Item
1.01. Entry into a Material
Definitive Agreement.
Investment
Agreement and Issuance of 6,804,188 Shares of Common Stock
On August
19, 2009, Empire Resorts, Inc. (the “Company”) entered into an Investment
Agreement (the “Investment Agreement”) with Kien Huat Realty III Limited, a
corporation organized under the laws of the Isle of Man (the “Investor” or “Kien
Huat”), pursuant to which (i) the Company issued to the Investor 6,804,188
shares of its common stock, par value $0.01 per share (“Common Stock”), or
approximately 19.9% of the outstanding shares of Common Stock on a
pre-transaction basis, for aggregate consideration of $11 million (the “First
Tranche”), and (ii) subject to and following stockholder approval of the
transaction, as required under applicable NASDAQ Marketplace Rules, and the
satisfaction of other customary closing conditions, the Company is to issue to
the Investor an additional 27,701,852 shares of Common Stock for additional
consideration of $44 million (the “Second Tranche”). During the
period between the closing of the First Tranche and the closing of the Second
Tranche, the Company will be subject to certain customary covenants related to
the operation of its business.
As a
result of the closing of the Second Tranche, if approved by the Company’s
stockholders, the Investor would own 34,506,040 shares of the Common Stock,
representing one share less than 50.0% of the voting power of the Company
following the closing. The Company intends to use the proceeds of the
First Tranche and Second Tranche, if approved by stockholders, for transaction
costs, to pay interest on existing indebtedness, including approximately $2.6
million of interest on the Company’s Convertible Senior Notes due July 31, 2014,
and for general working capital.
Under the
Investment Agreement, the parties also agreed to negotiate in good faith and
cooperate to mutually agree upon the terms and conditions of a loan agreement,
to be executed upon the closing of the Second Tranche in a form and substance
reasonably agreeable to the parties, pursuant to which it is anticipated that
the Investor will make available to the Company a loan of up to the lesser of
$10 million or the maximum amount the Company is then permitted to borrow
(taking into account other indebtedness of the Company at such time) under the
terms of its existing indebtedness. The Company would be permitted to
use the proceeds of this loan, among other things, to repay in full, purchase or
acquire by assignment any remaining obligation of the Company under its loan
agreement with The Park Avenue Bank and for working capital
purposes.
Registration
Rights Agreement
Pursuant
to the terms of the Investment Agreement, on August 19, 2009, the Company also
entered into a Registration Rights Agreement with the Investor (the
“Registration Rights Agreement”). The Registration Rights Agreement
provides, among other things, that the Investor may require that the Company
file one or more “resale” registration statements, registering under the
Securities Act of 1933, as amended (the “Securities Act”), the offer and sale of
all of the Common Stock issued or to be issued to the Investor pursuant to the
Investment Agreement as well as any shares acquired by way of a share dividend
or share split or in connection with a combination of such shares,
recapitalization, merger, consolidation or other reorganization with respect to
such shares.
Stockholder
Voting Agreement
Concurrently
with the execution of the Investment Agreement, and as a condition and
inducement to the Investor’s willingness to enter into the Investment Agreement,
holders of approximately 38% of the Company’s outstanding Common Stock entered
into a Stockholder Voting Agreement (the “Stockholder Voting Agreement”),
pursuant to which such stockholders, among other things, agreed to vote all of
the shares of voting capital stock of the Company that such stockholders own in
favor of the proposals to be recommended by the Company at the special meeting
of stockholders to be held to approve the transactions contemplated by the
Investment Agreement and other related matters.
The
foregoing summary of the Investment Agreement, the Registration Rights
Agreement, the Stockholder Voting Agreement and the other documents related
thereto does not purport to be complete and is subject to and qualified in its
entirety by reference to the actual text of such agreements, copies of which are
attached hereto as Exhibits 10.1, 10.2, and 10.3 and are incorporated herein by
reference.
Amendment
to Rights Agreement
As
required under the Investment Agreement, the Company also entered into a First
Amendment to Rights Agreement (the “Rights Agreement Amendment”) with
Continental Stock Transfer & Trust Company, as rights agent (the “Rights
Agent”), effective August 19, 2009. The Rights Agreement Amendment
amended Section 1(a) of that certain rights agreement, dated as of March 24,
2008, by and between the Company and the Rights Agent (the “Rights Agreement”)
to provide that no person shall become an “Acquiring Person,” as such term is
defined therein, if such person becomes the beneficial owner of 20% or more of
the Common Stock of the Company then outstanding as a consequence of an
agreement, transaction or understanding with the Company that has been
previously approved by a majority of the Company’s Board of Directors (the
“Board”). As permitted under the Rights Agreement Amendment, the
Board resolved that the Investor is not and shall not be deemed to be an
“Acquiring Person” for purposes of the Rights Agreement as a result of the
execution of the Investment Agreement and the consummation of the transactions
contemplated thereby. A copy of the Rights Agreement Amendment is
attached hereto as Exhibit 4.2 and is incorporated herein by
reference.
About
the Investor
Kien Huat
is an investment company beneficially owned by a Lim family trust of which Mr.
Lim Kok Thay of Malaysia and members of his family are beneficiaries. Affiliates
of Kien Huat maintain substantial interests in a multinational group of
companies actively involved in gaming, leisure, hospitality, power generation,
plantations, property development, biotechnology and oil and gas (collectively,
“Genting”). Kien Huat affiliates separately own a substantial interest in Star
Cruises Ltd., the largest cruise operator in Asia, and financed the startup of
the Foxwoods Resort & Casino in Connecticut and the Seneca Niagara Casino in
New York.
Genting
is Asia’s largest casino operator and a leading integrated resorts development
specialist with over 20 years of global experience in developing, operating and
marketing internationally acclaimed casinos and integrated resorts in different
parts of the world, including Australia, the Americas, Malaysia, the Philippines
and the United Kingdom. Genting is the largest casino operator in the United
Kingdom through its ownership of Genting UK Plc. In 2010, Genting
will open a $4.55 billion integrated resort on Sentosa Island in Singapore,
which will include a Universal Studios Theme Park, a Hard Rock Hotel, and
gaming, leisure and hospitality venues.
Genting
was founded in 1965 by Mr. Lim Kok Thay’s father, Mr. Lim Goh Tong, who built
Genting's first gaming and entertainment resort, known as Genting Highlands, in
Malaysia, the world’s largest single resort, which includes over 10,000 hotel
rooms within a complete entertainment city. In 2008, Guinness World Records
listed the Genting Highlands First World Hotel as the world's largest
hotel.
Today,
Genting has 27,000 employees and is four listed companies: Genting Berhad (Kuala
Lumpur Stock Exchange: 3182.KL - www.genting.com), Genting Malaysia Berhad
(Kuala Lumpur Stock Exchange: 4715.KL - www.gentingmalaysia.com), Genting
Plantations Berhad (Kuala Lumpur Stock Exchange: 2291.KL -
www.gentingplantations.com) and Genting Singapore PLC (Stock Exchange of
Singapore: G13.SI - www.gentingsingapore.com).
Important
Information
The offer
and sale of the securities sold or to be sold pursuant to the Investment
Agreement has not been registered under the Securities Act in reliance on the
provisions of Section 4(2) thereof, and such securities may not be offered or
sold in the United States in the absence of an effective registration statement
or exemption from the registration requirements under the Securities
Act.
In
connection with the Investment Agreement, the Company will prepare a proxy
statement for the Company’s stockholders to be filed with the Securities and
Exchange Commission (the “Commission”). The proxy statement will contain
information about the Company, the Investment Agreement and related matters.
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY WHEN IT IS
AVAILABLE, AS IT WILL CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD
CONSIDER BEFORE MAKING A DECISION ABOUT WHETHER OR NOT TO APPROVE THE ISSUANCE
OF SHARES PURSUANT TO THE TERMS OF THE INVESTMENT AGREEMENT AND ANY OTHER
PROPOSALS TO BE DESCRIBED THEREIN.
In
addition to receiving the proxy statement from the Company by mail, shareholders
will be able to obtain the proxy statement, as well as other filings containing
information about the Company, without charge, from the Commission’s website
(http://www.sec.gov) or, without charge, from the Company’s website at
www.empireresorts.com or by directing such request to Empire Resorts, Inc., c/o
Monticello Casino and Raceway, Route 17B, P.O. Box 5013, Monticello, New York
12701, attention: Charles Degliomini. The Company and its directors
and executive officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies. Information concerning
the Company and its directors and executive officers is set forth in the
Company’s proxy statement and Annual Report on Form 10-K previously filed with
the Commission.
Item
3.02. Unregistered Sales of Equity
Securities.
The
information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item
3.03. Material Modification to
Rights of Security Holders.
The
information set forth in Items 1.01 and 5.03 of this Current Report on Form 8-K
is incorporated by reference.
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Item
5.02.
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Departure of Directors
or Certain Officer; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
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Under the
terms of the Investment Agreement, the Investor is entitled to recommend three
directors whom the Company is required to cause to be elected or appointed to
its Board (such directors, the “Board Representatives”), subject to the
satisfaction of all legal and governance requirements regarding service as a
director of the Company and to the reasonable approval of the Governance
Committee of the Board. The Investor will be entitled to recommend
three Board Representatives for so long as it owns at least 24% of the voting
power of the Company outstanding at such time, after which the number of Board
Representatives whom the Investor will be entitled to designate for election or
appointment to the Board will be reduced as follows: (i) to two, for
so long as the Investor owns capital stock of the Company with at least 16% of
the voting power of the Company; (ii) to one, for so long as the Investor owns
capital stock of the Company with at least 8% (but less than 16%) of the voting
power of the Company; and (iii) to zero, at such time that the Investor owns no
capital stock or capital stock with less than 8% of the voting power of the
Company.
Upon the
closing of the First Tranche on August 19, 2009, the Investor recommended two of
the Board Representatives, Messrs. G. Michael Brown and Colin Au, who were
appointed to the Board to serve within the Class I and II classes, respectively,
with terms expiring at the annual meeting during the calendar year 2010 and
2011, respectively. The Investor will also be entitled to recommend
the appointment of the third Board Representative upon the closing of the Second
Tranche. The Investor has also designated Mr. Brown to be appointed
at the next special meeting of the Board to serve as Chairman of the
Board. Under the Investment Agreement, for so long as the Investor is
entitled to designate Board Representatives, (i) the Company will be required to
recommend to its stockholders the election of any Board Representative whose
term is scheduled to expire at such meeting, provided that the Investor remains
entitled to a number of Board Representatives that includes such Board
Representative, and (ii) the Investor will have the right to nominate one of the
Board Representatives to serve as the Chairman of the Board. The
Investor also has the right under the Investment Agreement to require the
Company to cause one of the Board Representatives to be appointed to each of the
Audit, Compensation and Corporate Governance and Nominations Committees of the
Board, provided that the Board Representative meets the qualifications for
service on such Committees. Additionally, following the closing of
the Second Tranche and until such time as the Investor ceases to own capital
stock with at least 30% of the voting power of the Company outstanding at such
time, the Board will be prohibited under the terms of the Investment Agreement
from taking certain actions relating to fundamental transactions involving the
Company and its subsidiaries and certain other matters without the affirmative
vote of the Board Representatives.
Mr. Au is
also a party to a Consulting Agreement with the Company, dated as of August 19,
2009 (the “Consulting Agreement”), pursuant to which Mr. Au has agreed to
provide the Company with certain consulting services, including assisting the
Company in expanding its presence in the gaming industry and advising the
Company on matters related to casino development. In consideration of
the services to be performed under the Consulting Agreement, the Company has
agreed to pay to Mr. Au $300,000 annually, paid in equal monthly
installments. The term of the Consulting Agreement expires on the
third anniversary of the date of its execution, unless extended by mutual
agreement of the parties. The foregoing summary of the Consulting
Agreement does not purport to be complete and is subject to and qualified in its
entirety by reference to the actual text of such agreement, a copy of which is
attached hereto as Exhibit 10.4 and is incorporated herein by
reference.
Item
5.03. Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
On August
12, 2009, the Board of the Company approved an amendment to the Company’s Second
Amended and Restated By-laws (the “By-law Amendment”), in accordance with the
terms of the Investment Agreement. The By-law Amendment, which became
effective upon the closing of the First Tranche, modernizes the methods by which
notice of special meetings of the Board may be given and provides that such
notices must be given to the members of the Board at least 72 hours before the
time fixed for the meeting. A copy of the By-law Amendment is
attached as Exhibit 3.9 to this Current Report on Form 8-K and is incorporated
herein by reference.
As
required under the Investment Agreement, the Company also filed a Certificate of
Amendment to the Certificate of Designations of Series A Junior Participating
Preferred Stock with the Secretary of State of the State of Delaware on August
19, 2009, which increased the number of shares constituting such series of
preferred stock to 95,000. A copy of the Certificate of Amendment to
the Certificate of Designations of Series A Junior Participating Preferred Stock
is attached as Exhibit 4.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item
8.01. Other
Events.
On August
19, 2009, the Company issued a press release announcing the initial closing of
the transactions under the Investment Agreement, a copy of which is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
Item
9.01. Financial Statements and
Exhibits.
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Exhibits |
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Exhibit
No.
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Exhibits
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3.9
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Amendment
to Second Amended and Restated By-laws of Empire Resorts, Inc., effective
August 19, 2009.
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4.1
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Certificate
of Amendment to the Certificate of Designations of Series A Junior
Participating Preferred Stock, dated August 19,
2009.
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4.2
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First
Amendment To Rights Agreement, dated August 19, 2009, by and between
Empire Resorts, Inc. and Continental Stock Transfer & Trust Company,
as rights agent.
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10.1
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Investment
Agreement, dated as of August 19, 2009, by and between Empire Resorts,
Inc. and Kien Huat Realty III
Limited.
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10.2
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Registration
Rights Agreement, dated as of August 19, 2009, by and between Empire
Resorts, Inc. and Kien Huat Realty III
Limited.
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10.3
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Stockholder
Voting Agreement, dated as of August 19, 2009, by and among the
stockholders listed on the signature page(s) thereto, Empire Resorts, Inc.
and Kien Huat Realty III Limited.
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10.4
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Consulting
Agreement, dated as of August 19, 2009, by and between Empire Resorts,
Inc. and Colin Au.
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99.1
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Press
release of Empire Resorts, Inc., issued August 19,
2009.
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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EMPIRE
RESORTS, INC.
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Dated:
August 19, 2009
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By:
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/s/
Joseph E. Bernstein |
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Name:
Joseph E. Bernstein
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Title:
Chief Executive Officer
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Exhibit
Index
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Exhibit
No.
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Exhibits
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3.9
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Amendment
to Second Amended and Restated By-laws of Empire Resorts, Inc., effective
August 19, 2009.
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4.1
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Certificate
of Amendment to the Certificate of Designations of Series A Junior
Participating Preferred Stock, dated August 19,
2009.
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4.2
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First
Amendment To Rights Agreement, dated August 19, 2009, by and between
Empire Resorts, Inc. and Continental Stock Transfer & Trust Company,
as rights agent.
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10.1
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Investment
Agreement, dated as of August 19, 2009, by and between Empire Resorts,
Inc. and Kien Huat Realty III
Limited.
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10.2
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Registration
Rights Agreement, dated as of August 19, 2009, by and between Empire
Resorts, Inc. and Kien Huat Realty III
Limited.
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10.3
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Stockholder
Voting Agreement, dated as of August 19, 2009, by and among the
stockholders listed on the signature page(s) thereto, Empire Resorts, Inc.
and Kien Huat Realty III Limited.
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10.4
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Consulting
Agreement, dated as of August 19, 2009, by and between Empire Resorts,
Inc. and Colin Au.
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99.1
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Press
release of Empire Resorts, Inc., issued August 19,
2009.
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