EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
Dated as of ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇ and Among
EMPIRE RESORTS, INC.,
EMPIRE RESORTS HOLDINGS, INC.,
EMPIRE RESORTS SUB, INC.,
CONCORD ASSOCIATES LIMITED PARTNERSHIP
and
▇▇▇▇▇▇▇▇ RESORTS LLC
TABLE OF CONTENTS
PAGE
ARTICLE I.
Definitions
Certain Definitions............................................................2
ARTICLE II.
The Merger and Contribution; Closing
Section 2.1 Time and Place of Closing........................................6
Section 2.2 The Merger.......................................................6
Section 2.3 Effective Time...................................................6
Section 2.4 Effects of the Merger............................................6
Section 2.5 Certificate of Incorporation and Bylaws of Surviving Corporation.6
Section 2.6 Name Change; Certificate of Incorporation and Bylaws of Newco....7
Section 2.7 Officers and Directors...........................................7
Section 2.8 Initial Board of Directors of Newco..............................7
Section 2.9 Director's and Officer's Insurance...............................8
Section 2.10 Effect on Capital Stock..........................................8
Section 2.11 Effect on Class B and Class E Preferred Stock....................8
Section 2.12 Stock Options....................................................9
Section 2.13 Exchange of Shares in the Merger.................................9
Section 2.14 Tax-Free Treatment..............................................11
Section 2.15 Contribution....................................................11
Section 2.16 Issuance of Transferor Shares; Assumption of Liabilities........13
ARTICLE III.
Representations and Warranties of Transferor
Section 3.1 Due Formation, Existence, Etc...................................14
Section 3.2 Permits and Approvals...........................................15
Section 3.3 Consents and Approval...........................................15
Section 3.4 Ground Lease....................................................15
Section 3.5 Licenses........................................................16
Section 3.6 Leases..........................................................16
Section 3.7 Service Contracts...............................................16
Section 3.8 Empire Payment Obligations......................................16
Section 3.9 Title to Properties.............................................16
Section 3.10 Title to Ground Lease...........................................16
Section 3.11 Title to Licenses and Service Contracts.........................17
Section 3.12 Necessary Property..............................................17
Section 3.13 No Tenants or Occupants.........................................17
Section 3.14 Compliance with Laws............................................17
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Section 3.15 Litigation......................................................17
Section 3.16 Condemnation....................................................17
Section 3.17 Purchase Options................................................17
Section 3.18 Environmental Matters...........................................17
Section 3.19 Insurance.......................................................18
Section 3.20 Brokers and Finders.............................................18
Section 3.21 Taxes...........................................................18
Section 3.22 Employee Benefits...............................................19
Section 3.23 Water Capacity..................................................20
Section 3.24 Tax Opinion.....................................................20
Section 3.25 Disclaimer......................................................20
ARTICLE IV.
Representations and Warranties of Empire
Section 4.1 Organization, Good Standing and Qualification...................20
Section 4.2 Capital Structure...............................................21
Section 4.3 Corporate Authority; Approval...................................22
Section 4.4 Governmental Filings; No Violations; Certain Contracts, Etc.....23
Section 4.5 Empire Reports; Financial Statements............................23
Section 4.6 Absence of Certain Changes......................................25
Section 4.7 Litigation and Liabilities......................................25
Section 4.8 Compliance with Laws; Licenses..................................25
Section 4.9 Material Contracts..............................................26
Section 4.10 Takeover Statutes...............................................26
Section 4.11 Affiliate Transactions..........................................26
Section 4.12 Taxes...........................................................27
Section 4.13 Permits and Approvals...........................................27
Section 4.14 Catskill Development, L.L.C.....................................28
Section 4.15 Monticello Property.............................................28
Section 4.16 Condemnation....................................................28
Section 4.17 Environmental Matters...........................................28
Section 4.18 Labor and Employee Benefits.....................................28
Section 4.19 Tax Opinion.....................................................29
ARTICLE V.
Covenants of the Parties
Section 5.1 Interim Operations of Empire....................................29
Section 5.2 Interim Operations of Transferor................................30
Section 5.3 Land Use Applications and Approvals.............................31
Section 5.4 Environmental Remediation.......................................32
Section 5.5 Restrictions Regarding Certain Other Transactions...............32
Section 5.6 Restrictions on Gaming Facilities on Retained Property..........34
Section 5.7 Access..........................................................34
Section 5.8 Further Assurances; Reasonable Efforts to Satisfy Conditions....34
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Section 5.9 Public Announcements............................................35
Section 5.10 Proxy Statement; Registration Statement; Blue Sky...............36
Section 5.11 Stockholders' Meeting; Board Recommendation.....................37
Section 5.12 Condemnation....................................................37
Section 5.13 Casualty........................................................38
Section 5.14 Changes in Representations and Warranties.......................38
Section 5.15 Additional Agreements...........................................38
Section 5.16 Golf Courses and Additional Property............................39
Section 5.17 Newco Operations on the Concord Owned Property..................41
Section 5.18 Employment of Employees.........................................41
Section 5.19 Tax-free Qualification..........................................41
Section 5.20 Confidentiality; Release of Information.........................41
Section 5.21 Tax Representations.............................................41
Section 5.22 Requisite Approvals.............................................42
Section 5.23 Refinancing Cooperation;
Satisfaction of Empire Payment Obligations......................43
Section 5.24 HSR Act; Certain Registration Rights............................43
ARTICLE VI.
Evidence and Condition of Title
Section 6.1 Evidence and Condition of Title.................................43
Section 6.2 Preliminary Evidence of Title...................................43
Section 6.3 Title Defects...................................................44
Section 6.4 Material Title Defects and New Material Title
Defects Prior to Closing........................................45
Section 6.5 Voluntary Title Defects.........................................45
Section 6.6 Permitted Exceptions............................................45
ARTICLE VII.
Conditions Precedent
Section 7.1 Conditions to Empire's Obligations..............................46
Section 7.2 Conditions to Transferor's Obligation...........................48
ARTICLE VIII.
Closing Deliveries
Section 8.1 Deliveries by Empire, Newco and/or Merger Sub...................50
Section 8.2 Deliveries by Transferor........................................51
Section 8.3 Apportionments..................................................53
ARTICLE IX.
Termination and Default
Section 9.1 Termination. (a)..............................................55
Section 9.2 Default.........................................................57
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ARTICLE X.
Miscellaneous
Section 10.1 Counterparts....................................................58
Section 10.2 GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY TRIAL.....58
Section 10.3 Dispute Resolution..............................................59
Section 10.4 Entire Agreement; Beneficiaries.................................59
Section 10.5 Notices.........................................................59
Section 10.6 Successors and Assigns..........................................60
Section 10.7 Headings; Definitions...........................................60
Section 10.8 Amendments and Waivers..........................................61
Section 10.9 Specific Performance............................................61
Section 10.10 Severability....................................................61
Section 10.11 Fees and Expenses...............................................61
Section 10.12 Transferor......................................................62
Section 10.13 Mutual Drafting.................................................62
Section 10.14 Gaming Facilities...............................................62
Section 10.15 Letter Agreement Superseded.....................................62
EXHIBITS AND SCHEDULES
Exhibit A - Registration Rights Term Sheet
Exhibit B - Map of Concord Owned Property, Concord Hotel Site, Golf Courses and
Retained Property
Exhibit C - Monticello Property
Exhibit ▇ - ▇▇▇▇▇▇▇▇▇▇'▇ Property
Exhibit E - Trademarks, Service Marks, Logos and Tradenames Associated with
▇▇▇▇▇▇▇▇▇▇'▇ Property and Concord Property
Exhibit F - Form of Trade Name License Agreement
Exhibit G - Excluded Personal Property
Exhibit H - Golf Course Agreement Term Sheet
Exhibit I - REA Term Sheet Exhibit J - Form of Tax Representation Certificates
Empire Disclosure Schedule
Transferor Disclosure Schedule
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DEFINED TERMS
Acquisition Proposal......................32 Golf Course Agreement.....................38
Action....................................58 Governmental Entity.......................22
Additional Agreements.....................38 ▇▇▇▇▇▇▇▇▇▇'▇ Property.....................11
Affiliate..................................2 Ground Lease...............................3
Agreement..................................1 Hazardous Materials.......................18
Assumed Liabilities.......................13 Indian Tribe Agreement.....................3
Assumption Agreement......................13 knowledge..................................4
Audit Date................................23 Knowledge or knowledge.....................4
Book Entry Shares..........................9 Law........................................4
Catskills Acquisition.....................33 Lead Based Paint..........................18
Catskills Transfer........................33 Leased Property...........................11
Certificate of Merger......................6 Leases....................................12
Certificates...............................9 Legal Requirements........................17
Closing....................................5 Lender....................................14
Closing Conditions.........................5 Lender Consents...........................15
Closing Date...............................6 Letter Agreement...........................2
Code.......................................1 Licenses..................................12
Concord Associates.........................1 Lien.......................................4
Concord Owned Property....................11 MAC Notice Party..........................56
Concord Property..........................11 Material Adverse Effect....................4
Confidentiality Agreement.................34 materially and adversely..................37
Contract..................................23 Merger.....................................1
Contribution...............................1 Merger Sub.................................1
Covered Persons...........................26 Monticello Property........................4
Deeds.....................................51 New Material Title Defect(s)..............44
Delaware Secretary of State................6 Newco......................................1
DGCL.......................................3 Newco Common Stock.........................8
Effective Time.............................6 Option Agreement...........................2
Empire.....................................1 Owned Property............................12
Empire Common Stock.......................20 Owner's Title Commitments.................43
Empire Disclosure Schedule.................3 Permitted Exceptions......................45
Empire Licenses...........................25 Person.....................................4
Empire Material Contracts.................26 Preferred Stock...........................21
Empire Merger Consideration................8 Properties................................13
Empire Proxy Statement....................35 Purchase Shares...........................13
Empire Reports............................23 Registration Statement....................35
Empire Requisite Vote.....................22 Representatives...........................32
Environmental Legal Requirements..........18 Requisite Approvals.......................42
Exchange Act...............................3 Requisite Cayuga Approvals................42
Exchange Agent.............................9 Requisite Seneca Cayuga Approvals.........42
Exchange Fund..............................9 Retained Property..........................5
Frontline.................................35 SEC....................................5, 23
GAAP...................................... 3 Securities Act.............................5
Gaming Facility............................4 Service Contracts.........................52
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Shareholders Agreement.....................2 Tax Returns................................5
SOXA,.....................................24 Title Company.............................43
Stockholders Meeting......................37 Title Review Period.......................44
Subsidiary.................................5 Trade Name License Agreement..............12
▇▇▇▇▇▇▇▇ Resorts...........................1 Transactions...............................1
Surveys...................................43 Transferor.................................1
Surviving Corporation......................6 Transferor Disclosure Schedule.............5
Takeover Statute..........................26 Transferor's Title Cure Election Period...44
Tax Forms.................................52 U.S........................................5
Tax or Taxes...............................5 Voting Agreements..........................2
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AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
THIS AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION (this
"AGREEMENT"), dated as of March 3, 2005, is entered into by and among EMPIRE
RESORTS, INC., a Delaware corporation ("EMPIRE"), EMPIRE RESORTS HOLDINGS, INC.,
a Delaware corporation and wholly owned subsidiary of Empire ("NEWCO"), EMPIRE
RESORTS SUB, INC., a Delaware corporation and wholly owned subsidiary of Newco
("MERGER SUB"), and CONCORD ASSOCIATES LIMITED PARTNERSHIP, a New York limited
partnership ("CONCORD ASSOCIATES") and ▇▇▇▇▇▇▇▇ RESORTS, LLC, a New York limited
liability company ("▇▇▇▇▇▇▇▇ RESORTS") (Concord Associates and ▇▇▇▇▇▇▇▇ Resorts
being referred to herein, collectively, as "TRANSFEROR"). Unless otherwise
specified, capitalized terms used herein shall have the meaning ascribed to them
in Article I.
WHEREAS, Newco is a newly formed corporation that has issued and
outstanding 100 shares of capital stock, all of which are owned by Empire; and
WHEREAS, Empire has caused Newco to form Merger Sub, all of the
outstanding capital stock of which is owned by Newco; and
WHEREAS, the respective Boards of Directors of Empire and Merger Sub
have approved this Agreement and the merger of Merger Sub with and into Empire,
with Empire continuing as the surviving corporation (the "MERGER"), upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, Transferor owns fee simple or leasehold title to the
Properties (as defined below); and
WHEREAS, Transferor desires to contribute and Newco desires to
acquire, INTER ALIA, the Properties in exchange for the Transferor Shares (as
hereinafter defined) and the assumption or payment by Newco of certain
liabilities of Transferor on the terms and conditions hereinafter set forth (the
"CONTRIBUTION" and collectively with the Merger, the "TRANSACTIONS"); and
WHEREAS, the Board of Directors of Newco has approved this
Agreement, the Transactions and the other transactions contemplated hereby and
the Contribution upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, for U.S. federal income tax purposes, it is intended that
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and that the
Merger and the Contribution, taken together, will qualify as a transaction
described in Section 351 of the Code; and
WHEREAS, each outstanding share of Empire Common Stock (other than
shares of Empire Common Stock held in the treasury of Empire) shall cease to
exist and shall be converted into the right to receive one share of Newco Common
Stock; and
WHEREAS, Empire and Transferor have executed and delivered a letter
agreement, dated as of November 12, 2004 (the "LETTER AGREEMENT"), pursuant to
which the parties agreed to enter into this Agreement and consummate the
Transactions and the other transactions contemplated hereby subject to the
provisions hereof; and
WHEREAS, in connection with the parties' execution and delivery of
the Letter Agreement, (a) certain stockholders of Empire entered into Voting
Agreements with Transferor dated as of November 12, 2004 (the "VOTING
AGREEMENTS"), as amended by Amendment No. 1 to Voting Agreement dated as of the
date hereof (the "Voting Agreement Amendment"); and (b) Empire entered into an
Option Agreement with Concord Associates, dated as of November 12, 2004, as
amended by Amendment No. 1 to Option Agreement dated as of the date hereof (the
"OPTION AGREEMENT") and (c) the parties agreed, as a condition to the
consummation of the Transactions, to enter into a Registration Rights Agreement
on substantially the same terms as are set forth in the term sheet attached as
EXHIBIT A hereto and otherwise in reasonable and customary form (the
"REGISTRATION RIGHTS AGREEMENT"); and
WHEREAS, in order to more fully and completely describe and document
the transactions provided for in the Letter Agreement, the parties have agreed
to execute and deliver this Agreement, which shall supersede the Letter
Agreement in all respects.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
CERTAIN DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"AFFILIATE" means, with respect to any Person, another Person that
directly or indirectly controls, is controlled by, or is under common
control with, such first Person, where "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management policies of a Person, whether through the ownership of
voting securities, by contract, as trustee or executor, or otherwise.
"CONCORD HOTEL SITE" means up to approximately 100 acres of land
owned by Concord Associates in Kiamesha Lake, New York, which is intended
to be conveyed to the United States in trust for a native american indian
tribe or nation and is intended to be a portion of Lots 1A, 1B and/or 2
more particularly described in EXHIBIT B hereto.
"CONTEMPLATED BUSINESS" means (a) with respect to Transferor, the
ownership, development, operation, use and maintenance of the Retained
Property for residential purposes, including the use of the Golf Course
pursuant to the Golf Course Agreement and (b) with respect to Empire
and/or Newco, the ownership, development, operation, use and maintenance
of Class III gaming facilities.
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"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"EMPIRE DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule of
Empire, dated as of the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" of any Person means any other Person that,
together with such Person, would be treated as a single employer under
Section 414 of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"GROUND LEASE" shall mean the Lease, dated July 1, 1968, executed by
Nalou Realty Corp., as landlord, and Kiamesha Concord, Inc., as tenant as
amended, modified and supplemented by that certain order of the Bankruptcy
Court, dated October 16, 1998 and docketed on October 22, 1998, the
Stipulation of Settlement Resolving the 1968 Lease Issues, dated January
15, 1999, and docketed on January 20, 1999 and the Amendment to Lease,
dated December 1, 2001.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"INDIAN TRIBE AGREEMENTS" shall mean the (a) Gaming Facility
Development and Construction Agreement, dated as of April 3, 2003, by and
among Cayuga Catskill Gaming Authority, Monticello Raceway Development
Company, L.L.C., and Cayuga Nation of New York, (b) Shared Facilities
Agreement, contemplated to be executed by and between Cayuga Catskill
Gaming Authority and Monticello Raceway Management, Inc. ("MRMI"), (c)
Land Purchase Agreement, dated as of April 3, 2003, by and between Cayuga
Catskill Gaming Authority and Catskill Development, L.L.C., as amended by
the First Amendment of Land Purchase Agreement, dated as of April 30,
2004, by and between Catskill Development, L.L.C. and Cayuga Catskill
Gaming Authority, (d) Gaming Facility Management Agreement, dated as of
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April 3, 2003, by and among Cayuga Catskill Gaming Authority, Monticello
Casino Management, L.L.C., and Cayuga Nation of New York, (e) Letter
Agreement, dated as of April 3, 2003, by and among Alpha Hospitality
Corporation, Catskill Development, L.L.C. and Cayuga Nation of New York,
as amended by the First Amendment of Letter Agreement, dated as of April
30, 2004, by and between Empire Resorts, Inc. and Catskill Development,
L.L.C. and Cayuga Nation of New York and Cayuga Catskill Gaming Authority
and by the Letter Agreement, dated as of December 23, 2004, by and between
Empire Resorts, Inc. and the Cayuga Nation of New York, (f) Letter
Agreement, dated as of August 19, 2004, by and between Empire Resorts,
Inc. and the Seneca-Cayuga Tribe of Oklahoma and (g) Memorandum from
▇▇▇▇▇▇ ▇. Gold to the Cayuga Nation of New York, dated November 14, 2004,
signed by the Cayuga Nation of New York and Empire Resorts, Inc.
"KNOWLEDGE" or "knowledge" shall mean and be limited to (i) with
respect to Empire, when used in the phrase "TO EMPIRE'S KNOWLEDGE" or
similar phrases, the actual knowledge of the following individuals: ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, and the knowledge a reasonably prudent person
would be expected to have acting in such person's capacity in the conduct
of similar business and (ii) with respect to Transferor when used in the
phrase "TO TRANSFEROR'S KNOWLEDGE" or similar phrases, the actual
knowledge of the following individuals: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, and
the knowledge a reasonably prudent person would be expected to have acting
in such person's capacity in the conduct of similar business.
"LAW" shall mean any U.S. federal, state or local, or any foreign,
order, writ, injunction, judgment, award, decree, common law, statute,
code, ruling, law, agency requirement, arbitration award, ordinance, rule,
regulation, license or permit of any Governmental Entity.
"LIEN" shall mean any easement, encroachment, security interest,
pledge, mortgage, lien (including, without limitation, environmental, Tax
and ERISA liens), charge, judgment, claim, encumbrance, proxy, voting
trust or voting agreement.
"MATERIAL ADVERSE EFFECT" with respect to any Person means (x) a
material adverse effect on the condition (financial or other), properties,
assets, liabilities or business with respect to or in connection with the
Contemplated Business of such Person and its Subsidiaries or (y) an effect
that would prevent, materially delay or materially impair the ability of
such Person to consummate the transactions contemplated by this Agreement
(including, without limitation, with respect to Newco the ability to
develop, construct and operate a Resort Facility at the Concord Property,
which Resort Facility shall include a hotel containing approximately 1500
rooms).
"MONTICELLO PROPERTY" shall mean the land located in Monticello, New
York and described on EXHIBIT C hereto, and all buildings, structures and
other improvements thereon, which property is owned by MRMI, a wholly
owned subsidiary of Empire and known as the Monticello Raceway.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
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"RESORT FACILITY" shall mean a hotel(s) and resort complex, which,
with respect to the Concord Hotel Site, shall include a fully licensed
Class III gaming enterprise.
"RETAINED PROPERTY" shall mean the land owned or leased by Concord
Associates in Kiamesha Lake, New York and which is outside of the Golf
Courses and Concord Owned Property marked or indicated on EXHIBIT B
hereto, and all buildings, structures and improvements located thereon,
and all rights and interests appurtenant thereto.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, any other
Person, whether incorporated or unincorporated, of which at least a
majority of the securities or ownership interests having by their terms
voting power to elect a majority of the board of directors or other
Persons performing similar functions is directly or indirectly owned or
controlled by such entity or by one or more of its respective
Subsidiaries.
"TAX" or "TAXES" shall mean all federal, state, local or foreign net
or gross income, gross receipts, net proceeds, sales, use, ad valorem,
value added, franchise, bank shares, withholding, payroll, employment,
excise, property, alternative minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any
nature whatsoever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto,
whether disputed or not, in each case including such taxes for which a
Person is or may be liable (i) as a result of Treasury Regulation Section
1.1502-6 (or a similar provision of state, local or foreign law), as
transferee or successor, and (ii) as a result of being party to any
agreement or any expressed or implied obligation to indemnify any Person.
"TAX RETURNS" shall mean any federal, state, local or foreign
returns, reports, claims for refund, information returns or statements
(including any amended returns or information returns) filed or required
to be filed for purposes of a particular Tax.
"TRANSFEROR DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule
of Transferor, dated as of the date hereof.
"U.S." shall mean the United States of America.
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ARTICLE II.
THE MERGER AND CONTRIBUTION; CLOSING
Section 2.1 TIME AND PLACE OF CLOSING. The closing of the
Transactions (the "CLOSING") shall take place at the offices of Empire's
counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, in New York City, on such date and time that is
substantially contemporaneous with the last to be satisfied or waived of the
conditions to Closing (the "CLOSING CONDITIONS") set forth in Article VII, but
in no event later than 5 business days following satisfaction or waiver of the
Closing Conditions (the date of the Closing, the "CLOSING DATE"); PROVIDED that
if all such Closing Conditions shall not have been satisfied and/or waived by
December 31, 2005, then either party shall have such rights to terminate this
Agreement as are set forth in SECTION 9.1 hereof.
Section 2.2 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Closing, and in accordance with the DGCL, Merger Sub shall be
merged with and into Empire at the Effective Time (as defined below). Following
the Merger, the separate corporate existence of Merger Sub shall cease and
Empire shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
Section 2.3 EFFECTIVE TIME. As promptly as practicable on the
Closing Date, Merger Sub and Empire shall (a) file with the Secretary of State
of the State of Delaware (the "DELAWARE SECRETARY OF STATE") a certificate of
merger (the "CERTIFICATE OF MERGER") in such form as is required by and executed
in accordance with the relevant provisions of the DGCL, and (b) make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State or at such subsequent time as Empire and Transferor shall
agree and as shall be specified in the Certificate of Merger (the date and time
the Merger becomes effective being the "EFFECTIVE TIME").
Section 2.4 EFFECTS OF THE MERGER. At and after the Effective Time,
the Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of Empire and Merger Sub
shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of Empire and Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
Section 2.5 CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION. The certificate of incorporation of Empire shall be amended to read
in its entirety as the certificate of incorporation of Merger Sub in effect
immediately prior to the Effective Time, except that (a) Article I of the
certificate of incorporation shall provide that the name of the surviving
corporation is "Empire Resorts Properties, Inc." and (b) such certificate of
incorporation shall state that the total number of authorized shares of common
stock shall be 1000. The bylaws of Empire shall be amended to read in its
entirety as the bylaws of Merger Sub in effect immediately prior to the
Effective Time, until thereafter changed or amended as provided therein or by
applicable Law.
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Section 2.6 NAME CHANGE; CERTIFICATE OF INCORPORATION AND BYLAWS OF
NEWCO. At the Effective Time, Empire shall cause Newco's name to be changed to
"Empire Resorts, Inc." Empire shall cause Newco's certificate of incorporation
and bylaws to be amended as of immediately prior to the Effective Time to be the
same as Empire's certificate of incorporation and bylaws as of the date hereof,
until thereafter changed or amended as provided therein or by applicable Law.
Section 2.7 OFFICERS AND DIRECTORS. The officers of Empire at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an officer or
until their respective successors are duly elected and qualified, as the case
may be. The Board of Directors of Empire at the Effective Time shall be the
Board of Directors of the Surviving Corporation until the earlier of their
resignation or removal or otherwise ceasing to be a member of the Board of
Directors or until their respective successors are duly elected and qualified.
The initial Board of Directors of Newco to be in office at the Closing shall be
as set forth in Section 2.8 below.
Section 2.8 INITIAL BOARD OF DIRECTORS OF NEWCO. The initial Board
of Directors of Newco to be in office at the Effective Time shall be comprised
of eleven (11) members, two (2) of whom shall be designees of Transferor (such
designees or such other individuals designated from time to time by Transferor
to take their place or places, the "TRANSFEROR DESIGNEES"). Newco and Transferor
agree that the Transferor Designees shall be members of the class of directors
who will not be subject to reelection until the annual meeting to be held in
2008. Of the remaining nine (9) members of the initial Board of Directors at
least seven (7) members of the Board of Directors will be independent. Newco and
Transferor agree that the seven (7) initial independent members shall be
comprised as follows: (1) in addition to Transferor's right to designate the
Transferor Designees, Transferor will be entitled to designate three (3) of the
seven (7) independent members of the Board of Directors; (2) Newco will be
entitled to designate three (3) independent directors selected from the existing
independent directors on the Board of Directors of Empire, as of the date
hereof; and (3) the six (6) independent directors selected pursuant to (1) and
(2) above will together select the seventh independent director. Committee
representation will be proportionate to representation on the Board of Directors
(except that committees that are required to be comprised of independent
directors will have comparable proportionate independent representatives). To
the extent permitted by applicable NASDAQ rules and by applicable law, for a
period of at least three years after the Effective Time, at least one of the
Transferor Designees shall be entitled to serve as a member of each committee of
the Board of Directors. If prior to the expiration of any Transferor Designee's
term, any Transferor Designee ceases to be a member of the Board of Directors
(for any reason other than for cause), Newco will use its commercially
reasonable efforts (subject to any NASDAQ regulations, applicable law and
fiduciary duties and obligations of Newco's directors then in office) to appoint
a new member of the Board of Directors designated by Transferor to fill the
vacancy left by such departing member so that until at least the annual meeting
held in 2008, at least two Transferor Designees will be members of the Board of
Directors. Newco agrees that each of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are
acceptable as Transferor Designees (without limiting Transferor's rights to make
replacements), provided that ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are able to comply
with the suitability requirements of applicable state, federal and tribal gaming
regulators with jurisdiction over Empire's operations, and if ▇▇▇▇▇ ▇▇▇▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ do not so comply, Transferor shall be entitled to name
7
replacement designees who meet such requirements. Transferor hereby acknowledges
and agrees that all members of the Board of Directors shall be subject to
suitability requirements of applicable state, federal and tribal gaming
regulators. Empire and Newco agree to use commercially reasonable efforts to
effect the foregoing, including seeking and obtaining any required shareholder
approvals of the foregoing at the Stockholders Meeting (or any adjournment(s) or
postponement(s) thereof), or any other meeting of shareholders of Empire or
Newco at which the matters contemplated by this Agreement or this Agreement are
to be presented to a vote of shareholders of Empire or Newco (or any
adjournment(s) or postponement(s) thereof). Empire and Newco also agree that in
connection with seeking and obtaining any required shareholder approvals of the
foregoing it shall undertake the same efforts and comply with the same
obligations with respect to seeking and obtaining such approvals as those set
forth in Section 5.11 of this Agreement. Notwithstanding anything in this
Agreement to the contrary, in the event that any such required shareholder
approval is not obtained for any reason, the parties agree that such failure
shall be treated for all purposes (including, for purposes of determining the
exercisability of the Option and the termination of this Agreement) as a failure
to satisfy the shareholder approval condition to Closing set forth in Section
7.1(a) of this Agreement. The terms and provisions of this Section 2.8 shall
survive the Closing.
Section 2.9 DIRECTOR'S AND OFFICER'S INSURANCE.
On or prior to the Effective Time, Empire shall obtain, or shall
cause to be obtained, a new policy of director's and officer's insurance or an
endorsement to Empire's existing director's and officer's insurance policy for
the officers and Board of Directors of Newco. Such policy or endorsement shall
provide the same coverage to the Newco officers and Board of Directors as is
provided to Empire's officers and Board of Directors as of the date hereof.
Section 2.10 EFFECT ON CAPITAL STOCK. (a) At the Effective Time, by
virtue of the Merger, each share of Empire Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held in the treasury
of Empire) shall cease to exist and be converted into the right to receive one
share of common stock, par value $0.01 per share, of Newco ("NEWCO COMMON
STOCK").
(b) At the Effective Time, by virtue of the Merger, each share of
the common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall cease to exist and be
converted into the right to receive one share of common stock, par value $0.01,
of the Surviving Corporation.
(c) At the Effective Time, by virtue of the Merger, each share of
Empire Common Stock held in the treasury of Empire immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange thereof.
Section 2.11 EFFECT ON CLASS B AND CLASS E PREFERRED STOCK. (a) At
the Effective Time, by virtue of the Merger, each share of Empire Class B and
Class E Preferred Stock (the "EMPIRE PREFERRED STOCK") issued and outstanding
8
immediately prior to the Effective Time (other than shares held in the treasury
of Empire) shall cease to exist and be converted into the right to receive one
share of preferred stock, par value $0.01 per share, of Newco, having equivalent
terms to the Class B and Class E Preferred Stock, respectively, of Empire
("NEWCO PREFERRED STOCK", together with Newco Common Stock, the "EMPIRE MERGER
CONSIDERATION").
(b) At the Effective Time, by virtue of the Merger, each share of
Empire Preferred Stock held in the treasury of Empire immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange thereof.
Section 2.12 STOCK OPTIONS. At the Effective Time, by virtue of the
Merger, each stock option or warrant exercisable for shares of Empire Common
Stock (the "EMPIRE STOCK OPTIONS") outstanding immediately prior to the
Effective Time shall be converted automatically at the Effective Time into an
option or warrant to purchase a number of shares of Newco Common Stock (a "NEWCO
STOCK OPTION") equal to the same number of shares of Empire Common Stock subject
to such Empire Stock Option. The terms and conditions (including the exercise
price per share) of the Newco Stock Options shall otherwise remain the same as
the terms and conditions of each Empire Stock Option. Notwithstanding the
foregoing, each Empire Stock Option (whether such option is a non-qualified
stock option or an option that is intended to be an "incentive stock option" (as
defined under Section 422 of the Code)) shall be adjusted in accordance with the
principles set forth in Section 424 of the Code.
Section 2.13 EXCHANGE OF SHARES IN THE MERGER. (a) At the Effective
Time, Newco shall make available to an exchange agent selected by Newco and
reasonably acceptable to Transferor (the "EXCHANGE AGENT"), for the benefit of
those Persons who immediately prior to the Effective Time were the holders of
shares of Empire Common Stock or Empire Preferred Stock, a sufficient number of
certificates representing shares of Newco Common Stock or Newco Preferred Stock,
as the case may be, required to effect the delivery of the aggregate Empire
Merger Consideration required to be issued pursuant to Section 2.10(a) (the
certificates representing shares of Newco Common Stock or Newco Preferred Stock
comprising such aggregate Empire Merger Consideration being hereinafter referred
to as the "EXCHANGE FUND").
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Empire Common
Stock or Empire Preferred Stock (the "CERTIFICATES") (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates for exchange therefor or for effecting the
exchange of Certificates for shares of Newco Common Stock or Newco Preferred
Stock, as the case may be, to be held in book entry form. Promptly after the
Effective Time, the Exchange Agent shall also mail to each holder of record of
shares of Empire Common Stock and Empire Preferred Stock held in book entry form
("BOOK ENTRY SHARES") instructions for use in effecting the exchange of said
Book Entry Shares for shares of Newco Common Stock or Newco Preferred Stock, as
the case may be. Upon surrender of Certificates to the Exchange Agent, together
with such letter of transmittal duly executed and any other required documents,
9
or, in the case of Book Entry Shares, compliance with the instructions for the
exchange thereof, the holder of such Certificates or Book Entry Shares shall be
entitled to receive for the Empire Common Stock or Empire Preferred Stock, as
the case may be, represented by such Certificates the Empire Merger
Consideration, and the Certificates so surrendered or Book Entry Shares so
exchanged shall forthwith be canceled. Until so surrendered, Certificates, and
until exchanged as contemplated by this Section 2.13(b), Book Entry Shares,
shall represent solely the right to receive the Empire Merger Consideration. No
dividends or other distributions that are declared after the Effective Time on
shares of Newco Common Stock or Newco Preferred Stock and payable to the holders
of record thereof after the Effective Time will be paid to Persons entitled by
reason of the Merger to receive shares of Newco Common Stock or Newco Preferred
Stock, as the case may be, until such Persons surrender their Certificates or
comply with the procedures for exchanging Book Entry Shares. After such
surrender or compliance, as the case may be, there shall be paid to the Person
in whose name the shares of Newco Common Stock or Newco Preferred Stock are
issued any dividends or other distributions on such shares of Newco Common Stock
or Newco Preferred Stock, as the case may be, which shall have a record date
after the Effective Time but prior to such surrender provided that the payment
date occurs after such surrender, and, in such event, such payment shall be made
on such payment date. In no event shall the Persons entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions. If any Certificate representing shares of
Newco Common Stock or Newco Preferred Stock is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to the Exchange Agent any transfer or
other Taxes required by reason of the issuance of certificates for such shares
of Newco Common Stock or Newco Preferred Stock, as the case may be, in a name
other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such Tax has been
paid or is not applicable. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the shares of Newco Common
Stock and Newco Preferred Stock held by it from time to time hereunder, except
that it shall receive and hold all dividends or other distributions paid or
distributed with respect to such shares of Newco Common Stock and Newco
Preferred Stock for the account of the Persons entitled thereto. If, after the
Effective Time, Certificates or unexchanged Book Entry Shares representing
shares of Empire Common Stock or Empire Preferred Stock outstanding prior to the
Effective Time are presented to Newco, they shall be cancelled and exchanged for
the consideration provided for, and in accordance with the procedures set forth,
in this Article II.
(c) Any portion of the Exchange Fund which remains unclaimed by the
former holders of Empire Common Stock or Empire Preferred Stock, as the case may
be, for six months after the Effective Time shall be delivered to Newco, upon
demand of Newco, and any former holders of Empire Common Stock and Empire
Preferred Stock shall thereafter look only to Newco for payment of their claim
for the Empire Merger Consideration for the shares of Empire Common Stock and
Empire Preferred Stock.
(d) Notwithstanding anything to the contrary in this Agreement to
the fullest extent permitted by Law, none of the Exchange Agent, Newco or the
Surviving Corporation shall be liable to a holder of shares of Empire Common
10
Stock or Empire Preferred Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Newco and the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Empire Common Stock or Empire Preferred Stock such
amounts as Newco (or any Affiliate thereof) or the Exchange Agent are required
to deduct and withhold with respect to the making of such payment under the Code
or any provision of any applicable state, local or foreign Tax Law. To the
extent that amounts are so withheld by Newco or the Exchange Agent, such
withheld amounts will be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Empire Common Stock or Empire Preferred
Stock, as the case may be, in respect of whom such deduction and withholding
were made by Newco.
(f) Newco agrees that from and after the Effective Time, it will
assume and perform any obligations of Empire with respect to registration of
securities under Federal or state securities laws, listing obligations and
related obligations that Empire had immediately prior to the Effective Time to
holders of Empire Common Stock or securities, options, warrants or instruments
convertible, exchangeable or exercisable for Empire Common Stock as if Newco
were Empire and as if those obligations were with respect to Newco Common Stock
or securities, options, warrants or instruments convertible, exchangeable or
exercisable for Newco's common stock. Empire represents and warrants to
Transferor that such obligations will not conflict with or prevent the
consummation of the Registration Rights Agreement, and Empire and Newco agree
that they shall not enter into or become subject to any agreement that conflicts
with or prevents the consummation of the Registration Rights Agreement.
Section 2.14 TAX-FREE TREATMENT. The Parties intend that the Merger
will meet the requirements of Section 368(a) of the Code and rules and
regulations promulgated thereunder, that the Merger and the Contribution, taken
together, will meet the requirements described in Section 351 of the Code and
the rules and regulations promulgated thereunder, and that this Agreement shall
constitute the "plan of reorganization."
Section 2.15 CONTRIBUTION. Upon the terms and conditions set forth
in this Agreement, on the Closing Date and immediately following the Effective
Time, Transferor will convey to Newco or its designee (which designee shall be a
permitted assignee described in Section 10.6 hereof), and Newco or such designee
will obtain title to, all of Transferor's right, title and interest in and to
the following, subject only to the Permitted Exceptions and subject to Section
5.16 hereof:
(a) the land located in Liberty, New York and described on EXHIBIT D
hereto and commonly known as the ▇▇▇▇▇▇▇▇▇▇'▇ Hotel and Golf Resort
consisting of approximately 582 acres (the "▇▇▇▇▇▇▇▇▇▇'▇ PROPERTY");
(b) the land located in Kiamesha Lake, New York and described on
EXHIBIT B hereto, commonly known as the Concord Hotel and Resort,
consisting of approximately 163 acres (including the Concord Hotel Site,
the owned portion of the Golf Courses and the Challenger golf course) (the
"CONCORD OWNED PROPERTY");
11
(c) the land located in Kiamesha Lake, New York and substantially
described on EXHIBIT B, hereto and commonly known as the Monster and
International golf courses (the "GOLF COURSES" and, collectively with the
Concord Owned Property, the "CONCORD PROPERTY"), a portion of which land
is leased by Concord Associates pursuant to the Ground Lease and a portion
of which land is owned by Concord Associates (with the owned portion of
the Golf Courses being deemed to be included in the definition of "CONCORD
OWNED PROPERTY");
(d) all buildings, structures and improvements located on the
▇▇▇▇▇▇▇▇▇▇'▇ Property and the Concord Owned Property, and (subject to the
terms and provisions of the Ground Lease) on the Golf Courses;
(e) with respect to the ▇▇▇▇▇▇▇▇▇▇'▇ Property and the Concord Owned
Property (collectively, the "OWNED PROPERTY"), (i) the easements, rights,
privileges and appurtenances belonging thereto, and any abutting strips or
gores, (ii) any land lying in the bed of any street, road or avenue, open
or proposed, in front of or adjoining such property, and (iii) all
appurtenant easements for ingress, egress, utilities and other purposes;
(f) the leases, subleases, occupancy agreements, license agreements,
concession agreements and other tenancy arrangements (including, without
limitation, all amendments and modifications thereto and guarantees
thereof) of space and/or improvements at the Owned Property or the Golf
Courses (collectively, the "LEASES");
(g) all Service Contracts which Empire elects to assume at Closing
as more fully provided herein;
(h) the trademarks, service marks, logos and tradenames (including,
without limitation, those listed on EXHIBIT E attached hereto and made a
part hereof) associated with the ▇▇▇▇▇▇▇▇▇▇'▇ Property and the Concord
Property, provided that Transferor shall retain or shall license from
Newco, without additional consideration, the right to use (i) the name
"Concord" in connection with any residential development projects at the
Retained Property and (ii) the name "Concord" or "▇▇▇▇▇▇▇▇▇▇'▇" for
reasonable uses unrelated to hotel, resort and/or gaming operations of
Newco or Empire (including, without limitation, retail uses) pursuant to
the license agreement attached as EXHIBIT F hereto (the "TRADE NAME
LICENSE AGREEMENT");
(i) all licenses, franchises, certificates, authorizations,
approvals, variances and permits issued or approved by any Governmental
Entity and relating to the development, operation, ownership, maintenance
and use of the ▇▇▇▇▇▇▇▇▇▇'▇ Property or the Concord Property or any part
thereof including, without limitation, all applications and/or filings for
environmental approvals and consents, licenses and building permits, and
land use and subdivision approvals, all to the extent assignable (the
"LICENSES");
(j) all machinery, equipment, fixtures, furnishings and other
tangible personal property (including, without limitation, golf carts,
clubs, equipment utilized in greens maintenance and other golfing
12
equipment situated in or upon or used in connection with the operation or
maintenance of the ▇▇▇▇▇▇▇▇▇▇'▇ Property or the Concord Property or any
part thereof, and all replacements additions or accessories thereto
between the date hereof and the Closing Date (hereinafter defined), but
excluding any personal property owned by tenants under any Leases and any
other personal property described in EXHIBIT G; and
(k) all architectural plans and specifications (including all design
drawings and concept plans), engineering reports (structural and
mechanical), other development plans and site plans and all environmental,
zoning, feasibility and other reports relating to the condition and
development of the ▇▇▇▇▇▇▇▇▇▇'▇ Property or the Concord Property, all to
the extent assignable (all of the foregoing property, real, personal and
mixed, described in clauses (a) through (k) of this Section 2.15 being
collectively called the "PROPERTIES").
Section 2.16 ISSUANCE OF TRANSFEROR SHARES; ASSUMPTION OF
LIABILITIES. (a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing and contemporaneous with the Contribution, Newco shall
issue to Transferor a total of Eighteen Million (18,000,000) shares of Newco
Common Stock (the "TRANSFEROR SHARES"); PROVIDED, HOWEVER that if, prior to or
at the Closing, the number of outstanding shares of Empire Common Stock shall
have been changed into a different number of shares or a different class by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split, reverse split, combination or exchange of shares, or shall have increased
as a result of the issuance of additional shares of Empire Common Stock from the
number of shares outstanding as of the date hereof (other than any issuance of
Empire Common Stock in connection with the payment of dividends on or the
conversion of Empire's Preferred Stock in accordance with the current terms of
Empire's Preferred Stock, the exercise of employee stock options or warrants,
the conversion of existing convertible debt in accordance with the terms of the
Indenture, dated as of July 26, 2004, as of the date hereof, or the issuance of
Empire Common Stock for cash or in exchange for assets, contributions or
services, which issuance for cash, assets, contributions or services are in the
ordinary course of Empire's gaming and hospitality business (collectively, the
"EXCLUDED SHARES")), then the number of Transferor Shares shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, reverse split, combination, exchange
of more shares or other similar transactions, or issuance such that Transferor
receives 40% of any newly issued shares that are not Excluded Shares. The
Transferor Shares will be issued by Newco to Transferor at Closing, free and
clear of all Liens (exclusive of any restrictions imposed or referred to by this
Agreement or by applicable federal or state licensing and securities laws).
(b) In addition, at the Closing, subject to Section 5.23 hereof,
Newco shall (i) assume, pursuant to an assumption agreement in form mutually
satisfactory to Transferor and Empire (the "ASSUMPTION AGREEMENT"), or otherwise
satisfy the liabilities and obligations of Concord Associates and/or ▇▇▇▇▇▇▇▇
Resorts under those mortgage loans and the provisions of the limited partnership
agreement of Concord Associates relating to Resort Group Investors LLC, in each
case, as more particularly described in Section 3.8 of the Transferor Disclosure
Schedule and (ii) subject to Section 5.16 hereof, pay to Transferor or to the
ground lessor under the Ground Lease at Transferor's direction, the amount
required to be paid to exercise the purchase option under the Ground Lease as of
the Closing Date (the "EMPIRE PAYMENT OBLIGATIONS"), PROVIDED that,
13
notwithstanding anything to the contrary contained in this Agreement, in no
event shall Empire be obligated to assume or otherwise satisfy any Empire
Payment Obligations to the extent the amount of such obligations exceeds
$30,000,000 (and with the Empire Payment Obligation allocated to the Ground
Lease being deemed to equal the purchase option price under the Ground Lease as
of the Closing Date). In addition, at Closing, Empire and/or Newco shall provide
guarantees or such other credit enhancement to the holders of any such mortgages
in order to cause (i) any personal guarantees of the current borrowers and any
outstanding guarantees of such mortgages from any Affiliates of Concord
Associates and/or ▇▇▇▇▇▇▇▇ Resorts to be released and discharged at Closing (in
each case, except to the extent such guarantees survive the repayment or
maturity of such mortgages) and (ii) any deposits or cash collateral held by any
such lender to be released to Transferor (it being understood and agreed that
none of Empire's or Newco's officers, directors, stockholders (other than Newco
as a stockholder of Empire) or Affiliates will be expected to provide personal
guaranties of any nature).
(c) In the event Newco is required under applicable law to deduct or
withhold any Taxes with respect to the delivery of the Transferor Shares, Newco
shall be entitled to receive from Transferor a payment of money in an amount
equal to such required deduction or withholding. To the extent that such amounts
are paid by Transferor to Newco, Newco shall promptly remit such funds to the
relevant Tax authority in accordance with applicable Law and shall provide
Transferor with evidence of such payment.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR
Transferor hereby represents and warrants to Empire, Newco and
Merger Sub as follows:
Section 3.1 DUE FORMATION, EXISTENCE, ETC. Transferor is duly
formed, validly existing, and in good standing, and has the requisite power and
authority to own, lease, and operate its properties as it is now owned, leased
and operated. Transferor has full power and authority and has taken all limited
partnership and/or limited liability company action necessary to execute and
deliver this Agreement and to perform the obligations of Transferor hereunder,
and all limited partnership and/or limited liability company action necessary to
authorize the person(s) executing this Agreement on behalf of Transferor to
execute and deliver this Agreement and all documents to be executed by
Transferor pursuant to this Agreement on behalf of Transferor and to perform the
obligations of Transferor hereunder. This Agreement is a valid and binding
agreement of Transferor enforceable against Transferor in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution and delivery
by Transferor of, and the performance and compliance by Transferor with, the
terms and provisions of this Agreement do not (a) violate any term, condition or
provision of Transferor's organizational or governing documents; (b) violate any
judgment, order, injunction, decree, regulation or ruling of any court or other
Governmental Entity to which Transferor is subject; or (c) require any consent
or approval under, result in any breach of or any loss of any benefit under,
give rise to other's right of termination, vesting, amendment, acceleration, or
14
cancellation of, result in the creation of any Lien on the Properties pursuant
to, or cause a violation of any agreement, promissory note, bond, mortgage,
indenture, contract, lease, license, or any other instrument of obligation to
which Transferor is a party or by which Transferor is bound, subject, however,
to the receipt of the consent of (i) subject to section 5.23, each holder (each
"LENDER") of a mortgage that is part of the Empire Payment Obligations to the
transfer of the applicable Property, the assumption of any such Empire Payment
Obligations by Newco and the releases as described in Section 2.16(b) (the
"LENDER CONSENTS") and (ii) such other consents as are set forth in Section 3.3
of the Transferor Disclosure Schedule and except that, in the case of clauses
(b) or (c) above, for any breach, violation, termination, default, acceleration,
creation or change that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Transferor.
Section 3.2 PERMITS AND APPROVALS. Transferor has (a) all material
zoning and governmental approvals and all certificates of occupancy,
underwriters certificates, building, housing, safety, fire, health,
environmental and other similar approvals, and all other material permits
necessary to maintain, operate and use the Properties in the manner in which the
same are presently being maintained, operated and used, and (b) with respect to
the site plan for the Concord Property (the "SITE PLAN") described in Section
3.2 of the Transferor Disclosure Schedule, obtained the governmental approvals
described in Section 3.2 of the Transferor Disclosure Schedule (the "SITE PLAN
APPROVALS"), and, in each case, all of such items have been issued and are valid
and in full force and effect. All of the foregoing are assignable and
transferable to Newco without the consent or approval of any person or entity or
the payment of any material fee or charge (it being understood and agreed that
Transferor shall pay any such fees or charges at Closing). Transferor has no
Knowledge of any existing or threatened facts or circumstances that would cause
the Site Plan Approvals to be attacked, revoked, rescinded, impaired or
otherwise rendered ineffective or would result in the inability of Empire or
Newco, under applicable law, to use the Concord Hotel Site for purposes of
development and construction of a Resort Facility. For purposes of this Section
3.2 "threatened facts or circumstances" shall mean a threat from any
Governmental Entity, or a material, written threat from an adjacent property
owner or other party who has standing to attack or oppose the Site Plan
Approvals. Transferor has not received any written notice revoking any
certificate of occupancy for the improvements located at the Properties, which
revocation has not been cured. Transferor has no Knowledge of any alterations
performed or alteration applications on file which would require an amendment or
any certificate of occupancy.
Section 3.3 CONSENTS AND APPROVAL. Other than Lender Consent and
such other consents as are set forth in Section 3.3 of the Transferor Disclosure
Schedule, no consent, waiver, authorization, permit, or approval by any third
party or governmental entity which heretofore has not been obtained is required
in connection with the execution and delivery by Transferor of this Agreement or
the performance by Transferor of the obligations to be performed under this
Agreement by Transferor.
Section 3.4 GROUND LEASE. The Ground Lease is in full force and
effect, and no material rights or interests of Transferor as the tenant
thereunder have been waived or released by Transferor, including, without
limitation, the tenant's purchase option contained therein. Neither the
Transferor nor, to Transferor's Knowledge, the ground lessor is in default under
the Ground Lease nor has any event occurred that with the giving of notice, the
passage of time or both would give rise to a default thereunder.
15
Section 3.5 LICENSES. Section 3.5 of the Transferor Disclosure
Schedule is a true, correct and complete list of each of the material Licenses,
as amended and in effect, (b) each of the material Licenses is in full force and
effect, and (c) Transferor does not know of, and neither Transferor nor any
agent or employee of Transferor has received notice of, any intention on the
part of the issuing authority to cancel, suspend or modify any of such Licenses
or to take any action or institute any proceedings to effect such a
cancellation, suspension or modification. The Licenses identified in Section 3.5
of the Transferor Disclosure Schedule comprise all licenses, franchises,
certifications, authorizations, approvals and permits required by any
governmental or quasi-governmental authority for the use and operation of the
Properties as the same are presently used and operated, and the Properties are
operated and occupied in compliance with each of the Licenses, except for such
noncompliance that would not cause a Material Adverse Effect.
Section 3.6 LEASES. The Leases, which are set forth in Section 3.6
of the Transferor Disclosure Schedule are all of the real property leases
affecting the Properties as of the date hereof. Transferor hereby represents and
warrants that all Leases are in full force and effect, and no rights or
interests of the landlord thereunder have been waived or released by Transferor.
Neither Transferor, as landlord, nor (to Transferor's Knowledge) any tenant is
in default under any Lease.
Section 3.7 SERVICE CONTRACTS. Section 3.7 of the Transferor
Disclosure Schedule contains a list of all of the Service Contracts affecting
the Properties, including, without limitation, the operation of the golf courses
thereon, and Empire has been provided with a copy of each of the Service
Contracts, and amendments and modifications thereof, and such copies are true,
correct and complete in all material respects. Transferor is not in material
default and has not received any written notice of default under any of the
Service Contracts that has not been cured, and all of the Service Contracts are
in full force and effect and are terminable without material cost to Transferor
upon not more than thirty (30) days' notice thereunder.
Section 3.8 EMPIRE PAYMENT OBLIGATIONS. Empire has been provided
with copies of each of the documents securing and/or evidencing the Empire
Payment Obligations and listed in Section 3.8 of the Transferor Disclosure
Schedule, and all amendments and modifications thereof, and such copies are
true, correct and complete in all respects, there are no defaults under any of
such documents that have not been cured, and such documents are in full force
and effect.
Section 3.9 TITLE TO PROPERTIES. Transferor owns fee simple title to
the ▇▇▇▇▇▇▇▇▇▇'▇ Property and to the Concord Owned Property free and clear of
Liens, other than the Permitted Exceptions.
Section 3.10 TITLE TO GROUND LEASE. Transferor has good and valid
leasehold title to the portion of the Golf Courses leased by Transferor pursuant
to the Ground Lease, free and clear of Liens, other than the Permitted
Exceptions.
16
Section 3.11 TITLE TO LICENSES AND SERVICE CONTRACTS. The interest
of Transferor in the Service Contracts and Licenses is free and clear of all
Liens and has not been assigned to any other Person, except with respect to
Permitted Exceptions.
Section 3.12 NECESSARY PROPERTY. The Properties (together with any
rights of Newco under the REA) represent all of the real and personal property
necessary in connection with the use, operation and maintenance of the Golf
Courses as currently used, operated and maintained. To Transferor's Knowledge
and subject to the provisions of SECTION 5.16 hereof, the Retained Property is
not necessary for the use, operation, maintenance or compliance with applicable
Law of the Properties as currently used or as contemplated to be used as a
Resort Facility and the lack of conveyance by Transferor of the Retained
Property to Newco will not otherwise result in a Material Adverse Effect.
Section 3.13 NO TENANTS OR OCCUPANTS. Except for Transferor and
tenants, or their permitted subtenants or other occupants or assignees, under
the Leases, there are no persons in possession or occupancy of the Properties,
nor are there any persons who have possessory or other occupancy rights with
respect to the Properties.
Section 3.14 COMPLIANCE WITH LAWS. Except as described on Section
3.14 to the Transferor Disclosure Schedule, the Properties are presently used
and operated in compliance in all material respects with (a) all legal
requirements applicable to the Properties ("LEGAL REQUIREMENTS"), and (b) all
Permitted Exceptions.
Section 3.15 LITIGATION. Except as set forth in Section 3.15 of the
Transferor Disclosure Schedule, there are no claims, causes of action or other
litigation or proceedings pending or, to Transferor's Knowledge, threatened with
respect to Transferor. Except as set forth in Section 3.15 of the Transferor
Disclosure Schedule, there are no material claims, causes of action or other
litigation or proceedings pending or, to Transferor's Knowledge, threatened with
respect to the Properties, except possible claims for workers' compensation,
personal injury or property damage which are covered by insurance maintained by
Transferor.
Section 3.16 CONDEMNATION. Except as set forth in Section 3.16 of
the Transferor Disclosure Schedule, there is no existing, pending or to the best
of Transferor's Knowledge, threatened (a) condemnation of all or any part of the
Properties, (b) widening, change of grade or limitation on use of streets
abutting the Properties, (c) special Tax or assessment to be levied against the
Properties, (d) change in the zoning classification of the Properties, or (e)
change in the tax assessment of the Properties.
Section 3.17 PURCHASE OPTIONS. Transferor has not granted any
purchase options or options to lease with respect to all or any portion of the
Properties.
Section 3.18 ENVIRONMENTAL MATTERS. Except as set forth in Section
3.18 of the Transferor Disclosure Schedule (including in the reports and other
documents listed therein) and, to Transferor's Knowledge, (a) there currently
are, and have been, no Hazardous Materials (as defined below) or underground
storage tanks located in, on or under the Properties, (b) Hazardous Materials
17
have not been released into the environment, or discharged, placed or disposed
of at, on or under the Properties in violation of Environmental Legal
Requirements (as defined below) or which would require remediation or
notification under Environmental Legal Requirements, (c) the Properties have not
been used as a landfill, including without limitation for debris, waste or
Hazardous Materials, (d) Transferor has not received any written notice or other
written communication from any person relating to actual or potential liability
pursuant to, or violation of, Environmental Legal Requirements at or due to the
Properties, (e) the Properties currently comply, and have complied, with
applicable Environmental Legal Requirements in all respects, and (f) Transferor
has provided to Empire in writing all material information relating to
environmental conditions in, on, under or from the Properties known to
Transferor or contained in Transferor's files or records, including but not
limited to any such reports relating to Hazardous Materials in, on, under or
migrating to or from the Properties and/or the environmental condition of the
Properties.
For purposes of this SECTION 3.18, the term "HAZARDOUS MATERIALS"
shall include without limitation (a) asbestos or asbestos-containing materials,
polychlorinated biphenyls, petroleum or petroleum products or byproducts,
flammable explosives, radioactive materials, Lead Based Paint, mold, infectious
substances or raw materials which include hazardous constituents or (b) any
hazardous, toxic or harmful substances, wastes, materials, pollutants,
contaminants, or any other substances or materials which are regulated by, or
may form the basis of liability under, any Environmental Legal Requirement.
For purposes of this SECTION 3.18, the term "ENVIRONMENTAL LEGAL
REQUIREMENTS" shall mean all federal, state and local Legal Requirements
relating to contamination or the protection of human health and the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. ss. 9601 ET SEQ.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 ET SEQ.), the
Federal Water Pollution Control Act (33 U.S.C. ss. 1251 ET SEQ.), the Clean Air
Act (42 U.S.C. ss. 7401 ET SEQ.), the Emergency Planning and
Community-Right-to-Know Act (42 U.S.C. ss. 11001 ET SEQ.), the Endangered
Species Act (16 U.S.C. ss. 1531 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. ss. 2601 ET SEQ.), the Occupational Safety and Health Act (29 U.S.C. ss.
651 ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 ET
SEQ.), and those relating to paint containing more than .05% lead by dry weight
("LEAD BASED PAINT") and the regulations promulgated pursuant to said laws, all
as amended from time to time.
Section 3.19 INSURANCE. Section 3.19 of the Transferor Disclosure
Schedule is a list of all insurance policies presently affording coverage with
respect to the Properties, and the information contained thereon is complete and
accurate in all material respects as of the date hereof.
Section 3.20 BROKERS AND FINDERS. Neither Transferor nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the transactions contemplated in this Agreement.
Section 3.21 TAXES. (a) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Transferor, (i) each Transferor has duly and timely (subject to any extensions
18
permitted by applicable law) filed all material Tax Returns required to be filed
by it and all such Tax Returns are true, complete and accurate in all material
respects, (ii) each Transferor has paid all material Taxes that are required to
be paid by it or that it is obligated to withhold from amounts owing to any
employee, creditor or third party, (iii) there are no pending audits,
examinations, investigations, deficiencies, claims or other proceedings in
respect of material Taxes relating to either Transferor, (iv) there are no Liens
for Taxes on any of the Properties, except for Taxes not yet due and payable,
(v) neither Transferor has made any election, or is required, to treat any of
the Properties owned by it as owned by another Person for Tax purposes, (vi)
none of the Properties directly or indirectly secures any debt the interest on
which is tax-exempt under Section 103(a) of the Code, and (vii) none of the
Properties is "tax-exempt use property" within the meaning of Section 168(h) of
the Code.
(b) Notwithstanding the foregoing, the representations and
warranties set forth in SECTION 3.21(a)(i), (ii) and (iii) hereof shall not be
applicable to the extent that the Properties cannot be made subject to Tax liens
and Newco (or its Affiliates) cannot be held liable for Taxes relating to
matters constituting any breach of such representations and warranties.
(c) Neither Transferor has taken any action or knows of any fact
that is reasonably likely to prevent (i) the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or (ii) the
Merger and the Contribution, taken together, from qualifying as a transaction
described in Section 351 of the Code.
Section 3.22 EMPLOYEE BENEFITS
(a) Section 3.22 of the Transferor Disclosure Schedule contains a
complete and accurate list of all operations and maintenance employees at the
Properties as of the date hereof (the "TRANSFERRED EMPLOYEES"), their positions,
their annual/weekly/hourly rate of compensation (as applicable), maximum bonus
opportunity (if any) and benefits received as of the date hereof. Section 3.22
of the Transferor Disclosure Schedule lists each employee benefit plan (within
the meaning of Section 3(3) of ERISA), program or arrangement providing benefits
to any Transferred Employee or any beneficiary or dependent thereof that is
sponsored or maintained by any Transferor or any ERISA Affiliate of any
Transferor or to which any Transferor or any ERISA Affiliate of any Transferor
contributes or is obligated to contribute.
(b) No Transferor has any liability under Title IV of ERISA (whether
absolute or contingent) with respect to any "single-employer plan" within the
meaning of Section 4001(a)(15) of ERISA or "multiemployer plan" within the
meaning of section 3(37) of ERISA. No Transferor or any subsidiary of any
Transferor is subject to any lien or has provided, or is required to provide,
security to any "employee benefit pension plan" (as defined in Section 3(2) of
ERISA) or single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(c) Transferor is not a party to any collective bargaining
agreement, contract, or other agreement with any labor union with respect to any
Transferred Employer. No Transferred Employee is a party to any (i) individual
contract, written or oral, with Transferor for the employment of the Transferred
Employee or the provision of severance, retention or change of control benefits
19
or (ii) confidentiality, non-solicitation or non-competition agreement with
Transferor. Each Transferor is in compliance in all material respects with all
applicable legal requirements relating to the employment of the Transferred
Employees, including with respect to employment discrimination, equal pay, wages
and hours, and there are no complaints, charges or claims against Transferors
pending or, to the Knowledge of the Transferors, threatened in respect thereof.
Section 3.23 WATER CAPACITY. Transferor has no Knowledge of any
existing or threatened facts or circumstances that would materially impair or
prevent adequate water capacity from being available to the Concord Hotel Site
upon completion of the improvements thereon as contemplated by the Site Plan,
either from Kiamesha Artesian Spring Water Company and/or from an alternative
source readily available at or adjacent to the Concord Hotel Site.
Section 3.24 TAX OPINION. Transferor has no Knowledge of any facts
or circumstances that would cause Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ not to deliver
the tax opinion described in Section 7.2(h) hereof in a form reasonably
satisfactory to Transferor.
Section 3.25 DISCLAIMER. Empire, Newco and Merger Sub acknowledge
and agree that, except as set forth in this Agreement, Transferor has not made,
does not make and specifically negates and disclaims any representations,
warranties, promises, covenants, agreements or guaranties of any kind or
character whatsoever, whether express or implied, oral or written, past or
present, of, as to, concerning or with respect to the Properties. Additionally,
no person acting on behalf of Transferor is authorized to make, and by execution
hereof Empire acknowledges that no person has made, on behalf of Transferor, any
representation, agreement, statement, warranty, guaranty or promise regarding
the Properties or the transactions contemplated herein other than the
representations, agreements, statements, warranties, guaranties and promises
contained in this Agreement; and no such other representation, warranty,
agreement, guaranty, statement or promise, if any, made by any person acting on
behalf of Transferor shall be valid or binding upon Transferor unless
specifically set forth herein. Empire further acknowledges and agrees that to
the extent permitted by law, the sale of the property as provided for herein is
made on an "as is" condition and basis with all faults except as expressly
provided in this Agreement.
The representations and warranties contained in this Article III
shall not survive the Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF EMPIRE
Empire hereby represents and warrants to Transferor as follows:
Section 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of
Empire, Newco and Merger Sub is a legal entity duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
20
foreign corporation in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification except where such failures to be so qualified, licensed, or in
good standing would not have a Material Adverse Effect on Empire.
Section 4.2 CAPITAL STRUCTURE. (a) The authorized capital stock of
Empire consists of 75,000,000 shares of common stock, par value $0.01 per share
(the "EMPIRE COMMON STOCK"), of which, as of the date of this Agreement,
26,092,315 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.01 per share (the "PREFERRED STOCK"), of which, as of the
date of this Agreement, 1,774,954 shares are outstanding. All of the outstanding
shares of Empire Common Stock and Preferred Stock have been duly authorized and
are validly issued, fully paid and nonassessable. As of the date hereof, Empire
has no shares of Empire Common Stock or Preferred Stock reserved for issuance,
except as set forth on Section 4.2 of the Empire Disclosure Schedule. Section
4.2 of the Empire Disclosure Schedule contains a true and complete list as of
March 1, 2005 of (i) the number of outstanding options to purchase shares of
empire Common Stock (each an "OPTION"), the exercise price of all Options and
number of shares of Empire Common Stock issuable at such exercise price and (ii)
the number of outstanding rights to receive, or rights the value of which is
determined by reference to, shares of Empire Common Stock, the date of grant and
number of shares of Empire Common Stock subject thereto. Each of the outstanding
shares of capital stock or other securities of each of Empire's Subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and owned by
Empire or by a direct or indirect wholly-owned Subsidiary of Empire, free and
clear of any Lien. Each of the Transferor Shares when issued will be validly
issued, fully paid and non-assessable, free and clear of any Liens. Except as
set forth in Section 4.2 of the Empire Disclosure Schedule, as of the date
hereof, there are no preemptive, registration or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate Empire or any of its Subsidiaries to register,
issue or sell any shares of capital stock or other securities of Empire or any
of its Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of Empire or any of its Subsidiaries, and no securities
or obligations evidencing such rights are authorized, issued or outstanding.
(b) Except as set forth in Section 4.2 of the Empire Disclosure
Schedule, as of the date hereof (i) there are no outstanding contractual
obligations of Empire or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any capital stock (or options to acquire any such capital
stock) or other security or equity interest of Empire or its Subsidiaries, and
(ii) Empire does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
Empire on any matter.
(c) The authorized capital stock of Newco consists of 1,000 shares
of common stock, par value $0.01 per share (the "NEWCO COMMON STOCK"), of which,
as of the date of this Agreement, 100 shares are issued and outstanding, and 0
shares of preferred stock, par value $0.01 per share of which, as of the date of
this Agreement, no shares are outstanding. All of the outstanding shares of
Newco Common Stock have been duly authorized and are validly issued, fully paid
and nonassessable. As of the date hereof, Newco has no shares of Newco Common
21
Stock or preferred stock reserved for issuance. As of the date hereof, there are
no preemptive, registration or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, commitments or rights of any kind that
obligate Newco, or any of its Affiliates to register, issue or sell any shares
of capital stock or other securities of Newco or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
Newco or any of its Subsidiaries, and no securities or obligations evidencing
such rights are authorized, issued or outstanding.
(d) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $0.01 per share (the "MERGER SUB COMMON
STOCK"), of which, as of the date of this Agreement, 1,000 shares are issued and
outstanding, and 0 shares of preferred stock, par value $0.01 per share, of
which, as of the date of this Agreement, no shares are outstanding. All of the
outstanding shares of Merger Sub Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. As of the date hereof, Merger Sub
has no shares of Merger Sub Common Stock or preferred stock reserved for
issuance. As of the date hereof, there are no preemptive, registration or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind that obligate Merger Sub or any of its
Affiliates to register, issue or sell any shares of capital stock or other
securities of Merger Sub or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of Merger Sub or any
of its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding.
Section 4.3 CORPORATE AUTHORITY; APPROVAL. (a) Empire, Newco, and
Merger Sub have all requisite corporate power and authority and have taken all
corporate action necessary in order to execute, deliver and perform their
obligations under this Agreement, subject only to adoption of this Agreement by
the vote of holders of a majority of the outstanding shares of Empire Common
Stock (such affirmative vote, the "EMPIRE REQUISITE VOTE"). The Empire Requisite
Vote is the only vote of the holders of any class or series of capital stock of
Empire necessary to adopt, approve or authorize this Agreement and the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of Empire, Newco and Merger Sub, enforceable against Empire, Newco and
Merger Sub in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Subject to SECTION 5.10 hereof, the Board of Directors of Empire
has (i) by the affirmative vote of all directors voting, duly approved this
Agreement, the Option Agreement, the Transactions and the other transactions
contemplated hereby, including for purposes of Section 203 of the Delaware
General Corporate Law; (ii) determined that this Agreement, the Transactions and
the other transactions contemplated hereby are advisable and in the best
interests of the holders of shares of Empire Common Stock; (iii) resolved to
recommend approval of this Agreement and the Transactions to the holders of
shares of Empire Common Stock; and (iv) directed that this Agreement be
submitted to the holders of shares of Empire Common Stock for their adoption.
22
Section 4.4 GOVERNMENTAL FILINGS; NO VIOLATIONS; CERTAIN CONTRACTS,
ETC. (a) Other than the reports, filings, registrations, consents, approvals,
permits, authorizations and/or notices set forth on Section 4.4 of the Empire
Disclosure Schedule, no notices, reports or other filings are required to be
made by Empire or any of its Affiliates with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Empire or any of its Affiliates from, any governmental or regulatory authority,
agency, commission, body, court or other governmental entity (each a
"GOVERNMENTAL ENTITY"), in connection with the execution and delivery of this
Agreement by Empire and the consummation by Empire of the transactions
contemplated hereby.
(b) The execution, delivery and performance of this Agreement by
Empire do not, and the consummation by Empire of the transactions contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, the certificate of incorporation or by-laws of Empire or the
comparable governing instruments of any of its Subsidiaries; (ii) except as set
forth in Section 4.4 of the Empire Disclosure Schedule, a breach or violation
of, a termination (or right of termination) or a default under, the acceleration
of or creation of any obligations or the creation of a Lien on the assets of
Empire or any of its Subsidiaries, or, except as set forth in Section 4.4 of the
Empire Disclosure Schedule, otherwise require consent or approval, pursuant to,
any agreement, lease, license, contract, note, mortgage, indenture, loan, credit
agreement or arrangement or other obligation (each a "CONTRACT") binding upon
Empire or any of its Subsidiaries or any Laws or governmental or
non-governmental License to which Empire or any of its Subsidiaries is subject;
or (iii) any change in the rights or obligations of any party under any
Contracts to which Empire or any of its Subsidiaries is a party (including
without limitation any change in pricing, put or call rights, rights of first
offer, rights of first refusal, tag-along or drag-along rights or any similar
rights or obligations which may be exercised in connection with the other
transactions contemplated hereby), except, in the case of clause (ii) or (iii)
above, for any breach, violation, termination, default, acceleration, creation
or change that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Empire.
Section 4.5 EMPIRE REPORTS; FINANCIAL STATEMENTS. (a) Empire has
made available to Transferor each registration statement, report, proxy
statement or information statement prepared by it since December 31, 2003 (the
"AUDIT DATE"), including (x) Empire's Annual Report on Form 10-K for the year
ended December 31, 2003, and (y) Empire's Quarterly Reports on Form 10-Q for the
periods ended March 31, 2004, June 30, 2004, and September 30, 2004, each in the
form (including exhibits, annexes and any amendments thereto) filed with the
SEC. Empire has filed and furnished all forms, statements, reports and documents
required to be filed or furnished by it with the SEC pursuant to applicable
securities statutes, regulations, policies and rules since January 1, 2004 (the
forms, statements, reports and documents filed since January 1, 2004, or those
filed subsequent to the date of this Agreement, and as amended including, any
financial statements or schedules contained therein, the "EMPIRE REPORTS"). The
23
Empire Reports were prepared in all material respects in accordance with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations thereunder and complied in all material respects with the then
applicable accounting standards Securities Act, Exchange Act and rules and
regulations thereunder. As of their respective dates (and, if amended, as of the
date of such amendment) the Empire Reports at the time filed (and in the case of
registration statements and proxy statements on the dates of effectiveness and
the dates of the meetings, respectively) did not (except to the extent such
Empire Reports were subsequently amended or supplemented by an Empire filing
prior to the date hereof), and any Empire Reports filed with the SEC subsequent
to the date of this Agreement will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Empire Reports (including the related notes
and schedules) filed prior to the date of this Agreement fairly presents, and,
if filed after the date of this Agreement, will fairly present, the consolidated
financial position of Empire or any other entity included therein and their
respective Subsidiaries, as of its date, and each of the consolidated statements
of operations, cash flows and of changes in shareholders' equity included in or
incorporated by reference into the Empire Reports (including any related notes
and schedules) fairly presents, and, if filed after the date of this Agreement,
will fairly present, the results of operations, retained earnings and changes in
financial position, as the case may be, of Empire or any other entity included
therein and their respective Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to notes and customary year-end
audit adjustments that will not be material in amount or effect), in each case
in accordance with GAAP consistently applied during the periods involved, except
as may be noted therein.
(c) Empire has in place the "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) required in order
for the Chief Executive Officer and Chief Financial Officer of Empire to engage
in the review and evaluation process mandated by Section 302 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 ("SOXA"). Empire and its Subsidiaries' "disclosure
controls and procedures" are reasonably designed to ensure that all information
(both financial and non-financial) required to be disclosed by Empire in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC, and that all such information is accumulated and communicated to the
Empire's management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of Empire required by Section 302 of SOXA with respect
to such reports.
(d) Since January 12, 2004, (x) neither Empire nor any of its
Subsidiaries nor, to the Knowledge of the officers of Empire, any director,
officer, employee, auditor, accountant or representative of Empire or any of its
Subsidiaries has received or otherwise had or obtained Knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
Empire or any of its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
Empire or any of its Subsidiaries has engaged in questionable accounting or
auditing practices, and (y) no attorney representing Empire or any of its
24
Subsidiaries, whether or not employed by Empire or any of its Subsidiaries, has
reported evidence of a material violation of securities Laws, breach of
fiduciary duty or similar violation by Empire or any of its officers, directors,
employees or agents to the Board of Directors of Empire or any committee thereof
or to any director or officer of Empire.
Section 4.6 ABSENCE OF CERTAIN CHANGES. Since December 31, 2003,
there has not been any Material Adverse Effect on Empire or any event,
occurrence, discovery or development which would, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
Section 4.7 LITIGATION AND LIABILITIES. (a) Except as set forth in
Section 4.7 of the Empire Disclosure Schedule, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the Knowledge of Empire, threatened against Empire or
any of its Subsidiaries or Affiliates, or (ii) litigations, arbitrations,
investigations or other proceedings, or injunctions or final judgments relating
thereto, pending or, to the Knowledge of Empire, threatened against Empire or
any of its Subsidiaries or Affiliates before any Governmental Entity, except in
the case of either clause (i) or (ii), for those that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Empire. None of Empire, any of its Subsidiaries or Affiliates is a party to or
subject to the provisions of any judgment, order, writ, injunction, decree or
award of any Governmental Entity which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Empire.
(b) There are no liabilities or obligations of Empire or any
Subsidiary of Empire, whether or not accrued, contingent or otherwise, or any
other facts or circumstances that would reasonably be expected to result in any
obligations or liabilities of, Empire or any of its Subsidiaries, other than:
(i) liabilities or obligations to the extent reflected on the consolidated
balance sheet of Empire or, in the notes thereto, or included in the Empire
Reports filed prior to the date hereof; and (ii) liabilities or obligations
that, individually or in the aggregate, would not be reasonably expected to have
a Material Adverse Effect on Empire.
Section 4.8 COMPLIANCE WITH LAWS; LICENSES. (a) The businesses of
each of Empire and its Subsidiaries have not been conducted in violation of any
Law, except for such violations that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Empire.
No investigation or review by any Governmental Entity with respect to Empire or
any of its Subsidiaries is pending or, to the Knowledge of Empire, threatened,
nor has any Governmental Entity (other than any indian tribe or nation or
governing body thereof) indicated in writing an intention to conduct the same
except for such investigations or reviews that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Empire.
Empire and its Subsidiaries each has all governmental permits, licenses,
franchises, variances, exemptions, orders issued or granted by a Governmental
Entity and all other authorizations, consents and approvals issued or granted by
a Governmental Entity ("EMPIRE LICENSES") necessary to conduct its business as
presently conducted, except those the absence of which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Empire.
25
(b) Each of Empire and its Subsidiaries is in compliance with its
obligations under each of the Empire Licenses, in each case except for such
failures to be in compliance as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Empire. There is not
pending or, to the Knowledge of Empire, threatened before any Governmental
Entity any proceeding, notice of violation, order of forfeiture or complaint or
investigation against Empire or any of its Subsidiaries relating to any of the
Empire Licenses, in each case, except as would not individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Empire.
Section 4.9 MATERIAL CONTRACTS. (a) As of the date of this
Agreement, neither Empire nor any of its Subsidiaries is a party to or bound by
any Contract that (either individually or together with any related or similar
Contract) is material to the business of Empire and its Subsidiaries, taken as a
whole except as disclosed on Section 4.9 of the Empire Disclosure Schedule (the
"EMPIRE MATERIAL CONTRACTS").
(b) Except with respect to the Indian Tribe Agreements, each Empire
Material Contract is a valid and binding agreement of Empire or one of its
Subsidiaries, as the case may be, and is to Empire's Knowledge in full force and
effect, and neither Empire nor any of its Subsidiaries nor, to the Knowledge of
Empire, any other party thereto is in default or breach in any respect under the
terms of any such Contract, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Empire.
Section 4.10 TAKEOVER STATUTES. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
(each, a "TAKEOVER STATUTE") or any anti-takeover provision in Empire's
certificate of incorporation and by-laws is applicable to the Empire Shares or
the other transactions contemplated by this Agreement. The Board of Directors of
Empire has taken or caused to be taken all action so that Transferor will not be
prohibited as an "interested stockholder" (as such term is used in Section 203
of the DGCL) from entering into this Agreement, the Voting Agreement, Option
Agreement or Registration Rights Agreement or consummating the Transactions or
the other transactions contemplated hereby.
Section 4.11 AFFILIATE TRANSACTIONS
(a) Except as set forth on Section 4.11 of the Empire Disclosure
Schedule, there are no transactions, arrangements or Contracts between Empire
and its Subsidiaries, on the one hand, and any officer or director of Empire,
any holder of more than 10% of the outstanding Empire Common Stock or any
Affiliate of Empire or such other Persons (collectively, the "COVERED PERSONS")
(other than wholly-owned Subsidiaries of Empire) or other Persons, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act.
(b) Empire has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the transactions contemplated in this Agreement except that Empire has disclosed
to Transferor that Empire has employed Jefferies as its financial advisor, the
arrangements with which have been disclosed to Transferor prior to the date of
this Agreement.
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Section 4.12 TAXES. (a) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Empire,
(i) Empire and each of its Subsidiaries have duly and timely filed all Tax
Returns required to be filed by any of them, and all such Tax Returns are true,
complete and accurate in all material respects, (ii) Empire and each of its
Subsidiaries have paid all Taxes that are required to be paid by any of them
(other than Taxes that are being diligently contested by appropriate proceedings
and for which adequate reserves are reflected in the Empire Reports) or that
Empire or any of its Subsidiaries are obligated to withhold from amounts owing
to any employee, creditor or third party, (iii) the unpaid Taxes of Empire and
its Subsidiaries do not exceed the reserve for Tax liability (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and tax income) reflected in the financial statements contained in the
Empire Reports filed prior to the date of this Agreement, as adjusted for
results of operations and cash flows through the date hereof, (iv) neither
Empire nor any of its Subsidiaries has waived any statute of limitations with
respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, (v) there are no pending audits, examinations,
investigations, deficiencies, claims or other proceedings in respect of Taxes
relating to Empire or any of its Subsidiaries, (vi) there are no Liens for Taxes
on any asset of Empire or any of its Subsidiaries, except for Taxes not yet due
and payable, (vii) none of Empire or any of its Subsidiaries has been a member
of any group that has filed a combined, consolidated or unitary Tax Return,
other than the affiliated group of corporations of which Empire is the common
parent, (viii) none of Empire or its Subsidiaries has any liability for Taxes of
any person under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign law), as transferee or successor, by
contract or otherwise, except as a result of the application of Treasury
Regulation Section 1.1502-6 (and any comparable provision of state, local or
foreign law to Empire and its Subsidiaries which are members of the affiliated
group of corporations of which Empire is the common parent, (ix) none of Empire
or any of its Subsidiaries has been a distributing corporation or a controlled
corporation with respect to any distribution occurring during the last three
years in which the parties to such distribution treated the distribution as one
to which Section 355 of the Code (or any comparable provision of state, local or
foreign law) applied, (x) none of Empire or any of its Subsidiaries has made any
election, or is required, to treat any of the assets owned by such entity as
owned by another Person for Tax purposes, and (xi) none of Empire or any of its
Subsidiaries has received or has been subject to any written ruling relating to
Taxes or entered into any written and legally binding agreement with any taxing
authority relating to Taxes.
(b) None of Empire or any of its Subsidiaries has taken any action
or knows of any fact that is reasonably likely to prevent (i) the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code or (ii) the Merger and the Contribution, taken together, from qualifying as
a transaction described in Section 351 of the Code.
Section 4.13 PERMITS AND APPROVALS. Except as set forth on Section
4.13 of the Empire Disclosure Schedule, Empire has all material zoning and
governmental approvals and all material certificates of occupancy, underwriters
certificates, building, housing, safety, fire, health, environmental and other
similar approvals, and all other material permits and licenses necessary to
maintain, operate and use the Monticello Property in the manner in which the
27
same is presently being maintained, operated and used, and all of such items
have been issued and are valid and in full force and effect.
Section 4.14 CATSKILL DEVELOPMENT, L.L.C. Except those being
transferred on the Closing Date by Catskill Development, L.L.C. (or its
Subsidiaries or Affiliates, if applicable) to Empire, all material assets,
income, revenues, rights and fees (including those related to gaming, including,
without limitation, pari-mutual, video lottery terminals and indian tribe
related gaming and the Monticello Property) or agreements or joint ventures with
the Cayuga Nation of New York or other indian tribes or nations in which
Catskill Development, L.L.C. or its Subsidiaries or Affiliates had any interest
prior to January 12, 2004 have been transferred (directly or indirectly) to
Empire.
Section 4.15 MONTICELLO PROPERTY. Except as set forth in the Indian
Tribe Agreements, (i) MRMI owns fee simple title to the Monticello Property,
free and clear of all Liens, other than Liens that do not have a Material
Adverse Effect on the Monticello Property; (ii) neither Empire nor MRMI is a
party to any material leases or occupancy agreements or arrangements with any
third party providing for the right of such third party to lease or occupy any
material portion of the Monticello Property; and (iii) there are no purchase
options or lease options in favor of any third party with respect to all or any
material portion of the Monticello Property.
Section 4.16 CONDEMNATION. There is no pending or to Empire's
Knowledge, threatened, condemnation of all or any material portion of the
Monticello Property.
Section 4.17 ENVIRONMENTAL MATTERS. Except as set forth in the Phase
I Environmental Site Assessment Report Update, dated as of October 7, 2003 and
prepared by ▇▇▇▇▇▇ Engineering and Environmental Services, Inc. and the
Underground Storage Tank Closure Report, dated as of December 15, 2004 and
prepared by ▇▇▇▇▇▇ Engineering and Environmental Services, Inc., and to Empire's
Knowledge, except as would not have a Material Adverse Effect on Empire, (i)
Hazardous Materials have not been released into the environment, or discharged,
placed or disposed of at, on or under the Monticello Property in violation of
Environmental Legal Requirements or which would require remediation or
notification under Environmental Legal Requirements, and (ii) the Monticello
Property currently complies, and has complied, with applicable Environmental
Legal Requirements.
Section 4.18 LABOR AND EMPLOYEE BENEFITS. (a) Section 4.18 of the
Empire Disclosure Schedule lists all material employee benefit plans (each, an
"Empire Plan"), union or collective bargaining agreements, and employment
agreements to which Empire or its Subsidiaries are a party or (with respect to
any Empire Plan) to which Empire or its Subsidiaries contribute or have
contributed; Empire has made available to Transferor true and complete copies of
such Empire Plans and agreements; Empire and its Subsidiaries are in compliance
in all material respects with their obligations under such Empire Plans and
agreements (including making any required contributions to any Empire Plan).
28
(b) With respect to each such Empire Plan, Empire and its
Subsidiaries have complied, and are now in compliance with, the provisions of
ERISA, the Code and the laws and regulations applicable to such Empire Plans in
all material respects and, to Empire's knowledge, such Empire Plans are
maintained and administered in all material respects in accordance with ERISA
and any other applicable laws.
(c) No event has occurred (including events contemplated by this
Agreement) that can reasonably be expected to trigger any complete or partial
withdrawal by Empire or its Subsidiaries from any multiemployer Empire Plan.
(d) The liability of Empire and its Subsidiaries with respect to
multi-employer Empire Plans to which Empire and its Subsidiaries contribute (or
have contributed) is not reasonably likely to have a Material Adverse Effect on
Empire or its Subsidiaries.
(e) There are no material organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other material
labor disputes, pending or threatened against or involving Empire or any of its
Subsidiaries.
Section 4.19 TAX OPINION. Empire has no Knowledge of any facts or
circumstances that would cause ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP not to deliver the tax
opinion described in Section 7.1(h) hereof in a form reasonably satisfactory to
Empire.
The representations and warranties contained in this Article IV
shall not survive the Closing.
ARTICLE V.
COVENANTS OF THE PARTIES
Section 5.1 INTERIM OPERATIONS OF EMPIRE. Except as expressly
contemplated hereby, Empire covenants and agrees as to itself and its
Subsidiaries that, from the date of this Agreement until the Closing Date, the
business of it and its Subsidiaries shall be conducted in the ordinary course of
business, consistent with past practices. Without limiting the generality of the
foregoing, from the date of this Agreement until the Closing Date, without the
written consent of Transferor (which consent shall not be unreasonably withheld
or delayed), Empire will not and will not permit its Subsidiaries to:
(a) merge or consolidate Empire or any of its Subsidiaries with any
other Person;
(b) other than with respect to Excluded Shares, issue, sell, pledge,
dispose of, grant, transfer, lease, license, guarantee, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, lease,
license, guarantee or encumbrance of, any shares of capital stock of
Empire or any its Subsidiaries, or securities convertible or exchangeable
29
or exercisable for any shares of such capital stock, or any options,
warrants or other rights of any kind to acquire any shares of such capital
stock or such convertible or exchangeable securities;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock or enter into any agreement with respect to
the voting of its capital stock other than with respect to Excluded Shares
or dividends on Empire preferred stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or
securities convertible or exchangeable into or exercisable for any share
of its capital stock other than in a transaction pursuant to which the
Transferor Shares would be adjusted pursuant to Section 2.14;
(e) change any method of accounting for Tax purposes, (ii) make,
change or revoke any material Tax election, (iii) settle or compromise any
material Tax liability in each case, other than in the ordinary course of
business;
(f) incur any indebtedness for borrowed money or guarantee such
indebtedness or another Person, or issue or sell any debt securities or
warrants or other rights to acquire any debt security of Empire or any of
its Subsidiaries, except for (i) indebtedness for borrowed money incurred
in the ordinary course of business not to exceed $5,000,000 in the
aggregate, and (ii) indebtedness for borrowed money in replacement of
existing indebtedness for borrowed money on customary commercial terms; or
(g) change the primary nature of its business as a gaming and
hospitality company.
In addition, prior to (i) the making of any material amendment or
modification, waiver of any material right or obligation, the giving of any
material notice, granting of any material consent or approval or any termination
of any Indian Tribe Agreement or the entering into of any material new agreement
with any indian tribe or nation, or (ii) the giving of any material notice,
making of any material submission or filing, or taking of any other material
action with respect to the Requisite Approvals, Empire shall consult with
Transferor and in good faith consider Transferor's recommendations and
suggestions regarding such matters, provided that Empire shall not be required
to obtain Transferor's consent or approval with respect to any such matters.
Newco and Merger Sub also agreed to abide by the covenants set forth in this
Section 5.1 as if such covenants were applicable to, and referred to, Newco and
Merger Sub (in addition to Empire).
Section 5.2 INTERIM OPERATIONS OF TRANSFEROR(a) . (a) From the date
of this Agreement to the Closing Date, Transferor shall (i) comply or cause to
be complied in all material respects with all of its obligations under the
Ground Lease, all Leases, Service Contracts, the Permitted Exceptions and all
documents evidencing and/or securing, as the case may be, the Empire Payment
Obligations (including, without limitation, the mortgages securing all or any
30
portion of the Empire Payment Obligations with respect to the Properties) such
that such agreements be maintained in full force and effect and Transferor shall
promptly provide to Empire copies of all notices received by Transferor
thereunder, (ii) operate the Properties in a manner consistent with good
practice and in accordance with its insurance company's requirements and
applicable Legal Requirements, (iii) comply with SECTION 6.5 hereof regarding
the prohibition against voluntary title defects and (iv) maintain the Properties
in substantially the same condition as exists on the date hereof, reasonable
wear and tear excepted, and shall keep the same or cause the same to be kept
fully insured against fire and with extended coverage consistent with prior
practice. During the term of this Agreement and through the Closing Date,
Transferor shall not, without Empire's prior written consent (which consent
shall not be unreasonably withheld or delayed):
(A) enter into any material transaction or agreement relating
to the Properties not in the ordinary course of business;
(B) remove any personalty from the Properties (other than in
the ordinary course of business, or due to obsolescence);
(C) enter into, extend, amend, terminate or waive any material
rights under (a) the Ground Lease, (b) any material Lease (except pursuant to
the exercise by the tenant of a right granted to tenant pursuant to the terms
thereof) or other possessory arrangement regarding the Properties or (c) any
Service Contract regarding the Properties other than for a term which is
terminable, without any cost or fee, on not more than thirty days' notice to the
service provider; or
(D) settle any material suit, action, arbitration or
proceeding pending with respect to the Properties and/or the use, operation
and/or maintenance thereof;
(b) Upon or prior to March 1, 2005, Empire shall provide Transferor
with a list of those Service Contracts, that Empire does not wish to assume at
Closing. Transferor shall terminate such Service Contracts (including payment of
termination fees) prior to the Closing, the termination of which shall be a
condition to Empire's obligation to close as set forth in Section 7.1 hereof.
Section 5.3 LAND USE APPLICATIONS AND APPROVALS. Transferor shall
continue to pursue all land use related approvals, permits and agreements as
more particularly described on Schedule 5.3(i) hereto deemed necessary by
Transferor and Empire with respect to the intended future development of the
Concord Hotel Site as a Resort Facility. Transferor shall not file or pursue any
of the applications or approvals described on Schedule 5.3(ii) hereto with
respect to the Properties or the Retained Property if it is mutually determined
by the parties in consultation with their respective land use counsel, that such
filing or pursuit would adversely affect the Properties or the Contemplated
Business intended to be conducted thereon. In the event that the parties fail to
reach agreement with respect to such determination, the parties' dispute shall
be submitted to a mutually acceptable expert (each party agreeing to be diligent
and reasonable in designating such expert) for binding resolution thereof.
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Section 5.4 ENVIRONMENTAL REMEDIATION. Through the Closing Date,
Transferor shall continue to pursue any necessary environmental remediation at
the Properties in the ordinary course of business, at Transferor's sole cost and
expense. Subsequent to the Closing Date, Newco shall be responsible for the
completion and cost of all environmental remediation required to be performed at
the Properties. The parties agree to use their commercially reasonable efforts
to add Newco as a "co-volunteer" under the existing ▇▇▇▇▇▇▇▇▇▇ cleanup agreement
between Concord Associates and the New York State Department of Environmental
Conservation. All tax credits received by either Concord Associates or Newco in
connection with the ▇▇▇▇▇▇▇▇▇▇ cleanup program and related to the Concord
Property shall be divided equally between Concord Associates and Newco. All tax
credits available in connection with the ▇▇▇▇▇▇▇▇▇▇ cleanup program and related
to the Retained Property shall be retained by Concord Associates. The provisions
of this Section 5.4 shall survive the Closing.
Section 5.5 RESTRICTIONS REGARDING CERTAIN OTHER TRANSACTIONS(a) .
(a) Empire agrees that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant ("REPRESENTATIVES") retained by it or
any of its subsidiaries) not to, directly or indirectly, initiate or solicit any
inquiries or the making of any proposal or offer with respect to (i) a merger,
reorganization, share exchange, consolidation or similar transaction involving
Empire or any of its Subsidiaries, (ii) any purchase of an equity interest
representing an amount equal to or greater than a 15% voting or economic
interest in Empire and its Subsidiaries taken as a whole or (iii) any purchase
of assets, securities or ownership interests representing an amount equal to or
greater than 15% of the consolidated assets of Empire and its Subsidiaries taken
as a whole (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL"). Empire further agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its subsidiaries
shall, and that it shall cause its and its subsidiaries' employees, agents and
Representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person or entity relating to an Acquisition Proposal;
PROVIDED, HOWEVER, that the foregoing shall not prevent Empire or its Board of
Directors from (x) complying with its disclosure obligations under Sections
14d-9 and 14e-2 of the Exchange Act of 1934 with regard to an unsolicited
Acquisition Proposal; PROVIDED, HOWEVER, that if such disclosure has the effect
of withdrawing, modifying or qualifying the recommendation of its Board of
Directors in a manner adverse to Transferor or the approval of the transactions
contemplated by this Agreement by the Board of Directors of Empire, Transferor
shall have the right to terminate this Agreement, after which termination the
Option Agreement shall remain in full force and effect and the Grantee under the
Option Agreement shall thereafter have the right to exercise the Option; and (y)
at any time prior to, but not after, the time the transactions contemplated by
this Agreement are adopted by holders of shares of capital stock of Empire, (A)
providing information in response to a request therefore by a person or entity
who has made an unsolicited bona fide written Acquisition Proposal if the Board
of Directors of Empire receives from the person or entity so requesting such
information an executed confidentiality agreement on customary terms; or (B)
engaging in any negotiations or discussions with any person or entity who has
made an unsolicited bona fide written Acquisition Proposal if the Board of
Directors of Empire receives from such person or entity an executed
confidentiality agreement on customary terms; if and only to the extent that,
32
(1) in each such case referred to in clause (A) or (B) above, the Board of
Directors of Empire reasonably determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable law, (2) in
each case referred to in clause (A) or (B) above, the Board of Directors of
Empire reasonably determines in good faith (after consultation with its
financial advisor and outside counsel) that such Acquisition Proposal, if
accepted, is reasonably likely to be consummated, taking into account all legal,
financial and regulatory aspects of the proposal, the likelihood of obtaining
financing, and the person or entity making the proposal, and if consummated,
would result in a transaction more favorable to Empire's stockholders from a
financial point of view than the Transactions and the other transactions
contemplated by this Agreement taking into account any change in any proposal
proposed by Transferor and (3) in the case of clause (A) and (B), Transferor
shall have had written notice of Empire's intention to take the action referred
to in clause (A) or (B) at least five business days prior to the taking of such
action by Empire; provided, that any more favorable Acquisition Proposal
referred to in clause (A) or (B) above must involve 50% rather than the 15% used
in the definition of Acquisition Proposal. Empire represents that since the date
of the Letter Agreement to the date hereof, there have been no activities,
discussions or negotiations with any person or entity conducted heretofore with
respect to any Acquisition Proposal. Empire agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence of this Section of the obligations undertaken in this
Section. Empire agrees that it will notify Transferor promptly, but in any event
within 48 hours if any such inquiries, proposals or offers are received by, any
such information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, it or any of its Representatives
indicating, in connection with such notice, the name of such person or entity
and the material terms and conditions of any proposals or offers and thereafter
shall keep Transferor informed on a current basis, and, in any event, within 48
hours of any changes in the status and terms of any such proposals or offers,
including whether any such proposal has been withdrawn or rejected. Empire also
agrees to provide any information to Transferor that it is providing to another
person or entity at substantially the same time it provides it to such other
person or entity and that it will promptly request each person or entity that
has heretofore executed a confidentiality agreement in connection with its
consideration of a transaction with Empire to return all confidential
information furnished prior to the execution hereof to or for the benefit of
such person or entity by or on behalf of it or any of its Subsidiaries.
(b) During the term of this Agreement, (i) Empire shall work
exclusively with Transferor (and Indian tribes or nations) in connection with
any transaction involving the direct or indirect acquisition by Empire of hotel,
gaming or resort properties in the Catskills ("CATSKILLS ACQUISITION"), and (ii)
Empire shall not solicit, contact, facilitate or engage in discussions or
negotiations with any third party (other than Transferor and Indian tribes or
nations) with respect to any Catskills Acquisition.
(c) During the term of this Agreement, (i) Transferor shall work
exclusively with Empire in connection with any transaction involving the direct
or indirect transfer by Transferor of hotel, gaming or resort properties in the
Catskills ("CATSKILLS TRANSFER"), and (ii) Transferor shall not solicit,
contact, facilitate or engage in discussions or negotiations with any third
party (other than Empire) with respect to any Catskills Transfer.
33
Section 5.6 RESTRICTIONS ON GAMING FACILITIES ON RETAINED PROPERTY.
Transferor agrees that neither Transferor, nor any of its principals (including,
without limitation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇), nor any of its or their
respective Subsidiaries and Affiliates, shall, for a period of twenty (20) years
after the Closing, (a) build, own or operate a Class III gaming facility located
on the Retained Property, or (b) build, own or operate a hotel located on the
Retained Property that is a competitor of a hotel developed on the Concord Owned
Property, provided that Transferor or its Subsidiaries or Affiliates may build,
own or operate a boutique luxury hotel on the Retained Property (the parties
hereby agreeing that a boutique luxury hotel, which, for purposes of this
Agreement, shall mean a four star (or higher quality) hotel consisting of 300
rooms or less, will be deemed not to be a competitor of a hotel developed on the
Concord Owned Property). Transferor shall file a restrictive covenant (the
"RESTRICTIVE COVENANT") of record that shall run with the land and be binding
upon any and all grantees, mortgagees and tenants of the Retained Property (or
any portion thereof) and/or successors and assigns of Concord Associates)
stating that (i) the right of the owner of the Retained Property or any portion
thereof to obtain public utilities for the benefit of any Class III gaming
facility which may be constructed on such property shall be subordinated to the
utility requirements of the Resort Facility located or to be located on the
Concord Hotel Site, and (ii) the owner of any such property shall not take any
action with respect to such property that is reasonably likely to materially
adversely affect or materially impair the Requisite Approvals for the Resort
Facility which is proposed to be constructed on the Concord Hotel Site. Other
than as set forth in this Agreement, Transferor's actions with respect to the
Retained Property shall not be limited or restricted pursuant to this Agreement.
The provisions of this Section 5.6 shall survive the Closing.
Section 5.7 ACCESS. In connection with each party's due diligence
review and otherwise during the term of this Agreement, each party will give the
other party (and its consultants and representatives) reasonable access to its
books, records, contracts, agreements, financial information, documents,
personnel, and other relevant materials and information, subject to the terms of
the Confidentiality Agreement dated November 12, 2004, between Transferor and
Empire (the "CONFIDENTIALITY AGREEMENT"), provided that any on-site inspections
or testing shall have obtained the approval of the party owning the applicable
property (which approval shall not be unreasonably withheld or delayed). Any
information provided to Empire or Transferor or their respective representatives
pursuant to this Agreement shall be subject to the terms of the Confidentiality
Agreement.
Section 5.8 FURTHER ASSURANCES; REASONABLE EFFORTS TO SATISFY
CONDITIONS. (a) The parties hereto agree that, from time to time, whether
before, at or after the Closing Date, each of them will execute and deliver such
further instruments of conveyance and transfer and take such other actions as
may be necessary to carry out the purposes and intents of this Agreement.
(b) Without limiting the foregoing, subject to the terms and
conditions provided herein and to applicable laws, each of the parties shall use
its commercially reasonable efforts to take, or cause to be taken, all actions,
and do, or cause to be done, and assist and cooperate with the other party in
doing, in the most expeditious manner practicable, all things necessary, proper
or advisable to ensure that the conditions set forth in Article VII hereof are
34
satisfied and to consummate the transactions contemplated hereby. Without
limiting the generality of the foregoing, each of Empire and Transferor shall:
(i) use their commercially reasonable efforts to cooperate with one another in
(A) timely making any filings and notifications that are required to be made
under applicable laws in connection with gaming approvals and any other
consents, licenses, approvals, permits, waivers, orders or authorizations that
are required to be obtained under applicable laws from governmental entities or
other persons in connection with the consummation of the transactions
contemplated by this Agreement, and (B) as promptly as practicable, responding
to any request for information from such governmental entities or such other
persons; (ii) use its commercially reasonable efforts to avoid the entry of, or
to have vacated, lifted, reversed, overturned or terminated, any order,
judgment, injunction or decree (whether temporary, preliminary or permanent) or
any other judicial, administrative or legislative action or proceeding that
would restrain, prevent or delay the closing of the transactions contemplated by
this Agreement, including, without limitation, defending through litigation on
the merits any claim asserted in any court by any party; and (iii) use its
commercially reasonable efforts to take any steps necessary to avoid or
eliminate any impediment under any applicable Law that may be asserted by any
governmental entity or private party with respect to the transactions
contemplated by the Agreement so as to enable the Closing to occur as soon as
reasonably practicable after the date hereof.
(c) Transferor agrees to use commercially reasonable efforts to
obtain the approval to this transaction of the Bankruptcy Court having
jurisdiction over the bankruptcy proceeding involving Frontline Capital Corp.
("FRONTLINE"), which approval is a condition to Transferor's obligation to close
hereunder. In furtherance of the foregoing, Transferor and its members covenant
to cause Frontline to (x) promptly petition the Bankruptcy Court for such
approval, and (y) recommend that the Bankruptcy Court approve this transaction.
Notwithstanding the foregoing, in the event that the Bankruptcy Court
disapproves this transaction, then Transferor, upon written notice to Empire
given within ten (10) days after such disapproval, shall have the right to
terminate this Agreement, whereupon (i) this Agreement shall terminate and
neither party shall have any further rights or obligations hereunder, and (ii)
the Option (as defined in the Option Agreement) shall not be exercisable
thereafter.
Section 5.9 PUBLIC ANNOUNCEMENTS. Subject to their respective
obligations under applicable Law (including requirements of stock exchanges and
other similar regulatory bodies), Empire and Transferor will consult with each
other before issuing, or permitting any agent or Affiliate to issue, and provide
each other the opportunity to review and make reasonable comment upon, any press
releases or otherwise making or permitting any agent or Affiliate to make, any
public statements with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable Law or any
listing agreement with the Nasdaq National Market System, will not issue any
such press release or make any such public statement prior to such consultation;
PROVIDED, HOWEVER, that each of Empire and Transferor may make any public
statement in response to specific questions by the press, analysts, investors or
those attending industry conferences or financial analyst conference calls, so
long as any such statements are not inconsistent with previous press releases,
public disclosures or public statements made by Empire or Transferor and do not
reveal non-public information regarding the other party or its respective
Subsidiaries.
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Section 5.10 PROXY STATEMENT; REGISTRATION STATEMENT; BLUE SKY. (a)
Empire and Transferor shall cooperate and Empire shall promptly prepare, and
shall file as promptly as practicable, a registration statement with respect to
the shares of Newco to be issued to Empire's current shareholders and to
Transferor in connection with the Transactions (together with all amendments
thereto, the "REGISTRATION STATEMENT"), which shall include the proxy statement
to be sent to Empire stockholders in connection with the Stockholders Meeting
(the "EMPIRE PROXY STATEMENT"). Empire, (with respect to information supplied by
it or its Affiliates) will cause the Registration Statement to comply as to form
in all material respects with the applicable provisions of the Exchange Act and
the rules and regulations thereunder. Empire shall its commercially reasonable
efforts to have the Registration Statement cleared by the SEC as promptly as
practicable after such filing. No filing of, or amendment or supplement to, the
Registration Statement shall be made by Empire, and no filing of, or amendment
or supplement to, the Empire Proxy Statement shall be made by Empire, in each
case, without providing Transferor a reasonable opportunity to review and
comment thereon, which comments shall be considered in good faith. Empire will
advise Transferor promptly after Empire receives notice thereof, of the time
when the Empire Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, the suspension of
the qualification of the Empire Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Registration Statement or the Empire Proxy Statement or
comments thereon and responses thereto or requests by the SEC for additional
information.
(b) The information supplied by Empire for inclusion in the
Registration Statement and the Empire Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Empire Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, and (iii) the time of the Empire Stockholders
Meeting contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein not misleading. If at any time prior to the
Effective Time, any event or circumstance relating to Empire or any Empire
Subsidiary, or their respective officers or directors, should be discovered by
Empire which should be set forth in an amendment or a supplement to the
Registration Statement, the Empire Proxy Statement or any other filing, Empire
shall promptly inform the Transferor; PROVIDED, HOWEVER, that the delivery of
any notice (and the filing with the SEC promptly of an appropriate amendment or
supplement describing such information) pursuant to this SECTION 5.10(b) shall
not cure any breach of any representation or warranty, the failure to comply
with any covenant, the failure to meet any condition or otherwise limit or
affect the remedies available hereunder to the party receiving such notice.
(c) The information supplied by the Transferor for inclusion in the
Registration Statement and the Empire Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Empire Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, and (iii) the time of the Empire Stockholders
Meeting contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein not misleading. If at any time prior to the
Effective Time, any event or circumstance relating to the Transferor, or their
respective officers or directors, should be discovered by the Transferor which
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should be set forth in an amendment or a supplement to the Registration
Statement, the Empire Proxy Statement or any other filing, the Transferor shall
promptly inform Empire.
(d) Empire shall use its commercially reasonable efforts to cause
the Empire Proxy Statement, to be mailed to the Empire stockholders as promptly
as practicable after the date hereof.
(e) Empire will use its commercially reasonable efforts to obtain,
prior to the Effective Time, all necessary state securities or "blue sky"
permits and approvals required to permit the distribution of the shares of Newco
Common Stock to be issued in accordance with the provisions of this Agreement.
Section 5.11 STOCKHOLDERS' MEETING; BOARD RECOMMENDATION.
(a) Empire will take, in accordance with applicable law and its
certificate of incorporation and by-laws, all action necessary to convene a
meeting of holders of shares of its capital stock (the "STOCKHOLDERS MEETING")
as promptly as possible to consider and vote upon the adoption of this
Agreement.
(b) Subject to applicable law, the Board of Directors of Empire
shall recommend the approval of this Agreement, the Additional Agreements, the
Transactions and the other transactions contemplated hereby, such recommendation
shall be included in the Empire Proxy Statement, and the Board of Directors of
Empire shall take all lawful action to solicit the adoption thereof by the
holders of shares of its capital stock. In the event that subsequent to the date
of this Agreement, the Board of Directors of Empire reasonably determines in
good faith after consultation with outside counsel that its fiduciary duties
under applicable Law require it to withdraw, modify or qualify its
recommendation in a manner adverse to Transferor, the Board of Directors of
Empire may so withdraw, modify or qualify its recommendation; however, subject
to applicable Law, unless this Agreement is theretofore terminated, Empire shall
nevertheless submit this Agreement to the holders of the shares of its capital
stock for adoption at the Stockholders Meeting.
Section 5.12 CONDEMNATION. In the event that all or part of the
Properties is taken by, or made the subject of, any condemnation or eminent
domain proceeding between the date of this Agreement and the Closing Date,
Empire may (a) cancel this Agreement, if loss of the part of the Properties so
taken materially and adversely impacts the contemplated use of the Properties or
affects greater than 25% of the aggregate acreage of the Properties, or (b)
elect to have Newco take title subject to such condemnation or taking and
receive the proceeds thereof, Transferor assigning all its rights to unpaid
proceeds with respect to the Properties to Newco at the Closing. Empire shall
notify Transferor of its election not more than five (5) business days after
notice from Transferor of the occurrence of the condemnation or taking and the
extent thereof and if the Closing Date shall occur on or after such day that
Transferor notifies Empire, then the Closing Date shall be extended to afford
Empire the entire five (5) business day period described above. If Empire shall
elect to cancel this Agreement, then this Agreement shall be null and void and
the parties shall have no further rights, duties or obligations to each other
37
hereunder, except for those obligations which are to survive a termination of
this Agreement. For purposes of this SECTION 5.12, "MATERIALLY AND ADVERSELY"
shall mean any loss that: (a) exceeds $5,000,000; (b) removes a right of access
to the Properties if there is no other reasonable means of access to the
Properties available; (c) adversely and materially affects the utilities serving
the Properties; or (d) results in the right of the ground lessor to terminate
the Ground Lease.
Section 5.13 CASUALTY. Transferor shall maintain in effect until the
Closing Date its existing insurance policies with respect to the Properties. In
the event of damage to the Properties by fire or any other casualty insured
under Transferor's policies, Transferor shall promptly notify Empire and this
Agreement. Transferor shall pay or assign to Empire at the Closing all monies
received or receivable from the insurance companies which wrote such policies,
in each case, with respect to the Properties and all claims against such
insurance companies as a result of the losses covered by such policies and shall
pay to Empire at the Closing the cost of repairing any uncovered damage,
including any deductible under such policies.
Section 5.14 CHANGES IN REPRESENTATIONS AND WARRANTIES. At all times
prior to the Closing, each party shall notify the other of any material change,
modification or qualification to such party's representations and warranties
contained in this Agreement, PROVIDED, however, that the delivery of any such
notice pursuant to this Section 5.14 shall not cure any breach of any
representation or warranty, the failure to comply with any covenant, the failure
to meet any condition or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
Section 5.15 ADDITIONAL AGREEMENTS. Transferor and Empire each agree
to execute and deliver at Closing (a) the Registration Rights Agreement, (b) a
mutually acceptable, non-exclusive easement agreement with respect to the Golf
Courses, providing for the use of the Golf Courses by residents (including
guests) of the Retained Property and Empire's hotel/casino guests and the mutual
sharing (on an equal basis between the parties) of capital, operating and
maintenance costs as well as usage rights (including tee times) for the Golf
Courses by Empire and Transferor and on substantially such other terms as are
set forth in the term sheet attached hereto as EXHIBIT H (the "GOLF COURSE
AGREEMENT"), (c) a reciprocal easement agreement ("REA") with respect to the
Properties and the Retained Property providing for reasonable ingress and egress
along the best route to the extent reasonable and to and from such properties,
reasonable shared use of utilities servicing such properties, the equitable
sharing of certain costs and expenses applicable to such properties, and other
commercially reasonable and customary terms and conditions provided that the
same may not materially impair the development, use or value of the Properties
or the Retained Property, all as substantially set forth in the term sheet
attached hereto as EXHIBIT I and (d) an agreement between Transferor and Newco
with respect to (i) the allocation of sewer capacity first as required by the
Concord Hotel Site (but not to exceed 1 million gallons of sewer capacity), then
to the Retained Property and finally, if any capacity remains, to the Concord
Owned Property and (ii) Transferor's obligation not to act in a manner that
would materially impair or prevent adequate water capacity that is otherwise
available from being made available to the Concord Hotel Site (collectively, the
"ADDITIONAL AGREEMENTS"). The parties hereby agree to use commercially
38
reasonable efforts to prepare or cause their respective counsel to prepare
initial drafts of the Additional Agreements and to negotiate and execute final
versions of the same as soon as is practicable after the date hereof.
Section 5.16 GOLF COURSES AND ADDITIONAL PROPERTY.
(a) The parties hereby confirm and agree that the Retained Property
will not be conveyed by Transferor to Newco in connection with this transaction,
and that Transferor (including its successors or assigns) shall, subject to the
Restrictive Covenant, have the exclusive right to develop, operate, maintain,
lease or transfer the Retained Property or any portion thereof.
(b) As used in this Section 5.16, the term "Golf Courses" shall mean
the Golf Courses themselves, plus the property within a 100 foot setback line
from the external perimeter boundaries of the golf course fairways (and such
additional land as may be required to be included in the Golf Courses under
applicable zoning law or land use requirements, and (ii) the term "Additional
Property" shall mean that certain unsubdivided property that is part of the
Concord Property and is outside of such setback area and shown on EXHIBIT B
hereto. The Additional Property shall in no event include the clubhouse and
maintenance, lodging and support facilities for the Golf Courses. The Additional
Property is intended by the parties to be retained and used by Transferor in
connection with the Retained Property.
(c) At the Closing, Newco shall (i) at Newco's cost, acquire fee
title to the property leased under the Ground Lease pursuant to the exercise (by
Concord Associates, as lessee) of the lessee's purchase option under the Ground
Lease, with the purchase option price being paid at Closing by Newco as part of
the Empire Payment Obligations, and (ii) lease the portion of such acquired
property that is beyond 100 feet of the external perimeter boundaries of the
golf course fairways shown on EXHIBIT B (and, if applicable, beyond such
additional setback areas as are described in clause (b) above) to Concord
Associates under a 99-year ground lease, for a ground rent equal to $1 per year
(net of any and all costs, losses, expenses, fees, liabilities and obligations
including, without limitation, taxes and insurance allocable to such ground
leased premises) and on other mutually acceptable terms as are customary for a
ground lease of such duration. Notwithstanding the foregoing, Newco may elect,
upon written notice given to Concord Associates at least 60 days prior to the
Closing, not to acquire fee title to the Monster Golf Course at the Closing in
the manner described in the preceding sentence, in which event Concord
Associates shall retain the leasehold interest in the Ground Lease as of the
Closing Date, and the Monster Golf Course shall be subleased (or otherwise made
available to Newco pursuant to a license or other mutually acceptable
arrangement) at Closing by Concord Associates to Newco (and the ground rent
under the Ground Lease and applicable costs, losses, expenses, fees, liabilities
and obligations including, without limitation, taxes and insurance would be
borne by Newco pursuant to such sublease or other arrangement); provided that,
notwithstanding anything in this paragraph to the contrary, usage, tee times and
operational and maintenance costs applicable to the Golf Courses after the
Closing Date shall be governed by the Golf Course Agreement.
(d) At the Closing, notwithstanding anything to the contrary herein,
Concord Associates shall retain fee title to the International Golf Course and
shall lease the International Golf Course (and a 100-foot setback area as
described above) to Newco pursuant to a 99-year ground lease, for a ground rent
39
equal to $1 per year (net of any and all costs, losses, expenses, fees,
liabilities, obligations including, without limitation, taxes and insurance) and
on other mutually acceptable terms as are customary for a ground lease of such
duration.
(e) The Additional Property and Golf Courses shall be subdivided
from each other pursuant to a subdivision process that shall be initiated by
Concord Associates and that shall commence on or about the earlier of (i) the
date on which Newco has reasonably determined that such subdivision would not
adversely affect the ability to obtain the Requisite Approvals pertaining to the
Concord Hotel Site, and (ii) one (1) year after the Closing Date. Upon
completion of such subdivision, the necessary conveyances would be made between
Transferor and Newco such that Newco would own fee title to the Golf Courses and
Transferor would own fee title to the Additional Property, and the 99-year
ground leases referenced above would be terminated, provided that the Golf
Course Agreement shall thereafter remain in full force and effect. If Newco
shall not have acquired fee title to the land demised under the Monster Ground
Lease at Closing pursuant to the exercise of the lessee's purchase option under
the Ground Lease, then Newco shall do so prior to the commencement of such
subdivision process on the terms set forth in clause (c)(i) above, including
payment by Newco of the purchase option price thereunder as part of the Empire
Payment Obligations, PROVIDED that in no event shall the Empire Payment
Obligations be in an amount in excess of $30,000,000.
(f) Concord Associates shall initiate and shall promptly and
diligently pursue such subdivision using commercially reasonable efforts as of
the commencement date indicated in clause (e) above, and shall pay all of the
costs and expenses, fees and charges (in each case, direct and indirect) of such
subdivision (other than the purchase option price under the Monster Ground
Lease, which shall be paid by Newco as part of the Empire Payment Obligations),
and Newco shall fully cooperate with Concord Associates in connection with such
subdivision (at no cost or expense to it).
(g) Any "open space rights" relating to the Golf Courses may be used
by Concord Associates in connection with the Retained Property, and Newco shall
execute any documents or instruments reasonably required by Concord Associates
in form and substance reasonably acceptable to Newco to evidence the foregoing.
(h) Any conveyance by Newco or Concord Associates to the other party
pursuant to the subdivision described above shall be for no additional
consideration and shall be free and clear of all material Liens other than those
applicable to such property as of the Closing and those imposed in connection
with the subdivision. Anything to the contrary contained herein notwithstanding,
to the extent required to comply with applicable Legal Requirements (including,
without limitation, zoning and land use laws, rules, regulations, ordinances and
variances), the parties hereby agree to cooperate with each other using
commercially reasonable efforts, good faith and fair dealing to redefine the lot
lines of the Retained Property (including the Additional Property) and the Golf
Courses and effectuate such conveyances of property by a deed or otherwise as
may be necessary as a result of such redefinition done to conform the
configuration of the lot lines of the Concord Property and the Retained Property
to all applicable Legal Requirements, PROVIDED, however that such redefinition
shall not cause a Material Adverse Effect on the Contemplated Business of Newco
or Concord Associates.
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(i) The provisions of this SECTION 5.16 shall survive the Closing.
Section 5.17 NEWCO OPERATIONS ON THE CONCORD OWNED PROPERTY. Newco
shall not use, manage, operate or develop any portion of the Concord Owned
Property (other than the Concord Hotel Site) in any manner that would materially
impair or interfere with (a) the development and/or construction of a Resort
Facility on the Concord Hotel Site or the governmental approvals relating
thereto, or (b) the currently pending approvals on the Retained Property. The
foregoing shall be incorporated in a restriction in the deeds delivered by
Transferor at Closing conveying the Concord Owned Property to Newco, and such
restrictions shall run with the land and shall be binding upon the successors
and assigns of Newco. The provisions of this Section 5.17 shall survive the
Closing.
Section 5.18 EMPLOYMENT OF EMPLOYEES. At the Closing, Newco will
offer employment to the Transferred Employees on then current terms, provided
that (i) such terms are customary and commercially reasonable, (ii) such terms
are consistent in the aggregate with the benefits set forth on Section 3.22 of
the Transferor Disclosure Schedule. Notwithstanding the foregoing, nothing
herein shall be deemed to (a) require Newco to provide any specific benefit to
any Transferred Employee for any period of time following the Closing or (b)
create an employment contract with any Transferred Employee.
Section 5.19 TAX-FREE QUALIFICATION. Newco, Empire and Transferor
shall each use commercially reasonable efforts to cause the Merger to qualify as
a "reorganization" within the meaning of Section 368(a) of the Code, and the
Merger and the Contribution, taken together, to qualify as a transaction
described in Section 351 of the Code. Newco, Empire and Transferor shall each
use its commercially reasonable efforts not to take any action that would
prevent or impede the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code or the Merger and the Contribution, taken
together, from qualifying as an exchange described in Section 351 of the Code.
On any Tax Return that includes the transactions contemplated by this Agreement,
Newco, Empire and Transferor shall report the Merger and the Contribution, taken
together, for all Tax purposes as an exchange described in Section 351 of the
Code. Transferor is responsible for, and shall indemnify and hold harmless Newco
and Empire from and against any state and local transfer, conveyance or similar
non-income Taxes imposed on Newco or Empire arising as a result of the
conveyance of the Properties and the Merger. Each of Newco, Empire and
Transferor shall promptly notify the others in the event of any Tax proceeding
relating to the Merger or the Contribution and shall not settle, compromise or
abandon any such Tax proceeding without the consent of the other parties (such
consent not to be unreasonably withheld, conditioned or delayed). The provisions
of this SECTION 5.19 shall survive the Closing.
Section 5.20 CONFIDENTIALITY; RELEASE OF INFORMATION. The parties
confirm that they have entered into the Confidentiality Agreement, the terms of
which shall remain in full force and effect.
Section 5.21 TAX REPRESENTATIONS. Each of Newco, Empire, Merger Sub
and Transferor shall deliver to counsel to Empire and counsel to Transferor, for
the purpose of their rendering the tax opinions described in SECTIONS 7.1(h) and
7.2(h) of this Agreement, customary representations contained in certificates of
41
Newco, Empire, Merger Sub and Transferor, executed and dated as of the Closing
Date, substantially in the form of EXHIBIT J, hereto (allowing for such
amendments to the representation letters as counsel to Empire or Transferor,
respectively, deems reasonably necessary).
Section 5.22 REQUISITE APPROVALS. The parties hereby acknowledge and
agree that certain approvals are necessary in order to pursue the development of
a Class III indian gaming facility at the Concord Owned Property and at the
Monticello Property. Such approvals include:
(1) (x) the execution of a definitive binding agreement between the
Seneca Cayuga Nation and the State of New York settling all
outstanding land claims in the State of New York (which agreement
has all requisite United States approvals (from Congress and/or the
Department of the Interior)), (y) the execution of a binding compact
between the Seneca Cayuga Nation and the governor of the State of
New York, which Compact has been approved by the Department of the
Interior of the United States (and which does not require further
legislative approval by the legislature of the State of New York)
and (z) all requisite United States approvals (either from Congress
and/or the Department of Interior) to take land into trust for the
benefit of the Seneca Cayuga Nation (and the consummation of the
transfer to such trust) for the purpose of operating a Class III
Resort Facility, which land into trust would be from either the
Monticello Property or a Concord Property, and any other federal
approvals required to own or operate a Class III Resort Facility,
with all such agreements and approvals described in the preceding
clauses (x), (y), and (z) being in full force and effect
(collectively (x), (y) and (z), the "REQUISITE SENECA CAYUGA
APPROVALS"); and
(2) (a) the execution of a definitive binding agreement between the
Cayuga Nation and the State of New York settling all outstanding
land claims in the State of New York (which agreement has all
requisite United States approvals (from Congress and/or the
Department of the Interior)), (b) the execution of a binding Compact
between the Cayuga Nation and the governor of New York, which
Compact has been approved by the Department of the Interior of the
United States (and which does not require further legislative
approval by the legislature of the State of New York) and (c) all
requisite United States approvals (either from Congress and/or the
Department of Interior) to take land into trust for the benefit of
the Cayuga Nation (and the consummation of the transfer to such
trust) for the purpose of operating a Class III Resort Facility,
which land into trust would be from either the Monticello Property
or a Concord Property and any other federal approvals required to
own or operate a Class III Resort Facility, with all such agreements
and approvals described in the preceding clauses (a), (b), and (c)
being in full force and effect (collectively (a), (b) and (c), the
"REQUISITE CAYUGA APPROVALS", and each of the Requisite Cayuga
Approvals and the Requisite Seneca Cayuga Approvals, individually,
the "REQUISITE APPROVALS").
42
Empire shall continue to use all reasonable commercial efforts to diligently
pursue the Requisite Approvals during the term of this Agreement.
Section 5.23 REFINANCING COOPERATION; SATISFACTION OF EMPIRE PAYMENT
OBLIGATIONS. Notwithstanding anything to the contrary set forth herein, in the
event that Transferor cannot deliver any of the Lender Consents at Closing, the
parties hereby agree to cooperate, using commercially reasonable efforts, to
obtain replacement financing for any Mortgage Loan for which a Lender Consent
cannot be obtained, which replacement financing shall be on substantially
similar terms and conditions (or terms and conditions otherwise acceptable to
Empire) as such Mortgage Loan and with a lender reasonably satisfactory to
Empire (it being understood and agreed that Bank of Scotland and Bank of America
shall be deemed satisfactory). If, notwithstanding anything to the contrary
herein, a Lender Consent shall not have been obtained with respect to any such
mortgage loan and any such refinancing cannot be closed as of the Closing Date,
then Newco shall repay and satisfy such mortgage loan at the Closing, provided
that in no event shall the Empire Payment Obligations assumed or satisfied by
Newco at Closing exceed $30 million in the aggregate.
Section 5.24 HSR ACT; CERTAIN REGISTRATION RIGHTS. (a) Each
Transferor and each shareholder of Empire required pursuant to the HSR Act to
make a premerger filing and report thereunder, shall do so, provided, that
Transferor shall pay all costs, fees and expenses (including, without
limitation, filing fees and attorneys' fees) incurred in connection with the
preparation of (i) Transferor's filings, and (ii) any such filing by a
shareholder of Empire, up to an aggregate amount equal to $200,000 with respect
to filings required by Empire's shareholders (with Empire to pay any costs of
such filings in excess of $200,000).
(b) Empire shall provide registration rights with respect to any
shares of Empire purchased by Transferor pursuant to the Voting Agreement
Amendment, which registration rights shall be on the terms set forth on EXHIBIT
A. The terms of this Section 5.24(b) shall survive the Closing or prior
termination of this Agreement.
ARTICLE VI.
EVIDENCE AND CONDITION OF TITLE
Section 6.1 EVIDENCE AND CONDITION OF TITLE. At Closing, Transferor
shall convey (a)(i) good and valid fee title to the Owned Property and (ii) good
and valid fee and leasehold or subleasehold title, as the case may be, to the
Golf Courses, in each case free and clear of all Liens other than Permitted
Exceptions and (b) title to the Personalty shall be good and marketable, free
and clear of all Liens other than Permitted Exceptions.
Section 6.2 PRELIMINARY EVIDENCE OF TITLE. Within forty-five (45)
days following the date hereof, Empire shall use commercially reasonable efforts
to obtain each of the following (and shall provide to Transferor a copy thereof
promptly after Empire's receipt thereof):
(a) with respect to the Properties, title insurance commitments (the
"TITLE COMMITMENTS") for ALTA Form B (1992) Owner's Title Insurance
Policies proposing to insure Newco (or its permitted designee) a fee and
43
leasehold interest in and to the Properties, issued by Fidelity National
Title Insurance Company of New York (referred to herein as the "TITLE
COMPANY"); and
(b) an updated "as built" ALTA/ACSM survey plats (collectively, the
"SURVEYS") of the Properties, prepared by a surveyor registered in New
York State showing, to the extent applicable all easements of record,
parking spaces (including a count thereof), curb cuts, setback reductions
of record, flood zone designations and such other items as Empire may
reasonably request.
Section 6.3 TITLE DEFECTS. If any Title Commitment or Survey
discloses any (i) mortgages, deeds of trust, financing statements, judgments,
mechanic's liens, materialmen's liens, tax liens, or similar monetary liens,
other than those listed on Schedule 6.6 hereto, or (ii) other title exceptions
or defects that materially and adversely affect the Contemplated Business of a
Property or can be cured or removed by the payment of a liquidated sum of money
(not to exceed $5,000,000) (collectively, "MATERIAL TITLE DEFECTS"), Empire
shall notify Transferor in writing of such Material Title Defect within ten (10)
business days after Empire's receipt of a Title Commitment and Survey for a
Property (the "TITLE REVIEW PERIOD"), and Transferor shall have ten (10) days
from the receipt of Empire's notice ("TRANSFEROR'S TITLE CURE ELECTION PERIOD")
to elect whether to have the Material Title Defect removed or cured, to the
reasonable satisfaction of Empire. In the event Transferor fails to make such
election, Transferor shall be deemed to have elected not to cure the Material
Title Defects. In the event Transferor elects, within Transferor's Title Cure
Election Period, not to remove or cure such Material Title Defect, Empire shall
have the option, within ten (10) days after the expiration of Transferor's Title
Cure Election Period, to either (i) waive such Material Title Defect and proceed
to Closing for the Properties in accordance with this Agreement, or (ii) elect
not to acquire the Properties and terminate this Agreement. If Empire fails to
so elect, Empire shall be deemed to waive the Material Title Defects. In the
event Transferor elects, within Transferor's Title Cure Election Period, to
remove or cure such Material Title Defect, Transferor shall be entitled to a
period ending on the later of (1) 45 days after the expiration of Transferor's
Title Cure Election Period, or (2) the 10 days prior to Closing Date, to remove
or cure such Material Title Defect, upon which removal or cure the parties shall
proceed to Closing in accordance with this Agreement. Such cure or removal shall
be a condition to Empire's obligation to proceed to Closing. Any liens,
encumbrances, title defects or other title exceptions disclosed in any Title
Commitment or Survey and which do not constitute Material Title Defects (and any
Material Title Defects which Empire elects to waive pursuant to this SECTION
6.3), shall be deemed to be Permitted Exceptions. Notwithstanding the foregoing,
Transferor shall cause to be removed and discharged of record (including by
bonding) prior to Closing (i) any Lien encumbering the Properties securing money
borrowed by Transferor or removable by the payment of a liquidated monetary sum,
other than the Empire Payment Obligations, (ii) any judgment lien or other lien
securing a liquidated sum, provided that Transferor shall not be required to
remove or discharge at Closing any judgment liens or other liens (excluding
judgment liens relating to non-appealable judgments) encumbering the Properties
and described in this clause (ii) if the aggregate amount of such Liens exceeds
$5,000,000, and if Transferor so elects not to remove and discharge such Liens
at Closing pursuant to this proviso, then Empire shall have the same rights (as
set forth in the second sentence of this SECTION 6.3) as if Transferor shall
44
have elected not to cure a Material Title Defect. Such cure or removal shall be
a condition to Empire's obligation to proceed to Closing.
Section 6.4 MATERIAL TITLE DEFECTS AND NEW MATERIAL TITLE DEFECTS
PRIOR TO CLOSING. If Transferor agrees to cure any Material Title Defects and
such Material Title Defects remain uncured at the Closing, or if additional
Material Title Defects exist at the time of the Closing (such additional
defects, "NEW MATERIAL TITLE DEFECT(S)") which Transferor elects not to cure,
then Empire shall either (i) take such title as Transferor may give, with a
payment of a sum of money by Transferor in an amount necessary to cure or
correct the New Material Title Defects (as reasonably determined by Title
Company), if the same constitute monetary liens in an ascertainable amount, or
(ii) if the Material Title Defect is not a New Material Title Defect, terminate
this Agreement, whereupon the rights and liabilities of the parties hereunder
likewise shall terminate, except those that survive any termination of this
Agreement. With respect to New Material Title Defects, if Transferor elects to
cure such New Material Title Defects and so notifies Empire within three (3)
business days after Transferor's receipt of the notice that New Title Defects
exist, then Transferor shall have an additional reasonable period, not to exceed
thirty (30) days, to cure such New Material Title Defects and, accordingly, may
adjourn the Closing Date by such period. Notwithstanding the foregoing, if the
total payments of monetary sums, as determined by the Title Company under this
Section 6.4, exceed $5,000,000, Transferor may elect (within five business days
of learning of such determination) to terminate this Agreement. In the event
that Transferor elects to terminate this Agreement in accordance with the
preceding sentence, upon notification of such election to Empire, Empire may
elect, within 5 business days after the receipt thereof, not to have this
Agreement terminated and to require Transferor to provide Empire with a payment
of a sum of money by Transferor in the amount of $5,000,000 and Empire shall
accept title to the Properties subject to such New Material Title Defects or
Material Title Defects. If Transferor is unable to cure such New Material Title
Defects by the extended Closing Date, then Empire and Transferor shall have the
same rights as they would have had under this Section 6.4 with respect to the
original Closing Date.
Section 6.5 VOLUNTARY TITLE DEFECTS. Transferor shall not
voluntarily and intentionally transfer, encumber or grant a security interest in
the Properties or any part thereof during the term of this Agreement.
Notwithstanding anything to the contrary contained herein, Transferor shall cure
any New Material Title Defects not otherwise agreed to by Empire, at the sole
cost and expense of Transferor, caused by Transferor's voluntary and intentional
acts, which New Material Title Defects occur during the term of this Agreement.
Section 6.6 PERMITTED EXCEPTIONS. As used in this Agreement, the
term "PERMITTED EXCEPTIONS" shall mean the following (none of which shall
constitute Material Title Defects hereunder):
(a) those title matters listed on SCHEDULE 6.6 hereto;
(b) the matters deemed to be Permitted Exceptions pursuant to
Section 6.3;
(c) the REA and the Golf Course Agreement (to the extent
applicable);
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(d) any title exceptions or defects (A) over which the Title Company
is willing to insure (without additional cost to Empire or where
Transferor pays such cost for Empire's account), (B) against which the
Title Company is willing to provide affirmative insurance (without
additional cost to Empire or where Transferor pays such cost for Empire's
account) (provided that any insurance by the Title Company pursuant to
clauses (A) and (B) shall be in a form acceptable to Empire in its
reasonable discretion), (C) which will be extinguished upon the Closing,
or (D) which are the responsibility of the Ground Lessor under the Ground
Lease to cure, correct or remove and which will not result in a forfeiture
of the lessee's interest under the Ground Lease or a Material Adverse
Effect on the Leasehold Property;
(e) Real property Taxes which are a lien but not yet due and
payable;
(f) Any Legal Requirements affecting the Properties, including,
without limitation, those relating to zoning and land use, provided the
same do not result in a Material Adverse Effect;
(g) any installment not due and payable as of the Closing Date of
assessments imposed after the date hereof and affecting the Properties or
any portion thereof;
(h) any public or quasi-public utility company rights, easements and
franchises for electricity, water, steam, gas, telephone or other service
or right to use and maintain poles, lines, wires, cables, pipes, boxes and
other fixtures and facilities in, over, under and upon the Properties,
provided the same do not, individually or in the aggregate, result in a
Material Adverse Effect; and
(i) any other easements, rights of way, declarations, covenants,
restrictions, encumbrances and other title matters, provided the same do
not, individually or in the aggregate, result in a Material Adverse
Effect.
ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.1 CONDITIONS TO EMPIRE'S OBLIGATIONS. The obligations of
Empire, Newco and Merger Sub to consummate the Transactions shall be subject to
the satisfaction or waiver by Empire on or prior to the Closing Date of all of
the following conditions:
(a) The conveyance of the Properties to Empire and the issuance and
delivery of the Transferor Shares shall have been approved by the
shareholders of Empire in accordance with all applicable federal and state
Laws;
(b) (i) The representations and warranties of Transferor contained
in Sections 3.1, 3.3, and 3.18 shall be true and correct as of the date
hereof and as of the Closing as though made on and as of the Closing
(except that those representations and warranties which address matters
only as of a particular date need only be true and correct as of such
date), and (ii) all other representations and warranties of Transferor
contained in this Agreement and in the Additional Agreements, and in any
certificate or other writing delivered by Transferor pursuant hereto, in
46
each case disregarding and without giving any effect to all qualifications
and exceptions contained herein and therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall be
true and correct as of the date hereof and as of the Closing as though
made on and as of the Closing (except that those representations and
warranties which address matters only as of a particular date need only be
true and correct as of such date), except where the untruth or
incorrectness of such representations and warranties, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. Empire shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of Transferor to that
effect.
(c) The Properties shall be conveyed to Empire and shall be free and
clear of any Liens other than Permitted Exceptions;
(d) No decision, order or similar ruling shall have been issued (and
remain in effect) restraining or enjoining the Transactions or any of the
other transactions contemplated hereby;
(e) Any internal, third party, court or HSR Act approvals or
consents required with respect to Empire and set forth on SCHEDULE 7.1(e)
attached hereto shall have been obtained;
(f) There shall have been no material adverse change to (x) the
properties, assets, business, prospects or financial or other condition of
the Properties (or Transferor to the extent relevant to the transactions
contemplated, including obtaining gaming licenses and gaming related
approvals from governmental authorities), or (y) the ability of Transferor
to consummate the transactions described herein, from the date hereof
through the Closing Date, which determination shall be based upon (in the
case of clause (x) above) the purposes for which Empire intends to
develop, operate, use and maintain the Properties after the Closing (and
not the current use or operation of the Properties);
(g) Transferor shall have performed (i) all of its obligations and
covenants under Section 5.2 of this Agreement, and (ii) all of its other
obligations and covenants under this Agreement except, with respect to
clause (ii), those the failure of which to be performed shall not have had
or be reasonably likely to have a Material Adverse Effect.
(h) Empire shall have received an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
in form and substance reasonably satisfactory to Empire, dated the date of
the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, for U.S.
federal income tax purposes, either (i) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code or (ii)
the Merger and the Contribution, taken together, will be treated as a
transfer of property to Newco qualifying under Section 351 of the Code. In
rendering such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP may receive and rely upon
representations contained in certificates of Empire, Newco, Merger Sub and
Transferor and described in Section 5.21 of this Agreement to be delivered
47
on the Closing Date. Notwithstanding the foregoing, if ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP is unable to deliver the opinion referred to in this Section 7.1(h),
the parties shall revise the structure of the transactions contemplated by
this Agreement to a transfer by Transferor of the Properties to Empire in
exchange for Empire shares and the Merger shall not occur. In such an
event, (i) the percentage ownership of Transferor in Empire shall be the
same as it would have been in Newco immediately after the Effective Time
under this Agreement, (ii) all references to Transferor Shares shall be
deemed to be references to shares of Empire, (iii) Empire shall assume or
otherwise satisfy the Empire Payment Obligations, (iv) this agreement
shall be automatically amended by the parties as appropriate to give
effect to the revised structure on substantially similar terms and
conditions and with the applicable representations and warranties
contained herein and (vi) each party shall execute a written amendment to
this Agreement as necessary to reflect the foregoing and to otherwise
effect the substance of the transaction as set forth in this Agreement.
Any restructuring and closing of this transaction in accordance with the
two preceding sentences shall be deemed to satisfy the condition set forth
in this Section 7.1(h). The condition set forth in this Section 7.1(h)
shall not be waivable after receipt of the Empire Requisite Vote unless
further stockholder approval is obtained with appropriate disclosure.
(i) Transferor shall have made all necessary filings under the HSR
Act and any applicable waiting periods, together with any extensions
thereof, under the HSR Act and the antitrust or competition laws of any
other applicable jurisdiction shall have expired or been terminated.
(j) Transferor shall have executed and delivered at Closing the
documents, instruments agreements set forth in SECTION 8.2 hereof.
Section 7.2 CONDITIONS TO TRANSFEROR'S OBLIGATION. Transferor's
obligation to consummate the Transactions shall be subject to the satisfaction
or waiver by Transferor on or prior to the Closing Date of all of the following
conditions:
(a) The conveyance of the Properties to Empire and the issuance and
delivery of the Transferor Shares shall have been approved by the
shareholders of Empire in accordance with all applicable federal and state
Laws;
(b) The Transferor Shares shall be issued to Transferor and shall be
free and clear of all Liens, and Newco shall have assumed or otherwise
satisfied the Empire Payment Obligations at Closing in the manner set
forth herein;
(c) (i) The representations and warranties of Empire contained in
Sections 4.1, 4.2, 4.3, 4.4 and 4.15 shall be true and correct as of the
date hereof and as of the Closing as though made on and as of the Closing
(except that those representations and warranties which address matters
only as of a particular date need only be true and correct as of such
date), and (ii) all other representations and warranties of Empire
contained in this Agreement and in the Additional Agreements, and in any
certificate or other writing delivered by Empire pursuant hereto, in each
case disregarding and without giving any effect to all qualifications and
exceptions contained herein and therein relating to materiality or
48
Material Adverse Effect or any similar standard or qualification, shall be
true and correct as of the date hereof and as of the Closing as though
made on and as of the Closing (except that those representations and
warranties which address matters only as of a particular date need only be
true and correct as of such date), except where the untruth or
incorrectness of such representations and warranties, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. Transferor shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of Empire to that
effect.
(d) No decision, order or similar ruling shall have been issued (and
remain in effect) restraining or enjoining the Transactions or the other
transactions contemplated hereby;
(e) There shall have been no material adverse change to (x) the
properties, assets, business, prospects, financial or other condition of
Empire, or (y) the ability of Empire to consummate the transactions
described herein, from the date hereof through the Closing Date, which
determination shall be based upon (in the case of clause (x) above)
Empire's Contemplated Business after receipt of the Requisite Approvals
(and not the current properties, assets, business, prospects, or financial
or other condition of Empire);
(f) Any internal, third party, court or HSR Act approvals or
consents required with respect to Transferor and set forth on SCHEDULE
7.2(f) hereto shall have been obtained;
(g) Empire shall have performed (i) all of its obligations and
covenants under Section 5.1 of this Agreement and (ii) all of its other
obligations and covenants under this Agreement and the Empire Shareholders
shall have performed all of their obligations under the Voting Agreement,
except, with respect to clause (ii), those the failure of which to be
performed shall not have a Material Adverse Effect; and
(h) Transferor shall have received an opinion of Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, in form and substance reasonably satisfactory to Transferor,
dated the date of the Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion, for U.S. federal income tax purposes, the Merger and the
Contribution, taken together, will be treated as a transfer of property to
Newco qualifying under Section 351 of the Code. In rendering such opinion,
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ may receive and rely upon representations
contained in certificates of Newco, Empire, Merger Sub and Transferor and
described in Section 5.21 of this Agreement to be delivered on the Closing
Date. Notwithstanding the foregoing, if Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ is
unable to deliver the opinion referred to in this Section 7.2(h), the
parties shall revise the structure of the transactions contemplated by
this Agreement to a transfer by Transferor of the Properties to Empire in
exchange for Empire shares and the Merger shall not occur. In such an
event, (i) the percentage ownership of Transferor in Empire shall be the
same as it would have been in Newco immediately after the Effective Time
under this Agreement, (ii) all references to Transferor Shares shall be to
49
deemed to be references to shares of Empire, (iii) Empire shall assume or
otherwise satisfy the Empire Payment Obligations, (iv) this agreement
shall be automatically amended by the parties as appropriate to give
effect to the revised structure on substantially similar terms and
conditions and with the applicable representations and warranties
contained herein and (vi) each party shall execute a written amendment to
this Agreement as necessary to reflect the foregoing and to otherwise
effect the substance of the transaction as set forth in this Agreement.
Any restructuring and closing of this transaction in accordance with the
two preceding sentences shall be deemed to satisfy the condition set forth
in this Section 7.2(h).
(i) Newco shall have executed and delivered the documents,
instruments and agreements set forth in SECTION 8.1 hereof.
(j) Catskill Development, L.L.C., ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
each shall have conveyed to Empire all right, title and interest in any
material assets, income, revenues, fees and rights related to gaming, the
Monticello Property or any agreements with the Cayuga Nation of New York
or other indian tribes or nations and retained in connection with the
restructuring transaction that closed on January 12, 2004.
(k) Any shareholder of Empire required under the HSR Act to file
thereunder shall have completed such filing (subject to Transferor's
payment of all costs, fees and expenses (including, without limitation,
filing fees and attorneys' fees) incurred in connection with the
preparation of such filing, up to an aggregate amount for all such Empire
shareholders equal to $200,000 (with Empire to pay any costs of such
filings in excess of $200,000)) and any applicable waiting periods,
together with any extensions thereof, under the HSR Act and the antitrust
or competition laws of any other applicable jurisdiction shall have
expired or been terminated.
ARTICLE VIII.
CLOSING DELIVERIES
Section 8.1 DELIVERIES BY EMPIRE, NEWCO AND/OR MERGER SUB. At the
Closing, Empire, Newco and/or Merger Sub (as applicable) shall execute and
deliver to Transferor:
(a) A certificate for the Transferor Shares as provided for in
Section 2.13.
(b) Certificates from appropriate officers of Empire, Newco and
Merger Sub respecting authority, incumbency and similar matters.
(c) A 99 year ground lease between Newco and Transferor in
accordance with the terms of Section 5.16(c) or (d), if applicable.
(d) An assignment and assumption of the Service Contracts and the
equipment leases set forth in Section 3.7 of the Transferor Disclosure
Schedule ("EQUIPMENT LEASES"), duly executed by Newco.
50
(e) The Registration Rights Agreement, the Golf Course Agreement,
the REA and the Trade Name License Agreement, each duly executed and
acknowledged by Newco and/or Empire, as applicable.
(f) The Assumption Agreement and/or any documents, instruments or
agreements required to comply with or otherwise satisfy Newco's or
Empire's obligations under Section 5.23 hereof all in form and substance
reasonably satisfactory to Newco or Empire, as the case may be, with
respect to the Empire Payment Obligations, duly executed by Newco.
(g) Any additional documentation reasonably required by the Lender
from Empire and/or Newco to effectuate the assignment and assumption of
such Empire Payment Obligations by Transferor to Newco, and the release of
Transferor and any of its Affiliates with respect to any Empire Payment
Obligations or any guaranties relating thereto, provided such
documentation is reasonably acceptable to Empire (it being understood and
agreed that neither Empire's nor Newco's officers, directors, shareholders
or Affiliates (other than Newco as a stockholder of Empire) will be
expected to provide personal guaranties of any nature).
(h) A certificate from appropriate officers of Newco with respect to
the matters described in Section 7.1(b).
(i) An assignment and assumption with respect to the matters
described in Section 7.2(j).
(j) Any other documentation that reasonably may be required to
satisfy the conditions precedent set forth in ARTICLE VII of this
Agreement or that may be reasonably requested by Transferor as necessary
to consummate the transaction provided that any such documentation would
result in no additional exposure or liability to Empire or Newco.
Section 8.2 DELIVERIES BY TRANSFEROR. At the Closing, Transferor
shall execute (if applicable) and deliver to Newco:
(a) One or more bargain and sale deeds without covenants
(collectively, the "DEEDS"), duly executed and acknowledged by Transferor,
in proper form for recording in the State of New York conveying
Transferor's fee interests in the Properties to Newco.
(b) One or more bills of sale without warranty or recourse, to any
personal property owned by Transferor and used in connection with the
Properties on the date hereof duly executed by Transferor.
(c) A bargain and sale deed (without covenants) from ground lessor
under the Ground Lease or a sublease or other occupancy agreement from
Transferor to Newco, as applicable, in accordance with the terms of
Section 5.16(c) hereof.
51
(d) A 99 year ground lease to Newco of the International Golf Course
or such other ground lease as is required in accordance with the terms of
Section 5.16(c) or (d) hereof.
(e) An estoppel certificate from the ground lessor under the Ground
Lease in form and substance reasonably satisfactory to Empire (unless the
purchase option under the Ground Lease shall have been exercised at
Closing as provided in Section 5.16(c)).
(f) An assignment and assumption of all of Transferor's interest in
the service contracts management agreements, operating agreements and
maintenance agreements with respect to the Properties assigned to Newco
hereunder, if any, (collectively, the "SERVICE CONTRACTS") and the
Equipment Leases duly executed by Transferor, together with the originals,
to the extent in Transferor's possession or certified copies thereof.
(g) Such customary title affidavits as Title Company shall
reasonably require.
(h) All keys, security cards, passes and entrance codes to entrance
doors to, and equipment and utility rooms located in the Properties and in
the possession or control of Transferor.
(i) A valid assignment and assumption of the Leases, together with
those security deposits held by Transferor pursuant to the Leases, duly
executed by Transferor, assigning to Empire all of Transferor's interest
in the Leases, together with the original executed Leases (or photocopies,
certified by Transferor as true and complete where originals are not in
Transferor's possession). Empire shall execute such document to evidence
its assumption of the same.
(j) Certificates from appropriate officers of Transferor respecting
authority, incumbency and similar matters.
(k) All certificates of occupancy for the Properties in Transferor's
possession or other evidence of occupancy in compliance with applicable
laws, to the extent reasonably available to Transferor.
(l) Letters executed by Transferor, advising tenants of the sale of
the Properties to Newco and the assumption by Newco of Transferor's
obligations under the Leases, and directing that rents and other payments
thereafter be sent to Newco or as Newco may direct.
(m) Assignments of any assignable warranties and guaranties from any
manufacturers or installers of any furniture, fixtures or equipment
installed at the Properties and owned by Transferor, all permits,
Licenses, plans and specifications, utility agreements, any rights to use
of the site plans, zoning and annexation approvals and amendments thereto,
and any guaranties or warranties which Transferor may have received in
connection with any work or services performed or equipment installed in
the construction of the Properties, together with originals of same to the
extent in Transferor's possession or certified copies of same.
52
(n) Notarized copies of any real property transfer, real property
conveyance and/or Deeds transfer Tax forms required to be filed in
connection with a conveyance of real property in the State of New York
(the "TAX FORMS"), accompanied by a check payable either to the Title
Company or to the order of the appropriate Tax receiver, in payment of the
Tax due upon the transfer of the Properties. Newco agrees to sign and to
cause the delivery of such Tax Forms and such Tax payment to the
appropriate taxing authority with the Deeds promptly after Closing.
(o) Subject to Section 5.23 hereof, the Lender Consents and an
estoppel certificate from each Lender in form and substance reasonably
satisfactory to Empire.
(p) Subject to Section 5.23 hereof, all documentation reasonably
required by a Lender from Transferor to effectuate the assignment and
assumption of the Empire Payment Obligations by Transferor to Newco.
(q) The Registration Rights Agreement, the Golf Course Agreement,
the REA and the Trade Name License Agreement, each duly executed and
acknowledged by Transferor.
(r) Any other documentation that reasonably may be required to
satisfy the conditions precedent set forth in Article VII of this
Agreement or that may be reasonably requested by Newco as necessary to
consummate the transaction provided that any such documentation would
result in no additional exposure or liability to Transferor.
(s) A certificate of non-foreign status from Transferor;
substantially in the form of sample certification set forth in Treasury
Regulation Section 1.1445-2(b)(2)(iv)(B); provided, that if such
certificate is not delivered to Newco by Transferor at or prior to the
Closing, Newco may retain a portion of the Transferor Shares otherwise
required to be delivered to Transferor pursuant to this Agreement, such
portion not to exceed 20% of the Transferor Shares, until Transferor pays
to Newco any amounts required to be withheld by Newco pursuant to Section
1445 of the Code with respect to the Transferor Shares.
(t) Transferor's certificate from appropriate officers of Transferor
with respect to the matters described in Section 7.2(b).
(u) A closing statement setting forth the prorations and credits and
debits regarding any payment of money on the Closing Date (which closing
statement shall also be executed by Newco).
(v) The Restrictive Covenant in recordable form.
Section 8.3 APPORTIONMENTS. Transferor shall be entitled to all
income produced from the operation of the Properties which is allocable to the
period prior to the Closing Date and shall be responsible for all expenses
allocable to that period. Newco shall be entitled to all income and responsible
for all expenses allocable to the period beginning at 12:01 A.M. on the Closing
53
Date. At the Closing, all items of income and expense listed below with respect
to the Properties shall be prorated in accordance with the foregoing principles
and the rules for the specific items set forth hereafter computed and
apportioned between Newco and Transferor as of the Closing Date on a per diem
and on a 365-day year basis, which agreement shall survive Closing:
(a) Real property Taxes and personal property Taxes shall be
prorated based upon the period (i.e., calendar or other tax fiscal year)
to which same are attributable, regardless of whether or not any such
Taxes are then due and payable or are a Lien. Transferor shall pay at
Closing (or Newco shall receive payment of a sum of money for) any unpaid
Taxes attributable to periods prior to the Closing Date (whether or not
then due and payable or a Lien as aforesaid). Transferor shall receive
payment of a sum of money for any previously paid or prepaid Taxes
attributable to periods from and after the Closing Date. In the event that
as of the Closing Date, the actual Tax bills for the tax year or years in
question are not available and the amount of Taxes to be prorated as
aforesaid cannot be ascertained, then rates, millages and assessed
valuation of the previous year, with known changes, shall be used. After
the Closing occurs and when the actual amount of Taxes for the year or
years in question is determinable, such Taxes will be re-prorated between
the parties as described above to reflect the actual amount of such taxes.
(b) Fixed, minimum, additional, percentage or average rent and other
amounts payable under the applicable Ground Lease shall be prorated on a
per diem basis.
(c) Any amounts payable under an assigned Service Contracts and
Licenses; provided, that if Newco receives a ▇▇▇▇ for any such amount
after the Closing Date which ▇▇▇▇ covers a period prior to the Closing
Date, Transferor shall pay to Newco upon demand that part of such amount
properly allocable to the period prior to the Closing Date. In the event
that the service to be provided under any Service Contract has been
provided prior to the Closing Date and Transferor has not yet received a
▇▇▇▇ therefor, then Newco shall receive a payment of a sum of money for
the portion of such service allocable to the period prior to the Closing
Date and Newco shall pay the ▇▇▇▇ when it is received. Further, in the
event that Transferor has received a ▇▇▇▇ for any service to be provided
pursuant to any Service Contract but such service has not yet been
provided, Transferor shall receive a payment of a sum of money for the
amount pre-paid for such service pursuant to the Service Contract which is
applicable to the Closing Date and thereafter.
(d) All water, electricity, heat, fuel, sewer and other utility
company charges, up to and including the Closing Date accrued and payable
by Transferor based upon the last ▇▇▇▇ therefor. If any such ▇▇▇▇ has not
been received by the Closing Date, then such adjustment shall be based
upon the next such ▇▇▇▇ received and such adjustment shall occur after the
Closing Date. Transferor shall retain the right to the refund of such
deposits.
(e) Interest payable under the Empire Payment Obligations for the
interest period in which the Closing Date falls, with Newco receiving a
payment of a sum of money at Closing in the amount of interest that
54
accrued between the last interest payment date under the Loan Documents
and the Closing Date.
(f) In the event that any of the foregoing prorations of items in
this Section 8.3 are based on estimates, then at such time that the actual
amounts of any of the above listed items are known Empire and Transferor
agree to cooperate with each other to reallocate the amounts calculated as
of the Closing Date with respect to such items and reimburse each other in
accordance with the provisions of this Section 8.3.
(g) All payments made under this Section 8.3 shall be made by the
applicable party to the other in cash. This Section 8.3 shall survive the
Closing.
ARTICLE IX.
TERMINATION AND DEFAULT
Section 9.1 TERMINATION. (a) Subject to this Section 9.1, in the
event that the conditions to either party's obligation to close hereunder shall
not have been satisfied by December 31, 2005 (for reasons other than a breach or
default under this Agreement by such party), then such party may elect to
terminate this Agreement by written notice to the other party given on or after
January 1, 2006 but not later than January 20, 2006, and if such notice is
timely delivered then this Agreement shall terminate and be of no further force
or effect, and neither party shall have any further rights or obligations
hereunder.
(b) In the event that this Agreement shall terminate in accordance
with its terms, then the Option Agreement shall remain in full force and effect
in accordance with its terms and shall continue to be fully binding on the
parties thereto, and the Option (as defined in the Option Agreement) may
thereafter be exercised by the Grantee under the Option Agreement.
Notwithstanding the foregoing, the Option (as defined in the Option Agreement)
shall not be exercisable by the Grantee under the Option Agreement following the
termination of this Agreement (i) by Empire pursuant to Section 9.1(a) due to
the failure of the Closing Conditions set forth in Sections 7.1(b), 7.1(c),
7.1(d), 7.1(f), 7.1(g), 7.1(h) (unless Empire shall have breached its
obligations under such subparagraph) or 7.1(i) to be satisfied; (ii) by
Transferor pursuant to Section 9.1(a) due to the failure of the Closing
Conditions set forth in Section 7.2(c), 7.2(d), 7.2(e), 7.2(f), 7.2(g) or 7.2(h)
(unless Empire shall have breached its obligations under such subparagraph) to
be satisfied, or (iii) by Empire pursuant to Section 9.2(b) following a material
default hereunder by Transferor.
(c) In the event Empire shall terminate this Agreement in accordance
with Section 9.1(a) due to the failure of the condition set forth in Section
7.1(e) to be satisfied, Empire shall not solicit, contact, facilitate or engage
in discussions or negotiations with any third party (other than Transferor and
Indian tribes or nations) with respect to any Catskills Acquisition for a period
of eighteen (18) months following such termination.
(d) Notwithstanding anything to the contrary in Section 9.1(a)
hereof, in the event that Transferor shall terminate this Agreement pursuant to
Section 7.2(f) (other than due to the failure to obtain Bankruptcy Court
approval of this transaction as described in Section 5.8(c) hereof), then
55
Transferor shall not solicit, contact, facilitate or engage in discussions or
negotiations with any third party (other than Empire) with respect to any
Catskills Transfer for a period of eighteen (18) months following such
termination.
(e) Intentionally omitted.
(f) With respect to the required consent from the holders of
Empire's convertible bonds, as set forth in Section 7.1(f) of the Empire
Disclosure Schedule, relating to the proposed assumption of the Empire Payment
Obligations by Newco at Closing and/or the consummation of the Merger, if the
parties determine that such consent is unlikely to be obtained by Empire,
PROVIDED that Empire shall have used its commercially reasonable efforts to
obtain such consent as required by Section 5.8(b) hereof, then the parties shall
reasonably cooperate to restructure the transaction, with no adverse effect on
either party (including any change of control or deemed change of control of
Empire) and PROVIDED that a restructuring that would result in a taxable
transaction to Transferor would not be deemed an adverse effect, in such manner
as to eliminate the requirement of such consent (which restructuring may
include, without limitation, the pay-off of debt by Transferor and an increase
in the number of Transferor Shares or other consideration to Transferor in
respect of such pay-off). Such restructuring shall be accomplished on the
following terms and conditions: (i) the percentage ownership of Transferor in
Empire shall be the same as it would have been in Newco immediately after the
Effective Time under this Agreement, (ii) all references to Transferor Shares
shall be to deemed to be references to shares of Empire, (iii) Empire shall
assume or otherwise satisfy the Empire Payment Obligations, (iv) this agreement
shall be automatically amended by the parties as appropriate to give effect to
the revised structure on substantially similar terms and conditions and with the
applicable representations and warranties contained herein and (vi) each party
shall execute a written amendment to this Agreement as necessary to reflect the
foregoing and to otherwise effect the substance of the transaction as set forth
in this Agreement
(g) If (i) the shareholders of Empire shall fail to approve this
transaction at the Stockholders Meeting, (ii) Empire shall fail for any reason
(other than as a result of delays in the SEC review process) to submit this
Agreement, the Additional Agreements, and the Transaction or other transactions
contemplated hereby (or any transaction pursuant to a restructuring in accord
with Sections 7.1(h), 7.2(h) or 9.1(f)) for shareholder approval by August 20,
2005, or (iii) the Board of Directors of Empire changes its favorable
recommendation with respect to this Agreement, the Additional Agreements, the
Transactions and other transactions contemplated hereby (or any transaction
pursuant to a restructuring in accord with Sections 7.1(h), 7.2(h) or 9.1(f)),
then Transferor shall, upon written notice to Empire, have the right to
terminate this Agreement, provided that, in such event, the Option Agreement
shall remain in full force and effect and shall be fully binding upon the
parties following any such termination of this Agreement by Transferor, and the
Option (as defined in the Option Agreement) may thereafter be exercised by the
Grantee under the Option Agreement.
(h) In the event that (x) a material adverse change with respect to
Transferor shall occur as set forth in SECTION 7.1(f), or (y) a material adverse
change with respect to Empire shall occur as set forth in SECTION 7.2(e), then
Empire (in the case of (x) above) or Transferor (in the case of (y) above) shall
give written notice (such party being hereinafter referred to as the "MAC NOTICE
56
PARTY") to the other party promptly after obtaining Knowledge of such material
adverse change, and if such material adverse change shall not be substantially
cured (in the reasonable judgment of the MAC Notice Party) within sixty (60)
days after delivery of such notice, then the MAC Notice Party shall have the
right to terminate this Agreement upon written notice to the other party,
whereupon this Agreement shall terminate and neither party shall have any
further rights or obligations under this Agreement, and the Option (as defined
in the Option Agreement) shall not thereafter be exercisable by the Grantee
under the Option Agreement.
(i) Notwithstanding anything to the contrary herein, the provisions
of this Section 9.1 shall survive the termination of this Agreement.
Section 9.2 DEFAULT. (a) If Empire shall default (references to
"Empire" in this Section 9.2(a) being deemed to include Newco and Merger Sub) in
the performance of its material obligations under this Agreement (including,
without limitation, the obligations of Empire pursuant to Sections 5.5 and 5.11
hereof), and if such default is not cured by Empire within fifteen (15) business
days after written notice thereof from Transferor to Empire, then Transferor
shall have the right, at Transferor's option, to (x) ▇▇▇ Empire for actual
damages suffered by Transferor as a result of such default, (y) institute a suit
against Empire for specific performance of Empire's obligations under this
Agreement and/or (z) if the default has a Material Adverse Effect, terminate
this Agreement (provided that the remedies described in clauses (x), (y) and (z)
may be sought by Transferor in the alternative in any pleadings or related
documents to the extent permitted by law). In the event that the Transferor does
not terminate this Agreement following a default by Empire, Transferor shall
have the right to ▇▇▇ Empire for an amount equal to damages multiplied by 166%.
In the event of such an uncured material default, and until such time as
Transferor shall obtain a non-appealable judgment of specific performance
against Empire, then (i) the Option Agreement shall remain in full force and
effect in accordance with its terms and shall continue to be fully binding on
the parties thereto, and (ii) Empire shall not solicit, contact, facilitate or
engage in discussions or negotiations with any third party (other than
Transferor and any Indian tribe or nation) with respect to any Catskills
Acquisition for a period of eighteen (18) months following the initiation of any
such suit for damages or specific performance. Following any termination of this
Agreement by Transferor as described in this Section 9.2(a) arising from a
default that has a Material Adverse Effect, the Grantee under the Option
Agreement shall have the right to exercise the Option (as defined in the Option
Agreement).
(b) If Transferor shall default in the performance of its material
obligations under this Agreement (including, without limitation, its obligations
under Section 5.8(c) hereof), and if such default is not cured by Transferor
within fifteen (15) business days after written notice thereof from Empire to
Transferor, then Empire shall have the right, at Empire's option, to (x) ▇▇▇
Transferor for actual damages suffered by Empire as a result of such default,
(y) institute a suit against Transferor for specific performance of Transferor's
obligations under this Agreement and/or (z) if the default has a Material
Adverse Effect, terminate this Agreement (provided that the remedies described
in clauses (x), (y) and (z) may be sought by Empire in the alternative in any
pleadings or related documents to the extent permitted by law). In the event
that the Empire does not terminate this Agreement following a default by
Transferor, Empire shall have the right to ▇▇▇ Transferor for damages. In the
event of such an uncured material default by Transferor, and until such time as
57
Empire shall obtain a non-appealable judgment of specific performance against
Transferor, then Transferor shall not solicit, contact, facilitate or engage in
discussions or negotiations with any third party (other than Empire) with
respect to any Catskills Transfer for a period of eighteen (18) months following
the initiation of any such suit for damages or specific performance. Following
any termination of this Agreement by Empire as described in this Section 9.2(b)
arising from a default that has a Material Adverse Effect, the Option (as
defined in the Option Agreement) shall not be exercisable by Grantee under the
Option Agreement.
(c) Notwithstanding anything to the contrary herein, the provisions
of this Section 9.2 shall survive the termination of this Agreement.
ARTICLE X.
MISCELLANEOUS
Section 10.1 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 10.2 GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY
TRIAL. (A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW
PRINCIPLES THEREOF.
(b) Subject to Section 10.3 hereof, each of the parties hereto
irrevocably submits to the exclusive jurisdiction of any New York state or
federal court of appropriate jurisdiction in any action, suit, arbitration,
inquiry, proceeding or investigation by or before any court, governmental or
other regulatory or administrative agency or commission ("ACTION") arising out
of or relating to this Agreement, and hereby irrevocably agrees that all claims
in respect of such Action may be heard and determined in such New York state or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such Action. The parties further agree, to the extent
permitted by applicable Law, that any final and unappealable judgment against
any of them in any Action contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the U.S. by suit on the
judgment, a certified copy of which shall be conclusive evidence of the fact and
amount of such judgment.
(c) To the extent that any party hereto has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
party hereby irrevocably waives such immunity in respect of its obligations with
respect to this Agreement.
(d) Each party waives, to the fullest extent permitted by applicable
Law, any right it may have to a trial by jury in respect of any Action arising
out of or relating to this Agreement. Each party certifies that it has been
58
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications set forth above in this Section 10.2.
Section 10.3 DISPUTE RESOLUTION. Any claim or dispute between the
parties with respect to the terms and conditions of any of the Additional
Agreements shall be definitively resolved by binding arbitration. Upon written
notice from either party that such party desires to submit such a claim or
dispute to arbitration, the parties shall attempt to mutually agree upon one
reputable, independent arbitrator to arbitrate such claim or dispute. If the
parties shall mutually agree on such arbitrator, then such arbitrator shall be
directed to conduct the arbitration and make a final decision within thirty (30)
days after being appointed. In the event that the parties shall be unable to
agree upon one arbitrator within five (5) business days after delivery of such
written notice, then either party shall have the right to submit such claim or
dispute to binding arbitration by JAMS (formerly Judicial Arbitration and
Mediation Services) and JAMS shall be instructed to conduct such arbitration on
an expedited basis. The parties shall share any costs relating to any such
arbitration. Notwithstanding anything to the contrary herein, the determination
in any such arbitration proceeding shall be final and binding upon the parties.
The parties reserve all rights and remedies (including the right to commence
litigation) with respect to all other claims and disputes hereunder. The
provisions of this Section 10.3 shall survive the termination of this Agreement.
Section 10.4 ENTIRE AGREEMENT; BENEFICIARIES. This Agreement, the
Voting Agreements, the Registration Rights Agreement, the Option Agreement, the
Confidentiality Agreement and the Schedules and Exhibits hereto and thereto
contain the entire agreement between the parties with respect to the subject
matter hereof and there are no agreements, understandings, representations or
warranties between the parties other than those set forth or referred to herein.
Nothing expressed, referred to or implied by or in this Agreement will be
construed to give any Person (other than the parties to this Agreement) any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their permitted successors and assigns.
Section 10.5 NOTICES. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally (with
appropriate receipt), sent by certified mail or by nationally recognized
overnight delivery service to the appropriate address as set forth below.
Notices to Transferor shall be addressed to:
Concord Associates Limited Partnership
c/o Cappelli Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
59
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or at such other address and to the attention of such other person as Transferor
may designate by written notice to Empire. Notices to Empire, Newco or Merger
Sub shall be addressed to:
Empire Resorts, Inc.
▇/▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or at such other address and to the attention of such other person as Empire may
designate by written notice to Transferor. Any notice shall be deemed given (a)
by personal delivery, on the date delivered (b) by certified mail three (3)
business days after delivered to the carrier delivering same, delivery charges
prepaid, or (c) by nationally recognized overnight carrier, the next business
day after delivered to the carrier delivering same, delivery charges prepaid.
Section 10.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that no party hereto will assign its
rights or delegate any or all of its obligations under this Agreement without
the express prior written consent of each other party hereto, except that Newco
shall have the right to assign its rights under this Agreement, but not its
obligations, to any direct or indirect subsidiary that is, and at all times
through and including the Closing Date will be, disregarded as an entity
separate from Newco for federal income tax purposes. Nothing in this Agreement
is intended to confer upon any Person that is not a party to this Agreement any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.7 HEADINGS; DEFINITIONS. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
60
equally applicable to both the singular and plural forms of such terms. The
terms "hereof," "herein," and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all of the Exhibits hereto) and not to any particular provision of
this Agreement. The word "including" and words of similar import when used in
this Agreement shall mean "including without limitation" unless the context
otherwise requires or unless otherwise specified. All references in this
Agreement to any period of days shall be deemed to be to the relevant number of
calendar days unless otherwise specified.
Section 10.8 AMENDMENTS AND WAIVERS. This Agreement may in
accordance with this Section 10.8 be amended by the parties hereto, by action
taken or authorized by their respective boards of directors, at any time prior
to the Effective Time and, to the fullest extent permitted by law, after the
Effective Time (and the parties hereto expressly contemplate that this Agreement
can be amended after the Effective Time). This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party hereto may, only by an instrument in writing, waive compliance by another
party hereto with any term or provision of this Agreement on the part of such
other party hereto to be performed or complied with. The waiver by any party
hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
Section 10.9 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any party fails to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement and that the parties shall be entitled to specific performance in
such event, in addition to any other remedy or law or in equity.
Section 10.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 10.11 FEES AND EXPENSES. All state and local transfer Taxes
arising from the transfer of the Properties shall be paid by Transferor at the
Closing and Transferor shall be responsible for the cost of preparing the Deeds
and any Tax Forms. Transferor shall pay for all lender transactions costs
(including, without limitation, any prepayment fees or penalties) incurred by
Empire in connection with the Empire Payment Obligations. Empire shall pay for
the costs of the recordation of the Deeds. Empire shall be responsible for the
costs of title examination, owner's title insurance premiums (including the cost
of endorsements requested by Empire) and the cost of obtaining the Surveys of
the Properties. Empire shall also be responsible for the cost of obtaining
environmental and engineering reports in connection with its due diligence with
61
respect to the Properties, and any other inspections or reports relating to its
due diligence activities. Each party shall bear its own legal fees and expenses
incurred in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as otherwise set
forth in this Agreement.
Section 10.12 TRANSFEROR. Each of Concord Associates and ▇▇▇▇▇▇▇▇
Resorts shall be liable jointly and severally liable for the obligations of
Transferor under this Agreement, provided that ▇▇▇▇▇▇▇▇ shall not be liable for
any representations, warranties, covenants and other provisions of this
Agreement relating specifically to Concord Associates or the Concord Property,
and Concord shall not be liable for any representations, warranties, covenants
and other provisions of this Agreement relating specifically to ▇▇▇▇▇▇▇▇ Resorts
or the ▇▇▇▇▇▇▇▇▇▇'▇ Property.
Section 10.13 MUTUAL DRAFTING. Each party hereto has participated in
the drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
Section 10.14 GAMING FACILITIES. It is the preference of the parties
that, subsequent to the Closing, (a) any Class III gaming facility to be
developed by Empire or Newco on behalf of the Seneca Cayuga Nation be located on
a portion of the Concord Owned Property, and (b) any Class III gaming facility
to be developed by Empire or Newco on behalf of the Cayuga Nation of New York be
located on a portion of the Monticello Property.
Section 10.15 LETTER AGREEMENT SUPERSEDED. This Agreement is
intended to amend, restate and supersede the Letter Agreement in all respects,
provided that the Voting Agreements and the Option Agreement (which were entered
into in connection with the Letter Agreement) shall remain valid and in full
force and effect.
[Remainder of page intentionally left blank]
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first written above.
EMPIRE RESORTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
EMPIRE RESORTS HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
EMPIRE RESORTS SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CONCORD ASSOCIATES LIMITED
PARTNERSHIP
By: Convention Hotels, Inc.,
as general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇ RESORTS, LLC
By: Catskill Resort Group, LLC
as Managing Member
By: ▇▇▇▇▇▇▇▇ Resorts LLC, as Managing Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Managing Member
By: Melville-Catskill, LLC, as Managing Member
By: Reckson Strategic Venture Partners, LLC,
as Managing Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Authorized Signatory
Pursuant to Item 601(b)(2) of Regulation S-K, below please find a
list identifying the contents of all omitted schedules.
SUMMARY OF EMPIRE DISCLOSURE SCHEDULE
Section 4.2 -Capital Structure
Section 4.4 - Governmental Filings; No Violations; Certain Contracts, Etc.
Section 4.7 - Litigation and Liabilities
Section 4.9 - Material Contracts
Section 4.11 - Affiliate Transactions
Section 4.13 - Permits and Approvals
Section 4.18 - Labor and Employee Benefits
SUMMARY OF TRANSFEROR DISCLOSURE SCHEDULE
Section 3.2 - Concord Site Plan and Site Plan Approval
Section 3.3 - Consents and Approval
Section 3.5 - Material Licenses
Section 3.6 - Leases Where Transferor is Lessor
Section 3.7 - Service Contracts/Equipment Leases
Section 3.8 - Empire Payment Obligations
Section 3.14 - Exceptions to Compliance with Laws
Section 3.15 - Litigation
Section 3.16 - Condemnation
Section 3.18 - Environmental Matters
Section 3.19 - Insurance
Section 3.22 - Employment of Employees
Schedule 5.3 (i) - Land Use Applications and Approvals - Concord Properties
Schedule 5.3 (ii) - Land Use Applications and Approvals - Retained Property
Schedule 6.6 - Permitted Exceptions
Schedule 7.2(f) - Conditions to Transferor's Obligation