On June 30, 2014, Empire Resorts, Inc. (together with its subsidiaries, the
Company), through a wholly-owned subsidiary, Montreign Operating Company, LLC, submitted its application to the New York State Gaming Facility Location Board for a casino to be located at the site of Adelaar, the four-season destination
resort planned for the Town of Thompson in Sullivan County 90 miles from New York City (the Project). The casino resort (the Casino Project), to be called Montreign Resort Casino, is a part of the initial phase of
Adelaar, which will also include an Indoor Waterpark Lodge and adventure park, Rees Jones redesigned Monster Golf Course and an Entertainment Village, which will include retail, restaurant, shopping and entertainment. Together with the
Casino Project, this initial phase of the Project is referred to as the Gaming Facility. If Montreign Operating Company, LLC is awarded a gaming facility license for the Gaming Facility by the New York State Gaming Commission
(NYSGC), the size of the Casino Project, including the amount of capital necessary to complete the Montreign Resort Casino, will vary based upon the number and location of competitive licenses issued by the NYSGC in the Hudson
Valley-Catskills area (our Area), in which the Casino Project will be located. The Casino Project has in place essentially all of its approvals and permits to commence construction upon the awarding of a gaming facility license.
In the event the Company is awarded a gaming facility license, it currently anticipates financing the associated costs and expenses of the
license award and the development of the Casino Project with a combination of debt and equity financing. For the debt portion of the Companys financing, Credit Suisse AG (Credit Suisse) has committed to provide a senior secured
credit facility of up to a maximum amount of $478 million (the CS Credit Facility). The CS Credit Facility provides that Credit Suisse may change the terms of the credit facility to ensure successful syndication. Depending upon a variety
of factors outside the control of the Company, such as the number of licenses in our Area, the amount of financing needed for the Casino Project may be less than the maximum amount of the commitment. The CS Credit Facility is subject to various
conditions precedent, including the Companys receipt of a gaming facility license and evidence of an equity investment in the Company of up to $150 million. Please review the Information Statement included with this Notice for details of the
Companys application for a gaming facility license for the Gaming Facility.
The Company may launch a rights offering to its
existing equity holders in an amount necessary to meet the equity investment requirements of the CS Credit Facility and to redeem certain outstanding shares of Series E preferred stock of the Company, par value $0.01 per share (the Series E
Preferred Stock) in accordance with an existing settlement agreement. On June 26, 2014, the Company and Kien Huat Realty III Limited (Kien Huat), the Companys largest stockholder, entered into a letter agreement (the
Commitment Letter) pursuant to which Kien Huat committed to exercise its proportionate share of subscription rights if the Company commenced a rights offering on the terms described in the Commitment Letter to meet the requirements of
the CS Credit Facility (the Casino Project Rights Offering). In addition, in lieu of exercising any oversubscription rights in such a Casino Project Rights Offering, Kien Huat agreed it would enter into a standby purchase agreement (the
Casino Project Standby Purchase Agreement) to exercise all subscription rights not exercised by other holders in the Casino Project Rights Offering, upon the same terms as the other holders. For such commitment, the Company agreed to pay
Kien Huat a fee of 1% of the maximum amount that may be raised in the Casino Project Rights Offering, of which 0.5% was paid upon execution of the Commitment Letter and the remaining 0.5% is due if the Casino Project Rights Offering is launched. In
addition, the Company has agreed to pay for or reimburse Kien Huat for all of its out-of-pocket expenses in connection with the negotiation, execution and delivery of the Commitment Letter and the consummation of the transactions contemplated
thereby.
In addition, on November 17, 2010, the Company entered into a loan agreement (the Loan
Agreement) with Kien Huat, pursuant to which Kien Huat made a loan to the Company in the original principal amount of $35,000,000 (the Loan), subject to the terms and conditions set forth in the Loan Agreement and represented
by a convertible promissory note (the Note), dated November 17, 2010. On May 20, 2011, the Company used the proceeds of a rights offering to repay approximately $17.6 million of the Loan and the maturity date of the Note was
extended to May 17, 2013. Pursuant to subsequent amendments, the maturity date of the Note was extended to March 15, 2015 and the Note bears interest at a rate of 7.5% per annum.
Subject to and upon compliance with the applicable provisions of the Loan Agreement, Kien Huat has the right to convert, and the Company may
force Kien Huat to convert, all or any portion of the principal sum evidenced by the Note into common stock of the Company, par value $0.01 per share (the Common Stock). The Note is convertible into shares of Common Stock of the
Company at a conversion rate of 382.202837 shares of Common Stock per $1,000 in principal amount, which represents a conversion price of approximately $2.6164 per share, which conversion rate and conversion price are subject to adjustment pursuant
to the Loan Agreement. As of the date hereof, the Note is convertible into 6,660,289 shares of Common Stock (the Conversion Shares).
This Notice and the accompanying Information Statement are being furnished to the stockholders of the Company to advise our stockholders that
the holders of a majority of the voting power of the issued and outstanding shares of the Companys Common Stock, Series B preferred stock, par value $0.01 per share (the Series B Preferred Stock), and Series E Preferred Stock
(together with the Common Stock and Series B Preferred Stock, the Voting Stock) have acted by written consent to approve the sale and issuance to Kien Huat of (i) shares of our Common Stock issuable upon exercise of subscription
rights granted in the Casino Project Rights Offering (the Rights Offering Shares) in accordance with the Commitment Letter and in the event the Company decides to launch such a rights offering and (ii) 6,660,289 Conversion Shares,
subject to adjustment pursuant to the terms of the Loan Agreement. The entry into the Commitment Letter and the issuance of the Conversion Shares were approved by the Board of Directors of the Company, and the Audit Committee and Special Committee
for Development and Expansion also approved the Commitment Letter, prior to approval by the holders of a majority of the voting power of our Voting Stock.
Please review the Information Statement included with this Notice for a more complete description of these matters.
The close of business on , 2014, the date that the holders of a
majority of the Voting Stock gave written consent, is the record date (the Record Date) for the determination of stockholders entitled to notice of the action by written consent. The actions taken by the holders of a majority of the
voting power of the Voting Stock will not become effective until 40 days after the initial mailing of the Notice of Internet Availability of Information Statement to the other stockholders, or
, 2014. The Notice of Internet Availability is first being mailed to stockholders on or about ,
2014.
As the matters set forth in this Notice and accompanying Information Statement have been duly authorized and approved by the written consent
of the holders of a majority of voting power of the Voting Stock, your vote or consent is not requested or required to approve these matters. The accompanying Information Statement is provided solely for your information, and we are not, by sending
this Information Statement, asking any of our security holders to vote. This Notice and the accompanying Information Statement also serve as the notice required by Section 228 of the General Corporation Law of the State of Delaware of the
taking of a corporate action without a meeting by less than unanimous written consent of the Companys stockholders.
INFORMATION STATEMENT
WE ARE NOT ASKING FOR YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
General
On June 30, 2014, Empire
Resorts, Inc. (together with its subsidiaries, the Company), through a wholly-owned subsidiary, Montreign Operating Company, LLC, submitted its application to the New York State Gaming Facility Location Board for a casino to be located
at the site of Adelaar, the four-season destination resort planned for the Town of Thompson in Sullivan County 90 miles from New York City (the Project). The casino resort (the Casino Project), to be called Montreign
Resort Casino, is a part of the initial phase of Adelaar, which will also include an Indoor Waterpark Lodge and adventure park, Rees Jones redesigned Monster Golf Course and an Entertainment Village, which will include retail,
restaurant, shopping and entertainment. Together with the Casino Project, this initial phase of the Project is referred to as the Gaming Facility. The size of the Casino Project, including the amount of capital necessary to complete the
Montreign Resort Casino, will vary based upon the number and location of competitive licenses issued by the NYSGC in the Hudson Valley-Catskills area (our Area), in which the Casino Project will be located. The Casino Project has in
place essentially all of its approvals and permits to commence construction upon the awarding of a gaming facility license. Please see the section entitled The Commitment LetterBackground and Reasons for the Commitment Letter for
details of the Companys application for a gaming facility license for the Gaming Facility.
In the event the Company is awarded a
gaming facility license, it currently anticipates financing the associated costs and expenses of the license award and the development of the Casino Project with a combination of debt and equity financing. For the debt portion of the Companys
financing, Credit Suisse AG (Credit Suisse) has committed to provide a senior secured credit facility of up to a maximum amount of $478 million (the CS Credit Facility). The CS Credit Facility provides that Credit Suisse may
change the terms of the credit facility to ensure successful syndication. Depending upon a variety of factors outside the control of the Company, such as the number of licenses in our Area, the amount of financing needed for the Casino Project may
be less than the maximum amount of the commitment. The CS Credit Facility is subject to various conditions precedent, including the Companys receipt of a gaming facility license and evidence of an equity investment in the Company of up to $150
million.
The Company may launch a rights offering to its existing equity holders in an amount necessary to meet the equity investment
requirements of the CS Credit Facility and to redeem certain outstanding shares of Series E preferred stock of the Company, par value $0.01 per share (the Series E Preferred Stock) in accordance with an existing settlement agreement. On
June 26, 2014, the Company and Kien Huat Realty III Limited (Kien Huat), the Companys largest stockholder, entered into a letter agreement (the Commitment Letter) pursuant to which Kien Huat committed to exercise
its proportionate share of subscription rights if the Company commenced a rights offering on the terms described in the Commitment Letter to meet the requirements of the CS Credit Facility (the Casino Project Rights Offering). In
addition, in lieu of exercising any oversubscription rights in such a Casino Project Rights Offering, Kien Huat agreed it would enter into a standby purchase agreement (the Casino Project Standby Purchase Agreement) to exercise all
subscription rights not exercised by other holders in the Casino Project Rights Offering, upon the same terms as the other holders. For such commitment, the Company agreed to pay Kien Huat a fee of 1% of the maximum amount that may be raised in the
Casino Project Rights Offering, of which 0.5% was paid upon execution of the Commitment Letter and the remaining 0.5% is
1
due if the Casino Project Rights Offering is launched. In addition, the Company has agreed to pay for or reimburse Kien Huat for all of its out-of-pocket expenses in connection with the
negotiation, execution and delivery of the Commitment Letter and the consummation of the transactions contemplated thereby.
In addition,
on November 17, 2010, the Company entered into a loan agreement (the Loan Agreement) with Kien Huat, pursuant to which Kien Huat made a loan to the Company in the original principal amount of $35,000,000 (the Loan),
subject to the terms and conditions set forth in the Loan Agreement and represented by a convertible promissory note (the Note), dated November 17, 2010. On May 20, 2011, the Company used the proceeds of a rights offering to
repay approximately $17.6 million of the Loan and the maturity date of the Note was extended to May 17, 2013. Pursuant to subsequent amendments, the maturity date of the Note was extended to March 15, 2015 and the Note bears interest at a
rate of 7.5% per annum.
Subject to and upon compliance with the applicable provisions of the Loan Agreement, Kien Huat has the right
to convert, and the Company may force Kien Huat to convert, all or any portion of the principal sum evidenced by the Note into common stock of the Company, par value $0.01 per share (the Common Stock). The Note is convertible into
shares of Common Stock of the Company at a conversion rate of 382.202837 shares of Common Stock per $1,000 in principal amount, which represents a conversion price of approximately $2.6164 per share, which conversion rate and conversion price are
subject to adjustment pursuant to the Loan Agreement. As of the date hereof, the Note is convertible into 6,660,289 shares of Common Stock (the Conversion Shares).
This Information Statement is being furnished to the stockholders of the Company to advise our stockholders that the holders of a majority of
the voting power of the issued and outstanding shares of the Companys Common Stock, Series B preferred stock, par value $0.01 per share (the Series B Preferred Stock), and Series E Preferred Stock (together with the Common Stock
and Series B Preferred Stock, the Voting Stock) have acted by written consent to approve the sale and issuance to Kien Huat of (i) shares of our Common Stock issuable upon exercise of subscription rights granted in the Casino
Project Rights Offering (the Rights Offering Shares) in accordance with the Commitment Letter if the Company decides to launch at such a rights offering and (ii) 6,660,289 Conversion Shares, subject to adjustment pursuant to the
terms of the Loan Agreement. The entry into the Commitment Letter and the issuance of the Conversion Shares were approved by the Board of Directors of the Company, and the Audit Committee and Special Committee for Development and Expansion also
approved the Commitment Letter, prior to approval by the holders of a majority of the voting power of our Voting Stock.
Our principal
executive offices are located at c/o Monticello Casino and Raceway, 204 State Route 17B, P.O. Box 5013, Monticello, New York 12701.
Internet
Availability of the Information Statement
Pursuant to rules adopted by the Securities and Exchange Commission (the SEC),
the Company has elected to provide access to its Information Statement via the Internet instead of mailing printed copies. Accordingly, the Company is sending a Notice of Internet Availability of Proxy Materials (the Internet Availability
Notice) to the Companys stockholders. Most stockholders will not receive printed copies of the Information Statement unless they request them. Instead, instructions on how to access the Information Statement over the Internet or to
request a printed copy may be found with the Internet Availability Notice. All stockholders will have the ability to access the Information Statement on the website referred to in the Internet Availability Notice or request to receive a printed set
of the proxy materials. Stockholders may request to receive the Information Statement in printed form by telephone, mail, by logging on to or electronically by email on an
ongoing basis. The Company encourages stockholders to take advantage of the availability of the Information Statement on the Internet to help reduce the environmental impact of our corporate actions.
We anticipate that the Notice of Internet Availability will be mailed to stockholders on or about
, 2014.
2
Approval of the Commitment Letter and Loan Agreement
On June 26, 2014, the Companys Board of Directors, Audit Committee and Special Committee for Development and Expansion (the
Development Committee) approved, subject to stockholder approval, the transactions contemplated by the Commitment Letter. A copy of the Commitment Letter, as approved and executed by the parties, is attached as
Annex A
. On
, 2010, the Board of Directors had approved the Loan and the issuance of the Conversion Shares if and when the Note is converted, subject to stockholder approval. The Loan and
Note have been filed with the Companys filings with the SEC. For more information regarding the approval of the Commitment Letter and the Loan Agreement, please refer to the section entitled The Commitment LetterBackground and
Reasons for the Commitment Letter and The Loan AgreementBackground and Reasons for the Loan Agreement below.
Requirement to
Obtain Stockholder Approval
We are subject to the Nasdaq Stock Market Listing Rules because our Common Stock is currently listed on
the Nasdaq Global Market.
Pursuant to Nasdaq Stock Market Rule 5635(d), stockholder approval is required prior to the issuance or
potential issuance by the Company of securities in a transaction other than a public offering of securities equal to 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book
or market value of the stock.
We cannot currently determine the total number of shares of our Common Stock that will be issued pursuant
to the Commitment Letter and in connection with the Casino Project Standby Purchase Agreement because the number depends on a number of factors, including our need for liquidity support and the market price of our Common Stock on the day immediately
prior to the commencement of the Casino Project Rights Offering and during the 30-day period ending on the day immediately prior to the announcement of the award of the gaming facility license. Due to these uncertainties, the Commitment Letter has
the potential to provide for the issuance of securities equal to 20% or more of the Companys Common Stock or 20% or more of our Voting Stock for less than the greater of book or market value of the stock. As a result of the foregoing, we have
determined to seek stockholder approval of the issuance of the Rights Offering Shares pursuant to the Commitment Letter and Casino Project Standby Purchase Agreement.
As of the date hereof, 6,660,289 Conversion Shares are issuable upon conversion of the Note, subject to further adjustment pursuant to the
terms of the Loan Agreement. As of the date of the consummation of the Loan Agreement, the amount of Conversion Shares issuable upon conversion of the Note was in excess of 20% of the Companys Common Stock for less than the greater of book or
market value. In addition, the Loan Agreement required stockholder consent be obtained prior to the issuance of Conversion Shares. As a result of the foregoing, we have determined to seek stockholder approval of the issuance of the Conversion Shares
upon conversion of the Note.
The Action by Written Consent
On , 2014, following the approval of the Companys Board of
Directors, Audit Committee and Development Committee, the holders of a majority of the voting power of our outstanding Voting Stock approved by written consent (the Written Consent) the issuance of the Rights Offering Shares. In
addition, on , 2014, the holders of a majority of the voting power of our outstanding Voting Stock approved by written consent the issuance of the Conversion Shares. Pursuant to
the Exchange Act, the Company may make effective the corporate actions approved by the Written Consent 40 business days after this Information Statement is first made available to our stockholders via the Internet, which would be
, 2014.
No Voting Required
We are not seeking a vote, authorizations or proxies from you. Our Bylaws and Section 228 (Section 228) of the Delaware
General Corporation Law (the DGCL) provide that stockholders may take action without a meeting of the stockholders and without prior notice if a consent in writing, setting forth the action so taken, is signed by the holders of
outstanding Voting Stock holding not less than the minimum number of votes that would be necessary to approve such actions at a stockholders meeting. The approval by at least a majority of voting
3
power of the outstanding Voting Stock is required to approve (i) the issuance of the Rights Offering Shares in a Casino Project Rights Offering in accordance with the terms of the Commitment
Letter if the Company decides to launch such a rights offering and (ii) the issuance of the Conversion Shares pursuant to the Loan Agreement for purposes of the Nasdaq Stock Market Listing Rules and, in each case, such approval has been
obtained by way of the Written Consent.
As of the Record Date, we had
shares of Common Stock and 44,258 shares of Series B Preferred Stock and 1,577,880 shares of Series E Preferred Stock issued and outstanding and
entitled to vote. Each shares of Common Stock entitles the holder thereof to one vote, each share of Series B Preferred Stock entitles the holder thereof to twenty-seven hundredths (.27) of a vote and each share of Series E Preferred Sock entitles
the holder thereof to twenty-five hundredths (.25) of a vote. Accordingly, a total of shares are entitled to vote on the issuance of the Rights Offering
Shares and Conversion Shares.
Notice Pursuant to Section 228
Pursuant to Section 228, we are required to provide prompt notice of the taking of a corporate action by written consent to our
stockholders who have not consented in writing to such action. The Notice and this Information Statement serves as the notice required by Section 228.
Dissenters Rights of Appraisal
The
DGCL does not provide dissenters rights of appraisal to our stockholders in connection with the matters approved by the Written Consent.
4
THE COMMITMENT LETTER
Background and Reasons for the Commitment Letter
Through our wholly-owned subsidiary, Monticello Raceway Management, Inc. (MRMI), the Company currently owns and operates Monticello
Casino and Raceway, a 45,000 square foot video gaming machine (VGM) and harness horseracing facility located in Monticello, New York, 90 miles northwest of New York City. Monticello Casino and Raceway operates 1,110 VGMs, which
includes 1,090 video lottery terminals (VLTs) and 20 electronic table game positions (ETGs). VGMs are similar to slot machines, but they are connected to a central system and report financial information to the central
system. The Company also generates racing revenues through pari-mutuel wagering on the running of live harness horse races, the import simulcasting of harness and thoroughbred horse races from racetracks across the country and internationally, and
the export simulcasting of its races to offsite pari-mutuel wagering facilities.
In December 2012, MRMI entered into a master development
agreement (the MDA) with EPT Concord II, LLC (EPT) to develop 1,500 acres located in the Town of Thompson in Sullivan County, New York (the EPT Property), which is owned by EPT and EPR Concord II, LP, each a
wholly-owned subsidiary of EPR Properties Trust (EPR). The parties envision developing a four-season destination resort, to be named Adelaar. The Montreign Resort Casino is part of the Gaming Facility, which is the initial phase of the
development of Adelaar. In addition to the Casino Project, the Gaming Facility will include an Indoor Waterpark Lodge and adventure park, Rees Jones redesigned Monster Golf Course and an Entertainment Village, which will include retail,
restaurant, shopping and entertainment. Over the past three years, the Company has expended substantial energy on designing the Casino Project and, in conjunction with EPR, working with local and state agencies and officials to obtain the necessary
permits and approvals to begin construction. The Casino Project has in place essentially all of its approvals and permits to commence construction upon the awarding of a gaming facility license, as described below.
Effective as of June 30, 2013 (the Closing Date), the Company, Kien Huat, Colin Au Fook Yew (Au) and Joseph
DAmato (DAmato and, together with the Company, Kien Huat and Au, the Company Parties) consummated the closing of a Settlement Agreement and Release (the Settlement Agreement) with Stanley Stephen
Tollman (Tollman) and Bryanston Group, Inc. (Bryanston Group and, together with Tollman, the Bryanston Parties). Pursuant to the Settlement Agreement, the Company Parties and the Bryanston Parties agreed to the
settlement of certain claims relating to shares of Series E Preferred Stock held by the Bryanston Parties and that certain Recapitalization Agreement, dated December 10, 2002, by and between, among others, the Bryanston Parties and a
predecessor to the Company (the Recapitalization Agreement), pursuant to which the Bryanston Parties acquired the Series E Preferred Stock. On the Closing Date, the Recapitalization Agreement terminated and ceased to have any further
force and effect as between the Bryanston Parties and the Company. In consideration for the mutual release of all claims, the Company will redeem, purchase and acquire the Series E Preferred Stock from the Bryanston Parties in accordance with the
timeline and payment schedule outlined in the Settlement Agreement and based upon the closing by the Company of third party financing in an aggregate amount sufficient to enable the Company to complete the construction of the Casino Project. On
June 30, 2013 all Series E Preferred Stock held by Tollman was redeemed for approximately $1.5 million. If the outstanding Series E Preferred Stock held by the Bryanston Group is redeemed on or before December 31, 2014, the Series E
Preferred Stock would be redeemed for an amount between $28.0 million and the $10 per share liquidation value of the Series E Preferred Stock and all accrued dividends as of December 31, 2014 from funds legally available to the Company to
effect such redemption on a prorated basis.
On June 30, 2014, the Company, through a wholly-owned subsidiary, Montreign Operating
Company, LLC, submitted its application to the New York State Gaming Facility Location Board for the Gaming Facility. In total, 17 applications were filed by entities seeking to build gaming facilities and nine of such applications relate to
proposed projects in our Area. The NYSGCs website indicates that casino siting and operators are expected to be formally announced in early Fall 2014.
5
The Casino Project will be called Montreign Resort Casino. If Montreign Operating
Company, LLC is awarded a gaming facility license for the Gaming Facility by the New York State Gaming Commission (NYSGC), the size of the Casino Project, including the amount of capital necessary to complete the Montreign Resort Casino,
will vary based upon the number and location of competitive licenses issued by the NYSGC in our Area.
The preferred Gaming Facility
proposed by the Company in its gaming facility license application anticipates that the Companys minimum capital investment in the Casino Project, without including the license fee, is approximately $452 million. At this level, the Gaming
Facility has an expected total combined investment of approximately $1.1 billion and is proposed to include:
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The Casino Project: an 18-story casino, hotel and entertainment complex featuring an 80,000 square foot casino (with 61 table games and 2,150 state-of-the-art slot machines), 391 luxury rooms designed to meet the 4-star
and 4-diamond standards of Forbes
®
and AAA
®
, multiple dining and entertainment options, and meeting and conference space.
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The Indoor Waterpark Lodge: A 350-room, family-style, non-gaming resort featuring a wide range of amenities, including an 80,000 square foot indoor water park, dining facilities and other recreational activities. The
Indoor Waterpark Lodge would be the first resort hotel with an indoor waterpark in the Catskills region.
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Entertainment Village: A pedestrian-friendly, 200,000 square foot entertainment village featuring multiple dining opportunities and specialty retail shops.
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Monster Golf Course: This famous course will be redesigned and improved by Rees Jones. The Monster Golf Course would be leased to the Company, which would manage the course.
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In its gaming facility license application, the Company also addressed two alternatives to this preferred Gaming Facility proposal, which alternatives are
based on the location of other gaming facilities in our Area. In these alternative proposals, the Companys minimum capital investment in the Casino Project, without including the license fee, would be approximately $277 million and $172
million, respectively. If the Company were to build one of the alternatives to the preferred Gaming Facility, each of the alternative building programs for the Casino Project would be scaled back to properly take into account the location of and the
economic realities of increased competition from another gaming facility. The financing requirements for such a scaled back Casino Project is expected to be lower in each alternative, as well.
On January 30, 2012, the Board of Directors formed the Development Committee for the purpose of assisting the Companys staff with
the Project and Casino Project. The Development Committee retained independent advisors, including, among others, legal counsel and Moelis & Company LLC (Moelis) to assist in evaluating the transaction and financing alternatives
regarding the Casino Project. Mr. Gregg Polle, a director of the Company, is a managing director of Moelis. Mr. Polle refrained from participating in the discussion of the Moelis engagement, which was approved by the remaining independent
members of the Companys Board of Directors. Mr. Polle also did not participate on the deal team that provided services to the Company. The Development Committee consulted with legal counsel, its financial advisors and the Companys
senior management in evaluating means of financing the Casino Project. During its initial meetings, the Development Committees legal counsel informed the Development Committee of their obligations. Subsequent to being engaged in December 2013,
Moelis discussed with the Development Committee a list of entities to approach as potential equity investors in the Casino Project. After a number of additional Development Committee meetings, Moelis provided members of the Development Committee
with an update of possible equity financing sources and noted to members the feedback provided by such potential equity investors. Members of the Development Committee also met with representatives of Kien Huat, our largest stockholder, on multiple
occasions, who expressed an interest in providing a backstop commitment if the Company launched a rights offering to raise equity capital in support of the Casino Project. Upon receiving from Kien Huat a preliminary commitment letter that set forth
the terms upon which Kien Huat would enter into a Casino Project Standby Purchase Agreement,
6
the Development Committee met with its legal counsel and Moelis to review and discuss the negotiation of the proposed commitment letter. During the next several weeks, the Development Committee
met with its legal counsel, Moelis and the Companys senior management on a number of occasions and directed the legal counsel and the Companys senior management to continue negotiating with Kien Huat. On June 26, 2014, the Board of
Directors, the Audit Committee and Development Committee approved the Commitment Letter and declared that the transactions contemplated thereby are fair to, and in the best interest of, the Company and its stockholders.
Other Agreements with Kien Huat
Loan
Agreement
The Loan Agreement is described below in the section entitled The Issuance of Conversion SharesThe Loan
Agreement.
Investment Agreement
On August 19, 2009, we entered into that certain investment agreement (the Investment Agreement) with Kien Huat, pursuant to
which (i) we issued to the Kien Huat 6,804,188 shares of our common stock (the First Tranche), or approximately 19.9% of the outstanding shares of common stock on a pre-transaction basis, for aggregate consideration of $11 million,
and (ii) agreed, following stockholder approval of the transaction, to issue an additional 27,701,852 shares of common stock to Kien Huat (the Second Tranche) for additional consideration of $44 million. We held a special
meeting of our stockholders on November 10, 2009, at which our stockholders approved, among other things, the issuance of shares and related proposals to facilitate the Second Tranche. The closing of the Second Tranche occurred on
November 12, 2009, at which time we issued an additional 27,701,852 shares of common stock
As a result of the closing of the Second
Tranche, as of November 12, 2009, Kien Huat owned 34,506,040 shares of common stock, representing just under 50% of our voting power. As of the closing of the Second Tranche we had certain options and warrants outstanding. Under the
Investment Agreement, if any of such options or warrants are exercised (or any of the first one million options or warrants issued after the closing of the First Tranche to our officers and directors who held either of such positions as of
July 31, 2009), Kien Huat has the right to purchase an equal number of additional shares of Common Stock as are issued upon such exercise at the exercise price for the applicable option or warrant, which right we refer to herein as the
Option Matching Right. Following any such purchase by Kien Huat, Kien Huat may not own more than one share less than 50% of our voting power.
Under the terms of the Investment Agreement, Kien Huat is entitled to recommend three directors whom we are required to cause to be elected or
appointed to our Board of Directors, subject to the satisfaction of all legal and governance requirements regarding service as a member of our Board of Directors and to the reasonable approval of the Governance Committee of the Board of
Directors. Kien Huat recommended Joseph A. DAmato, Emanuel Pearlman and Edward Marinucci for appointment to the Board of Directors pursuant to the Investment Agreement. Kien Huat will continue to be entitled to recommend three
directors for so long as it owns at least 24% of our voting power outstanding at such time, after which the number of directors whom Kien Huat will be entitled to designate for election or appointment to the Board of Directors will be reduced
proportionally to Kien Huats percentage of ownership. Under the Investment Agreement, for so long as Kien Huat is entitled to designate representatives to the Board of Directors, among other things, Kien Huat will have the right to
nominate one of its director designees to serve as the Chairman of the Board, and Mr. Pearlman has been appointed to serve as Chairman of the Board pursuant to Kien Huats recommendation. Until such time as Kien Huat ceases to own
capital stock with at least 30% of our voting power outstanding at such time, the Board of Directors will be prohibited under the terms of the Investment Agreement from taking certain actions relating to fundamental transactions involving us and our
subsidiaries and certain other matters without the affirmative vote of the directors designated by Kien Huat.
7
Registration Rights Agreement
Pursuant to the terms of the Investment Agreement, on August 19, 2009, the Company also entered into a Registration Rights Agreement with
the Kien Huat (the Registration Rights Agreement). The Registration Rights Agreement provides, among other things, that Kien Huat may require that the Company file one or more resale registration statements, registering
under the Securities Act of 1933, as amended, the offer and sale of all of the Common Stock issued or to be issued to Kien Huat pursuant to the Investment Agreement as well as any shares acquired by way of a share dividend or share split or in
connection with a combination of such shares, recapitalization, merger, consolidation or other reorganization with respect to such shares.
The
Commitment Letter
This section describes the material terms of the Commitment Letter. The description in this section and elsewhere in
this Information Statement is qualified in its entirety by reference to the complete text of the Commitment Letter, a copy of which is attached as
Annex A
and is incorporated by reference into this Information Statement.
In the event that the Company is awarded a gaming facility license, it currently anticipates financing the associated costs and expenses of
the license award and the development of the Casino Project with a combination of debt and equity financing. For the debt portion of the Companys financing, Credit Suisse has committed to provide a senior secured credit facility of up to a
maximum amount of $478 million (the CS Credit Facility). The CS Credit Facility provides that Credit Suisse may change the terms of the credit facility to ensure successful syndication. Depending upon a variety of factors outside the
control of the Company, such as the number and location of licenses awarded in our Area, the amount of financing needed for the Casino Project may be less than the maximum amount of the commitment. The CS Credit Facility is subject to various
conditions precedent, including the Companys receipt of a gaming facility license and evidence of an equity investment in the Company of up to $150 million. Please see Background and Reasons for the Commitment Letter for
details of the Companys application for a gaming facility license.
The Company may launch a rights offering to its existing equity
holders in an amount necessary to meet the equity investment requirements of the CS Credit Facility and to redeem certain outstanding Series E Preferred Stock in accordance with the Settlement Agreement. If a Casino Project Rights Offering meeting
the terms described on the term sheet annexed to the Commitment Letter is launched by the Company, Kien Huat has committed to exercise its basic subscription rights. In addition, in lieu of exercising any oversubscription rights, Kien Huat has
agreed to enter into the Casino Project Standby Purchase Agreement whereby Kien Huat would commit to exercise all subscription right not otherwise exercised by other holders, upon the same terms as the other holders. The proceeds of such Casino
Project Rights Offering would be used in the following manner:
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First, to redeem the outstanding Series E Preferred Stock held by the Bryanston Group in accordance with the terms of the Settlement Agreement;
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Second, the balance of the proceeds would be contributed to Montreign Operating Company, LLC to pay Casino Project related expenses; and
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Third, if all the previously described uses are met, then for the general working capital and corporate purposes of Montreign Operating Company, LLC.
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The Commitment Letter contemplates the Casino Project Rights Offering based on the following terms:
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Subscription rights to purchase shares of Common Stock of the Company would be distributed to holders of Common Stock and Series B Preferred Stock;
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Holders of the Common Stock and Series B Preferred Stock will be entitled to oversubscription rights in respect of their pro rata portion of unpurchased shares of Common Stock in the Casino Project Rights Offering
(although Kien Huat has agreed not to exercise this oversubscription right).
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The maximum amount raised in the Casino Project Rights Offering would be such amounts required by the CS Credit Facility (not to exceed $150 million) plus the amount needed to redeem the Series E Preferred Stock
pursuant to the Settlement Agreement.
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The subscription rights would have a subscription price equal to the lower of (i) 80% of the closing market price of a share of Common Stock on the day immediately prior to the commencement of the Casino Project
Rights Offering and (ii) the 30-day volume-weighted average price for a share of Common Stock for the period ending on the day immediately prior to the announcement of the award of the gaming facility license.
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Subscription rights will be transferable (other than by Kien Huat, which has agreed to exercise its allocation as described below.)
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If the Company decides to launch the Casino Project Rights Offering, the parties contemplate a prospectus supplement describing the Casino
Project Rights Offering being filed within five (5) business days of the Company being granted a gaming facility license and taking all steps necessary to complete the Casino Rights Offering within 30 days of the filing of the prospectus
supplement.
In addition to the terms above, the Company has further agreed to file a resale registration statement covering all shares of
Common Stock of the Company owned by Kien Huat and not otherwise registered within five business days of the consummation of the Casino Project Rights Offering. In addition, Kien Huat has agreed to convert the Note into shares of Common Stock upon
the earlier of the (i) consummation of the Casino Project Rights Offering and (ii) the maturity date of the Note.
The foregoing
description of the Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the complete text of the Commitment Letter, a copy of which is attached as
Annex A
to this Information Statement and is
incorporated herein by reference.
The Commitment Letter should not be read alone, but should instead be read in conjunction with the
other information regarding the Company and Kien Huat contained in this Information Statement, as well as in the filings that we have made and may make with the SEC.
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ISSUANCE OF CONVERSION SHARES
Pursuant to the Commitment Letter, Kien Huat has agreed to convert the Note into shares of Common Stock of the Company upon to the earlier to
occur of (i) the closing of the Casino Project Rights Offering and (ii) the maturity of the Note. Upon conversion, Kien Huat will receive the number of shares of Common Stock of the Company to which it is entitled at a conversion price of
$2.6164 per share or conversion rate of 382.202837 shares of Common Stock per $1,000 of principal amount, which conversion rate and conversion price are subject to adjustment pursuant to the Loan Agreement.
Background and Reasons for the Loan
On
November 17, 2010, the Company entered into a Loan Agreement with Kien Huat, pursuant to which Kien Huat agreed to make, and made, a loan to the Company in the principal amount of $35,000,000.00, subject to the terms and conditions set
forth in the Loan Agreement and represented by a convertible promissory note dated November 17, 2010. The purpose of the Loan was to restructure the Companys indebtedness and provide the Company with working capital. In particular¸
proceeds of the Loan were used to effectuate the repurchase of the Companys outstanding 5-1/2% Convertible Senior Existing Notes Due 2014 (the Existing Notes) in accordance with the terms of the settlement agreement between the
Company and certain of the beneficial owners of the Existing Notes dated as of September 23, 2010.
The Loan Agreement
On November 17, 2010, the Company entered into a loan agreement with Kien Huat, pursuant to which Kien Huat made a loan to the
Company in the principal amount of $35,000,000, subject to the terms and conditions set forth in the Loan Agreement and represented by the Note. On May 20, 2011, the Company used the proceeds of a rights offering to repay approximately $17.6
million of the Loan and the maturity date of the Note was extended to May 17, 2013. Pursuant to subsequent amendments, the maturity date of the Note was extended to March 15, 2015 and the Note bears interest at a rate of 7.5% per
annum.
The foregoing description of the Loan does not purport to be complete and is qualified in its entirety by reference to the
complete text of the Loan and Note, copies of which were previously filed with the SEC.
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Description of Capital Stock
General
Our authorized capital stock
consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, of which 95,000 shares have been designated Series A Junior Participating Preferred Stock, $.01 par value per share, 821,496 shares have been designated Series B
Preferred Stock, 137,889 shares have been designated Series C Preferred Stock, $.01 par value per share, 4,000 shares have been designated Series D Preferred Stock, $.01 par value per share, and 1,730,697 shares have been designated Series E
Preferred Stock.
Common Stock
As of the Record Date, there were shares of
Common Stock outstanding and holders of record of our Common Stock.
Voting.
Each holder of Common Stock is entitled to one vote
for each share on all matters to be voted upon by the holders of Common Stock.
Dividends.
Subject to preferences that may be
applicable to any then outstanding preferred stock, holders of Common Stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by our board of directors out of legally available funds.
Liquidation.
In the event of our liquidation, dissolution or winding up, holders of Common Stock will be entitled to share ratably in
the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preferences that may be granted to the holders of any then outstanding shares of
preferred stock.
Rights and Preferences
The Common Stock has no preemptive, conversion or other subscription rights (other than
pursuant to a Casino Project Rights Offering described in this Information Statement, if launched), and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences and privileges of the holders of
Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock, which we may designate and issue in the future.
New York State Gaming Commission
. Our Common Stock is transferable only subject to the provisions of Section 303 of the Racing,
Pari-Mutuel Wagering and Breeding Law, so long as we hold directly or indirectly, a racing license issued by the New York State Gaming Commission (formerly the New York Racing and Wagering Board), and may be subject to compliance with the
requirements of other laws pertaining to licenses held directly or indirectly by us. The owners of Common Stock issued by the Company may be required by regulatory authorities to possess certain qualifications and may be required to dispose of their
Common Stock if the owner does not possess such qualifications.
Our Common Stock is admitted for trading on The Nasdaq Global Market
under the symbol NYNY.
The transfer agent and registrar for our Common Stock is Continental Stock Transfer & Trust
Company.
Preferred Stock
Our Board of Directors has the authority to issue up to an aggregate of 5,000,000 shares of preferred stock in one or more series and to fix
the voting powers, designations, preferences and rights, and qualifications, limitations or restrictions thereof, of each such series without any further vote or action by the stockholders, of which an aggregate of 2,210,918 have been designated as
a previously issued series of preferred stock. 44,258 shares of Series B Preferred Stock are currently outstanding and 1,577,880 shares of Series E Preferred Stock are currently outstanding.
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Series A Preferred Stock
We are authorized to issue up to 40,000 shares of Series A Preferred Stock, none of which are issued and outstanding. Because of the nature of
the Series A Preferred Stocks dividend, liquidation and voting rights, the value of the one one-thousandth interest in the Series A Preferred Stock should approximate the value of one share of Common Stock.
Series B Preferred Stock
We are authorized to issue up to 821,496 shares of Series B Preferred Stock, of which 44,258 shares are issued and outstanding. Each share of
Series B Preferred Stock is convertible into .27 of a share of Common Stock and represents the right to .27 of a vote on all matters to be voted upon by the holders of Common Stock. The holders of Series B Preferred Stock are entitled to receive,
out of assets legally available for payment, a cash dividend of $2.90 per annum per share of Series B Preferred Stock. This Series B dividend accrues from the date of initial issuance and is payable on the first day of each January, April, July and
October. If any dividend on any share shall for any reason not be paid at the time such dividend becomes due, such dividend in arrears shall be paid as soon as payments are permissible under Delaware law. However, any dividend payment which is not
made on or before January 30 of the following calendar year shall be payable in the form of shares of Common Stock in such number of shares as shall be determined by dividing (A) the product of (x) the amount of the unpaid dividend
and (y) 1.3 by (B) the fair market value of the Common Stock. Finally, in the event of our liquidation, dissolution or winding up, the holders of our Series B Preferred Stock are entitled to receive a preferential distribution of $29 per
share, plus all unpaid accrued dividends.
Series C Preferred Stock
We are authorized to issue up to 137,889 shares of Series C Preferred Stock, none of which are issued and outstanding. Each share of Series C
Preferred Stock is convertible into 24 shares of Common Stock and represents the right to 24 votes on all matters to be voted upon by the holders of Common Stock. The holders of Series C Preferred Stock are entitled to receive, out of assets legally
available for payment, a cash dividend of $5.76 per annum per share of Series C Preferred Stock. This Series C dividend accrues from the date of initial issuance and is payable on the first day of each January, April, July and October. If any
dividend on any share shall for any reason not be paid at the time such dividend becomes due, such dividend in arrears shall be paid as soon as payments are permissible under Delaware law. However, any dividend payment which is not made on or before
January 30 of the following calendar year shall be payable in the form of shares of Common Stock in such number of shares as shall be determined by dividing (A) the product of (x) the amount of the unpaid dividend and (y) 1.3 by
(B) the fair market value of the Common Stock. In the event of our liquidation, dissolution or winding up, the holders of our Series C Preferred Stock are entitled to receive a preferential distribution of $72 per share, plus all unpaid accrued
dividends. Finally, we may, within 120 days after the occurrence of a capital event, elect to redeem all or a pro rata portion of the outstanding Series C Preferred Stock for the redemption price of $72 per share, plus all unpaid accrued
dividends. A capital event is defined as a sale of our assets which results in at least a $5,000,000 excess of the purchase price paid for the assets over our basis in such assets.
Series D Preferred Stock
We are authorized to issue up to 4,000 shares of Series D Preferred Stock, none of which are issued and outstanding. The Series D Preferred
Stock has a stated value of $1,000 per share and is convertible into an aggregate of 330,000 shares of Common Stock at the lesser price of $6.00 per share or the average of the two lowest closing prices of the Common Stock during the 30 consecutive
trading days immediately preceding the date of conversion. Prior to conversion, the holders of Series D Preferred Stock are not entitled to vote on any matter except as required by Delaware law. The holders of shares of Series D Preferred Stock are
entitled to receive a dividend of $70 per annum per share of Series D Preferred Stock, which shall increase to $150 per annum per share of Series D Preferred Stock upon the conversion of the outstanding Series D Preferred Stock
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into more than 330,000 shares of Common Stock. Dividends with respect to a share of Series D Preferred Stock are payable in arrears on the earlier to occur of the conversion or redemption of such
share of Series D Preferred Stock. At our option, Series D Preferred Stock dividends are payable in cash or, subject to certain limitations, by delivery of that number of shares of Common Stock that the amount of accrued dividends payable would
entitle the Series D Preferred Stock holder to acquire at a price per share of Common Stock equal to the lesser of $6.00 and the average of the two lowest closing prices of the Common Stock during the preceding 30 days. In the event of our
liquidation, dissolution or winding up, the holders of our Series D Preferred Stock are entitled to receive a preferential distribution of $1,000 per share, plus all unpaid accrued dividends. On or after February 8, 2005, the holders of Series
D Preferred Stock can demand that their Series D Preferred Stock be redeemed for that number of shares of Common Stock equal to the product of (a) the number of shares of Series D Preferred Stock surrendered and (b) a fraction, the
numerator of which is the Common Stocks current market price and the denominator of which is the lesser of $6.00 and the average of the two lowest closing prices of the Common Stock during the preceding 30 days. The holders of Series D
Preferred Stock can also demand that their shares be redeemed if we default in effecting a conversion of shares of Series D Preferred Stock and such default continues for 10 days, or if we default in the payment of the stated value ($1,000 per
share) or of dividends when due and such default continues for 10 days. Upon a redemption following such a default described in the prior sentence, we must pay the holders of Series D Preferred Stock demanding redemption, in cash, $1,250 per share
of Series D Preferred Stock plus all accrued unpaid dividends. Finally, between the date we announce our intention to effectuate a change in our control until three days prior to such change in control, the holders of Series D Preferred Stock may
demand that their Series D Preferred Stock be redeemed for 125% of the number of shares of Common Stock to which their Series D Preferred Stock would otherwise be convertible.
Series E Preferred Stock
We are authorized to issue up to 1,730,697 shares of Series E Preferred Stock, of which 1,577,880 are issued and outstanding. These shares of
Series E Preferred Stock are not convertible into shares of Common Stock. However, each share of Series E Preferred Stock represents the right to .25 of a vote on all matters to be voted upon by the holders of Common Stock. The holders of Series E
Preferred Stock are entitled to receive, out of assets legally available for payment, a cash dividend of $.80 per annum per share of Series E Preferred Stock. This Series E Preferred Stock dividend accrues from the date of initial issuance and is
payable on the first to occur of the redemption of such Series E Preferred Stock or our liquidation, dissolution or winding up. In the event of our liquidation, dissolution or winding up, the holders of our Series E Preferred Stock are entitled to
receive a preferential distribution of $10 per share, plus all unpaid accrued dividends. Finally, we, at our option, may redeem all or part of the Series E Preferred Stock at any time for the redemption price of $10 per share, plus all accrued
unpaid dividends, in cash or by delivery of a promissory note payable over three years.
Delaware Anti-Takeover Law and Provisions of our Certificate
of Incorporation and Bylaws
Delaware Anti-Takeover Law
We are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a public Delaware corporation
from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
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prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
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the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding
(i) shares owned by persons who are directors and also officers and (ii) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
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on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
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Section 203 defines a business
combination to include:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
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subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with, or controlling, or controlled by, the entity or person. The term owner is broadly defined to include any person that, individually, with or through that persons affiliates or
associates, among other things, beneficially owns the stock, or has the right to acquire the stock, whether or not the right is immediately exercisable, under any agreement or understanding or upon the exercise of warrants or options or otherwise or
has the right to vote the stock under any agreement or understanding, or has an agreement or understanding with the beneficial owner of the stock for the purpose of acquiring, holding, voting or disposing of the stock.
The restrictions in Section 203 do not apply to corporations that have elected, in the manner provided in Section 203, not to be
subject to Section 203 of the DGCL or, with certain exceptions, which do not have a class of voting stock that is listed on a national securities exchange or authorized for quotation on the Nasdaq Stock Market or held of record by more than
2,000 stockholders. Our certificate of incorporation and amended and restated bylaws do not opt out of Section 203.
Section 203
could delay or prohibit mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock
at a price above the prevailing market price.
Certificate of Incorporation and Bylaws
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may delay or discourage transactions
involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in
their best interests. Therefore, these provisions could adversely affect the price of our Common Stock. Among other things, our certificate of incorporation and amended and restated bylaws:
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permit our Board of Directors to issue up to an additional 3,225,045 shares of preferred stock, without further action by the stockholders, with any rights, preferences and privileges as they may designate, including
the right to approve an acquisition or other change in control;
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provide that the authorized number of directors may be changed only by resolution of the Board of Directors;
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provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
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do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election,
if they should so choose);
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provide that special meetings of our stockholders may be called only by the chairman of the board or by the Board of Directors; and
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set forth an advance notice procedure with regard to the nomination, other than by or at the direction of our board of directors, of candidates for election as directors and with regard to business to be brought before
a meeting of stockholders.
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Limitation of Liability; Indemnification
Our certificate of incorporation contains certain provisions permitted under the DGCL relating to the liability of our directors. These
provisions eliminate a directors personal liability for monetary damages resulting from a breach of fiduciary duty, except in certain circumstances involving wrongful acts, including:
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for any breach of the directors duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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any unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions as provided in Section 174 of the DGCL; or
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for any transaction from which the director derives an improper personal benefit.
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These provisions do not
limit or eliminate our rights or those of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a directors fiduciary duty. These provisions will not alter a directors liability
under federal securities laws. Our amended and restated bylaws also contain provisions indemnifying our directors and officers to the fullest extent permitted by the DGCL. We believe that these provisions are necessary to attract and retain
qualified individuals to serve as directors and officers.
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