Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of a Registrant.
On November 30, 2018, Empire Resorts, Inc. (the
“Company”) entered into a Revolving Loan Agreement (the “Sub Revolving Loan Agreement”) with Montreign Operating Company, LLC (“Montreign”), its indirect, wholly-owned subsidiary. The Sub Revolving Loan Agreement
provides for loans (in the aggregate, the “Sub Revolving Loan”) to Montreign in an aggregate principal amount of up to $10 million (the “Loan Amount”). Interest will accrue on outstanding borrowings at a rate of 7% per annum
and will be payable beginning on the last day of each calendar quarter beginning on March 31, 2019. Of that interest, 1% will be payable in cash and 6% will accrue and remain outstanding until paid in full (and continue to bear interest). The
Sub Revolving Loan, together with interest accrued and yet unpaid, shall be due and payable on April 25, 2023.
As a condition to
each advance under the Sub Revolving Loan, (i) Montreign will be required to deliver a written request for an advance three days before the date on which the advance is made; (ii) after giving effect to the advance, the principal amount
outstanding shall not exceed the Loan Amount; (iii) no event of default will have occurred and be continuing, or would occur after giving effect to the advance, on the date of the advance request.
The Sub Revolving Loan Agreement contains customary representations and warranties and affirmative covenants, including representations,
warranties and covenants on organization, authorization, enforceability and maintenance of existence.
The Sub Revolving Loan is secured
by a security interest in all personal property of Montreign except Excluded Collateral (as such term is defined in the Sub Revolving Loan Agreement). Obligations under the Sub Revolving Loan Agreement may be accelerated upon certain customary
events of default (subject to grace periods, as appropriate), including, among others: nonpayment of principal, interest or fees, breach of any term, covenant, or agreement under the Sub Revolving Loan Agreement, a bankruptcy proceeding involving
Montreign, whether voluntary or involuntary and the acceleration of any indebtedness in excess of $10,000,000.
Montreign agreed to
indemnify the Company and its officers, partners, members, directors, employees and agents (together, the “Indemnified Parties” and each an “Indemnified Party”) against any and all damages arising out of any negligence or
tortious acts or omissions by Montreign or its agents, contractors, servants or employees, any failure by Montreign to comply with the terms of the Sub Revolving Loan Agreement, and any failure by Montreign to comply with the law, except to the
extent any such damages result from the gross negligence or willful misconduct of an Indemnified Party.
On November 30, 2018 and December
7, 2018, the Company advanced an aggregate of $10,000,000 to Montreign pursuant to a request for advance under the Sub Revolving Loan.