EXECUTION VERSION
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WARRANT AGREEMENT
Dated as of July 8, 1998
Between
EPIC RESORTS, LLC,
as Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent
and joined by
EPIC WARRANT CO.
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WARRANT AGREEMENT (the "Agreement"), dated as of July 8, 1998,
between Epic Resorts, LLC, a Delaware limited liability company (together
with any successors and assigns, the "Company"), and United States Trust
Company of New York, a New York banking corporation, as Warrant Agent (the
"Warrant Agent"). Epic Warrant Co., a Delaware corporation ("Warrant Co."),
hereby joins in this Agreement with respect to its obligations to the parties
to this Agreement and the holders of the Warrants (hereinafter defined).
WHEREAS, the Company proposes, among other things, to issue and
sell pursuant to a Purchase Agreement, dated as of June 30, 1998 (the
"Purchase Agreement"), among the Company, Epic Capital Corp., the other
subsidiaries of the Company, and NatWest Capital Markets Limited ("NatWest"),
as Initial Purchaser, 130,000 Units (the "Units") consisting of $130,000,000
principal amount of 13% Senior Secured Notes due 2005 (the "Notes") and, at
the Initial Purchaser's election, either (i) warrants (the "LLC Warrants") to
purchase membership interests (together with any successor securities, the
"Membership Interests") in the Company, or (ii) warrants (the "Corporate
Warrants") to purchase shares of common stock (the "Common Stock"), of
Warrant Co. (whose sole assets will be Warrant Co. LLC Warrants (as defined
herein));
WHEREAS, each Unit will represent $1,000 principal amount of Notes
and, in the case of the LLC Warrants, one warrant to purchase one Membership
Interest representing 0.000077% of the total membership interests of the
Company outstanding as of the date hereof (each a "Warrant Membership
Interest", including all other membership interests or other securities
issued or issuable upon exercise of the Warrants (hereinafter defined)) or,
in the case of the Corporate Warrants, one warrant to purchase one share of
Common Stock;
WHEREAS, the Company proposes to issue to Warrant Co. warrants (the
"Warrant Co. LLC Warrants") for the purchase of Membership Interests with the
same terms as the LLC Warrants and the number of Warrant Co. LLC Warrants
issued shall be equal to the number of all Corporate Warrants issued;
WHEREAS, the Company wishes the Warrant Agent to act on behalf of
the Company and the Warrant Agent is willing to act in connection with the
issuance, division, transfer, exchange and exercise of LLC Warrants and
Warrant Co. LLC Warrants (collectively, the "Warrants") as provided herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant
Agent hereby accepts such appointment, subject to the terms and conditions
hereof.
SECTION 2. WARRANT CERTIFICATES. The Warrants will be initially
issued in registered form as physical Warrant certificates (the "Physical
Warrants"). Any certificates (the
"Warrant Certificates") evidencing the Physical Warrants to be delivered
pursuant to this Agreement shall be substantially in the form set forth in
EXHIBIT A attached hereto. Such Warrant Certificates shall represent such of
the outstanding Warrants as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Warrants from
time to time endorsed thereon and that the aggregate amount of outstanding
Warrants represented thereby may from time to time be reduced or increased,
as appropriate. Any endorsement of a Warrant Certificate to reflect the
amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent in accordance with
instructions given by the holder thereof.
SECTION 3. EXECUTION OF WARRANT CERTIFICATES.
(a) Warrant Certificates shall be signed on behalf of the Company
by an Officer (as defined) of the Company. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, President, Chief Financial
Officer, Vice President or Treasurer (each, an "Officer") of the Company and
may be imprinted or otherwise reproduced on the Warrant Certificates and for
that purpose the Company may adopt and use the facsimile signature of any
person who shall at the time of affixing such signature be an Officer of the
Company, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to
hold such office.
(b) In case any Officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such Officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not
ceased to be such Officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be an Officer of the Company to
sign such Warrant Certificate, although at the date of the execution of this
Warrant Agreement any such person was not such Officer.
(c) Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. REGISTRATION AND COUNTERSIGNATURE.
(a) The Warrants shall be numbered and shall be registered on
the books of the Company maintained at the principal office of the Warrant
Agent in the Borough of Manhattan, city of New York (the "Warrant Register")
as they are issued.
(b) Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of an Officer of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than an aggregate amount of 186,000
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Membership Interests and shall thereafter countersign and deliver Warrants as
otherwise provided in this Agreement.
(c) The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the
absolute owners thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. TRANSFER AND EXCHANGE OF WARRANTS.
(a) The Warrant Agent shall from time to time, subject to the
limitations of Section 6, register the transfer of any outstanding Warrant
upon the records to be maintained by it for that purpose, upon surrender
thereof duly endorsed or accompanied (if so required by it) by a written
instrument or instruments of transfer in form satisfactory to the Warrant
Agent, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Subject to the terms of this Agreement, each Warrant Certificate may be
exchanged for another certificate or certificates entitling the Holder or
Holders thereof to purchase a like aggregate amount of Membership Interests
as the certificate or certificates surrendered then entitle each Holder to
purchase. Any Holder desiring to exchange a Warrant Certificate or
Certificates shall make such request in writing delivered to the Warrant
Agent, and shall surrender, duly endorsed or accompanied (if so required by
the Warrant Agent) by a written instrument or instruments of transfer in form
satisfactory to the Warranty Agent, the Warrant Certificate or Certificates
to be so exchanged.
(b) Upon registration of transfer, the Warrant Agent shall
countersign and deliver by hand, by certified mail or by such other method as
the Warrant Agent shall reasonably determine a new Warrant Certificate or
Certificates to the persons entitled thereto. The Warrant Certificates may
be exchanged at the option of the Holder thereof, when surrendered at the
office or agency of the Company maintained for such purpose, which initially
will be the corporate trust office of the Warrant Agent in New York, New
York, for another Warrant Certificate, or other Warrant Certificates of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like amount of Membership Interests.
(c) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.
(d) Upon any Holder's surrender of a Warrant Certificate for
registration of transfer of such LLC Warrants to Warrant Co., subject to
Section 6, such transfer shall be registered in accordance with this Section
5 and the Holder's LLC Warrant shall be cancelled and a Warrant Co. LLC
Warrant shall be issued to Warrant Co. in respect thereof, provided that such
Holder and Warrant Co. certify to the Company and the Warrant Agent that such
transfer is solely for the purpose of exchanging a Corporate Warrant
corresponding thereto as contemplated by this Agreement.
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(e) Upon Warrant Co.'s surrender of a Warrant Certificate for
registration of transfer to a holder of a Corporate Warrant, subject to
Section 6, such transfer shall be registered in accordance with this Section
5, such Warrant Co. LLC Warrant shall be cancelled and a corresponding LLC
Warrant shall be issued to such Corporate Warrant holder in respect thereof;
provided that such Corporate Warrant holder and Warrant Co. certify to the
Company and Warrant Agent that such transfer is solely for the purpose of
exchanging a Corporate Warrant corresponding thereto as contemplated by this
Agreement.
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) Transfer and Exchange of Physical Warrants. When Physical
Warrants are presented to the Warrant Agent with a request:
(A)(i) to register the transfer of the Physical Warrants; or
(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other authorized denominations, the Warrant Agent
shall, subject to Section 5, register the transfer or make the exchange
as requested if the requirements under this Agreement as set forth in
this Section 6 for such transactions are met; PROVIDED, HOWEVER, that
the Physical Warrants presented or surrendered for registration of
transfer or exchange;
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Warrant Agent,
duly executed by the Holder thereof or his attorney duly authorized
in writing; and
(II) in the case of Physical Warrants the offer and sale of
which have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), such Physical Warrants shall be
accompanied by the following additional information and documents,
as applicable:
(A) if such Physical Warrants are being delivered to
the Warrant Agent by a Holder for registration in the name
of such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of Exhibit
B hereto); or
(B) if such Physical Warrants are being transferred
to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act (a "Qualified Institutional
Buyer")) in accordance with Rule 144A under the Securities
Act, a certificate to that effect (in substantially the form
of Exhibit B hereto); or
(C) if such Physical Warrants are being transferred
to an institutional "accredited investor" (as defined in
Rule 501 (a)(1), (2), (3) or (7) under the Securities Act
(an "Institutional Accredited Investor")) delivery of a
certification to that effect (in substantially the form of
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Exhibit B hereto) and a Transferee Certificate for
Institutional Accredited Investors in substantially the form
of Exhibit C hereto; or
(D) if such Physical Warrants are being transferred
in reliance on Regulation S under the Securities Act
("Regulation S"), delivery of a certification to that effect
(in substantially the form of Exhibit B hereto) and a
Transferee Certificate for Regulation S Transfers in
substantially the form of Exhibit D hereto and an opinion of
counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act;
or
(E) if such Physical Warrants are being transferred
in reliance on Rule 144 under the Securities Act, delivery
of a certification to that effect (in substantially the form
of Exhibit B hereto) and an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(F) if such Physical Warrants are being transferred
in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (in substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act.
(b) LEGENDS.
(i) For so long as transfer of a Warrant is not permitted without
registration under the Securities Act, each Warrant Certificate evidencing such
Warrant (and all Warrants issued in exchange therefor or substitution thereof)
shall bear a legend substantially to the following effect:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING
THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD
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REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT
AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER
OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO EPIC RESORTS, LLC (THE "ISSUE") OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), AND
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE AMOUNT OF SECURITIES AT
THE TIME OF TRANSFER OF LESS THAN 250 WARRANTS, AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER), (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH
CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER
OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS. THIS
WARRANT AND THE MEMBER INTERESTS OF THE COMPANY INTO WHICH THIS WARRANT
IS EXERCISABLE ARE SUBJECT TO A REGISTRATION RIGHTS AND MEMBERS'
AGREEMENT DATED AS OF JULY 8, 1998, WHICH CONTAINS PROVISIONS REGARDING
THE RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING THE MANDATORY
TRANSFER OF SUCH MEMBERSHIP INTERESTS AND OTHER MATTERS. A COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY.
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(c) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF PHYSICAL
WARRANTS.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and the Warrant
Agent shall countersign Physical Warrants.
(ii) All Physical Warrants issued upon any registration of
transfer or exchange of Physical Warrants shall be the valid obligations
of the Company, entitled to the same benefits under this Agreement as
the Physical Warrants surrendered upon the registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the person
in whose name any Warrant is registered as the absolute owner of such
Warrant, and neither the Warrant Agent nor the Company shall be affected
by notice to the contrary.
SECTION 7. SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF
WARRANTS.
(a) The Notes and Warrants will be immediately separated upon sale
by the Initial Purchaser.
(b) Subject to the terms of this Agreement, each Holder shall
have the right, which may be exercised commencing on the Business Day
immediately following the date of issuance and until 5:00 p.m., New York City
time, on June 15, 2005 (the "Expiration Date"), to receive from the Company
upon the exercise of each Warrant the number of Warrant Membership Interests
which the Holder may at the time be entitled to receive on exercise of such
Warrant and payment of the Exercise Price (as defined) then in effect for
such Warrant Membership Interests. Each Warrant not exercised prior to the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No
adjustments as to distributions will be made upon exercise of the Warrants.
(c) The initial price at which one Warrant Membership Interest
shall be purchasable upon exercise of a Warrant (the "Exercise Price") shall
be $.01. A Warrant may be exercised upon surrender at the office or agency of
the Company maintained for such purpose, which initially will be the
corporate trust office of the Warrant Agent in New York, New York, of the
certificate or certificates evidencing the Warrant to be exercised with the
form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a participant in a recognized
Signature Guarantee Medallion Program, and upon payment to the Warrant Agent
for the account of the Company of the Exercise Price, as adjusted as herein
provided, for the Warrant Membership Interests in respect to which such
Warrant is then exercised. Payment of the Exercise Price shall be made in
cash or by certified or official bank check to the order of the Company in
immediately available funds.
(d) Subject to the provisions of Section 6 and such other
conditions precedent to the exercise of the Warrants as may be set forth in
this Agreement, if any, upon surrender of a
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Warrant and payment of the Exercise Price in respect thereof, the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the Holder and in such name or names as the Holder may
designate a certificate or certificates for the Warrant Membership Interests
issuable upon the exercise of such Warrant together with cash as provided in
Section 13; provided, however, that if any consolidation, merger or sale of
assets is proposed to be effected by the Company as described in Section 12,
or a tender offer or an exchange offer for Membership Interests shall be
made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall, as soon as practicable, but in any event not
later than 2 days, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are not open for business ("Business
Day"), thereafter, issue and cause to be delivered the Warrant Membership
Interests issuable upon the exercise of such Warrant in the manner described
in this sentence together with cash as provided in Section 13. Such
certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Membership Interest as of the date of the
surrender of such Warrant and payment of the Exercise Price in respect
thereof. EACH WARRANT SHALL BE EXERCISABLE ONLY IN FULL, AND NOT IN PART.
(e) All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure for such disposal and
in a manner reasonably satisfactory to the Company. The Warrant Agent shall
account promptly to the Company with respect to Warrants exercised and
promptly pay to the Company all monies received by the Warrant Agent for the
purchase of the Warrant Membership Interests through the exercise of such
Warrants.
(f) The Warrant Agent shall keep copies of this Agreement and
any notices given or received hereunder available for inspection by the
Holders during normal business hours at its office. The Company shall supply
the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.
SECTION 8. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Membership
Interests upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company
shall not be required to pay any tax or taxes which may be payable in respect
of any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Membership Interests in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise
of a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has
been paid.
SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may at its discretion issue and the Warrant Agent may
countersign, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the
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Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction of such Warrant Certificate and indemnity also
satisfactory to them. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 10. RESERVATION OF MEMBERSHIP INTERESTS.
(a) The Company will at all times reserve and keep available,
free from preemptive or other similar rights of members of the Company or
others, the right to issue additional Warrant Membership Interests for the
purpose of enabling it to satisfy its obligation to issue Membership
Interests upon exercise of Warrants up to the maximum number of Warrant
Membership Interests which may then be deliverable upon the exercise of all
outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the
Membership Interests (the "Transfer Agent") and every subsequent transfer
agent for any membership interests of the Company issuable upon the exercise
of any of the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such amount of Membership Interests, whether
stated as units or otherwise, as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any membership interests of the
Company issuable upon the exercise of the rights of purchase represented by
the Warrants. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from such Transfer Agent any Member
certificates or other instruments required to honor outstanding Warrants upon
exercise thereof in accordance with the terms of this Agreement. The Company
will supply such Transfer Agent with duly executed certificates or other
instruments for such purposes and will provide or otherwise make available
any cash which may be payable as provided in Section 13. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to Section
14 hereof.
(c) The Company covenants that all Warrant Membership Interests
which may be issued upon exercise of Warrants made in accordance with the
terms of this Agreement will, upon payment of the Exercise Price therefor and
issue, be validly authorized and issued, free of preemptive and other similar
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof. The Company will not enter into any
agreements inconsistent with the rights of Holders hereunder. The Company
will use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Agreement. The Company shall not take any action reasonably within its
control, including the hiring of a broker to solicit exercises, which would
render unavailable an exemption from registration under the Securities Act
which might otherwise be available with respect to the issuance of Warrant
Membership Interests upon exercise of any Warrants.
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SECTION 11. OBTAINING STOCK EXCHANGE LISTINGS. The Company will
from time to time take all actions which may be necessary so that the Warrant
Membership Interests, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America (including the NASDAQ National Market
System), if any, on which other Membership Interests are then listed.
SECTION 12. ADJUSTMENT OF NUMBER OF WARRANT MEMBERSHIP INTERESTS
ISSUABLE. The number of Warrant Membership Interests issuable upon exercise
of a Warrant (the "Exercise Rate") is subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 12. The
Exercise Rate shall initially be one.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL. If the Company:
(1) makes a distribution on its outstanding Membership Interests
payable in Membership Interests or other membership interests of the
Company;
(2) subdivides, combines or reclassifies its outstanding
Membership Interests; and
(3) makes a distribution to all holders of its outstanding
Membership Interests of rights, warrants or options to purchase
Membership Interests at a price per membership interest less than the
Current Market Value (as defined in Section 12(d)) at the Time of
Determination (as defined below));
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate amount and kind of membership interests
of the Company which he would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action; PROVIDED,
HOWEVER, that notwithstanding the foregoing, upon the occurrence of an event
described in any of paragraphs (1) or (3) above, which otherwise would have
given rise to an adjustment, no adjustment shall be made if the Company
includes the Holders of Warrants in such distribution pro rata to all
Membership Interests issued and outstanding (after giving effect to the
Warrant Membership Interests as if they were issued and outstanding).
The adjustment shall become effective (the "Time of Determination")
immediately after the record date in the case of a distribution and
immediately after the effective date in the case of a subdivision,
combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it
may receive interests in two or more classes of the Membership Interests of
the Company, the manager of the Company shall determine the allocation of the
adjusted Exercise Price between such separate classes of Membership Interests
of the Company. After such allocation, the exercise privilege and the
Exercise Price of each class of Membership Interests shall thereafter be
subject to adjustment on terms comparable to those applicable to Membership
Interests in this Subsection 12(a).
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Adjustments pursuant to this Subsection 12(a) shall be made
successively whenever any event listed above shall occur.
(b) ADJUSTMENT FOR CERTAIN ISSUANCES OF MEMBERSHIP INTERESTS.
Subject to Subsection 12(a), if the Company issues or sells Membership
Interests or distributes any rights, options or warrants to all holders of
its Membership Interests entitling them to purchase Membership Interests, or
securities convertible into or exchangeable for Membership Interests (other
than pursuant to (1) the exercise of the Warrants or issuance of Membership
Interests to Warrant Co. solely to accommodate a holder of Warrant Co.'s
common stock right to receive the corresponding Warrant Membership Interest
held by Warrant Co. in exchange for such common stock, (2) any options,
warrants or rights outstanding as of the date of this Agreement, (3) without
limiting any options, warrants or rights outstanding covered by the
immediately preceding clause (2), any executive management plans and employee
option or purchase plans to the extent that the aggregate amount of
Membership Interests (or securities convertible into or exchangeable or
exercisable for Membership Interests) distributed under all such executive
management plans and employee option and purchase plans does not exceed ten
percent (10%) of the Company's membership interests at any one time
outstanding (of which no options to purchase are currently outstanding) and
(4) any security convertible into, or exchangeable or exercisable for,
Membership Interests as to which the issuance thereof has previously been the
subject of any required adjustment pursuant to this Agreement and exercisable
securities of the Company for which the applicable adjustment has already
been made, at a price per membership interest less than the Current Market
Value at the Time of Determination, the Exercise Rate shall be adjusted in
accordance with the formula:
(0 + N)
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E(1) = E x 0 + (N x P)
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M
where:
E(l) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of any such distribution.
0 = the number of Fully Diluted Membership Interests (as defined
in Section 12(m)) outstanding on the Time of Determination
for any such issuance, sale or distribution.
N = the number of additional Membership Interests issued, sold
or issuable upon exercise of such rights, options or
warrants.
P = the price received in the case of any issuance or sale of
Membership Interests or exercise price per membership
interest of such rights, options or warrants.
-11-
M = the Current Market Value per Membership Interests on the
Time of Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of holders of membership interests of the
Company entitled to receive the rights, options or warrants. If at the end of
the period during which any such rights, options or warrants are exercisable,
not all rights, options or warrants shall have been exercised, the Warrant shall
be immediately readjusted to what it would have been if "N" in the above formula
had been the amount of membership interests actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTION. Subject to Subsection
12(a), if the Company distributes to all holders of its Membership Interests
(i) any evidences of indebtedness of the Company, (ii) any assets of the
Company (excluding cash distributions or distributions from current or
retained earnings other than any Extraordinary Cash Distribution and
excluding cash distributions made pursuant to Section 4.07(b)(vi) of the
Indenture), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise
Rate shall be adjusted in accordance with the formula:
E(1) = (E x M)
-------
M - F
where:
E(1) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of any such distribution.
M = the Current Market Value per Membership Interests on the
record date mentioned below.
F = the fair market value on the record date mentioned below of
the indebtedness, assets, rights, options or warrants
distributable in respect of each Membership Interests.
Adjustments pursuant to this Subsection 12(c) shall be made
successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of holders
of membership interests of the Company entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this Subsection
12(c) as a result of the issuance of rights, options or warrants and at the
end of the period during which any such rights, options or warrants are
exercisable, not all such rights, options or warrants shall have been
exercised, the Warrant shall be immediately readjusted as if "F" in the above
formula was the fair market value on the record date of the indebtedness or
assets actually distributed upon exercise of such rights, options or warrants
divided by amount of Membership Interests outstanding on the record date.
Notwithstanding the foregoing provisions of this Subsection
-12-
12(c), (x) an event which would otherwise give rise to an adjustment pursuant
to this Subsection 12(c) shall not give rise to such an adjustment if the
Company includes the Holders of the Warrants in such distribution pro rata to
all Membership Interests issued and outstanding after giving effect to the
Membership Interests as if they were issued and outstanding and (y) no
adjustment shall be made pursuant to this Subsection 12(c) with respect to
cash distributions other than Extraordinary Cash Distributions.
This Subsection 12(c) does not apply to rights, options or warrants
referred to in Subsection 12(b).
(d) MERGER, CONSOLIDATION, ETC. If (x) the Company merges or
consolidates with, or sells all or substantially all of its property and
assets to, another person (other than an Affiliate of the Company) and
consideration is payable to holders of Membership Interests in exchange for
their Membership Interests in connection with such merger, consolidation or
sale which consists solely of cash, or (y) in the event of a dissolution,
liquidation or winding up of the Company, then the Holders of Warrants shall
be entitled to receive distributions on the date of such event on an equal
basis with all holders of Membership Interests (or other securities issuable
upon exercise of the Warrants) as if the Warrants had been exercised
immediately prior to such event, less the Exercise Price. Upon receipt of
such payment, if any, the rights of a Holder of a Warrant shall terminate and
cease and his or her Warrants shall expire. In case of any such merger,
consolidation or sale of assets, the surviving or acquiring person and, in
the event of any dissolution, liquidation or winding up of the Company, the
Company shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay the Holders of the Warrants. After receipt of such deposit
from such person or the Company and after receipt of surrendered Warrant
Certificates, the Warrant Agent shall make payment by delivering a check in
such amount as is appropriate (or, in the case of consideration other than
cash, such other consideration as is appropriate) to such person or persons
as it may be directed in writing by the Holders surrendering such Warrants.
(e) CURRENT MARKET VALUE. "Current Market Value" of Membership
Interests or of any other security (herein collectively referred to as a
"Security") at any date shall be:
(1) if the Security is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of
the Security determined in good faith by the manager of the Company,
based on the most recently completed arm's length transaction between
the Company and a person other than an Affiliate of the Company in which
such determination is necessary and the closing of which occurs on such
date or shall have occurred within the six months preceding such date,
(ii) if no such transaction shall have occurred on such date or within
such six-month period, the value of the Security most recently
determined as of a date within the six months preceding such date by an
Independent Financial Expert or (iii) if neither clause (i) nor (ii) is
applicable, the value of the Security determined as of such date by an
Independent Financial Expert, or
(2) if the Security is registered under the Exchange Act, the
average of the daily market prices for each Business Day during the
period commencing 15 Business
-13-
Days before such date and ending on the date one day prior to such date
or, if the Security has been registered under the Exchange Act for less
than 15 consecutive Business Days before such date, then the average of
the daily market prices for all of the Business Days before such date
for which daily market prices are available. If the market price is not
determinable for at least 10 Business Days in such period, the Current
Market Value of the Security shall be determined as if the Security was
not registered under the Exchange Act.
The "market price" for any Security on each Business Day means: (A)
if such Security is listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day on the principal exchange on
which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security
is not then listed or admitted to trading on any securities exchange, the
last reported sale price on such day, or if there is no such last reported
sale price on such day, the average of the closing bid and the asked prices
on such day, as reported by a reputable quotation source designated by the
Company, or (C) if neither clause (A) nor (B) is applicable, the average of
the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City of New York, customarily published on each
Business Day, designated by the Company. If there are no such prices on a
Business Day, then the market price shall not be determinable for such
Business Day.
"Independent Financial Expert" shall mean (a) NatWest (or any
successor) or (b) another nationally recognized investment banking firm, a
nationally recognized regional investment banking firm or a nationally
recognized accounting firm selected by the Company reasonably acceptable to
the Warrant Agent (i) that does not (and whose directors, officers, employees
and Affiliates do not) have a direct or indirect material financial interest
in the Company, (ii) that has not been, and, at the time it is called upon to
serve as an Independent Financial Expert under this Agreement is not (and
none of whose directors, officers, employees or Affiliates is) a promoter,
director or officer of the Company, (iii) that has not been retained by the
Company for any purpose, other than to perform an equity valuation, within
the preceding twelve months, and (iv) that, in the reasonable judgment of the
manager of the Company, is otherwise qualified to serve as an independent
financial advisor. Any such person may receive customary compensation and
indemnification by the Company for opinions or services it provides as an
Independent Financial Expert.
"Affiliate" shall mean, with respect to any person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such person. For the purposes of this
definition, "control" when used with respect to any person, means the power
to direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Extraordinary Cash Distribution" means cash distributions with
respect to Membership Interests, the aggregate amount of which in any fiscal
year exceeds the lesser of (i)
-14-
15% of the net income of the Company for the fiscal year immediately
preceding the payment of such distribution or (ii) $1,000,000.
(f) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 5% in the Exercise Rate. Notwithstanding
the foregoing, any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment, provided that no such
adjustment shall be deferred beyond the date on which a Warrant is exercised.
All calculations under this Section 12 shall be made to the nearest cent or
to the nearest 1/100 of a membership interest.
(g) WHEN NO ADJUSTMENT REQUIRED. If an adjustment is made upon
the establishment of a record date for a distribution subject to Subsections
12(a), (b) or (c) and such distribution is subsequently cancelled, the
Exercise Rate then in effect shall be readjusted, effective as of the date
when the manager of the Company determines to cancel such distribution, to
that which would have been in effect if such record date had not been fixed.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(h) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate or
Exercise Price is adjusted, the Company shall provide the notices required by
Section 14 hereof.
(i) VOLUNTARY REDUCTION. The Company from time to time may
increase the Exercise Rate by any amount for any period of time (including,
without limitation, permanently) if the period is at least 20 Business Days.
An increase of the Exercise Rate under this Subsection 12(i) (other than a
permanent increase) does not change or adjust the Exercise Rate otherwise in
effect for purposes of Subsections 12(a), 12(b) or 12(c).
(j) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in
which this Section 12 shall require that an adjustment in the Exercise Rate
be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event (i) issuing to the Holder
of any Warrant exercised after such record date the Warrant Membership
Interests and other membership interests of the Company or other entities, if
any, issuable upon such exercise over and above the Warrant Membership
Interests and other membership interests of the Company or other entities, if
any, issuable upon such exercise on the basis of the Exercise Rate prior to
such adjustment, and (ii) paying to such Holder any amount in cash in lieu of
a fractional interest pursuant to Section 13; provided, however, that the
Company shall deliver to the Warrant Agent and shall cause the Warrant Agent,
on behalf of and at the expense of the Company, to deliver to such Holder a
due ▇▇▇▇ or other appropriate instrument evidencing such Holder's right to
receive such additional Warrant Membership Interests and other membership
interests of the Company or other entities and cash upon the occurrence of
the event requiring such adjustment.
(k) REORGANIZATIONS. In case of any capital reorganization,
other than the cases referred to in Subsections 12(a), 12(b), 12(c) or 12(d),
or the consolidation or merger of the Company with or into another entity
(other than a merger or consolidation in which the Company
-15-
is the continuing entity and which does not result in any reclassification of
the outstanding Membership Interests into other membership interests or other
securities or property), or the sale of the property of the Company as an
entirety or substantially as an entirety (collectively such actions being
hereinafter referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of any Warrant (in lieu of the amount of Warrant
Membership Interests theretofore deliverable), the amount of membership
interests or other securities or property to which a holder of the amount of
Membership Interests that would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such Reorganization if
such Warrant had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the manager of the Company, shall be made in the
application of the provisions herein set forth with respect to the rights and
interests of Holders so that the provisions set forth herein shall thereafter
be applicable, as nearly as possible, in relation to any membership interests
or other securities or property thereafter deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor entity (if
other than the Company) resulting from such Reorganization or the entity
purchasing or leasing such assets or other appropriate entity shall (i)
expressly assume, by a supplemental Warrant Agreement or other acknowledgment
executed and delivered to the Warrant Agent the obligation to deliver to the
Warrant Agent and to cause the Warrant Agent to deliver to each Holder of
Warrants such membership interests or other securities or property as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement and
(ii) enter into an agreement providing to the Holders of Warrants rights and
benefits substantially similar to those enjoyed by such Holders under the
Registration Rights and Members' Agreement of even date herewith.
The provisions of this Subsection 12(k) shall apply to successive
Reorganization transactions.
(l) FORM OF WARRANTS. Irrespective of any adjustments in the
number or kind of membership interests or other securities or property
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind
of membership interests as are stated in the Warrants initially issuable
pursuant to this Agreement.
(m) CERTAIN REORGANIZATIONS. Notwithstanding any other
provisions of Section 12, in the event that the Company transfers
substantially all of its assets to a wholly-owned subsidiary of the Company,
receiving common stock of such subsidiary in return, and then makes a
liquidating distribution of such common stock to holders of Membership
Interests, holders of Warrants shall be entitled to receive, in exchange for
such Warrants, warrants ("Exchange Warrants") to purchase the number of
shares of common stock of such subsidiary that the holder of such Warrants
would have been entitled to receive had such holder exercised such Warrants
immediately prior to such transaction. The Company shall not effect any such
transaction unless such subsidiary shall have entered into an agreement with
the Warrant Agent
-16-
providing the holders of Exchange Warrants with rights and privileges with
respect thereto substantially similar to those that holders of Warrants enjoy
under this Agreement.
(n) MISCELLANEOUS. For purposes of this Section 12 the term
"Fully Diluted Membership Interests" shall mean (i) all Membership Interests
outstanding as of a specified date, and (ii) all Membership Interests into or
for which rights, options, warrants or other securities outstanding as of
such date are exercisable or convertible (other than the Warrants). In the
event that at any time, as a result of an adjustment made pursuant to this
Section 12, the Holders of Warrants shall become entitled to purchase any
securities of the Company other than, or in addition to, Membership
Interests, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Warrant Membership Interests contained in
Subsections 12(a) through 12(l), inclusive, and the provisions of Sections 7,
8, 10 and 13 with respect to the Warrant Membership Interests or other
Membership Interests shall apply on like terms to any such other securities.
SECTION 13. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Membership Interests on the exercise of
Warrants. The number of full Warrant Membership Interests which shall be
issuable upon the exercise of a Warrant shall be computed on the basis of the
aggregate number of Warrant Membership Interests purchasable on exercise of
the Warrant so presented. If any fraction of a Warrant Membership Interest
would, except for the provisions of this Section 13, be issuable on the
exercise of any Warrant, the Company shall pay an amount in cash equal to the
Current Market Value on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
SECTION 14. NOTICES TO WARRANT HOLDERS. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice
of such adjustment to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, within 10 days after such
adjustment, to mail by first class mail, postage prepaid, to each Holder a
notice of such adjustment(s) and shall deliver to the Warrant Agent a
certificate of the manager of the Company, accompanied by the report thereon
by a firm of independent public accountants selected by the manager of the
Company (who may be the regular accountants for the Company), setting forth
in reasonable detail (i) the number of Warrant Membership Interests
purchasable upon the exercise of each Warrant and the Exercise Price of such
Warrant after such adjustment(s), (ii) a brief statement of the facts
requiring such adjustment(s) and (iii) the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other
provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
Membership Interests rights, options or warrants to subscribe for or
purchase Membership Interests or of any other subscription rights or
warrants; or
-17-
(b) the Company shall authorize the distribution to all holders
of Membership Interests of evidences of its indebtedness or assets; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any members of the Company is required,
or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any reclassification or
change of Membership Interests (other than as a result of a subdivision
or combination), or a tender offer or exchange offer for Membership
Interests; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Exercise Rate or the Exercise Price pursuant to
Section 12;
then the Company shall give prompt written notice to the Warrant Agent and
shall cause the Warrant Agent, on behalf of and at the expense of the Company
to give to each of the registered holders of the Warrant Certificates at his
or its address appearing on the Warrant Register, at least 30 days (or 20
days in any case specified in clauses (a) or (b) above) prior to the
applicable record date hereinafter specified, or the date of the event in the
case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the day as of which the holders
of record of Membership Interests to be entitled to receive any rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for
Membership Interests, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is
expected to become effective or consummated, and the date as of which it is
expected that holders of record of Membership Interests shall be entitled to
exchange such Membership Interests for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company
or the Warrant Agent to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
The Company shall give prompt written notice to the Warrant Agent
and shall cause the Warrant Agent, on behalf of and at the expense of the
Company, to give to each Holder written notice of any determination to make a
distribution to the holders of Membership Interests of any cash, assets, debt
securities, or any rights or warrants to purchase debt securities, assets or
other securities (other than Membership Interests, or rights, options, or
warrants to purchase Membership Interests) of the Company, which notice shall
state the nature and amount of such planned distribution and the record date
therefor, and shall be received by the Holders at least 30 days prior to such
record date therefor.
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as Members in respect of the meetings of Members
of the Company or any other matter, or any rights whatsoever as Members of
the Company.
-18-
SECTION 15. NOTICES TO THE COMPANY AND WARRANT AGENT. Any notice
or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or
made when received at the office of the Company expressly designated by the
Company as its office for purposes of this Agreement (until the Warrant Agent
is otherwise notified in accordance with this Section 15 by the Company), as
follows:
Epic Resorts, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any notice pursuant to this Agreement to be given by the Company or
by any Holder(s) to the Warrant Agent shall be sufficiently given when
received by the Warrant Agent at the address appearing below (until the
Company is otherwise notified in accordance with this Section by the Warrant
Agent).
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 16. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Warrants in order to cure any
ambiguity or to correct or supplement any provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable and which
shall not in any way adversely affect the interests of any Holder of
Warrants. No other amendment or modification of this Agreement or the rights
and obligations of the Company or the rights of Holders of Warrants may be
made at any time by the Company and the Warrant Agent without the consent of
Holders of Warrants representing a majority in number of the then outstanding
Warrants.
SECTION 17. CONCERNING THE WARRANT AGENT. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders,
by their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of any of the same.
The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrants except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for and shall
incur no liability to the Company or any Holder for any failure of the
Company to comply with the
-19-
covenants contained in this Agreement or in the Warrants to be complied
with by the Company.
(c) The Warrant Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself (through its employee) by or through its attorneys or agents
(which shall not include its employees) and shall not be responsible for
the negligence or misconduct of any attorney or agent appointed with due
care.
(d) The Warrant Agent may consult at any time with legal counsel
satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to
any Holder in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice
of such counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
such evidence in respect thereof be herein specifically prescribed) may
be deemed conclusively to be proved and established by a certificate
signed by the Chairman of the Board, the President, one of the Vice
Presidents, the Treasurer or the Secretary of the Company and delivered
to the Warrant Agent; and such certificate shall be full authorization
to the Warrant Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the Warrant
Agent for all expenses, taxes and governmental charges and other charges
of any kind and nature incurred by the Warrant Agent in the performance
of its duties under this Agreement (including, without limitation,
reasonable fees and expenses of counsel), and to indemnify the Warrant
Agent and its agents, employees, directors, officers and affiliates and
save it and them harmless against any and all liabilities, losses and
expenses, including, without limitation, judgments, costs and counsel
fees, for anything done or omitted by the Warrant Agent in the
performance of its duties under this Agreement, except as a result of
the Warrant Agent's negligence or bad faith. The provisions of this
subparagraph (f) shall survive the resignation or removal of the Warrant
Agent and the termination of this Agreement.
(g) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders shall furnish
the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as the Warrant Agent
may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement or under any of the
Warrants may
-20-
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by
the Warrant Agent shall be brought in its name as Warrant Agent, and any
recovery of judgment shall be for the ratable benefit of the Holders, as
their respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer or
employee ("Related Parties") of the Warrant Agent may buy, sell or deal
in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transactions in which the Company may be
interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement or such director, officer or employee. Nothing herein shall
preclude the Warrant Agent or any Related Party from acting in any other
capacity for the Company or for any other legal entity including,
without limitation, acting as Transfer Agent or as a lender to the
Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent, and
its duties shall be determined solely by the provisions hereof. No
implied duties or obligations shall be read into this Agreement against
the Warrant Agent. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate
or other paper, document or instrument reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party
or parties.
(k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant (except its
countersignature thereof); nor shall the Warrant Agent by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Warrant Membership Interests (or
other securities) to be issued pursuant to this Agreement or any
Warrant, or as to whether any Warrant Membership Interests (or other
securities) will, when issued, be validly issued, fully paid and
nonassessable, or as to the Exercise Price or the number or amount of
Warrant Membership Interests or other securities or other property
issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President or the Secretary of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and shall not
be liable for any action taken or suffered to be taken by it in good
faith and without negligence in accordance with instructions of any such
officer or officers.
-21-
(m) By countersigning Warrant Certificates or by any other act
hereunder the Warrant Agent shall not be deemed to make any
representations as to validity or authorization of the Warrants or the
Warrant Certificates (except as to its countersignature thereon) or of
any securities or other property delivered upon exercise or tender of
any Warrant, or as to the accuracy of the computation of the Exercise
Price or the number or kind or amount of stock or other securities or
other property deliverable upon exercise of any Warrant or the
correctness of the representations of the Company made in any
certifications that the Warrant Agent receives. The Warrant Agent shall
not have any duty to calculate or determine any adjustments with respect
either to the Exercise Price or the kind and amount of shares or other
securities or any property receivable by holders of Warrants upon the
exercise or tender of Warrants required from time to time, and the
Warrant Agent shall have no duty or responsibility in determining the
accuracy or correctness of any such calculation.
SECTION 18. CHANGE OF WARRANT AGENT. The Warrant Agent may resign
and be discharged from its duties under this Agreement by giving to the
Company 30 days' notice in writing. The Warrant Agent may be removed by like
notice to the Warrant Agent from the Company. If the Warrant Agent shall
resign or be removed or shall otherwise be incapable of acting, the Company
shall appoint a successor to the Warrant Agent. If the Company shall fail to
make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by any Holder (who shall with
such notice submit his Warrant for inspection by the Company), then any
Holder may apply to any court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor to
the Warrant Agent, either by the Company or by such court, the duties of the
Warrant Agent shall be carried out by the Company. Any successor warrant
agent, whether appointed by the Company or such a court, shall be a bank or
trust company in good standing, incorporated under the laws of the United
States of America or any State thereof or the District of Columbia and having
at the time of its appointment as warrant agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor warrant
agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer
to the successor warrant agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for such purpose. Failure to file any notice provided for in this
Section 18, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the
appointment of the successor warrant agent, as the case may be. In the event
of such resignation or removal, the Company or the successor warrant agent
shall mail by first class mail, postage prepaid, to each Holder, written
notice of such removal or resignation and the name and address of such
successor warrant agent.
SECTION 19. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any Transfer Agent for the Membership Interests, or any other
membership interests or other securities of the Company issuable upon the
exercise of the Warrants, the Company shall file with the Warrant Agent a
statement setting forth the name and address of such Transfer Agent.
-22-
SECTION 20. SUCCESSORS. All the covenants and provisions of this
Agreement by and for the benefit of the Company, the Warrant Agent or any
Holder of Warrants shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 21. TERMINATION. This Agreement shall terminate on the
Expiration Date. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been exercised or redeemed
pursuant to this Agreement.
SECTION 22. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and shall be governed by and construed in
accordance with the laws of said State, without regard to the conflict of law
rules thereof.
SECTION 23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.
SECTION 24. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
-23-
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above.
EPIC RESORTS, LLC
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
JOINDER:
EPIC WARRANT CO.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
-24-
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF OR A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON, IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO EPIC RESORTS, LLC (THE "ISSUER") OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF
TRANSFER OF LESS THAN 250 WARRANTS, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH CASE,
IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
Exhibit A
Page 2
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION
REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS WARRANT AND THE MEMBERSHIP INTERESTS OF THE COMPANY INTO WHICH
THIS WARRANT IS EXERCISABLE ARE SUBJECT TO A REGISTRATION RIGHTS AND MEMBERS'
AGREEMENT, DATED AS OF JULY 8, 1998, WHICH CONTAINS PROVISIONS REGARDING THE
RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING THE MANDATORY TRANSFER
OF SUCH MEMBERSHIP INTERESTS AND OTHER MATTERS. A COPY OF SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
EXERCISABLE AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE JUNE 15, 2005
Warrant No.
CUSIP No.: No. of Warrants ___________
Warrant Certificate
Epic Resorts, LLC
This Warrant Certificate certifies that ___________, or registered
assigns, is the registered holder of _____ Warrant(s) expiring June 15, 2005
(the "Warrant") to purchase Membership Interests ("Membership Interests") in
Epic Resorts, LLC, a Delaware limited liability company (the "Company").
Each Warrant initially entitles the holder upon exercise to receive from the
Company on or after July 9, 1998 and on or before 5:00 p.m. New York City
Time on June 15, 2005, one Membership Interest at the initial exercise price
(the "Exercise Price") of $0.01 payable in lawful money of the United States
of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
on the reverse hereof. The Exercise Price and the number of Membership
Interests issuable upon exercise of the Warrants are subject to adjustment
upon the occurrence of certain events set forth in the Warrant Agreement.
The Warrants may not be exercised after 5:00 p.m., New York City
Time, on June 15, 2005, and to the extent not exercised by such time the
Warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Epic Resorts, LLC has executed this Warrant
Certificate.
Dated:
EPIC RESORTS, LLC
By: ___________________________________
Name:
Title:
Countersigned:
United States Trust Company of New York,
as Warrant Agent
By:_____________________________________
Authorized Signature
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate is part of a
duly authorized issue of Warrants expiring June 15, 2005, entitling the
holders on exercise of each Warrant initially to receive one Membership
Interests, and is issued or to be issued pursuant to a Warrant Agreement
dated as of July 8, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company and United States Trust Company of New York, a
banking corporation organized and existing under the laws of the State of New
York, as warrant agent (the "Warrant Agent"), and joined by Epic Warrant Co.
The Warrant Agreement is hereby incorporated by reference in and made a part
of this Warrant Certificate and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The Warrants may be exercised at any time on or after July 9, 1998
and on or before June 15, 2005, subject to extension as provided in the
Warrant Agreement. The holder of the Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with
the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in cash at the office
of the Warrant Agent. The Warrants evidenced hereby shall be exercisable only
in full, and not in part. No adjustment shall be made for any distributions
on the Membership Interests issuable upon exercise of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Membership Interests issuable upon exercise of the Warrants may,
subject to certain conditions, be adjusted. No fractional Membership
Interests will be issued upon the exercise of Warrants, but the Company will
pay the cash value thereof determined as provided in the Warrant Agreement.
This Warrant Certificate, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in
the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate Warrants to
purchase the aggregate number of Membership Interests to which the
surrendered Warrants were entitled.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and representing in the aggregate the
right to purchase a like amount of Membership Interests shall be issued to
the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any
tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any
rights of a Member of the Company.
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive Membership Interests in,
and herewith tenders payment for such Membership Interests to the order of,
Epic Resorts, LLC in the amount of $__________ in accordance with the terms
hereof. The undersigned requests that a certificate for such Membership
Interest be registered in the name of __________________________, whose
address is _________________________ and that evidence of such Membership
Interest be delivered to _________________________ whose address is
____________________________.
Signature:
Date:
Signature Guarantee:
_______________________________________
Signatures must be guarantee by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements will
include membership or participation
in the Securities Transfer Agents
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the Registrar
in addition to, or in substitution
for, STAMP, all in accordance with
the Securities Exchange Act of 1934,
as amended.)
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase Membership Interests
(THE "SECURITIES") OF EPIC RESORTS, LLC
This Certificate relates to Securities held in the form of Physical
Warrants by the undersigned (the "Transferor").
The Transferor:*
/ / has requested that the Warrant Agent by written order to
exchange or register the transfer of a Physical Warrant or Physical Warrants.
In connection with such request and in request of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 6 of such Warrant
Agreement, and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the "Act")
because *:
/ / Such Security is being acquired for the Transferor's own
account, without transfer.
/ / Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Act), in reliance on
Rule 144A.
/ / Such Security is being transferred to an institutional
"accredited investor" within the meaning of subparagraphs (a)(1), (2), (3)
or (7) of Rule 501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S
under the Act.
/ / Such Security is being transferred in reliance on Rule 144
under the Act.
/ / Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
_______________________________________
(INSERT NAME OF TRANSFEROR)
By: ___________________________________
(Authorized Signature)
Date:
_______________________________________
*Check applicable box.
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Re: EPIC RESORTS, LLC (THE "COMPANY") WARRANTS TO PURCHASE
MEMBERSHIP INTERESTS (THE "SECURITIES")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities of the
Company, we confirm that:
1. We have received such information as we deem necessary in
order to make our investment decision.
2. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the Warrant
Agreement and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the Membership Interests of the Company
referenced by this Certificate are subject to a Registration Rights and
Members' Agreement dated as of July 8, 1998, which contains provisions
regarding restrictions on the transfer and the mandatory transfer of such
interests and other matters.
4. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Securities, we will
do so only (A) to the Company or any subsidiary thereof, (B) inside the
United States in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) inside the United
States to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Warrant Agent a signed letter substantially in the form
hereof, (D) outside the United States in accordance with Regulation S under
the Securities Act, (E) pursuant to the exemption from registration provided
Exhibit C
Page 2
by Rule 144 under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing Securities from us a notice
advising such purchaser that resales of the Securities are restricted as
stated herein.
5. We understand that, on any proposed resale of Securities, we
will be required to furnish the Warrant Agent and the Company, such
certification, legal opinions and other information as the Warrant Agent and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in
Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Transferee)
By: ____________________________________
(Authorized Signatory)
EXHIBIT D
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Re: EPIC RESORTS, LLC (THE "COMPANY") WARRANTS TO PURCHASE
MEMBERSHIP INTERESTS (THE "SECURITIES")
Dear Sirs:
In connection with our proposed transfer of the Securities, we
confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither we nor any person acting on our behalf
knows that the transaction has been prearranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
Exhibit D
Page 2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby. Defined terms used
herein without definition have the respective meanings provided in
Regulation S.
Very truly yours,
(Name of Transferor)
By: ___________________________________
(Authorized Signatory)