EXHIBIT 10.40
CLOSING MEMORANDUM
This Closing
Memorandum (this "MEMO
AGREEMENT") is entered into as
of
January
12,
2004 by and among
Catskill
Development,
L.L.C.,
a New York
limited
liability
company
("CATSKILL"),
Alpha
Monticello,
Inc., a Delaware
corporation
("ALPHA"),
Americas Tower Partners, a New York general partnership
("ATP"),
Monticello Realty L.L.C., a Delaware limited liability company
("MR"),
Watertone Holdings, LP, a Delaware limited partnership
("WATERTONE"); Fox-Hollow
Lane, L.L.C., a New York limited liability company ("FOX"),
Shamrock Strategies,
Inc., a Delaware
corporation
("SHAMROCK"),
Clifford A. Ehrlich ("CE"),
BY-B,
LLC, a New York limited
liability
company
("BKB"),
Robert A. Berman
("RB"),
Philip B. Berman ("PB"),
Scott A. Kaniewski
("SK"),
Kaniewski
Family Limited
Partnership ("KFLP"), KFP Trust ("KFP"), New York Gaming, LLC, a
Georgia limited
liability
company
("NYG") and Empire
Resorts,
Inc.,
a Delaware
corporation
("EMPIRE").
Each of the
signatories
hereto
is
individually
a
"PARTY"
and
collectively the "PARTIES".
Capitalized terms not otherwise defined herein will
have
the
meanings
assigned
to
such
terms
in the
Securities
Contribution
Agreement (as such term is defined below).
RECITALS
A.
The
Parties
entered
into
that
certain
Amended
and
Restated
Securities Contribution Agreement, dated as of December 12, 2003,
by
and between the Parties (the "SECURITIES
CONTRIBUTION
AGREEMENT"),
pursuant
to
which:
(i)
the
Transferors
are
contributing
the
Interests to Empire;
and (ii) Empire is issuing
Exchange Shares to
the Transferors in exchange for the Interests.
B.
Contemporaneously
with
the
execution
and
delivery
hereof,
the
Transaction is being consummated.
C.
The Parties
desire to set forth their
understanding
in connection
therewith
and have a memorandum
of the actions and
agreements
on
account thereof.
AGREEMENT
In consideration
of the foregoing
recitals and the mutual promises
and covenants contained herein, the sufficiency of which is hereby
acknowledged,
the Parties agree as follows:
ARTICLE I
CLOSING ACTIONS AND DELIVERY OF DOCUMENTS
The following
steps and actions of the Parties were taken at the closing of the
Transaction,
which took place on January
12,
2004 at the
offices of Latham &
Watkins LLP, 885 Third Avenue, New York, New York, 10022:
1)
delivery of an Opinion from Olshan Grundman Frome
Rosenzweig &
Wolosky LLP that neither Empire nor the Transferors
(including
any direct or indirect
owner of any of the
Transferors)
will
recognize any income,
gain or loss for U.S. federal income tax
purposes as a direct result of the Transaction and that Maurice
Dabbah
will not
recognize
any gain or loss for U.S.
federal
income tax purposes upon any subsequent
resale of the Exchange
Shares,
assuming no change in the law and that Empire is not a
U.S. Real Property Holding Company at the time of such resale;
2)
the bylaws of Empire
shall be
amended,
substantially
in the
form of Exhibit C to the Securities Contribution Agreement;
3)
the
certificate of
incorporation
of Empire shall be amended,
substantially
in the
form
of
Exhibit
D to
the
Securities
Contribution Agreement;
4)
delivery
of a Letter
Agreement
regarding
the Cayuga
Letter
Agreement
providing
for
Empire's
assumption
of
Catskill's
obligations under such letter agreement;
5)
termination of the Service Compensation Agreements;.
6)
the Notice Letter,
dated as of January 12, 2004, from Catskill
to the Cayuga Nation and the Cayuga Catskill
Gaming
Authority
regarding
the
assignment
of
agreements,
shall
have
been
acknowledged
by the
Cayuga
Nation
and the
Cayuga
Catskill
Gaming Authority;
7)
Empire
shall have
received
certificates
with respect to the
representations
and
warranties
made
in
the
Securities
Contribution Agreement, dated the Closing Date, and executed by
an
executive
officer
of
Catskill
and
each of the
Current
Catskill
Members
(other
than
CE,
who
shall
sign
such
certificate individually);
8)
Empire shall have
received a
certificate
with respect to the
representations
and warranties
made by the MRD Members in the
Securities Contribution Agreement, dated the Closing Date,. and
executed by each of the MRD Members;
9)
Each of the Affiliates
shall have
executed.
and delivered to
Empire an Affiliate Agreement;
10)
Empire
shall
have
received
an
opinion
from
Kane
Reece
Associates,
Inc. to the effect that the Transaction is fair to
Empire and its stockholders
from a financial point of view and
the Special Committee shall have approved the Transaction;
11)
the Lease shall have been amended, substantially in the form of
Exhibit E to the Securities Contribution Agreement;
12)
the Shared Facilities Agreement shall have been amended whereby
MRM shall become a co-party to the Shared Facilities Agreement;
13)
Empire
shall have
received
an opinion
from each of Latham &
Watkins LLP, Patterson,
Belknap, Webb & Tyler LLP and Stites &
Harbison,
PLLC, substantially in the form of Exhibits F-A, F-B
and
F-C,
respectively,
to
the
Securities
Contribution
Agreement;
2
14)
Catskill and the Transferors
shall have received a certificate
with
respect to the
representations
and
warranties
made by
Empire
in the
Securities
Contribution
Agreement,
dated the
Closing Date, and executed by an executive officer of Empire;
15)
Catskill
and the
Transferors
shall have
received an opinion
from
Olshan
Grundman
Frome
Rosenzweig
&
Wolosky
LLP,
counsel
to Empire,
substantially
in the form of Exhibit G to
the Securities Contribution Agreement;
16)
Catskill and the Transferors
shall have received a certificate
from
Empire's
transfer
agent
verifying,
in
all
material
respects,
the
accuracy of the
outstanding
shares of capital
stock
of
Empire
as
set
forth
in
Section
5.8(a)
of
the
Securities Contribution Agreement,
subject to modifications as
may
be
contemplated
by
Section
6.3(b)
of
the
Securities
Contribution Agreement;
17)
the Transferors shall have received the Exchange Shares;
18)
delivery of an assignment and assumption agreement, in form and
substance
reasonably
satisfactory to it, as to the assumption
by Empire of the Liabilities;
19)
the Employment
Agreements
shall have been amended as provided
in Section 6.17 of the Securities Contribution Agreement,
with
such amendments to be effective as of the Closing Date; and
20)
Empire shall have
executed a guarantee
of lease
guaranteeing
MRM's obligations under the Lease, substantially in the form of
Exhibit H to the Securities Contribution Agreement.
ARTICLE II
POST-CLOSING ACTIONS AND DELIVERY OF DOCUMENTS
As of the Closing Date,
certain
conditions to the Closing have not
been satisfied and certain documents that were to be executed in
connection with
the
Closing
have not been
executed.
The
parties
have
agreed
to close the
Transaction
notwithstanding
the failure to satisfy
such
requirements
on the
condition that the delinquent
party agrees to satisfy the obligations set forth
on Exhibit A attached
hereto within ten (30)
calendar days
following the date
hereof. Each of the parties hereby agrees that it shall satisfy the
requirements
set forth on Exhibit A attached
hereto
within such thirty
(30)
calendar
day
period.
ARTICLE III
POST-CLOSING PAYMENTS
Empire agrees to, and shall, pay all of the. fees, including,
legal
fees, costs and expenses,
incurred by Catskill,
the Remaining Catskill Members
and the Transferred Companies incident to or in connection with the
negotiation,
preparation,
execution, delivery and performance of the Securities Contribution
Agreement and the Catskill Related
Agreements,
including
without
limitation,
legal fees,
and
expenses,
and
payments
made in
connection
with
obtaining
consents,
waivers,
agreements and permits,
any stock transfer,
real property
transfer, documentary transfer or other similar taxes and sales,
use or
3
other
taxes
imposed,by
reason of or on account
of, or
arising
out of or in
connection
with the
sale of the
Interests
and any
deficiency,
interest
or
penalty
asserted
wit
