REGISTRATION RIGHTS AGREEMENT
by and between
Atlantic Coast Entertainment Holdings, Inc.
And
The Other Signatories Hereto
Dated as of July 22, 2004
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
Page
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ARTICLE I SALE OF SHARES AND CLOSING............................................................................1
Section 1.1 PURCHASE AND SALE...........................................................................1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................2
Section 2.1 CORPORATE EXISTENCE OF THE COMPANY..........................................................2
Section 2.2 AUTHORITY...................................................................................2
Section 2.3 CAPITAL AND DEBT STRUCTURE..................................................................2
Section 2.4 NO CONFLICTS................................................................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................3
Section 3.1 ORGANIZATION OF PURCHASER...................................................................3
Section 3.2 AUTHORITY...................................................................................3
Section 3.3 NO CONFLICTS................................................................................3
Section 3.4 CASINO AUTHORIZATION........................................................................4
ARTICLE IV COVENANTS OF THE COMPANY..............................................................................4
Section 4.1 PIGGY-BACK REGISTRATION.....................................................................4
Section 4.2 DEMAND REGISTRATION.........................................................................5
Section 4.3 REGISTRATIONS ON FORM S-3...................................................................5
Section 4.4 EFFECTIVENESS...............................................................................5
Section 4.5 INDEMNIFICATION BY THE COMPANY..............................................................6
Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SHARES............................................8
Section 4.7 EXCHANGE ACT REGISTRATION...................................................................9
Section 4.8 DAMAGES....................................................................................10
Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY.........................................................10
Section 4.10 EXPENSES..................................................................................12
Section 4.11 TRANSFERABILITY...........................................................................12
Section 4.12 MERGERS, ETC..............................................................................12
ARTICLE V DEFINITIONS..........................................................................................12
Section 5.1 DEFINITIONS................................................................................13
ARTICLE VI MISCELLANEOUS........................................................................................15
Section 6.1 ENTIRE AGREEMENT...........................................................................15
Section 6.2 WAIVER.....................................................................................15
Section 6.3 AMENDMENT..................................................................................15
Section 6.4 NO THIRD PARTY BENEFICIARY.................................................................15
Section 6.5 ASSIGNMENT; BINDING EFFECT.................................................................15
Section 6.6 HEADINGS...................................................................................15
Section 6.7 INVALID PROVISIONS.........................................................................16
Section 6.8 GOVERNING LAW..............................................................................16
Section 6.9 COUNTERPARTS...............................................................................16
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
_______, 2004 is made and entered into by and between Atlantic Coast
Entertainment Holdings, Inc., a Delaware corporation (the "Company"), and the
other signatories listed hereto (collectively the "Holders"). Capitalized terms
used herein, but not otherwise defined shall have the meaning set forth in the
Registration Statement filed on Form S-4, dated as of _______, 2004, with
Registration No. 333-110484 and the Registration Statement on Form S-4, dated as
of _______, 2004, with the Registration number 333-110485, as amended.
WHEREAS, pursuant to the Transaction, the Company shall distribute (the
"Distribution"), pro rata to the stockholders of GB Holdings, Inc. ("Parent")
(i) warrants (the "Warrants") to purchase an aggregate of 2,750,000 shares (the
"Warrant Shares") of common stock, par value $.01 per share (the "Common
Stock"), of the Company; or (ii) 2,750,000 shares (the "Shares") of Common
Stock;
WHEREAS, pursuant to the Transaction, the Company shall distribute New
Notes to holders of Existing Notes that elect to tender such Notes for exchange
and following the election of the holders of a majority of principal amount of
the New Notes outstanding, the New Notes will be payable in or convertible into
up to 7,250,000 shares of Common Stock;
WHEREAS, the Holders are stockholders of Parent and will receive
Warrants or Common Stock as part of the Distribution;
WHEREAS, the Holders own Existing Notes and if they tender for exchange
they will receive New Notes which will be payable in or convertible into up to
4,250,000 shares (the "Note Conversion Shares") of Common Stock;
WHEREAS, the Holders desire, and the Company agrees to grant to the
Holders, certain registration rights with respect to the Warrants, the Warrant
Shares, the Shares, and the Note Conversion Shares that they receive in the
Transaction.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DISTRIBUTION OF SHARES AND WARRANTS
Section 1.1 RIGHTS GRANTED. The Company agrees that, upon
consummation of the Transaction, the Holders shall be entitled to the
registration rights described in Article IV herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to The Holders as
follows:
Section 2.1 CORPORATE EXISTENCE OF THE COMPANY. The Company is
a corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. The Company has full corporate power and
authority to execute and deliver this Agreement and to perform the Company's
obligations hereunder and to consummate the transactions contemplated hereby.
Section 2.2 AUTHORITY. The execution and delivery by the
Company of this Agreement, and the performance by such party of its obligations
hereunder, have been duly and validly authorized by the Board of Directors of
the Company, no other corporate action on the part of the Company or its
stockholders being necessary. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
Section 2.3 CAPITAL STRUCTURE. The Shares, upon issuance as
contemplated herein, the Warrant Shares, when issued upon exercise of the
Warrants in accordance with their terms, and the Note Conversion Shares, when
issued upon payment or conversion of the New Notes, will be duly authorized,
validly issued, fully paid and nonassessable.
Section 2.4 NO CONFLICTS. The execution and delivery by the
Company of this Agreement do not, and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the certificate of incorporation
or by-laws (or other comparable corporate charter documents) of the Company;
(b) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to the Company or any of
its Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of the Company or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of the Holders or any of its Affiliates); or
(c)(i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require the Company to obtain
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any consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, or (v) result in the creation or imposition of any Lien upon
the Company or any of its Assets and Properties under, any Contract or License
to which the Company is a party or by which any of its Assets and Properties is
bound.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Each of the Holders severally represents and warrants to the
Company as follows:
Section 3.1 ORGANIZATION OF THE HOLDERS. Such Holder is duly
organized, validly existing and in good standing under the Laws of the state of
its organization. Such Holder is duly authorized to execute and deliver this
Agreement and to perform such Holder's obligations hereunder and to consummate
the transactions contemplated hereby.
Section 3.2 AUTHORITY. The execution and delivery by such
Holder of this Agreement, and the performance by such Holder of its obligations
hereunder, have been duly and validly authorized, no other action on the part of
such Holder being necessary. This Agreement has been duly and validly executed
and delivered by such Holder and constitutes a legal, valid and binding
obligation of the Holder enforceable against the Holder in accordance with its
terms.
Section 3.3 NO CONFLICTS. The execution and delivery by such
Holder of this Agreement does not, the performance by such Holder of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of its operating agreement (or other
comparable organizational documents) of such Holder;
(b) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to such Holder or any of
its Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of such Holder or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of the Company or any of its Affiliates); or
(c) (i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require such Holder to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, (iv) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, or (v) result
in the creation or imposition of
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any Lien upon such Holder or any of its Assets and Properties under, any
Contract or License to which such Holder is a party or by which any of its
Assets and Properties is bound.
Section 3.4 CASINO AUTHORIZATION. To the extent required, each
of the Holders has obtained Plenary Qualification from the New Jersey Casino
Control Commission.
ARTICLE IV
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Holders that the
Company will comply with the covenants and provisions of this ARTICLE IV, except
to the extent the Holders may otherwise consent in writing:
Section 4.1 PIGGY-BACK REGISTRATION. If at any time the
Company shall determine to register for its own account or the account of others
under the Securities Act (including pursuant to a demand for registration made
by any stockholder of the Company) any of its equity securities, or warrants to
purchase equity securities, other than on Form S-4 or Form S-8 or their then
equivalents relating to shares of Common Stock to be issued solely in connection
with any acquisition of any entity or business or shares of Common Stock
issuable in connection with stock option or other employee benefit plans, it
shall send to each holder of Registrable Securities as reflected on the books
and records of or maintained on behalf of the Company (each a "holder"),
including each holder who has the right to acquire, who is entitled to
registration rights under this SECTION 4.1 written notice of such determination
and, if within fifteen (15) days after receipt of such notice, such holder shall
so request in writing, the Company shall use its reasonable efforts to include
in such registration statement all or any part of the Registrable Securities
such holder requests to be registered, except that if, in connection with any
underwritten public offering of the Company the managing underwriter shall
impose a limitation on the number of shares of such Common Stock which may be
included in the registration statement because, in its judgment, such limitation
is necessary to effect an orderly public distribution, then the Company shall be
obligated to include in such registration statement only such limited portion of
the Registrable Securities with respect to which such holder has requested
inclusion hereunder. Any exclusion of Registrable Securities shall be made pro
rata among the holders seeking to include Registrable Securities, in proportion
to the number of Registrable Securities sought to be included by such holders;
provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities which are not
entitled by right to inclusion of securities in such registration statement
pursuant to this ARTICLE IV. No incidental right under this SECTION 4.1 shall be
construed to limit any registration required under SECTION 4.2. The obligations
of the Company to a holder under this SECTION 4.1 may be waived only by such
Holder. Anything herein to the contrary notwithstanding, no other registration
rights (demand or piggy-back) with respect to any debt or equity securities
shall be granted to any Person without the consent of the Holders.
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Section 4.2 DEMAND REGISTRATION. If at any time and from time
to time after the date hereof holders of a majority of Registrable Securities
shall notify the Company in writing that it or they intend to offer or cause to
be offered for public sale Registrable Securities held by such holders, which
shares constitute at least twenty percent (20%) of the Registrable Securities of
any class, type or series, then the Company will so notify all holders of
Registrable Securities, including all holders who have a right to acquire
Registrable Securities. Upon written request of any holder given within fifteen
(15) days after the receipt by such holder from the Company of such
notification, the Company will use its best efforts to cause such of the
Registrable Securities as may be requested by any holder thereof (including the
holder or holders giving the initial notice of intent to offer) to be registered
under the Securities Act as expeditiously as possible. In connection with any
request by any holder of Registrable Securities for registration thereof
pursuant to this SECTION 4.2, the Company shall have the right (to be exercised
not more than one time in any 365 day period) to defer the filing of a
registration statement with the Commission for up to 30 days after such filing
would otherwise be required hereunder if the Company shall furnish to the
holders requesting such registration a certificate approved by the Board of
Directors stating that, in the good faith judgment of the Company, it would be
materially detrimental to the interests of the Company for such registration
statement to be filed at such time.
Section 4.3 REGISTRATIONS ON FORM S-3. In addition to the
rights provided the holders of Registrable Securities in SECTIONS 4.1 and 4.2,
if the registration of Registrable Securities under the Securities Act can be
effected on Form S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of Registrable Securities for
the registration of Registrable Securities held by such holders, the Company
will so notify each holder of Registrable Securities, including each holder who
has a right to acquire Registrable Securities, and then will, as expeditiously
as possible, use its best efforts to effect qualification and registration under
the Securities Act on Form S-3 of all or such portion of the Registrable
Securities as the holder or holders shall specify in the initial request to the
Company or upon written request of a holder to the Company given within fifteen
(15) days after the receipt by the holder from the Company of such notification.
Section 4.4 EFFECTIVENESS. The Company will use its best
efforts to maintain the effectiveness for up to 90 days (or such shorter period
of time as the underwriters need to complete the distribution of the registered
offering, or one year in the case of a "shelf" registration statement on Form
S-3) of any registration statement pursuant to which any of the Registrable
Securities are being offered, and from time to time will use reasonable efforts
to amend or supplement such registration statement and the prospectus contained
therein to the extent necessary to comply with the Securities Act and any
applicable state securities statute or regulation. The Company will also provide
each holder of Registrable Securities with as many copies of the prospectus
contained in any such registration statement as it may reasonably request.
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Section 4.5 INDEMNIFICATION BY THE COMPANY. (a) In the event
that the Company registers any of the Registrable Securities under the
Securities Act, the Company will indemnify and hold harmless each holder and
each underwriter of the Registrable Securities (including their officers,
directors, affiliates and partners) so registered (including any broker or
dealer through whom such shares may be sold) and each Person, if any, who
controls such holder or any such underwriter within the meaning of Section 15 of
the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or the registration statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Securities (in the case of indemnification of such holder), any such underwriter
(in the case of indemnification of such underwriter) or any such controlling
Person (in the case of indemnification of such controlling Person) expressly for
use therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Securities (including a sale of such Registrable Securities through
any underwriter retained by such holder of Registrable Securities to engage in a
distribution solely on behalf of such holder of Registrable Securities), such
untrue statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable
Securities or such underwriter on a timely basis, and such holder of Registrable
Securities failed to deliver a copy of the final or amended prospectus at or
prior to the confirmation for the sale of the Registerable Shares to the person
asserting any such loss, claim, damage or liability in any case where such
delivery is required by the Securities Act.
(b) Promptly after receipt by any holder of Registrable
Securities, any underwriter or any controlling Person, of notice of the
commencement of any action in respect of which indemnity may be sought against
the Company, such holder of Registrable Securities, or such underwriter or such
controlling person, as the case may be, will notify the Company in writing of
the commencement thereof (provided, that failure by any such person to so notify
the
6
Company shall not relieve the Company from any liability it may have hereunder
to any other Person entitled to claim indemnity or contribution hereunder) and,
subject to the provisions hereinafter stated, the Company shall be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to such holder of Registrable
Securities, such underwriter or such controlling Person, as the case may be),
and the payment of expenses insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company.
(c) Such holder of Registrable Securities, any such
underwriter or any such controlling Person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel subsequent to any assumption of the
defense by the Company shall not be at the expense of the Company unless the
employment of such counsel has been specifically authorized in writing by the
Company. The Company shall not be liable to indemnify any Person for any
settlement of any such loss, claim, damage, expense, liability or action
effected without the Company's written consent. The Company shall not, except
with the approval of each party being indemnified under this SECTION 4.5,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to the parties being so indemnified of a release from all liability in respect
to such claim or litigation.
(d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
any holder of Registrable Securities exercising rights under this ARTICLE IV, or
any controlling Person of any such holder, makes a claim for indemnification
pursuant to this SECTION 4.5 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this SECTION 4.5 provides for indemnification in such case, then, the Company
and such holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the holder of Registrable Securities on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holder of Registrable Securities on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company on the one hand or by the holder of
Registrable Securities on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case, (A) no such
holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Securities offered by it pursuant to such
registration statement, net of any underwriting discounts or commissions paid by
such holder; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section
7
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE
SECURITIES. (a) In the event that the Company registers any of the Registrable
Securities under the Securities Act, each holder of the Registrable Securities
so registered will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed or otherwise participated in the
preparation of the registration statement, each underwriter of the Registrable
Securities so registered (including any broker or dealer through whom such of
the shares may be sold) and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act, applicable
state securities laws or under any other statute or at common law or otherwise,
and, except as hereinafter provided, will reimburse the Company and each such
director, officer, underwriter or controlling Person for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as (i) any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Securities expressly for use therein and (ii) in the case
of a sale directly by such holder of Registrable Securities (including a sale of
such Registrable Securities through any underwriter retained by such holder of
Registrable Securities to engage in a distribution solely on behalf of such
holder of Registrable Securities), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which were
delivered to such holder of Registrable Securities or such underwriter on a
timely basis, and such holder of Registrable Securities failed to deliver a copy
of the final or amended prospectus at or prior to the confirmation for the sale
of the Registerable Shares to the person asserting any such loss, claim, damage
or liability in any case where such delivery is required by the Securities Act;
provided, however, that such holder's obligations hereunder shall be limited to
an amount equal to the aggregate public offering price of the Registrable
Securities sold by such holder in such registration, net of any underwriting
discounts or commissions paid by such holder.
(b) Promptly after receipt of notice of the commencement
of any action in respect of which indemnity may be sought against such holder of
Registrable Securities hereunder, the Company will notify such holder of
Registrable Securities in writing of the commencement thereof (provided, that
failure by the Company to so notify such holder shall not
8
relieve such holder from any liability it may have hereunder to any other Person
entitled to claim indemnity or contribution hereunder), and such holder of
Registrable Securities shall, subject to the provisions hereinafter stated, be
entitled to assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to the Company) and the
payment of expenses insofar as such action shall relate to the alleged liability
in respect of which indemnity may be sought against such holder of Registrable
Securities. The Company and each such director, officer, underwriter or
controlling Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel subsequent to any assumption of the defense by such holder of
Registrable Securities shall not be at the expense of such holder of Registrable
Securities unless employment of such counsel has been specifically authorized in
writing by such holder of Registrable Securities. Such holder of Registrable
Securities shall not be liable to indemnify any Person for any settlement of any
such loss, claim, damage, expense, or liability or action effected without such
holder's written consent.
(c) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
the Company or another Person entitled to indemnification pursuant to this
SECTION 4.6 makes a claim for indemnification pursuant to this SECTION 4.6, but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding that this SECTION 4.6 provides for
indemnification, in such case, then, the Company and such holder will contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the holder of
Registrable Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Securities on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Securities on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Securities offered by it pursuant
to such registration statement, net of any underwriting discounts or commissions
paid by such holder; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
Section 4.7 EXCHANGE ACT REGISTRATION. If the Company at any
time shall list any class of equity securities on any national securities
exchange or obtain authorization for shares of such class to be quoted on an
automated quotation system and shall register such
9
class of equity securities under the Exchange Act, the Company will, at its
expense, simultaneously list on such exchange or qualify for trading on such
automated quotation system and maintain such listing or authorization of, the
Registrable Securities of such class. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
under the Securities Act (or any successor exemptive rule hereafter in effect)
with respect to such equity securities. The Company shall furnish to any holder
of Registrable Securities forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company as filed with
the Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the initial public offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
Section 4.8 DAMAGES. The Company recognizes and agrees that
the holder of Registrable Securities will not have an adequate remedy if the
Company fails to comply with this ARTICLE IV and that damages may not be readily
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by the holder of Registrable
Securities or any other Person entitled to the benefits of this ARTICLE IV
requiring specific performance of any and all provisions hereof or enjoining the
Company from continuing to commit any such breach of this ARTICLE.
Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under
the preceding SECTIONS of this ARTICLE IV, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(i) Furnish to each selling holder such copies of each
preliminary and final prospectus and such other documents as said holder may
reasonably request to facilitate the public offering of its Registrable
Securities;
(ii) Use its best efforts to register or qualify the
Registrable Securities covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any selling
holder may reasonably request; provided, however, that the Company shall not be
obligated to qualify to do business in any jurisdictions where it is not then so
qualified or to take any action which would subject it to the service of process
in suits other than those arising out of the offer or sale of the securities
covered by the registration statement in any jurisdiction where it is not then
so subject;
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(iii) Furnish to each selling holder a signed
counterpart, addressed to the selling holders and any underwriter, of "comfort"
letters signed by the Company's independent public accountants who have examined
and reported on the Company's financial statements included in the registration
statement, to the extent permitted by the standards of the American Institute of
Certified Public Accountants, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein) and
(in the case of the accountants' "comfort" letters) with respect to events
subsequent to the date of the financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities, to the
extent that the Company is required to deliver or cause the delivery of such
opinion or "comfort" letters to the underwriters in an underwritten public
offering of securities;
(iv) Permit each selling holder of Registrable
Securities or such holder's counsel or other representatives to inspect and copy
such non-confidential corporate documents and records as may reasonably be
requested by them;
(v) Furnish to each selling holder of Registrable
Securities a copy of all documents filed with and all correspondence from or to
the Commission in connection with any such offering of securities;
(vi) Use its best efforts to insure the obtaining of all
necessary approvals from the NASD or other applicable regulatory authority, if
applicable;
(vii) Use its best efforts to cause all Registrable
Securities so registered pursuant hereto to be listed on any securities exchange
or authorized for quotation in any automated quotation system on or in which
outstanding shares of such class are listed or authorized for quotation at the
time such registration is declared effective by the Commission;
(viii) Designate a transfer agent and registrar for the
class or classes of shares which include such Registrable Securities and obtain
a CUSIP number for such class or classes of shares, in each case not later than
the date such registration is declared effective by the Commission; and
(ix) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
registration statement covering the initial public offering, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
Whenever under the preceding SECTIONS of this ARTICLE IV the
holders of Registrable Securities are registering such securities pursuant to
any registration statement, each such holder agrees to timely provide to the
Company, at its request, such information and
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materials as it may reasonably request in order to effect the registration of
such Registrable Securities.
Section 4.10 EXPENSES. In the case of each registration
effected under this Article IV, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Securities, including, but not limited to, the Company's printing,
legal and accounting fees and expenses, Commission and NASD filing fees and
"Blue Sky" fees; provided, however, that the Company shall have no obligation to
pay or otherwise bear any portion of the underwriters' commissions or discounts
attributable to the Registrable Securities being offered and sold by the holders
of the Registrable Securities, or the fees and expenses of counsel for the
selling holders of Registrable Securities in connection with the registration of
the Registrable Securities. The Company shall also pay all expenses of the
holders of the Registrable Securities in connection with any registration
initiated pursuant to this ARTICLE IV which is withdrawn or abandoned at the
request of the Company.
Section 4.11 TRANSFERABILITY. (a) For all purposes of ARTICLE
IV of this Agreement, a Holder or assignee thereof who becomes a party to this
Agreement in accordance with SECTION 4.11(b) hereof shall be deemed at any
particular time to be the holder of all Registrable Securities of which such
Person shall at such time be the "beneficial owner," determined in accordance
with Rule 13d-3 under the Exchange Act.
(b) For all purposes of ARTICLE IV of this Agreement,
the holder of Registrable Securities shall include not only the Holder, but also
any assignee or transferee of the Registrable Securities; provided, however,
that such assignee or transferee agrees in writing to be bound by all of the
provisions of this Agreement.
Section 4.12 MERGERS, ETC. The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to Registrable Securities shall be deemed
to be references to the securities which the Holders would be entitled to
receive in exchange for Registrable Securities under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
SECTION 4.12 shall not apply in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving corporation if all
stockholders are entitled to receive in exchange for their Registrable
Securities consideration consisting solely of (i) cash, or (ii) securities of
the acquiring corporation which may be immediately sold to the public without
registration under the Securities Act.
ARTICLE V
DEFINITIONS
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Section 5.1 DEFINITIONS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise.
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"BOARD OF DIRECTORS" or "Board" means the board of directors
of the Company as constituted from time to time.
"BUSINESS OR CONDITION OF THE COMPANY" means the business,
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the United States Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act or the Exchange Act.
"COMPANY" has the meaning ascribed to it in the forepart of
this Agreement.
"CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States or any state, county, city or other
political subdivision.
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"HOLDERS" has the meaning ascribed to it in the forepart of
this Agreement.
"LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"LICENSE" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"NASD" means the National Association of Securities Dealers,
Inc.
"NOTE CONVERSION SHARES" shall have the meaning ascribed in
the Recitals of this Agreement.
"ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"REGISTRABLE SECURITIES" shall mean and include the Shares,
the Warrants the Warrant Shares, and the Note Conversion Shares issued, in the
aggregate, to the Holders; provided, however, that shares of Common Stock or
other securities which are Registrable Securities shall cease to be Registrable
Securities upon the consummation of any sale pursuant to a registration
statement or Rule 144 under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
(or of any other federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"SEC" means Commission.
"SHARES" has the meaning ascribed to it in the Recitals of
this Agreement.
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"SUBSIDIARY" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.
"WARRANTS" has the meaning ascribed to it in the Recitals of
this Agreement.
"WARRANT SHARES" has the meaning ascribed to it in the
Recitals of this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 ENTIRE AGREEMENT. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
Section 6.2 WAIVER. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.
Section 6.3 AMENDMENT. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
Section 6.4 NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person.
Section 6.5 ASSIGNMENT; BINDING EFFECT. This Agreement and any
right, interest or obligation hereunder may be assigned by Holder without the
prior written consent of the Company. This Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
Section 6.6 HEADINGS. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
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Section 6.7 INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance here from.
Section 6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York applicable to
a Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
Section 6.9 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
By: /s/ Douglas S. Niethold
----------------------------------------------
Name: Douglas S. Niethold
Title: Vice-President, Finance, Chief Financial
Officer, and Principal Accounting Officer
CYPRUS, LLC
By: BARBERRY CORP.
Title: Managing Member
By: /s/ Edward E. Mattner
--------------------------------------------
Name: Edward E. Mattner
Title: Authorized Signatory
AMERICAN REAL ESTATE HOLDINGS
LIMITED PARTNERSHIP
By: American Property Investors, Inc., its
general partner
By: /s/ Keith Meister
--------------------------------------------
Name: Keith Meister
Title: President and CEO, API