EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
Dated as of March 3, 2005
By and Among
EMPIRE RESORTS, INC.,
EMPIRE RESORTS HOLDINGS, INC.,
EMPIRE RESORTS SUB, INC.,
CONCORD ASSOCIATES LIMITED PARTNERSHIP
and
SULLIVAN RESORTS LLC
TABLE OF CONTENTS
PAGE
ARTICLE I.
Definitions
Certain
Definitions............................................................2
ARTICLE II.
The Merger and Contribution; Closing
Section 2.1
Time and Place of Closing........................................6
Section 2.2
The Merger.......................................................6
Section 2.3
Effective Time...................................................6
Section 2.4
Effects of the Merger............................................6
Section 2.5
Certificate of Incorporation and Bylaws of Surviving Corporation.6
Section 2.6
Name Change; Certificate of Incorporation and Bylaws of Newco....7
Section 2.7
Officers and Directors...........................................7
Section 2.8
Initial Board of Directors of Newco..............................7
Section 2.9
Director's and Officer's Insurance...............................8
Section 2.10
Effect on Capital Stock..........................................8
Section 2.11
Effect on Class B and Class E Preferred Stock....................8
Section 2.12
Stock Options....................................................9
Section 2.13
Exchange of Shares in the Merger.................................9
Section 2.14
Tax-Free Treatment..............................................11
Section 2.15
Contribution....................................................11
Section 2.16
Issuance of Transferor Shares; Assumption of Liabilities........13
ARTICLE III.
Representations and Warranties of Transferor
Section 3.1
Due Formation, Existence, Etc...................................14
Section 3.2
Permits and Approvals...........................................15
Section 3.3
Consents and Approval...........................................15
Section 3.4
Ground Lease....................................................15
Section 3.5
Licenses........................................................16
Section 3.6
Leases..........................................................16
Section 3.7
Service Contracts...............................................16
Section 3.8
Empire Payment Obligations......................................16
Section 3.9
Title to Properties.............................................16
Section 3.10
Title to Ground Lease...........................................16
Section 3.11
Title to Licenses and Service Contracts.........................17
Section 3.12
Necessary Property..............................................17
Section 3.13
No Tenants or Occupants.........................................17
Section 3.14
Compliance with Laws............................................17
-i-
Section 3.15
Litigation......................................................17
Section 3.16
Condemnation....................................................17
Section 3.17
Purchase Options................................................17
Section 3.18
Environmental Matters...........................................17
Section 3.19
Insurance.......................................................18
Section 3.20
Brokers and Finders.............................................18
Section 3.21
Taxes...........................................................18
Section 3.22
Employee Benefits...............................................19
Section 3.23
Water Capacity..................................................20
Section 3.24
Tax Opinion.....................................................20
Section 3.25
Disclaimer......................................................20
ARTICLE IV.
Representations and Warranties of Empire
Section 4.1
Organization, Good Standing and Qualification...................20
Section 4.2
Capital Structure...............................................21
Section 4.3
Corporate Authority; Approval...................................22
Section 4.4
Governmental Filings; No Violations; Certain Contracts, Etc.....23
Section 4.5
Empire Reports; Financial Statements............................23
Section 4.6
Absence of Certain Changes......................................25
Section 4.7
Litigation and Liabilities......................................25
Section 4.8
Compliance with Laws; Licenses..................................25
Section 4.9
Material Contracts..............................................26
Section 4.10
Takeover Statutes...............................................26
Section 4.11
Affiliate Transactions..........................................26
Section 4.12
Taxes...........................................................27
Section 4.13
Permits and Approvals...........................................27
Section 4.14
Catskill Development, L.L.C.....................................28
Section 4.15
Monticello Property.............................................28
Section 4.16
Condemnation....................................................28
Section 4.17
Environmental Matters...........................................28
Section 4.18
Labor and Employee Benefits.....................................28
Section 4.19
Tax Opinion.....................................................29
ARTICLE V.
Covenants of the Parties
Section 5.1
Interim Operations of Empire....................................29
Section 5.2
Interim Operations of Transferor................................30
Section 5.3
Land Use Applications and Approvals.............................31
Section 5.4
Environmental Remediation.......................................32
Section 5.5
Restrictions Regarding Certain Other Transactions...............32
Section 5.6
Restrictions on Gaming Facilities on Retained Property..........34
Section 5.7
Access..........................................................34
Section 5.8
Further Assurances; Reasonable Efforts to Satisfy Conditions....34
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Section 5.9
Public Announcements............................................35
Section 5.10
Proxy Statement; Registration Statement; Blue Sky...............36
Section 5.11
Stockholders' Meeting; Board Recommendation.....................37
Section 5.12
Condemnation....................................................37
Section 5.13
Casualty........................................................38
Section 5.14
Changes in Representations and Warranties.......................38
Section 5.15
Additional Agreements...........................................38
Section 5.16
Golf Courses and Additional Property............................39
Section 5.17
Newco Operations on the Concord Owned Property..................41
Section 5.18
Employment of Employees.........................................41
Section 5.19
Tax-free Qualification..........................................41
Section 5.20
Confidentiality; Release of Information.........................41
Section 5.21
Tax Representations.............................................41
Section 5.22
Requisite Approvals.............................................42
Section 5.23
Refinancing Cooperation;
Satisfaction of Empire Payment Obligations......................43
Section 5.24
HSR Act; Certain Registration Rights............................43
ARTICLE VI.
Evidence and Condition of Title
Section 6.1
Evidence and Condition of Title.................................43
Section 6.2
Preliminary Evidence of Title...................................43
Section 6.3
Title Defects...................................................44
Section 6.4
Material Title Defects and New Material Title
Defects Prior to Closing........................................45
Section 6.5
Voluntary Title Defects.........................................45
Section 6.6
Permitted Exceptions............................................45
ARTICLE VII.
Conditions Precedent
Section 7.1
Conditions to Empire's Obligations..............................46
Section 7.2
Conditions to Transferor's Obligation...........................48
ARTICLE VIII.
Closing Deliveries
Section 8.1
Deliveries by Empire, Newco and/or Merger Sub...................50
Section 8.2
Deliveries by Transferor........................................51
Section 8.3
Apportionments..................................................53
ARTICLE IX.
Termination and Default
Section 9.1
Termination.
(a)..............................................55
Section 9.2
Default.........................................................57
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ARTICLE X.
Miscellaneous
Section 10.1
Counterparts....................................................58
Section 10.2
GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY TRIAL.....58
Section 10.3
Dispute Resolution..............................................59
Section 10.4
Entire Agreement; Beneficiaries.................................59
Section 10.5
Notices.........................................................59
Section 10.6
Successors and Assigns..........................................60
Section 10.7
Headings; Definitions...........................................60
Section 10.8
Amendments and Waivers..........................................61
Section 10.9
Specific Performance............................................61
Section 10.10
Severability....................................................61
Section 10.11 Fees and
Expenses...............................................61
Section 10.12
Transferor......................................................62
Section 10.13 Mutual
Drafting.................................................62
Section 10.14 Gaming
Facilities...............................................62
Section 10.15 Letter Agreement
Superseded.....................................62
EXHIBITS AND SCHEDULES
Exhibit A - Registration Rights Term Sheet
Exhibit B - Map of Concord Owned Property,
Concord Hotel Site, Golf Courses and
Retained
Property
Exhibit C - Monticello
Property
Exhibit D - Grossinger's Property
Exhibit E - Trademarks,
Service
Marks,
Logos and Tradenames
Associated
with
Grossinger's Property and Concord Property
Exhibit F - Form of Trade Name License Agreement
Exhibit G - Excluded Personal Property
Exhibit H - Golf Course Agreement
Term
Sheet
Exhibit I - REA Term Sheet Exhibit J - Form of Tax Representation
Certificates
Empire Disclosure Schedule
Transferor Disclosure Schedule
-iv-
DEFINED TERMS
Acquisition Proposal......................32
Golf Course Agreement.....................38
Action....................................58
Governmental Entity.......................22
Additional Agreements.....................38
Grossinger's Property.....................11
Affiliate..................................2
Ground Lease...............................3
Agreement..................................1
Hazardous Materials.......................18
Assumed Liabilities.......................13
Indian Tribe Agreement.....................3
Assumption Agreement......................13
knowledge..................................4
Audit Date................................23
Knowledge or knowledge.....................4
Book Entry Shares..........................9
Law........................................4
Catskills Acquisition.....................33
Lead Based Paint..........................18
Catskills Transfer........................33
Leased Property...........................11
Certificate of Merger......................6
Leases....................................12
Certificates...............................9
Legal Requirements........................17
Closing....................................5
Lender....................................14
Closing Conditions.........................5
Lender Consents...........................15
Closing Date...............................6
Letter Agreement...........................2
Code.......................................1
Licenses..................................12
Concord Associates.........................1
Lien.......................................4
Concord Owned Property....................11
MAC Notice Party..........................56
Concord Property..........................11
Material Adverse Effect....................4
Confidentiality Agreement.................34
materially and adversely..................37
Contract..................................23
Merger.....................................1
Contribution...............................1
Merger Sub.................................1
Covered Persons...........................26
Monticello Property........................4
Deeds.....................................51
New Material Title Defect(s)..............44
Delaware Secretary of State................6
Newco......................................1
DGCL.......................................3
Newco Common Stock.........................8
Effective Time.............................6
Option Agreement...........................2
Empire.....................................1
Owned Property............................12
Empire Common Stock.......................20
Owner's Title Commitments.................43
Empire Disclosure Schedule.................3
Permitted Exceptions......................45
Empire Licenses...........................25
Person.....................................4
Empire Material Contracts.................26
Preferred Stock...........................21
Empire Merger Consideration................8
Properties................................13
Empire Proxy Statement....................35
Purchase Shares...........................13
Empire Reports............................23
Registration Statement....................35
Empire Requisite Vote.....................22
Representatives...........................32
Environmental Legal Requirements..........18
Requisite Approvals.......................42
Exchange Act...............................3
Requisite Cayuga Approvals................42
Exchange Agent.............................9
Requisite Seneca Cayuga Approvals.........42
Exchange Fund..............................9
Retained Property..........................5
Frontline.................................35
SEC....................................5, 23
GAAP...................................... 3
Securities Act.............................5
Gaming Facility............................4
Service Contracts.........................52
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Shareholders Agreement.....................2
Tax Returns................................5
SOXA,.....................................24
Title Company.............................43
Stockholders Meeting......................37
Title Review Period.......................44
Subsidiary.................................5
Trade Name License Agreement..............12
Sullivan Resorts...........................1
Transactions...............................1
Surveys...................................43
Transferor.................................1
Surviving Corporation......................6
Transferor Disclosure Schedule.............5
Takeover Statute..........................26
Transferor's Title Cure Election Period...44
Tax Forms.................................52
U.S........................................5
Tax or Taxes...............................5
Voting Agreements..........................2
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AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
THIS
AGREEMENT
AND
PLAN
OF
MERGER
AND
CONTRIBUTION
(this
"AGREEMENT"),
dated as of March 3, 2005,
is entered
into by and among
EMPIRE
RESORTS, INC., a Delaware corporation ("EMPIRE"), EMPIRE RESORTS
HOLDINGS, INC.,
a Delaware
corporation and wholly owned subsidiary of Empire ("NEWCO"),
EMPIRE
RESORTS SUB, INC., a Delaware
corporation and wholly owned
subsidiary of Newco
("MERGER SUB"), and CONCORD ASSOCIATES LIMITED
PARTNERSHIP,
a New York limited
partnership ("CONCORD ASSOCIATES") and SULLIVAN RESORTS, LLC, a New
York limited
liability company ("SULLIVAN
RESORTS") (Concord Associates and Sullivan Resorts
being
referred to herein,
collectively,
as
"TRANSFEROR").
Unless
otherwise
specified, capitalized terms used herein shall have the meaning
ascribed to them
in Article I.
WHEREAS,
Newco is a newly
formed
corporation
that has issued and
outstanding 100 shares of capital stock, all of which are owned by
Empire; and
WHEREAS,
Empire has caused
Newco to form
Merger
Sub,
all of the
outstanding capital stock of which is owned by Newco; and
WHEREAS, the respective Boards of Directors of Empire and Merger
Sub
have approved this
Agreement and the merger of Merger Sub with and into Empire,
with Empire
continuing as the surviving
corporation
(the "MERGER"),
upon the
terms and subject to the conditions set forth in this Agreement;
and
WHEREAS,
Transferor
owns
fee
simple
or
leasehold
title to the
Properties (as defined below); and
WHEREAS,
Transferor
desires
to
contribute
and Newco
desires to
acquire,
INTER ALIA, the
Properties in exchange for the Transferor
Shares (as
hereinafter
defined)
and
the
assumption
or
payment
by
Newco
of
certain
liabilities of Transferor on the terms and conditions hereinafter
set forth (the
"CONTRIBUTION" and collectively with the Merger, the
"TRANSACTIONS"); and
WHEREAS,
the
Board
of
Directors
of
Newco
has
approved
this
Agreement,
the Transactions and the other transactions
contemplated hereby and
the Contribution
upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS,
for U.S. federal income tax purposes,
it is intended that
the Merger will qualify as a reorganization within the meaning of
Section 368(a)
of the Internal
Revenue Code of 1986,
as amended
(the
"CODE"),
and that the
Merger and the
Contribution,
taken
together,
will
qualify as a
transaction
described in Section 351 of the Code; and
WHEREAS,
each outstanding
share of Empire Common Stock (other than
shares of Empire
Common
Stock held in the
treasury of Empire)
shall cease to
exist and shall be converted into the right to receive one share of
Newco Common
Stock; and
WHEREAS,
Empire and Transferor have executed and delivered a letter
agreement,
dated as of November 12, 2004 (the "LETTER AGREEMENT"),
pursuant to
which
the
parties
agreed to enter
into this
Agreement
and
consummate
the
Transactions
and the other
transactions
contemplated
hereby
subject
to the
provisions hereof; and
WHEREAS,
in connection with the parties'
execution and delivery of
the Letter
Agreement,
(a) certain
stockholders
of Empire entered into Voting
Agreements
with
Transferor
dated
as
of
November
12,
2004
(the
"VOTING
AGREEMENTS"),
as amended by Amendment No. 1 to Voting Agreement dated as of the
date hereof (the "Voting Agreement
Amendment");
and (b) Empire entered into an
Option
Agreement
with Concord
Associates,
dated as of November 12, 2004,
as
amended by Amendment No. 1 to Option
Agreement dated as of the date hereof (the
"OPTION
AGREEMENT")
and
(c)
the
parties
agreed,
as
a
condition
to
the
consummation of the Transactions,
to enter into a Registration Rights Agreement
on
substantially
the same terms as are set forth in the term sheet attached as
EXHIBIT
A
hereto
and
otherwise
in
reasonable
and
customary
form
(the
"REGISTRATION RIGHTS AGREEMENT"); and
WHEREAS, in order to more fully and completely describe and
document
the transactions
provided for in the Letter Agreement,
the parties have agreed
to
execute
and
deliver
this
Agreement,
which
shall
supersede
the Letter
Agreement in all respects.
NOW,
THEREFORE,
in
consideration
of the foregoing and the mutual
covenants
and
agreements
contained
in this
Agreement,
and
intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
CERTAIN
DEFINITIONS.
As used in this Agreement the following terms
shall have the following respective meanings:
"AFFILIATE"
means, with respect to any Person,
another Person that
directly or
indirectly
controls,
is
controlled
by, or is under common
control with,
such first Person,
where
"control"
means the possession,
directly or
indirectly,
of the power to direct or cause the direction of
the
management
policies of a Person,
whether
through the
ownership of
voting securities, by contract, as trustee or executor, or
otherwise.
"CONCORD
HOTEL
SITE" means up to
approximately
100 acres of land
owned by Concord
Associates in Kiamesha Lake, New York, which is intended
to be conveyed to the United States in trust for a native
american indian
tribe or nation
and is
intended
to be a portion of Lots 1A, 1B and/or 2
more particularly described in EXHIBIT B hereto.
"CONTEMPLATED
BUSINESS"
means (a) with respect to Transferor,
the
ownership,
development,
operation,
use and
maintenance of the Retained
Property for
residential
purposes,
including the use of the Golf Course
pursuant
to the Golf
Course
Agreement
and (b) with
respect
to Empire
and/or Newco, the ownership,
development,
operation, use and maintenance
of Class III gaming facilities.
2
"DGCL"
shall
mean
the
General
Corporation
Law of the
State of
Delaware.
"EMPIRE DISCLOSURE
SCHEDULE" shall mean the Disclosure
Schedule of
Empire, dated as of the date hereof.
"ERISA" shall mean the Employee
Retirement
Income
Security Act of
1974, as amended.
"ERISA
AFFILIATE"
of any
Person
means
any
other
Person
that,
together
with such Person,
would be treated as a single
employer
under
Section 414 of the Code.
"EXCHANGE
ACT" shall mean the
Securities
Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"GAAP" shall mean U.S.
generally
accepted
accounting
principles,
consistently applied.
"GROUND LEASE" shall mean the Lease, dated July 1, 1968, executed
by
Nalou Realty Corp., as landlord,
and Kiamesha Concord, Inc., as tenant as
amended, modified and supplemented by that certain order of the
Bankruptcy
Court,
dated
October 16, 1998 and
docketed
on October
22,
1998,
the
Stipulation of Settlement
Resolving the 1968 Lease Issues,
dated January
15,
1999,
and
docketed on January 20, 1999 and the
Amendment to Lease,
dated December 1, 2001.
"HSR ACT" means the Hart-Scott-Rodino
Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"INDIAN
TRIBE
AGREEMENTS"
shall
mean
the
(a)
Gaming
Facility
Development and Construction Agreement,
dated as of April 3, 2003, by and
among Cayuga Catskill Gaming
Authority,
Monticello
Raceway
Development
Company,
L.L.C.,
and Cayuga
Nation of New York,
(b) Shared
Facilities
Agreement,
contemplated
to be executed by and
between
Cayuga
Catskill
Gaming Authority and Monticello Raceway
Management,
Inc.
("MRMI"),
(c)
Land Purchase Agreement,
dated as of April 3, 2003, by and between Cayuga
Catskill Gaming Authority and Catskill Development,
L.L.C., as amended by
the First
Amendment
of Land
Purchase
Agreement,
dated as of April 30,
2004, by and between
Catskill
Development,
L.L.C.
and Cayuga
Catskill
Gaming Authority,
(d) Gaming Facility Management
Agreement,
dated as of
3
April 3, 2003, by and among Cayuga Catskill Gaming
Authority,
Monticello
Casino
Management,
L.L.C.,
and
Cayuga
Nation of New York,
(e) Letter
Agreement,
dated as of April 3,
2003,
by and
among
Alpha
Hospitality
Corporation,
Catskill Development,
L.L.C. and Cayuga Nation of New York,
as amended by the First Amendment of Letter
Agreement,
dated as of April
30, 2004, by and between Empire
Resorts,
Inc. and Catskill
Development,
L.L.C.
and Cayuga Nation of New York and Cayuga Catskill Gaming Authority
and by the Letter Agreement, dated as of December 23, 2004, by and
between
Empire
Resorts,
Inc.
and the
Cayuga
Nation
of New York,
(f)
Letter
Agreement,
dated as of August 19, 2004,
by and between
Empire
Resorts,
Inc.
and the
Seneca-Cayuga
Tribe of Oklahoma
and (g)
Memorandum
from
Martin R. Gold to the Cayuga Nation of New York,
dated November 14, 2004,
signed by the Cayuga Nation of New York and Empire Resorts, Inc.
"KNOWLEDGE"
or
"knowledge"
shall
mean and be limited to (i) with
respect to Empire,
when used in the phrase
"TO
EMPIRE'S
KNOWLEDGE"
or
similar phrases, the actual knowledge of the following individuals:
Morad
Tahbaz and Robert
Berman,
and the knowledge a reasonably
prudent person
would be expected to have acting in such person's
capacity in the conduct
of similar
business and (ii) with respect to Transferor
when used in the
phrase
"TO
TRANSFEROR'S
KNOWLEDGE"
or
similar
phrases,
the
actual
knowledge of the following individuals: Louis Cappelli and Bruce
Berg, and
the knowledge a reasonably prudent person would be expected to have
acting
in such person's capacity in the conduct of similar business.
"LAW" shall mean any U.S.
federal,
state or local, or any foreign,
order, writ,
injunction,
judgment,
award, decree,
common law, statute,
code, ruling, law, agency requirement, arbitration award,
ordinance, rule,
regulation, license or permit of any Governmental Entity.
"LIEN" shall mean any
easement,
encroachment,
security
interest,
pledge, mortgage, lien (including, without limitation,
environmental, Tax
and ERISA liens),
charge,
judgment,
claim,
encumbrance,
proxy, voting
trust or voting agreement.
"MATERIAL
ADVERSE
EFFECT"
with
respect to any Person means (x) a
material adverse effect on the condition (financial or other),
properties,
assets,
liabilities or business with respect to or in connection with the
Contemplated Business of such Person and its Subsidiaries or (y) an
effect
that would prevent,
materially delay or materially
impair the ability of
such Person to consummate the transactions
contemplated by this Agreement
(including,
without
limitation,
with
respect
to Newco the
ability to
develop,
construct and operate a Resort Facility at the Concord Property,
which Resort Facility shall include a hotel containing
approximately 1500
rooms).
"MONTICELLO PROPERTY" shall mean the land located in Monticello,
New
York and described on EXHIBIT C hereto, and all buildings,
structures and
other
improvements
thereon,
which
property is owned by MRMI,
a wholly
owned subsidiary of Empire and known as the Monticello Raceway.
"PERSON"
shall
mean
any
individual,
corporation,
partnership,
limited
liability
company,
association,
trust
or
other
entity
or
organization, including a government or political subdivision or an
agency
or instrumentality thereof.
4
"RESORT
FACILITY" shall mean a hotel(s) and resort complex,
which,
with respect to the Concord
Hotel Site,
shall
include a fully
licensed
Class III gaming enterprise.
"RETAINED
PROPERTY"
shall mean the land owned or leased by Concord
Associates
in
Kiamesha
Lake,
New York and which is outside of the Golf
Courses
and
Concord
Owned
Property
marked or
indicated
on EXHIBIT B
hereto,
and all buildings,
structures and improvements
located thereon,
and all rights and interests appurtenant thereto.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES
ACT" shall mean the Securities Act of 1933, as amended,
and the regulations promulgated thereunder.
"SUBSIDIARY"
shall
mean,
with
respect to any
Person,
any other
Person,
whether
incorporated
or
unincorporated,
of
which
at least a
majority of the
securities or ownership
interests
having by their terms
voting
power to elect a
majority
of the
board
of
directors
or other
Persons
performing
similar
functions is directly or indirectly owned or
controlled
by
such
entity
or
by
one
or
more
of
its
respective
Subsidiaries.
"TAX" or "TAXES" shall mean all federal, state, local or foreign
net
or gross income,
gross receipts,
net proceeds,
sales,
use, ad valorem,
value added, franchise,
bank shares,
withholding,
payroll,
employment,
excise,
property,
alternative
minimum,
environmental
or other
taxes,
assessments,
duties,
fees, levies or other
governmental
charges of any
nature
whatsoever,
whether disputed or not,
together with any interest,
penalties,
additions to tax or additional
amounts with respect
thereto,
whether
disputed
or not, in each case
including
such taxes for which a
Person is or may be liable (i) as a result of Treasury
Regulation Section
1.1502-6
(or a similar
provision
of state,
local or foreign
law),
as
transferee
or
successor,
and
(ii) as a result
of
being
party to any
agreement or any expressed or implied obligation to indemnify any
Person.
"TAX
RETURNS"
shall
mean any
federal,
state,
local or
foreign
returns,
reports,
claims for refund,
information
returns or statements
(including any amended
returns or information
returns) filed or required
to be filed for purposes of a particular Tax.
"TRANSFEROR
DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule
of Transferor, dated as of the date hereof.
"U.S." shall mean the United States of America.
5
ARTICLE II.
THE MERGER AND CONTRIBUTION; CLOSING
Section
2.1
TIME
AND
PLACE
OF
CLOSING.
The
closing
of
the
Transactions
(the
"CLOSING")
shall
take
place at the
offices
of
Empire's
counsel,
Latham & Watkins LLP, in New York City,
on such date and time that is
substantially
contemporaneous
with the last to be
satisfied
or waived of the
conditions to Closing (the "CLOSING
CONDITIONS")
set forth in Article VII, but
in no event later than 5 business days following
satisfaction
or waiver of the
Closing Conditions (the date of the Closing, the "CLOSING DATE");
PROVIDED that
if all such Closing
Conditions
shall not have been satisfied
and/or waived by
December
31, 2005,
then either party shall have such rights to terminate
this
Agreement as are set forth in SECTION 9.1 hereof.
Section 2.2 THE MERGER. Upon the terms and subject to the
conditions
hereof,
at the Closing,
and in accordance
with the DGCL,
Merger Sub shall be
merged with and into Empire at the Effective Time (as defined
below).
Following
the
Merger,
the
separate
corporate
existence
of Merger Sub shall cease and
Empire
shall
continue
as
the
surviving
corporation
(the
"SURVIVING
CORPORATION").
Section
2.3
EFFECTIVE
TIME.
As promptly
as
practicable
on the
Closing
Date,
Merger Sub and Empire shall (a) file with the Secretary of State
of the State of Delaware (the
"DELAWARE
SECRETARY OF STATE") a certificate
of
merger (the "CERTIFICATE OF MERGER") in such form as is required by
and executed
in accordance
with the relevant
provisions of the DGCL, and (b) make all other
filings or recordings required under the DGCL. The Merger shall
become effective
at such
time as the
Certificate
of
Merger is duly
filed
with the
Delaware
Secretary of State or at such
subsequent
time as Empire and
Transferor
shall
agree and as shall be specified in the
Certificate of Merger (the date and time
the Merger becomes effective being the "EFFECTIVE TIME").
Section 2.4 EFFECTS OF THE MERGER.
At and after the Effective Time,
the Merger
will have the effects set forth in the DGCL.
Without
limiting
the
generality of the foregoing,
and subject thereto, at the Effective Time all the
property,
rights,
privileges,
powers and
franchises of Empire and Merger Sub
shall be vested in the Surviving
Corporation,
and all debts,
liabilities
and
duties of Empire and Merger Sub shall become the debts,
liabilities
and duties
of the Surviving Corporation.
Section 2.5
CERTIFICATE
OF
INCORPORATION
AND BYLAWS OF SURVIVING
CORPORATION. The certificate of incorporation of Empire shall be
amended to read
in its
entirety as the
certificate
of
incorporation
of Merger Sub in effect
immediately
prior to the
Effective
Time,
except
that (a)
Article
I of the
certificate
of
incorporation
shall
provide
that the
name of the
surviving
corporation is "Empire
Resorts
Properties,
Inc." and (b) such
certificate of
incorporation
shall state that the total number of authorized
shares of common
stock
shall be 1000.
The
bylaws of
Empire
shall be
amended
to read in its
entirety
as the
bylaws
of
Merger
Sub in
effect
immediately
prior
to the
Effective Time,
until
thereafter
changed or amended as provided therein or by
applicable Law.
6
Section 2.6 NAME CHANGE;
CERTIFICATE OF INCORPORATION AND BYLAWS OF
NEWCO. At the Effective
Time,
Empire shall cause Newco's name to be changed to
"Empire Resorts,
Inc." Empire shall cause Newco's
certificate of incorporation
and bylaws to be amended as of immediately prior to the Effective
Time to be the
same as Empire's
certificate of incorporation and bylaws as of the date hereof,
until thereafter changed or amended as provided therein or by
applicable Law.
Section 2.7
OFFICERS AND
DIRECTORS.
The officers of Empire at the
Effective
Time shall be the officers of the
Surviving
Corporation,
until the
earlier of their resignation or removal or otherwise ceasing to be
an officer or
until their
respective
successors are duly elected and qualified,
as the case
may be.
The Board of
Directors
of Empire at the
Effective
Time shall be the
Board of
Directors
of the
Surviving
Corporation
until the
earlier of their
resignation
or
removal
or
otherwise
ceasing
to be a member of the Board of
Directors or until their
respective
successors are duly elected and qualified.
The initial
Board of Directors of Newco to be in office at the Closing shall be
as set forth in Section 2.8 below.
Section 2.8 INITIAL
BOARD OF DIRECTORS OF NEWCO.
The initial Board
of Directors of Newco to be in office at the
Effective
Time shall be comprised
of eleven (11) members,
two (2) of whom shall be designees of Transferor
(such
designees or such other
individuals
designated from time to time by Transferor
to take their place or places, the "TRANSFEROR DESIGNEES"). Newco
and Transferor
agree that the Transferor
Designees
shall be members of the class of directors
who will not be subject
to
reelection
until the annual
meeting to be held in
2008.
Of the
remaining
nine (9) members of the initial
Board of Directors at
least seven (7) members of the Board of Directors will be
independent. Newco and
Transferor
agree
that the
seven
(7)
initial
independent
members
shall be
comprised as follows:
(1) in addition to
Transferor's
right to designate
the
Transferor Designees,
Transferor will be entitled to designate three (3) of the
seven (7)
independent
members
of the Board of
Directors;
(2) Newco
will be
entitled to designate three (3) independent directors selected from
the existing
independent
directors
on the
Board of
Directors
of
Empire,
as of the date
hereof;
and (3) the six (6) independent
directors selected pursuant to (1) and
(2) above will
together
select the
seventh
independent
director.
Committee
representation will be proportionate to representation on the Board
of Directors
(except
that
committees
that are
required
to be
comprised
of
independent
directors will have comparable proportionate
independent
representatives).
To
the extent
permitted by applicable
NASDAQ rules and by
applicable
law, for a
period of at least
three years after the
Effective
Time,
at least one of the
Transferor Designees shall be entitled to serve as a member of each
committee of
the Board of Directors.
If prior to the expiration of any Transferor Designee's
term,
any Transferor
Designee
ceases to be a member of the Board of Directors
(for
any
reason
other
than
for
cause),
Newco
will
use its
commercially
reasonable
efforts
(subject
to any
NASDAQ
regulations,
applicable
law and
fiduciary duties and obligations of Newco's directors then in
office) to appoint
a new member of the Board of
Directors
designated
by
Transferor
to fill the
vacancy left by such departing
member so that until at least the annual meeting
held in 2008, at least two Transferor
Designees will be members of the Board of
Directors.
Newco
agrees
that each of Scott
Rechler
and Louis
Cappelli
are
acceptable as Transferor Designees (without limiting Transferor's
rights to make
replacements), provided that Scott Rechler and Louis Cappelli are
able to comply
with the suitability requirements of applicable state, federal and
tribal gaming
regulators with jurisdiction over Empire's
operations,
and if Scott Rechler or
Louis
Cappelli
do
not
so
comply,
Transferor
shall
be
entitled
to
name
7
replacement designees who meet such requirements. Transferor hereby
acknowledges
and
agrees
that all
members
of the Board of
Directors
shall be
subject to
suitability
requirements
of
applicable
state,
federal
and
tribal
gaming
regulators.
Empire and Newco agree to use
commercially
reasonable
efforts to
effect the foregoing,
including seeking and obtaining any required
shareholder
approvals of the foregoing at the Stockholders Meeting (or any
adjournment(s) or
postponement(s)
thereof),
or any other
meeting of
shareholders
of Empire or
Newco at which the matters
contemplated by this Agreement or this Agreement are
to
be
presented
to a
vote
of
shareholders
of
Empire
or
Newco
(or
any
adjournment(s) or postponement(s)
thereof). Empire and Newco also agree that in
connection with seeking and obtaining any required shareholder
approvals of the
foregoing
it
shall
undertake
the
same
efforts
and
comply
with
the same
obligations
with respect to seeking and obtaining
such
approvals as those set
forth
in
Section
5.11 of this
Agreement.
Notwithstanding
anything
in this
Agreement
to the
contrary,
in the event
that any such
required
shareholder
approval is not
obtained
for any reason,
the parties
agree that such failure
shall be treated for all purposes
(including,
for purposes of determining
the
exercisability of the Option and the termination of this Agreement)
as a failure
to satisfy the
shareholder
approval
condition to Closing set forth in Section
7.1(a) of this
Agreement.
The terms and
provisions
of this Section 2.8 shall
survive the Closing.
Section 2.9 DIRECTOR'S AND OFFICER'S INSURANCE.
On or prior to the Effective
Time,
Empire shall
obtain,
or shall
cause to be obtained,
a new policy of director's and officer's
insurance or an
endorsement to Empire's existing
director's and officer's
insurance policy for
the officers and Board of Directors of Newco.
Such policy or endorsement
shall
provide the same
coverage to the Newco
officers
and Board of
Directors as is
provided to Empire's officers and Board of Directors as of the date
hereof.
Section 2.10 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time, by
virtue of the Merger,
each share of Empire Common Stock issued and
outstanding
immediately
prior to the Effective Time (other than shares held in the treasury
of Empire)
shall cease to exist and be converted
into the right to receive one
share of common
stock,
par value
$0.01 per
share,
of Newco
("NEWCO
COMMON
STOCK").
(b) At the Effective
Time,
by virtue of the Merger,
each share of
the
common
stock,
par
value
$0.01
per
share,
of Merger
Sub
issued
and
outstanding
immediately prior to the Effective Time shall cease to exist and be
converted into the right to receive one share of common stock,
par value $0.01,
of the Surviving Corporation.
(c) At the Effective
Time,
by virtue of the Merger,
each share of
Empire
Common
Stock held in the
treasury of Empire
immediately
prior to the
Effective
Time shall
automatically
be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange thereof.
Section 2.11 EFFECT ON CLASS B AND CLASS E PREFERRED
STOCK.
(a) At
the Effective
Time,
by virtue of the Merger,
each share of Empire Class B and
Class E Preferred Stock (the "EMPIRE PREFERRED STOCK") issued and
outstanding
8
immediately
prior to the Effective Time (other than shares held in the treasury
of Empire)
shall cease to exist and be converted
into the right to receive one
share of preferred stock, par value $0.01 per share, of Newco,
having equivalent
terms to the
Class B and
Class E
Preferred
Stock,
respectively,
of
Empire
("NEWCO PREFERRED
STOCK",
together with Newco Common Stock, the "EMPIRE MERGER
CONSIDERATION").
(b) At the Effective
Time,
by virtue of the Merger,
each share of
Empire Preferred Stock held in the treasury of Empire
immediately
prior to the
Effective
Time shall
automatically
be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange thereof.
Section 2.12 STOCK OPTIONS.
At the Effective Time, by virtue of the
Merger,
each stock option or warrant
exercisable
for shares of Empire
Common
Stock
(the
"EMPIRE
STOCK
OPTIONS")
outstanding
immediately
prior
to
the
Effective
Time shall be converted
automatically
at the Effective Time into an
option or warrant to purchase a number of shares of Newco Common
Stock (a "NEWCO
STOCK OPTION") equal to the same number of shares of Empire Common
Stock subject
to such Empire Stock Option.
The terms and
conditions
(including the exercise
price per share) of the Newco Stock Options shall
otherwise
remain the same as
the terms and
conditions
of each
Empire
Stock
Option.
Notwithstanding
the
foregoing,
each Empire Stock
Option
(whether
such option is a
non-qualified
stock option or an option that is intended to be an "incentive
stock option" (as
defined under Section 422 of the Code)) shall be adjusted in
accordance with the
principles set forth in Section 424 of the Code.
Section 2.13 EXCHANGE OF SHARES IN THE MERGER.
(a) At the Effective
Time,
Newco shall make
available
to an exchange
agent
selected by Newco and
reasonably
acceptable to Transferor (the "EXCHANGE AGENT"),
for the benefit of
those Persons who
immediately
prior to the Effective
Time were the holders of
shares of Empire Common Stock or Empire Preferred Stock, a
sufficient
number of
certificates representing shares of Newco Common Stock or Newco
Preferred Stock,
as the case may be,
required
to effect the
delivery of the
aggregate
Empire
Merger
Consideration
required to be issued
pursuant to Section
2.10(a)
(the
certificates
representing shares of Newco Common Stock or Newco Preferred Stock
comprising such aggregate Empire Merger Consideration being
hereinafter referred
to as the "EXCHANGE FUND").
(b) Promptly after the Effective Time, the Exchange Agent shall
mail
to each holder of record of a
certificate
or
certificates
which
immediately
prior to the
Effective
Time
represented
outstanding
shares of Empire Common
Stock or Empire
Preferred
Stock (the
"CERTIFICATES")
(i) a form of letter of
transmittal
(which shall specify that delivery
shall be effected,
and risk of
loss and title to the Certificates
shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii)
instructions
for use in effecting
the
surrender of the
Certificates
for exchange
therefor or for effecting the
exchange of
Certificates
for shares of Newco Common
Stock or Newco
Preferred
Stock,
as the case may be, to be held in book entry
form.
Promptly
after the
Effective
Time,
the Exchange Agent shall also mail to each holder of record of
shares of Empire Common Stock and Empire Preferred Stock held in
book entry form
("BOOK ENTRY
SHARES")
instructions
for use in effecting
the exchange of said
Book Entry Shares for shares of Newco Common Stock or Newco
Preferred
Stock, as
the case may be. Upon surrender of Certificates to the Exchange
Agent,
together
with such letter of transmittal duly executed and any other
required
documents,
9
or, in the case of Book Entry Shares,
compliance with the
instructions for the
exchange thereof,
the holder of such Certificates or Book Entry Shares shall be
entitled to receive for the Empire Common Stock or Empire
Preferred
Stock,
as
the
case
may
be,
represented
by
such
Certificates
the
Empire
Merger
Consideration,
and the
Certificates
so
surrendered
or Book Entry
Shares so
exchanged shall forthwith be canceled. Until so surrendered,
Certificates,
and
until
exchanged as
contemplated
by this Section
2.13(b),
Book Entry Shares,
shall represent solely the right to receive the Empire Merger
Consideration.
No
dividends or other
distributions
that are declared after the Effective Time on
shares of Newco Common Stock or Newco Preferred Stock and payable
to the holders
of record thereof after the Effective
Time will be paid to Persons
entitled by
reason of the Merger to receive shares of Newco Common Stock or
Newco
Preferred
Stock, as the case may be, until such Persons
surrender
their
Certificates or
comply
with the
procedures
for
exchanging
Book
Entry
Shares.
After
such
surrender or
compliance,
as the case may be, there shall be paid to the Person
in whose
name the shares of Newco
Common
Stock or Newco
Preferred
Stock are
issued any dividends or other distributions on such shares of Newco
Common Stock
or Newco
Preferred
Stock,
as the case may be,
which shall have a record date
after the Effective Time but prior to such
surrender
provided that the payment
date occurs after such surrender, and, in such event, such payment
shall be made
on such
payment
date.
In no event shall the Persons
entitled to receive such
dividends
or other
distributions
be
entitled
to
receive
interest
on such
dividends or other
distributions.
If any
Certificate
representing
shares of
Newco Common Stock or Newco Preferred Stock is to be issued in a
name other than
that in which the Certificate surrendered in exchange therefor is
registered, it
shall be a condition of such exchange that the Certificate so
surrendered
shall
be properly
endorsed
and
otherwise
in proper form for
transfer and that the
Person
requesting such exchange shall pay to the Exchange Agent any
transfer or
other Taxes required by reason of the issuance of
certificates
for such shares
of Newco Common Stock or Newco
Preferred
Stock,
as the case may be, in a name
other than that of the
registered
holder of the
Certificate
surrendered,
or
shall establish to the satisfaction of the Exchange Agent that such
Tax has been
paid or is not
applicable.
The Exchange Agent shall not be entitled to vote or
exercise
any rights of
ownership
with
respect to the shares of Newco
Common
Stock and Newco Preferred
Stock held by it from time to time hereunder,
except
that it shall
receive and hold all
dividends
or other
distributions
paid or
distributed
with
respect
to such
shares
of Newco
Common
Stock
and
Newco
Preferred Stock for the account of the Persons entitled
thereto.
If, after the
Effective
Time,
Certificates
or
unexchanged
Book Entry Shares
representing
shares of Empire Common Stock or Empire Preferred Stock outstanding
prior to the
Effective Time are presented to Newco, they shall be cancelled and
exchanged for
the consideration provided for, and in accordance with the
procedures set forth,
in this Article II.
(c) Any portion of the Exchange Fund which remains
unclaimed by the
former holders of Empire Common Stock or Empire Preferred Stock, as
the case may
be, for six months after the
Effective
Time shall be delivered to Newco,
upon
demand of Newco,
and any
former
holders
of Empire
Common
Stock and
Empire
Preferred
Stock shall
thereafter look only to Newco for payment of their claim
for the Empire
Merger
Consideration
for the shares of Empire Common Stock and
Empire Preferred Stock.
(d)
Notwithstanding
anything to the contrary in this
Agreement to
the fullest extent
permitted by Law, none of the Exchange
Agent,
Newco or the
Surviving
Corporation
shall be liable
to a holder of shares of Empire
Common
10
Stock
or
Empire
Preferred
Stock
for any
amount
properly
paid to a public
official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Newco and the
Exchange
Agent
shall be
entitled to deduct and
withhold from the consideration
otherwise payable pursuant to this Agreement to
any
holder of shares of Empire
Common
Stock or Empire
Preferred
Stock
such
amounts as Newco (or any Affiliate
thereof) or the Exchange
Agent are required
to deduct and withhold with respect to the making of such payment
under the Code
or any
provision
of any
applicable
state,
local or foreign
Tax Law. To the
extent
that
amounts
are so
withheld
by Newco or the
Exchange
Agent,
such
withheld
amounts will be treated for all
purposes of this
Agreement as having
been paid to the holder of the shares of Empire Common Stock or
Empire Preferred
Stock,
as the case may be, in respect of whom such
deduction
and
withholding
were made by Newco.
(f) Newco
agrees that from and after the
Effective
Time,
it will
assume and perform any
obligations
of Empire with respect to
registration
of
securities
under Federal or state
securities
laws,
listing
obligations
and
related
obligations that Empire had immediately
prior to the Effective Time to
holders of Empire Common Stock or securities,
options,
warrants or instruments
convertible,
exchangeable
or
exercisable
for Empire Common Stock as if Newco
were Empire and as if those
obligations were with respect to Newco Common Stock
or securities,
options,
warrants or instruments
convertible,
exchangeable or
exercisable
for
Newco's
common
stock.
Empire
represents
and
warrants
to
Transferor
that
such
obligations
will
not
conflict
with
or
prevent
the
consummation of the Registration
Rights
Agreement,
and Empire and Newco agree
that they shall not enter into or become subject to any agreement
that conflicts
with or prevents the consummation of the Registration Rights
Agreement.
Section 2.14 TAX-FREE TREATMENT.
The Parties intend that the Merger
will
meet
the
requirements
of
Section
368(a)
of the Code
and
rules
and
regulations promulgated thereunder, that the Merger and the
Contribution,
taken
together,
will meet the
requirements
described in Section 351 of the Code and
the rules and regulations promulgated thereunder,
and that this Agreement shall
constitute the "plan of reorganization."
Section 2.15
CONTRIBUTION.
Upon the terms and conditions set forth
in this Agreement,
on the Closing Date and immediately
following the Effective
Time, Transferor will convey to Newco or its designee (which
designee shall be a
permitted assignee described in Section 10.6 hereof), and Newco or
such designee
will obtain title to, all of
Transferor's
right,
title and interest in and to
the following,
subject only to the Permitted
Exceptions and subject to Section
5.16 hereof:
(a) the land located in Liberty, New York and described on EXHIBIT
D
hereto
and
commonly
known as the
Grossinger's
Hotel
and Golf
Resort
consisting of approximately 582 acres (the "GROSSINGER'S
PROPERTY");
(b) the land
located in Kiamesha
Lake,
New York and
described on
EXHIBIT
B
hereto,
commonly
known
as the
Concord
Hotel
and
Resort,
consisting of
approximately
163 acres (including the Concord Hotel Site,
the owned portion of the Golf Courses and the Challenger golf
course) (the
"CONCORD OWNED PROPERTY");
11
(c) the land located in Kiamesha
Lake,
New York and
substantially
described
on EXHIBIT B,
hereto and
commonly
known as the
Monster
and
International golf courses (the "GOLF COURSES" and,
collectively with the
Concord Owned Property,
the "CONCORD PROPERTY"),
a portion of which land
is leased by Concord Associates pursuant to the Ground Lease and a
portion
of which land is owned by Concord
Associates
(with the owned
portion of
the Golf Courses being deemed to be included in the definition of
"CONCORD
OWNED PROPERTY");
(d)
all
buildings,
structures
and
improvements
located
on the
Grossinger's Property and the Concord Owned Property,
and (subject to the
terms and provisions of the Ground Lease) on the Golf Courses;
(e) with respect to the Grossinger's
Property and the Concord Owned
Property (collectively,
the "OWNED PROPERTY"), (i) the easements, rights,
privileges and appurtenances belonging thereto, and any abutting
strips or
gores, (ii) any land lying in the bed of any street,
road or avenue, open
or
proposed,
in front of or
adjoining
such
property,
and
(iii)
all
appurtenant easements for ingress, egress, utilities and other
purposes;
(f) the leases, subleases, occupancy agreements, license
agreements,
concession agreements and other tenancy arrangements
(including,
without
limitation,
all
amendments
and
modifications
thereto
and
guarantees
thereof) of space and/or
improvements
at the Owned
Property or the Golf
Courses (collectively, the "LEASES");
(g) all Service
Contracts
which Empire elects to assume at Closing
as more fully provided herein;
(h) the trademarks,
service marks, logos and tradenames (including,
without
limitation,
those listed on EXHIBIT E attached hereto and made a
part hereof)
associated
with the
Grossinger's
Property and the Concord
Property,
provided
that
Transferor
shall retain or shall
license from
Newco,
without
additional
consideration,
the right to use (i) the name
"Concord" in connection with any residential
development
projects at the
Retained
Property
and (ii)
the name
"Concord"
or
"Grossinger's"
for
reasonable
uses
unrelated to hotel,
resort and/or gaming
operations of
Newco or Empire (including,
without limitation,
retail uses) pursuant to
the
license
agreement
attached
as EXHIBIT F hereto
(the
"TRADE
NAME
LICENSE AGREEMENT");
(i)
all
licenses,
franchises,
certificates,
authorizations,
approvals,
variances and permits
issued or approved by any
Governmental
Entity and relating to the development,
operation, ownership, maintenance
and use of the
Grossinger's
Property or the Concord Property or any part
thereof including, without limitation, all applications and/or
filings for
environmental
approvals and consents,
licenses and building permits, and
land use and
subdivision
approvals,
all to the extent
assignable
(the
"LICENSES");
(j)
all
machinery,
equipment,
fixtures,
furnishings
and
other
tangible personal property
(including,
without
limitation,
golf carts,
clubs,
equipment
utilized
in
greens
maintenance
and
other
golfing
12
equipment
situated in or upon or used in connection with the operation or
maintenance of the
Grossinger's
Property or the Concord
Property or any
part
thereof,
and all
replacements
additions
or
accessories
thereto
between the date hereof and the Closing Date
(hereinafter
defined),
but
excluding any personal
property owned by tenants under any Leases and any
other personal property described in EXHIBIT G; and
(k) all architectural plans and specifications (including all
design
drawings
and
concept
plans),
engineering
reports
(structural
and
mechanical), other development plans and site plans and all
environmental,
zoning,
feasibility
and other
reports
relating
to the
condition
and
development of the Grossinger's
Property or the Concord Property,
all to
the extent assignable (all of the foregoing
property,
real, personal and
mixed,
described
in clauses (a) through (k) of this
Section
2.15 being
collectively called the "PROPERTIES").
Section
2.16
ISSUANCE
OF
TRANSFEROR
SHARES;
ASSUMPTION
OF
LIABILITIES.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing and contemporaneous with the
Contribution, Newco shall
issue to
Transferor a total of Eighteen
Million
(18,000,000)
shares of Newco
Common Stock (the "TRANSFEROR SHARES");
PROVIDED,
HOWEVER that if, prior to or
at the Closing,
the number of
outstanding
shares of Empire Common Stock shall
have been
changed
into a different
number of shares or a
different
class by
reason of any stock dividend, subdivision,
reclassification,
recapitalization,
split, reverse split, combination or exchange of shares, or shall
have increased
as a result of the issuance of additional shares of Empire Common
Stock from the
number of shares
outstanding
as of the date hereof (other than any issuance of
Empire
Common
Stock in
connection
with the
payment of
dividends
on or the
conversion of Empire's
Preferred
Stock in accordance with the current terms of
Empire's
Preferred
Stock,
the exercise of employee stock options or warrants,
the conversion of existing
convertible debt in accordance with the terms of the
Indenture,
dated as of July 26, 2004, as of the date hereof, or the issuance
of
Empire
Common
Stock
for cash or in
exchange
for
assets,
contributions
or
services, which issuance for cash, assets,
contributions or services are in the
ordinary course of Empire's gaming and hospitality business
(collectively,
the
"EXCLUDED
SHARES")),
then
the
number
of
Transferor
Shares
shall
be
correspondingly
adjusted
to
reflect
such
stock
dividend,
subdivision,
reclassification,
recapitalization, split, reverse split, combination, exchange
of more shares or other similar
transactions,
or issuance such that Transferor
receives
40% of any newly
issued
shares
that are not
Excluded
Shares.
The
Transferor
Shares will be issued by Newco to
Transferor
at Closing,
free and
clear of all Liens (exclusive of any restrictions imposed or
referred to by this
Agreement or by applicable federal or state licensing and
securities laws).
(b) In
addition,
at the
Closing,
subject to Section 5.23 hereof,
Newco shall (i) assume,
pursuant to an
assumption
agreement in form
mutually
satisfactory to Transferor and Empire (the "ASSUMPTION AGREEMENT"),
or otherwise
satisfy the liabilities and
obligations of Concord
Associates
and/or Sullivan
Resorts under those mortgage loans and the provisions of the
limited partnership
agreement of Concord Associates
relating to Resort Group Investors LLC, in each
case, as more particularly described in Section 3.8 of the
Transferor Disclosure
Schedule and (ii) subject to Section 5.16 hereof,
pay to
Transferor
or to the
ground
lessor
under the Ground
Lease at
Transferor's
direction,
the amount
required to be paid to exercise the purchase option under the
Ground Lease as of
the
Closing
Date
(the
"EMPIRE
PAYMENT
OBLIGATIONS"),
PROVIDED
that,
13
notwithstanding
anything to the
contrary
contained in this
Agreement,
in no
event
shall
Empire be
obligated
to assume or
otherwise
satisfy
any Empire
Payment
Obligations
to the
extent
the
amount
of such
obligations
exceeds
$30,000,000
(and with the Empire
Payment
Obligation
allocated
to the Ground
Lease being deemed to equal the purchase
option price under the Ground Lease as
of the Closing Date). In addition, at Closing, Empire and/or Newco
shall provide
guarantees or such other credit enhancement to the holders of any
such mortgages
in order to cause (i) any personal
guarantees of the current
borrowers and any
outstanding
guarantees
of
such
mortgages
from
any
Affiliates
of
Concord
Associates
and/or Sullivan Resorts to be released and discharged at Closing
(in
each
case,
except to the extent
such
guarantees
survive
the
repayment
or
maturity of such mortgages) and (ii) any deposits or cash
collateral held by any
such lender to be released to Transferor
(it being
understood
and agreed that
none of Empire's or Newco's officers, directors,
stockholders (other than Newco
as a stockholder of Empire) or Affiliates
will be expected to provide
personal
guaranties of any nature).
(c) In the event Newco is required under applicable law to deduct
or
withhold any Taxes with respect to the delivery of the Transferor
Shares,
Newco
shall be entitled
to receive
from
Transferor
a payment of money in an amount
equal to such required deduction or withholding. To the extent that
such amounts
are paid by Transferor to Newco,
Newco shall
promptly
remit such funds to the
relevant Tax
authority in
accordance
with
applicable
Law and shall
provide
Transferor with evidence of such payment.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR
Transferor
hereby
represents
and
warrants
to Empire,
Newco and
Merger Sub as follows:
Section
3.1
DUE
FORMATION,
EXISTENCE,
ETC.
Transferor
is duly
formed,
validly existing, and in good standing, and has the requisite power
and
authority to own, lease,
and operate its properties as it is now owned,
leased
and operated.
Transferor has full power and authority and has taken all limited
partnership
and/or limited
liability
company action
necessary to execute and
deliver this Agreement and to perform the
obligations of Transferor
hereunder,
and all limited partnership and/or limited liability company action
necessary to
authorize
the
person(s)
executing
this
Agreement on behalf of Transferor to
execute
and
deliver
this
Agreement
and
all
documents
to be
executed
by
Transferor pursuant to this Agreement on behalf of Transferor and
to perform the
obligations
of
Transferor
hereunder.
This
Agreement
is a valid and binding
agreement of Transferor
enforceable
against
Transferor in accordance with its
terms, subject to bankruptcy,
insolvency, fraudulent transfer,
reorganization,
moratorium
and similar Laws of general
applicability
relating to or affecting
creditors' rights and to general equity
principles.
The execution and delivery
by Transferor of, and the
performance
and
compliance by Transferor
with, the
terms and provisions of this Agreement do not (a) violate any term,
condition or
provision of Transferor's organizational or governing documents;
(b) violate any
judgment, order, injunction,
decree, regulation or ruling of any court or other
Governmental
Entity to which Transferor is subject;
or (c) require any consent
or approval
under,
result in any breach of or any loss of any
benefit
under,
give rise to other's right of termination, vesting, amendment,
acceleration, or
14
cancellation
of, result in the creation of any Lien on the Properties
pursuant
to, or cause a violation of any
agreement,
promissory
note,
bond,
mortgage,
indenture,
contract,
lease,
license, or any other instrument of obligation to
which Transferor is a party or by which Transferor is bound,
subject,
however,
to the receipt of the consent of (i) subject to section 5.23,
each holder (each
"LENDER") of a mortgage that is part of the Empire
Payment
Obligations
to the
transfer of the applicable
Property,
the assumption of any such Empire Payment
Obligations
by Newco and the
releases as
described
in Section
2.16(b)
(the
"LENDER
CONSENTS") and (ii) such other consents as are set forth in Section
3.3
of the
Transferor
Disclosure
Schedule and except that, in the case of clauses
(b) or (c) above, for any breach, violation, termination, default,
acceleration,
creation or change that would not, individually or in the
aggregate,
reasonably
be expected to have a Material Adverse Effect on Transferor.
Section 3.2 PERMITS AND
APPROVALS.
Transferor has (a) all material
zoning
and
governmental
approvals
and
all
certificates
of
occupancy,
underwriters
certificates,
building,
housing,
safety,
fire,
health,
environmental
and
other
similar
approvals,
and all other
material
permits
necessary to maintain, operate and use the Properties in the manner
in which the
same are presently being maintained,
operated and used, and (b) with respect to
the site plan for the Concord
Property
(the "SITE PLAN")
described in Section
3.2 of the Transferor Disclosure Schedule,
obtained the governmental
approvals
described in Section 3.2 of the Transferor
Disclosure
Schedule (the "SITE PLAN
APPROVALS"), and, in each case, all of such items have been issued
and are valid
and in
full
force
and
effect.
All
of
the
foregoing
are
assignable
and
transferable to Newco without the consent or approval of any person
or entity or
the payment of any material fee or charge (it being
understood
and agreed that
Transferor
shall pay any such fees or charges at
Closing).
Transferor
has no
Knowledge of any existing or threatened facts or circumstances
that would cause
the
Site
Plan
Approvals
to be
attacked,
revoked,
rescinded,
impaired
or
otherwise
rendered
ineffective
or would result in the
inability of Empire or
Newco,
under
applicable
law,
to use the Concord
Hotel Site for
purposes of
development and construction of a Resort Facility.
For purposes of this Section
3.2
"threatened
facts
or
circumstances"
shall
mean
a
threat
from
any
Governmental
Entity,
or a material,
written threat from an adjacent
property
owner or other
party
who has
standing
to
attack
or
oppose
the Site
Plan
Approvals.
Transferor
has
not
received
any
written
notice
revoking
any
certificate of occupancy for the improvements
located at the Properties,
which
revocation has not been cured.
Transferor
has no Knowledge of any
alterations
performed or alteration applications on file which would require an
amendment or
any certificate of occupancy.
Section 3.3 CONSENTS
AND
APPROVAL.
Other than Lender
Consent and
such other consents as are set forth in Section 3.3 of the
Transferor Disclosure
Schedule, no consent,
waiver,
authorization,
permit, or approval by any third
party or governmental
entity which heretofore has not been obtained is required
in connection with the execution and delivery by Transferor of this
Agreement or
the
performance
by Transferor of the
obligations
to be performed
under this
Agreement by Transferor.
Section
3.4 GROUND
LEASE.
The
Ground
Lease is in full force and
effect,
and no
material
rights
or
interests
of
Transferor
as the
tenant
thereunder
have been
waived or
released
by
Transferor,
including,
without
limitation,
the
tenant's
purchase
option
contained
therein.
Neither
the
Transferor nor, to Transferor's Knowledge, the ground lessor is in
default under
the Ground Lease nor has any event occurred that with the giving of
notice,
the
passage of time or both would give rise to a default thereunder.
15
Section
3.5
LICENSES.
Section
3.5 of the
Transferor
Disclosure
Schedule is a true,
correct and complete list of each of the material Licenses,
as amended and in effect, (b) each of the material Licenses is in
full force and
effect,
and (c)
Transferor
does not know of, and neither
Transferor
nor any
agent or employee of
Transferor
has received
notice of, any
intention on the
part of the issuing authority to cancel,
suspend or modify any of such Licenses
or
to
take
any
action
or
institute
any
proceedings
to
effect
such
a
cancellation, suspension or modification. The Licenses identified
in Section 3.5
of
the
Transferor
Disclosure
Schedule
comprise
all
licenses,
franchises,
certifications,
authorizations,
approvals
and
permits
required
by
any
governmental
or
quasi-governmental
authority for the use and operation of the
Properties as the same are presently
used and operated,
and the Properties are
operated and occupied in compliance
with each of the Licenses,
except for such
noncompliance that would not cause a Material Adverse Effect.
Section 3.6 LEASES.
The Leases,
which are set forth in Section 3.6
of the
Transferor
Disclosure
Schedule
are all of the
real
property
leases
affecting the Properties as of the date hereof. Transferor hereby
represents and
warrants
that all
Leases
are in full
force
and
effect,
and no
rights
or
interests of the landlord thereunder have been waived or released
by Transferor.
Neither Transferor,
as landlord, nor (to Transferor's
Knowledge) any tenant is
in default under any Lease.
Section
3.7
SERVICE
CONTRACTS.
Section
3.7
of
the
Transferor
Disclosure
Schedule contains a list of all of the Service
Contracts
affecting
the Properties, including, without limitation, the operation of the
golf courses
thereon,
and
Empire
has
been
provided
with a copy of
each of the
Service
Contracts,
and amendments and modifications
thereof, and such copies are true,
correct and complete in all
material
respects.
Transferor
is not in material
default
and has not
received
any written
notice of default
under any of the
Service
Contracts that has not been cured, and all of the Service Contracts
are
in full force and effect and are terminable
without material cost to Transferor
upon not more than thirty (30) days' notice thereunder.
Section 3.8 EMPIRE
PAYMENT
OBLIGATIONS.
Empire has been
provided
with
copies of each of the
documents
securing
and/or
evidencing
the Empire
Payment
Obligations
and listed in
Section
3.8 of the
Transferor
Disclosure
Schedule,
and all amendments
and
modifications
thereof,
and such copies are
true,
correct and complete in all respects,
there are no defaults under any of
such
documents
that have not been cured,
and such documents are in full force
and effect.
Section 3.9 TITLE TO PROPERTIES. Transferor owns fee simple title
to
the
Grossinger's
Property and to the Concord Owned
Property free and clear of
Liens, other than the Permitted Exceptions.
Section 3.10 TITLE TO GROUND
LEASE.
Transferor
has good and valid
leasehold title to the portion of the Golf Courses leased by
Transferor pursuant
to the
Ground
Lease,
free
and
clear of
Liens,
other
than
the
Permitted
Exceptions.
16
Section 3.11 TITLE TO LICENSES AND SERVICE
CONTRACTS.
The interest
of
Transferor
in the Service
Contracts
and Licenses is free and clear of all
Liens and has not been
assigned to any other
Person,
except
with
respect to
Permitted Exceptions.
Section 3.12 NECESSARY PROPERTY.
The Properties
(together with any
rights of Newco under the REA)
represent all of the real and personal
property
necessary in
connection
with the use,
operation and
maintenance
of the Golf
Courses as currently used,
operated and maintained.
To Transferor's
Knowledge
and subject to the provisions of SECTION 5.16 hereof,
the Retained
Property is
not necessary for the use, operation,
maintenance or compliance with applicable
Law of the
Properties
as
currently
used or as
contemplated
to be used as a
Resort
Facility
and the
lack of
conveyance
by
Transferor
of the
Retained
Property to Newco will not otherwise result in a Material Adverse
Effect.
Section
3.13 NO TENANTS OR
OCCUPANTS.
Except for
Transferor
and
tenants,
or their permitted
subtenants or other occupants or assignees,
under
the Leases,
there are no persons in possession or occupancy of the
Properties,
nor are there any persons who have
possessory
or other
occupancy
rights with
respect to the Properties.
Section 3.14
COMPLIANCE
WITH LAWS.
Except as described on Section
3.14 to the Transferor
Disclosure
Schedule,
the Properties are presently used
and
operated
in
compliance
in all
material
respects
with
(a)
all
legal
requirements
applicable to the Properties ("LEGAL
REQUIREMENTS"),
and (b) all
Permitted Exceptions.
Section 3.15 LITIGATION.
Except as set forth in Section 3.15 of the
Transferor
Disclosure Schedule,
there are no claims, causes of action or other
litigation or proceedings pending or, to Transferor's Knowledge,
threatened with
respect to
Transferor.
Except as set forth in Section
3.15 of the
Transferor
Disclosure
Schedule,
there are no material
claims,
causes of action or other
litigation or proceedings pending or, to Transferor's Knowledge,
threatened with
respect to the Properties,
except
possible
claims for workers'
compensation,
personal injury or property damage which are covered by insurance
maintained by
Transferor.
Section
3.16
CONDEMNATION.
Except as set forth in Section 3.16 of
the Transferor Disclosure Schedule, there is no existing, pending
or to the best
of Transferor's Knowledge, threatened (a) condemnation of all or
any part of the
Properties,
(b)
widening,
change
of grade or
limitation
on use of
streets
abutting the Properties,
(c) special Tax or assessment to be levied against the
Properties,
(d) change in the zoning
classification of the Properties,
or (e)
change in the tax assessment of the Properties.
Section
3.17
PURCHASE
OPTIONS.
Transferor
has not
granted
any
purchase
options or options to lease with
respect to all or any portion of the
Properties.
Section 3.18 ENVIRONMENTAL
MATTERS.
Except as set forth in Section
3.18 of the Transferor
Disclosure
Schedule (including in the reports and other
documents
listed therein) and, to Transferor's
Knowledge,
(a) there currently
are, and have been,
no Hazardous
Materials (as defined
below) or
underground
storage tanks located in, on or under the
Properties,
(b) Hazardous
Materials
17
have not been released into the environment,
or discharged,
placed or disposed
of
at,
on
or
under
the
Properties
in
violation
of
Environmental
Legal
Requirements
(as
defined
below)
or
which
would
require
remediation
or
notification under Environmental Legal Requirements, (c) the
Properties have not
been used as a landfill,
including
without
limitation
for
debris,
waste or
Hazardous Materials, (d) Transferor has not received any written
notice or other
written
communication from any person relating to actual or potential
liability
pursuant to, or violation of,
Environmental Legal Requirements at or due to the
Properties,
(e) the
Properties
currently
comply,
and
have
complied,
with
applicable
Environmental Legal Requirements in all respects, and (f)
Transferor
has
provided
to
Empire
in
writing
all
material
information
relating
to
environmental
conditions
in,
on,
under
or
from
the
Properties
known
to
Transferor
or contained in
Transferor's
files or records,
including
but not
limited to any such
reports
relating to Hazardous
Materials
in, on, under or
migrating to or from the Properties
and/or the
environmental
condition of the
Properties.
For purposes of this SECTION 3.18,
the term
"HAZARDOUS
MATERIALS"
shall include without limitation (a) asbestos or
asbestos-containing
materials,
polychlorinated
biphenyls,
petroleum
or
petroleum
products
or
byproducts,
flammable explosives,
radioactive materials, Lead Based Paint, mold, infectious
substances or raw
materials
which include
hazardous
constituents
or (b) any
hazardous,
toxic
or
harmful
substances,
wastes,
materials,
pollutants,
contaminants,
or any other
substances or materials
which are regulated by, or
may form the basis of liability under, any Environmental Legal
Requirement.
For purposes of this SECTION
3.18,
the term
"ENVIRONMENTAL
LEGAL
REQUIREMENTS"
shall
mean all
federal,
state
and
local
Legal
Requirements
relating to contamination or the protection of human health and the
environment,
including,
without
limitation,
the
Comprehensive
Environmental
Response,
Compensation
and
Liability
Act of 1980 (42
U.S.C.
ss.
9601 ET
SEQ.),
the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901
ET SEQ.), the
Federal Water Pollution
Control Act (33 U.S.C. ss. 1251 ET SEQ.), the Clean Air
Act
(42
U.S.C.
ss.
7401
ET
SEQ.),
the
Emergency
Planning
and
Community-Right-to-Know
Act (42
U.S.C.
ss.
11001 ET
SEQ.),
the
Endangered
Species Act (16 U.S.C. ss. 1531 ET SEQ.),
the Toxic Substances
Control Act (15
U.S.C. ss. 2601 ET SEQ.), the Occupational
Safety and Health Act (29 U.S.C. ss.
651 ET SEQ.), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 ET
SEQ.),
and those relating to paint containing more than .05% lead by dry
weight
("LEAD BASED PAINT") and the regulations
promulgated pursuant to said laws, all
as amended from time to time.
Section 3.19
INSURANCE.
Section 3.19 of the Transferor
Disclosure
Schedule is a list of all insurance policies
presently
affording coverage with
respect to the Properties, and the information contained thereon is
complete and
accurate in all material respects as of the date hereof.
Section 3.20 BROKERS AND FINDERS.
Neither Transferor nor any of its
officers,
directors or employees
has employed any broker or finder or incurred
any liability for any brokerage fees,
commissions or finders fees in connection
with the
transactions
contemplated in this Agreement.
Section 3.21 TAXES. (a) Except as would not,
individually or in the
aggregate,
reasonably
be
expected
to
have
a
Material
Adverse
Effect
on
Transferor,
(i) each
Transferor has duly and timely (subject to any extensions
18
permitted by applicable law) filed all material Tax Returns
required to be filed
by it and all such Tax Returns are true,
complete
and accurate in all material
respects,
(ii) each Transferor has paid all material Taxes that are required
to
be paid by it or that it is
obligated
to withhold
from
amounts
owing to any
employee,
creditor
or
third
party,
(iii)
there
are
no
pending
audits,
examinations,
investigations,
deficiencies,
claims
or other
proceedings
in
respect of material Taxes relating to either Transferor, (iv) there
are no Liens
for Taxes on any of the
Properties,
except for Taxes not yet due and
payable,
(v) neither
Transferor has made any election,
or is required,
to treat any of
the
Properties
owned by it as owned by another
Person for Tax purposes,
(vi)
none of the Properties
directly or indirectly
secures any debt the interest on
which is
tax-exempt
under
Section
103(a) of the Code,
and (vii) none of the
Properties is "tax-exempt use property"
within the meaning of Section 168(h) of
the Code.
(b)
Notwithstanding
the
foregoing,
the
representations
and
warranties set forth in SECTION
3.21(a)(i),
(ii) and (iii) hereof shall not be
applicable to the extent that the Properties cannot be made subject
to Tax liens
and Newco
(or its
Affiliates)
cannot be held
liable
for Taxes
relating
to
matters constituting any breach of such representations and
warranties.
(c)
Neither
Transferor
has taken any
action or knows of any fact
that is
reasonably
likely to
prevent
(i) the
Merger
from
qualifying
as a
"reorganization"
within the
meaning of Section
368(a) of the Code or (ii) the
Merger and the
Contribution,
taken together,
from qualifying as a transaction
described in Section 351 of the Code.
Section 3.22 EMPLOYEE BENEFITS
(a) Section 3.22 of the Transferor
Disclosure
Schedule
contains a
complete and accurate list of all
operations and
maintenance
employees at the
Properties as of the date hereof (the "TRANSFERRED EMPLOYEES"),
their positions,
their
annual/weekly/hourly rate of compensation (as applicable),
maximum bonus
opportunity (if any) and benefits
received as of the date hereof.
Section 3.22
of the Transferor
Disclosure
Schedule lists each employee benefit plan (within
the meaning of Section 3(3) of ERISA), program or arrangement
providing benefits
to any
Transferred
Employee or any
beneficiary
or dependent
thereof that is
sponsored
or
maintained
by any
Transferor
or
any
ERISA
Affiliate
of any
Transferor or to which any
Transferor or any ERISA
Affiliate of any Transferor
contributes or is obligated to contribute.
(b) No Transferor has any liability under Title IV of ERISA
(whether
absolute or contingent)
with respect to any
"single-employer
plan" within the
meaning of
Section
4001(a)(15)
of ERISA or
"multiemployer
plan"
within the
meaning
of section
3(37) of ERISA.
No
Transferor
or any
subsidiary
of any
Transferor
is subject to any lien or has
provided,
or is required to provide,
security to any "employee
benefit
pension plan" (as defined in Section 3(2) of
ERISA)
or
single-employer
plan of an
ERISA
Affiliate
pursuant
to
Section
401(a)(29) of the Code.
(c)
Transferor
is
not
a
party
to
any
collective
bargaining
agreement, contract, or other agreement with any labor union with
respect to any
Transferred
Employer.
No Transferred Employee is a party to any (i) individual
contract, written or oral, with Transferor for the employment of
the Transferred
Employee or the provision of severance,
retention or change of control benefits
19
or (ii)
confidentiality,
non-solicitation
or
non-competition
agreement with
Transferor.
Each Transferor is in compliance in all material
respects with all
applicable
legal
requirements
relating to the
employment of the
Transferred
Employees, including with respect to employment discrimination,
equal pay, wages
and hours,
and there are no complaints,
charges or claims against
Transferors
pending or, to the Knowledge of the Transferors, threatened in
respect thereof.
Section
3.23 WATER
CAPACITY.
Transferor
has no
Knowledge of any
existing or threatened
facts or circumstances
that would materially
impair or
prevent
adequate water capacity from being
available to the Concord Hotel Site
upon
completion of the
improvements
thereon as contemplated by the Site Plan,
either from Kiamesha
Artesian
Spring Water Company
and/or from an alternative
source readily available at or adjacent to the Concord Hotel Site.
Section 3.24 TAX OPINION.
Transferor
has no Knowledge of any facts
or circumstances that would cause Wachtell,
Lipton, Rosen & Katz not to deliver
the
tax
opinion
described
in
Section
7.2(h)
hereof
in a form
reasonably
satisfactory to Transferor.
Section 3.25
DISCLAIMER.
Empire,
Newco and Merger Sub acknowledge
and agree that, except as set forth in this Agreement,
Transferor has not made,
does
not make and
specifically
negates
and
disclaims
any
representations,
warranties,
promises,
covenants,
agreements
or
guaranties
of any
kind
or
character
whatsoever,
whether
express or implied,
oral or
written,
past or
present, of, as to, concerning or with respect to the Properties.
Additionally,
no person acting on behalf of Transferor is authorized to make, and
by execution
hereof Empire acknowledges that no person has made, on behalf of
Transferor, any
representation,
agreement,
statement,
warranty, guaranty or promise regarding
the
Properties
or
the
transactions
contemplated
herein
other
than
the
representations,
agreements,
statements,
warranties,
guaranties and promises
contained
in
this
Agreement;
and no
such
other
representation,
warranty,
agreement,
guaranty, statement or promise, if any, made by any person acting
on
behalf
of
Transferor
shall
be
valid
or
binding
upon
Transferor
unless
specifically
set forth herein.
Empire further
acknowledges and agrees that to
the extent
permitted by law, the sale of the property as provided for herein
is
made on an "as is"
condition
and basis
with all
faults
except as
expressly
provided in this Agreement.
The
representations
and
warranties
contained in this Article III
shall not survive the Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF EMPIRE
Empire hereby represents and warrants to Transferor as follows:
Section 4.1 ORGANIZATION,
GOOD STANDING AND QUALIFICATION.
Each of
Empire, Newco and Merger Sub is a legal entity duly organized,
validly existing
and
in
good
standing
under
the
laws
of
its
respective
jurisdiction
of
organization
and has all requisite
corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on
its business as
presently conducted and is qualified to do business and is in good
standing as a
20
foreign
corporation
in each
jurisdiction
where
the
ownership,
leasing
or
operation of its assets or properties
or conduct of its business
requires such
qualification
except where such
failures to be so qualified,
licensed,
or in
good standing would not have a Material Adverse Effect on Empire.
Section 4.2 CAPITAL
STRUCTURE.
(a) The authorized capital stock of
Empire consists of 75,000,000
shares of common stock, par value $0.01 per share
(the
"EMPIRE
COMMON
STOCK"),
of
which,
as of the
date of this
Agreement,
26,092,315 shares are issued and outstanding,
and 5,000,000 shares of preferred
stock,
par value $0.01 per share (the "PREFERRED
STOCK"),
of which, as of the
date of this Agreement, 1,774,954 shares are outstanding. All of
the outstanding
shares of Empire Common Stock and Preferred
Stock have been duly authorized and
are validly issued, fully paid and nonassessable.
As of the date hereof, Empire
has no shares of Empire Common Stock or Preferred
Stock
reserved for issuance,
except as set forth on Section 4.2 of the Empire
Disclosure
Schedule.
Section
4.2 of the Empire
Disclosure
Schedule
contains a true and complete list as of
March 1, 2005 of (i) the number of
outstanding
options to
purchase
shares of
empire
Common Stock (each an "OPTION"),
the exercise
price of all Options and
number of shares of Empire Common Stock issuable at such exercise
price and (ii)
the number of
outstanding
rights to
receive,
or rights the value of which is
determined by reference to, shares of Empire Common Stock, the date
of grant and
number of shares of Empire Common Stock subject thereto. Each of
the outstanding
shares of capital stock or other securities of each of Empire's
Subsidiaries is
duly
authorized,
validly
issued,
fully paid and
nonassessable
and owned by
Empire or by a direct or indirect
wholly-owned
Subsidiary of Empire,
free and
clear of any Lien.
Each of the
Transferor
Shares
when issued will be validly
issued,
fully paid and
non-assessable,
free and clear of any Liens. Except as
set forth in
Section
4.2 of the
Empire
Disclosure
Schedule,
as of the date
hereof,
there are no
preemptive,
registration
or other
outstanding
rights,
options,
warrants,
conversion rights,
stock appreciation
rights,
redemption
rights,
repurchase
rights,
agreements,
arrangements,
calls,
commitments or
rights of any kind that obligate Empire or any of its
Subsidiaries to register,
issue or sell any shares of capital
stock or other
securities of Empire or any
of its Subsidiaries or any securities or obligations convertible or
exchangeable
into or
exercisable
for,
or giving
any
Person a right to
subscribe
for or
acquire, any securities of Empire or any of its Subsidiaries,
and no securities
or obligations evidencing such rights are authorized, issued or
outstanding.
(b)
Except as set forth in
Section
4.2 of the
Empire
Disclosure
Schedule,
as of the
date
hereof
(i)
there
are no
outstanding
contractual
obligations
of
Empire
or any of its
Subsidiaries
to
repurchase,
redeem or
otherwise
acquire
any capital
stock (or
options to acquire any such
capital
stock) or other security or equity interest of Empire or its
Subsidiaries,
and
(ii)
Empire does not have
outstanding
any bonds,
debentures,
notes or other
obligations the holders of which have the right to vote (or
convertible
into or
exercisable
for securities
having the right to vote) with the
stockholders of
Empire on any matter.
(c) The
authorized
capital stock of Newco consists of 1,000 shares
of common stock, par value $0.01 per share (the "NEWCO COMMON
STOCK"), of which,
as of the date of this Agreement,
100 shares are issued and outstanding,
and 0
shares of preferred stock, par value $0.01 per share of which, as
of the date of
this Agreement,
no shares are
outstanding.
All of the
outstanding
shares of
Newco Common Stock have been duly authorized and are validly
issued,
fully paid
and
nonassessable.
As of the date hereof,
Newco has no shares of Newco Common
21
Stock or preferred stock reserved for issuance. As of the date
hereof, there are
no preemptive,
registration or other
outstanding
rights,
options,
warrants,
conversion rights,
stock
appreciation
rights,
redemption rights,
repurchase
rights, agreements,
arrangements, calls, commitments or rights of any kind that
obligate Newco,
or any of its Affiliates to register,
issue or sell any shares
of capital stock or other
securities of Newco or any of its Subsidiaries or any
securities or obligations
convertible or exchangeable
into or exercisable for,
or giving any Person a right to
subscribe
for or acquire,
any
securities
of
Newco or any of its
Subsidiaries,
and no securities or obligations
evidencing
such rights are authorized, issued or outstanding.
(d) The
authorized
capital
stock of Merger Sub
consists of 1,000
shares of common
stock,
par value
$0.01 per share
(the
"MERGER
SUB
COMMON
STOCK"), of which, as of the date of this Agreement, 1,000 shares
are issued and
outstanding,
and 0 shares of
preferred
stock,
par value $0.01 per share,
of
which, as of the date of this Agreement,
no shares are outstanding.
All of the
outstanding
shares of Merger Sub Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable.
As of the date hereof, Merger Sub
has no shares
of Merger
Sub
Common
Stock or
preferred
stock
reserved
for
issuance. As of the date hereof, there are no preemptive,
registration or other
outstanding rights,
options,
warrants,
conversion rights,
stock appreciation
rights, redemption rights, repurchase rights, agreements,
arrangements,
calls,
commitments
or
rights
of any
kind
that
obligate
Merger
Sub or any of its
Affiliates
to
register,
issue or sell any
shares of
capital
stock or other
securities
of
Merger
Sub
or any of its
Subsidiaries
or any
securities
or
obligations
convertible or exchangeable
into or exercisable for, or giving any
Person a right to subscribe for or acquire,
any securities of Merger Sub or any
of its Subsidiaries, and no securities or obligations evidencing
such rights are
authorized, issued or outstanding.
Section 4.3 CORPORATE AUTHORITY;
APPROVAL.
(a) Empire,
Newco, and
Merger Sub have all requisite
corporate
power and authority and have taken all
corporate
action
necessary
in order to execute,
deliver
and
perform
their
obligations under this Agreement,
subject only to adoption of this Agreement by
the vote of holders of a majority
of the
outstanding
shares of Empire
Common
Stock (such affirmative vote, the "EMPIRE REQUISITE VOTE"). The
Empire Requisite
Vote is the only vote of the holders of any class or series of
capital
stock of
Empire
necessary
to
adopt,
approve
or
authorize
this
Agreement
and
the
transactions
contemplated
hereby.
This
Agreement
is
a
valid
and
binding
agreement of Empire, Newco and Merger Sub, enforceable against
Empire, Newco and
Merger Sub in
accordance
with its terms,
subject to
bankruptcy,
insolvency,
fraudulent
transfer,
reorganization,
moratorium
and similar
Laws of general
applicability
relating to or affecting
creditors' rights and to general equity
principles.
(b) Subject to SECTION 5.10 hereof, the Board of Directors of
Empire
has (i) by the
affirmative
vote of all
directors
voting,
duly approved this
Agreement,
the Option
Agreement,
the Transactions and the other
transactions
contemplated
hereby,
including
for
purposes of Section
203 of the
Delaware
General Corporate Law; (ii) determined that this Agreement, the
Transactions and
the
other
transactions
contemplated
hereby
are
advisable
and in the
best
interests of the holders of shares of Empire
Common
Stock;
(iii)
resolved to
recommend
approval of this
Agreement
and the
Transactions
to the holders of
shares of
Empire
Common
Stock;
and (iv)
directed
that
this
Agreement
be
submitted to the holders of shares of Empire Common Stock for their
adoption.
22
Section 4.4 GOVERNMENTAL FILINGS; NO VIOLATIONS;
CERTAIN CONTRACTS,
ETC. (a) Other than the reports, filings,
registrations,
consents,
approvals,
permits,
authorizations
and/or
notices set forth on Section 4.4 of the Empire
Disclosure
Schedule,
no notices,
reports or other
filings are required to be
made
by
Empire
or
any
of
its
Affiliates
with,
nor
are
any
consents,
registrations,
approvals,
permits or authorizations required to be obtained by
Empire or any of its Affiliates from, any governmental or
regulatory
authority,
agency,
commission,
body,
court
or
other
governmental
enti
