the power to appoint or remove all, or the majority, of the board of directors of PBL Macau; or

(iv)    there ceases to be a majority of directors on the board of PBL Macau who were elected with the approval of a majority of the directors of Melco PBL Entertainment whose election to the board of Melco PBL Entertainment was in turn approved by the Sponsors collectively (or by directors whose election was approved by the Sponsors collectively),

Payments will be made into the DSAA to the extent that the amount standing to the credit of the DSAA (split between US$ and HK$ accounts):

i)        as at the end of the first month of each quarter, is not less than one-third of the aggregate amount of interest and principal (if any) due (in the relevant currency) under the Facilities and the permitted Hedge Agreements on the next payment date;

ii)      as at the end of the second month of each quarter, is not less than two-thirds of the aggregate amount of interest and principal (if any) due (in the relevant currency) under the Facilities and Hedge Agreements on the next payment date; and

iii)     as at the end of the third month of each quarter, is not less than the aggregate amount of interest and principal (if any) due (in the relevant currency) under the Facilities and Hedge Agreements on such payment date.

Payments will be made into the High Yield Bond DSAA on a similar basis to ensure build-up in each month over each semi-annual period of balance equal to that period's scheduled interest payment.

i)        Subconcession Facility Agreement

ii)      Facility Agreements and Common Terms Agreement or composite Senior Facilities Agreement

iii)     Guarantees

iv)     Intercreditor Agreement

v)      Security Documents (including the other documents referred to in "Security")

i)        Subconcession (and any guarantees or performance bonds thereunder) and any agreement relating thereto with Macau SAR;

ii)      Land Agreements (and any guarantees or performance bonds thereunder);

iii)     Lease Agreements;

iv)     the Construction Contract(s);

v)       the Contractor's completion guarantee by its [ultimate] parent company (if any);

vi)     performance bond issued in respect of the Contractor's obligations under the relevant Construction Contract(s) or from any other contractor;

vii)    the Hotel Management Agreements;

viii)   [IP Agreements];

ix)     the PBL Asia Call Option

x)       [others to be agreed]²⁵.