EXHIBIT 10(a)
CIRCUS CIRCUS ENTERPRISES, INC.
Atwater Casino Group LLC
C/O Xxxxxxx X. XxXxxxxx
Xxxxxx Xxxxxxx PLLC
800 Michigan National Tower
Lansing Michigan 48933
RE: Formation of Joint Venture Agreement to Apply for Casino
License in Detroit, Michigan
Ladies and Gentlemen:
This binding letter (the Letter of Intent ) outlines the
material terms and conditions pursuant to which Circus Circus
Enterprises, Inc., or one of its affiliates ( Circus ) is
prepared to enter into a joint venture agreement (the Definitive
Agreement ) with Atwater Casino Group LLC ( Atwater Casino ) to
apply for a casino license in Detroit, Michigan pursuant to the
Michigan Gaming Control and Revenue Act and to own and operate a
hotel/casino and related amenities in Detroit, Michigan.
Collectively, Circus and Atwater Casino are referred to in this
letter of intent as the Joint Venture Members .
The Joint Venture Members acknowledge that they have expended
considerable amounts of time and money and have otherwise set
aside pursuing other bona fide opportunities to develop a
proposal for a casino license and a hotel/casino in Detroit,
Michigan in order to devote their full-time and attention to the
finalization and execution of this Letter of Intent in reliance
upon each Joint Venture Member's agreement to diligently engage
in good faith efforts to fulfill the respective commitments set
forth in this Letter of Intent.
The interests, rights and obligations of the Joint Venture
Members will be evidenced by a Definitive Agreement containing
the terms and conditions described in the Executive Summary set
forth in Exhibit A attached to this Letter of Intent (the
Executive Summary ). The Joint Venture Members acknowledge that
while this Letter of Intent is not intended to constitute the
Definitive Agreement, this Letter of Intent is intended to be a
binding commitment by the Joint Venture Members to enter into a
Definitive Agreement containing the substantive terms described
in the attached Executive Summary (which contains all the
material and essential substantive elements of the joint
venture), together with such additional provisions as are
mutually agreed to by the Joint Venture Members (including
provisions of the Atwater Casino Operating Agreement as amended).
The Joint Venture Members acknowledge and agree, however, that
the ability of Circus to enter into the Definitive Agreement is
conditioned upon, and expressly subject to, obtaining the
approval of the Board of Directors of Circus. Similarly, the
Definitive Agreement is subject to the approval of the Board of
Managers of Atwater Entertainment Associates, L.L.C., and the
Manager of Atwater Casino.
The Executive Summary and all information given by any Joint
Venture Member to any other Joint Venture Member in connection
with this Letter of Intent or the negotiation of the Definitive
Agreement shall be confidential material (herein the
Confidential Information ) and shall not be disclosed except to
the extent expressly mutually agreed by the Joint Venture Members
and/or as required by applicable law, regulatory authorities or
final court order. The Confidential Information shall be used
solely for the purpose of advancing the finalization of the
Definitive Agreement and consummating the joint venture
contemplated by the Definitive Agreement. The Confidential
Information shall be disclosed only to the Joint Venture Members
and their respective representatives, affiliates and/or agents
who need to know such Confidential Information for the purposes
of (I) advancing the completion and execution of the Definitive
Agreement and/or (ii) consummating the joint venture contemplated
by the Definitive Agreement, except to the extent required to be
disclosed by applicable law, regulatory authorities or final
court order. If the proposed Definitive Agreement is not signed
for any reason, each Joint Venture Member will return to the
appropriate Joint Venture Member(s) all Confidential Information
received therefrom in connection with the proposed joint venture.
This Letter of Intent will expire if it is not accepted, signed
and returned by Atwater Casino to Circus prior to 5:00 P.M.,
Detroit, Michigan local time on May 28, 1997.
Very truly yours,
CIRCUS CIRCUS ENTERPRISES, INC.,
A Nevada corporation
By: Xxxxxxx X. Xxxxxx
Vice Chairman of the Board and
Its:Chief Operating Officer
THE UNDERSIGNED XXXXXX ACCEPT AND AGREE TO BE BOUND BY THE TERMS
OF THE CIRCUS CIRCUS ENTERPRISES, INC. LETTER OF INTENT SET FORTH
ABOVE.
ATWATER CASINO GROUP, L.L.C.,
A Michigan limited liability company
By: Z.R.X., L.L.C.,
Its: Manager
By: ZLM Corporation
Its: Manager
By: Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, President
Acknowledged and Agreed:
Atwater Entertainment Associates, L.L.C.,
A Michigan limited liability company
By: Xxxxxxx X. Xxxxxxxx
Its:Manager
EXECUTIVE SUMMARY
OF
JOINT VENTURE AMONG
CIRCUS CIRCUS AND ATWATER CASINO GROUP
1.Joint Venture Members:
Circus Circus Enterprises, Inc., a Nevada corporation or its
subsidiary or affiliate ( Circus ), Atwater Casino Group, L.L.C.,
a Michigan limited liability company (f/k/a X.R.N., L.L.C.) or its
affiliate ( Atwater Casino ),will form Detroit Entertainment,
L.L.C., a limited liability company formed in a jurisdiction
acceptable to the parties (the Joint Venture ), for the purpose of
acquiring, constructing and operating the Project (defined below).
The Joint Venture will be owned 45% by Circus and 55% by Atwater
Casino, which is owned by ZRX, L.L.C., a Michigan limited liability
company ( ZRX ) and Atwater Entertainment Associates, L.L.C., a
Michigan limited liability company ( AEA ), as its Members.
2.Project:
The Joint Venture will be formed to assemble property in Detroit,
Michigan on which it will develop, construct and operate a
hotel/casino [ *
] (the Project ) [
*
]
3.Project Budget:
The total cost of land acquisition, development (including the cost
of the campaign for passage of Proposal E and expenses incurred in
the formation of Joint Venture), design, construction, equipping
and opening of the Project (including initial bankroll and
deposits) is currently estimated and approved not to exceed [
* ] ( Project Budget ). [
*
] Any increase in that Project Budget must be approved
by a majority of all the members of the Joint Venture Board.
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
0.Xxxxxxx Contributions:
[
*
]
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
5.Project Financing:
[
*
]
0.Xxxxxxxxxx of the Company: Joint Venture Board
(a)The management of the Joint Venture will be vested in a 12-
member Board. [
*
]
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
(b)Board approval will generally require a majority vote. [
*
]
(c)Any costs incurred in furtherance of the Project approved by a
majority of the Board after May 1, 1997 and prior to receipt of a
gaming license shall be borne 45% by Circus and 55% by Atwater
Casino. Except as provided in the Joint Venture Agreement, no
Member is authorized to incur any expenditures on behalf of the
Joint Venture without the prior written consent of the Board. Upon
licensing, all such costs approved by the Board and borne by the
Members shall be included in the Project Budget and shall be
reimbursed immediately to the Members. Notwithstanding the general
authority granted to the Board but consistent with the policies
adopted by the Board, Circus will have the exclusive authority for
implementing decisions relating to the operation of the Project,
including the layout of the casino, marketing and credit policies,
internal control and security procedures and employment decisions.
(d)Notwithstanding the foregoing, the unanimous approval of the
Members in the Joint Venture shall be required for the following
decisions:
(i)any sale, lease, assignment, transfer, or other conveyance
exclusive of financing requirements) of the assets of the Joint
Venture or any merger, consolidation, dissolution, divestiture or
winding-up of the Joint Venture (except as provided in Section
6(b));
(ii)any amendment or restatement of the Joint Venture Agreement of
the Joint Venture;
(iii)any transaction between the Joint Venture and a Member or an
affiliate of a Member, except as provided in Section 7(b);
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
(iv)any material change in the character of the business and
affairs of the Joint Venture;
(v)The commission of any act which would make it impossible for the
Joint Venture to carry on its ordinary business and affairs (except
as provided in Section 6(b)); or
(vi)The commission of any act that would contravene any provision
of the Joint Venture Agreement or applicable limited liability
company statute governing the Joint Venture.
0.Xxxxxxxxxx of the Project:
(a)Circus will be responsible for the day to day operations of the
Project. The Joint Venture will pay all costs to operate the
Project. [
*
]
(b)Circus may appoint, from time to time, certain employees of
Circus to devote essentially full time to the day-to-day management
of the Project and retain such employees on Circus payroll. In
such event, the Joint Venture shall reimburse Circus for the out of
pocket compensation (for example, salary, bonus, direct cost of
health and retirement benefit plans but excluding stock options and
other incentive compensation unless approved by the Board) paid to
or on behalf of such employee for performing services to the Joint
Venture on a full time basis. However, the Joint Venture shall not
reimburse Circus for any time or expense associated with Circus
personnel who do not perform full-time services on behalf of the
Joint Venture.
[
*
]
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
(d)Other than as set forth above, no Member or its affiliates shall
receive any management, consulting, development, or license fees,
commissions, or other payments in connection with the acquisition,
development or operation of the Project without the approval of a
majority of the Board; [
*
]
8.Gaming License:
Each Member shall be responsible for submitting its own gaming
license application and the applications of any party required to
submit an application due to its affiliation with a Member. [
*
]
9.Transfer Restrictions:
(a)Generally, no Member may transfer its interest in the Joint
Venture without the approval of the majority in interest of the
other Members; provided that Circus shall be allowed to transfer
its ownership interest to a wholly-owned subsidiary or affiliate
without the consent of the other Members or in connection with the
sale or transfer of substantially all of the assets of Circus. In
addition, Atwater Casino may transfer its interest to an entity
that is beneficially-owned by the same persons as the transferring
Member.
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
(b)Transfer of any ownership interest in the Joint Venture to an
unrelated person or entity (that is, to a party not already owning
an interest in the Joint Venture member) by any Member shall be
subject to (i) regulatory approval and (ii) a right of first
refusal running to the other Members to purchase the interest on
the same terms and conditions as the proposed third party transfer,
which must be accepted or rejected within one hundred and twenty
(120) days. If more than one Member elects to exercise the right
of first refusal, then the ownership interest shall be allocated
amongst the exercising Members in proportion to their ownership
interest in the Joint Venture. [
*
]
(c)In the event a Member declares bankruptcy or makes an assignment
for the benefit of creditors, then the remaining Members shall have
the right to purchase that ownership interest. If more than one
Member elects to exercise its rights, than the ownership interest
shall be allocated amongst the exercising Members in proportion to
their ownership interest in the Joint Venture. [
*
]
10.Project Cash Flow:
[
*
] Financial statements will be audited annually by a
big six certified public accounting firm. [
*
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
*
]
11.Representations and Warranties:
Each Member will represent and warrant to the other Members that,
as of the date of the signing of the Joint Venture agreement, the
party has knowledge of no facts or circumstances that are likely to
affect the ability of such Member (or any party having an interest
in such Member) or the Joint Venture to receive all gaming and
other licenses, permits and approvals necessary or advisable for
the construction, completion, operation, ownership and use of the
Project as a gaming facility or which would otherwise affect any
Member s ability to be found suitable by any applicable authority,
except for certain disputes concerning ownership interests in AEA.
In the event any representation or warranty made by a Member is
untrue or is breached, the defaulting party shall indemnify the
other Members for any damages resulting from such breach.
* This material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the
Securities and Exchange Commission.
