GENERAL MEMORANDUM OF UNDERSTANDING
ALPHA ST. REGIS, INC., a Delaware corporation qualified to do business
in New York ("ASR") and CATSKILL DEVELOPMENT, L.L.C., a New York limited
liability company ("Catskill") have entered into this Memorandum of
Understanding this 1st day of December, 1995, for purposes of preliminarily
setting forth their agreement to jointly create a New York limited liability
company to be known as Mohawk Management, LLC, or other mutually acceptable name
(hereinafter referred to as "Casino") to manage and operate a gaming casino on
behalf of the Mohawk Indian Nation to be located on a portion of certain real
property located just outside of Monticello, Xxxxxxxx County, New York, on which
a harness racing facility is located known as "Monticello Raceway". Catskill,
anticipates purchasing Monticello Raceway no later than June 3, 1996.
After the execution of this Memorandum of Understanding, ASR and
Catskill will jointly form Casino and in good faith negotiate the terms and
conditions of the operating Agreement of Casino which terms and conditions will
not be inconsistent with this General Memorandum of Understanding. Catskill and
ASR will each own an undivided fifty percent (50%) membership interest in
Casino. Xxxxxx will have one class of member and two members, ASR and Catskill.
The affirmative vote of ASR and Catskill will be required for the execution or
extension of any Casino Management Contract with the St. Regis Mohawk Tribe for
a casino to be located at Monticello Raceway. Thereafter, ASR will manage and
operate the casino on behalf of Casino in accordance with the Casino Management
Contract and all applicable laws. ASR will perform or cause to be performed all
obligations required under any contracts Casino obtains and will prepare all
operating budgets and create and maintain all required financial, operating, and
accounting records. Xxxxxx will utilize accountants agreed to by both ASR and
Catskill.
ASR has a relationship with the St. Regis Mohawk Tribe ("Tribe"). The
Tribe is interested in owning and operating a casino at Monticello Raceway. Both
ASR and Catskill will negotiate with the Tribe for a multi-year Casino
Management Contract, which will provide for a management fee to Casino, and
advise the Tribe in obtaining necessary regulatory approvals from the Bureau of
Indian Affairs, National Indian Gaming Commission, and other agencies of the
Department of Interior and the State of New York ("Regulatory Approval") to
permit the Tribe to own and operate a casino at Monticello Raceway. Negotiations
with the Tribe are underway but not final, and Regulatory Approval has not been
obtained for the operation of a casino at Monticello Raceway. If Casino
successfully negotiates a Casino Management Contract with the Tribe, and the
Tribe obtains Regulatory Approval, Catskill will negotiate in good faith an
agreement to convey any necessary real property required for the proposed casino
to the United States Government to be held in trust for
the Tribe's use for Class II and Class III gaming. It is presently anticipated
that this conveyance will be of approximately ten to twenty acres, in the
aggregate, adjoining the existing raceway facilities. The size of the parcel and
the terms of any such conveyance shall conform to the reasonable requirements of
the United States Department of the Interior and its agencies and shall be for
consideration and on terms and conditions reasonably satisfactory to Catskill.
Both Catskill and ASR will advise the Tribe in obtaining financing for
the construction of the proposed casino, and financing necessary for the
purchase or lease of furnishings and equipment for the casino as well as
financing required for pre-opening activities and working capital. Any Casino
Management Contract reached with the Tribe for the management of a casino at
Monticello Raceway by either of the parties or their related or affiliated
business organizations will be with Casino.
It is acknowledged hereby that ASR will be required to provide
management, supervisory, support and all other services (the "Service") in the
performance of Casino's obligations under any casino Management Contract. It is
further acknowledged hereby that ASR will be entitled to be paid a reasonable
fee for performing the Service, but no greater than is customarily paid in the
gaming industry for the same or similar services. It is the intent of the
parties hereto, to recover the costs of the Service directly from the gross
revenue of the casino operations as a cost of operation on the basis of a
service fee, not to exceed two percent (2%) of the gross win (the "Service
Fee"). Catskill may cause Casino to request proposals for the performance of the
Service from first class casino operators (such as Harrahs). In the event any
such operator submits a proposal to perform the Service for a price more
favorable to Casino than provided herein and ASR does not elect to perform the
Service for the price proposed within thirty (30) days of receipt of the
proposal, Catskill may cause Casino to contract with any such qualified operator
to perform the Service at a price and on terms and conditions satisfactory to
Catskill and ASR. Assuming ASR provides the Service: either (a) the Service Fee
will be deducted and paid from gross casino revenues and will not be deducted as
part of the management fee received by Casino under the Casino Management
Contract, or (b) in the event the Service Fee is not paid from gross revenue,
through no fault of ASR, then ASR will be paid ten percent (10%) of the fee
received under the Casino Management Contract (but in no event will such amount
be greater than either two percent (2%) of the gross win or the proposal amount
ASR elected to receive, whichever is less) for its performance of the service.
For example, if the fee received under the casino Management Contract is thirty
percent (30%), the Service Fee shall be three percent (3%), but such amount will
not be greater than either two percent (2%) of the gross win or the proposal
amount ASR elected to receive, whichever is less.
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The planning and development of all facilities at Monticello Raceway,
including the casino, will be Catskill's responsibility and shall be
accomplished under a contract between Catskill and Monticello Raceway
Development Company,, L.L.C. ("MRD"). Catskill shall cause MRD to enter into an
agreement with ASR on terms and conditions consistent with gaming industry
standards and negotiated in good faith whereby ASR shall provide technical
services for the planning and programing of the casino set-up and operations to
MRD at a fee that is consistent with technical service fees charged for similar
services in the gaming industry. Such fee shall only be earned in the event a
casino at Monticello Raceway for the Tribe receives Regulatory Approval by
December 31, 1998. Any technical service fees earned by ASR for performing the
technical services pursuant to any said agreement with MRD, will be paid by MRD
in connection with the development of the casino and related facilities and in
accordance with an approved development budget and payment schedule as provided
in the contract between Catskill and MRD; provided, however, no such payments
will be made unless said payments are made to MRD. The technical services fees
earned, but not paid, hereunder will accrue interest at one percent (1%) per
month until paid. In the event ASR and MRD are unable to agree upon the terms,
conditions or technical service fees to be charged, MRD and ASR shall submit to
binding arbitration on these issues for determination of reasonable terms,
conditions and fees consistent with gaming industry standards.
ASR and Catskill will develop a mutually acceptable budget for the soft
costs related to the start-up of Casino and the preliminary planning and other
activities related to establishing the Tribe's Casino at Monticello Raceway
("Soft Cost Budget"). Once the Soft Cost Budget has been established and
mutually approved, ASR and Catskill agree to fund a maximum amount of operating
capital not to exceed $2,117,803.00 on a pro rata basis for Casino. ASR has
previously funded $19,789.00 and Catskill has previously funded $19,789.00 of
the required operating capital leaving a balance of $1,078,225.00 to be funded
on a pro rata basis. Upon execution of this Memorandum of Understanding and
approval of the Soft Cost Budget, ASR and Catskill shall fund thirty-three
percent (33%) of the balance set forth above. After funding thirty-three percent
(33%) of the balance or after any subsequent funding of a portion of the then
remaining balance, no further funding will be required unless and until Catskill
has furnished ASR an accounting for amounts previously funded and has notified
ASR of amounts funded under the Soft Cost Budget. All funds will be administered
by Catskill and will be expended in a manner consistent with approved budgets.
Any additional capital required by casino in excess of the amount set forth
above will be obtained from mutually acceptable outside financing sources on
terms satisfactory to both ASR and Catskill. Any modifications to any budget or
increases in the amount of operating capital to be funded will require the
written approval of both ASR and Catskill.
Profits derived from the Casino Management Contract will be split on an
equal basis, fifty percent (50%) each between ASR and Catskill,
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after deduction of the ministerial and accounting expenses incurred by Casino,
Service Fees, any expenses approved by ASR and Catskill and advanced by ASR or
Catskill which are not reimbursed under the terms of any Casino Management
Agreement, and any non-recovered costs and expenses incurred by either Catskill
or ASR or their affiliates in connection with the ownership or the operation of
the casino, provided both Catskill and ASR approve such costs, as well as any
payments to any third parties assisting ASR, Catskill, or Casino with respect to
the proposed casino operations at Monticello Raceway, provided such payment(s)
are mutually approved by both ASR and Catskill.
This Memorandum is for the exclusive use and benefit of ASR and
Catskill and: (a) is not intended to, nor does it, create any rights in any
third-party not signatory to it; (b) is not a contract for the conveyance of
real property; and (c) is not intended to, nor does it, create any right, title
or interest of any nature in or to real property. Neither ASR nor Catskill shall
assign this Memorandum to any other person or entity without the written consent
of the other, which consent will not be unreasonably withheld.
After execution of this Memorandum, Casino will be formed incorporating
the foregoing substantive provisions into its Operating Agreement. Both parties
will use their best efforts to negotiate a Casino Management Contract with the
Tribe, obtain Regulatory Approval for casino operations at Monticello Raceway
from all governmental authorities involved, and use their best efforts to make
casino operations at Monticello Raceway in behalf of the Tribe a reality. Any
disputes which may hereafter arise by virtue of the execution of this instrument
with regard to this instrument or to the terms and conditions of the Operating
Agreement of Mohawk Management LLC, which operating Agreement will not be
inconsistent with this General Memorandum of Understanding, shall be resolved
through arbitration by the American Arbitration Association in New York City,
New York, using AAA Rules of Arbitration.
This agreement and any Operating Agreement of Casino shall terminate
and be of no further force or effect if, for any reason whatsoever:(a) the
purchase of the real property known as Monticello Raceway does not close, or,
(b) all necessary Regulatory Approval (federal, state and local) for a Mohawk
Indian Casino to operate at Monticello Raceway shall not have been obtained by
December 31, 1998. Time is of the essence of this Agreement. Any waiver of any
condition contained herein shall only be effective if said waiver is in writing
and is signed by Catskill and ASR.
IN WITNESS WHEREOF, authorized representatives of the parties hereto
have executed this Memorandum of Understanding as of the date first above
written and Catskill, through the execution of this Memorandum by its Voting
Members, has approved this agreement and has
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instructed its Officers to treat it as an agreement entered into in accordance
with 3.4(b) of Catskill's Operating Agreement.
ALPHA ST. REGIS, INC. CATSKILL DEVELOPMENT, L.L.C.
By its Voting Members and
President
By:/s/Xxxxxxx Xxxxxxxx By:/s/Xxxxxx X. Xxxxxx
______________________________ ________________________________
Its: Vice President Xxxxxx X. Xxxxxx, President
WATERMARK INVESTMENTS LIMITED
Voting Member
By: /s/ Xxxxxx X. Xxxxxx
________________________________
Xxxxxx X. Xxxxxx
AMERICAS TOWER PARTNERS
Voting Member
By:/s/
________________________________
Managing Director
BRYANSTON GROUP, INC.
Voting Member
By:/s/ Xxxxxxx Xxxxxxxx
________________________________
Executive Vice President
MONTICELLO REALTY L.L.C.
Voting Member
By: MANHATTAN DEVELOPMENT CORP.
By:
________________________________
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