1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October
31, 2003
EMPIRE RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12522 13-3714474
(State or other jurisdiction(Commission (IRS Employer
of incorporation) File Number)Identification
No.)
Route 17B, Monticello, New York 12701
Address of principal executive offices
Registrant's telephone number, including area code:
(845)794-4100 ext 478
______________________________________________________
(Former name or former address, if changed since last
report.)
Item 5. Other Items.
On October 29, 2003, an affiliate of the Company, Monticello
Raceway Management, Inc. ("MRMI") consummated a $3,500,000
loan agreement with The Berkshire Bank. MRMI is a wholly
owned subsidiary of Catskill Development, L.L.C.
("Catskill"), in which the Company currently owns a minority
interest. Pursuant to the terms of a planned consolidation
with Catskill, MRMI is scheduled to become a wholly owned
subsidiary of the Company. Prior to the consummation of the
loan, Catskill and MRMI entered into a 48 year lease with
regard to the Monticello Raceway property, which includes an
option to purchase the property. The loan is secured by a
leasehold mortgage, a pledge of raceway revenues and
security interests in certain equipment.
The leasehold mortgage loan bears interest at 8.75% and
matures in two years, with monthly principal and interest
payments based on a 48 month amortization schedule. Proceeds
from the loan are to be used primarily to pay for design and
development costs and site work in connection with the
planned improvements to Monticello Raceway in preparation
for video lottery operations. Total costs of the
improvements are expected to exceed $20,000,000. A portion
of the proceeds from the loan is also expected to pay
certain administrative expenses of the Company. The Company
has entered into a surety agreement with The Berkshire Bank
to guarantee the loan.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Surety Agreement dated October 29, 2003
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.
EMPIRE RESORTS, INC.
Dated: October 31, 2003
By /s/ Robert A.Berman
Robert A. Berman
Chief Executive
Officer
EXHIBIT 99.1
SURETY AGREEMENT
This Surety Agreement ("Agreement") is made and executed
this 29th day of October, 2003 by Empire Resorts, Inc.
("Surety") in favor of The Berkshire Bank ("Lender") having
a place of business at 4 East 39th Street, New York, NY
10016.
The undersigned Surety undertakes and agrees as follows:
1. Obligations Guaranteed. To induce Lender to establish
and/or continue financing arrangements with and consider
making or continuing certain loans and extending or
continuing to extend credit from time to time to Monticello
Raceway Management, Inc. ("Borrower"), and for other good
and valuable consideration, the Surety, intending to be
legally bound, hereby absolutely and unconditionally
guarantees and becomes surety for the payment and
performance when due (at maturity, upon acceleration, or
otherwise) of all of the Obligations of Borrower of every
kind or nature, whether joint or several, due or to become
due, absolute or contingent, now existing or hereafter
arising, and whether principal, interest, fees, costs,
expenses or otherwise (including without limitation any
interest and/or expenses accruing following the commencement
of any insolvency, receivership, reorganization or
bankruptcy case or proceeding relating to Borrower, whether
or not a claim for post-petition interest and/or expenses is
allowed in such case or proceeding). The Surety shall also
pay or reimburse Lender on demand for all costs and
expenses, including without limitation attorneys' fees,
incurred by Lender at any time to enforce, protect,
preserve, or defend Lender's rights hereunder and with
respect to any property securing this Agreement. All
payments hereunder shall be made in lawful money of the
United States, in immediately available funds. Unless
otherwise defined herein, all capitalized terms shall have
the respective meanings given to such terms in that certain
Loan and Security Agreement dated the date hereof between
Borrower and Lender (as it may hereafter be amended,
supplemented, restated or replaced from time to time, the
"Loan Agreement").
2. Representations and Warranties. The Surety represents
and warrants that:
2.1. Corporate Organization and Validity:
(a) Surety (i) is a corporation, duly organized and validly
existing under the laws of the state of Delaware, (ii) has
the appropriate power and authority to operate its business
and to own its Property and (iii) is duly qualified, is
validly existing and in good standing and has lawful power
and authority to engage in the business it conducts in each
state where the nature and extent of its business requires
qualification, except where the failure to so qualify does
not and could not have a Material Adverse Effect. A list of
all states and other jurisdictions where Surety is qualified
to do business is shown on Schedule "2.1" attached hereto
and made part hereof.
(b) The making and performance of this Agreement and the
other Loan Documents will not violate any law, government
rule or regulation, court or administrative order or other
such order, or the charter, minutes or bylaw provisions of
the Surety, or violate or result in a default (immediately
or with the passage of time) under any contract, agreement
or instrument to which Surety is a party, or by which Surety
is bound. Surety is not in violation of any term of any
material agreement or instrument to which it is a party or
by which it may be bound, or of its charter, minutes or
bylaw provisions.
(c) Surety has all requisite power and authority to enter
into and perform this Agreement and to incur the obligations
herein provided for, and has taken all proper and necessary
action to authorize the execution, delivery and performance
of this Agreement.
(d) No consent, license or approval of, or filing or
registration with, any governmental authority is necessary
for the execution and performance hereof by the Surety.
(e) This Agreement is valid and binding upon Surety and
enforceable in accordance with its respective terms except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles.
2.2. Places of Business: The only places of business of
Surety, and the places where Surety keeps and intends to
keep its Property, are at the addresses shown on Schedule
"2.2" attached hereto and made part hereof.
2.3. Pending Litigation: There are no judgments or judicial
or administrative orders or proceedings pending, or to the
knowledge of Surety, threatened, against Surety in any court
or before any Governmental Authority except as shown on
Schedule "2.3" attached hereto and made part hereof. To the
knowledge of Surety, there is no investigation (civil or
criminal) pending or threatened against Surety in any court
or before any Governmental Authority. Surety is not in
default with respect to any order of any Governmental
Authority. Surety and, to the knowledge of Surety, no
current executive officer of Surety, has not been indicted
in connection with or convicted of engaging in any criminal
conduct, or is currently subject to any lawsuit or
proceeding or under investigation in connection with any
anti-racketeering or other conduct or activity which, in
each case may result in the forfeiture of any Property to
any Governmental Authority.
2.4. Title to Properties: Surety has good and marketable
title in fee simple (or its equivalent under applicable law)
to all the other Property it purports to own, free from
Liens and free from the claims of any other Person, except
for Permitted Liens.
2.5. Taxes: All tax returns required to be filed by Surety
in any jurisdiction have been filed, and all taxes,
assessments, fees and other governmental charges upon
Surety, or upon any of its Property, income or franchises,
which are shown to be due and payable on such returns have
been paid, except for those taxes being contested in good
faith with due diligence by appropriate proceedings for
which appropriate reserves have been maintained under GAAP
and as to which no Lien has been entered. Surety is not
aware of any proposed additional tax assessment or tax to be
assessed against or applicable to Surety.
2.6. Financial Statements: The unaudited balance sheet of
Surety as of June 30, 2003, and the related statements of
profit and loss, stockholder's equity and cash flow as of
such date have been prepared in accordance with GAAP and
present fairly in all material respects the financial
position of Surety as of such dates and the results of its
operations for such periods (except for absence of footnotes
and year end adjustments). The fiscal year for Surety
currently ends on December 31. Surety's federal tax
identification number and state organizational
identification number for UCC purposes are as shown on
Schedule "2.6" attached hereto and made part hereof.
2.7. Full Disclosure: The financial statements referred to
in Section 2.6 of this Agreement do not, nor does any other
written statement of Surety to Lender in connection with the
negotiation of the Loan, contain any untrue statement of a
material fact. Such statements do not omit a material
fact, the omission of which would make the statements
contained therein misleading. There is no fact known to
Surety which has not been disclosed in writing to Lender
which had or could reasonably be expected to have a Material
Adverse Effect.
2.8. Subsidiaries: Surety does not have any Subsidiaries or
Affiliates, except as shown on Schedule "2.8" attached
hereto and made part hereof.
2.9. Investments, Guarantees, Contracts, etc.:
(a) Surety has not entered into any leases for real or
personal Property (whether as landlord or tenant or lessor
or lessee), except as shown on Schedule "2.9(a)," attached
hereto and made part hereof.
(b) Surety is not party to any contract or agreement, or
subject to any charter or other corporate restriction, which
has or could have a Material Adverse Effect.
2.10. Government Regulations, etc.:
(a) Surety has obtained all licenses, permits, franchises
or other governmental authorizations necessary for the
ownership of its Property and for the conduct of its
business.
(b) As of the date hereof, no employee benefit plan
("Pension Plan"), as defined in Section 3(2) of ERISA,
maintained by Surety or under which Surety could have any
liability under ERISA (i) has failed to meet the minimum
funding standards established in Section 302 of ERISA, (ii)
has failed to comply in a material respect with all
applicable requirements of ERISA and of the Internal Revenue
Code, including all applicable rulings and regulations
thereunder, (iii) has engaged in or been involved in a
prohibited transaction under Section 406 of ERISA or Section
4975 of the Internal Revenue Code which would subject Surety
to any material liability, or (iv) has been terminated if
such termination would subject Surety to any material
liability. Surety has not assumed, or received notice of a
claim asserted against Surety for, withdrawal liability (as
defined in Section 4207 of ERISA) with respect to any multi
employer pension plan and is a member of any Controlled
Group (as defined in ERISA). Surety has timely made all
contributions when due with respect to any multi employer
pension plan in which it participates and no event has
occurred triggering a claim against Surety for withdrawal
liability with respect to any multi employer pension plan in
which Surety participates. All Employee Benefit Plans and
multi employer pension plans in which Surety participates
are shown on Schedule "2.10(b)" attached hereto and made
part hereof.
(c) Surety is not in violation of or receipt of written
notice that it is in violation of any applicable statute,
regulation or ordinance of the United States of America, or
of any state, city, town, municipality, county or of any
other jurisdiction, or of any agency, or department thereof,
(including, without limitation, Environmental Laws or
government procurement regulations), a violation of which
causes or could cause a Material Adverse Effect.
(d) Surety is current with all reports and documents
required to be filed with any state or federal securities
commission or similar agency and is in full compliance in
all material respects with all applicable rules and
regulations of such commissions.
2.11. Business Interruptions: Within two (2) years
prior to the date hereof, none of the business, Property or
operations of Surety has been materially and adversely
affected in any way by any casualty, strike, lockout,
combination of workers, order of the United States of
America, or any state or local government, or any political
subdivision or agency thereof, directed against Surety.
There are no pending or, to Surety's knowledge, threatened
labor disputes, strikes, lockouts or similar occurrences or
grievances affecting Surety. Except as set forth on
Schedule 2.11, no labor contract of Surety is scheduled to
expire prior to the Maturity Date.
2.12. Names and Intellectual Property:
(a) Within five (5) years prior to the Closing Date, Surety
has not conducted business under or used any other name
(whether corporate or assumed) except for the names shown on
Schedule "2.12(a)" attached hereto and made part hereof.
Surety is the sole owner of its names listed on such
Schedule "2.12(a)" and any and all business done and all
invoices issued in such trade names are Surety's sales,
business and invoices. Each trade name of Surety represents
a division or trading style of Surety and not a separate
Subsidiary or Affiliate or independent entity.
(b) All trademarks, service marks, patents or copyrights
which Surety uses, plans to use or has a right to use are
shown on Schedule "2.12(b)" attached hereto and made part
hereof and Surety is the sole owner of such Property except
to the extent any other Person has claims or rights in such
Property, as such claims and rights are shown on Schedule
"2.12(b)". Surety is not in violation of any rights of any
other Person with respect to such Property.
(c) Except as shown on Schedule "2.12(c)" attached hereto
and made part hereof, (i) Surety does not require any
copyrights, patents, trademarks or other intellectual
property, or any license(s) to use any patents, trademarks
or other intellectual property in order to provide services
to its customers in the ordinary course of business; and
(ii) Lender will not require any copyrights, patents,
trademarks or other intellectual property or any licenses or
consents to use the same in order to provide such services
after the occurrence of an Event of Default.
2.13. Regulation O: No director, executive officer or
principal shareholder of Surety is a director, executive
officer or principal shareholder of Lender. For the
purposes hereof the terms "director" "executive officer" and
"principal shareholder" (when used with reference to
Lender), have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal
Reserve System.
2.14. Solvency: After giving effect to the transactions
contemplated under this Agreement, Surety is solvent, is
able to pay its debts as they become due, and has capital
sufficient to carry on its business and all businesses in
which it is about to engage, and now owns Property having a
value both at fair valuation and at present fair salable
value greater than the amount required to pay Surety's
debts. Surety will not be rendered insolvent by the
execution and delivery of this Agreement or by the
transactions contemplated hereunder.
3. Surety's Affirmative Covenants. The Surety covenants
as follows, so long as any Obligations remain outstanding:
3.1. Payment of Taxes and Claims: Surety shall pay, before
it becomes delinquent, all taxes, assessments and
governmental charges, or levies imposed upon it, or upon
Surety's Property, and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other
Persons, entitled to the benefit of statutory or common law
Liens which, in any case, if unpaid, would result in the
imposition of a Lien upon its Property; provided, however,
that Surety shall not be required to pay any such tax,
assessment, charge, levy, claim or demand if the amount,
applicability or validity thereof, shall at the time, be
contested in good faith and by appropriate proceedings by
Surety, and if Surety shall have set aside on its books
adequate reserves in respect thereof, if so required in
accordance with GAAP; which deferment of payment is
permissible so long as no Lien other than a Permitted Lien
has been entered and Surety's title to, and its right to
use, its Property are not materially adversely affected
thereby.
3.2. Maintenance of Properties and Corporate Existence:
(a) Property-Surety shall maintain its Property in good
condition (normal wear and tear excepted) make all necessary
renewals, replacements, additions, betterments and
improvements thereto and will pay and discharge when due the
cost of repairs and maintenance to its Property, and will
pay all rentals when due for all real estate leased by
Surety.
(b) Property Insurance, Public and Products Liability
Insurance-(i) Surety shall maintain insurance on all
insurable tangible Property against fire, flood, casualty
and such other hazards (including, without limitation,
extended coverage, workmen's compensation, boiler and
machinery, with inflation coverage by endorsement) and
against public liability, product liability and business
interruption, in each case in such amounts, with such
deductibles and with such insurers as are customarily used
by companies operating in the same industry as Surety. (ii)
Surety further covenants that all insurance premiums owing
under its current policies have been paid. Surety shall
notify Lender, immediately, upon Surety's receipt of a
notice of termination, cancellation, or non-renewal from its
insurance company of any such policy.
(c) Corporate Existence and Rights-Surety shall do (or
cause to be done) all things necessary to preserve and keep
in full force and effect its existence, good standing,
rights and franchises.
(d) Compliance with Laws-Surety shall be in compliance with
any and all laws, ordinances, governmental rules and
regulations, and court or administrative orders or decrees
to which it is subject, whether federal, state or local,
(including, without limitation, Environmental Laws and
government procurement regulations) and shall obtain any and
all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its Property or
to the conduct of its businesses, which violation or failure
to obtain causes or could reasonably be expected to cause a
Material Adverse Effect. Surety shall timely satisfy all
assessments, fines, costs and penalties imposed (after
exhaustion of all appeals, provided a stay has been put in
effect during such appeal) by any Governmental Authority
against Surety or any Property of Surety.
3.3. Litigation: Surety shall give prompt notice to Lender
of any litigation claiming in excess of Five Hundred
Thousand Dollars ($500,000), or which may otherwise have a
Material Adverse Effect.
3.4. Employee Benefit Plans: Employee Benefit Plans:
Surety shall (a) fund all of its Pension Plan(s) in a manner
that will satisfy the minimum funding standards of Section
302 of ERISA, (b) furnish Lender, promptly upon Lender's
request, with copies of all reports or other statements
filed with the United States Department of Labor, the PBGC
or the IRS with respect to all Pension Plan(s), or which
Surety, or any member of a Controlled Group, may receive
from the United States Department of Labor, the IRS or the
PBGC, with respect to all such Pension Plan(s), and (c)
promptly advise Lender of the occurrence of any reportable
event (as defined in Section 4043 of ERISA, other than a
reportable event for which the thirty (30) day notice
requirement has been waived by the PBGC) or prohibited
transaction (under Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) with respect to any such Pension
Plan(s) and the action which Surety proposes to take with
respect thereto. Surety will make all contributions when
due with respect to any multi employer pension plan in which
it participates and will promptly advise Lender upon (x) its
receipt of notice of the assertion against Surety of a claim
for withdrawal liability, (y) the occurrence of any event
which, to the best of Surety's knowledge, would trigger the
assertion of a claim for withdrawal liability against
Surety, and (z) upon the occurrence of any event which, to
the best of each Surety's knowledge, would place Surety in a
Controlled Group as a result of which any member (including
Surety) thereof may be subject to a claim for withdrawal
liability, whether liquidated or contingent.
3.5. Financial and Business Information: Surety shall
deliver or cause to be delivered to Lender the following:
(a) Financial Statements and Collateral Reports-such data,
reports, statements and information, financial or otherwise,
as Lender may reasonably request, including, without
limitation:
(i) within forty-five (45) days after the end of each
calendar quarter, the income and cash flow statements of
Surety and its Subsidiaries for such quarter and for the
expired portion of the fiscal year ending with the end of
such quarter, setting forth in comparative form the
corresponding figures for the corresponding periods of the
previous fiscal year, and the balance sheet of Surety and
its Subsidiaries as at the end of such quarter, setting
forth in comparative form the corresponding figures as at
the end of the corresponding periods of the previous fiscal
year, all in reasonable detail and certified by Surety's
chief financial officer to have been prepared from the books
and records of Surety;
(ii) within one hundred twenty (120) days after the end of
each fiscal year of Surety, the income and cash flow
statements of Surety and its Subsidiaries for such year, and
the balance sheet of each Surety and its Subsidiaries as at
the end of such fiscal year, setting forth in each case in
comparative form the corresponding figures as at the end of
and for the previous fiscal year, all in reasonable detail,
including all supporting schedules, and audited by an
independent public accounting firm acceptable to Lender, and
unqualifiedly certified to have been prepared in accordance
with GAAP;
(b) Notice of Event of Default-promptly upon becoming aware
of the existence of any condition or event which constitutes
an Event of Default under this Agreement, a written notice
specifying the nature and period of existence thereof and
what action Surety is taking (and proposes to take) with
respect thereto;
(c) Notice of Claimed Default-promptly upon receipt by
Surety, notice of default, oral or written, given to either
Surety by any creditor for Indebtedness for borrowed money,
otherwise holding long term Indebtedness of Surety in excess
of Five Hundred Thousand Dollars ($500,000); and
(d) Securities and Other Reports-if Surety shall be
required to file reports with the Securities and Exchange
Commission pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, promptly upon
its becoming available, one copy of each financial
statement, report, notice or proxy statement sent by Surety,
if any, to stockholders generally, and, a copy of each
regular or periodic report, and any registration statement,
or prospectus in respect thereof, filed by Surety with any
securities exchange or with federal or state securities and
exchange commissions or any successor agency.
3.6. Audits and Inspection: Surety shall permit any of
Lender's officers or other representatives to visit and
inspect upon reasonable notice during business hours any of
the locations of Surety, to examine and audit all of
Surety's books of account, records, reports and other
papers, to make copies and extracts therefrom and to discuss
its affairs, finances and accounts with its officers,
employees and independent certified public accountants all
at Surety's expense at the standard rates charged by Lender
for such activities, plus Lender's reasonable out-of-pocket
expenses.
3.7. Tax Returns, Financial Statements and Other Reports:
Promptly after each calendar year (but in any event no later
than September 15), Surety shall promptly furnish, or shall
cause to be furnished, to Lender copies of the annual
federal and state income tax returns of Surety for the
immediately preceding year. Surety further agrees that, if
requested by Lender, it shall promptly furnish Lender with
copies of all material reports filed with any federal, state
or local Governmental Authority.
3.8. Information to Participant: Lender may divulge to any
participant, assignee or co-lender or prospective
participant, assignee or co lender it may obtain in the Loan
or any portion thereof, all information, and furnish to such
Person copies of any reports, financial statements,
certificates, and documents obtained under any provision of
this Agreement, or related agreements and documents.
4. Surety's Negative Covenants.
Surety covenants as follows, so long as the Obligations
remain outstanding:
4.1. Merger, Consolidation, Dissolution or Liquidation:
(a) Except as provided in the Consolidation Transaction,
Surety shall not engage in any Asset Sale other than: (i)
Inventory sold in the ordinary course of Surety's business,
or (ii) disposition in the ordinary course of business of
obsolete or nonworking equipment, which, if reasonably
necessary, shall be promptly replaced by other equipment of
comparable or superior quality and value.
(b) Except with respect to the Consolidation Transaction,
Surety shall not merge or consolidate with any other Person
or engage in a division, conversion, dissolution or
liquidation. Surety shall give Lender written notice of the
completion of the transactions contemplated by the
Consolidation Transaction promptly following completion
thereof and provide Lender, upon request, with copies of all
material agreements related thereto.
4.2. Acquisitions: Except with respect to the Consolidation
Transactions, Surety shall not acquire all or a material
portion of the Capital Stock or assets of any Person in any
transaction or in any series of related transactions or
enter into any sale and leaseback transaction.
4.3. Liens and Encumbrances: Surety shall not: (i) execute
or permit to exist a negative pledge agreement with any
Person covering any of its Property, or (ii) cause or permit
or agree or consent to cause or permit in the future (upon
the happening of a contingency or otherwise), its Property
(including, without limitation, the Collateral), whether now
owned or hereafter acquired, to be subject to a Lien or be
subject to any claim except for Permitted Liens.
4.4. Transactions With Affiliates or Subsidiaries: Except
with respect to the Consolidation Transaction, Surety shall
not enter into any transaction with any Subsidiary or other
Affiliate, including, without limitation, the purchase,
sale, or exchange of Property, or the loaning or giving of
funds to any Affiliate or any Subsidiary unless: (i) such
Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by Surety,
and the transaction is in the ordinary course of and
pursuant to the reasonable requirements of Surety's business
and upon terms substantially the same and no less favorable
to Surety as it would obtain in a comparable arm's length
transaction with any Person not an Affiliate or a
Subsidiary, or if not on any arm's length basis then such
transaction would not have a Material Adverse Effect, and in
any event so long as such transaction is not prohibited
hereunder and any obligations incurred by Surety as a result
thereof are subordinated to the Obligations under agreements
acceptable to Lender; or (ii) such transaction is intended
for incidental administrative purposes.
4.5. Guarantees: Excepting the endorsement in the ordinary
course of business of negotiable instruments for deposit or
collection, Surety shall not become or be liable, directly
or indirectly, primary or secondary, matured or contingent,
in any manner, whether as guarantor, surety, accommodation
maker, or otherwise, for the existing or future Indebtedness
of any kind of any Person.
4.6. Indebtedness: Surety shall not incur or be liable at
any time for any Indebtedness except for Permitted
Indebtedness.
4.7. Loans and Investments: Surety shall not make or have
outstanding loans, advances, extensions of credit or capital
contributions to, or investments in, any Person other than
Permitted Investments.
4.8. Use of Party's Name: Neither Party hereto shall use
the other party's name in connection with any of its
business operations. Nothing herein contained is intended
to permit or authorize either party to make any contract on
behalf of the other.
4.9. Miscellaneous Covenants:
(a) Surety shall not become or be a party to any contract
or agreement which at the time of becoming a party to such
contract or agreement materially impairs Surety's ability to
perform under this Agreement, or under any other instrument,
agreement or document to which Surety is a party or by which
it is or may be bound.
(b) Surety shall not carry or purchase any "margin stock"
within the meaning of Regulations U, T or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter
II.
4.10. Jurisdiction of Organization: Surety shall not
change its jurisdiction of organization.
4.11. Change of Control: There shall not occur a Change
of Control.
5. Events of Default.
5.1. Each of the following events shall constitute an event
of default ("Event of Default"):
(a) Payments - Surety fails to make any monetary payment on
the date such payment is due and payable; or
(b) Particular Covenant Defaults - Surety fails to perform,
comply with or observe any covenant or undertaking contained
in this Agreement (other than with respect to the covenants
contained in Section 3.5 and Section 4 for which no cure
period shall exist) and such failure continues for thirty
(30) days after the occurrence thereof; or
(c) Financial Information any statement, report,
financial statement, or certificate made or delivered by
Surety or any of its officers, employees or agents to Lender
is not true and correct, in all material respects, when
made; or
(d) Warranties or Representations any warranty,
representation or other statement by or on behalf of Surety
contained in or pursuant to this Agreement or in any
document, agreement or instrument furnished in compliance
with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when
made; or
(e) Agreements with Others - The holder of any Indebtedness
of Surety in excess of Two Hundred Fifty Thousand Dollars
($250,000) accelerates the payment of Surety's obligations,
which are the subject thereof, prior to the maturity date or
prior to the regularly scheduled date of payment;
(f) Judgments any final judgment for the payment of money
in excess of Seven Hundred Fifty Thousand Dollars ($750,000)
in the aggregate (i) which is not fully and unconditionally
covered by insurance or (ii) for which Surety has not
established a cash or cash equivalent reserve in the full
amount of such judgment, shall be rendered by a court of
record against Surety and such judgment shall continue
unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged,
satisfied or bonded pending appeal; or
(g) Assignment for Benefit of Creditors, etc. if Surety
makes or proposes in writing, an assignment for the benefit
of creditors generally, offers a composition or extension to
creditors, or makes or sends notice of an intended bulk sale
of any business or assets now or hereafter owned or
conducted by Surety; or
(h) Bankruptcy, Dissolution, etc. upon the commencement
of any action for the dissolution or liquidation of Surety,
or the commencement of any proceeding to avoid any
transaction entered into by Surety, or the commencement of
any case or proceeding for reorganization or liquidation of
Surety's debts under the Bankruptcy Code or any other state
or federal law, now or hereafter enacted for the relief of
debtors, whether instituted by or against Surety; provided
however, that Surety shall have thirty (30) days to obtain
the dismissal or discharge of involuntary proceedings filed
against it, it being understood that during such thirty (30)
day period, Lender may seek adequate protection in any
bankruptcy proceeding; or
(i) Receiver upon the appointment of a receiver,
liquidator, custodian, trustee or similar official or
fiduciary for Surety or for Surety's Property; or
(j) Termination of Business if Surety ceases any material
portion of its business operations as presently conducted;
or
(k) Pension Benefits, etc. if Surety fails to comply with
ERISA so that proceedings are commenced to appoint a trustee
under ERISA to administer Surety's employee plans or the
PBGC institutes proceedings to appoint a trustee to
administer such plan(s), or a Lien is entered to secure any
deficiency or claim or a "reportable event" as defined under
ERISA occurs; or
(l) Loan Documents - if any breach or default occurs under
the Loan Agreement or any of the Loan Documents; or
(m) Liens - if any Lien in favor of Lender shall cease to
be valid, enforceable and perfected and prior to all other
Liens other than Permitted Liens or if Surety or any
Governmental Authority shall assert any of the foregoing; or
(n) Material Adverse Effect - if there is any change in
Surety's financial condition which, in Lender's reasonable
opinion, has or would be reasonably likely to have a
Material Adverse Effect.
5.2. Cure: Nothing contained in this Agreement or the Loan
Documents shall be deemed to compel Lender to accept a cure
of any Event of Default hereunder.
5.3. Rights and Remedies on Default: To the extent
permitted by law, in addition to all other rights, options
and remedies granted or available to Lender under this
Agreement, or otherwise available at law or in equity, upon
or at any time after the occurrence and during the
continuance of an Event of Default, Lender may, in its
discretion, declare the Obligations immediately due and
payable, all without demand, notice, presentment or protest
or further action of any kind (it also being understood that
the occurrence of any of the events or conditions set forth
in Sections 5.1(g),(h) or (i) shall automatically cause an
acceleration of the Obligations).
6. Surety Acknowledgements.
(a) The Surety hereby waives notice of (i) acceptance of
this Agreement, (ii) the existence or incurring from time to
time of any Obligations guaranteed hereunder, (iii) the
existence of any Event of Default, the making of demand,
nonpayment, or the taking of any action by Lender, under the
Loan Agreement, and (iv) default and demand hereunder.
(b) The Surety further acknowledges that the Surety (i) has
examined or had the opportunity to examine the Loan
Agreement and related agreements and (ii) waives any defense
which may exist resulting from the Surety's failure to
receive or examine at any time the Loan Documents or any
amendments, supplements, restatements or replacements
therefor.
(c) The Surety acknowledges that in entering into this
Agreement the Surety is not relying upon any statement,
representation, warranty or opinion of any kind from Lender
as to the present or future financial condition,
performance, assets, liabilities or prospects of Borrower or
as to any other matter.
7. Lender Actions. The Surety hereby consents and agrees
that Lender may at any time or from time to time in Lender's
discretion (a) extend or change the time of payment and/or
change the manner, place or terms of payment of any or all
Obligations, (b) amend, supplement, restate or replace the
Loan Agreement or any related agreements, (c) renew or
extend any financing now or hereafter reflected by the Loan
Agreement or the maturity thereof or increase (without limit
of any kind and whether related or unrelated) or decrease
loans and extensions of credit to Borrower, (d) modify the
terms and conditions under which loans and extensions of
credit may be made to Borrower, (e) settle, compromise or
grant releases for liabilities of Borrower, and/or any other
Person or Persons liable with Borrower for, any Obligations,
(f) exchange, compromise, release or surrender, or
subordinate or release any lien on, any property (including
any collections therefrom or proceeds thereof) of Borrower
or any other Person or Persons now or hereafter securing any
of the Obligations, and (g) apply any and all payments and
proceeds of any property of any Person securing any or all
of the Obligations received by Lender at any time against
the Obligations in any order as Lender may determine; all of
the foregoing in such manner and upon such terms as Lender
may see fit, and without notice to or further consent from
the Surety, who hereby agrees to be and shall remain bound
upon this Agreement notwithstanding any such action on
Lender's part.
8. Scope of Guaranty. The Agreement is an agreement of
suretyship and a guaranty of payment and not of collection.
The liability of the Surety hereunder is absolute, primary,
unlimited and unconditional and shall not be reduced,
impaired or affected in any way by reason of (a) any failure
to obtain, retain or preserve, or the lack of prior
enforcement of, any rights against any Person or Persons
liable for the Obligations (including Borrower and the
Surety) or in any property, (b) the invalidity,
unenforceability or voidability of any Obligations or any
liens or rights in any property pledged by any Person or
Persons, (c) any delay in making demand upon Borrower or any
delay in enforcing, or any failure to enforce, any rights
against Borrower or any other Person or Persons liable for
any or all of the Obligations or in any property pledged by
any Person or Persons, even if such rights are thereby lost,
(d) any failure, neglect or omission on Lender's part to
obtain, perfect or continue any lien upon, protect, exercise
rights against, or realize on, any property of Borrower, the
Surety or any other party securing the Obligations, (e) the
existence or nonexistence of any defenses which may be
available to the Borrower with respect to the Obligations,
(f) the granting of any waiver or forbearance at any time
and for any period with respect to any performance by
Borrower or any Event(s) of Default under the Loan
Agreement, (g) the commencement of any bankruptcy,
reorganization, liquidation, dissolution or receivership
proceeding or case filed by or against Borrower or any
Surety or (h) any other fact, event, condition or omission
which may give rise to a suretyship defense. Surety
promises and undertakes to make all payments hereunder free
and clear of any deduction, offset, defense, claim or
counterclaim of any kind.
9. Reinstatement. If any or all payments or proceeds of
property securing any or all of the Obligations made from
time to time to Lender with respect to any obligation hereby
guaranteed are at any time recovered from, or repaid by,
Lender in whole or in part in any bankruptcy,
reorganization, receivership, insolvency or similar case or
proceeding instituted by or against Borrower, this Agreement
shall continue to be fully applicable to (or, as the case
may be, reinstated to be applicable to) such obligation to
the same extent as if the recovered or repaid payment(s) or
proceeds had never been originally paid to Lender.
10. Cumulative Remedies. All rights and remedies hereunder
and under the Loan Documents, and related agreements, are
cumulative and not alternative, and Lender may proceed in
any order from time to time against Borrower, the Surety
and/or any other Person or Persons liable for any or all of
the Obligations and their respective assets. Lender shall
not have any obligation to proceed at any time or in any
manner against, or exhaust any or all of Lender's rights
against, Borrower or any other Person or Persons liable for
any or all of the Obligations prior to proceeding against
the Surety hereunder.
11. Subrogation. Any and all rights of any nature of the
Surety to subrogation, reimbursement or indemnity and any
right of the Surety to recourse to any assets or property
of, or payment from, Borrower or any other Person or Persons
liable for any or all of the Obligations as a result of any
payments made or to be made hereunder for any reason shall
be unconditionally subordinated to all of Lender's rights
under the Loan Agreement and the Surety shall not at any
time exercise any of such rights unless and until all of the
Obligations have been unconditionally paid in full. Any
payments received by the Surety in violation of this Section
7 shall be held in trust for and immediately remitted to
Lender
12. Lender Records. Lender's books and records of any and
all of the Obligations, absent manifest error, shall be
prima facie evidence against the Surety of the indebtedness
owing or to become owing to Lender hereunder.
13. Continuing Surety. The liability of the Surety under
this Agreement may not be revoked or terminated and this
Agreement shall constitute a continuing surety obligation
with respect to all Obligations from time to time incurred
or arising and shall continue in effect until all
Obligations are indefeasibly paid and satisfied.
14. Setoff. The Surety agrees that Lender shall have a
right of setoff against any and all property of the Surety
now or at any time in Lender's possession, including without
limitation deposit accounts, and the proceeds thereof, as
security for the obligations of the Surety hereunder.
15. Acceleration. If an Event of Default occurs and is
continuing under the Loan Agreement, then all of the
Surety's liabilities of every kind or nature to Lender
hereunder shall, at Lender's option, become immediately due
and payable and Lender may at any time and from time to
time, at Lender's option (regardless of whether the
liability of Borrower or any other Person or Persons liable
for any or all of the Obligations has matured or may then be
enforced), take any and/or all actions and enforce all
rights and remedies available hereunder or under applicable
law to collect the Surety's liabilities hereunder.
16. Enforcement Timing. Failure or delay in exercising any
right or remedy against the Surety hereunder shall not be
deemed a waiver thereof or preclude the exercise of any
other right or remedy hereunder. No waiver of any breach of
any provision of this Agreement shall be construed as a
waiver of any subsequent breach or of any other provision.
17. Successors and Assigns. This Agreement shall (a) be
legally binding upon the Surety, and the Surety's successors
and assigns, provided that the Surety's obligations
hereunder may not be delegated or assigned without Lender's
prior written consent and (b) benefit any and all of
Lender's successors and assigns.
18. Entire Agreement. This Agreement embodies the whole
agreement and understanding of the parties hereto relative
to the subject matter hereof. No modification or waiver of
any provision hereof shall be enforceable unless approved by
Lender in writing.
19. Governing Law and Jury Trial. THIS AGREEMENT SHALL IN
ALL RESPECTS BE INTERPRETED, CONSTRUED AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK. THE SURETY
IRREVOCABLY KNOWINGLY AND VOLUNTARILY (I) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY LITIGATION OR
PROCEEDING HEREUNDER OR CONCERNING THE TERMS HEREOF AND (II)
WAIVES THE RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
LITIGATION, CLAIMS OR PROCEEDING HEREUNDER OR CONCERNING THE
TERMS HEREOF OR OTHERWISE IN CONNECTION WITH THE SURETY'S
DEALINGS WITH LENDER.
20. Notices.
(a) In any action or proceeding brought by Lender to
enforce the terms hereof, the Surety waives personal service
of the summons, complaint, and any motion or other process,
and agrees that notice thereof may be served (i) in person,
(ii) by registered or certified mail, return receipt
requested, or (iii) by nationally recognized overnight
courier (in the case of (i) above, on the date of delivery,
in the case of (ii) above, on the 3rd day after deposit in
the U.S. mail, and in the case of (iii) above, on the
Business Day following delivery to the courier). Service
may be made at the address of the Surety on the signature
page hereof or such other address at which Surety is then
located.
(b) Any and all notices which may be given to the Surety by
Lender hereunder shall be sent to the Surety at the address
of the Surety set forth on the signature page hereof (or
such other address at which the Surety is then located) and
shall be deemed given to and received (on the date
delivered) by the Surety if sent by facsimile transmission
or if sent in the manner provided for service of process in
paragraph 20(a) above.
21. Maximum Liability. To the extent that applicable law
otherwise would render any of the obligations of Surety
hereunder invalid or unenforceable, Surety's obligations
hereunder shall be limited to the maximum amount which does
not result in such invalidity or unenforceability, provided,
however, that Surety's obligations hereunder shall be
presumptively valid and enforceable to their fullest extent
in accordance with the terms hereof, as if this Section 21
were not a part of this Agreement.
22. Severability. The invalidity or unenforceability of
any provision hereof shall not affect the remaining
provisions which shall remain in full force and effect.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
DATED the date and year first above written.
EMPIRE RESORTS, INC.
By: /s/ Scott A. Kaniewski
Name: Scott A. Kaniewski
Address: