sec document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): November 12, 2004
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EMPIRE RESORTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-12522 13-3714474
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
c/o Monticello Raceway, Route 17B, Monticello, NY 12701
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (845) 794-4100
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N/A
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 12, 2004, the Company entered into a binding agreement (the
"Letter Agreement") with Concord Associates Limited Partnership and an affiliate
thereof (collectively, "Concord Associates") providing for the acquisition by
the Company from Concord Associates of certain real estate assets, including the
Concord and Grossinger's resorts, which are located in the Catskill's region of
New York. The acquisition when completed is expected to allow the Company to
obtain additional casino and hotel development sites, totaling over 1,200 acres
of land which also include the Monster, International, Challenger and
Grossinger's golf courses. The Letter Agreement also provides that certain
acreage associated with these properties, including related rights and easements
will be retained by Concord Associates.
The Letter Agreement provides that upon the closing, the Company will
deliver 18,000,000 shares of its common stock, subject to registration and
governance rights as are described below and subject to anti-dilution for
specified events occurring prior to or at the closing, to Concord Associates as
consideration for the transfer of the properties. The obligation of either party
to close the transaction is subject to certain conditions (which may be waived),
including (1) the completion of due diligence reviews by December 14, 2004, (2)
the continuing validity of the respective material representations and
warranties of the parties, (3) the continuing performance of the material terms
of the agreement by the parties and the obtaining all necessary consents and
approvals, (4) the absence of material liens and encumbrances on the property to
be conveyed, other than certain permitted encumbrances on the resort properties,
and (5) the absence of any material adverse change or decision, order or similar
ruling restraining or enjoining the transaction. The permitted encumbrances on
the resort properties include mortgages and other obligations in an aggregate
amount not to exceed $30 Million, liens for taxes not yet due and payable, any
utility easements, rights of way, and other encumbrances that do not materially
impair the development, use or value of the property, and certain reciprocal
easements to be entered into at closing. In addition, the obligation of Concord
Associates is also conditioned upon obtaining the approval to this transaction
of the Bankruptcy Court having jurisdiction over the bankruptcy proceeding
involving Frontline Capital Corp, the principal owner of one of the beneficial
owners of Concord Associates, and the Company's obligation to close the
transaction is also conditioned upon:
(a) Approval by its shareholders of the conveyance of the properties to
the Company and the issuance and delivery of the shares to be issued
as consideration therefore in accordance with all applicable federal
and state laws; and
(b) The first to occur of the requisite approvals for either the Cayuga
Nation of New York or the Seneca Cayuga Tribe of Oklahoma to conduct
gaming activities either at or the site of Monticello Raceway or the
Concord Resort, including (i) a definitive binding agreement with the
State of New York settling all outstanding land claims in the State of
New York (which agreement has all requisite United States approvals
(either from Congress and/or the Department of the Interior), (ii) a
binding Compact with the Governor of New York, which has been approved
by the Department of the Interior of the United States does not
require further legislative approval by the legislature of the State
of New York, and (iii) all requisite United States approvals (either
from Congress and/or the Department of Interior) to take land into
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trust (and the transfer thereof) and any other federal approvals
required to own or operate a Class III Gaming Facility.
The Company has the option, on 60 days notice, to elect not to purchase the
Concord Resort and Golf Club (which includes the Monster and International golf
courses) at Closing. If the Company exercises such option in a timely manner,
the Concord Resort and Golf Club will be retained by Concord Associates and the
debt and other obligations relating to the properties to be assumed by the
Company in connection with the transaction will be reduced to approximately
$17.5 million (after deduction of the approximately $7.5 million lessee purchase
option price under the Monster golf course ground lease and approximately $5
million of debt encumbering the golf courses). The parties will also enter into
a mutually acceptable license agreement providing for the non-exclusive use of
the Concord Resort and Golf Club by guests of the Company's hotels and casinos,
and providing for the sharing of capital, operating and maintenance costs for
the Concord Resort and Golf Club by the Company and Concord Associates in
proportion to the annual number of rounds of golf attributable to hotel/casino
guests and residents of the retained residential property.
The Company and Concord Associates have agreed to enter into certain
additional agreements to provide for the following:
(a) Concord Associates Board Representation. Subject to any applicable
shareholder approval, the initial Board of Directors to be in office
at the Closing shall be comprised of eleven (11) members, two of whom
shall be designees of Concord Associates. These designees will be
members of the class of directors who will not be subject to
reelection until the annual meeting to be held in 2008. Of the
remaining nine members of the initial Board of Directors at least
seven members of the Board of Directors will be independent. The seven
initial independent members shall be comprised as follows: (1) Concord
Associates will be entitled to designate three of the seven
independent members of the Board of Directors; (2) the Company will be
entitled to designate three independent directors selected from the
existing independent directors on the Board; and (3) the six
independent directors so selected will together select the seventh
independent director. Committee representation will be proportionate
to representation on the Board (except that committees that are
required to be comprised of independent directors will have comparable
proportionate independent representatives). To the extent permitted by
applicable NASDAQ rules and by applicable law, for a period of at
least three years after the Closing, at least one of the designees of
Concord Associates will be entitled to serve as a member of each
committee of the Board of Directors. The Company will use its
reasonable commercial efforts so that until at least the annual
meeting held in 2008 at least two Concord Associates designees will be
members of the Board of Directors. All Board members shall be subject
to suitability requirements of applicable state, federal and tribal
gaming regulators. The Company agrees to use all commercially
reasonable efforts, including seeking and obtaining any required
shareholder approvals of the foregoing at the Stockholders Meeting or
any other meeting of shareholders of the Company at which the matters
related to the Agreement are to be presented to a vote of shareholders
of the Company. The parties have further agreed that failure to
receive such required shareholder approval shall be treated for all
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purposes as a failure to satisfy the condition of shareholder approval
to closing contained in the Agreement.
(b) Registration Rights. Concord Associates will be entitled to unlimited
demand registration rights (although only the first three will be at
the Company's expense and will be entitled to piggyback rights on
equity offerings by the Company (but in the case of Concord
Associates' exercise of piggyback rights, the Company will have
priority in the event the underwriter requires cutbacks.) In addition,
the underwriter for shares sold by Concord Associates must be
reasonably acceptable to the Company.
The Company has agreed to take all action necessary to convene a meeting of
holders of shares of its capital stock (the "Stockholders Meeting") as promptly
as possible to consider and vote upon the adoption of the Agreement. Subject to
applicable law, the Board of Directors of the Company shall recommend the
approval and adoption of the transactions contemplated by the Agreement, such
recommendation shall be included in the proxy statement circulated in connection
with the Stockholders Meeting, and the Board of Directors of the Company is to
take all lawful action to solicit the adoption thereof by the holders of shares
of its capital stock. In the event that subsequent to the date of the
Agreement, the Board of Directors of the Company reasonably determines in good
faith after consultation with outside counsel that its fiduciary duties under
applicable law require it to withdraw, modify or qualify its recommendation in a
manner adverse to Concord Associates, the Board of Directors of the Company may
so withdraw, modify or qualify its recommendation; however, subject to
applicable law, unless the Agreement is theretofore terminated, the Company
shall nevertheless submit the Agreement to the holders of the shares of its
capital stock for adoption at the Stockholders Meeting.
By their execution of certain letter agreements concurrently with the date
of the Agreement certain of the Company's shareholders (each, a "Stockholder")
holding approximately 40% in the aggregate of its common stock have covenanted
and agreed pursuant to separate voting agreements (each, a "Voting Agreement,"
collectively, the "Voting Agreements") to (i) vote their shares in favor of this
transaction at the Stockholders Meeting, and (ii) vote their shares against any
Acquisition Proposal and any alternative transaction involving the acquisition
by the Company of hotel, gaming, or resort properties in the Catskills at any
applicable stockholders meeting. In addition, such letter agreements provide
certain restrictions on the right of each such shareholder to sell or otherwise
dispose of their shares, including any shares over which such shareholder
directly or indirectly (and whether as record owner, trustee, or otherwise)
holds voting power.
The closing is to take place by August 31, 2005 (subject to extension) or
the parties will have the right to terminate the Agreement. Each party agrees to
proceed in good faith to enter into, by December 23, 2004, the additional
agreements referenced in the Agreement, including a non-exclusive license
agreement with respect to the Concord Resort and Golf Club, the Reciprocal
Easement Agreements and a Shareholders Agreement between the Company and Concord
Associates, provided that failure to enter into such additional agreements will
in no way affect or impair the binding nature of the Agreement and, in the
event of any dispute over the terms and conditions of any additional agreement,
such dispute is to be resolved by binding arbitration.
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Concord Associates agrees to use all commercially reasonable efforts to
obtain the approval to this transaction of the Bankruptcy Court having
jurisdiction over the bankruptcy proceeding involving Frontline Capital Corp.,
which approval is a condition to its obligation to close. In furtherance
thereof, Concord Associates and its members covenant to cause Frontline Capital
Corp. to promptly petition the Bankruptcy Court for such approval, and recommend
that the Bankruptcy Court approve this transaction. If the Bankruptcy Court
disapproves the transaction, however, then Concord Associates, upon written
notice to the Company given within ten days after such disapproval, will have
the right to terminate the Agreement and neither party will have any further
rights or obligations under it and the Option (as described in the next
paragraph) shall no longer be exercisable.
The Company has granted Concord Associates an irrevocable three year option
to purchase up to 5,188,913 shares of its Common Stock at a price of $7.50 per
share. The option is exercisable in the event that the Letter Agreement is
terminated in accordance with its terms for reasons other than (a) failure of
the due diligence condition to be satisfied by either party as of the completion
of due diligence on December 14, 2004, (b) a material adverse change (i) in the
properties, assets, business, prospects, or financial or other condition of (1)
the Resort Properties (or Concord Associates to the extent relevant to the
transactions contemplated by the Letter Agreement) or (2) the Company, in each
case to the extent relevant to the transactions contemplated by, or the ability
to consummate, the transactions, (c) an election by the Company to terminate due
to a default by Concord Associates in the performance of the Letter Agreement
that has a material adverse effect, (d) failure to close due to the failure to
satisfy certain specified conditions to the closing of the transactions
contemplated by the Letter Agreement, or (d) an election by Concord Associates
to terminate due to failure to receive necessary approvals of the Bankruptcy
Court having jurisdiction over the bankruptcy proceeding involving Frontline
Capital Corp.
The Company has agreed that neither it nor any of its subsidiaries nor any
of the officers and directors of it or its subsidiaries shall, and that it shall
cause its and its subsidiaries' employees, agents and representatives (including
any investment banker, attorney or accountant ("Representatives") retained by it
or any of its subsidiaries) not to, directly or indirectly, initiate or solicit
any inquiries or the making of any proposal or offer with respect to (i) a
merger, reorganization, share exchange, consolidation or similar transaction
involving the Company or any of its subsidiaries, (ii) any purchase of an equity
interest representing an amount equal to or greater than a 15% voting or
economic interest in the Company and its subsidiaries taken as a whole or (iii)
any purchase of assets, securities or ownership interests representing an amount
equal to or greater than 15% of the consolidated assets of the Company and its
subsidiaries taken as a whole (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its subsidiaries nor any of the officers and directors of
it or its subsidiaries shall, and that it shall cause its and its subsidiaries'
employees, agents and Representatives not to, directly or indirectly, engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person or entity relating to an Acquisition
Proposal; provided, however, that the foregoing shall not prevent the Company or
its Board of Directors from (x) complying with its disclosure obligations under
Sections 14d-9 and 14e-2 of the Securities Exchange Act of 1934 with regard to
an unsolicited Acquisition Proposal; provided, however, that if such disclosure
has the effect of withdrawing, modifying or qualifying the recommendation of its
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Board of Directors in a manner adverse to Concord Associates or the approval of
the transactions contemplated by the Agreement by the Board of Directors of the
Company, Concord Associates shall have the right to terminate the Agreement,
after which termination the Option Agreement shall remain in full force and
effect and the Grantee under the Option Agreement shall thereafter have the
right to exercise the Option; and (y) at any time prior to, but not after, the
time the transactions contemplated by the Agreement are adopted by holders of
shares of capital stock of the Company, (A) providing information in response to
a request therefore by a person or entity who has made an unsolicited bona fide
written Acquisition Proposal if the Board of Directors of the Company receives
from the person or entity so requesting such information an executed
confidentiality agreement on customary terms; or (B) engaging in any
negotiations or discussions with any person or entity who has made an
unsolicited bona fide written Acquisition Proposal if the Board of Directors of
the Company receives from such person or entity an executed confidentiality
agreement on customary terms; if and only to the extent that, (1) in each such
case referred to in clause (A) or (B) above, the Board of Directors of the
Company reasonably determines in good faith after consultation with outside
legal counsel that such action is necessary in order for its directors to comply
with their respective fiduciary duties under applicable law, (2) in each case
referred to in clause (A) or (B) above, the Board of Directors of the Company
reasonably determines in good faith (after consultation with its financial
advisor and outside counsel) that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal, the likelihood of obtaining financing,
and the person or entity making the proposal, and if consummated, would result
in a transaction more favorable to the Company's stockholders from a financial
point of view than the transaction contemplated by the Agreement taking into
account any change in any proposal proposed by Concord Associates and (3) in the
case of clause (A) and (B), Concord Associates shall have had written notice of
the Company's intention to take the action referred to in clause (A) or (B) at
least five business days prior to the taking of such action by the Company;
provided, that any more favorable Acquisition Proposal referred to in clause (A)
or (B) above must involve 50% rather than the 15% used in the definition of
Acquisition Proposal (any such more favorable Acquisition Proposal is referred
to in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any person or entity conducted heretofore with
respect to any Acquisition Proposal. The Company agrees that it will take the
necessary steps to promptly inform the appropriate individuals or entities of
these obligations. The Company agrees that it will notify Concord Associates
promptly, but in any event within 48 hours if any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, it or
any of its Representatives indicating, in connection with such notice, the name
of such person or entity and the material terms and conditions of any proposals
or offers and thereafter shall keep Concord Associates informed on a current
basis, and, in any event, within 48 hours of any changes in the status and terms
of any such proposals or offers, including whether any such proposal has been
withdrawn or rejected. The Company also agrees to provide any information to
Concord Associates that it is providing to another person or entity at
substantially the same time it provides it to such other person or entity and
that it will promptly request each person or entity that has heretofore executed
a confidentiality agreement in connection with its consideration of a
transaction with the Company to return all confidential information furnished
prior to the execution hereof to or for the benefit of such person or entity by
or on behalf of it or any of its subsidiaries.
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During the term of the Agreement, each party is to work exclusively with
each other in connection with any transaction involving the direct or indirect
acquisition hotel, gaming or resort properties in the Catskills and may not
solicit, contact, facilitate or engage in discussions or negotiations with any
third party (other than Native American tribes) with respect thereto.
Concord Associates agrees that neither it, nor any of its subsidiaries and
affiliates, will, for a period of twenty years after the Closing, (i) build, own
or operate a gaming facility located on the retained property, or (ii) build,
own or operate a hotel located on such property that is a competitor of a hotel
developed on the Concord property, provided that it or its subsidiaries or
affiliates may build, own or operate a boutique luxury hotel on such property.
If the Company terminates the Agreement due to its failure to obtain
necessary consents, it may not solicit, contact, facilitate or engage in
discussions or negotiations with any third party with respect to any property
acquisition in the Catskills for a period of eighteen months following such
termination. Similarly, if Concord Associates terminates the Agreement for a
failure to gain any required consent (other than due to the failure to obtain
Bankruptcy Court approval), then it shall not solicit, contact, facilitate or
engage in discussions or negotiations with any third party with respect to any
transfer of its property in the Catskills for a period of eighteen months
following such termination.
The Agreement requires consent from the holders of the Company's
convertible bonds, relating to the proposed assumption of certain debt by the
Company at Closing. If the parties determine that such consent is unlikely to be
obtained, then they will reasonably cooperate to restructure the transaction,
with no adverse effect on either party, in such manner as to eliminate the
requirement of such consent.
If the shareholders of the Company fail to approve the transaction at the
Stockholders Meeting, or if (other than as a result of delays in the SEC review
process) the Company fails for any reason to submit the transactions
contemplated hereby for shareholder approval by August 20, 2005, or if the Board
of Directors changes its favorable recommendation with respect to the
transaction, then Concord Associates has the right to terminate the Agreement
and the Option Agreement will remain in full force and effect and be fully
binding upon the parties following any such termination.
If the Company defaults in the performance of its material obligations
under the Agreement and if such default is not cured within fifteen business
days after written notice thereof, then Concord Associates has the right, at its
option, to (x) sue for actual damages suffered as a result of such default, (y)
institute a suit for specific performance of the Agreement and/or (z) if the
default has a material adverse effect, terminate the Agreement. In the event
that the Concord Associates does not terminate the Agreement following a
default by the Company, Concord Associates has the right to sue for an amount
equal to damages multiplied by 166%. In the event of such an uncured material
default, and until such time as it obtains a non-appealable judgment of specific
performance, then (i) the Option Agreement will remain in full force and effect
in accordance with its terms and shall continue to be fully binding on the
parties thereto, (ii) and the Company may not solicit, contact, facilitate or
engage in discussions or negotiations with any third party with respect to any
acquisition of property in the Catskills for a period of eighteen months
following the initiation of any such suit for damages or specific performance.
Following any termination of the Agreement arising from a default that has a
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material adverse effect, Concord Associates will have the right to exercise the
Option under the Option Agreement.
If Concord Associates defaults in the performance of its material
obligations under the Agreement and such default is not cured within fifteen
business days after written notice, then the Company has the right, at its
option, to (x) sue for actual damages as a result of such default, (y) institute
a suit for specific performance and/or (z) if the default has a material adverse
effect, terminate the Agreement. In the event that the Company does not
terminate the Agreement following a default, the Company shall have the right
to sue for damages. In the event of such an uncured material default, and until
such time as the Company shall obtain a non-appealable judgment of specific
performance, then Concord Associates shall not solicit, contact, facilitate or
engage in discussions or negotiations with any third party with respect to any
transfer of its properties in the Catskills for a period of eighteen months
following the initiation of any such suit for damages or specific performance.
Following any termination by the Company arising from a default that has a
material adverse effect, the options will no longer be exercisable under the
Option Agreement. The provisions of the Agreement concerning default survive the
termination of the Agreement.
Any claim or dispute between the parties (including, without limitation,
any dispute with respect to the terms and conditions of any of the Additional
Agreements) arising under the Agreement shall be definitively resolved by
binding arbitration.
A copy of the Letter Agreement, the Option Agreement and a form of the
Voting Agreement are filed as Exhibits 2.1, 10.1, and 10.2 respectively, to this
report and the contents of each are incorporated herein by reference. The
foregoing description of the terms and conditions of the Letter Agreement,
Option Agreement and Voting Agreements described herein is only a summary of
some of the material provisions of such agreements and does not purport to be
complete and does not restate such agreements in their entirety.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit No. Exhibits
2.1 Letter Agreement, dated November 12, 2004, by and
among Empire Resorts, Inc., Concord Associates
Limited Partnership and Sullivan Resorts, LLC
(filed without exhibits or schedules, all of which
are available upon request, without cost).
10.1 Option Agreement, dated November 12, 2004, by and
among Empire Resorts, Inc. and Concord Associates
Limited Partnership (filed without exhibits or
schedules, all of which are available upon request,
without cost).
10.2 Form of Voting Agreement by and between Concord
Associates Limited Partnership and Stockholder.
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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.
EMPIRE RESORTS, INC.
Dated: November 18, 2004 By: /s/ Scott A. Kaniewski
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Name: Scott A. Kaniewski
Title: Chief Financial Officer
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