EXHIBIT 10.16
EMPIRE RESORTS, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
January 26, 2004, among Empire Resorts, Inc., a Delaware corporation (the
"COMPANY"), and the purchasers identified on the signature pages hereto (each a
"PURCHASER" and collectively the "PURCHASERS"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and each Purchaser, severally and not jointly, desires to
purchase from the Company in the aggregate, $30,375,000 of Common Stock on the
Closing Date.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained
in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"ACTION" shall have the meaning ascribed to such term in Section
3.1(j).
"AFFILIATE" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed
under Rule 144.
"BUSINESS DAY" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
"CLOSING" means the closing of the purchase and sale of the
Common Stock pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing, which shall be the
date hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $0.01 par
value per share, and any securities into which such common stock may
hereafter be reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
"COMPANY COUNSEL" means Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx &
Wolosky LLP, counsel to the Company.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules attached
hereto.
"EFFECTIVE DATE" means the date that the Registration Statement
is first declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed to
such term in Section 3.1(o).
"LIENS" means a lien, charge, security interest, encumbrance,
right of first refusal or other restriction.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to such
term in Section 3.1(b).
"MATERIAL PERMITS" shall have the meaning ascribed to such term
in Section 3.1(m).
"PER SHARE PURCHASE PRICE" equals $7.50, subject to adjustment
for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"REGISTRATION STATEMENT" means a registration statement meeting
the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company
and each Purchaser, in the form of Exhibit A hereto.
"RULE 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"SEC REPORTS" shall have the meaning ascribed to such term in
Section 3.1(h).
"SECURITIES" means the Shares.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock issued or issuable to
each Purchaser pursuant to this Agreement.
"SUBSCRIPTION AMOUNT" means, as to each Purchaser, the amounts
set forth below such Purchaser's signature block on the signature
page hereto, in United States dollars and in immediately available
funds.
"SUBSIDIARY" means any "significant subsidiary" as defined in
Rule 1-02(w) of Regulation S-X promulgated by the Commission under
the Exchange Act.
"TRADING DAY" means (i) a day on which the Common Stock is traded
on a Trading Market, or (ii) if the Common Stock is not listed on a
Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter
market as reported by the National Quotation Bureau Incorporated (or
any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then Trading Day shall mean a Business Day.
"TRADING MARKET" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
"TRANSACTION DOCUMENTS" means this Agreement and the Registration
Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Purchasers shall purchase, severally and not
jointly, and the Company shall issue and sell, in the aggregate, 4,050,000
shares of Common Stock, with each such share being purchased at the Per Share
Purchase Price. Each Purchaser shall purchase from the Company, and the Company
shall issue and sell to each Purchaser, a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price as
determined pursuant to Section 2.2(a). As soon as practicable following
satisfaction of the conditions set forth in Section 2.2 and Article VI, the
Closing shall occur at the offices of Mayer, Brown, Xxxx & Maw LLP, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location as the parties shall
mutually agree.
2.2 CLOSING DELIVERIES.
(a) At the Closing the Company shall deliver or cause to be
delivered to each Purchaser the following:
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(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing a number of Shares equal to
such Purchaser's Subscription Amount divided by the Per Share
Purchase Price, registered in the name of such Purchaser;
(iii) the Registration Rights Agreement duly executed by the
Company; and
(iv) the legal opinion(s) of Company Counsel, executed by
such counsel and delivered to the Purchasers, in form and substance
reasonably satisfactory to all Purchasers.
(b) At the Closing each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's Subscription Amount as to such Closing
by wire transfer to the account designated in writing by the
Company;
(iii) the Registration Rights Agreement duly executed by
such Purchaser; and
(iv) completed Investor Questionnaires, in the form attached
as Exhibit B hereto, duly executed by such Purchaser.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
7.4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the SEC Reports or under the corresponding section of the Disclosure
Schedules delivered concurrently herewith, the Company hereby makes the
following representations and warranties as of the date hereof and as of the
Closing Date to each Purchaser:
(a) SUBSIDIARIES. The Company owns, directly or indirectly, all
of the capital stock of each Subsidiary free and clear of any lien,
charge, security interest, encumbrance, right of first refusal or other
restriction (collectively, "Liens"), and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights.
(b) ORGANIZATION AND QUALIFICATION. Each of the Company and
each Subsidiary is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly
qualified or licensed to conduct business and is in good standing as a
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foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, would not have or reasonably be
expected to result in (i) a material adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material
adverse effect on the results of operations, assets, business or financial
condition of the Company and the Subsidiaries, taken as a whole, or (iii)
adversely impair the Company's ability to perform in any material respect
on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to execute and deliver each of the
Transaction documents and to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is party and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents to which it is a party by
the Company and the consummation by it of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company or its
stockholders in connection therewith. Each Transaction Document including
this Agreement has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
(d) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the
Company's or any Subsidiary's certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is bound
or affected, or (iii) conflict with, or result in or constitute any
violation of, any award, decision, judgment, decree, injunction, writ,
order, subpoena, ruling, verdict or arbitration award entered, issued,
made or rendered by any federal, state, local or foreign government or any
other Governmental Entity (each an "ORDER"), or any Law, applicable to the
Company or any of its subsidiaries, or to any of their respective
properties or assets, or to any Securities; (a) result in the creation or
imposition of (or the obligation to create or impose) any Lien on any of
the properties or assets of the Company or any of its subsidiaries, or on
any of the Securities; or (b) conflict with, or result in or constitute
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any violation of, or result in the termination, suspension or revocation
of, any Authorization applicable to the Company or any of its
subsidiaries, or to any of their respective properties or assets, or to
any of the Securities, or result in any other impairment of the rights of
the holder of any such Authorization; except in the case of each of
clauses (ii) and (iii), such as would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(e) FILINGS, CONSENTS AND APPROVALS. Assuming the accuracy of
the representation of each Purchaser set forth in Section 3.2 hereof, no
registration (including any registration under the Securities Act) or
filing with, or any notification to, or any approval, permission, consent,
ratification, waiver, authorization, order, finding of suitability,
permit, license, franchise, exemption, certification or similar instrument
or document (each, an "AUTHORIZATION") of or from, any court, arbitral
tribunal, arbitrator, administrative or regulatory agency or commission or
other governmental or regulatory authority, agency or governing body,
domestic or foreign, including without limitation any Indian tribe or
gaming commission, authority or control board (each, a "GOVERNMENTAL
ENTITY"), or any other person, or under any statute, law, ordinance, rule,
regulation or agency requirement of any Governmental Entity, including
without limitation any gaming regulation or regulatory requirement (each,
a "LAW"), on the part of the Company or any of its subsidiaries is
required in connection with the execution or delivery by the Company of
the Transaction Documents or the performance by the Company of its
obligations under each of the Transaction Documents except as would not
have a material effect on the Company or its performance of its
obligations under the Transaction Documents.
(f) ISSUANCE OF THE SECURITIES. The Securities have been duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens, except for such restrictions
on transfer or ownership imposed by applicable federal or state securities
laws or applicable gaming laws. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement.
(g) CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 80,000,000 shares, 75,000,000
shares of which are common stock, $0.01 par value per share and 5,000,000
shares of which are preferred stock, $0.01 par value per share. As of
January 12, 2004, after giving effect to the consolidation described in
the Form S-4/A filed by the Company with the Commission on December 18,
2003, there were 21,912,868 shares of common stock issued and outstanding
and 1,774,954 shares of preferred stock issued and outstanding. Other than
as contemplated in this Agreement, the Company has not issued any capital
stock since the filing of the Form S-4/A on December 18, 2003 other than
pursuant to the exercise of employee stock options under the Company's
stock option plans, the issuance of shares of Common Stock to employees
pursuant to the Company's employee stock purchase plan and pursuant to the
conversion or exercise of outstanding Common Stock Equivalents. No Person
has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by
the Transaction Documents. Except as disclosed in SECTION 3.1(g) of the
Disclosure Schedule, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or
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acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is
or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock; provided, however, that the Company will issue warrants to
Xxxxxxxxx & Company, Inc as of the Closing Date as contemplated in the
immediately following sentence. The issue and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the shares of Common Stock being
issued to the Purchasers hereunder and warrants exercisable for 250,000
shares of Common Stock, at an exercise price of $7.50 per share, to be
issued as of the Closing to Xxxxxxxxx & Company, Inc.) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto, being collectively referred to
herein as the "SEC REPORTS" and, together with the Disclosure Schedules to
this Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has
timely filed a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. The
Company has informed each Purchaser prior to the date hereof of any filing
by the Company of any SEC Reports within the 10 days preceding the date
hereof. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as disclosed
in the SEC Reports, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities that would not be required to be reflected in
the Company's financial statements pursuant to GAAP or that would not be
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required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
(j) LITIGATION. Except as disclosed in the SEC Reports, there
are no actions, suits, inquiries, notices of violation, proceedings or
investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an "ACTION") which (i) adversely affects
or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or
any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.
(k) LABOR RELATIONS. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in a
Material Adverse Effect.
(l) COMPLIANCE. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, could result
in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is bound
or affected (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental
body, or (iii) to the Company's knowledge, is or has been in violation of
any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product
quality and safety and employment, labor matters and gaming matters,
except in each case as would not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect. The
Company is in compliance with the applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations thereunder
promulgated by the Commission, except where such noncompliance would not
have or reasonably be expected to result in a Material Adverse Effect.
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(m) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits would not have
or reasonably be expected to result in a Material Adverse Effect
("MATERIAL PERMITS"), and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) TITLE TO ASSETS. The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by them that
is material to their respective businesses and good and marketable title
in all personal property owned by them that is material to their
respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property, do not
materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and, in each case, would not,
individually or in the aggregate, reasonably be expected to have or result
in a Material Adverse Effect. To the Company's knowledge, any real
property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance except,
in each case, as would not reasonably be expected to result in a Material
Adverse Effect.
(o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
own (and are the record owner of) or possess adequate licenses to use, all
patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses, confidential information,
technology and other similar rights (and all goodwill associated
therewith) that are necessary or that are used in connection with their
respective businesses as described in the SEC Reports and which the
failure to so own or have would, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company
nor any Subsidiary has received a written notice that any of the
Intellectual Property Rights violates or infringes upon or conflicts with
the rights of any Person. Except as set forth in the SEC Reports, or as
would not reasonably be expected to result in a Material Adverse Effect,
to the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
(p) INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors), including
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any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to
or from, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of
$60,000 other than (a) for payment of salary or consulting fees for
services rendered, (b) reimbursement for expenses incurred on behalf of
the Company and (c) for other employee benefits, including stock option
agreements under any stock option plan of the Company.
(r) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information
relating to the Company, including its subsidiaries, is made known to the
certifying officers by others within those entities, particularly during
the period in which the Company's Form 10-K or 10-Q, as the case may be,
is being prepared. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of a date within
90 days prior to the filing date of the Form 10-Q for the quarter ended
September 30, 2003 (such date, the "EVALUATION DATE"). The Company
presented in its most recently filed Form 10-K or Form 10-Q the
conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in
Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's
knowledge, in other factors that could significantly affect the Company's
internal controls.
(s) SOLVENCY. Based on the financial condition of the Company
as of the Closing Date (and assuming that the Closing shall have
occurred), (i) the Company's fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital requirements
and capital availability thereof; and (iii) the current cash flow of the
Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect
of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they
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mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt).
(t) CERTAIN FEES. Other than fees paid to Xxxxxxxxx & Company,
Inc., no brokerage or finder's fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement. The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated
by this Agreement.
(u) CERTAIN REGISTRATION MATTERS. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section
3.2(b)-(e), no registration under the Securities Act is required for the
offer and sale of the Shares by the Company to the Purchasers under the
Transaction Documents. The Company is eligible to register the resale of
its Common Stock for resale by the Purchasers under Form S-3 promulgated
under the Securities Act.
(v) REGISTRATION RIGHTS. No Person has any right to cause the
Company to effect the registration under the Securities Act of any
securities of the Company.
(w) LISTING AND MAINTENANCE REQUIREMENTS. Except as specified
in the SEC Reports, the Company has not, in the twenty-four months
preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements. The Company
is in compliance with the listing and maintenance requirements for
continued listing of the Common Stock on the Nasdaq National Market.
(x) INVESTMENT COMPANY. The Company is not, and after giving
effect to the sale of the Securities and the application of the net
proceeds therefrom, will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or an Affiliate
of an "investment company."
(y) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation or any agreement to which the Company is a party that is or
could become applicable to the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities.
11
(z) NO ADDITIONAL AGREEMENTS. The Company does not have any
agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as
specified in this Agreement.
(aa) DISCLOSURE. The Company confirms that, neither the Company
nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that
constitutes or might constitute material, non-public information. The
Company understands and confirms that the Purchasers will rely on the
foregoing representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, furnished by
or on behalf of the Company are true and correct and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(bb) REGULATION D. None of the Company or any affiliate (as
defined in Rule 501(b) of Regulation D ("REGULATION D") under the
Securities Act) of the Company has directly, or through any agent
(provided that no representation is made as to the Agent or its affiliates
or any person acting on its behalf), (a) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of any security (as
defined in the Securities Act) which is or will be integrated with the
sale of the Securities in a manner that would require the registration of
the Securities under the Securities Act or; (b) engaged in or used any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the sale of the Securities, including
articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(cc) CLOSING OF MERGER. The Company has consummated its
acquisition of Monticello Raceway Management, Inc., Monticello Casino
Management, LLC, Monticello Raceway Development Company, LLC and Mohawk
Management, LLC, on the terms and conditions described in Amendment No. 4
to Form S-4, as filed by the Company with the Commission on December 18,
2003.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability
company or other applicable like action, on the part of such Purchaser.
Each of this Agreement and the Registration Rights Agreement has been duly
12
executed by such Purchaser, and when delivered by such Purchaser in
accordance with terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance
with its terms.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only
and not with a view to or for distributing or reselling such Securities or
any part thereof, without prejudice, however, to such Purchaser's right,
subject to the provisions of this Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act or under an
exemption from such registration and otherwise in compliance with
applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for
any period of time. Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.
(d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
(f) REGISTRATION REQUIRED. Such Purchaser hereby covenants with
the Company not to make any sale of the Shares without complying with the
provisions hereof and of the Registration Rights Agreement, and without
effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (unless such Purchaser is selling such
Shares in a transaction not subject to the prospectus delivery
requirement), and such Purchaser acknowledges that the certificates
evidencing the Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith.
(g) ACCESS TO INFORMATION. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Shares and the merits and risks of
investing in the Securities; (ii) access to information about the Company
13
and the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect
such Purchaser's right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(h) CERTAIN FEES. Except for the fees that will be payable by
the Company under Section 3.1(t), such Purchaser has not entered into any
agreement or arrangement that would entitle any broker or finder to
compensation by the Company in connection with the sale of the Company
Securities to such Purchaser
(i) NO TAX, LEGAL OR INVESTMENT ADVICE. Such Purchaser
understands that nothing in the Transaction Documents or any other
materials presented to such Purchaser in connection with the purchase and
sale of the Securities constitutes tax, legal, or investment advice. Such
Purchaser has consulted such tax, legal, and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Securities.
(j) Such Purchaser represents and warrants that it is aware of
the following Telephone Interpretation in the SEC Manual of Publicly
Available Telephone Interpretations (July 1997):
A.65. Section 5
An issuer filed a Form S-3 registration statement for
a secondary offering of common stock which is not yet
effective. One of the selling shareholders wanted to
do a short sale of common stock "against the box" and
cover the short sale with registered shares after the
effective date. The issuer was advised that the short
sale could not be made before the registration
statement becomes effective, because the shares
underlying the short sale are deemed to be sold at
the time such sale is made. There would, therefore,
be a violation of Section 5 if the shares were
effectively sold prior to the effective date.
(k) Such Purchaser represents and warrants that, in connection
with its purchase of the Securities, it has complied with all applicable
provisions of the Act, the rules and regulations promulgated by the SEC
thereunder, including Regulation M, and applicable state securities laws.
The Company acknowledges and agrees that each Purchaser does not
make or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2.
14
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with
state and federal securities laws, including pursuant to an exemption
therefrom. In connection with any transfer of the Securities other than
pursuant to an effective registration statement, pursuant to paragraph (k)
of Rule 144, to the Company, to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities in
the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT.
The Company acknowledges and agrees that a Purchaser may from
time to time pledge and/or grant a security interest pursuant to a bona
fide margin agreement in a bona fide margin account and, if required under
the terms of such arrangement, agreement or account, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. However, at the
discretion of the Company, such legal opinion may be required in
connection with a subsequent transfer following default by the Purchaser
transferee of the pledge. No notice shall be required of such pledge. At
15
the appropriate Purchaser's expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities
may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration
pursuant to the Registration Rights Agreement, the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
(c) Certificates evidencing the Shares shall not contain any
legend (including the legend set forth in Section 4.1(b)), (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, or (ii)
following any sale of such Shares pursuant to Rule 144, or (iii) if such
Shares are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff
of the Commission). The Company shall cause its counsel to issue a legal
opinion to the Company's transfer agent promptly after the Effective Date
if required by the Company's transfer agent to effect the removal of the
legend hereunder. The Company agrees that following the Effective Date or
at such time as such legend is no longer required under this Section
4.1(c), it will, no later than three Trading Days following the delivery
by a Purchaser to the Company or the Company's transfer agent of a
certificate representing Shares, as the case may be, issue with a
restrictive legend (such date, the "LEGEND REMOVAL DATE"), deliver or
cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The
Company may not make any notation on its records or give instructions to
any transfer agent of the Company that enlarge the restrictions on
transfer set forth in this Section.
(d) Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company's reliance that the Purchaser will sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom.
4.2 FURNISHING OF INFORMATION. As long as any Purchaser owns the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such holder of Securities, the Company
shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 INTEGRATION. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
16
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.
4.4 FURTHER ISSUANCES. Except as otherwise contemplated herein, the
Company will not issue, sell, offer or agree to sell, or otherwise dispose of,
directly or indirectly, securities of the Company that are substantially similar
to the Common Stock or any securities convertible into, or exercisable, or
exchangeable for, Common Stock; or publicly announce an intention to effect any
such transaction, during the period beginning as of the Closing and ending on
the date which is the later to occur of (a) 120 days following the Closing Date
and (b) the Effective Date (as defined in the Registration Rights Agreement);
provided, however, that the Company may (i) issue Common Stock pursuant to any
stock option plan, stock option agreement, stock ownership plan or dividend
reinvestment plan of the Company that is currently in effect and is disclosed in
the SEC Reports or in SECTION 4.4 of the Disclosure Schedules; (ii) issue
options to purchase Common Stock pursuant to any stock option plan that is
currently in effect and is disclosed in the SEC Reports or in SECTION 4.4 of the
Disclosure Schedules; (iii) issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Closing; (iv) issue
Common Stock or any other security substantially similar to the Common Stock to
a seller in connection with an acquisition transaction, and (v) engage in such
other transactions, if any, agreed in writing by the Lead Purchaser.
4.5 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, by
8:30 a.m. Eastern time on the Business Day following the date of this Agreement,
issue a press release or file a Current Report on Form 8-K, in each case
reasonably acceptable to each Purchaser disclosing the transactions contemplated
hereby and make such other filings and notices in the manner and time required
by the Commission. The Company and each Purchaser shall consult with each other
in issuing any press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Purchaser shall issue any such press
release or otherwise make any such public statement without the prior consent of
the Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under subclause
(i) or (ii). Subject to the foregoing, neither the Company nor any Purchaser
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Purchaser, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and
(ii) as is required by applicable law and regulations (provided that in the case
17
of clause (i) each Purchaser shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).
4.6 SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by
the Company or any other Person that any Purchaser is an "Acquiring Person"
under any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchasers.
4.7 NON-PUBLIC INFORMATION. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.8 USE OF PROCEEDS. Except as set forth in SECTION 4.8 of the
Disclosure Schedules, the Company shall use the net proceeds from the sale of
the Securities hereunder for the development of a video lottery terminal (VLT)
facility in the existing grandstand at Monticello Raceway, pre-development
expenses for a Native American casino, fees and expenses related to the
transactions contemplated by this Agreement and the Registration Rights
Agreement and for working capital and general corporate purposes, provided that
such net proceeds shall not be used to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation. In
addition, the Company may use a portion of the proceeds to repay outstanding
indebtedness, including but not limited to indebtedness under (i) the Loan and
Security Agreement between Monticello Raceway Management, Inc. and The Berkshire
Bank, dated as of October 29, 2003, in the aggregate principal amount of
$3,500,000, which unpaid principal balance bears interest at a per annum rate of
8.75%, will mature on November 1, 2005 and is subject to a prepayment penalty of
2.5% and (ii) the 7% subordinated promissory notes, in the aggregate principal
amount of $5,072,856.84 issued to The Bryanston Group and Xxxxxxxx Xxxxxxx on
January 9, 2004, which notes mature in six-month increments (varying in amount
from 13.33% to 26.67% of the note amount) beginning on January 9, 2005 and
ending on January 9, 2007.
4.9 REIMBURSEMENT. If any Purchaser becomes involved in any capacity
in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
18
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.
4.10 INDEMNIFICATION OF PURCHASERS. The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "PURCHASER PARTY") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to: (a) any
misrepresentation, breach or inaccuracy, of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents; or (b) any cause of action, suit or claim
brought or made against such Purchaser Party and arising solely out of or solely
resulting from the execution, delivery, performance or enforcement of this
Agreement or any of the other Transaction Documents and without causation by any
other activity, obligation, condition or liability pertaining to such Purchaser.
The Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred.
4.11 RESERVATION OF COMMON STOCK. As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement.
4.12 LISTING OF COMMON STOCK. The Company hereby agrees to use
commercially reasonably efforts to maintain the listing of the Common Stock on
the Trading Market, and as soon as reasonably practicable following the Closing
(but not later than the earlier of the Effective Date and the first anniversary
of the Closing Date) to list all of the Shares on the Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Shares, and will take such other action as is necessary or desirable in the
opinion of the Purchasers to cause the Shares to be listed on such other Trading
Market as promptly as possible. The Company will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the Trading Market.
ARTICLE V.
MISCELLANEOUS
5.1 FEES AND EXPENSES. Except as otherwise set forth in this
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Securities.
19
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 6:30 p.m. (New York City time) on
any Trading Day, (c) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages
attached hereto.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
5.5 CONSTRUCTION. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. This
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.
20
5.8 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, New York for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.9 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and delivery of the Shares.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
21
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.15 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser was introduced to the Company by Xxxxxxxxx & Company,
Inc., which has acted solely as placement agent for the Company and not for any
Purchaser. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, certain Purchasers and their respective counsel
have chosen to communicate with the Company through Xxxxxxxxx & Company, Inc.
and its counsel. Counsel to Xxxxxxxxx & Company, Inc. does not represent the
Purchasers or the Company but only Xxxxxxxxx & Company, Inc. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.
22
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO CLOSING OF THE PURCHASERS. Each Purchaser's
obligation to purchase the Securities at the Closing is subject to the
satisfaction, or waiver by such Purchaser, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the date of this Agreement and shall be true and correct in
all material respects (except for those qualified as to materiality or a
Material Adverse Effect, which shall be true and correct) as of the
Closing Date (except to the extent that such representation or warranty
speaks of an earlier date, in which case such representation or warranty
shall be true and correct in all material respects (or if qualified as to
materiality or a Material Adverse Effect, true and correct) as of such
date) as though made on and as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. The Company shall
have performed in all material respects all agreements and covenants
required to be performed by it under this Agreement on or prior to the
Closing Date.
(c) REGULATORY APPROVALS. The Company and each Purchaser shall
have received all requisite approvals (including all required findings of
suitability).
(d) NASD FILING. The Company shall have filed with the National
Association of Securities Dealers, a Notification Form: Listing of
Additional Shares with respect to the Shares.
(e) NO SUSPENSION OF TRADING. From the date hereof to the
Closing Date, trading in the Common Stock shall not have been suspended by
the Commission (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to
the Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on
any Trading Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities.
(f) LOCK-UP AGREEMENTS. The "lock-up" agreements, each
substantially in the form of EXHIBIT C hereto, between the Purchasers and
each of the executive officers, directors and Affiliates of the Company
relating to sales and certain other dispositions of shares of Common Stock
or certain other securities, shall have been executed and copies shall
have been delivered to the Purchasers and such agreements shall be in full
force and effect on the Closing Date.
6.2 CONDITIONS TO CLOSING OF THE COMPANY. The Company's obligation
to issue and sell the Securities at the Closing is subject to the satisfaction,
or waiver by the Company, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser set forth in this Agreement shall be true and
correct as of the date of this Agreement and shall be true and correct in
23
all material respects as of the Closing Date (except to the extent that
such representation or warranty speaks of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such date) as though made on and as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF THE PURCHASERS. Each of the
Purchasers shall have performed in all material respects all agreements
and covenants required to be performed by it under this Agreement on or
prior to the Closing Date.
(c) REGULATORY APPROVALS. The Company and each Purchaser shall
have received all requisite approvals (including all required findings of
suitability).
(d) NASD FILING. The Company shall have filed with the National
Association of Securities Dealers, a Notification Form: Listing of
Additional Shares with respect to the Shares.
(Signature Page Follows)
2
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
EMPIRE RESORTS, INC. Address for Notice:
------------------
By:_____________________________________
Name: Attn:
Title: Tel:
Fax:
With copy to (which shall not constitute notice):
Attn:
Tel:
Fax:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
25
IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
_____________________________ Address for Notice:
[Print Name of Purchaser] ------------------
By: __________________________
Name:
Title:
Subscription Amount: $_________________
Shares:_____________________
[SIGNATURE PAGE CONTINUED]
26
Exhibit C
FORM OF LOCK-UP AGREEMENT
January 23, 2004
[PURCHASERS]
[ ]
[ ]
Re: Empire Resorts, Inc.
Ladies and Gentlemen:
The undersigned understands that certain purchasers have entered
into a Securities Purchase Agreement (the "PURCHASE AGREEMENT") with Empire
Resorts, Inc., a Delaware corporation (the "COMPANY") providing for the offering
(the "OFFERING") by the several Purchasers of certain shares of Common Stock of
the Company ("COMMON STOCK"). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Purchase Agreement.
In consideration of the Purchasers' agreement to purchase the
Shares, and for other good and valuable consideration receipt of which is hereby
acknowledged, the undersigned hereby agrees that, without the prior written
consent of Purchasers representing at least 66.67% in interest of all
Purchasers, the undersigned will not, during the period from the date of this
Agreement through (and including) the later to occur of (a) the date 120 days
after the Closing under the Purchase Agreement (the "Closing") and (b) the
Effective Date (as defined in the Registration Rights Agreement dated the date
of the Purchase Agreement, between the Purchaser and the Company), (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (including without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and
Exchange Commission and securities which may be issued upon exercise of a stock
option or warrant) or (2) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of Purchasers representing at least 66.67% in interest of all
Purchasers, it will not, during the period from the date of this Agreement
through (and including) the date 180 days after the date of the Closing, make
B-1
any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
Whether or not the Closing actually occurs depends on a number of
factors, including but not limited to certain conditions outside the control of
the Company and the Purchasers.
The undersigned understands that, if the Purchase Agreement does not
become effective, or if the Purchase Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this Letter Agreement
The undersigned understands that the Purchasers are entering into
the Purchase Agreement in reliance upon this Letter Agreement.
This lock-up agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
Very truly yours,
[NAME OF STOCKHOLDER]
By: _______________________
Name:
Title:
