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Item
2.04.
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Triggering Events That
Accelerate or Increase a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet
Arrangement.
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On
November 9, 2009, Empire Resorts, Inc. (the “Company”) received a notice (the
“Notice”) from The Bank of New York Mellon Corporation (the “Trustee”), as
indenture trustee under that certain indenture, dated as of July 26, 2004, by
and among the Company, the Trustee and certain guarantors named therein (the
“Indenture”). The Notice asserted that an event of default has
occurred and is continuing, which has not been waived, as a result of the
Company’s failure to pay the principal amount of the Company’s 5½%, senior
convertible notes (the “Notes”), plus accrued and unpaid interest and liquidated
damages, upon the purported timely exercise of certain put rights under the
Indenture. As a result, the Notice advised that the Trustee has
declared the entire $65 million unpaid principal amount of the Notes, all
accrued, unpaid interest thereon and any additional amounts due and owning under
the Indenture to be immediately due and payable. The Company’s legal
position that no exercise of any put rights has occurred in accordance with the
terms of the Indenture and, consequently, no event of default has occurred under
the Indenture. As previously disclosed, the Company has commenced a
declaratory judgment action against The Depository Trust Company and the Trustee
in the Supreme Court of the State of New York in Sullivan County, pursuant to
which the Company is seeking a judicial determination that (1) no Holder, as
defined under the Indenture, delivered an executed put exercise notice to the
office of the Trustee within the lawfully mandated time for exercise of a
Holder’s put rights under the Indenture, which was prior to the close of
business on July 31, 2009, as expressly required under the Indenture in order to
properly exercise a put, and that, accordingly, (2) the Notes, in the full
amount of $65 million, continue to mature on July 31, 2014.
A failure
to have repurchased the Notes when required would result in an “Event of
Default” under the Indenture and could result in a cross-default under the
Company’s loan agreement, dated July 27, 2009, as amended (the “Loan
Agreement”), with The Park Avenue Bank of New York (“PAB”). This
event would permit PAB to accelerate the debt outstanding under the Loan
Agreement and, if such debt is not paid, to enforce security interests in the
collateral securing such debt or result in the Company becoming involved in an
insolvency proceeding.
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Item
3.02.
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Unregistered Sale of
Equity Securities.
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The
Company held a special meeting of stockholders on November 10, 2009, at which
the Company’s stockholders approved, among other things, the issuance of shares
and related proposals to facilitate the issuance of 27,701,852 shares of the
Company’s common stock, par value $0.01 per share (“Common Stock”), to Kien Huat
Realty III Limited, a corporation organized under the laws of the Isle of Man
(the “Investor”), for consideration of $44 million (the “Second Tranche”),
pursuant to that certain Investment Agreement, dated August 19, 2009, as
amended, by and between the Company and the Investor (the “Investment
Agreement”), as well as the issuance of any additional shares of Common Stock to
the Investor as may be necessary pursuant to certain matching rights provided
for under the Investment Agreement. The Company previously issued
6,804,188 shares of Common Stock, or approximately 19.9% of the then outstanding
Common Stock on a pre-transaction basis, for aggregate consideration of $11
million (the “First Tranche”), pursuant to the Investment
Agreement.
The
closing of the Second Tranche occurred on November 12, 2009, at which time, the
Company issued an additional 27,701,852 shares of Common Stock to the Investor
for consideration of $44 million in accordance with the terms of the Investment
Agreement. The Company intends to use the proceeds of the First
Tranche and the Second Tranche for transaction costs, to pay interest on
existing indebtedness and for general working capital. The shares of
Common Stock issued pursuant to the Investment Agreement have not been
registered under the Securities Act of 1933, as amended (the “Securities
Act”). The shares of Common Stock were issued to the Investor in
reliance upon exemptions from registration under Section 4(2) of the Securities
Act and/or Regulation D promulgated thereunder. The funds used by the
Investor to purchase the First Tranche and Second Tranche of Common Stock
pursuant to the Investment Agreement were obtained as contributions from Golden
Hope Unit Trust, which generated the funds through its investment
activities.
As a
result of the closing of the Second Tranche, as of November 12, 2009, the
Investor owns 34,506,040 shares of Common Stock, representing just under 50% of
the voting power of the Company. Following any purchase by the
Investor pursuant to the option matching rights provided under the Investment
Agreement, the Investor will own no more than one share less than 50% of the
voting power of the Company, given the issuance of shares upon exercise of the
option or warrant that triggered such option matching rights. 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 of Directors (the “Board”), 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 has designated Au Fook Yew and G. Michael Brown
as members of the Board pursuant to its rights under the Investment
Agreement. The Investor has not yet identified to the Board the third
director whom it will recommend for appointment to the Board pursuant to the
Investment Agreement. The Investor will continue to be entitled to
recommend three directors 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
directors whom the Investor will be entitled to designate for election or
appointment to the Board will be reduced proportionally to the Investor’s
percentage of ownership. Under the Investment Agreement, for so long
as the Investor is entitled to designate representatives to the Board, among
other things, the Investor will have the right to nominate one of its director
designees to serve as the Chairman of the Board, and Mr. Brown has been
appointed to serve as Chairman of the Board pursuant to the Investor’s
recommendation. 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 directors designated by the Investor.
The
consummation of the transactions contemplated by the Investment Agreement did
not constitute a “change of control” under the Indenture.
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Item
5.01.
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Change in Control of
Registrant.
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The
information set forth in Item 3.02 of this Current Report on Form 8-K is
incorporated herein by reference.
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Item
5.03.
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Amendments to Articles
of Incorporation or Bylaws; Change in Fiscal
Year.
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On
November 12, 2009, the Company filed with the State of Delaware an amendment to
its Certificate of Incorporation to increase the Company’s authorized capital
stock from 80,000,000 shares, consisting of 75,000,000 shares of Common Stock
and 5,000,000 shares of preferred stock, par value $0.01 per share (“Preferred
Stock”), to a total of 100,000,000 shares, consisting of 95,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock (the “Certificate
Amendment”). The foregoing description of the Certificate Amendment
does not purport to be complete and is qualified in its entirety by reference to
the full text of such agreement, which is filed as Exhibit 3.1 hereto and
incorporated herein by reference.
On
November 10, 2009, the Company issued a press release announcing the approval by
the Company’s stockholders of, among other things, the issuance of shares and
related proposals to facilitate the consummation of Second
Tranche. The full text of such release is filed as Exhibit 99.1
hereto and incorporated herein by reference.
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Item
9.01
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Financial Statements
and Exhibits.
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(d) Exhibits
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3.1
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Amendment
to Certificate of Incorporation of Empire Resorts, Inc. filed on November
12, 2009.
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99.1
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Press
release issued by Empire Resorts, Inc. on November 10,
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:
November 13, 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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3.1
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Amendment
to Certificate of Incorporation of Empire Resorts, Inc. filed on November
12, 2009.
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99.1
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Press
release issued by Empire Resorts, Inc. on November 10,
2009.
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