EXHIBIT 2.1
Executed Copy
------------------------------------------
AMENDED AND RESTATED
SECURITIES CONTRIBUTION AGREEMENT
------------------------------------------
BY AND AMONG
EMPIRE RESORTS, INC.
ALPHA MONTICELLO, INC.
CATSKILL DEVELOPMENT, L.L.C.
AMERICAS TOWER PARTNERS
MONTICELLO REALTY L.L.C.
WATERTONE HOLDINGS, LP
NEW YORK GAMING, LLC
FOX-HOLLOW LANE, LLC
SHAMROCK STRATEGIES, INC.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
BKB, LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
KFP TRUST
Dated as of December 12, 2003
TABLE OF CONTENTS
Page No.
--------
ARTICLE I
THE TRANSACTION
Section 1.1 The Contribution.....................................................3
Section 1.2 Consideration........................................................3
Section 1.3 Closing..............................................................3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CATSKILL AND THE CURRENT CATSKILL MEMBERS
Section 2.1 Corporate Existence..................................................4
Section 2.2 Authorization; Validity..............................................4
Section 2.3 No Conflict..........................................................4
Section 2.4 Consents and Approvals...............................................5
Section 2.5 Capitalization.......................................................5
Section 2.6 Subsidiaries.........................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CATSKILL
Section 3.1 Financial Statements.................................................6
Section 3.2 Absence of Certain Changes and Events................................6
Section 3.3 Material Contracts...................................................7
Section 3.4 General..............................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MRD MEMBERS
Section 4.1 Corporate Existence..................................................9
Section 4.2 Authorization; Validity..............................................9
Section 4.3 No Conflict..........................................................9
Section 4.4 Consents and Approvals...............................................9
Section 4.5 Capitalization......................................................10
Section 4.6 Subsidiaries........................................................10
Section 4.7 Inactive Entity.....................................................10
Section 4.8 Material Contracts..................................................10
Section 4.9 General.............................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EMPIRE
Section 5.1 Corporate Existence.................................................12
Section 5.2 Authorization; Validity.............................................12
Section 5.3 No Conflict.........................................................12
Section 5.4 Consents and Approvals..............................................12
Section 5.5 Brokers.............................................................13
Section 5.6 SEC Reports; Financial Statements...................................13
Section 5.7 Absence of Certain Changes and Events...............................14
Section 5.8 Capitalization......................................................15
Section 5.9 Valid Issuance of Exchange Shares...................................16
Section 5.10 No Undisclosed Liabilities.........................................16
Section 5.11 Bryanston Litigation...............................................16
Section 5.12 Recapitalization Agreement.........................................17
Section 5.13 Taxes..............................................................17
Section 5.14 No Investment Company..............................................17
Section 5.15 Complete Disclosure................................................17
ARTICLE VI
COVENANTS
Section 6.1 Access to Records...................................................18
Section 6.2 Representations and Warranties; Covenants...........................18
Section 6.3 Conduct of Empire Prior to Closing..................................18
Section 6.4 Conduct of Transferred Companies Prior to Closing...................20
Section 6.5 Commercially Reasonable Efforts.....................................22
Section 6.6 NY Gaming Distribution..............................................22
Section 6.7 Catskill Redemption.................................................22
Section 6.8 Catskill Assets and Liabilities Contribution........................22
Section 6.9 Catskill Subsidiary Interests Distribution..........................22
Section 6.10 Amendment of Cayuga Letter Agreement...............................22
Section 6.11 Services Compensation Agreements...................................22
Section 6.12 Preparation of Litigation Trust....................................23
Section 6.13 Fairness Opinion Cooperation.......................................23
Section 6.14 Due Authorization of Exchange Shares...............................23
Section 6.15 Section 351(a).....................................................23
Section 6.16 Officers and Directors.............................................23
Section 6.17 Executive Employment Agreement.....................................24
ARTICLE VII
REGISTRATION STATEMENT, STOCKHOLDER VOTE AND BRYANSTON REDEMPTION
Section 7.1 Registration Statement..............................................24
Section 7.2 Exchange Shares Listing.............................................25
Section 7.3 Stockholder Vote....................................................25
Section 7.4 Bryanston Redemption................................................26
Section 7.5 Affiliate Agreements................................................26
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to the Obligations of Each Party.........................26
Section 8.2 Conditions to the Obligations of Empire.............................28
Section 8.3 Conditions to the Obligations of The Transferors....................29
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND AGREEMENTS; INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties..........................30
Section 9.2 Indemnification of Empire...........................................31
Section 9.3 Indemnification of the Transferors..................................32
Section 9.4 Indemnification Procedure...........................................32
ARTICLE X
TERMINATION
Section 10.1 Termination........................................................33
Section 10.2 Effect of Termination..............................................33
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices............................................................34
Section 11.2 Specific Performance...............................................34
Section 11.3 Announcements......................................................35
Section 11.4 Entire Agreement...................................................35
Section 11.5 Binding Effect, Benefits, Assignments..............................35
Section 11.6 Applicable Law.....................................................35
Section 11.7 Jurisdiction.......................................................35
Section 11.8 Severability.......................................................36
Section 11.9 Headings...........................................................36
Section 11.10 Pronouns and Plurals...............................................36
Section 11.11 Counterparts.......................................................36
Section 11.12 Representation By Counsel; Interpretation..........................36
Section 11.13 Third Party Beneficiaries..........................................36
INDEX OF SCHEDULES
Schedule 1.2................................................................Allocation of Exchange Shares
Schedule 2.4.............................................................Catskill Consents and Approvals
Schedule 2.5...............................................................Catskill Subsidiary Interests
Schedule 2.6........................................................................Catskill Subsidiaries
Schedule 3.3..................................................................Catskill Material Contracts
Schedule 3.4(a)...............................................................Catskill Proprietary Rights
Schedule 3.4(f)............................................................Catskill Litigation and Claims
Schedule 4.4...................................................................MRD Consents and Approvals
Schedule 4.5...........................................................................MRD Capitalization
Schedule 4.8.......................................................................MRD Material Contracts
Schedule 4.9(a)....................................................................MRD Proprietary Rights
Schedule 5.4...............................................................Empire Consents and Approvals
Schedule 5.8(c)...................................................Shares of Common Stock to be Registered
Schedule 6.3(f)...............................................Empire Severance or Termination Commitments
Schedule 11.13..................................................................Third Party Beneficiaries
INDEX OF EXHIBITS
Exhibit A.........................................................................Bryanston Search Report
Exhibit B.....................................................................Form of Affiliate Agreement
Exhibit C.....................................................................Form of Amendment to Bylaws
Exhibit D...............................................Form of Amendment to Certificate of Incorporation
Exhibit E......................................................................Form of Amendment to Lease
Exhibit F..............................................................Form of Counsel to Sellers Opinion
Exhibit G..................................Form of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP Opinion
Exhibit H......................................................................Form of Guarantee of Lease
INDEX OF DEFINED TERMS
Page
Affiliate Agreement....................................................................................26
Affiliates.............................................................................................26
Agreement...............................................................................................1
Alpha Monticello........................................................................................1
ATP.....................................................................................................1
Berkshire...............................................................................................2
Berkshire Loan Documents................................................................................2
BKB.....................................................................................................1
Breach.................................................................................................31
Bryanston..............................................................................................16
Catskill................................................................................................1
Catskill Companies......................................................................................1
Catskill Company Material Contract......................................................................7
Catskill Contribution..................................................................................22
Catskill Distribution..................................................................................22
Catskill Financial Statements...........................................................................6
Catskill Operating Agreement............................................................................4
Catskill Redemption....................................................................................22
Catskill Related Agreements.............................................................................4
Catskill Subsidiary Interests...........................................................................5
Cayuga Letter Agreement................................................................................22
CE......................................................................................................1
Closing.................................................................................................3
Closing Date............................................................................................3
Closing Time............................................................................................3
Code....................................................................................................2
Common Stock............................................................................................2
Common Stock Redemption................................................................................26
Conflict................................................................................................5
Current Catskill Members................................................................................1
DGCL...................................................................................................20
Empire..................................................................................................1
Empire Consent.........................................................................................25
Empire Financial Statements............................................................................13
Empire Related Agreements..............................................................................12
Empire SEC Reports.....................................................................................13
Empire Securities......................................................................................16
Employment Agreements..................................................................................24
Exchange Act...........................................................................................13
Exchange Shares.........................................................................................2
Fox-Hollow..............................................................................................1
GAAP...................................................................................................13
Governmental Entity.....................................................................................5
Injured Party..........................................................................................32
Interests...............................................................................................2
KFLP....................................................................................................1
KFP.....................................................................................................1
Lease...................................................................................................2
Liabilities.............................................................................................3
Litigation.............................................................................................23
Losses.................................................................................................31
MCM.....................................................................................................1
MM......................................................................................................1
Monticello Realty.......................................................................................1
MRD.....................................................................................................1
MRD Interests..........................................................................................10
MRD Material Contract..................................................................................10
MRD Members.............................................................................................1
MRD Related Agreements..................................................................................9
MRM.....................................................................................................1
NASD...................................................................................................24
NY Gaming...............................................................................................1
NY Gaming Distribution.................................................................................22
Organizational Documents................................................................................4
Original Agreement......................................................................................2
Other Party............................................................................................32
PB......................................................................................................1
Plaintiffs.............................................................................................23
Proceeds...............................................................................................23
Proprietary Rights......................................................................................7
Prospectus.............................................................................................13
RB......................................................................................................1
Recapitalization Agreement.............................................................................17
Remaining Catskill Members..............................................................................1
Rule 145...............................................................................................26
S-4 Registration Statement.............................................................................24
SEC....................................................................................................13
Securities Act.........................................................................................13
Series B Preferred Stock...............................................................................15
Series E Preferred Stock...............................................................................15
Services Compensation Agreements.......................................................................22
Shamrock................................................................................................1
Shared Facilities Agreements...........................................................................29
SK......................................................................................................1
Special Committee......................................................................................23
Subsidiary..............................................................................................6
Surviving Catskill Representations.....................................................................31
Surviving Empire Representations.......................................................................30
Surviving MRD Representations..........................................................................31
Transaction.............................................................................................4
Transferors.............................................................................................2
Transferred Companies...................................................................................1
Trust..................................................................................................23
U.S. Attorney..........................................................................................16
Watertone...............................................................................................1
AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT
------------------------------------------------------
THIS AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT (the
"AGREEMENT") is entered into as of this 12th day of December, 2003 by and among
Empire Resorts, Inc., a Delaware corporation (together with its successors and
permitted assigns, "EMPIRE"), Alpha Monticello, Inc., a Delaware corporation
("ALPHA MONTICELLO"), Catskill Development, L.L.C., a New York limited liability
company ("CATSKILL"), Monticello Realty L.L.C., a Delaware limited liability
company ("MONTICELLO REALTY"), Americas Tower Partners, a New York general
partnership ("ATP"), Watertone Holdings, LP, a Delaware limited partnership
("WATERTONE"), New York Gaming, LLC, a Georgia limited liability company ("NY
GAMING"), Fox-Hollow Lane, LLC, a New York limited liability company
("FOX-HOLLOW"), Shamrock Strategies, Inc., a Delaware corporation ("SHAMROCK"),
▇▇▇▇▇▇▇▇▇ Family Limited Partnership, a Georgia limited partnership ("KFLP"),
KFP Trust, an Illinois Trust ("KFP"), BKB, LLC, a New York limited liability
company ("BKB"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("CE"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("RB"), ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("PB") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("SK").
W I T N E S S E T H:
WHEREAS, Alpha Monticello, a wholly owned subsidiary of Empire, ATP,
Monticello Realty, Watertone, NY Gaming, Fox-Hollow, Shamrock and CE (together,
the "CURRENT CATSKILL MEMBERS") collectively own all of the issued and
outstanding membership units of Catskill;
WHEREAS, Empire and Catskill, directly or indirectly, collectively
own all of the issued and outstanding membership units of both Monticello Casino
Management, LLC, a New York limited liability company ("MCM"), and Mohawk
Management, LLC, a New York limited liability company ("MM"), and Catskill owns
all of the issued and outstanding capital stock of Monticello Raceway
Management, Inc., a New York corporation ("MRM" and together with MM and MCM,
the "CATSKILL COMPANIES");
WHEREAS, ATP, RB, PB, SK, KFLP and KFP (together, the "MRD MEMBERS")
collectively own all of the issued and outstanding membership units of
Monticello Raceway Development Company, LLC, a New York limited liability
company ("MRD");
WHEREAS, the Board of Directors of Empire, the MRD Members and the
Current Catskill Members believe it to be in the best interest of their
respective companies for the Catskill Companies and MRD (together, the
"TRANSFERRED COMPANIES") to become wholly owned subsidiaries of Empire;
WHEREAS, prior to the Transferred Companies becoming wholly owned
subsidiaries of Empire, however, NY Gaming will transfer all of its membership
interest in Catskill to Alpha Monticello and Catskill shall, immediately
thereafter, redeem all of Alpha Monticello's membership interest in Catskill for
40% of the issued and outstanding capital stock of MRM, leaving ATP, Monticello
Realty, Watertone, Fox-Hollow, Shamrock and CE as Catskill's sole remaining
members (together, the "REMAINING CATSKILL MEMBERS");
WHEREAS, following the redemption of Alpha Monticello's membership
interest in Catskill, Catskill shall distribute all of its equity interests in
the Catskill Companies to the Remaining Catskill Members;
WHEREAS, each of the Transferred Companies will become wholly owned
subsidiaries of Empire by having the Remaining Catskill Members and the MRD
Members (together, the "TRANSFERORS"), subject to and in accordance with the
terms and conditions set forth herein, contribute all of their membership
interests and/or capital stock of the Transferred Companies (the "INTERESTS"),
as the case may be, to Empire, in exchange for that number of newly issued
shares (the "EXCHANGE SHARES") of Empire's common stock, $.01 par value per
share (the "COMMON STOCK"), equal to 80.25% of Empire's Common Stock, on a
fully-diluted basis, immediately following the Closing Time (as hereinafter
defined);
WHEREAS, the parties to this Agreement intend for the above
described contribution and exchange to qualify as a transaction described in
Section 351(a) of the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, on July 3, 2003, Empire, Catskill, ATP and BKB entered into
a securities contribution agreement (the "ORIGINAL AGREEMENT") pursuant to which
Catskill and the MRD Members agreed to contribute all of their Interests in the
Transferred Companies to Empire in exchange for the Exchange Shares;
WHEREAS, on October 29, 2003, certain of the parties to this
Agreement entered into a series of agreements to provide Empire and the Catskill
Companies with a $3,500,000 secured term loan, including (i) that certain
Agreement of Lease, made as of the 29th day of October, 2003, between Catskill
and MRM, with respect to those certain 200 acres of land in Monticello, New York
owned by Catskill (the "LEASE"), (ii) that certain Loan and Security Agreement,
dated October 29, 2003, by and among MRM and The Berkshire Bank ("BERKSHIRE"),
(iii) that certain Term Note, dated October 29, 2003, issued by MRM to
Berkshire, (iv) that certain Leasehold Mortgage, Security Agreement, Assignment
of Leases and Rents and Fixture Filing, dated as of October 29, 2003, by MRM, as
mortgagor, to Berkshire, (v) that certain Security Agreement, dated as of
October 29, 2003, by and between Catskill and Berkshire Bank, (vi) that certain
Surety Agreement, made and executed October 29, 2003, by Empire in favor of
Berkshire, (vii), that certain Nondisturbance and Attornment Agreement, made and
entered into as of October 29, 2003, by and between ATP, Monticello Realty, MRM,
Catskill and Berkshire and (viii) that certain Guaranty Agreement, made and
executed October 29, 2003, by RB in favor of Berkshire (items (i) through (viii)
above, and all related documents, are hereinafter collectively referred to as
the "BERKSHIRE LOAN DOCUMENTS"); and
WHEREAS, the parties now desire to amend and restate the Original
Agreement in order to, among other things, (i) provide for the Interests to be
contributed to Empire by the Transferors rather than by Catskill and the MRD
Members, (ii) provide for the Exchange Shares to be issued by Empire directly to
the Transferors rather than to Catskill and the MRD Members, (iii) reflect the
fact that since the date of the Original Agreement, BKB has transferred all of
its Interests in MRD to RB, PB, SK, KFP and KFLP, (iv) reflect that Empire will
amend its Series E Preferred Stock certificate of designations to provide the
holders of its Series E Preferred Stock with certain voting rights in order to
make such shares of Series E Preferred Stock more marketable, (v) reflect the
transactions provided for in the Berkshire Loan Documents, (vi) eliminate the
redemption by Empire of its outstanding Series E Preferred Stock as a condition
to Closing, (vii) eliminate Empire's obligation to provide the U.S. Attorney (as
hereinafter defined) with prior written notice of the Common Stock Redemption
(as hereinafter defined) as a condition to Closing, (viii) eliminate the
2
requirement that RB and SK enter into a voting agreement as a condition to
Closing, and (ix) eliminate the requirement that a shareholder rights agreement
be duly adopted by Empire as a condition to Closing.
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements and covenants contained herein, and for such other good
and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree that the Original Agreement
is hereby amended and restated in its entirety as follows:
ARTICLE I
THE TRANSACTION
Section 1.1 THE CONTRIBUTION. On the Closing Date (as hereinafter
defined), and at the Closing Time (as hereinafter defined), subject in all
instances to each of the terms, conditions, provisions, and limitations
contained in this Agreement, (i) the Transferors shall contribute, transfer,
convey, and assign to Empire, free and clear of any and all liens and charges,
and Empire shall acquire from the Transferors, their Interests, comprising, as
to each such Transferor, its entire ownership interest in the Transferred
Companies and (ii) Empire shall assume all liabilities of Catskill and the
Transferred Companies (the "LIABILITIES") other than any mortgage currently
encumbering those certain 200± acres of land and improvements thereon, located
in Monticello, New York and currently owned by Catskill, in exchange for the
Exchange Shares, so that thereafter Empire shall become the sole holder of the
Interests.
Section 1.2 CONSIDERATION. As consideration for contributing its
Interests to Empire as provided in Section 1.1 above, each Transferor shall be
entitled to receive that number of Exchange Shares set forth opposite its name
on Schedule 1.2 attached hereto and made a part hereof.
Section 1.3 CLOSING.
(a) The closing of the transactions contemplated hereby (the
"CLOSING") shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ &
Wolosky LLP, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
as soon as practicable following the satisfaction or waiver of the conditions
set forth in Article VIII hereof (or such other date and place as the parties
may mutually agree). The date on which the Closing actually occurs is
hereinafter referred to as the "CLOSING DATE" and the time at which the Closing
occurs is hereinafter referred to as the "CLOSING TIME." All events that are to
occur at the Closing Time shall, for all purposes, be deemed to occur
simultaneously, except to the extent, if at all, that a specific order of
occurrence is otherwise described.
(b) On the Closing Date, and at the Closing Time, Empire shall
deliver to each Transferor a certificate (or certificates), registered in the
name of such Transferor or its nominee, representing that number of Exchange
Shares to be received by it pursuant to Schedule 1.2, and each Transferor shall
deliver to Empire one or more limited liability company interest certificates
and/or stock certificates, as the case may be, or such other evidence of
ownership that is reasonably satisfactory to Empire and its counsel,
representing all of such Transferor's Interests, accompanied by a duly executed
transfer instrument in form and substance mutually satisfactory to the parties
3
(this exchange, together with all other related transactions provided for in
this Agreement are collectively referred to herein as the "TRANSACTION"). For
the avoidance of doubt, to the extent that any Transferor's ownership interest
in a Transferred Company is not certificated on the Closing Date, this Section
1.3(b) does not create an obligation on the part of such Transferor to
certificate such ownership interest.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CATSKILL AND THE CURRENT
CATSKILL MEMBERS
Each of Catskill and the Current Catskill Members, recognizing that
Empire is relying on the contents of this Article II as a material inducement to
its execution, delivery and performance of this Agreement, hereby represents and
warrants to its knowledge and without independent investigation, except for the
representations and warranties in Sections 2.5(b) through (f) which shall not be
subject to such qualification as to knowledge, and severally and not jointly on
an individual basis on its own behalf and not on behalf of Catskill or any other
Current Catskill Member, as the case may be, to Empire as follows:
Section 2.1 CORPORATE EXISTENCE. Each of the Catskill Companies is a
corporation, limited liability company, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the State of
New York, possessing the requisite power and authority to own, operate and lease
its properties and assets, and to carry on its business as now and as currently
proposed to be conducted. True and accurate copies of the bylaws, certificate of
incorporation, or such other constitutive documents (together, the
"ORGANIZATIONAL DOCUMENTS") of the Catskill Companies, each as amended and in
effect on and as of the Closing, have been delivered to Empire.
Section 2.2 AUTHORIZATION; VALIDITY. Each of Catskill and the
Current Catskill Members has all requisite power and authority to enter into
this Agreement and all other documents and instruments required to be executed
by it in connection with the Transaction (together, the "CATSKILL RELATED
AGREEMENTS"). The execution and delivery of this Agreement and the Catskill
Related Agreements and the consummation of the Transaction have been duly
authorized by all necessary action, corporate, partnership, limited liability
company or otherwise and no further action is required on the part of Catskill
or the Current Catskill Members to authorize the execution and delivery of this
Agreement, the Catskill Related Agreements applicable to it and that portion of
the Transaction applicable to it. This Agreement and the Catskill Related
Agreements have been duly executed and delivered by Catskill and the Current
Catskill Members, as the case may be, and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto, constitute a
valid and binding obligation of Catskill and the Current Catskill Members, as
the case may be, enforceable in accordance with their respective terms, subject
to the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and the rules of law governing specific performance,
injunctive relief or other equitable remedies.
Section 2.3 NO CONFLICT. Except as may otherwise be provided in the
Berkshire Loan Documents and the provisions of the First Amended and Restated
Operating Agreement of Catskill, dated January 1, 1999 (the "CATSKILL OPERATING
AGREEMENT") relating to the Senior Obligation and Priority Returns (as such
4
terms are defined in the Catskill Operating Agreement), the execution and
delivery of this Agreement and any Catskill Related Agreement by Catskill or any
Current Catskill Member does not, and the consummation of the Transaction will
not, conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or
loss of any benefit under (any such event, a "CONFLICT") (a) any provision of
Catskill's, the Catskill Companies' or any Current Catskill Member's
Organizational Documents, (b) any mortgage, indenture, lease, contract or other
agreement or instrument or permit, concession, franchise or license to which
Catskill, the Catskill Companies or any Current Catskill Member are subject, or
(c) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Catskill, the Catskill Companies or any Current Catskill Member,
or their respective properties or assets.
Section 2.4 CONSENTS AND APPROVALS. Except as set forth on Schedule
2.4 attached hereto and made a part hereof, no consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission (a
"GOVERNMENTAL ENTITY") or other third party, including a party to any agreement
with Catskill, the Catskill Companies or any Current Catskill Member (so as not
to trigger a Conflict), is required by or with respect to Catskill, the Catskill
Companies or any Current Catskill Member in connection with the execution and
delivery of this Agreement and the Catskill Related Agreements or for
consummation of the Transaction, except for such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable securities laws.
Section 2.5 CAPITALIZATION.
(a) The equity interests of the Catskill Companies listed on
Schedule 2.5 attached hereto and made a part hereof are held by Catskill
(collectively referred to herein as the "CATSKILL SUBSIDIARY INTERESTS"). The
Catskill Subsidiary Interests are duly authorized, validly issued, fully paid
and nonassessable and are not subject to any preemptive right, whether created
by statute, the Catskill Companies' Organizational Documents or any agreement to
which either Catskill, the Catskill Companies or any Current Catskill Member is
a party or by which Catskill, the Catskill Companies or any Current Catskill
Member is bound, and such Catskill Subsidiary Interests have been issued in
compliance with all federal and state securities laws. There are no declared or
unpaid accrued dividends with respect to any of the Catskill Subsidiary
Interests.
(b) Catskill holds no other equity securities, or securities
convertible into, exchangeable for, exercisable for or in any other way
evidencing the right to receive equity securities of any of the Catskill
Companies, authorized, issued or outstanding other than the Catskill Subsidiary
Interests.
(c) Catskill owns the Catskill Subsidiary Interests set forth
opposite its name on Schedule 2.5 (which Catskill Subsidiary Interests are to,
first, be transferred by Catskill to the Remaining Catskill Members, and,
second, by the Remaining Catskill Members to Empire at the Closing, except to
the extent of that certain number of shares of MRM capital stock, no par value
per share, to be transferred to Empire in accordance with the terms of the
5
Catskill Redemption (as hereinafter defined)) free and clear of any and all
liens, claims, encumbrances, and rights of others.
(d) Catskill is authorized and entitled to sell, transfer and convey
to the Remaining Catskill Members free and clear title to the Catskill
Subsidiary Interests, without any further approval or authorization being
required, other than approval by the Remaining Catskill Members and a waiver by
the holders of the Senior Obligation and Priority Returns (as such terms are
defined in the Catskill Operating Agreement).
(e) Upon receipt of the Catskill Subsidiary Interests as described
in the preceding paragraph, each Remaining Catskill Member, solely with respect
to itself, will be authorized and entitled to sell, transfer and convey to
Empire free and clear title to its Catskill Subsidiary Interests, without any
further approval or authorization being required.
(f) At the Closing Time, the Catskill Subsidiary Interests being
contributed by each Remaining Catskill Member to Empire will constitute all of
the Catskill Subsidiary Interests received by such Remaining Catskill Member
pursuant to the Catskill Distribution (as hereinafter defined).
Section 2.6 SUBSIDIARIES. Except for the Catskill Companies and as
provided on Schedule 2.6 attached hereto and made a part hereof, Catskill has no
Subsidiaries. As used in this Agreement, the word "SUBSIDIARY" when used with
respect to any party shall mean any corporation, partnership or other
organization, whether incorporated or unincorporated, of which at least a
majority of the securities or other interests having by their terms voting power
to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly beneficially owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CATSKILL
In addition to those representations and warranties made by Catskill
in Article II, Catskill, recognizing that Empire is relying on the contents of
this Article III as a material inducement to its execution, delivery and
performance of this Agreement, hereby also represents and warrants to its
knowledge and without independent investigation to Empire as follows:
Section 3.1 FINANCIAL STATEMENTS. Catskill has delivered to Empire
true and complete copies of the balance sheet and income statement for the
Catskill Companies for the year ended December 31, 2002 and for the nine month
period ended September 30, 2003 (collectively, the "CATSKILL FINANCIAL
STATEMENTS"). The Catskill Financial Statements (a) are true, correct and
complete, (b) are in accordance with the books and records of the Catskill
Companies and (c) fairly, completely and accurately present the financial
position of the Catskill Companies at the dates specified and the results of
their operations for the periods covered.
Section 3.2 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
expressly contemplated by this Agreement or the Berkshire Loan Documents, since
September 30, 2003 the Catskill Companies have conducted their businesses only
in the ordinary course, and there has not been:
6
(a) any event, occurrence or development of a state of circumstances
or facts that could reasonably be expected to result in a material adverse
effect to the business, properties, prospects or financial condition of the
Catskill Companies;
(b) any incurrence, assumption or guarantee by the Catskill
Companies of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(c) any (i) grant of any material severance or termination pay to
any director, officer or employee of the Catskill Companies, (ii) entering into
of any material employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director, manager,
officer or other employee of the Catskill Companies, or (iii) other than in the
ordinary course of business and consistent with past practices, material
increase in compensation, bonus or other benefits payable to directors,
managers, officers or other employees of the Catskill Companies; or
(d) any agreement or commitment obligating the Catskill Companies to
do any of the things described in clauses (a) through (c).
Section 3.3 MATERIAL CONTRACTS. Except as set forth on Schedule 3.3
attached hereto and made a part hereof, none of the Catskill Companies is a
party to or bound by any contract which has a term in excess of one year and
will result in payments in excess of $100,000 over any 12 month period other
than (a) contracts entered into in the ordinary course of business and (b)
contracts cancelable upon not more than 30 days' notice (each such contract a
"CATSKILL COMPANY MATERIAL CONTRACT").
Section 3.4 GENERAL.
(a) Except as set forth on Schedule 3.4(a), each Catskill Company
possesses full ownership of, or adequate licenses or other rights to use all
trade secrets, copyrights, patents, trademarks, service marks, customer lists,
and all similar types of intangible property developed, created, registered in
the name of, or owned by it or used by it in connection with its business
("PROPRIETARY RIGHTS").
(b) Except as described in the Catskill Financial Statements or as
provided for in the Berkshire Loan Documents, no Catskill Company has any
material debts, liabilities or obligations of any kind, whether accrued,
absolute, contingent or other, whether due or to become due, except as incurred
in the ordinary course of business.
(c) No Catskill Company is in material violation of any provision of
its Organizational Documents, each as amended and in effect on and as of the
Closing, or in any material respect of any provision of any agreement,
instrument or contract to which it is a party or by which it is bound.
(d) No Catskill Company is in breach of or in default under any
Catskill Company Material Contract, and no other party to any such Catskill
Company Material Contract is in breach of or in default thereunder (and no event
has occurred which with notice or the lapse of time or both would constitute a
default or violation), except such defaults which, singly or in the aggregate,
7
could not reasonably be expected to result in a material adverse effect to the
business, properties, prospects or financial condition of such Catskill Company.
(e) Each Catskill Company is in substantial compliance with, and has
not received notice of any material violation of, any law or regulation
applicable to its operations, including, without limitation, the use of any
premises occupied by it, or with respect to which compliance is a condition of
engaging in any aspect of its business, and each Catskill Company has all
permits, licenses, zoning rights, and other governmental authorizations
necessary to conduct its business as presently conducted except where the
failure to be in such compliance, or the failure to possess such permits,
licenses, zoning rights and other governmental authorizations would not
reasonably be expected to result in a material adverse effect to the business,
properties, prospects or financial condition of such Catskill Company.
(f) Except as set forth on Schedule 3.4(f) attached hereto and made
a part hereof, there is no action, suit, claim or proceeding of any nature
pending, or threatened, against the Catskill Companies, nor is there any
reasonable basis therefor.
(g) Each Catskill Company has (i) filed all tax returns and reports
as required by law (all of which are true and correct in all material respects),
(ii) paid all material taxes and other assessments due, except those being
contested by it in good faith, (iii) made adequate provisions on its books of
account for all material taxes, assessments and governmental charges with
respect to its business, properties and operations for each relevant period and
(iv) withheld or collected from each payment made to its employees, the amount
of all material taxes required to be withheld or collected therefrom and has
paid the same to the proper tax receiving officers or authorized depositaries.
(h) No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction.
(i) Except as may otherwise be provided in the Berkshire Loan
Documents, each Catskill Company has good, marketable, and insurable title, or
valid, effective, and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by it or used by
it in the conduct of its business, free and clear of all liens, claims,
encumbrances, and charges, except liens for taxes not yet due and minor
imperfections of title and encumbrances, if any, which singly and in the
aggregate are not substantial in amount and do not materially impair the use
thereof.
(j) The business of each Catskill Company is not being conducted in
violation of any applicable order, writ, judgment, injunction, decree, statute,
ordinance, rule or regulation of any Governmental Entity, except such violations
which, singly or in the aggregate, could not reasonably be expected to result in
a material adverse effect to the business, properties, prospects or financial
condition of such Catskill Company.
(k) There are no activities or controversies, including, without
limitation, any labor organizing activities, election petitions or proceedings,
unfair labor practice complaints, labor strikes, disputes, slowdowns, or work
stoppages, pending or threatened, between the Catskill Companies and their
8
respective employees except such activities or controversies which, singly or in
the aggregate, would not reasonably be expected to result in a material adverse
effect to the business, properties, prospects or financial condition of such
Catskill Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MRD MEMBERS
Each of the MRD Members, recognizing that Empire is relying on the
contents of this Article IV as a material inducement to its execution, delivery
and performance of this Agreement, hereby represents and warrants to its
knowledge, without independent investigation and severally and not jointly on an
individual basis on its own behalf and not on behalf of any other MRD Member,
except for the representations and warranties in Sections 4.5(b) through (d)
which shall not be subject to such qualification as to knowledge, to Empire as
follows:
Section 4.1 CORPORATE EXISTENCE. MRD is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of New York, possessing the requisite limited liability company power and
authority to own, operate and lease its properties and assets, and to carry on
its business as now and as currently proposed to be conducted. True and accurate
copies of MRD's Organizational Documents, each as amended an in effect on and as
of the Closing, have been delivered to Empire.
Section 4.2 AUTHORIZATION; VALIDITY. Each MRD Member has all
requisite power and authority to enter into this Agreement and all other
documents and instruments required to be executed by it in connection with the
Transaction (collectively, the "MRD RELATED AGREEMENTS"). The execution and
delivery of this Agreement and the MRD Related Agreements and the consummation
of the Transaction have been duly authorized by all necessary action, corporate,
partnership, limited liability company or otherwise, and no further action is
required on the part of the MRD Members to authorize this Agreement, the MRD
Related Agreements applicable to it and that portion of the Transaction
applicable to it. This Agreement and the MRD Related Agreements have been duly
executed and delivered by the MRD Members, as the case may be, and, assuming the
due authorization, execution and delivery by the other parties hereto and
thereto, constitute a valid and binding obligation of the MRD Members, as the
case may be, enforceable in accordance with their respective terms, subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and the rules of law governing specific performance,
injunctive relief or other equitable remedies.
Section 4.3 NO CONFLICT. Except as may otherwise be provided in the
Berkshire Loan Documents, the execution and delivery of this Agreement and any
MRD Related Agreement by MRD or any MRD Member does not, and, the consummation
of the Transaction will not result in a Conflict with (a) any provision of MRD's
or any MRD Member's Organizational Documents, (b) any mortgage, indenture,
lease, contract or other agreement or instrument or permit, concession,
franchise or license to which MRD or any MRD Member is subject, or (c) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to MRD or any MRD Member.
Section 4.4 CONSENTS AND APPROVALS. Except as set forth on Schedule
4.4 attached hereto and made a part hereof, no consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any
9
Governmental Entity or other third party, including a party to any agreement
with MRD or any MRD Member (so as not to trigger a Conflict), is required by or
with respect to MRD or any MRD Member in connection with the execution and
delivery of this Agreement and the MRD Related Agreements or for consummation of
the Transaction, except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws.
Section 4.5 CAPITALIZATION.
(a) The authorized equity securities of MRD consist of membership
units (referred to herein as the "MRD INTERESTS"), all of which are held by the
MRD Members in the percentages as provided on Schedule 4.5 attached hereto and
made a part hereof. The MRD Interests are duly authorized, validly issued, fully
paid and nonassessable and are not subject to any preemptive right, whether
created by statute, MRD's Organizational Documents or any agreement to which
either MRD or any MRD Member is a party or by which MRD or any MRD Member is
bound, and such MRD Interests have been issued in compliance with all federal
and state securities laws. There are no declared or accrued unpaid dividends
with respect to any of the MRD Interests.
(b) MRD has no other equity securities, or securities convertible
into, exercisable for or in any other way evidencing the right to receive equity
securities of MRD, authorized, issued or outstanding other than the MRD
Interests held by the MRD Members.
(c) Each MRD Member owns the MRD Interests set forth opposite its
name on Schedule 4.5 (which MRD Interests are to be transferred to Empire at the
Closing) free and clear of any and all liens, claims, encumbrances, and rights
of others.
(d) Each MRD Member is authorized and entitled to sell, transfer and
convey to Empire free and clear title to its MRD Interests, without any further
approval or authorization being required.
Section 4.6 SUBSIDIARIES. MRD does not own or control, directly or
indirectly, any equity interest in any other corporation, partnership, limited
liability company, association or other business entity.
Section 4.7 INACTIVE ENTITY. MRD has no (a) employees, (b) material
operations or (c) assets, other than the contractual right to develop 229
acres of land in Monticello, New York.
Section 4.8 MATERIAL CONTRACTS. Except as set forth on Schedule 4.8
attached hereto and made a part hereof, MRD is not a party to or bound by any
contract which has a term in excess of one year and will result in payments in
excess of $100,000 over any 12 month period other than (a) contracts entered
into in the ordinary course of business and (b) contracts cancelable upon not
more than 30 days' notice (each such contract, a "MRD MATERIAL CONTRACT").
Section 4.9 GENERAL.
(a) Except as set forth on Schedule 4.9(a), MRD possesses full
ownership of, or adequate licenses or other rights to use (without payment) all
of its Proprietary Rights.
10
(b) MRD has no material debts, liabilities or obligations of any
kind, whether accrued, absolute, contingent or other, whether due or to become
due, except as incurred in the ordinary course of business.
(c) MRD is not in material violation of any provision of its
Organizational Documents, each as amended and in effect on and as of the
Closing, or in any material respect of any provision of any agreement,
instrument or contract to which it is a party or by which it is bound.
(d) MRD is not in breach of or in default under any MRD Material
Contract, and no other party to any such MRD Material Contract is in breach of
or in default thereunder (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation), except such
defaults which, singly or in the aggregate, could not reasonably be expected to
result in a material adverse effect to the business, properties, prospects or
financial condition of MRD.
(e) MRD is in substantial compliance with, and has not received
notice of any material violation of, any law or regulation applicable to its
operations, including, without limitation, the use of any premises occupied by
it, or with respect to which compliance is a condition of engaging in any aspect
of its business and MRD has all permits, licenses, zoning rights, and other
governmental authorizations necessary to conduct its business as presently
conducted except where the failure to be in such compliance, or the failure to
possess such permits, licenses, zoning rights and other governmental
authorizations would not reasonably be expected to result in a material adverse
effect to the business, properties, prospects or financial condition of MRD.
(f) There is no action, suit, claim or proceeding of any nature
pending, or threatened, against MRD, nor is there any reasonable basis therefor.
(g) MRD has (i) filed all tax returns and reports as required by law
(all of which are true and correct in all material respects), (ii) paid all
material taxes and other assessments due, except those being contested by it in
good faith, (iii) made adequate provisions on its books of account for all
material taxes, assessments and governmental charges with respect to its
business, properties and operations for each relevant period and (iv) withheld
or collected from each payment made to its employees, the amount of all material
taxes required to be withheld or collected therefrom and has paid the same to
the proper tax receiving officers or authorized depositaries.
(h) No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction.
(i) The business of MRD is not being conducted in violation of any
applicable order, writ, judgment, injunction, decree, statute, ordinance, rule
or regulation of any Governmental Entity, except such violations which, singly
or in the aggregate, could not reasonably be expected to result in a material
adverse effect to the business, properties, prospects or financial condition of
MRD.
11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EMPIRE
Empire, recognizing that the Transferors are relying on the contents
of this Article V as a material inducement to their execution, delivery and
performance of this Agreement, hereby represents and warrants to the Transferors
as follows:
Section 5.1 CORPORATE EXISTENCE. Empire is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, possessing the requisite power and authority to own, operate and lease
its properties and assets and to carry on its business as now and as currently
proposed to be conducted. Empire is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of the properties owned or leased by it, or the nature of its activities, is
such that qualification as a foreign corporation in that jurisdiction is
required by law. True and accurate copies of Empire's Organizational Documents,
each as amended an in effect on and as of the Closing, have been delivered to
the Transferors.
Section 5.2 AUTHORIZATION; VALIDITY. Empire has all requisite power
and authority to enter into this Agreement and all other documents and
instruments required to be executed by it in connection with the Transaction
(collectively, the "EMPIRE RELATED AGREEMENTS"). The execution and delivery of
this Agreement and the Empire Related Agreements, the consummation of the
Transaction and the issuance of the Exchange Shares in accordance with the
Transaction have been duly authorized by all necessary action, corporate or
otherwise, and no further action is required on the part of Empire to authorize
the Agreement, the Empire Related Agreements, the Transaction and the issuance
of the Exchange Shares in accordance with the Transaction, subject only to the
approval and adoption of this Agreement and the Transaction by Empire's
stockholders. This Agreement and the Empire Related Agreements have been duly
authorized and validly executed and delivered by Empire, and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute a valid and binding obligation of Empire, enforceable in accordance
with their respective terms, subject to the laws of general application relating
to bankruptcy, insolvency and the relief of debtors and the rules of law
governing specific performance, injunctive relief or other equitable remedies.
Section 5.3 NO CONFLICT. Except as may otherwise be provided in the
Berkshire Loan Documents, the execution and delivery of this Agreement and the
Empire Related Agreements do not, and, the performance thereof by Empire and the
consummation of the Transaction, will not result in a Conflict with (a) any
provision of Empire's Organizational Documents, (b) any mortgage, indenture,
lease, contract or other agreement or instrument or permit, concession,
franchise or license to which Empire, its properties or its assets (including
intangible assets) are subject, or (c) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Empire, its properties or its
assets.
Section 5.4 CONSENTS AND APPROVALS. Except as set forth on Schedule
5.4 attached hereto and made a part hereof, no consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity or other third party, including a party to any agreement
with Empire (so as not to trigger a Conflict), is required by or with respect to
Empire in connection with the execution and delivery of this Agreement and the
12
Empire Related Agreements or for the performance hereof and thereof and for the
consummation of the Transaction, except for such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable securities laws.
Section 5.5 BROKERS. No broker, finder, or investment banker is
entitled to any brokerage, finder's, or other fee or commission in connection
with this Agreement or the Transaction or any related transaction based upon any
agreement, written or oral, made by or on behalf of Empire.
Section 5.6 SEC REPORTS; FINANCIAL STATEMENTS. Empire has timely
filed all required reports, registration statements, proxy statements, forms and
other documents with the Securities and Exchange Commission (the "SEC") since
January 1, 2002 (as such documents have since the time of their filing been
amended or supplemented, the "EMPIRE SEC REPORTS"). As of their respective
dates, each of the Empire SEC Reports (including any financial statements filed
as a part thereof or incorporated by reference therein) complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as the case may be, each as in effect on the dates
such Empire SEC Reports were filed. None of the Empire SEC Reports contained,
when filed or at the time when they became effective, as the case may be, any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of Empire and its Subsidiaries included in the
Empire SEC Reports (the "EMPIRE FINANCIAL STATEMENTS") comply as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present, in conformity with generally
accepted accounting principals ("GAAP") applied on a consistent basis throughout
the relevant periods (except as may be indicated in the notes thereto and,
except in the case of unaudited quarterly statements, as permitted by Form
10-QSB of the SEC), the consolidated financial position of Empire and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and changes in financial position and cash flows for the
periods then ended (subject, in the case of unaudited interim financial
statements, to normal year-end adjustments). The S-4 Registration Statement (as
hereinafter defined) and the prospectus used in connection with the S-4
Registration Statement, and each amendment or supplement thereto (the
"PROSPECTUS"), as of the effective date of the S-4 Registration Statement and as
of the dates of the effectiveness of any amendments thereto, and as of the
filing date of the S-4 Registration Statement and each Prospectus and as of the
filing dates of any amendments or supplements thereto, and as of the filing
dates of any documents incorporated by reference therein, and as of the date a
proxy or information statement of Empire containing the Prospectus included in
the S-4 Registration Statement (or any amendment thereof or supplement thereto)
is first mailed by Empire to its stockholders, and as of the date of the Empire
Consent (as hereinafter defined) and as of the Closing Date, (i) will comply in
all material respects with the requirements of the Securities Act, or the
Exchange Act, as applicable, and the rules and regulations of the SEC thereunder
and other applicable laws, (ii) with respect to the S-4 Registration Statement,
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
therein not misleading and (iii) will not contain any untrue statement of a
13
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties set forth in this sentence shall not be deemed to
be breached as a result of any information in the S-4 Registration Statement or
Prospectus furnished to Empire by Catskill or the Transferors in writing
expressly for use therein. The consolidated financial statements of Empire and
its Subsidiaries to be included in the S-4 Registration Statement and the
Prospectus (including any financial statements filed as a part thereof or
incorporated by reference therein) will comply as to form in all material
respects with applicable accounting requirements of the SEC and with the
published rules and regulations of the SEC with respect thereto and will be
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto). Any
reference in this Section 5.6 to the S-4 Registration Statement or the
Prospectus as of any time shall be deemed to include any document incorporated,
or deemed to be incorporated, therein by reference as of such time and any
reference herein to any amendment to the S-4 Registration Statement or any
supplement to a Prospectus as of any time shall be deemed to include any
document incorporated, or deemed to be incorporated, therein by reference as of
such time.
Section 5.7 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
expressly contemplated by this Agreement or the Berkshire Loan Documents, since
September 30, 2003 Empire and each of its Subsidiaries have conducted their
businesses only in the ordinary course, and there has not been:
(a) any event, occurrence or development of a state of circumstances
or facts that could reasonably be expected to result in a material adverse
effect to the business, properties, prospects or financial condition of Empire
or any of its Subsidiaries;
(b) any declaration, payment or setting aside for payment of any
dividends or other distribution (whether in cash, stock or other property) in
respect of any capital stock of, or other membership or ownership interest in,
or other equity securities, of Empire or any of its Subsidiaries;
(c) any redemption, repurchase or other acquisition, for any
consideration, of any outstanding shares of capital stock of, or other
membership or ownership interests in, or other equity securities, of Empire or
any of its Subsidiaries, or any securities which are convertible into or
exchangeable or exercisable therefor;
(d) any incurrence, assumption or guarantee by Empire or any of its
Subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any change in any method of accounting or accounting practice by
Empire or any of its Subsidiaries, except such changes that are required by
reason of a concurrent change in GAAP;
(f) any (i) grant of any material severance or termination pay to
any director, officer or employee of Empire or any of its Subsidiaries, (ii)
entering into of any material employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
manager, officer or other employee of Empire or any of its Subsidiaries or (iii)
14
other than in the ordinary course of business and consistent with past
practices, material increase in compensation, bonus or other benefits payable to
directors, managers, officers or other employees of Empire or any of its
Subsidiaries; or
(g) any agreement or commitment obligating Empire or any of its
Subsidiaries to do any of the things described in clauses (a) through (f).
Section 5.8 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of Empire
consists solely of:
(i) 75,000,000 shares of Common Stock, of which 6,024,151 are
issued and outstanding;
(ii) 821,496 shares of Series B Preferred Stock, $.01 par value
per share (the "SERIES B PREFERRED STOCK"), of which 44,258 are issued and
outstanding;
(iii) 137,889 shares of Series C Preferred Stock, $.01 par value
per share, none of which are issued and outstanding;
(iv) 4,000 shares of Series D Preferred Stock, $.01 par value
per share, none of which are issued and outstanding;
(v) 1,730,697 shares of Series E Preferred Stock, $.01 par value
per share (the "SERIES E PREFERRED STOCK"), all of which are issued and
outstanding;
(vi) 2,305,918 shares of undesignated Preferred Stock, $.01 par
value per share, none of which are issued and outstanding; and
(vii) no shares of Common Stock are held as treasury shares.
(b) As of the date hereof, there are outstanding stock options to
purchase an aggregate of 852,528 shares of Empire Common Stock, all of which are
currently exercisable. As of the date hereof, (i) 852,528 shares of Common Stock
were reserved for issuance upon exercise of outstanding options to acquire
Common Stock, and (ii) 35,407 shares of Common Stock were reserved for issuance
pursuant to warrants, rights or other securities convertible into or
exchangeable or exercisable for shares of Common Stock.
(c) All of the outstanding shares of capital stock of Empire have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section 5.8, as of the date hereof there are no
outstanding (i) shares of capital stock or other voting securities of Empire,
(ii) securities of Empire convertible into or exchangeable for shares of capital
stock or voting securities of Empire (other than the shares of Series B
Preferred Stock, which are convertible into shares of Empire Common Stock) or
(iii) options or other rights to acquire from Empire, and no obligation of
Empire to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Empire (other
15
than the shares of Series B Preferred Stock, which are convertible into shares
of Empire Common Stock). Except as set forth on Schedule 5.8(c) attached hereto
and made a part hereof or as disclosed in the Empire SEC Reports, there is no
commitment by Empire to register with the SEC any shares of its capital stock.
The securities described in Sections 5.8(a) and (b) above are collectively
referred to herein as the "EMPIRE SECURITIES". Except pursuant to the terms of
the Empire Securities and this Agreement, there are no outstanding obligations
of Empire to repurchase, redeem or otherwise acquire any Empire Securities.
Section 5.9 VALID ISSUANCE OF EXCHANGE SHARES. The Exchange Shares
have been duly authorized and validly reserved for issuance, and, when issued
and delivered by Empire in accordance with the provisions of this Agreement,
will (a) be duly authorized, validly issued, fully paid, and nonassessable and
free of preemptive rights, and free and clear of all liens, claims,
encumbrances, adverse interests of any kind and free of any restriction on
transfer, other than restrictions on transfer under applicable federal and state
securities laws, and (b) represent (i) 80.25% of Empire's issued and outstanding
Common Stock, determined as of the Closing Date, on a fully diluted basis (full
dilution for purposes of this Section shall include all shares of Common Stock,
including shares of Common Stock held as treasury shares, shares of Common Stock
reserved for issuance upon exercise of outstanding options to acquire Common
Stock (whether vested or unvested) and shares of Common Stock reserved for
issuance pursuant to warrants, rights or other securities convertible into or
exchangeable or exercisable for shares of Common Stock) and (ii) at least 80% of
the voting rights in Empire. The Exchange Shares will be issued in compliance
with all applicable federal and state securities laws. Upon issuance and
delivery of the Exchange Shares by Empire in accordance with the provisions of
this Agreement and consummation of the Common Stock Redemption (as hereinafter
defined), the authorized, issued and outstanding capital stock of Empire will
consist solely of (i) shares of Common Stock, (ii) 44,258 shares of Series B
Preferred Stock and (iii) 1,730,697 shares of Series E Preferred Stock.
Section 5.10 NO UNDISCLOSED LIABILITIES. To the best of Empire's
knowledge and belief, without independent investigation, except as set forth in
and properly reserved against on the Empire Financial Statements and except as
provided in the Berkshire Loan Documents, neither Empire nor any of its
Subsidiaries has any material debts, liabilities or obligations of any kind,
whether accrued, absolute, contingent or other, whether due or to become due,
except as incurred in the ordinary course of business. None of the debts,
liabilities or obligations described in the preceding sentence has had or could
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, properties, prospects or financial condition of
Empire or any of its Subsidiaries. Except as may be provided in the Berkshire
Loan Documents, neither Empire nor any of its Subsidiaries has any material
debts, liabilities or obligations of any kind, whether accrued, absolute,
contingent or other, whether due or to become due, unrelated to its respective
business and operations as currently conducted.
Section 5.11 BRYANSTON LITIGATION. Except as provided on that
certain judgment, suit and lien report prepared by the Corporation Research
Company and attached hereto as EXHIBIT A, to the best of Empire's knowledge and
belief, without independent investigation, there is no outstanding civil
judgment, order, decree, stipulation or injunction against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ or the Bryanston Group, Inc., a Georgia
corporation ("BRYANSTON"), in favor of the United States Attorney for the
Southern District of New York (the "U.S. ATTORNEY"), nor is any such civil
action, suit or proceeding pending.
16
Section 5.12 RECAPITALIZATION AGREEMENT. That certain
Recapitalization Agreement, dated December 10, 2002, by and between Empire,
Alpha Monticello, Bryanston, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
(the "RECAPITALIZATION AGREEMENT"), was duly authorized validly executed and
delivered by Empire and Alpha Monticello, and, assuming the due authorization,
execution and delivery by the other parties thereto, constitutes a valid and
binding obligation of the parties thereto, enforceable in accordance with its
terms, subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law governing specific
performance, injunctive relief or other equitable remedies.
Section 5.13 TAXES. To the best of Empire's knowledge and belief,
Empire has (a) filed all tax returns and reports as required by law (all of
which are true and correct in all material respects), (b) paid all taxes and
other assessments due, except those being contested by it in good faith, (c)
made adequate provisions on its books of account for all taxes, assessments and
governmental charges with respect to its business, properties and operations for
each relevant period and (d) withheld or collected from each payment made to its
employees, the amount of all taxes required to be withheld or collected
therefrom and has paid the same to the proper tax receiving officers or
authorized depositaries. None of Empire, any Subsidiary of Empire or to the
knowledge of Empire, any Affiliate (as hereinafter defined) of Empire has taken
or agreed to take any action that would prevent the Transaction from qualifying
as a contribution and exchange within the meaning of Section 351(a) of the Code.
Empire is not aware of any agreement, plan or other circumstance that would
prevent the Transaction from qualifying as a contribution and exchange within
the meaning of Section 351(a) of the Code.
Section 5.14 NO INVESTMENT COMPANY. Empire is not, and after giving
effect to the Transaction, will not be an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended.
Section 5.15 COMPLETE DISCLOSURE. No representation or warranty made
by Empire in this Agreement, and no exhibit, schedule, statement, certificate or
other writing furnished to the Transferors, by or on behalf of Empire, pursuant
to this Agreement, the Empire Related Agreements or in connection with the
Transaction, contains or will contain, any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading. Moreover, Empire has provided the
Transferors with all information reasonably available to it that the Transferors
have requested for deciding whether to invest in the Exchange Shares and all
information which Empire believes is reasonably necessary to enable the
Transferors to make such a decision. Empire has conducted its own independent
investigation of the Transferred Companies, has been provided the opportunity to
obtain information concerning the Transferred Companies and has had the
opportunity to ask questions of, and receive answers from, the management of the
Transferred Companies pertaining to the Transferred Companies. Empire is a
sophisticated investor and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
Transaction. Empire understands and is able to bear any economic risks
associated with the Transaction.
17
ARTICLE VI
COVENANTS
The parties covenant as follows:
Section 6.1 ACCESS TO RECORDS. Between the date of this Agreement
and the Closing Time, Empire shall and the Transferors shall cause the
Transferred Companies to (a) afford each other and each other's representatives
full and free access to each other's personnel, properties, contracts, books and
records, and other documents and data, (b) furnish each other with copies of all
such contracts, books and records, and other existing documents and data as may
be reasonably requested, and (c) furnish each other with such additional
financial, operating, and other data and information as may be reasonably
requested.
Section 6.2 REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
parties hereto shall give prompt written notice to the other parties of (a) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which has caused or will likely cause any of its representations or warranties
hereunder to be materially untrue and (b) any failure by it to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however that the delivery of any notice pursuant to this
Section 6.2 shall not limit or otherwise affect any party's right to rely on the
representations and warranties herein or any of the remedies available to it.
Section 6.3 CONDUCT OF EMPIRE PRIOR TO CLOSING. Except as expressly
contemplated by this Agreement and the Berkshire Loan Documents, Empire
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Closing
Time, unless the Transferors shall otherwise agree in writing, Empire shall
conduct its business only in, and Empire shall not take any action except, in
the ordinary course of business and in a manner consistent with past practice;
and Empire shall use all reasonable efforts to preserve substantially intact the
business organization of Empire, to keep available the services of the present
officers, employees and consultants of Empire and to preserve the present
relationships of Empire with customers, suppliers and other persons with which
Empire has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement and the Berkshire Loan
Documents, Empire shall not, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Closing Time, directly or indirectly do, or agree to do, any of the following
without the prior written consent of each Transferor:
(a) other than to amend the Series E Preferred Stock certificate of
designations, providing each holder of Series E Preferred Stock with the right
to one vote for every four shares of Series E Preferred Stock held of record on
all matters submitted to Empire's stockholders for a vote, amend or otherwise
change its Organizational Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in
Empire (except for (i) the issuance of shares of Empire Common Stock issuable
18
pursuant to stock options which are outstanding on the date hereof and (ii)
grants of stock options under Empire's existing stock option plans for the
purchase of a maximum of 200,000 shares of Empire's Common Stock);
(c) directly or indirectly sell, pledge, dispose of or encumber any
assets of Empire (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, and (iii) sales of immaterial assets not in excess
of $75,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine, reclassify, subdivide
or redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock or issue or authorize or propose the issuance of any other
securities or property in respect of, in lieu of or in substitution for shares
of its capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities, including, without limitation, shares of Empire's Common Stock or
any option, warrant or right, directly or indirectly, to acquire shares of
Empire's Common Stock, or provide that upon the exercise or conversion of any
such option, warrant or right the holder thereof shall receive cash, or propose
to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue any
debt securities, or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice, make any loans
or advances; (iii) enter into or amend any material contract or agreement; (iv)
authorize any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $100,000 for Empire; or (v) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 6.3(e);
(f) except as may be required by contractual commitments or
corporate policies with respect to severance or termination pay in existence on
the date of this Agreement as disclosed on Schedule 6.3(f) attached hereto and
made a part hereof, increase the compensation payable or to become payable to
its officers or employees, except for increases in salary or wages of employees
of Empire who are not officers of Empire in the ordinary course of business in
accordance with past practice, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer or
other employee of Empire, establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
19
Empire's Financial Statements or incurred in the ordinary course of business and
consistent with past practice;
(h) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, or other reorganization;
(i) waive, release, assign, settle or compromise any material
claims, or any material litigation or arbitration;
(j) make any material tax election or settle or compromise any
material liability for taxes;
(k) take any action to exempt Empire from or make Empire not subject
to (i) the provisions of Section 203 of the Delaware General Corporation Law
(the "DGCL"), or (ii) any other state takeover law or state law that purports to
limit or restrict business combinations or the ability to acquire or vote
shares; or
(l) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.3 (a) through (k) above, or any action which
would make any of the representations or warranties of Empire contained in this
Agreement untrue or incorrect in any material respect or prevent Empire from
performing or cause Empire not to perform its covenants hereunder.
Section 6.4 CONDUCT OF TRANSFERRED COMPANIES PRIOR TO CLOSING.
Except as expressly contemplated by this Agreement and the Berkshire Loan
Documents, Catskill and the Transferors covenant and agree that, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing Time, unless Empire shall otherwise
agree in writing, they shall cause the Transferred Companies to conduct their
businesses only in, and Catskill and the Transferors shall cause the Transferred
Companies not take any action except in, the ordinary course of business and in
a manner consistent with past practice; and Catskill and the Transferors shall
use all reasonable efforts to preserve substantially intact the business
organization of the Transferred Companies, to keep available the services of the
present officers, employees and consultants of the Transferred Companies and to
preserve the present relationships of the Transferred Companies with customers,
suppliers and other persons with which the Transferred Companies have
significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement and the Berkshire Loan Documents,
Catskill and the Transferors shall cause the Transferred Companies not to,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing Time, directly or
indirectly do, or agree to do, any of the following without the prior written
consent of Empire:
(a) amend or otherwise change their Organizational Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Transferred Companies;
20
(c) directly or indirectly sell, pledge, dispose of or encumber any
assets of the Transferred Companies (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $50,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of their capital stock, (ii) split, combine or reclassify any of
their capital stock or issue or authorize or propose the issuance of any other
securities or property in respect of, in lieu of or in substitution for shares
of their capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of
their securities, including, without limitation, the Interests or (to the extent
issued) any option, warrant or right, directly or indirectly, to acquire
Interests, or provide that upon the exercise or conversion of any such option,
warrant or right the holder thereof shall receive cash, or propose to do any of
the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue any
debt securities, or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice, make any loans
or advances; (iii) enter into or amend any material contract or agreement; (iv)
authorize any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $100,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited by
this Section 6.4(e);
(f) increase the compensation payable or to become payable to their
officers or employees, except for increases in salary or wages of employees of
the Transferred Companies who are not officers of the Transferred Companies in
the ordinary course of business in accordance with past practice, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Transferred
Companies, establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers or employees, except, in each case, as
may be required by law;
(g) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or properly reserved
against in the financial statements of the Transferred Companies or incurred by
them in the ordinary course of business and consistent with past practice;
(h) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, or other reorganization;
21
(i) waive, release, assign, settle or compromise any material
claims, or any material litigation or arbitration;
(j) make any material tax election or settle or compromise any
material liability for taxes; or
(k) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.4(a) through (j) above, or any action which
would make any of the representations or warranties of Catskill or the
Transferors contained in this Agreement untrue or incorrect in any material
respect or prevent the Transferors from performing or cause the Transferors not
to perform their covenants hereunder.
Section 6.5 COMMERCIALLY REASONABLE EFFORTS. Each of the parties
hereto shall use its commercially reasonable efforts to take or cause to be
taken all action, and to do or cause to be done all things necessary, proper or
advisable to consummate the Transaction, including, without limitation, (a)
obtaining all necessary consents, approvals and authorizations, (b) making all
necessary filings and (c) delivering all required notices.
Section 6.6 NY GAMING DISTRIBUTION. Prior to the Closing, NY Gaming
shall distribute all of its membership interest in Catskill to Alpha Monticello
(the "NY GAMING DISTRIBUTION").
Section 6.7 CATSKILL REDEMPTION. Subsequent to the NY Gaming
Distribution, but prior to the Closing, Catskill shall redeem all of Alpha
Monticello's membership interest in Catskill in exchange for 40% of the issued
and outstanding capital stock of MRM, on terms and conditions mutually
satisfactory to Catskill and Empire (the "CATSKILL REDEMPTION").
Section 6.8 CATSKILL ASSETS AND LIABILITIES CONTRIBUTION. Subsequent
to the Catskill Redemption, but prior to the Closing, Catskill shall contribute
all of its assets and liabilities, except for Catskill's interest in 229 acres
of land in Monticello, New York and its claims related to the Litigation (as
hereinafter defined) to MCM (the "CATSKILL CONTRIBUTION").
Section 6.9 CATSKILL SUBSIDIARY INTERESTS DISTRIBUTION. Subsequent
to the Catskill Contribution, but prior to the Closing, Catskill shall
distribute all of its Catskill Subsidiary Interests to the Remaining Catskill
Members, on terms and conditions mutually satisfactory to Catskill and the
Remaining Catskill Members (the "CATSKILL DISTRIBUTION").
Section 6.10 AMENDMENT OF CAYUGA LETTER AGREEMENT. Prior to the
Closing, the letter agreement by and among Empire, Catskill, the Cayuga Nation
of New York, the Cayuga Catskill Gaming Authority, RB, ▇▇▇▇▇ ▇▇▇▇▇▇, Alpha
Monticello, ATP, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Monticello Realty and Watertone, dated as of April 3, 2003 (the "CAYUGA LETTER
AGREEMENT"), will be amended to provide for Empire's assumption of Catskill's
obligations under the Cayuga Letter Agreement.
Section 6.11 SERVICES COMPENSATION AGREEMENTS. In connection with
the Closing, each of (a) MCM, Alpha Monticello and BKB shall terminate that
certain ASR Services Compensation Agreement among them dated July 10, 2000 and
(b) MM, Alpha Monticello and BKB shall terminate that certain ASR Services
Compensation Agreement among them dated January 9, 1999 (together, the "SERVICES
COMPENSATION AGREEMENTS").
22
Section 6.12 PREPARATION OF LITIGATION TRUST. Prior to the Closing,
Empire, Catskill and the Transferors shall, and each of them shall cause the
Transferred Companies (each to the extent a party to the Litigation, the
"PLAINTIFFS") to, assign all of their claims under or related to the subject
matter of the alienation and frustration of their agreements and business
relations with the St. Regis Mohawk Tribe and their rights to any proceeds from
any judgment or settlement that may arise from any litigation relating to such
subject matter (the "PROCEEDS"), including those certain litigations entitled
Catskill Development, L.L.C., Mohawk Management, L.L.C., and Monticello Raceway
Development Company, L.L.C., Plaintiffs. v. Park Place Entertainment
Corporation, Defendant. (Civil Action No. 00CIV8660 (CM)(GAY)) (United ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇) and Catskill Development, L.L.C.,
Mohawk Management, L.L.C., and Monticello Raceway Development Company, L.L.C.,
Plaintiffs. against ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, President MR. - St.
Regis Management Company, et al, Defendants. (Index No. 891/03) (Supreme Court
of the State of New York County of ▇▇▇▇▇▇▇▇) (collectively, the "LITIGATION") to
a grantor trust (the "TRUST") on behalf of all persons who shall be the
individual beneficiaries of such claims on the date preceding the Closing Date
(with Empire to receive a 19.75% interest in the Trust), and each party shall
cooperate with each other prior thereto in formation of the Trust and
preparation of its Organizational Documents. Empire shall provide an irrevocable
line of credit to the Trust in the amount of $2,500,000 and each of ▇▇▇▇ ▇.
deBary and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall be appointed as co-trustees of the Trust,
with the Trust's Organizational Documents providing for Messrs. deBary and
▇▇▇▇▇▇▇▇▇ to each receive $60,000 per year and 1% and 4%, respectively, of the
Proceeds as remuneration for their services as trustees. The Trust's
Organizational Documents shall also provide that any Proceeds received by the
Trust shall first be applied to pay the expenses of the Trust, including
compensation of the trustees, second, to provide for a reserve, if necessary,
for future expenses of the Trust, third to repay Empire in addition to any
amount borrowed under the line of credit, up to $7,500,000 to compensate Empire
for other previously incurred expenses in connection with the Litigation, and
then for the remaining amount to be distributed pro rata to the Trust's
beneficiaries.
Section 6.13 FAIRNESS OPINION COOPERATION. Each of the parties
hereto shall cooperate with ▇▇▇▇ ▇▇▇▇▇ Associates, Inc., the valuation
consulting firm retained by the Special Committee of Empire's Board of Directors
(the "SPECIAL COMMITTEE") to evaluate the fairness of the Transaction to Empire
and its stockholders from a financial point of view, in its preparation of a
fairness opinion with respect to the Transaction.
Section 6.14 DUE AUTHORIZATION OF EXCHANGE SHARES. Empire shall not
take any action, or omit to take any action, that would cause the Exchange
Shares, when issued, not to be duly authorized, validly issued, fully paid and
non-assessable.
Section 6.15 SECTION 351(a). The parties shall not take any action,
or omit to take any action, that would cause the Transaction not to qualify as a
transaction described in Section 351(a) of the Code.
Section 6.16 OFFICERS AND DIRECTORS. The Board of Directors of
Empire and the Nominating Committee thereof shall nominate for election at the
next stockholders' meeting, or action or approval by written consent, with
respect to which directors are to be elected, three persons to be selected by
each of Watertone, ATP and Monticello Realty, two of which shall be
23
"independent" within the meaning of the listing rules and any other applicable
rules or regulations promulgated by the National Association of Securities
Dealers (the "NASD"), through its subsidiary, The Nasdaq Stock Market, Inc.
and/or any exchange where the Common Stock is or will be listed, with each such
entity being entitled to have one of its nominees nominated as a Class I
Director, Class II Director and Class III Director.
Section 6.17 EXECUTIVE EMPLOYMENT AGREEMENT. As soon as practicable
after the date hereof, Empire and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ shall amend those certain employment agreements, dated as of February
12, 2002, by and between Empire and each of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
(collectively, the "EMPLOYMENT AGREEMENTS"), respectively, so that (a) the term
of each Employment Agreement is terminable at will by either party upon 30 days
prior written notice, and (b) the amounts payable thereunder from the date
hereof shall be limited to the base salary portion of such Employment Agreements
(e.g. amounts that would have been payable as provided in Schedule 6.3(f),
including severance or termination payments, shall not be payable, other than
accrued salary). As of the date hereof, $210,650 and $134,933 is due to each of
Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, respectively, as unpaid accrued compensation under
the Employment Agreements. Such amendments shall become effective upon, and only
upon, the Closing hereunder.
ARTICLE VII
REGISTRATION STATEMENT, STOCKHOLDER VOTE AND BRYANSTON
REDEMPTION
Section 7.1 REGISTRATION STATEMENT.
(a) Empire shall promptly prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"S-4 REGISTRATION STATEMENT") covering the registration under the Securities Act
of all the Exchange Shares, a portion of which S-4 Registration Statement shall
also serve as a proxy or information statement with respect to the Empire
Consent (as hereinafter defined). Empire shall provide Catskill and the
Transferors with a draft of the S-4 Registration Statement and a draft of each
amendment or supplement thereto, in each case at least five days prior to its
anticipated filing with the SEC, and Empire shall make any modifications to the
description of the Transferors, Catskill or the Transferred Companies therein
that are reasonably requested by Catskill or the Transferors. Empire shall use
commercially reasonable efforts to have the S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing.
Empire shall also take any action required to be taken under any applicable
state securities laws in connection with the issuance of the Exchange Shares.
Empire shall furnish all information concerning Empire, and Catskill and the
Transferors shall furnish all information concerning themselves and the
Transferred Companies, as may be reasonably requested in connection with the S-4
Registration Statement.
(b) From the date hereof through the Closing, Empire shall, as
expeditiously as possible, notify Catskill and the Transferors of any of the
following events: (i) when the S-4 Registration Statement has been filed and
when the same becomes effective, (ii) the receipt by Empire of any comments from
the SEC or from the blue sky or securities commissioner or regulator of any
24
state with respect thereto or any request by the SEC for amendments or
supplements to the S-4 Registration Statement or for additional information (and
Empire shall promptly respond to such comments or requests and file any
supplements or amendments in response thereto with a copy to the Transferors),
(iii) the receipt by Empire of any written notification with respect to the
suspension of the qualification of the Exchange Shares for sale in any
jurisdiction or the initiation or threat of any proceeding for such purpose,
(iv) the issuance by the SEC of any stop order or other suspension of the
effectiveness of the S-4 Registration Statement (and Empire shall make every
reasonable effort to obtain the withdrawal of any such order at the earliest
practicable moment), or (v) the occurrence of any event or the existence of any
condition or set of facts of which it has knowledge that requires the making of
any change to the S-4 Registration Statement such that the document will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (and Empire shall prepare and file a curative supplement or
amendment).
(c) Following the Closing, Empire shall (i) cause the S-4
Registration Statement to remain effective until the earlier of (A) the date on
which all of the Exchange Shares have been sold to the public, and (B) the date
on which all of the Exchange Shares can be freely sold to the public pursuant to
Rule 144 of the Securities Act without any volume limitations and (ii) prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the S-4 Registration Statement and the Prospectus used in
connection with the S-4 Registration Statement as may be necessary to keep the
S-4 Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all of the Exchange Shares at
all times during the period for which Empire is required to maintain the
effectiveness of the S-4 Registration Statement pursuant to the terms of this
Agreement. In addition, as promptly as practicable after becoming aware thereof,
Empire shall notify Catskill and each Transferor of (i) the happening of any
event of which Empire has knowledge, as a result of which the Prospectus
included in the S-4 Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and then promptly
prepare and file with the SEC a supplement or amendment to the S-4 Registration
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission and (ii) the issuance by the SEC of any stop order or
other suspension of the effectiveness of the S-4 Registration Statement and then
use its best efforts to promptly take all steps reasonably necessary to enable
the SEC to repeal and lift such stop order or other suspension of effectiveness
of the S-4 Registration Statement.
Section 7.2 EXCHANGE SHARES LISTING. Empire shall cause the Exchange
Shares to be listed on the Nasdaq SmallCap Market.
Section 7.3 STOCKHOLDER VOTE. Empire shall seek stockholder approval
of the Transaction (the "EMPIRE CONSENT") by either calling and holding a
meeting of its stockholders or seeking the written consent of the holders of a
majority of its outstanding voting stock. Empire shall promptly notify the
Transferors (a) if and when a date has been set for an Empire stockholders
meeting in connection with the Transaction, (b) of the date on which Empire
25
mails a proxy or information statement to its stockholders in connection with
the Transaction and (c) when the Transaction has been approved by an affirmative
vote of Empire's stockholders.
Section 7.4 BRYANSTON REDEMPTION. As soon as practicable following
receipt of the Empire Consent, Empire shall take all action necessary to redeem
those 2,326,857 and 66,000 shares of Empire's Common Stock held by Bryanston and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, respectively, in accordance with the terms of the
Recapitalization Agreement (the "COMMON STOCK REDEMPTION").
Section 7.5 AFFILIATE AGREEMENTS. Upon the execution of this
Agreement, Catskill and the Transferors shall provide Empire with a list of
those persons who, in Catskill's and/or the Transferors' reasonable judgment,
are "affiliates" of Catskill, the Catskill Companies or MRD (the "AFFILIATES"),
within the meaning of Rule 145 promulgated under the Securities Act ("RULE
145"). Catskill and the Transferors shall provide Empire with any such
information or documents as Empire may reasonably request for the purpose of
reviewing such list and shall notify Empire in writing regarding any change in
the identity of such Affiliates prior to the Closing Time. Moreover, on the
Closing Date, Catskill and the Transferors shall deliver or cause to be
delivered to Empire from each of the Affiliates, an executed affiliate
agreement, substantially in the form of EXHIBIT B hereto, by which each
Affiliate shall agree to comply with the applicable requirements of Rule 145 (an
"AFFILIATE AGREEMENT"). Empire shall be entitled to place appropriate legends on
the certificates evidencing any shares of Empire's Common Stock to be received
by an Affiliate pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for Empire's Common
Stock, consistent with the terms of the Affiliate Agreements; provided, however,
that such legends or stop transfer instructions shall be promptly removed after
the required restricted period under Rule 145 has expired or in connection with
any resale in accordance with the S-4 Registration Statement.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of Empire, Catskill and the Transferors to consummate the
Transaction are subject to the satisfaction or waiver, in whole or in part
(where permissible by applicable law), at or prior to the Closing, of each of
the following conditions:
(a) consummation of the Transaction shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction or any Governmental Entity;
(b) there shall be no statute, rule or regulation enacted,
promulgated or deemed applicable by any Governmental Entity to the Transaction
that prevents its consummation or makes the Transaction illegal;
(c) this Agreement and the Transaction shall have been approved and
adopted by the requisite vote of stockholders of Empire in accordance with the
DGCL, Empire's Organizational Documents and any applicable rules or regulations
promulgated by the NASD;
26
(d) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
Governmental Entity necessary for consummation of the Transaction shall have
been filed, expired or been obtained;
(e) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall have issued
an opinion that neither Empire nor the Transferors (including any direct or
indirect owner of any of the Transferors) will recognize any income, gain or
loss for U.S. federal income tax purposes as a direct result of the Transaction
and that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will not recognize any gain or loss for U.S. federal
income tax purposes upon any subsequent resale of the Exchange Shares, assuming
no change in the law and that Empire is not a U.S. Real Property Holding Company
at the time of such resale;
(f) Following receipt of the Empire Consent, Empire shall have
consummated the Common Stock Redemption, with the Common Stock Redemption only
to be effective upon the Closing;
(g) NY Gaming shall have consummated the NY Gaming Distribution,
with the NY Gaming Distribution only to be effective on the Closing Date;
(h) Following the NY Gaming Distribution, Catskill shall have
consummated the Catskill Redemption, with the Catskill Redemption only to be
effective on the Closing Date;
(i) Following the Catskill Redemption, Catskill shall have
consummated the Catskill Contribution, with the Catskill Contribution only to be
effective on the Closing Date.
(j) Following the Catskill Contribution, Catskill shall have
consummated the Catskill Distribution, with the Catskill Distribution only to be
effective on the Closing Date.
(k) the Trust shall have been created, with such Trust only to be
created upon the Closing Date, and each of the Plaintiffs and the Trust shall
have entered into a declaration of trust, reasonably satisfactory to each of the
parties thereto, pursuant to which each Plaintiff shall have assigned to the
Trust such Plaintiff's right to any Proceeds;
(l) an amendment to the bylaws of Empire, substantially in the form
of EXHIBIT C hereto, shall have been approved and adopted by the requisite vote
of the Board of Directors of Empire in accordance with the DGCL, Empire's
Organizational Documents and any applicable rules or regulations promulgated by
the NASD;
(m) an amendment to the certificate of incorporation of Empire,
substantially in the form of EXHIBIT D hereto, shall have been approved and
adopted by the requisite vote of the Board of Directors and stockholders of
Empire in accordance with the DGCL, Empire's Organizational Documents and any
applicable rules or regulations promulgated by the NASD;
(n) the S-4 Registration Statement shall have been declared
effective under the Securities Act, no stop order suspending the effectiveness
of the S-4 Registration Statement shall have been issued, and no proceedings for
that purpose shall have been initiated or, to the knowledge of Empire, Catskill
or the Transferors, threatened by the SEC;
27
(o) the Cayuga Letter Agreement shall have been amended to provide
for Empire's assumption of Catskill's obligations under such letter agreement;
(p) each of the Service Compensation Agreements shall have been
terminated;
(q) consummation of the Transaction shall have been deemed by the
parties hereto to be consistent with the prior approval by the Cayuga Nation of
New York previously rendered pursuant to Section 7.20 of the Gaming Facility
Management Agreement, by and among the Cayuga Nation of New York, the Cayuga
Catskill Gaming Authority and MCM, dated as of April 3, 2003; and
(r) the parties hereto shall have received a letter, executed by the
Cayuga Nation of New York, acknowledging that the Transaction is consistent with
the prior approval by the Cayuga Nation of New York previously rendered pursuant
to Section 7.20 of the Gaming Facility Management Agreement.
Section 8.2 CONDITIONS TO THE OBLIGATIONS OF EMPIRE. The obligations
of Empire to consummate the Transaction are subject to the satisfaction or
written waiver by Empire, in whole or in part (where permissible by applicable
law), at or prior to the Closing, of the following additional conditions:
(a) The representations and warranties of Catskill and the Current
Catskill Members in this Agreement shall be true and correct in all material
respects when made, provided that any changes and corrections to the Catskill
Financial Statements as a result of an audit subsequent to the date hereof will
not result in any inaccuracy of the representation in Section 3.1 and will be
deemed accepted and agreed to by Empire unless it objects to such changes and
corrections during a fourteen (14) day period after the date on which Catskill
provided Empire with such Catskill Financial Statements, and shall be true and
correct in all material respects on and as of the Closing Date, in which case
the representations and warranties shall not be subject to any qualification as
to knowledge, and Empire shall have received certificates to that effect, solely
with respect to the representations and warranties made in this Agreement, dated
the Closing Date, and executed by an executive officer of Catskill and each of
the Current Catskill Members (other than CE, who shall sign such certificate
individually);
(b) The representations and warranties of the MRD Members in this
Agreement shall be true and correct in all material respects when made and shall
be true and correct in all material respects on and as of the Closing Date and
Empire shall have received a certificate to that effect, solely with respect to
the representations and warranties made by them in this Agreement, dated the
Closing Date, and executed by each of the MRD Members;
(c) Each of the agreements and covenants of Catskill and the
Transferors to be performed under this Agreement at or prior to the Closing
shall have been duly performed in all material respects;
(d) Each of the Affiliates shall have executed and delivered to
Empire an Affiliate Agreement, which agreement shall be in full force and
effect;
28
(e) The Special Committee shall have received an opinion from ▇▇▇▇
▇▇▇▇▇ Associates, Inc., which opinion shall have been confirmed by ▇▇▇▇ ▇▇▇▇▇
Associates, Inc. (in writing) on the Closing Date, to the effect that the
Transaction is fair to Empire and its stockholders from a financial point of
view and the Special Committee shall have approved the Transaction;
(f) Catskill and MRM shall have entered into an amendment to the
Lease, substantially in the form of EXHIBIT E hereto, pursuant to which (i) the
amount of land subject to the purchase option under the Lease shall be increased
from 200 acres of land to 229 acres of land, without any consequential increase
in the purchase option price, (ii) such purchase option price shall be reduced
by any amount received by Catskill (or its successor) if the adjacent 29 acres
of land now owned by Catskill are sold pursuant to that certain Land Purchase
Agreement, dated as of April 3, 2003, by and between Catskill and the Cayuga
Catskill Gaming Authority and (iii) such purchase price, with respect to
Catskill, shall not be subject to the Senior Obligation or Priority Returns (as
such terms are defined in the Catskill Operating Agreement).
(g) That certain Shared Facilities Agreement, entered into as of
April 3, 2003, by and between the Cayuga Catskill Gaming Authority and Catskill
(the "SHARED FACILITIES AGREEMENT") shall have been amended (with such amendment
to be in a form reasonably satisfactory to Empire), whereby MRM shall have
become a co-party to the Shared Facilities Agreement.
(h) Catskill and the Transferors shall have provided Empire with
copies of all of the Transferred Companies' audited financial statements that
Empire is required by the SEC to include in the S-4 Registration Statement;
(i) Empire shall have received an opinion from a law firm or firms
reasonably acceptable to the parties hereto substantially in the form of EXHIBIT
F hereto; and
(j) Since the date of this Agreement, there shall have been no
change, occurrence or circumstance in the business, results of operations or
financial condition of the Transferred Companies having or reasonably likely to
have a material adverse effect on the Transferred Companies, and none of the
Transferors shall be aware of any event or condition reasonably likely to occur
immediately after the Closing Date which, individually or in the aggregate,
would cause or be expected to cause a material adverse change in the business or
assets of any Transferred Company.
Section 8.3 CONDITIONS TO THE OBLIGATIONS OF THE TRANSFERORS. The
obligations of Catskill and the Transferors to consummate the Transaction are
subject to the additional satisfaction or written waiver by each Transferor, in
whole or in part (where permissible by applicable law), at or prior to the
Closing, of the following additional conditions:
(a) The representations and warranties of Empire in this Agreement
shall be true and correct in all material respects when made and shall be true
and correct in all material respects on and as of the Closing Date, and the
Transferors shall have received a certificate to that effect, solely with
respect to the representations and warranties made by Empire in this Agreement,
dated the Closing Date, and executed by an executive officer of Empire;
29
(b) Each of the agreements and covenants of Empire to be performed
under this Agreement at or prior to the Closing shall have been duly performed
in all material respects;
(c) Catskill and the Transferors shall have received an opinion from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to Empire, substantially
in the form of EXHIBIT G hereto;
(d) The Exchange Shares shall have been approved for listing on the
Nasdaq SmallCap Market;
(e) There shall be no outstanding civil judgment, order, decree,
stipulation or injunction against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ or Bryanston, in favor of the U.S. Attorney that would be reasonably
likely to adversely affect the consummation of the Transaction, nor shall any
such civil action, suit or proceeding be pending and the Exchange Shares shall
be free and clear of any claims by the U.S. Attorney;
(f) Since the date of this Agreement, there shall have been no
change, occurrence or circumstance in the business, results of operations or
financial condition of Empire having or reasonably likely to have a material
adverse effect on Empire, and Empire shall not be aware of any event or
condition reasonably likely to occur after the Closing Date which, individually
or in the aggregate, would cause or be expected to cause a material adverse
change in the business or assets of Empire;
(g) Catskill and the Transferors shall have received a certificate
from Empire's transfer agent verifying, in all material respects, the accuracy
of the outstanding shares of capital stock of Empire as set forth in Section
5.8(a) hereof, subject to modifications as may be contemplated by Section 6.3(b)
hereof;
(h) Catskill shall have received an assignment and assumption
agreement, in form and substance reasonably satisfactory to it, as to the
assumption by Empire of the Liabilities;
(i) The Employment Agreements shall have been amended as provided in
Section 6.17 of this Agreement, with such amendments to be effective as of the
Closing Date; and
(j) Empire shall have executed a guarantee of lease guaranteeing
MRM's obligations under the Lease, substantially in the form attached hereto as
EXHIBIT H.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND AGREEMENTS;
INDEMNIFICATION
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Except for Empire's representations and warranties in Sections
5.2, 5.3, 5.4, 5.8(a), 5.8(b) and 5.9 hereof, (the "SURVIVING EMPIRE
REPRESENTATIONS") and the agreements contained herein (including the covenants
in Articles VI and VII) and in any instrument delivered pursuant to this
30
Agreement that requires performance by Empire after the Closing which will
survive and remain in effect indefinitely, all of Empire's representations and
warranties in this Agreement, and in any instrument delivered pursuant to this
Agreement, shall terminate at the Closing Time. The Surviving Empire
Representations, however, shall terminate on the first anniversary of the
Closing Date.
(b) Except for the representations and warranties of Catskill and
the Current Catskill Members in Sections 2.2, 2.3, 2.4, 2.5 and 2.6 of this
Agreement (the "SURVIVING CATSKILL REPRESENTATIONS") and the agreements
contained herein (including the covenants in Articles VI and VII) and in any
instrument delivered pursuant to this Agreement that requires performance by
Catskill or the Current Catskill Members after the Closing which will survive
and remain in effect indefinitely, all of Catskill's and the Current Catskill
Members' representations and warranties in this Agreement, and in any instrument
delivered pursuant to this Agreement, shall terminate at the Closing Time. The
Surviving Catskill Representations, however, shall terminate on the first
anniversary of the Closing Date.
(c) Except for the MRD Members' representations and warranties in
Sections 4.2, 4.3, 4.4 and 4.5 of this Agreement (the "SURVIVING MRD
REPRESENTATIONS") and the agreements contained herein (including the covenants
in Articles VI and VII) and in any instrument delivered pursuant to this
Agreement that requires performance by the MRD Members after the Closing which
will survive and remain in effect indefinitely, all of the MRD Members'
representations and warranties in this Agreement, and in any instrument
delivered pursuant to this Agreement, shall terminate at the Closing Time. The
Surviving MRD Representations, however, shall terminate on the first anniversary
of the Closing Date.
Section 9.2 INDEMNIFICATION OF EMPIRE.
(a) Each MRD Member shall, severally but not jointly, indemnify and
hold harmless Empire from, against, for and in respect of, and shall pay any and
all damages, losses, obligations, liabilities, claims, encumbrances,
deficiencies, costs and expenses, including, without limitation, reasonable
attorneys fees and other costs and expenses incident to any action,
investigation, claim or proceeding (all hereinafter collectively referred to as
"LOSSES") suffered, sustained, incurred or required to be paid by Empire by
reason of any inaccuracy in or breach of any of the Surviving MRD
Representations or the non-performance of any covenant or obligation to be
performed by any MRD Member under this Agreement; provided, however, that (i) no
MRD Member shall be required to indemnify Empire for any Losses that result from
a Breach by a different MRD Member unless such MRD Member (referring to the
first "MRD Member" mentioned in this proviso) also committed that Breach and
(ii) a MRD Member shall not be required to indemnify Empire for any Losses
(stemming from a Breach by such MRD Member) that exceed the value of that
portion of the Exchange Shares, valued as of the Closing Time, received by such
MRD Member pursuant to Section 1.2 of this Agreement. As used in this Agreement,
the word "BREACH" shall refer to any or all of the actions and/or situations
described in the first sentence of this Section 9.2.
(b) Each Remaining Catskill Member shall, severally but not jointly,
indemnify and hold harmless Empire from, against, for and in respect of, and
shall pay any and all Losses suffered, sustained, incurred or required to be
paid by Empire by reason of any inaccuracy in or breach of any of the Surviving
31
Catskill Representations or the non-performance of any covenant or obligation to
be performed by Catskill or the Remaining Catskill Members under this Agreement;
provided, however, that (i) no Remaining Catskill Member shall be required to
indemnify Empire for any Losses that result from a Breach by a different
Remaining Catskill Member unless such Remaining Catskill Member (referring to
the first "Remaining Catskill Member" mentioned in this proviso) also committed
that Breach and (ii) a Remaining Catskill Member shall not be required to
indemnify Empire for any Losses (stemming from a Breach by such Remaining
Catskill Member) that exceed the value of that portion of the Exchange Shares,
valued as of the Closing Time, received by such Remaining Catskill Member
pursuant to Section 1.2 of this Agreement.
Section 9.3 INDEMNIFICATION OF THE TRANSFERORS. Empire shall
indemnify and hold harmless the Transferors from, against, for and in respect
of, and shall pay any and all Losses suffered, sustained, incurred or required
to be paid by the Transferors by reason of any inaccuracy in or breach of any of
the Surviving Empire Representations or the non-performance of any covenant or
obligation to be performed by Empire under this Agreement; provided, however,
that Empire shall not be required to indemnify the Transferors for any Losses
(stemming from a Breach by Empire) that exceed the value of the Exchange Shares,
valued as of the Closing Time, received by the Transferors pursuant to Section
1.2 of this Agreement.
Section 9.4 INDEMNIFICATION PROCEDURE. For purposes of this Article
IX, the party entitled to indemnification shall be known as the "INJURED PARTY"
and the party required to indemnify shall be known as the "OTHER PARTY." In the
event that the Other Party shall be obligated to the Injured Party pursuant to
this Article IX, or in the event that a suit, action, investigation, claim or
proceeding is begun, made or instituted and as a result of which the Other Party
may become obligated to the Injured Party hereunder, the Injured Party shall
give prompt written notice to the Other Party of the occurrence of such event;
provided, however, that the failure to so notify the Other Party shall not
relieve the Other Party from any obligation or liability which it may have under
this Article IX, unless such notice is delivered following the expiration of the
applicable survival period, except to the extent that the Other Party has been
prejudiced in any material respect by such failure and in any event shall not
relieve the Other Party from any other obligation or liability which it may have
to such Injured Party otherwise than under this Article IX. The Other Party
agrees to defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding with counsel of its choice at the Other
Party's cost and expense and shall have the sole power to control and direct
such defense at its cost; provided, however, that such counsel shall be
satisfactory to the Injured Party in the exercise of its reasonable judgment.
The Injured Party shall have the right, but not the obligation, to participate
at its own expense in the defense thereof by counsel of its own choice. The
Injured Party shall not settle, admit or in any way materially prejudice a suit,
action, investigation, claim or proceeding for which it is indemnified by the
Other Party without the written consent of the Other Party. In the event that
(i) the Other Party fails to timely defend, contest or otherwise protect against
any such suit, action, investigation, claim or proceeding, (ii) the Other Party
shall not have employed counsel to represent such Injured Party within a
reasonable time after notice of the institution of any such lawsuit, claim or
proceeding, (iii) the use of counsel chosen by the Other Party to represent such
Injured Party would present such counsel with a conflict of interest or (iv) the
defendants in, or targets of, any such lawsuit, claim or proceeding include both
an Injured Party and the Other Party and such Injured Party shall have
reasonably concluded that there may be legal defenses available to it or to
32
other Injured Parties which are different from, or in addition to, those
available to the Other Party, the Injured Party shall have the right to defend,
contest or otherwise protect against the same and may make any compromise or
settlement thereof and recover the entire cost thereof from the Other Party
including, without limitation, reasonable attorneys fees, disbursements and all
amounts paid as a result of such suit, action, investigation, claim or
proceeding or compromise or settlement thereof, and the Other Party shall not
have the right to direct the defense of such action on behalf of the Injured
Party. The foregoing indemnification commitments shall apply whether or not the
Injured Party is a formal party to any such lawsuit, claim or proceeding.
ARTICLE X
TERMINATION
Section 10.1 TERMINATION. This Agreement may be terminated and the
Transaction abandoned at any time prior to the Closing:
(a) by the mutual written consent of the Transferors and Empire;
(b) by either any of the Transferors or Empire if the Transaction
shall not have been consummated prior to January 31, 2004; provided, however,
that the right to terminate this Agreement under this Section 10.1(b) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Transaction
to occur on or before such date;
(c) by any Transferor if such Transferor is not then in material
breach of its representations, warranties or obligations under this Agreement
and there has been a material breach of any representation, warranty, covenant
or agreement contained in this Agreement on the part of Empire or if any
representation or warranty of Empire shall have become materially untrue, in
either case, such that any of the conditions set forth in Sections 8.3(a) and
8.3(b) would not be satisfied;
(d) by Empire if it is not in material breach of its
representations, warranties or obligations under this Agreement and there has
been a material breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of any Transferor or if any
representation or warranty of any Transferor shall have become materially
untrue, in either case, such that any of the conditions set forth in Sections
8.2(a), 8.2(b) and 8.2(c) would not be satisfied; or
(e) by any Transferor or Empire if (i) there shall be a final
non-appealable order, decree or ruling of a court of competent jurisdiction in
effect preventing consummation of the Transaction or (ii) there shall be any
statute, rule, regulation or non-appealable order enacted, promulgated or issued
or deemed applicable to the Transaction by any Governmental Entity that would
make consummation of the Transaction illegal.
Section 10.2 EFFECT OF TERMINATION. In the event of any termination
of this Agreement in accordance with Sections 10.1(a), (b) or (e) hereof, this
Agreement shall immediately become void and there shall be no liability under
this Agreement on the part of any party hereto or its respective affiliates,
officers, directors, employees or agents by virtue of such termination. In the
33
event of any termination of this Agreement in accordance with Sections 10.1(c)
or (d), the parties hereto reserve their rights to take any action permitted by
law, including as provided in Section 11.2 hereof.
ARTICLE XI
MISCELLANEOUS
Section 11.1 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered personally
or three days after being sent by registered or certified mail, return receipt
requested, postage prepaid:
(a) If to Empire or Alpha Monticello to:
Empire Resorts, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to NY Gaming to:
c/o Watertone Holdings, LP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(c) If to Catskill or any Remaining Catskill Member to the address
set forth on the signature page of this Agreement for such party with a copy
(which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as any party shall have specified by notice in writing
to the other in compliance with this Section 11.1.
Section 11.2 SPECIFIC PERFORMANCE. All parties hereto recognize
that, because of the nature of the subject matter of this Agreement, it would be
impractical and extremely difficult to determine actual damages in the event of
34
a breach of this Agreement. Accordingly, if Catskill or any Transferor, on the
one hand, or Empire, on the other hand, commits a breach, or threatens to commit
a breach, of any of the provisions, as applicable, of this Agreement, each of
Empire, Catskill and/or the Transferors shall have the right to seek and receive
a temporary restraining order, injunction or other equitable remedy relating to
the prevention or cessation of such breach or threatened breach, including,
without limitation, the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being mutually
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury and that monetary damages will not provide an adequate
remedy.
Section 11.3 ANNOUNCEMENTS. None of the parties to this Agreement
shall make any public announcements prior to the Closing with respect to this
Agreement or the Transaction without the prior written consent of the other
parties hereto, except as required by law.
Section 11.4 ENTIRE AGREEMENT. This Agreement, including the
exhibits and schedules attached hereto, constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof and
supersedes all prior agreements, representations and understandings among the
parties hereto, whether written or oral.
Section 11.5 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns; nothing in this Agreement, expressed or
implied, is intended to confer on any other person, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. This Agreement
may not be assigned without the prior written consent of the other parties
hereto.
Section 11.6 APPLICABLE LAW. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 11.7 JURISDICTION. The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the Transaction shall be
brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of New York,
and each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.1 shall be deemed
effective service of process on such party.
35
Section 11.8 SEVERABILITY. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to the other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
Section 11.9 HEADINGS. The headings and captions in this Agreement
are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
Section 11.10 PRONOUNS AND PLURALS. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, singular or plural
as the context may require. All references herein to "he," "him" or "his" or
"she," "her" or "hers" shall be for purposes of simplicity and are not intended
to be a reference to a particular gender.
Section 11.11 COUNTERPARTS. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 11.12 REPRESENTATION BY COUNSEL; INTERPRETATION. The parties
hereto agree that they have been represented by counsel during the negotiation
and execution of this Agreement and, therefore, waive the application of any
law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such
agreement or document.
Section 11.13 THIRD PARTY BENEFICIARIES. The parties hereto agree
that each of the parties listed on Schedule 11.13 attached hereto and made a
part hereof is a third-party beneficiary as to the obligations imposed upon
Empire under this Agreement and as to the rights and privileges to which the
Transferors are entitled pursuant to this Agreement, and that such persons
listed on Schedule 11.13 are entitled to all of the rights and privileges
associated with such third-party-beneficiary status
[SIGNATURE PAGE FOLLOWS]
36
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
EMPIRE RESORTS, INC.
By: /s/ Empire Resorts, Inc.
----------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
CATSKILL DEVELOPMENT, L.L.C.
By: /s/ Catskill Development, L.L.C.
--------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
AMERICAS TOWER PARTNERS
By: /s/ Americas Tower Partners
-------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
BKB, LLC
By: /s/ BKB, LLC
-----------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
WATERTONE HOLDINGS, LP
By: /s/ Watertone Holdings, LP
------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
MONTICELLO REALTY L.L.C.
By: /s/ Monticello Realty L.L.C.
--------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
SHAMROCK STRATEGIES, INC.
By: /s/ Shamrock Strategies, Inc.
---------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
NEW YORK GAMING, LLC
By: /s/ New York Gaming, LLC
----------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
ALPHA MONTICELLO, INC.
By: /s/ Alpha Monticello, Inc.
------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
FOX-HOLLOW LANE, LLC
By: /s/ Fox-Hollow Lane, LLC
--------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
▇▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇▇▇ Family Limited Partnership
----------------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
KFP TRUST
By: /s/ KFP Trust
------------------------------
Name:
Title:
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES CONTRIBUTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first set forth.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Address: