Item
1.01.
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Entry into a Material
Definitive Agreement.
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On July
27, 2009, Empire Resorts, Inc. (the “Company”) entered into an Amended and
Restated Loan Agreement (the “Loan Agreement”), among the Company, the
subsidiary guarantors party thereto, The Park Avenue Bank (“PAB”), in its
capacity as assignee of Bank of Scotland, and PAB, as assignee of Bank of
Scotland, as agent, which amends and restates the Company’s $10.0 million
secured credit facility with the Bank of Scotland (the “Original Loan
Agreement”). In connection with the closing of the Loan Agreement,
Bank of Scotland assigned to PAB its rights, title and interest as agent and
lender in all loans made under the Original Loan Agreement and all liens and
other security interests granted in connection with the Original Loan
Agreement.
Immediately
prior to the closing of the Loan Agreement, the outstanding balance under the
Original Loan Agreement was approximately $6.9 million. Upon the
closing of the Loan Agreement, the Company repaid approximately $2.5 million of
the outstanding balance under the Original Loan Agreement. As a
result, the initial outstanding principal amount of the loans under the Loan
Agreement is approximately $4.4 million. PAB, as sole lender under
the Loan Agreement, executed a loan participation agreement with Stamford
(Victoria) LP (the “Participant”) with respect to $1.0 million of the loans
under the Loan Agreement. Under the terms of the Loan Agreement, the
Company may request that PAB and the Participant make available to the Company
up to approximately an additional $5.6 million in advances under the Loan
Agreement through the participation of third parties acceptable to
PAB.
This Loan
Agreement continues to be secured by a first mortgage on the 230-acre Monticello
Raceway, which was originally granted in favor of the Bank of Scotland by the
Company’s wholly-owned subsidiary, Monticello Raceway Management,
Inc. The Loan Agreement is also secured by all other assets of the
Company, now owned or later acquired, including a pledge of the Company’s equity
interests in all of its current and future subsidiaries. Pursuant to
the terms of that certain Intercreditor Agreement, dated as of July 11, 2005, by
and among Bank of Scotland, The Bank of New York, as trustee under the indenture
for the benefit of the holders of the Company’s 5½% senior convertible notes
(the “Notes”), the Company and certain subsidiaries of the Company (the
“Intercreditor Agreement”), the liens securing the obligations under the Loan
Agreement have a
first priority position notwithstanding the
security interests granted
in connection with the Company’s
issuance of $65 million of Notes.
Amounts
outstanding under the Loan Agreement bear interest at a rate per annum equal to
the greater of (i) the US prime rate plus 5.50% and (ii) 9.00%, which amount is
payable monthly following the closing of the Loan Agreement.
The
aggregate amount of unpaid principal outstanding under the Loan Agreement is to
be repaid upon maturity. The Loan Agreement provides for a short term
maturity date of July 28, 2009 (the “Short Term Maturity Date”). Individual
holders of the Notes have a right to demand repayment of the outstanding
principal balance of their Notes, plus accrued interest thereon, on July 31,
2009.
If a
settlement or restructuring transaction between the Company and the holders of
the Notes occurs on or before July 28, 2009 (or within 90 days thereof, provided
that all interest that would be due and payable on the unpaid principal has been
paid prior to the commencement of such 90 day period), the maturity date of the
Loan Agreement is to be extended to July 28, 2011 (the “First Maturity
Date”). If certain conditions are satisfied, the maturity date may be
further extended for up two consecutive periods of six months
each. The Company and PAB also agreed, pursuant to the terms of a
Side Letter Agreement entered into on July 27, 2009, that in the event the
Company reaches an agreement with the holders of the Notes providing for an
extension of the date upon which the Notes mature or become mandatorily
redeemable, then the First Maturity Date is to be extended to a date that is at
least seven days prior to such date.
As a
condition to the closing of the Loan Agreement, the Company issued warrants to
purchase an aggregate of 277,778 shares of its common stock, at an exercise
price of $0.01 per share, to PAB and a designee of the Participant (together,
the “Warrants”). The Warrants expire on July 26, 2014. On
July 27, 2009, the Company also entered into an Investor Rights Agreement with
PAB and the Participant in connection with issuance of the Warrants (the
“Investor Rights Agreement”). The Investor Rights Agreement provides
the holders of the Warrants with, among other things, certain rights with
respect to the registration under the Securities Act of 1933 of the resale of
the shares issuable upon exercise of the Warrants.
The
foregoing summary of the Loan Agreement and the other loan documents, security
agreements and other agreements 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 4.1 through
4.9, inclusive, and incorporated herein by reference.
Item
2.03.
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Creation of a Direct
Financial Obligation or an Obligation under an Off- Balance Sheet
Arrangement of a Registrant
.
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The
information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
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 July
29, 2009, PAB delivered to the Company and the subsidiary guarantors under the
Loan Agreement a notice of the occurrence of an event of default under the Loan
Agreement as a result of the Company’s failure to pay principal thereunder when
due on July 28, 2009. As a result, all principal outstanding under
the Loan Agreement, in the amount of approximately $4.4 million, is immediately
due and payable. Pursuant to the terms of the Loan Agreement, during
the continuance of this event of default, the Company is to pay interest on the
unpaid principal amount of the outstanding loans at a rate per annum equal to
the greater of (i) the US prime rate plus 5.50% and (ii) 9.00%, plus, in either
case, 6%.
Item
8.01.
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Other
Events
.
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On July
28, 2009, the Company issued a press release announcing the closing of the Loan
Agreement, a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
On July
29, 2009, PAB delivered a notice to The Bank of New York advising that, as a
result of the occurrence of the event of default under the Loan Agreement
described under Item 2.04 above, a standstill period has commenced under the
Intercreditor Agreement. Under the terms of the Intercreditor Agreement, during
the continuance of the standstill period the holders of the Notes and The Bank
of New York, as trustee under the indenture for the benefit of the holders of
the Notes, are prohibited from exercising any rights or remedies in respect of
collection on, set off against, marshalling of, or foreclosure on the collateral
pledged by the Company to secure its obligations under the Notes.