Exhibit 10.3


 


 


FOURTH AMENDMENT TO OPERATING
AGREEMENT OF


DETROIT ENTERTAINMENT, L.L.C.


A MICHIGAN LIMITED LIABILITY COMPANY


 


THIS FOURTH AMENDMENT TO OPERATING AGREEMENT (the “Fourth Amendment”)
is made and entered into as of August 2, 2002, 
by and between CIRCUS CIRCUS MICHIGAN, INC., a Michigan corporation
(“Circus”) and ATWATER CASINO GROUP, L.L.C., a Michigan limited liability
company (“ACG”), with reference to the following:


 


A.            Circus and ACG are
parties to an Operating Agreement of Detroit Entertainment, L.L.C., dated as of
October 7, 1997, as amended (the “Operating Agreement”) in connection with the
formation, governance and operation of Detroit Entertainment, L.L.C., a
Michigan limited liability company (the “Company”).


 


B             Atwater
Entertainment Associates, L.L.C. (“AEA”) and ZRX, L.L.C. (“ZRX”) are the
constituent members of ACG.


 


C.            Circus is a
subsidiary of Mandalay Resort Group (formerly known as Circus Circus
Enterprises, Inc.) (“Mandalay”).


 


D.            The parties desire
to amend the Operating Agreement of the Company to reflect the changes agreed
to by the parties, among others, in connection with the transfer restrictions
and distribution rights with respect to the Members.


 


NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:


 


                1.             Amendments to Operating
Agreement.  The Operating Agreement
shall be amended as follows:


 


                                a.             A new definition shall be added to
Appendix A and shall read as follows:


 


                                                ““Family
Members” means grandparents, parents, siblings, spouses, child (naturally or
adopted), grandchild (natural or adopted), father-in-law, mother-in-law,
including trusts for the benefit of, or entities wholly-owned by, the foregoing
persons.”


 


                                b.             Section 12.01(b) of the Operating
Agreement shall be amended in its entirety to read as follows:


 


                                                “(b)  Notwithstanding anything to the contrary
contained herein, for purposes of this Article XII, a “Disposition” shall not
include (and consent of the non-transferring Members under Section 12.02 and
the right of first refusal, provisions of 12.03 shall not apply to) (i) a
transfer by Circus to its parent or any wholly-owned Affiliate of its parent or
in connection with the sale or transfer of substantially all of the assets of
Circus or its parent (including, without limitation, any transfer by merger,
consolidation, stock sale, or the like); (ii) a


 

















 


 


 


transfer by ACG to an entity that is beneficially owned by the same
Persons who presently own ACG and in the same percentage as are presently owned
by such Persons; (iii) a transfer of any ownership interest in ZRX or AEA (A)
to another Person owning an interest in such entities as of the date hereof,
(B) to Family Members of the transferor, (C) to the beneficiaries or devisees
upon the death of a transferor, (D) in connection with the entry of a divorce
decree for or against a transferor, (E) to a corporation, partnership, limited
liability company, trust or other entity, the ownership or beneficiaries of
which are comprised wholly of and limited to the transferors and/or their
legal/beneficial owners, (F) as a result of the death or permanent disability
or a transferor, or (G) to the beneficial owners of entities who are members
upon the dissolution of the entity; (iv) or a transfer of the ownership
interest in a Member if such transfer is incident to a transfer by the ultimate
parent corporation of such Member of substantially all of its gaming assets; or
(v) a transfer to create a security interest; provided that such Member shall
give notice to the Company and the other Members upon completion of such
transaction and shall provide to the Company and the other Members, to the
extent requested, as a condition to the transferee being admitted as a
Substitute Member, and in compliance with Section 9.02, an opinion of counsel
to the effect that such transfer shall not result in the Company being
characterized for federal income tax purposes as an association taxable as a
corporation.”


 


                                c.             Section 12.03 of the Operating
Agreement shall be amended in its entirety and read as follows:


 


                                                “12.03   Rights of First Refusal.


 


                                                Each
time a Member proposed to Dispose of all or any part of such Member’s
Membership Interest (or is required by operation of law or other involuntary
transfer to do so), such Member shall first offer such Membership Interest (the
“Offered Interest”) to the non-transferring Members in accordance with the
following provisions:


 


                                                                (a)           Such Member shall deliver a written
notice to the non-transferring Members (the “Disposition Notice”) stating (i)
such Member’s intention to Dispose of the Offered Interest, (ii) the Sharing
Ration of the Offered Interest, (iii) the purchase price for which the Member
proposes to Dispose of the Offered Interest, and (iv) all other pertinent terms
and conditions of such proposed bona fide Disposition.


 


                                                                (b)           Within sixty (60) days after receipt
of the Disposition Notice (the “First Refusal Period”), the non-transferring
Members shall have the first right to purchase all but not less than all of
such Offered Interest upon the stated purchase price and terms designated in
such Disposition Notice and if they so elect, shall notify the Management
Committee in writing (an “Acceptance Notice”) of such election to purchase all
or a portion of the Offered Interest. 
The failure of a non-transferring Member to submit an Acceptance Notice
within the applicable period shall constitute an election on the part of that
Member not to purchase any of the Offered Interest.  If more than one non-transferring Member elects to purchase (the
“Electing Members”), each Electing Member shall purchase a portion of the
Offered Interest equal to a fraction, the numerator of which is the Electing
Member’s Sharing Ratio and the denominator of which is the total of all
Electing Member’s Sharing Ratios; provided, however, that the Electing Members
may elect to purchase the Offered Interest in some 


 


 


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other proportion.  If the non-transferring
Members elect to purchase the Offered Interest under this Section 12.03, such
purchase shall be consummated within ten (10) business days after the end of
the First Refusal Period.  At the
closing of such purchase, the transferring Member shall transfer the Offered
Interest to the Electing Members, free and clear of all liens, claims and other
encumbrances against payment of the applicable stated purchase price.


 


                                                                (c)           If the non-transferring Members do
not elect to purchase all of the Offered Interest, then the transferring Member
may offer to transfer any portion of the Offered Interest within 90 days after
the expiration of the First Refusal Period (“Offer Period”), provided such
transfer (i) is to a person to whom the transfer may occur without creating a
violation of the Development Agreement and who is suitable for licensure under
the Michigan Gaming Control and Revenue Act and is financially capable of
performing his/her obligations (a “Qualified Purchaser”), (ii) the transferring
Member receives and provides to the non-transferring Members, within the Offer
Period, (1) a binding purchase offer for the Offered Interest being transferred
to the Qualified Purchaser on terms no less favorable than designated on the
Disposition Notice, and (2) evidence of escrowed funds sufficient to close the
purchase of such Offered Interest, (iii) the transfer is completed after
approval by the Gaming Authorities, and (iv) the requirements of Sections
12.01(d) and (e) and 12.02 are met (other than the requirement to obtain
written consent of the non-transferring Members).  If such Offered Interest is not so transferred, the transferring
Member must give notice in accordance with this Section 12.03 prior to any
other or subsequent proposed transfer of all or any portion of its Membership
Interest.”


 


                                                d.             Section 4.05(d) shall be amended in
its entirety and read as follows:


 


                                                “During
the first ten (10) years following Completion of Construction, Circus shall
receive an annual Management Fee equal to 1.5% of the first $700 million of
approved Project Cost.  The Management
Fee shall be payable in monthly estimated installments in arrears, on or about
the tenth day of each calendar month, subject to annual adjustment within
thirty (30) days after the end of each Fiscal Year.  Notwithstanding the foregoing, the Management Fee shall only be
paid in amounts that do not exceed the cumulative distributions to Members of
Distributable Cash under Article VI (excluding Tax Distributions) beginning on
the date the Management Fee is first payable; provided, however, in the event
of dissolution of the Company, any accrued but unpaid Management Fee would be
paid in accordance with Section 13.02(b).”


 


                2.             Entire Amendment.  Except as amended or modified hereby, the
Operating Agreement shall remain unmodified and in full force and effect.


 


                3.             Counterparts.  This Amendment may be executed in
counterparts, each of which when executed and delivered by all parties named as
signatories below, shall have the force and effect of the original, but all
such counterparts shall constitute one and the same instrument.


 


 


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                IN WITNESS
WHEREOF, the undersigned have executed this Fourth Amendment as the date first
set forth above.


 


	
  ATWATER CASINO GROUP, L.L.C.

  	
   

  	
  CIRCUS CIRCUS MICHIGAN, INC.,

  
	
  a Michigan limited liability company

  	
   

  	
  a Michigan corporation

  
	
   

  	
   

  	
   

  
	
  By:  Atwater
  Management Corporation,

  	
   

  	
  By: 

  	
  /s/ GLENN W. SCHAEFFER

  
	
  a Michigan corporation, its Manager

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Glenn W. Schaeffer

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ THOMAS CELANI

  	
   

  	
  Title: President

  
	
   

  	
  Thomas Celani, President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ VIVIAN CARPENTER

  	
   

  	
   

  
	
   

  	
  Vivian Carpenter, Vice President

  	
   

  	
   

  



 


JOINDER


 


ATWATER ENTERTAINMENT ASSOCIATES, L.L.C., a Michigan limited liability
company and ZRX, L.L.C., a Michigan limited liability company, hereby join in
the execution of the foregoing Fourth Amendment, solely for the purposes of
acknowledging that they have read, understand and agree to be bound by, the
terms, covenants and provisions of the foregoing Fourth Amendment.


 


 


	
  ATWATER ENTERTAINMENT ASSOCIATES,

  	
   

  	
  ZRX, L.C.C.,

  
	
  L.L.C., a Michigan limited liability Company

  	
   

  	
  a Michigan limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By Z.L.M. Corporation, its Manager

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ VIVIAN CARPENTER

  	
   

  	
  /s/ THOMAS CELANI

  
	
   

  	
  By: Vivian Carpenter, Manager

  	
   

  	
  Thomas Celani, President

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ JACK BARTHWELL

  	
   

  	
  /s/ MARIAN ILITCH

  
	
   

  	
  By: Jack Barthwell, Manager

  	
   

  	
  Marian Ilitch, Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ THOMAS CELANI

  
	
   

  	
   

  	
   

  	
  Thomas Celani, President

  



 


 


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