EXECUTION VERSION
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REGISTRATION RIGHTS AND MEMBERS' AGREEMENT
dated as of July 8, 1998
by and among
EPIC RESORTS, LLC,
EPIC MEMBERSHIP CORP.,
MEMBERS OF EPIC RESORTS, LLC,
EPIC CAPITAL CORP.,
EPIC WARRANT CO.
and
NATWEST CAPITAL MARKETS LIMITED
as the Initial Purchaser
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EXHIBIT C
THIS REGISTRATION RIGHTS AND MEMBERS' AGREEMENT (this "Agreement")
is dated as of July 8, 1998, by and among Epic Resorts, LLC, a Delaware
limited liability company ("Epic" or the "Company"), Epic Capital Corp., a
Delaware corporation ("Capital Corp."), Epic Membership Corp., the Existing
Members (as defined herein), Epic Warrant Co., a Delaware corporation
("Warrant Co."), and NatWest Capital Markets Limited ("Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated June 30, 1998, among the Company, Capital Corp., Warrant
Co., the other subsidiaries of the Company and the Initial Purchaser (the
"Purchase Agreement"), relating to, among other things, the sale by the
Company to the Initial Purchaser, at the election of the Initial Purchaser,
of either warrants (the "LLC Warrants") to purchase membership interests of
the Company ("Membership Interests") or warrants (the "Corporate Warrants")
to purchase shares of common stock of Warrant Co. to be issued upon exercise
of the Corporate Warrants. The only assets of Warrant Co. will be warrants
in the Company with the same terms as the LLC Warrants (the "Warrant Co. LLC
Warrants" and, together with the LLC Warrants, the "Warrants"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide to the Holders (as defined herein), among other
things, the registration rights for Membership Interests set forth in this
Agreement and the Existing Members have agreed to provide the Holders, among
other things, the tag-along rights for the Warrants and Membership Interests
as set forth herein. In order to induce the Existing Members to enter into
this Agreement, the Initial Purchaser has agreed on behalf of the Holders to
provide to the Existing Members, among other things, the drag-along rights
for the Warrants and Membership Interests as set forth herein. The execution
and delivery of this Agreement is a condition to the obligation of the
Initial Purchaser to purchase either the LLC Warrants or the Corporate
Warrants under the Purchase Agreement.
The parties hereby agree as follows:
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"AFFILIATE" means, when used with reference to any Person, any
other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the referenced Person or such other
Person, as the case may be. For the purposes of this definition, "control"
(including, with correlative meanings, the term "controlling," "controlled
by," and "under common control with"), when used with respect to any
specified Person, means the power to direct or cause the direction of
management or policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
Neither the Holders nor any of their Affiliates shall be deemed to be an
Affiliate of the Company or of any of its Affiliates in their capacities as
such.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXISTING MEMBERS" shall mean (i) Xxxxxx X. Xxxxxxx, (ii) the
successors, assigns or heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of Xxxxxx X. Xxxxxxx, (iii) a trust the
beneficiary of which includes only Xxxxxx X. Xxxxxxx or of which he exercises
sole control, and (iv) Epic Membership Corp., a Delaware corporation wholly
owned by Xxxxxx X. Xxxxxxx.
"HOLDER" shall mean the Initial Purchaser and Warrant Co., for so
long as such entity owns any Warrants, Registrable Securities or Membership
Interests, and each of their respective successors, assigns and direct and
indirect transferees who become registered owners of Warrants, Registrable
Securities or Membership Interests.
"INDENTURE" shall mean the Indenture dated as of July 8, 1998 among
the Company, Capital Corp., the Subsidiary Guarantors (as therein defined)
and United States Trust Company of New York, as Trustee, as supplemented or
amended from time to time in accordance with the terms thereof.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday,
payment may be made on the next succeeding day that is not a Legal Holiday.
"MEMBER" means, collectively, each holder of Membership Interests,
each Existing Member and each Permitted Transferee.
"MEMBERSHIP INTERESTS" shall mean the Membership Interests and any
other securities issued or issuable upon exercise of the Warrants and any
successor securities to any of them.
"OPERATING AGREEMENT" means the Agreement of Membership of the
Company, dated July 7, 1998, by and among the Existing Members, as the same
may be amended from time to time.
"PERMITTED TRANSFEREE" shall mean any (i) Member, (ii) the Company,
and (iii) any Affiliate of any Member or the Company to the extent such
Person agrees to be bound by this Agreement.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
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"PROSPECTUS" shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference, if any, in such Prospectus.
"REGISTRABLE SECURITIES" shall mean the Membership Interests and
any other securities issued or issuable upon exercise of the Warrants. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to such
securities shall have been declared effective under the Securities Act and
such securities shall have been disposed of pursuant to such Registration
Statement, (ii) such securities have been sold to the public pursuant to Rule
144 (or any similar provision then in force, but not Rule 144A under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or resolution hereafter adopted by the SEC) under the Securities Act,
(iii) such securities shall have been otherwise Transferred by their Holder
and new certificates for such securities not bearing a legend restricting
further Transfer shall have been delivered by the Company or its Transfer
Agent and subsequent disposition of such securities shall not require
registration or qualification under the Securities Act or any similar state
law then in force or (iv) such securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees and expenses, fees and
expenses of compliance with securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the underwriters
in connection with blue sky qualifications of the Registrable Securities),
rating agency fees, printing expenses, messenger, telephone and delivery
expenses, fees and disbursements of counsel for the Company and all
independent certified public accountants, the fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (but not
including any underwriting discounts or commissions or transfer taxes, if
any, attributable to the sale of Registrable Securities by Holders of such
Registrable Securities) and other reasonable out-of-pocket expenses of
Holders.
"REGISTRATION STATEMENT" shall mean any registration statement of
the Company which covers any of the Membership Interests pursuant to the
provisions of this Agreement and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"RESTRICTED SECURITY" shall mean any Membership Interest which is a
"restricted security" within the meaning of Rule 144(a)(3) under the
Securities Act.
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"RULE 144" shall mean Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A under the Securities Act) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates
of an issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"TRANSFER" shall have the meaning set forth in Section 3.
"TRANSFER AGENT" means any transfer agent or registrar appointed by
the Company for the Warrants or Membership Interests.
2. REGISTRATION RIGHTS.
2.1. PIGGY-BACK REGISTRATION.
(a) If at any time the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company
for its own account or for the account of any holder of Membership Interests
(other than (i) a registration statement on Form S-8 (or any substitute form
that may be adopted by the SEC), (ii) a Registration Statement filed in
connection with an offer or offering of securities solely to the Company's
existing securityholders or (iii) a Registration Statement filed in
connection with an initial public offering by the Company), then the Company
shall give written notice of such proposed filing to the Holders as soon as
practicable (but in no event less than 20 Business Days before the
anticipated filing date), and such notice shall offer the Holders the
opportunity to register such number of Registrable Securities as each of the
Holders may request (which request shall specify the Registrable Securities
intended to be disposed of by such selling Holder and the intended method of
distribution thereof) (a "Piggy-Back Registration"). The Company shall use
its reasonable best efforts to cause the managing underwriter or underwriters
of such proposed underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration to be included on the
same terms and conditions as any similar securities of any other
securityholder included therein and to permit the sale or other disposition
of such Registrable Securities in accordance with the intended method of
distribution thereof. Any selling Holder shall have the right to withdraw
its request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.1 by giving written notice to the
Company of its request to withdraw. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective; PROVIDED
that the Company shall give prompt notice thereof to participating selling
Holders. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this
Section 2.1, and each Holder shall pay all underwriting discounts and
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commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to a Registration Statement
effected pursuant to this Section 2.1.
(b) No failure to effect a registration under this Section 2.1 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement.
2.2. REDUCTION OF OFFERING.
(a) If the managing underwriter or underwriters of any
underwritten offering described in Section 2.1 have informed, in writing, the
selling Holders of the Registrable Securities requesting inclusion in such
offering that it is their opinion that the total amount of Membership
Interests (or other equity securities) which the Company, the selling Holders
and any other Persons desiring to participate in such registration intend to
include in such offering is such as to materially and adversely affect the
success of such offering, including the price at which such securities can be
sold, then the amount of Membership Interests to be offered for the account
of the selling Holders and all such other Persons (other than the Company)
participating in such registration shall be reduced or limited PRO RATA in
proportion to the respective amounts of Membership Interests requested to be
registered to the extent necessary to reduce the total amount of Membership
Interests requested to be included in such offering to the amount of
Membership Interests, if any, recommended by such managing underwriters;
PROVIDED, however, that if such offering is effected for the account of any
securityholder of the Company other than the selling Holders, pursuant to the
demand registration rights of any such securityholder, then the amount of
Membership Interests to be offered for the account of the Company (if any)
and the selling Holders (but not such securityholders who have exercised
their demand registration rights) shall be reduced or limited PRO RATA in
proportion to the respective amounts of Membership Interests requested to be
registered to the extent necessary to reduce the total amount of Membership
Interests requested to be included in such offering to the amount of
Membership Interests, if any, recommended by such managing underwriters.
(b) If the managing underwriter or underwriters of any
underwritten offering described in Section 2.1 notify the selling Holders
requesting inclusion of Registrable Securities in such offering that the
number of Registrable Securities that the selling Holders, the Company and
any other Persons desiring to participate in such registration intend to
include Registrable Securities in such offering is such as to materially and
adversely affect the success of such offering, (x) the Registrable Securities
to be included in such offering shall be reduced as described in Subsection
2.2(a) or (y) if a reduction in the Registrable Securities pursuant to
Subsection 2.2(a) would, in the judgment of the managing underwriter or
underwriters, be insufficient to substantially eliminate the adverse effect
that inclusion of the Registrable Securities requested to be included would
have on such offering, such Registrable Securities will be excluded from such
offering.
(c) If, as a result of the proration provisions of this Section
2.2, any selling Holder shall not be entitled to include all Registrable
Securities in a Piggy-Back Registration that
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such selling Holder has requested to be included, such selling Holder may
elect to withdraw his request to include Registrable Securities in such
registration; PROVIDED, however, that such a withdrawal shall be irrevocable
and, after making such withdrawal, a selling Holder shall no longer have any
right to include Registrable Securities in the registration as to which such
withdrawal was made.
2.3. REGISTRATION PROCEDURES. In connection with the obligations of the
Company with respect to any Registration Statement pursuant to Section 2.1,
to the extent Registrable Securities are sought to be registered pursuant
thereto the Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company and (ii) shall comply as to form in all material respects with
the requirements of such form and include all financial statements required
by the SEC to be filed therewith, and the Company shall use its reasonable
best efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2.1;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
to keep such Registration Statement effective, cause each Prospectus to be
supplemented by any required prospectus supplement and, as so supplemented,
to be filed pursuant to Rule 424 under the Securities Act;
(c) furnish to each Holder of Registrable Securities and to each
underwriter of an underwritten offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents
as such Holder or underwriter may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Securities;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or Blue Sky laws
of such jurisdictions as any Holder shall reasonably request in writing by
the time the applicable Registration Statement is declared effective by the
SEC, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Securities owned by such Holder;
PROVIDED, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Subsection 2.3(d),
(ii) file any general consent to service of process or (iii) subject itself
to taxation in any such jurisdiction if it is not so subject;
(e) notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to a
Registration Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC
or any state securities authority
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of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties of
the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering cease
to be true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose and (v) of the happening of any event during the
period a Registration Statement is effective which makes any statement made
in such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein
not misleading;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) furnish to each Holder of Registrable Securities, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto (with documents incorporated therein by
reference or exhibits thereto);
(h) cooperate with the selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the selling Holders may
reasonably request at least two Business Days prior to the closing of any
sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Subsection
2.3(e)(v) hereof, use reasonable efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; PROVIDED, however, that the Company shall not be
required to amend or supplement a Registration Statement, any related
Prospectus or any document incorporated therein by reference in the event
that, and for so long as, an event occurs and is continuing as a result of
which the Registration Statement, any related Prospectus or any document
incorporated therein by reference as then amended or supplemented would, in
the Company's good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances under which
they are made. The Company agrees to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission. At such time as such public disclosure is
otherwise made or the Company determines in good faith that such
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disclosure is not necessary, the Company agrees promptly to notify each
Holder of such determination, to amend or supplement the Prospectus if
necessary to correct any untrue statement or omission therein and to furnish
each Holder such numbers of copies of the Prospectus as so amended or
supplemented as each Holder may reasonably request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document
to the Holders and make available for discussion of such document the
representatives of the Company as shall be reasonably requested by the
Holders of Registrable Securities;
(k) obtain a CUSIP number for the Membership Interests;
(l) (i) make reasonably available for inspection by a
representative of, and counsel for, any underwriter participating in any
disposition pursuant to a Registration Statement, all relevant financial and
other records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers and employees to supply all relevant
information reasonably requested by such representative, counsel or any such
underwriter in connection with any such Registration Statement; and
(m) if requested by the Holders in connection with any
Registration Statement, shall use its reasonable best efforts to cause (i)
counsel for the Company to deliver an opinion relating to the Registration
Statement and the Company interests of the Company, in customary form, (ii)
its President to execute and deliver all customary documents and certificates
requested by a representative of the Holders or any underwriter, as
applicable and (iii) its independent public accountants to provide a comfort
letter in customary form.
The Company may, as a condition to such Holder's participation in
any Registration Statement, require each Holder of Registrable Securities to
(i) furnish to the Company such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing and (ii) agree in
writing to be bound by this Agreement.
2.4. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Holder
of Registrable Securities offered pursuant to a Registration Statement, the
Affiliates, directors, officers, agents, representatives and employees of
each such Person or its affiliates, and each other Person, if any, who
controls any such Person or its Affiliates within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant") from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and
other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement pursuant to
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which the offering of such Registrable Securities is registered (or any
amendment thereto) or related Prospectus (or any amendments or supplements
thereto) or any related preliminary prospectus, or caused by, arising out of
or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER that the Company will not be required to
indemnify a Participant if (i) such losses, claims, damages or liabilities
are caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of such Participant expressly for
use therein or (ii) if such Participant sold to the person asserting the
claim the Registrable Securities which are the subject of such claim and such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the
Prospectus or any amendment or supplement thereto and the Prospectus does not
contain any other untrue statement or omission or alleged untrue statement or
omission of a material fact that was the subject matter of the related
proceeding and such Participant failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Securities sold to such Person
if required by applicable laws, unless such failure to deliver or provide a
copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 2.3 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, it officers and each Person who
controls the Company (including Capital Corp.) within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to each Participant, but only (i)
with reference to information furnished to the Company in writing by or on
behalf of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary
prospectus or (ii) with respect to any untrue statement or representation
made by such Participant in writing to the Company.
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any Person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person,
shall have the right to retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which
it may have hereunder or otherwise (unless and only to the extent that such
failure results in the loss or compromise of any material rights or defenses
by the Indemnifying Person). In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i)
the Indemnifying Person and the Indemnified Person shall have mutually agreed
in writing to the
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contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that, unless there exists a conflict among Indemnified
Persons, the Indemnifying Person shall not, in connection with any one such
proceeding or separate but substantially similar related proceeding in the
same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such reasonable fees
and expenses shall be reimbursed promptly as they are incurred. Any such
separate firm for the Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Securities sold
by all such Participants and any such separate firm for the Company, its
Managing Member and their directors, their officers and such control Persons
of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent
or if there be a final non-appealable judgment for the plaintiff for which
the Indemnified Person is entitled to indemnification pursuant to this
Agreement the Indemnifying Person agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement (A)
includes an unconditional written release of such Indemnified Person, in form
and substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B)
does not include any statement as to an admission of fault, culpability or
failure to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in Subsections 2.4(a) and
2.4(b) hereof is for any reason unavailable to an Indemnified Person in
respect of any losses, claims, damages or liabilities referred to therein,
then each Indemnifying Person under such Subsections, in lieu of indemnifying
such Indemnified Person thereunder and in order to provide for just and
equitable contribution, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and
the Indemnified Person or Persons on the other from the offering of the
Warrants or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements
or omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Participant or such other
Indemnified Person, as the case
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may be, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Subsection 2.4 were determined by PRO RATA
allocation (even if the Participants were treated as one entity for such
purposes) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding Subsection shall be deemed to include, subject to the limitations
set forth above, any reasonable legal or other expenses actually incurred by
such Indemnified Person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Subsection 2.4,
in no event shall a Participant be required to contribute any amount in
excess of the amount by which proceeds received by such Participant from
sales of Registrable Securities exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Subsection 2.4 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
3. RESTRICTIONS ON TRANSFER.
3.1. EXISTING MEMBERS. No Existing Member shall, directly or
indirectly, sell, assign, give, transfer, exchange, convert, devise,
bequeath, pledge or otherwise dispose of, in any transaction or series of
transactions (each, a "Transfer"), any Membership Interest or the beneficial
ownership thereof or any interest therein except (i) in compliance with
Sections 4 or 5, as the case may be, (ii) to a Permitted Transferee
(including, without limitation, to Warrant Co. if such Transfer is solely for
the purpose of exchanging such Transferred Membership Interest for
corresponding Common Stock in Warrant Co.), (iii) in a bona fide public
distribution pursuant to an effective registration statement under the
Securities Act or (iv) without limiting the application of Sections 4 and 5,
in a transaction to which Sections 4 and 5 do not apply (each Transfer
permitted by clauses (ii), (iii) and (iv) being an ("Exempt Transfer").
3.2. HOLDERS OF MEMBERSHIP INTERESTS. No Holder of any Membership
Interest shall Transfer such Membership Interest or the beneficial ownership
thereof or any interest therein except in compliance with Section 6.
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4. TAG-ALONG RIGHTS.
4.1. TRANSFER BY EXISTING MEMBERS.
(a) In the event of any proposed Transfer (a "Proposed Tag-Along
Transfer") of any Membership Interest by any of the Existing Members or their
respective Permitted Transferees in a single transaction or a series of
related transactions involving Membership Interests of the Company
aggregating at least 15% of the Membership Interests of the Company then
collectively owned by the Existing Members to a Person (such other Person
being hereinafter referred to as the "Proposed Purchaser"), other than
pursuant to an Exempt Transfer, the Holders of Warrants and Membership
Interests (the "Non-Selling Members") shall each have the irrevocable and
exclusive right, but not the obligation (the "Tag-Along Right"), to require
the purchase from each of them up to such number of Warrants and/or
Membership Interests determined in accordance with Section 4.3.
(b) Any Warrants or Membership Interests purchased from the
Holders pursuant to this Section 4.1 shall be paid for at the same price per
Membership Interest and upon the same terms and conditions as apply to the
proposed Transfer by such Existing Members; PROVIDED that the price per
Warrant payable by the Proposed Purchaser shall equal the price proposed to
be paid per Membership Interest for which such Warrant is exercisable, less
the exercise price of such Warrant.
(c) The Company or an Existing Member shall give written notice
at least 15 days prior to the date of any Proposed Tag-Along Transfer to the
Non-Selling Members stating (i) the name and address of the Proposed
Purchaser, (ii) the proposed amount of consideration and terms and conditions
of payment offered by such Proposed Purchaser (if the proposed consideration
is not cash, the notice shall describe the terms of the proposed
consideration), (iii) the amount of Membership Interests proposed to be
Transferred and (iv) that either the Proposed Purchaser has been informed of
the Tag-Along Right and has agreed to purchase Warrants and/or Membership
Interests in accordance with the terms hereof or that the Existing Members
will make such purchase. The Tag-Along Right may be exercised by any or all
of the Non-Selling Members by giving written notice to the Company and the
Person proposing to make such Transfer ("Tag-Along Notice"), within 5
Business Days of receipt of the notice specified in the preceding sentence,
indicating its election to exercise the Tag-Along Right (the "Participating
Holders"). The Tag-Along Notice shall state the amount of Warrants and/or
Membership Interests that such Participating Holder proposes to include in
such Transfer to the Proposed Purchaser. Failure by any Non-Selling Member
to give such notice within the 5 Business Days notice period shall be deemed
an election by such Non-Selling Member not to sell its Warrants and/or
Membership Interests in connection with that proposed Transfer. The closing
with respect to any sale to a Proposed Purchaser pursuant to this Section 4.1
shall be held at the time and place specified in the Tag-Along Notice but in
any event within 30 days of the date the Tag-Along Notice is given; PROVIDED
that if through the exercise of reasonable efforts the Existing Members or
Permitted Transferees so proposing to transfer Membership Interests are
unable to cause such transaction to close within 30 days, such period may be
extended for such reasonable
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period of time as may be necessary to close such transaction. Consummation
of the sale of Warrants and/or Membership Interests by any Existing Member or
Permitted Transferee to a Proposed Purchaser shall be conditioned upon
consummation of the sale by each Participating Holder to such Proposed
Purchaser of the securities subject to the Tag-Along Right, if any.
4.2. PURCHASE OBLIGATION OF EXISTING MEMBERS. In the event that
the Proposed Purchaser does not purchase such Warrants and/or Membership
Interests from the Participating Holders on the same terms and conditions as
purchased from the Existing Members or such Permitted Transferees, then the
Existing Members or such Permitted Transferees making such Transfer shall
purchase such securities if the Transfer occurs on such terms and conditions.
4.3. DETERMINATION OF TRANSFERRED INTERESTS. The number of
Warrants and/or Membership Interests purchased from each Participating Holder
shall be determined by multiplying the aggregate amount of Membership
Interests proposed to be sold by the Existing Members and/or such Permitted
Transferees to the Proposed Purchaser by a fraction, the numerator of which
is the total number of Membership Interests (including the number of
Membership Interests issuable upon exercise of the Warrants) owned by such
Participating Holder and the denominator of which is the total number of
Membership Interests (including the number of Membership Interests issuable
upon exercise of the Warrants) outstanding. In the event that any
Participating Holder shall elect to sell less than the maximum number of
Warrants and/or Membership Interests he is entitled to sell pursuant to the
provisions of this Section 4 then each other Participating Holder shall have
the right to sell additional Warrants and Membership Interests, pro rata
according to the respective number of Warrants and Membership Interests
offered for sale by the Participating Holders.
4.4. COSTS OF TRANSFER. The Existing Members and/or Permitted
Transferees who are parties to a sale to a Proposed Purchaser shall arrange
for payment directly by the Proposed Purchaser to each Participating Holder,
upon delivery of the certificate or certificates representing the Warrants
and/or Membership Interests duly endorsed for transfer, together with such
other documents as the Proposed Purchaser may reasonably request. The
reasonable costs and expenses incurred by the Existing Members and/or
Permitted Transferees and Participating Holders in connection with a sale of
Warrants and/or Membership Interests subject to this Section 4 shall be
allocated PRO RATA based upon the proceeds from the securities sold by each
Member and Participating Holder to a Proposed Purchaser; PROVIDED, that the
costs and expenses shall not include the fees and expenses of more than one
law firm, which firm shall be selected by the Existing Members, unless
representation of the Existing Members and/or Permitted Transferees and the
Participating Holders by the same counsel, due to actual or potential
differing interests between them, shall create a conflict of interest, in
which case the costs and expenses shall include the reasonable fees and
expenses of one additional law firm designated by Participating Holders
proposing to sell a majority of the Warrants and/or Membership Interests
proposed to be sold by all Participating Holders.
4.5. EXPIRATION OF TAG-ALONG RIGHT. If at the end of 30 days
following the date on which a Tag-Along Notice was given, or as otherwise
extended pursuant to the provisions of
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Subsection 4.1, the sale of Warrants and/or Membership Interests by the
Existing Members and/or Permitted Transferees and the sale of the Warrants
and/or Membership Interests by the Participating Holders have not been
completed in accordance with the terms of the Proposed Purchaser offer, all
certificates representing such Warrants and Membership Interests shall be
returned to the Participating Holders, and all the restrictions on sale,
transfer or assignment contained in this Agreement with respect to Membership
Interests owned by the Existing Members and Permitted Transferees shall again
be in effect.
4.6. TERMINATION. Tag-Along Rights shall terminate upon the
effectiveness of any registration statement filed with the SEC with respect
to Membership Interests in an initial public offering or subsequent public
offering if, after giving effect to such offering, at least 50% of the
Membership Interests on a fully-diluted basis would be held by non-Affiliates
of the Company and without restriction on transfer under the Securities Act.
5. DRAG-ALONG RIGHTS.
5.1. TRANSFER BY EXISTING MEMBERS.
(a) In the event of any proposed Transfer (a "Proposed Drag-Along
Transfer") of any Membership Interests by any of the Existing Members or
their respective Permitted Transferees in any single transaction or a series
of related transactions involving Membership Interests that aggregate at
least 51% of the total Membership Interests then outstanding, to a Person
(such other Person being hereinafter referred to as the "Proposed
Majority-Interest Purchaser"), other than pursuant to an Exempt Transfer,
such selling Existing Members or Permitted Transferees shall have the
exclusive and irrevocable right, but not the obligation (the "Drag-Along
Right"), to require each Holder to Transfer to the Proposed Majority-Interest
Purchaser the number of Membership Interests (and/or Warrants exercisable for
an amount of Membership Interests) determined in accordance with Subsection
5.3.
(b) Any Warrants or Membership Interests purchased from Holders
pursuant to this Section 5.1 shall be paid for at the same price per
Membership Interest, and upon the same terms and conditions of such proposed
Transfer by such Existing Members; PROVIDED that the price per Warrant
payable by the Proposed Majority Interest Purchaser shall equal the price
proposed to be paid per Membership Interest for which such Warrant is
exercisable, less the exercise price of such Warrant.
(c) The Company or the Existing Members shall notify, or cause to
be notified, each Holder in writing of any Proposed Drag-Along Transfer at
least 15 days prior to the date thereof (the "Drag-Along Notice"). Such
notice shall set forth (i) the name of the Proposed Majority-Interest
Purchaser and the number of Membership Interests proposed to be Transferred,
(ii) the name and address of the Proposed Majority-Interest Purchaser, (iii)
the proposed amount of consideration and terms and conditions of payment
offered by such Proposed Majority-Interest Purchaser (if the proposed
consideration is not cash, the notice shall describe the terms of the
proposed consideration) and (iv) that either the Proposed Majority-Interest
Purchaser has been informed of the Drag-Along Right and has agreed to
purchase
-14-
Warrants and/or Membership Interests in accordance with the terms hereof or
that the Existing Members will make such purchase. The closing with respect
to any Transfer to a Proposed Majority-Interest Purchaser pursuant to this
Section 5 shall be held at the time and place specified in the Drag-Along
Notice but in any event within 60 days of the date the Drag-Along Notice is
given; PROVIDED that if through the exercise of reasonable efforts the
Existing Members or Permitted Transferees so proposing to transfer Membership
Interests are unable to cause such transaction to close within 60 days, such
period may be extended for such reasonable period of time as may be necessary
to close such transaction. Consummation of the sale of Warrants and/or
Membership Interests by any Existing Member or Permitted Transferee to a
Proposed Majority-Interest Purchaser shall be conditioned upon consummation
of the sale by each Holder to such Proposed Majority-Interest Purchaser of
the securities subject to the Drag-Along Right.
5.2. PURCHASE OBLIGATION OF EXISTING MEMBERS. In the event that
the Proposed Majority-Interest Purchaser does not purchase Warrants and/or
Membership Interests from the Holders on the same terms and conditions as
purchased from the Existing Members, then the Existing Members making such
Transfer shall purchase such Warrants and/or Membership Interests if the
Transfer occurs on such terms and conditions.
5.3. DETERMINATION OF TRANSFERRED INTERESTS. The number of
Warrants and/or Membership Interests of each Holder which shall be subject to
the Drag-Along Right shall be equal to the total number of Membership
Interests (including the number of Membership Interests issuable upon the
exercise of Warrants) owned by such Holder multiplied by a fraction, the
numerator of which is the number of Membership Interests to be sold by the
Existing Members to the Proposed Majority-Interest Purchaser and the
denominator of which is the total number of Membership Interests then owned
by the Existing Members.
5.4. COSTS AND EXPIRATION OF DRAG-ALONG RIGHT. The provisions of
Subsection 4.4 and 4.5 shall, with respect to each exercise of the Drag-Along
Right by the Existing Members, apply with the same effect as if references
therein to Tag-Along Right were references to the Drag-Along Right.
5.5. TERMINATION. Drag-Along Rights shall terminate upon the
effectiveness of any registration statement filed with the SEC with respect
to Membership Interests in an initial public offering or subsequent public
offering if, after giving effect to such offering, at least 50% of the
Membership Interests on a fully-diluted basis would be held by Non-Affiliates
of the Company and without restriction on transfer under the Securities Act.
6. REGISTRATION OF TRANSFERS AND EXCHANGES. When any certificate
evidencing any Membership Interests (a "Membership Certificate") is presented
to the Transfer Agent with a request:
(A) to register the transfer of any Membership Interests; or
(B) to exchange such Membership Certificate for Membership
Certificates of other authorized denominations evidencing in the aggregate an
equal number of Membership
-15-
Interests, the Transfer Agent shall register the transfer or make the
exchange requested if the requirements of this Section 6 for such
transactions are met; PROVIDED, however, that the Membership Certificates
presented or surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer inform satisfactory to the Transfer Agent, duly executed by
the holder thereof or his attorney duly authorized in writing; and
(ii) in the case of Membership Interests the offer and sale of
which have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), such Membership Certificates shall be
accompanied by the following additional information and documents, as
applicable:
(1) if such Membership Certificates are being delivered
to the Transfer Agent by a Holder for registration in the name of
such Holder, without transfer, a certification from such holder to
that effect (in substantially the form of EXHIBIT A hereto); or
(2) if such Membership Interests are being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act (a "Qualified Institutional Buyer")) in
accordance with Rule 144A under the Securities Act, a certificate
to that effect (in substantially the form of EXHIBIT B hereto); or
(3) if such Membership Interests are being transferred
to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor")) delivery of a certification
to that effect (in substantially the form of EXHIBIT A hereto) and
a Transferee Certificate for Institutional Accredited Investors in
substantially the form of EXHIBIT B hereto; or
(4) if such Membership Interests are being transferred
in reliance on Regulation S under the Securities Act ("Regulation
S"), delivery of a certification to that effect (in substantially
the form of EXHIBIT A hereto) and a Transferee Certificate for
Regulation S Transfers in substantially the form of EXHIBIT C
hereto and an opinion of counsel reasonably satisfactory to the
General Member to the effect that such transfer is in compliance
with the Securities Act; or
(5) if such Membership Interests are being transferred
in reliance on Rule 144 under the Securities Act, delivery of a
certification to that effect (in substantially the form of EXHIBIT
A hereto) and an opinion of counsel reasonably satisfactory to the
Managing Member to the effect that such transfer is in compliance
with the Securities Act; or
-16-
(6) if such Membership Interests are being transferred
in reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect (in
substantially the form of EXHIBIT A hereto) and an opinion of
counsel reasonably satisfactory to the Managing Member to the
effect that such transfer is in compliance with the Securities Act.
6.1 LEGENDS. The legends set forth in this Section 6.1 shall be
affixed to certificates representing Registrable Securities in addition to
any legends required by the Operating Agreement and any other applicable
agreement.
(i) For so long as transfer of a Registrable Security is not
permitted without registration under the Securities Act, each
certificate evidencing a Registrable Security shall bear a legend
substantially to the following effect:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"')
OR (C) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS SECURITY FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATIONS
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO EPIC RESORTS, LLC
(THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRANSFER
AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF
-17-
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE AMOUNT OF SECURITIES AT THE
TIME OF TRANSFER OF LESS THAN 250 MEMBERSHIP INTERESTS AN OPINION
OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH CASE, IN ACCORDANCE
WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION." "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT
CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
(ii) For so long as this Agreement shall remain in effect
with respect to any Registrable Security, each certificate
evidencing a Registrable Security shall bear a legend substantially
to the following effect:
THIS SECURITY WAS ISSUED SUBJECT TO THAT CERTAIN REGISTRATION
RIGHTS AND MEMBERS' AGREEMENT DATED AS OF JULY 8, 1998 AMONG THE
COMPANY, CERTAIN MEMBERS AND THE INITIAL PURCHASER REFERRED TO
THEREIN, AND IS SUBJECT TO THE RESTRICTIONS SET FORTH THEREIN.
(iii) Upon any sale or transfer of any Restricted Security
pursuant to Rule 144 or an effective registration statement under
the Securities Act, the Transfer Agent shall permit the holder
thereof to exchange such Restricted Security for a Membership
Interest that does not bear the legends set forth above under
clauses (i) and (ii) above, and rescind any related restriction on
the transfer of such Membership Interest.
7. MISCELLANEOUS.
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7.1 NO INCONSISTENT AGREEMENTS. The Company has not entered and
will not enter, into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. The Company has not entered and it will not enter into any agreement
with respect to any of its securities which will grant to any Person
piggyback registration rights with respect to a Registration Statement.
7.2 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability of
the Holders of Registrable Securities to include such Registrable Securities
in a registration undertaken pursuant to this Agreement.
7.3 AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with
the prior written consent of the Holders of not less than a majority in
aggregate principal amount of the then outstanding Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement; PROVIDED, however, that the
provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding
sentence.
7.4 NOTICES. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or
facsimile: if to a Holder of the Registrable Securities, at the most current
address of such Holder set forth on the records of the registrar under the
Indenture; if to the Initial Purchaser, to NatWest Capital Markets Limited,
000 Xxxxxxxxxxx, Xxxxxx, XX0X, 0 XX, Xxxxxx Xxxxxxx, Attention: Xxxxx Xxxx;
with a copy to White & Case LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX
00000, Facsimile No: (000) 000-0000, Attention: Xxxxxxx X. Xxxxxxx; and if to
the Company, to Epic Resorts, LLC, 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxx xx
Xxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx with a copy to
Xxxxx, Day, Xxxxxx & Xxxxx, North Point, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, Facsimile No: (000) 000-0000, Attention: Xxxxxxxxxxx X. Xxxxx. All
such notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
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7.5 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto; PROVIDED, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registrable Securities.
7.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when SO executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
7.7 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning thereof.
7.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW, EACH OF THE PARTIES HERETO AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
7.9 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
7.10 REGISTRABLE SECURITIES HELD BY THE COMPANY, CAPITAL CORP. OR
THEIR AFFILIATES. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company, Capital Corp. or their affiliates (as such
term is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
7.11 THIRD PARTY BENEFICIARIES. Holders of Warrants are intended
third party beneficiaries of this Agreement and this Agreement may be
enforced by such Persons.
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IN WITNESS, the parties have executed this Registration Rights and
Member's Agreement as of the date first written above.
EPIC RESORTS, LLC
By: EPIC MEMBERSHIP CORP., its
Managing Member
By: /s/ X. X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
EPIC CAPITAL CORP.
By: /s/ X. X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
EPIC WARRANT CO.
By: /s/ X. X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
XXXXXX X. XXXXXXX, as an Existing
Member
By: /s/ X. X. Xxxxxxx
----------------------------------
Name:
Title:
EPIC MEMBERSHIP CORP., as Managing
Member
By: /s/ X. X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ X. X. Xxxx
----------------------------
Name: X. X. Xxxx
Title: Director
-2-
EXHIBIT A
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Membership Interests (the "Securities")
in Epic Resorts, LLC
(the "Company")
This Certificate relates to Securities in the form of physical
Membership Certificates to be transferred by the undersigned (the
"Transferor").
The Transferor has requested by written order that the Transfer
Agent exchange or register the transfer of Securities evidenced by physical
Membership Certificates.
In connection with such request and with respect to each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Operating Agreement of the Company and the Registration Rights and
Members' Agreement dated as of July 8, 1998, each relating to the above
captioned Securities, and the restrictions on transfers thereof as provided
therein; and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the "Act")
because *:
--Such Security is being acquired for the Transferor's own account,
without transfer.
--Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
--Such Security is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3)
or (7) of Rule 501 under the Act.
--Such Security is being transferred in reliance on Regulation S
under the Act.
--Such Security is being transferred in reliance on Rule 144 under
the Act.
EXHIBIT A
Page 2
--Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
______________________________________
(INSERT NAME OF TRANSFEROR)
By:___________________________________
(Authorized Signature)
Date:
_____________________________
*Check applicable box.
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EXHIBIT B
Form of Certificate to Be
Delivered by Purchasing
Institutional Accredited Investors
Re: Epic Resorts, LLC (the "Company")
MEMBERSHIP INTERESTS (THE "SECURITIES")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities, we confirm
that:
1. We have received such information as we deem necessary in
order to make our investment decision.
2. We understand that the Securities which we propose to
purchase are subject to restrictions on the transfer and the mandatory
transfer of interests and other matters, as contained in the Company's
Operating Agreement and in a Registration Rights and Members' Agreement dated
as of July 8, 1998, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Securities, we will
do so only (A) to the
EXHIBIT B
Page 2
Company or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer"
(as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the
Managing Member and the transfer agent for the Company a signed letter
substantially in the form hereof, (D) outside the United States in accordance
with Regulation S under the Securities Act, (E) pursuant to the exemption
from registration provided by Rule 144 under the Securities Act (if
available), or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We understand that, in connection with any proposed resale of
Securities, we will be required to furnish the Transfer Agent for the
Company, such certification, legal opinions and other information as may be
reasonably required to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased
by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Transfer Agent are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By:___________________________________
(Authorized Signatory)
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EXHIBIT C
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
In connection with our proposed transfer of the Securities, we confirm
that such transfer has been effected pursuant to, and in accordance with,
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, and
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in
the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company and its transfer agent are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Defined terms
used herein without definition have the respective meanings provided in
Regulation S.
Very truly yours,
(Name of Transferor)
By:___________________________________
(Authorized Signatory)
EXHIBIT C
Page 2
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