Prepared by MERRILL CORPORATION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GGozlNngUQltOmFrY/KcwGXK38lK9QKUVM+VSTqTsjSzYp+hL9eVEZ/UNGDeWTRq PekC+N6ix60EH8Zc721EtQ== 0000912057-01-516034.txt : 20010516 0000912057-01-516034.hdr.sgml : 20010516 ACCESSION NUMBER: 0000912057-01-516034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALADDIN GAMING HOLDING LLC CENTRAL INDEX KEY: 0001059127 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 880379607 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49717 FILM NUMBER: 1638563 BUSINESS ADDRESS: STREET 1: P O BOX 94827 CITY: LAS VEGAS STATE: NV ZIP: 89193 BUSINESS PHONE: 702736 MAIL ADDRESS: STREET 1: P O BOX 94827 CITY: LAS VEGAS STATE: NV ZIP: 89193 10-Q 1 a2046910z10-q.htm 10-Q Prepared by MERRILL CORPORATION
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

/x/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2001

/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-49717 and 333-49717-01

ALADDIN GAMING HOLDINGS, LLC
(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		88-0379607 (I.R.S. Employer Identification No.)
3667 Las Vegas Boulevard South, Las Vegas, Nevada (Address of principal executive offices)		89109 (Zip Code)

(702) 785-5555
(Registrant's telephone number, including area code)

ALADDIN CAPITAL CORP.
(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		88-0379606 (I.R.S. Employer Identification No.)
3667 Las Vegas Boulevard South, Las Vegas, Nevada (Address of principal executive offices)		89109 (Zip Code)

(702) 785-5555
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

Indicate the number of shares outstanding of the issuer's classes of common stock, as of the latest practicable date.

Aladdin Gaming Holdings, LLC
Not applicable
Aladdin Capital Corp.
2,500 shares of common stock, no par value as of March 31, 2001.

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES

INDEX

		Page No.
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets March 31, 2001 and December 31, 2000	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2001 and March 31, 2000	2
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and March 31, 2000	3,4
	Notes to the Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Part II	OTHER INFORMATION	18
Signatures		19

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
(In Thousands)

			March 31, 2001			December 31, 2000
			(unaudited)
ASSETS
Current assets:
		Cash and cash equivalents	$	25,540		$	20,209
		Restricted cash and cash equivalents		17,579			19,414
		Receivables, related parties		1,022			683
		Accounts receivables, net of allowance for doubtful accounts of $6,622 and $6,483 as of March 31, 2001 and December 31, 2000, respectively		18,492			30,440
		Inventory		3,594			4,227
		Prepaid assets		6,375			7,443

Total current assets				72,602			82,416

Property, plant and equipment, net				647,535			657,470

Other assets:
		Other assets, net of accumulated amortization of $852 and $650 as of March 31, 2001 and December 31, 2000, respectively		1,169			1,371
		Debt issuance costs, net of accumulated amortization of $12,850 and $11,212 as of March 31, 2001 and December 31, 2000, respectively		30,757			31,595

		Total other assets		31,926			32,966

		Total assets	$	752,063		$	772,852

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
	Current portion of long-term debt		$	25,000		$	23,950
	Current portion of energy service obligation			555			578
	Accounts payable-trade			6,510			12,285
	Construction payable			11,558			9,424
	Accrued payroll and related expenses			9,547			9,865
	Accrued interest			7,510			8,298
	Other accrued expenses			26,441			27,014

Total current liabilities				87,121			91,414

Long-term debt, net of discount				601,622			601,821
Interest rate collar payable				19,247			—
Energy service obligation				35,981			36,127
Related party payables and other liabilities				12,448			11,467
Advances to purchase membership interests				2			2

Total long-term liabilities				669,300			649,417

Total liabilities				756,421			740,831
Commitments and contingencies
Members' equity:
	Preferred membership interest			180,264			158,642
	Common membership interest, 10,000,000 common membership interests authorized; 1,000,000 common membership interests issued and outstanding as of March 31, 2001 and December 31, 2000			58,608			58,608
	Accumulated deficit			(243,230	)		(185,229	)

Total members' equity				(4,358	)		32,021

Total liabilities and members' equity			$	752,063		$	772,852

The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000
(In Thousands)

		For the three months ended March 31,
		2001			2000
		(unaudited)			(unaudited)
Revenues:
	Casino	$	33,124		$	—
	Hotel		28,117			—
	Food and beverage		18,361			—
	Entertainment and other income		2,919			—

Gross revenues			82,521			—
	Less: promotional allowances		(8,826	)		—

Net revenues			73,695			—

Costs and expenses:
	Casino		25,977			—
	Hotel		5,918			—
	Food and beverage		9,769			—
	Other operating expenses		441			—
	Selling, general and administrative		23,255			—
	Pre-opening expenses		—			4,301
	Depreciation and amortization		13,982			—

Total costs and expenses			79,342			4,301

Loss from operations			(5,647	)		(4,301	)

Other income (expense):
	Interest income		221			1,038
	Interest expense		(22,508	)		(14,004	)
	Interest rate collar expense		(8,537	)		—
	Capitalized interest		—			12,666

Total other expense, net			(30,824	)		(300	)

Accumulated effect of change in accounting principle			(10,709	)		—

Net loss		$	(47,180	)	$	(4,601	)

The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000
(In Thousands)

		For the three months ended March 31,
		2001			2000
		(unaudited)			(unaudited)
Cash flows from operating activities:
	Net loss	$	(47,180	)	$	(4,601	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization		13,982			78
	Amortization of debt costs		1,638			945
	Amortization of lease costs		202			—
	Amortization of original issue discount		6,326			5,405
	Interest rate collar payable		19,247			—
Changes in operating assets and liabilities:
	Interest receivable		—			74
	Inventory		633			—
	Prepaid expense		1,068			173
	Receivables, net		11,609			3
	Other assets		—			(150	)
	Accounts payable-trade		(5,775	)		11,835
	Accrued payroll and related expenses		(318	)		—
	Other accrued expenses		(573	)		(476	)
	Accrued interest		(788	)		(229	)
	Related party payable		981			982

Net cash provided by operating activities		$	1,052		$	14,039

Cash flows from investing activities:
	Payments for construction in progress	$	(1,762	)	$	(58,363	)
	Payments for furniture and equipment		(150	)		—
	(Increase) decrease in restricted cash		1,835			22,341

Net cash used in investing activities			(77	)		(36,022	)

Cash flows from financing activities:
	Proceeds from issuance of notes		—			—
	Proceeds from issuance of long-term debt		—			—
	Repayment of long-term debt		(5,644	)		—
	Debt issuance costs		(800	)		—
	Members' contributions		10,800			20,614
	Members' equity costs		—			—
	Payment of debt on contributed land		—			—

Net cash used by financing activities			4,356			20,614

Net increase (decrease) in cash			5,331			(1,369	)
Cash and cash equivalents at beginning of period			20,209			1,669

Cash and cash equivalents at end of period		$	25,540		$	300

The accompanying notes to these consolidated financials statements are an
integral part of these consolidated financial statements.

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000
(CONTINUED)
(In Thousands)

		For the three months ended March 31,
		2001		2001
		(unaudited)		(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest, net of amount capitalized		$	14,320	$	(6,003	)
Members' contributions-book value Land			—		—
	Construction in progress		—		—
Equipment acquired equal to assumption of debt			—		—
Non-cash investing and financing activities:
	Increase in construction payables		2,134		17,219
	Preferred dividends		10,822		4,926

The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.

ALADDIN GAMING HOLDINGS, LLC
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001

1. Nature of Business and Summary of Significant Accounting Policies

The Company

The accompanying condensed consolidated financial statements present the financial position, results of operations and cash flows of Aladdin Gaming Holdings, LLC ("Gaming Holdings") and its wholly-owned subsidiaries, Aladdin Gaming, LLC ("Gaming") Aladdin Capital Corp., and Aladdin Music Holdings, LLC (collectively, "Company"). The Company commenced operations on August 18, 2000.

Principles of Presentation

The condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the Company's 2000 Annual Report on Form 10-K. Although the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these financials be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report. Accounting policies utilized in the preparation of the financial information herein presented are the same as set forth in Gaming Holdings' annual financial statements except as modified for interim accounting policies. The interim condensed consolidated financial information is unaudited.

In the opinion of management, the accompanying financial statements include all adjustments (of a normal recurring nature) which are necessary for a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations of the Securities and Exchange Commission.

Reclassification

Certain amounts in the 2000 Condensed Consolidated Financial Statements have been reclassified to conform with the presentation for the year 2001. These reclassifications had no effect on the Company's net income.

Promotional Allowances

Promotional allowances represent goods and services given to customers as inducements to gamble which, if sold, would be accounted for as revenue. Examples of promotional allowances include rooms, food, beverages and entertainment. The cost of providing promotional allowances is included in costs and expenses.

Revenues and Expenses

Casino revenue is the net win from gaming activities (the difference between gaming wins and losses). Casino revenues are net of incentive discounts to casino patrons, players' club point accruals and accruals for anticipated payouts of progressive and certain other slot machine jackpots. Revenues include the retail value of rooms, food and beverage, and other items provided to customers on a complimentary basis. A corresponding amount is deducted as promotional allowances. The costs of such complimentaries are included in hotel, food and beverage expenses in the accompanying Condensed Consolidated Statements of Operations.

Property and Equipment

Property and equipment are stated at cost, except in the case of capitalized lease assets, which are stated at the lower of the present value of the future minimum lease payments or fair market value at the inception of the lease. Expenditures for additions, renewals, and improvements are capitalized. Costs of repairs and maintenance are expensed when incurred.

Depreciation and amortization of property and equipment is computed using the straight-line method over the following estimated useful lives:

Building and Leasehold Improvements		39 years
Furniture and Equipment		5 years
Energy Service Asset		17-20 years

2. Business Description and Basis of Presentation

Gaming Holdings through its wholly-owned subsidiary, Gaming developed, constructed and began operating a new hotel and casino on August 18, 2000, the Aladdin Resort and Casino ("Aladdin"), as the centerpiece of an approximately 35-acre resort, casino and entertainment complex in Las Vegas, Nevada. Gaming Holdings, through its subsidiaries, also owns 100% of Aladdin Music, LLC ("Aladdin Music"). Gaming is evaluating its options in connection with an approximately 5-acre parcel of land which evaluation includes selling the parcel. There can be no assurances that Gaming can reach a definitive agreement for the sale of the parcel.

3. Classes of Interest

As of March 31, 2001, Gaming Holdings Common Membership Interests were held: 39.953125% by London Clubs of Nevada Inc., a subsidiary of London Clubs; 31.859375% by Sommer Enterprises, LLC ("Sommer Enterprises"), an entity controlled by the Sommer Trust; 25.0% by Aladdin Gaming Enterprises, Inc., an entity owned by Sommer Enterprises; 3.0% by GAI, LLC, an entity owned by Richard J. Goeglein, the Company's Chief Executive Officer; and 0.1875% by Jose Rueda, a former executive of the Company.

As of March 31, 2001, Gaming Holdings has Preferred Membership Interests comprised of the following:

	London Clubs Nevada, Inc.		Sommer Enterprises, LLC		Total
	(In Thousands)
Series A	$	136,468	$	6,482	$	142,950
Series CC		3,698		—		3,698
Series D		26,260		—		26,260
Series E		—		7,356		7,356

TOTAL	$	166,426	$	13,838	$	180,264

Prior to April 25, 2000, there was outstanding $30 million in the aggregate Series C Convertible Preferred Membership Interests which earned a return equal to twenty percent (20%) per annum, cumulative and compounded semi-annually from October 1, 1999. On April 25, 2000, London Clubs International, plc ("London Clubs"), through its subsidiary London Clubs Nevada, Inc. ("LCNI"), converted all of the Series C Convertible Preferred Membership Interests into fifteen percent (15%) of the Gaming Holdings Common Membership Interests. The Series CC Preferred Membership Interests shall earn a return equal to twenty percent (20%) per annum, cumulative and compounded semi-annually. The Series A Preferred Membership Interests earn a return equal to twelve percent

(12%) per annum, cumulative and compounded semi-annually. Pursuant to a Letter Agreement between the Sommer Trust and London Clubs, dated February 23, 2000, the Series D Preferred Membership Interests and the Series A Preferred Membership Interests shall earn a combined preferred return equal to the return earned on the Series E Preferred Membership Interests (i.e., thirty percent (30%) per annum, cumulative and compounded semi-annually). The Series E Preferred Membership Interests earn a return equal to thirty percent (30%) per annum, cumulative and compounded semi-annually. With respect to the allocation of Profits and Losses, and Distributions (including distributions in liquidation), the following is the order of priority of the Preferred Shares: Series A Preferred Membership Interests, Series D Preferred Membership Interests, Series C Convertible Membership Interests, and Series CC Preferred Membership Interests, and collectively (pari passu) Series E and B Preferred Membership Interests.

If cash equity contributions are made to Gaming Holdings pursuant to the Keep-Well Agreement, Series A Preferred Membership Interests, or in the case of any payment required by London Clubs to repay in part Gaming's Bank Credit Facility pursuant to Section 13 of the Keep-Well Agreement, Series B Preferred Membership Interests, shall be issued in return for such cash equity contributions. As of March 31, 2001, 108,000 Series A and no Series B Preferred Membership Interests were issued pursuant to the Keep-Well Agreement.

4. Income Taxes

Gaming Holdings will file federal information tax returns only. Each member reports taxable income or loss on their respective tax returns.

5. Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that entities record all derivatives as assets or liabilities measured at fair value, with the change in fair value recognized in earnings or in other comprehensive income, depending on the use of the derivative and whether it qualifies for hedge accounting. SFAS 133 amends or supercedes several current accounting statements. In July, 1999, the FASB issued SFAS No. 137 which delayed the effective date of SFAS No. 133 from fiscal year 2000 to fiscal year 2001. In June 2000, the FASB issued SFAS 138 which amended certain sections of SFAS 133. During the quarter ended March 31, 2001, Gaming changed its method of accounting for interest rate collars to comply with SFAS 133. Gaming's interest rate collars do not qualify for accounting hedges according to SFAS 133, and accordingly, changes to the fair value of the interest rate collars are recognized in earnings. On January 1, 2001, Gaming recorded a liability of $10.7 million for the fair value of its interest rate collars at that date with a corresponding cumulative effect adjustment in the Condensed Consolidated Statement of Operations. As of March 31, 2001, the fair value of Gaming's interest rate collars was a liability of $19.2 million, and Gaming recorded the change in fair market value of $8.5 million to Interest Rate Collars Expense and corresponding liability in the Condensed Consolidated Financial Statements.

In November 2000, the Emerging Issues Task Force ("EITF") of the FASB reached a consensus on EITF 00-14, "Accounting for Certain Sales Incentives." EITF 00-14 requires that discounts which result in a reduction in or refund of the selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. The Company adopted EITF 00-14 in the first quarter 2001. The amount of "free plays" and coupons to date has not been significant. The Company's accounting policy related to free or discounted rooms, food and beverage and other services already complies with EITF 00-14.

In February 2001, the EITF reached a partial consensus on EITF 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to be Delivered in the Future." The consensus requires that vendors recognize the cash rebate or refund obligation association with time- or volume-based cash rebates as a reduction of revenue based on a "systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate or refund." The liability for such obligations should be based on the estimate amount of rebates or refunds to be ultimately earned, including an estimation of "breakage" if it can be reasonably estimated. The consensus is applicable beginning in the first quarter of 2001. The Company's players' club allows customers to earn certain complimentary services and/or cash rebates based on the volume of the customers' gaming activity. The Company adopted EITF 00-22 in the first quarter 2001. The Company reduced casino revenues by $.8 million for the three months ended March 31, 2001, which represented the estimated increase in value related to the slot club points to be ultimately earned.

6. Related Party Transactions

Since January 1, 2000, LCNI has funded approximately $870,880 of deposits relating to the payment for certain furniture, fixtures and equipment that is leased under Gaming's operating lease facility with General Electric Capital Corporation. The deposits will be refunded directly to LCNI by the lessors and therefore such amount has not been reflected in the accompanying financial statements. As of March 31, 2001, $466,602 has been refunded directly to LCNI.

7. Long-Term Debt Interest Rate Swaps

Effective June 30, 1999, Gaming restructured its interest rate swap arrangements in an effort to reduce future expenditures for interest. Gaming has entered into these agreements to manage interest expense, which is subject to fluctuations due to the variable nature of the London Interbank Offered Rate ("LIBOR"). In exchange for entering into the transaction, Gaming received $500,000 from the counterparty in July, 1999. Effective July 20, 2000, Gaming restructured its interest rate derivative financial instruments. In July, 2000, Gaming received $1 million from the counterparty related to the termination of the previous interest rate ceilings and floor caps.

Beginning June 30, 1999, Gaming had the following interest rate swaps, interest rate ceilings and floor caps, and related notional amounts in effect: (i) an interest rate swap with an original notional amount of $114 million increasing to a maximum of $222.5 million whereby interest is fixed at 5.50% through March 31, 2000. After March 31, 2000, an interest rate collar with a notional amount of $250 million, a maximum and minimum interest rate of 7.5% and 5.15%, respectively, went into effect and mature on September 30, 2006; and (ii) an interest rate collar with a notional amount of $160 million, a maximum rate of 8.00%, a minimum rate of 5.15% and a maturity date of March 31, 2003. All rates noted above are LIBOR equivalents only and do not include the impact of the basis point additions to LIBOR that are used in calculating interest expense on Gaming's term loans.

Beginning July 20, 2000, Gaming has the following interest rate derivative financial instruments in effect: (i) an interest rate collar with an amortizing notional amount of $245.7 million ($232.8 million at March 31, 2001), a maximum and minimum interest rate of 8.00% and 6.25%, respectively, and a maturity date of June 30, 2005, (ii) an interest rate collar with an amortizing notional amount of $159.2 million ($158.0 million at March 31, 2001), a maximum rate of 8.00%, a minimum rate of 6.25% and a maturity date of June 30, 2005; (iii) an interest rate collar with a notional amount of $50 million, a maximum rate of 8.00%, a minimum rate of 6.25%, and a maturity of June 30, 2005. All rates noted above are the three-months LIBOR equivalents only and do not include the impact of the basis point additions to LIBOR that are used in calculating interest expense on Gaming's term loans.

The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposure of the Company. The amounts exchanged are normally based on the notional amounts and other terms of the swaps. The variable rates are subject to change over time as LIBOR fluctuates.

Neither the Company nor the counterparty, which is a prominent financial institution, is required to collateralize their respective obligations under these swaps. The Company is exposed to loss if the counterparty defaults. However, the Company considers the risk of non-performance to be minimal as the counterparty is a member of the bank credit facility. The Company does not hold or issue rate agreements for trading purposes.

8. Commitments and Contingencies

As of March 31, 2001, the Company had accrued approximately $11.6 million in construction payables. In May 2001, the Company paid $8.0 million of such amount. The Company currently expects to finalize payments of the balance during the second quarter 2001.

In December 2000, Aladdin Bazaar, LLC ("Bazaar") initiated an arbitration against Gaming alleging various defaults by Gaming under the respective agreements between the parties. Gaming has filed its counter-claims against Bazaar. Such arbitration is continuing, with the parties currently developing a discovery plan and the arbitration hearings have been tentatively set to commence in mid-January 2002.

In December 2000, Korte-Bellew & Associates ("KBA") initiated in Nevada State District Court action seeking foreclosure on its mechanic's lien and payment of approximately $7.8 million. Pursuant to the construction contract between Gaming and KBA, the matter has been removed from the District Court and the parties will attempt mediation, and if the mediation does not result in agreement between the parties, the matter will be sent to binding arbitration to determine the disputes.

9. Liquidity

As of May 7, 2001, the Company had unrestricted funds available of approximately $9.0 million. The estimated principal and interest payments pursuant to the Bank Credit Facility for the next twelve months are as follows:

Due Date	Form	Amount
6/29/01	Principal	$4.8 million
6/29/01	Interest	$0.1 million
7/31/01	Interest	$8.8 million
9/28/01	Principal	$5.8 million
9/28/01	Interest	$0.1 million
10/31/01	Interest	$8.8 million
12/31/01	Principal	$5.8 million
12/31/01	Interest	$0.1 million
1/31/02	Interest	$8.5 million
3/31/02	Principal	$5.8 million
3/31/02	Interest	$0.1 million
5/1/02	Interest	$8.3 million

TOTAL		$57.0 million

The estimated principal and interest payments pursuant to the FF&E Facility for the next twelve months are as follows:

Due Date	Form	Amount
6/1/01	Principal	$.65 million
6/1/01	Lease Payment	$3.35 million
6/1/01	Interest	$.47 million
9/3/01	Principal	$.65 million
9/3/01	Lease Payment	$3.25 million
9/3/01	Interest	$.42 million
12/1/01	Principal	$.70 million
12/1/01	Lease Payment	$3.24 million
12/1/01	Interest	$.40 million
3/1/02	Principal	$.70 million
3/1/02	Lease Payment	$3.23 million
3/1/02	Interest	$.38 million

TOTAL		$17.44 million

The Company estimates that unrestricted cash on hand and projected internally generated funds will be sufficient to fund the Company's current operations, however, such amounts will not be sufficient to fund all the principal and interest payments on the Company's debt for the next twelve months. The Company and the Sponsors are seeking alternatives to improve the Company's current liquidity, which may include incurring additional indebtedness, to the extent permitted under the Company's various credit facilities, sale of an adjacent 5-acre parcel of undeveloped land, reaching an agreement with the Company's creditors reducing the Company's liquidity needs and/or cash equity infusions. In order for the Company to fund all the principal and interest payments, the Company will continue to rely on payments by the Sponsors pursuant to the Keep-Well Agreement. However, there can be no assurances that the Company or the Sponsors will be able to improve the Company's current liquidity or that the Sponsors will continue to perform pursuant to the Keep-Well Agreement. In the event the Company's liquidity does not improve or that the Sponsors do not perform under the Keep-Well Agreement or that the Company is unable to reach agreements with its creditors reducing the Company's liquidity needs, there would be serious doubt as to whether or not the Company will be able to continue as a going concern. The Company's auditors have included an explanatory paragraph in their opinion for the year ended December 31, 2000, which expresses substantial doubt about the Company's ability to continue as a going concern.

On March 30, 2001, Gaming and the various lenders under the Bank Credit Facility amended the Bank Credit Facility. This amendment provided: (a) a waiver of Gaming's compliance with the Total Debt to EBITDA Ratio, the Interest Coverage Ratio and the EBITDA covenants required pursuant to the Bank Credit Facility for the fiscal quarters ending on or prior to March 31, 2001; (b) a waiver until August 18, 2001 of the requirement to fund the FF&E Reserve, provided that Gaming cannot make certain Restricted Payments until the FF&E Reserve is funded as otherwise required by the Bank Credit Facility; (c) a waiver of the default that otherwise would have occurred as a result of a "going concern" qualification to the Company's auditor's report in respect of the Company's financial statements for the fiscal year ended December 31, 2000; (d) amendments to Gaming's following financial covenants (i) Total Debt to EBITDA Ratio: Quarter ended March 31, 2001, 6.4:1.0; Quarter ended June 30, 2001, 6.0:1.0; Quarter ended September 30, 2001, 6.0:1.0; and Quarter ended December 31, 2001, 5.1:1.0; (ii) Interest Coverage Ratio: Quarter ended March 31, 2001, 1.6:1.0; Quarter ended June 30, 2001, 1.6:1.0; Quarter ended September 30, 2001, 1.6:1.0; and Quarter ended December 31, 2001, 1.7:1.0; (iii) EBITDA: Quarter ended March 31, 2001, $75 million; Quarter ended June 30, 2001, $80 million; Quarter ended September 30, 2001, $80 million; and Quarter ended December 31, 2001 $90 million; and (e) for certain other technical and/or definitional amendments to further the above waivers and amendments. The foregoing is qualified in its entirety by the "Sixth Amendment to Credit Agreement," dated March 30, 2001. There can be no assurances that Gaming can comply with the revised financial covenant levels. Absent an improvement in Gaming's operating results or cash equity

contributions to Gaming pursuant to the Keep-Well Agreement, Gaming estimates that, based on its results year-to-date, it may not be in compliance with the revised financial covenant levels for the quarter ended June 30, 2001.

London Clubs International plc ("London Clubs"), the Sommer Trust, Aladdin Bazaar Holdings, LLC ("Bazaar Holdings"), which is indirectly owned 99% by the Sommer Trust, Jack Sommer, the Company's Chairman of the Board, and his spouse Laura Sommer are guarantors under a completion guaranty ("Bank Completion Guaranty") for the benefit of the lenders under the Bank Credit Facility, under which they have agreed to guarantee, among other things, the completion of the Aladdin. The Bank Completion Guaranty is not subject to any maximum dollar limitations. For payments made pursuant of the Bank Completion Guaranty, Gaming Holdings issues (i) Series A Preferred Shares in exchange for the contribution of such payments and (ii) Series D Preferred Shares representing a profits-only interest in Gaming Holdings. The holders of the Notes are not entitled to the benefit of the Bank Completion Guaranty, however, London Clubs, the Sommer Trust and Bazaar Holdings have entered into a limited completion guaranty for the benefit of the Noteholders ("Noteholder Completion Guaranty") under which they guarantee completion of the Aladdin, subject to certain important exceptions, limitations and qualifications. The Noteholder Completion Guaranty contains certain intercreditor provisions which significantly limit the rights of the Trustee under the Noteholder Completion Guaranty. There can be no assurance that the parties to either the Bank Completion Guaranty or the Noteholder Completion Guaranty will be able to make such payments to the Company if required pursuant to these agreements.

AHL, Bazaar Holdings and London Clubs entered into the Keep-Well Agreement ("Keep-Well Agreement") in favor of the lenders under the Bank Credit Facility. The Sommer Trust joined and became a party to the Keep-Well Agreement in July, 2000 (collectively, AHL, Bazaar Holdings, London Clubs and the Sommer Trust, "Sponsors"). The Keep-Well Agreement is the joint and several agreement of the Sponsors to make certain quarterly cash equity contributions to Gaming if Gaming fails to comply with the Minimum Fixed Charge Coverage Ratio set forth in the Bank Credit Facility, but in no event shall the aggregate cash equity contributions required to be made in any fiscal year of Gaming exceed $30.0 million. Based on Gaming's financial results for the quarter ended March 31, 2001, it is estimated that approximately $13.3 million will be due from the Sponsors under the Keep-Well Agreement ("First Quarter 2001 Keep-Well Payment"). During May, 2001, the Sponsors partially funded the First Quarter 2001 Keep-Well Payment as follows: $1.9 million Sommer Trust; and $1.5 million London Clubs and the Sponsors collectively had previously pre-funded $1.2 million on March 30, 2001. The $8.7 million remaining balance of the First Quarter 2001 Keep-Well Payment is due on or before May 29, 2001. There can be no assurances that the Sponsors will, or will be able to, make further cash equity contributions to Gaming if required pursuant to the Keep-Well Agreement.

10. Liquidity and Management's Plan

Absent an improvement in Gaming's operating results or further cash equity contributions to Gaming pursuant to the Keep-Well Agreement, Gaming estimates that, based on its year-to-date financial results, it may not be in compliance with the quarter ended June 30, 2001, financial covenant levels contained in the Bank Credit Facility and the FF&E Facility, as amended. The Company estimates that cash on hand and projected internally generated funds will be sufficient to fund the Company's current operations, however, such amounts will not be sufficient to fund all the principal and interest payments on the Company's debt for the next twelve months.

In order for the Company to fund all of its principal and interest payments, the Company will continue to rely on payments from its Sponsors, pursuant to the Keep-Well Agreement. Further, the Company and the Sponsors are seeking alternatives to improve the Company's current liquidity, which alternatives may include incurring additional indebtedness, to the extent permissible under the Company's various credit facilities, sale of an adjacent 5-acre parcel of undeveloped land, reaching an agreement with the Company's creditors reducing the Company's liquidity needs and/or equity infusions from either a third party and/or the Sponsors.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the various other reports which have been previously filed with the United States Securities and Exchange Commission ("SEC"), which may be inspected, without charge, at the Public Reference Section of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549 or the SEC internet site address: http://www.sec.gov.

General

Aladdin Gaming Holdings, LLC, a Nevada limited liability company ("Gaming Holdings") is a holding company, the material assets of which are 100% of the outstanding common membership interests and 100% of the outstanding Series A preferred interests of Aladdin Gaming, LLC ("Gaming"). Aladdin Capital Corp. ("Capital") is a wholly owned subsidiary of Gaming Holdings and was incorporated solely for the purpose of serving as a co-issuer of the Gaming Holdings 13¹/2% Senior Discount Notes ("Notes"). Capital does not have any material operations or assets and has no revenues.

Aladdin Holdings, LLC, a Delaware limited liability company ("AHL"), indirectly holds a majority interest in Gaming Holdings. The members of AHL are the Trust Under Article Sixth u/w/o Sigmund Sommer ("Sommer Trust"), which holds a 95% interest in AHL, and GW Vegas, LLC, a Nevada limited liability company, a wholly owned subsidiary of the Trust Company of the West, which holds a 5% interest in AHL.

As of March 31, 2001, Gaming Holdings common membership interests ("Holdings Common Membership Interests") were held 39.953125% by London Clubs Nevada Inc ("LCNI"), a subsidiary of London Clubs International plc ("London Clubs"); 31.859375% by Sommer Enterprises, LLC, a Nevada limited liability company ("Sommer Enterprises"), which is a subsidiary of AHL; 25.0% by Aladdin Gaming Enterprises, Inc., a Nevada corporation ("Gaming Enterprises"), which is a subsidiary of Sommer Enterprises; 3.0% by GAI, LLC, a Nevada limited liability company, which is owned by Richard J. Goeglein, the President and Chief Executive Officer of Gaming Holdings; and 0.1875% by Jose Rueda, a former executive of Gaming Holdings.

Except where the context otherwise requires, Gaming Holdings and its subsidiaries are collectively referred to herein as "Company."

The operations of the Company have been primarily limited to the design, development, construction and, as of August 18, 2000, the operation of a new Aladdin Resort & Casino ("Aladdin"). The Aladdin is the centerpiece of an approximately 35-acre world-class resort, casino and entertainment complex ("Complex"). The Aladdin includes a hotel which has 2,567 rooms ("Hotel"), an approximately 116,000 square foot Casino ("Casino"), five restaurants and one leased restaurant. The Casino's main gaming area contains approximately 2,165 slot machines, 68 table games, keno and a race and sports book facility. Included on a separate level of the Casino is an approximately 15,000 square foot luxurious gaming section ("The London Club at Aladdin") that contains approximately 30 high denomination table games and approximately 85 high denomination slot machines. The Hotel will contain an approximately 32,000 square foot spa, which is currently being constructed, and will be operated, by a subsidiary of Steiner Leisure Limited, and is expected to be completed in the fourth quarter, 2001. The Complex is comprised of: (i) the Aladdin; (ii) a themed entertainment shopping mall with approximately 496,000 square feet of retail space ("Desert Passage"); (iii) the renovated 7,000 seat Theater for the Performing Arts ("Theater"); and (iv) an approximately 4,800 space car parking facility ("Carpark" and, together with the Desert Passage, hereinafter, "Mall Project"). The Mall Project is separately owned in part by an affiliate of the Sommer Trust.

Results of Operations

Three Months Ended March 31, 2001

Until August 18, 2000, the Company was in the development stage and did not have any historical operating income as there were no operating revenues. Prior to August 18, 2000, the Company's operating expenses primarily consisted of interest, amortization costs, expenses related to the Notes and pre-opening costs. Due to the short operating period, there will not be a comparative discussion of prior periods included in this Form 10-Q. Historical results may not be indicative of future operating results.

For the quarter ended March 31, 2001, the Aladdin produced gross revenues of $82.5 million. Casino revenue (which includes both the main Casino and The London Club at Aladdin) represented 40% of gross revenue, hotel 34% of gross revenue, food and beverage 22% of gross revenue, and entertainment and other revenue 4% of gross revenue. The net loss for the quarter was $47.2 million including the recording of an Accumulated effect of change in accounting principle expense of $10.7 million and an Interest rate collar expense of $8.5 million related to the adoption of SFAS No. 133.

Revenues

The Casino revenues (inclusive of The London Club at Aladdin) of $33.1 million were derived $15.8 million from slot operations, $16.8 million from table games and $.5 million from other sources of gaming revenue. The London Club at Aladdin produced $7.3 million of Casino revenues, $6.7 million from table games and $.6 million from slot operations.

The overall table games gross win percentage was 14.5% for the quarter ended March 31, 2001, while the average daily win per table game was $2,115. The Company expects the normal gross win percentage to be approximately 17.5% for table games. The overall average slot gross daily win per unit was $86 during the quarter ended March 31, 2001.

During March 2001, the Company hired two new Casino marketing executives, who have been focused on slot and table games marketing. Casino marketing efforts have been focused on enhancing the customer data base, implementing an aggressive direct mail program and increasing the number of entertainment events in the Theater for Performing Arts and Casino events and promotions. The Company also completed a reconfiguration of the slot gaming floor. The Company believes such redesign has improved the competitiveness of the slot machine product and has enhanced customer traffic flow. Currently, the Company operates approximately 2,250 slot machines and 98 table games. Slot gross daily win per unit improved during the quarter from $72 in January, 2001, to $101 in March, 2001. The Company estimates the new programs and slot gaming floor reconfiguration will continue to improve Casino revenues during the second quarter 2001. There can be no assurances that such improvement will be significant or that other negative factors could arise offsetting such improvement.

The Company experienced hotel occupancy of 89.5% at an average daily rate of $139 during the quarter ended March 31, 2001. During the quarter ended March 31, 2001, the Company completed organizational changes to its marketing and advertising functions with the implementation of new media and advertising campaigns. The Company increased occupancy from 78% in January, 2001, to 90% and 99% for February and March, 2001, respectively. Occupancy trends are expected to continue in the 95% range during the second quarter 2001.

Costs and Expenses

The Company continued its cost containment and profit enhancement programs during the quarter ended March 31, 2001. The programs primarily focused on labor efficiency and procurement activities. The Company reduced its full time equivalent number of employees from approximately 4,500 upon

opening of the Aladdin to approximately 3,050 as of May 7, 2001, which the Company believes will result in approximately $10.0 million of annual labor cost savings. There can be no assurances that savings realized will be significant or that other negative factors could arise off setting such improvement.

Other Factors Affecting Earnings

On January 1, 2001, the Company adopted the SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." The Company recorded a liability of $19.2 million representing the fair market value of its interest rate collars at March 31, 2001. Corresponding to the adoption of SFAS No. 133, the Company recorded a $10.7 million accumulated effect of change in accounting principle and $8.5 million interest rate collar expense on the Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2001.

Liquidity and Capital Resources

During the quarter ended March 31, 2001, the Company generated net cash of approximately $1.1 million from operating activities and raised $10.8 million from the Sponsors' contributions pursuant to the Keep-Well Agreement requirement related to the quarter ended December 31, 2000. The combined funds were utilized primarily to fund principal payments of $5.6 million. The unrestricted cash balance during the period increased approximately $5.3 million to $25.5 million as of March 31, 2001 (see the Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2001, contained in this Form 10-Q). On May 3, 2001, the Company made its scheduled interest payment of approximately $11.3 million related to the Bank Credit Facility.

As of March 31, 2001, the Company estimated that remaining project construction payables were $11.6 million. During May, 2001, the Company utilized restricted funds to pay approximately $8.0 million toward the project construction costs, The Company anticipates utilizing $3.6 million of restricted funds during the second quarter 2001 to satisfy all remaining construction related payables.

Due Date	Form	Amount
6/29/01	Principal	$4.8 million
6/29/01	Interest	$0.1 million
7/31/01	Interest	$8.8 million
9/28/01	Principal	$5.8 million
9/28/01	Interest	$0.1 million
10/31/01	Interest	$8.8 million
12/31/01	Principal	$5.8 million
12/31/01	Interest	$0.1 million
1/31/02	Interest	$8.5 million
3/31/02	Principal	$5.8 million
3/31/02	Interest	$0.1 million
5/01/02	Interest	$8.3 million

TOTAL		$57.0 million

The estimated principal and interest payments pursuant to the FF&E Facility for the next twelve months are as follows:

Due Date	Form	Amount
6/1/01	Principal	$.65 million
6/1/01	Lease Payment	$3.35 million
6/1/01	Interest	$.47 million
9/3/01	Principal	$.65 million
9/3/01	Lease Payment	$3.25 million
9/3/01	Interest	$.42 million
12/1/01	Principal	$.70 million
12/1/01	Lease Payment	$3.24 million
12/1/01	Interest	$.40 million
3/1/02	Principal	$.70 million
3/1/02	Lease Payment	$3.23 million
3/1/02	Interest	$.38 million

TOTAL		$17.44 million

On March 30, 2001, Gaming and the various lenders under the Bank Credit Facility amended the Bank Credit Facility. This amendment provided: (a) a waiver of Gaming's compliance with the total debt to EBITDA ratio, the interest coverage ratio and the EBITDA covenants required pursuant to the Bank Credit Facility for the fiscal quarters ending on or prior to March 31, 2001; (b) a waiver until August 18, 2001, of the requirement to fund the FF&E reserve, provided that Gaming cannot make certain restricted payments until the FF&E reserve is funded as otherwise required by the Bank Credit Facility; (c) a waiver of the default that otherwise would have occurred as a result of a 'going concern' qualification to the Company's auditor's report in respect of the Company's financial statements for the fiscal year ended December 31, 2000; (d) amendments to certain of Gaming's financial covenants. The foregoing is qualified in its entirety by the 'Sixth Amendment to Credit Agreement,' dated March 30, 2001. There can be no assurances that Gaming can comply with the revised financial covenant levels. Absent an improvement in Gaming's operating results or cash equity contributions to Gaming pursuant to the Keep-Well Agreement, as defined below, Gaming estimates that, based on its results year-to-date, it may not be in compliance with the revised financial covenant levels for the quarter ended June 30, 2001. Corresponding amendments and waivers have been made to the FF&E Facility.

AHL, Bazaar Holdings and London Clubs entered into the Keep-Well Agreement ("Keep-Well Agreement") in favor of the lenders under the Bank Credit Facility. The Sommer Trust joined and became a party to the Keep-Well Agreement in July, 2000 (collectively, AHL, Bazaar Holdings, London Clubs and the Sommer Trust, "Sponsors"). The Keep-Well Agreement is the joint and several agreement of the Sponsors to make certain quarterly cash equity contributions to Gaming if Gaming fails to comply with the Minimum Fixed Charge Coverage Ratio set forth in the Bank Credit Facility, but in no event shall the aggregate cash equity contributions required to be made in any fiscal year of Gaming exceed $30.0 million. Based on Gaming's financial results for the quarter ended March 31, 2001, it is estimated that approximately $13.3 million will be due from the Sponsors under the Keep-Well Agreement ("First Quarter 2001 Keep-Well Payment"). During May, 2001, the Sponsors partially funded the First Quarter 2001 Keep-Well Payment as follows: $1.9 million Sommer Trust; and $1.5 million London Clubs and the Sponsors collectively pre-paid $1.2 million on March 30, 2001. The $8.7 million remaining balance of the First Quarter 2001 Keep-Well Payment is due on or before May 29, 2001. There can be no assurances that the Sponsors will, or will be able to, make further cash equity contributions to Gaming if required pursuant to the Keep-Well Agreement.

Market Risk

The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposure of Gaming. The amounts exchanged are based on the notional amounts and other terms of the swaps. The variable rates are subject to change over time as LIBOR fluctuates.

Neither Gaming nor the counterparty, which is a prominent financial institution, is required to collateralize their respective obligations under these swaps. Gaming is exposed to loss if the counterparty defaults. However, the Company considers the risk of non-performance to be minimal as the counterparty is a member of the Bank Credit Facility.

Gaming has a credit facility with various financial institutions which consists of four separate term loans. Gaming pays interest on each term loan at LIBOR plus between 150 and 300 basis points. Gaming has entered into the collar instruments discussed above to assist in managing interest variability on its long-term debt. If the notional amounts on the collar differs from the long-term debt balances, Gaming may be exposed to additional interest rate variability. On the aforementioned collar instruments, Gaming will pay the hedge counterparty to the extent that the three-month LIBOR drops below 6.25% and will receive payments from the hedge counterparty to the extent the three-month LIBOR exceeds 8.0% on the then outstanding notional amount of such instruments.

Certain Forward Looking Statements

Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the United States Securities and Exchange Commission (as well as information included in oral statements or other written statements made, or to be made, by the Company) contain statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, without limitation, those relating to the Bank Credit Facility, FF&E Facility, the Keep-Well Agreement and other agreements, plans for future operations, current operations, other business development activities, capital spending, financing sources and the effect of regulation (including gaming and tax regulations) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, those relating to the current development and operations, the Company's liquidity and the extent of the Company's alternatives thereto, the sources and extent of the Sponsors' liquidity and the Sponsors' payments under the Keep-Well Agreement, dependence on existing management, leverage and debt service, domestic or international economic conditions, changes in federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions) and retention of licenses and approvals under applicable jurisdictional laws and regulations (including gaming laws and regulations).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There is incorporated by reference the information appearing under the caption "Market Risk" in Item 2 of this Form 10-Q.

Item 6. Exhibits and Reports on Form 8-K


(a)	Exhibits
	10.01	Sixth Amendment to Credit Agreement, dated as of March 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
	10.02	First Amendment to Keep-Well Agreement, dated as of March 30, 2001, between London Clubs International plc, The Trust under Article Sixth under the will of Sigmund Sommer, Aladdin Bazaar Holdings, LLC, and Aladdin Holdings LLC and The Bank of Nova Scotia, as the Administrative Agents for Various Financial Institutions.
	10.03	Agreement of Amendment No. 5, dated the 30^th day of March, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and Aladdin Gaming, LLC.
(b)	Reports on Form 8-K: None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

	ALADDIN GAMING HOLDINGS, LLC
May 15, 2001	By:	/s/ RICHARD J. GOEGLEIN Richard J. Goeglein, President and Chief Executive Officer
May 15, 2001	By:	/s/ THOMAS A. LETTERO Thomas A. Lettero,Senior Vice President and Chief Financial Officer

	ALADDIN CAPITAL CORP.
May 15, 2001	By:	/s/ RICHARD J. GOEGLEIN Richard J. Goeglein, Chief Executive Officer
May 15, 2001	By:	/s/ THOMAS A. LETTERO Thomas A. Lettero, Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
10.01		Sixth Amendment to Credit Agreement, dated as of March 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
10.02		First Amendment to Keep-Well Agreement, dated as of March 30, 2001, between London Clubs International plc, The Trust under Article Sixth under the will of Sigmund Sommer, Aladdin Bazaar Holdings, LLC, and Aladdin Holdings LLC and The Bank of Nova Scotia, as the Administrative Agents for Various Financial Institutions.
10.03		Agreement of Amendment No. 5, dated the 30^th day of March, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and Aladdin Gaming, LLC.

QuickLinks

ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES
INDEX
ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001 AND DECEMBER 31, 2000 (In Thousands)
ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 (In Thousands)
ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 (In Thousands)
ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 (CONTINUED) (In Thousands)
ALADDIN GAMING HOLDINGS, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001
SIGNATURES
EXHIBIT INDEX
EX-10.01 2 a2046910zex-10_01.txt EXHIBIT 10.01 EXHIBIT 10.01 SIXTH AMENDMENT TO CREDIT AGREEMENT Dated as of March 30, 2001 (amending the Credit Agreement, dated as of February 26, 1998) between ALADDIN GAMING, LLC, as the Borrower, and THE BANK OF NOVA SCOTIA, as the Administrative Agent for Various Financial Institutions. ================================================================================ SIXTH AMENDMENT TO CREDIT AGREEMENT THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "SIXTH AMENDMENT TO CREDIT AGREEMENT") is dated as of March 30, 2001, by and between ALADDIN GAMING, LLC, a Nevada limited-liability company (the "BORROWER") and THE BANK OF NOVA SCOTIA, as administrative agent (together with any successor thereto in such capacity, the "ADMINISTRATIVE AGENT") for the various financial institutions as are or may become parties hereto (collectively, the "LENDERS"). In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, the Lenders, the Administrative Agent, Merrill Lynch Capital Corporation, as the syndication agent for the Lenders, and CIBC Oppenheimer Corp., as the documentation agent for the Lenders, have heretofore entered into (u) that certain Credit Agreement (the "CA") dated as of February 26, 1998, (v) that certain First Amendment to Credit Agreement (the "FIRST AMENDMENT TO CREDIT AGREEMENT") dated as of January 29, 1999, (w) that certain Second Amendment to Credit Agreement (the "SECOND AMENDMENT TO CREDIT AGREEMENT") dated as of April 5, 1999, effective as of March 10, 1999, (x) that certain Third Amendment to Credit Agreement (the "THIRD AMENDMENT TO CREDIT AGREEMENT") dated as of June 2, 2000, (y) that certain Fourth Amendment to Credit Agreement (the "FOURTH AMENDMENT TO CREDIT AGREEMENT") dated as of July 27, 2000 and (z) that certain Fifth Amendment to Credit Agreement (the "FIFTH AMENDMENT TO CREDIT AGREEMENT") dated as of December 29, 2000 (the CA, as amended by the First Amendment to Credit Agreement, the Second Amendment to Credit Agreement, the Third Amendment to Credit Agreement, the Fourth Amendment to Credit Agreement and the Fifth Amendment to Credit Agreement shall be referred to herein as the "CREDIT AGREEMENT"); and WHEREAS, the Borrower has requested the Lenders to acknowledge certain waivers under the Credit Agreement and enter into certain amendments of the Credit Agreement; and WHEREAS, each of the parties hereto is willing, on the terms and subject to the conditions hereinafter set forth, to so amend the Credit Agreement and grant the waivers, but only upon the terms and conditions set forth below. 1 NOW, THEREFORE, in consideration of the agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. CERTAIN DEFINED TERMS. The following terms (whether or not italicized) when used in this Sixth Amendment to Credit Agreement and the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement, including all preamble and recitals, shall, except where the context otherwise requires, have the following meanings: "CONSENTING LENDER" is defined in SECTION 5.2. "CONVERSION DATE" means August 18, 2000. "EFFECTIVE DATE" is defined in SECTION 5.1. "FIFTH AMENDMENT TO CREDIT AGREEMENT" is defined in the FIRST RECITAL. "FIRST AMENDMENT TO CREDIT AGREEMENT" is defined in the FIRST RECITAL. "FIRST AMENDMENT TO KEEP-WELL AGREEMENT" is defined in CLAUSE (a) of SECTION 5.1. "FOURTH AMENDMENT TO CREDIT AGREEMENT" is defined in the FIRST RECITAL. "OPENING DATE" means August 18, 2000. "POST-CONVERSION FISCAL QUARTERS" shall mean the Fiscal Quarters ended or ending December 31, 2000, March 31, 2001 and June 30, 2001. "SECOND AMENDMENT TO CREDIT AGREEMENT" is defined in the FIRST RECITAL. "SIXTH AMENDMENT FEE" is defined in SECTION 5.2. "SIXTH AMENDMENT TO CREDIT AGREEMENT" is defined in the PREAMBLE. "THIRD AMENDMENT TO CREDIT AGREEMENT" is defined in the FIRST RECITAL. "WORKING CAPITAL FACILITY" means a credit facility pursuant to any agreement or agreements for the making of loans and advances on a revolving basis, the issuance of letters of credit and/or the creation of bankers' acceptances to fund the Company's general corporate 2 requirements and any amendment, supplement, extension, modification, renewal, replacement or refinancing from time to time, including any agreement to renew, extend, refinance, or replace all or any portion of such facility. SECTION 1.2. OTHER DEFINED TERMS; CONSTRUCTION. For purposes of this Sixth Amendment to Credit Agreement, capitalized terms used but not defined herein shall have the meanings assigned to them in the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement, and the rules of construction set forth in ARTICLE I of the CA shall apply to this Sixth Amendment to Credit Agreement. ARTICLE II AMENDMENTS SECTION 2.1. AMENDMENTS. The parties hereto hereby agree that provided that the Borrower has delivered an opinion of counsel (the "COUNSEL OPINION") which conforms to the requirements of CLAUSE (h) of SECTION 5.1 (or alternatively the Borrower delivers an amendment to the GECC Facilities Agreement, the GECC Intercreditor Agreement or the Discount Note Indenture, as applicable, which includes all of the amendments set forth in this Sixth Amendment), from and after the Effective Date, the following amendments shall be made to the Credit Agreement: (a) From and after the Effective Date, the definitions of "APPLICABLE BASE RATE MARGIN", "APPLICABLE LIBO RATE MARGIN", "EBITDA", "EXCESS CASH FLOW", "FISCAL QUARTER", "FQ", "INTEREST COVERAGE RATIO", "MINIMUM FIXED CHARGE COVERAGE RATIO" and "TOTAL DEBT TO EBITDA RATIO" in the CA shall be deleted in their entirety and the following definitions shall be substituted in their place: "APPLICABLE BASE RATE MARGIN" means, (w) relative to any Term B Loan, 2.50% PER ANNUM, (x) relative to any Term C Loan, 3.00% PER ANNUM; (y) relative to any Term D Loan, 3.50% PER ANNUM; and (z) relative to any Term A Loan, (1) on any date prior to February 18, 2001, 2.00% PER ANNUM and (2) on any date from and after February 18, 2001, the PER ANNUM percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate:

3 ~~Equal or greater than 2.5:1 and less than 3.0:1 0.75% Less than 2.5:1 0.50%"~~

"APPLICABLE LIBO RATE MARGIN" means, (w) relative to any Term B Loan, 3.50% PER ANNUM, (x) relative to any Term C Loan, 4.00% PER ANNUM; (y) relative to any Term D Loan, 4.50% PER ANNUM; and (z) relative to any Term A Loan, (1) on any date prior to February 18, 2001, 3.00% PER ANNUM and (2) on any date from and after February 18, 2001, the PER ANNUM percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate:
Applicable LIBO Total Debt to EBITDA Ratio Rate Margin -------------------------- ---------------- Equal or greater than 4.5:1 3.00% Equal or greater than 4.0:1 and less than 4.5:1 2.75% Equal or greater than 3.5:1 and less than 4.0:1 2.50% Equal or greater than 3.0:1 and less than 3.5:1 2.00% Equal or greater than 2.5:1 and less than 3.0:1 1.75% Less than 2.5:1 1.50%"
"'EBITDA' means, for the Borrower only, for any applicable period, the sum (without duplication) of (a) Net Income for such period, PLUS (b) the amount deducted by the Borrower, in determining Net Income for such period, representing (i) Interest Expense of the Borrower; PLUS (ii) the amount deducted, in determining Net Income, of all federal, state and local income taxes (whether paid in cash or deferred) of the Borrower or, if the Borrower is treated as a pass-through entity or is not treated as a separate entity for United States federal income tax purposes, the amount of Restricted Payments made by the Borrower in accordance with CLAUSE (c) of SECTION 7.2.6, subject to the terms thereof; 4 PLUS (iii) depreciation of assets of the Borrower; PLUS (iv) amortization; PLUS (c) the amount of Cash Equity Contributions (as defined in the Keep-Well Agreement) made by one or more of the Sponsors in accordance with the Keep-Well Agreement attributable to such period; PLUS (d) the amount of Cash Contributions to Capital; PROVIDED, HOWEVER, that in computing EBITDA for purposes of determining the `Total Debt to EBITDA Ratio' in CLAUSE (h)(i)(b) of SECTION 7.2.6 or the amount of `Excess Cash Flow', the `Applicable Base Rate Margin' or the `Applicable LIBO Rate Margin', SUBCLAUSES (c) and (d) shall be excluded from such computation; and, FURTHER PROVIDED, in computing EBITDA for any period of four consecutive Fiscal Quarters ending on or prior to June 30, 2001 for purposes of determining compliance with respect to the covenants in CLAUSES (a), (b) and (d) of SECTION 7.2.4, EBITDA for such period shall equal the product of (x) the sum of the amounts determined pursuant to CLAUSES (a) and (b) for all Post-Conversion Fiscal Quarters that have then been completed MULTIPLIED BY (y) a fraction, the numerator of which is equal to 4 and the denominator of which is equal to the number of Post-Conversion Fiscal Quarters which have then been completed; and, FURTHER PROVIDED, that in computing EBITDA for purposes of determining compliance with the covenant in CLAUSE (e) of SECTION 7.2.4 for any Fiscal Quarter ending on or prior to June 30, 2001, EBITDA shall be calculated for the period beginning on August 18, 2000 and ending on the date of the most recently completed Post-Conversion Fiscal Quarter. "`EXCESS CASH FLOW' means, for any Fiscal Quarter, the excess (if any), of (a) EBITDA for such Fiscal Quarter OVER (b) the sum (during such Fiscal Quarter) of (i) Interest Expense of the Borrower actually paid in cash by the Borrower; 5 PLUS (ii) scheduled payments, to the extent actually made, of the principal amount of the Loans pursuant to SECTION 3.1.1 and scheduled principal repayments made with respect to the $20,000,000 term loan facility which is a part of the FF&E Financing, to the extent actually made; PLUS (iii) the amount of all federal, state and local income taxes (whether paid in cash or deferred) of the Borrower paid in cash by the Borrower or, if the Borrower is treated as a pass-through entity or is not treated as a separate entity for United States federal income tax purposes, the amount of Restricted Payments made in cash by the Borrower in accordance with CLAUSE (c) of SECTION 7.2.6, subject to the terms thereof; PLUS (iv) the amount of all Restricted Payments on the Borrower Series A Preferred Membership Interests made in accordance with CLAUSE (d) of SECTION 7.2.6; PLUS (v) Capital Expenditures actually made or reserved by the Borrower." "FISCAL QUARTER" or "FQ" means a calendar quarter ending on the last day of March, June, September or December; references to FQ 1 refer to the Fiscal Quarter which closed on December 31, 2000 and references to FQs after FQ1 (E.G., FQ2) refer to the number of Fiscal Quarters then to have elapsed in whole or in part since the date on which FQ1 commenced. "INTEREST COVERAGE RATIO" means, at the close of any Fiscal Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters of: (a) EBITDA for the period of four consecutive Fiscal Quarters then ended (determined for any period ending on or prior to June 30, 2001 consistently with the PROVISO to the definition of the term `EBITDA') TO (b) Interest Expense of the Borrower for such period; 6 PROVIDED, HOWEVER, that in computing the Interest Coverage Ratio for any period of four consecutive Fiscal Quarters ending on or prior June 30, 2001, the amount determined pursuant to CLAUSE (b) shall equal the product of (x) the aggregate Interest Expense for all Post-Conversion Fiscal Quarters that have then been completed, MULTIPLIED BY (y) a fraction, the numerator of which is equal to 4 and the denominator of which is equal to the number of Post-Conversion Fiscal Quarters which have then been completed." "`MINIMUM FIXED CHARGE COVERAGE RATIO' means, as of the close of any Fiscal Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters (or such lesser number of Fiscal Quarters that have closed since the Conversion Date) of: (a) EBITDA (for all such Fiscal Quarters or shorter period, as the case may be, and determined for any Fiscal Quarter ending on or prior to June 30, 2001, consistently with the PROVISO to the definition of `EBITDA'); TO (b) the sum (for all such Fiscal Quarters or such shorter period, as the case may be) of (i) Interest Expense; PLUS (ii) scheduled principal repayments of the Loans pursuant to CLAUSES (b) and (c) of SECTION 3.1.1 after giving effect to any reductions in such scheduled principal repayments attributable to any optional or mandatory prepayments of the Loans and scheduled principal repayments made with respect to the $20,000,000 term loan facility which is a part of the FF&E Financing; PLUS (iii) the amount of all federal, state and local income taxes (whether paid in cash or deferred) of the Borrower paid by the Borrower or, if the Borrower is treated as a pass-through entity or is not treated as a separate entity for United States federal income tax purposes, the amount of Restricted Payments made by the Borrower in accordance with CLAUSE (c) of SECTION 7.2.6, subject to the terms thereof, in each case, in cash during such Fiscal Quarters; PLUS 7 (iv) Restricted Payments of the types described in CLAUSE (d) of SECTION 7.2.6 made in cash during such Fiscal Quarters; PLUS (v) Capital Expenditures of the Borrower actually made or reserved during all such Fiscal Quarters pursuant to SECTION 7.2.7; PROVIDED, HOWEVER, that in computing the Minimum Fixed Charge Coverage Ratio for any Fiscal Quarter ending on or prior to June 30, 2001, the amount determined pursuant to CLAUSE (b) shall equal the sum of the amounts determined pursuant to CLAUSE (b) for the period beginning on August 18, 2000 and ending on the date of the most recently completed Post-Conversion Fiscal Quarter." "`TOTAL DEBT TO EBITDA RATIO' means, as of the end of any Fiscal Quarter, the ratio of (a) Total Debt outstanding on the last day of such Fiscal Quarter TO (b) EBITDA computed for the period consisting of such Fiscal Quarter and each of the three immediately preceding Fiscal Quarters (determined for any period ending on or prior to June 30, 2001, consistently with the PROVISO to the definition of the term `EBITDA')." (b) From and after the Effective Date, clause (c) of Section 3.1.1 of the Credit Agreement shall be deleted in its entirety and the following clause (c) shall be substituted in its place: "(c) (i) From and after the Conversion Date, the Borrower shall make mandatory prepayments of principal (the `MANDATORY PREPAYMENTS') of all Loans in addition to the Scheduled Amortization on the dates and in the amounts set forth in SCHEDULE III annexed to the Sixth Amendment to Credit Agreement; PROVIDED, HOWEVER, on any date on which a Mandatory Prepayment is to be made, any Term B Lender, any Term C Lender or any Term D Lender may elect not to receive its portion of such Mandatory Prepayment in which case 50% of the portion of the Mandatory Prepayment which was to have been made to such Lender shall be paid PRO RATA to (x) the Term B Lenders, the Term C Lenders and the Term D Lenders which have elected to receive their portions of such Mandatory Prepayment and (y) the Term A Lenders which have made a Term A Loan (up to the outstanding amount of the Term A Loans), and upon the payment of such 50% portion of such Mandatory Prepayment, the Borrower shall be deemed to have satisfied its obligations to make such Mandatory Prepayment. Except as set forth in the proviso of the immediately preceding sentence, Mandatory Prepayments will be applied PRO RATA in 8 inverse order among the Term A Loan, the Term B Loan, the Term C Loan and the Term D Loan. (ii) The `RELEASE PRICE' (as such term is defined in the Fourth Amendment to Credit Agreement) will be applied in forward order ratably among the aggregate outstanding principal balance of the Loans; PROVIDED, HOWEVER, on the date on which the Release Price is to be paid, any Term B Lender, any Term C Lender or any Term D Lender may elect not to receive its portion of such Mandatory Prepayment in which case the Release Price shall be paid PRO RATA to (x) the Term B Lenders, the Term C Lenders and the Term D Lenders which have elected to receive their portions of the Release Price and (y) the Term A Lenders which have made a Term A Loan (up to the outstanding amount of the Term A Loans)." (c) From and after the Effective Date, Section 7.2.4 of the Credit Agreement shall be deleted in its entirety and the following Section 7.2.4 shall be substituted in its place: "SECTION 7.2.4 FINANCIAL CONDITION AND OPERATIONS. The Borrower will not, as of the close of any Fiscal Quarter, commencing with the applicable Fiscal Quarter set forth below, permit: (a) TOTAL DEBT TO EBITDA RATIO. The Total Debt to EBITDA Ratio at the close of the applicable Fiscal Quarter set forth below to exceed the ratio set forth opposite such Fiscal Quarter:
Total Debt to Fiscal Quarter EBITDA Ratio -------------- --------------- FQ 1 (closing on December 31, 2000) 4.1:1 FQ 2 6.4:1 FQ 3 6.0:1 FQ 4 6.0:1 FQ 5 5.1:1 FQ 6 3.60:1 FQ 7 3.60:1 FQ 8 3.25:1 FQ 9 3.25:1 FQ 10 2.85:1
9
Total Debt to Fiscal Quarter EBITDA Ratio -------------- --------------- FQ 11 2.85:1 FQ 12 2.55:1 FQ 13 2.55:1 FQ 14 2.40:1 FQ 15 2.40:1 FQ 16 2.25:1 FQ 17 2.25:1 FQ 18 2.15:1 FQ 19 2.15:1 FQ 20 and each Fiscal Quarter thereafter 2.00:1
(b) INTEREST COVERAGE RATIO. The Interest Coverage Ratio as of the close of the Fiscal Quarter set forth below shall not be less than the ratio set forth opposite such Fiscal Quarter.
Interest Fiscal Quarter Coverage Ratio -------------- --------------- FQ 1 (closing on December 31, 2000) 2.0:1 FQ 2 1.6:1 FQ 3 1.6:1 FQ 4 1.6:1 FQ 5 1.7:1 FQ 6 and each Fiscal Quarter thereafter 2.0:1
(c) NET WORTH. Net Worth as of the close of any calendar month, commencing on August 31, 2000, to be less than the sum of $100,000,000 PLUS 85% of positive Net Income (after giving effect to the amount of Restricted Payments made by the Borrower in cash in accordance with CLAUSES (a) and (c) of SECTION 7.2.6, subject to the terms thereof for the period, treated as one accounting period). (d) EBITDA. EBITDA at the close of any such Fiscal Quarter (determined for such Fiscal Quarter and the three immediately preceding such Fiscal Quarters or for any Fiscal Quarter ended on or prior to June 30, 2001, determined consistently with the 10 PROVISO to the definition of the term `EBITDA') during any period set forth below to be less than the amount set forth below opposite such period:
Fiscal Quarter Amount -------------- --------------- FQ 1 (closing on December 31, 2000) $105,000,000 FQ 2 $75,000,000 FQ 3 $80,000,000 FQ 4 $80,000,000 FQ 5 $90,000,000 each of FQ 6, FQ 7 and FQ 8 $110,000,000 each of FQ 9, FQ 10, FQ 11 and FQ 12 $120,000,000 each of FQ 13, FQ 14, FQ 15, and FQ 16 $125,000,000 each of FQ 17, FQ 18, FQ 19 and FQ 20 $130,000,000 FQ 21 and each Fiscal Quarter thereafter $140,000,000
(e) MINIMUM FIXED CHARGE COVERAGE. The Minimum Fixed Charge Coverage Ratio for the Fiscal Quarter closing on December 31, 2000 and on the close of each Fiscal Quarter thereafter shall not be less than 1.10:1." (d) From and after the Effective Date, clause (h) of Section 7.2.6 of the Credit Agreement shall be deleted in its entirety and the following clause (h) shall be substituted in its place: "(h) notwithstanding the provisions of CLAUSE (a) above, the Borrower shall be permitted to make Restricted Payments as dividends or distributions to its stockholders in any Fiscal Quarter following the Conversion Date, so long as (i) the Borrower shall have delivered to the Administrative Agent (A) financial statements prepared on a PRO FORMA basis to give effect to such Restricted Payment for the Fiscal Quarter (the "BASE FISCAL QUARTER") then last ended for which financial statements and the Compliance Certificate relating thereto have been delivered to the Administrative Agent pursuant to SECTION 7.1.1, and 11 (B) a certificate of the Borrower executed by its chief financial or accounting Authorized Representative demonstrating that the financial results reflected in such financial statements would result in a Total Debt to EBITDA Ratio at the Close of any such Base Fiscal Quarter occurring during any period set forth below to be less than the ratio set forth opposite such period:
Total Debt to Period Of FQS EBITDA Ratio ------------- ------------- ~~FQ1 (closing on December 31, 3.50:1 2000) through FQ4 FQ5 through FQ8 3.25:1 FQ9 and thereafter 3.00:1; and~~
(ii) the aggregate amount of such Restricted Payment to be made by the Borrower pursuant to this CLAUSE (h), when added to the aggregate amount of all such Restricted Payments during the Fiscal Quarter in which such Restricted Payment would be made, does not exceed the lesser of (A) the sum of (1) 50% of Net Income for the Base Fiscal Quarter PLUS (2) the amount of Cash Contributions to Capital and (B) an amount equal to the excess of (1) Excess Cash Flow for the Base Fiscal Quarter OVER (2) the amount of Mandatory Prepayments required to have been made pursuant to CLAUSE (c) of SECTION 3.1.1 (without giving effect to the proviso to such Section) for the Base Fiscal Quarter;" (e) From and after the Effective Date, the heading of Section 7.2.23 of the Credit Agreement shall be "Net Worth" and the first sentence of said Section shall be deemed deleted in its entirety and the following sentence substituted in its place: "Commencing on August 31, 2000, the Borrower shall perform the covenant in clause (c) of Section 7.2.4, as such Section was amended by the Sixth Amendment to Credit Agreement." ARTICLE III WAIVERS BY THE LENDERS; AGREEMENT TO DEFER SECTION 3.1. WAIVERS PERTAINING TO FINANCIAL CONDITION AND OPERATIONS. The Borrower does not expect to perform its covenants under clause (a), clause (b) and clause (d) of Section 7.2.4 of the Credit Agreement, as amended by this Sixth Amendment to Credit 12 Agreement, with respect to the Fiscal Quarters ending on or prior to December 31, 2000. As of the Effective Date, the Lenders agree that (x) the Borrower's failure to perform its covenants under clause (a), clause (b) and clause (d) of Section 7.2.4 of the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement, are hereby waived with respect to the Fiscal Quarters ending on or prior to March 31, 2001 and (y) the requirement in clause (c) of Section 7.1.1 of the Credit Agreement that the annual audited financial statements under said clause shall not include any Impermissible Qualification is hereby waived with respect to the Borrower and Subsidiaries and the other Aladdin Parties for the Fiscal Year ending December 31, 2000. SECTION 3.2. WAIVER AND DEFERRAL PERTAINING TO FUNDING OF FF&E RESERVE. The Borrower has not performed its obligation under Section 7.1.3 of the Credit Agreement to fund on a monthly basis, from and after the Opening Date, the FF&E Reserve at the percentage of Gross Revenues for Year 1 (ending as of August 18, 2001). The Borrower has asked the Lenders to waive such Default and to agree that the Borrower may defer such fundings for Year 1 until such time as amounts are available to the Borrower to make the Restricted Payments permitted under clauses (c), (d), (g) or (h) in Section 7.2.6 of the Credit Agreement. As an inducement to the Lenders to grant the waiver and deferral, the Borrower covenants and agrees that it shall not make any Restricted Payments under clauses (c), (d), (g) or (h) of Section 7.2.6 of the Credit Agreement until such time as the FF&E Reserve has been funded in accordance with Section 7.1.3 of the Credit Agreement (without giving effect to the deferral granted herein) and the Borrower has otherwise satisfied all other conditions to making such Restricted Payments. The Lenders agree that such waiver and agreement to permit such deferral shall be effective from and after the Effective Date. ARTICLE IV CERTAIN RESTRICTED PAYMENT SECTION 4.1. CERTAIN RESTRICTED PAYMENT. The Lenders confirm that the Restricted Payment in clause (f) of Section 7.2.6 of the Credit Agreement is an amount which is to be deducted in determining Net Income; PROVIDED, HOWEVER, the making of any such Restricted Payment by the Borrower shall be subject to the applicable provisions of Section 7.2.6 of the Credit Agreement. ARTICLE V CONDITIONS PRECEDENT AND COVENANT; AMENDMENT FEE SECTION 5.1. CONDITIONS TO EFFECTIVENESS. This Sixth Amendment to Credit Agreement shall be and become effective on the date (the "EFFECTIVE DATE") on which each of the following conditions precedent shall have been satisfied. 13 (a) DELIVERIES. The Administrative Agent shall have received counterparts of (i) this Sixth Amendment to Credit Agreement executed by Authorized Representatives of the Borrower and the Administrative Agent; (ii) the Ratification and Reaffirmation executed by Authorized Representatives of each of the parties thereto; (iii) the First Amendment to Keep-Well Agreement of even date (the "FIRST AMENDMENT TO KEEP-WELL AGREEMENT") from London Clubs, the Trust, ABH and AHL; (iv) a consent from GECC and, if required, the Discount Note Indenture Trustee to the execution and delivery hereof in form and content satisfactory to the Administrative Agent; and (v) such other documents required by the Administrative Agent or any of the Lenders. (b) INCUMBENCY, ETC. The Administrative Agent shall have received (with copies for each Lender) a certificate, dated as of the date of the Sixth Amendment to Credit Agreement, of an Authorized Representative of (i) the Borrower certifying (x) as to the incumbency and signatures of the Person or Persons authorized to execute and deliver this Sixth Amendment to Credit Agreement and any instruments or agreements required hereunder, (y) as to an attached copy of one or more resolutions or other authorizations of the manager of the Borrower certified by the Authorized Representative of such manager as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Sixth Amendment to Credit Agreement and any instruments or agreements required hereunder, and (z) that the Organizational Documents of the Borrower have not been modified since the date on which they were last delivered to the Administrative Agent, and (ii) each signatory to the First Amendment to Keep-Well Agreement and the Ratification and Reaffirmation certifying (x) as to the incumbency and signatures of the Person or Persons authorized to execute and deliver such Instrument on behalf of such signatory, (y) as to an attached copy of one or more resolutions or other authorizations of (A) the Board of Directors certified by the Authorized Representative of such signatory or (B) the manager of such signatory certified by the Authorized Representative of such manager, as applicable, each as being in full force and effect on the 14 date hereof, authorizing the execution, delivery and performance of such Instrument, and (z) that the Organizational Documents of such signatory have not been modified since the date on which they were last delivered to the Administrative Agent, upon which certificate the Administrative Agent and each Lender (collectively, the "FINANCING PARTIES") may conclusively rely until it shall have received a further certificate of an Authorized Representative of such Person canceling or amending such prior certificate. (c) COSTS AND EXPENSES. All reasonable fees and costs and expenses of Mayer, Brown & Platt and other professionals employed by the Administrative Agent and all other reasonable expenses of the Administrative Agent in connection with the negotiation, execution and delivery of this Sixth Amendment to Credit Agreement and the transactions contemplated herein shall have been paid in full. (d) SATISFACTORY LEGAL FORM. Each Financing Party shall have received all information, approvals, opinions, documents or instruments as each Financing Party may have reasonably requested, and all documents executed or submitted pursuant hereto by or on behalf of the Borrower shall be satisfactory in form and substance to each Financing Party. (e) DEFAULT. After giving effect to this Sixth Amendment to Credit Agreement the following statements shall be true and correct: (i) to the best knowledge of the Borrower, no act or condition exists which, with the giving of notice or passage of time, would constitute a "DEFAULT" or "EVENT OF DEFAULT" (as defined in the Credit Agreement, the GECC Facilities Agreement and the Discount Note Indenture) and (ii) no material adverse change in the financial condition, business, property, prospects or ability of the Borrower to perform in all material respects its obligations under any Operative Document or any of the documents evidencing and securing the FF&E Financing to which it is a party. (f) CONSENTS AND APPROVALS. All approvals and consents required to be taken, given or obtained, as the case may be, by or from any Governmental Instrumentality or another Person, or by or from any trustee (including, without limitation, GECC and the Discount Note Indenture Trustee) or holder of any Indebtedness or Obligation of the Borrower or any other Obligor, that are necessary or, in the reasonable opinion of the Administrative Agent, advisable in connection with the execution, delivery and performance of the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement, by all parties hereto or thereto, shall have been taken, given or obtained, as the case may be, shall be in full force and effect and the time for appeal with respect to 15 any thereof shall have expired (or, if an appeal shall have been taken, the same shall have been dismissed) and shall not be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and shall be in form and substance satisfactory to the Administrative Agent. (g) DELIVERY OF SIXTH AMENDMENT TO CREDIT AGREEMENT, ETC. The Borrower shall have delivered this Sixth Amendment to Credit Agreement to all Persons entitled under the Operative Documents to receive delivery hereof and arranged for or caused the recording and/or filing thereof, if required. (h) OPINIONS. The Administrative Agent shall have received such opinions of counsel as it deems necessary, dated as of the date of the Sixth Amendment to Credit Agreement and addressed to the Administrative Agent, the Lenders and, if applicable, the Disbursement Agent, which shall provide, in relevant part, that no approvals, waivers, amendments or modifications are required under the GECC Facilities Agreement, the GECC Intercreditor Agreement or the Discount Note Indenture for the waivers, amendments or modifications set forth in this Sixth Amendment to Credit Agreement and shall otherwise be in form and substance satisfactory to the Administrative Agent. SECTION 5.2. AMENDMENT FEE. As an inducement to each of the Lenders to consent to this Sixth Amendment to Credit Agreement, the Borrower agrees to pay to each Lender which has consented to this Sixth Amendment to Credit Agreement (each, a "CONSENTING LENDER") a non-refundable fee (the "SIXTH AMENDMENT FEE") which has been earned as of the date hereof equal to (i) the product of the outstanding principal balance of the Loans on the date of this Sixth Amendment to Credit Agreement MULTIPLIED BY .5% (.005) with the result thereof (ii) MULTIPLIED BY such Lender's Percentage. The Sixth Amendment Fee shall be payable out of Excess Cash Flow in accordance with SCHEDULE III annexed hereto. ARTICLE VI REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent to enter into this Sixth Amendment to Credit Agreement on behalf of the Lenders, the Borrower hereby reaffirms, as of the date of this Sixth Amendment to Credit Agreement, its representations and warranties contained in Article VI of the Credit Agreement and the Disbursement Agreement and additionally represents and warrants unto each Financing Party as set forth in this ARTICLE VI. SECTION 6.1. MATTERS PERTAINING TO THE GECC FACILITIES AGREEMENT AND THE DISCOUNT NOTE INDENTURE. The Borrower has performed all of its obligations under the GECC Facilities Agreement and the Discount Note Indenture. To the best knowledge of the Borrower, no act or condition exists which, with the giving of notice or passage of time, would constitute a "DEFAULT" or "EVENT OF DEFAULT" (as defined in the Credit Agreement, the GECC Facilities Agreement and the 16 Discount Note Indenture). No material adverse change has occurred with respect to the financial condition, business, property, prospects or ability of the Borrower to perform in all material respects its obligations under any Operative Document or any of the documents evidencing and securing the FF&E Financing to which it is a party. SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery and performance by the Borrower of this Sixth Amendment to Credit Agreement and each other document executed or to be executed by it in connection with this Sixth Amendment to Credit Agreement are within the Borrower's powers, have been duly authorized by all necessary action, and do not (a) contravene the Borrower's Organizational Documents; (b) contravene any contractual restriction binding on or affecting any of the Aladdin Parties and/or the London Clubs Parties; (c) contravene any court decree or order or Legal Requirement binding on or affecting any of the Aladdin Parties and/or the London Clubs Parties; or (d) result in, or require the creation or imposition of, any Lien on any property of the Borrower, any of the other Aladdin Parties, any other Person which executes and delivers documents with respect to the Sixth Amendment to Credit Agreement in favor of the Lenders, except as expressly permitted by the Operative Documents, the GECC Facilities Agreement, the Discount Note Indenture and other Instruments binding on such Persons, as the case may be, and the Financing Parties may conclusively rely on such representation and warranty. SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower or any other Person of this Sixth Amendment to Credit Agreement or any other document to be executed by it or any other Person in connection with this Sixth Amendment to Credit Agreement. SECTION 6.4. VALIDITY, ETC. This Sixth Amendment to Credit Agreement constitutes, and each other document executed by the Borrower in connection with this Sixth Amendment to Credit Agreement, on the due execution and delivery thereof, will constitute, the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights generally and by general principles of equity. 17 SECTION 6.5. LIMITATION. Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Agreement and each other Operative Document shall remain unamended and unwaived and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments and modifications set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, amendment of, consent to or modification of any other term or provision of the Credit Agreement, the GECC Facilities Agreement, any Operative Document, the Discount Note Indenture or other Instrument referred to therein or herein, or of any transaction or further or future action on the part of the Borrower or any other Person which would require the consent of the Agents, the Lenders, GECC or the Discount Note Indenture Trustee or any other Person. SECTION 6.6. OFFSETS AND DEFENSES. The Borrower has no offsets or defenses to its obligations under the Loan Documents and no claims or counterclaims against any of the Agents or the Lenders. SECTION 6.7. RELEASE BY THE BORROWER. (a) As an inducement to the Administrative Agent to enter into this Sixth Amendment to Credit Agreement on behalf of the Lenders, the Borrower hereby releases and discharges the Lenders and the Agents, and their respective successors and assigns, and all officers, directors, employees, agents, representatives, insurers and attorneys of each of them from all actions, counterclaims, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever, in law, admiralty or equity, against the Lenders, the Agents and/or their successors and assigns which the Borrower ever had, now has or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Sixth Amendment to Credit Agreement (the "RELEASED CLAIMS"). (b) In order to induce the Administrative Agent to accept the release set forth herein on behalf of the Lenders, the Borrower represents that: (i) such release constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms. The execution and delivery of, and the performance and compliance by the Borrower with such release will not conflict with, or constitute on the part of the Borrower a violation or breach of, or a default under, and will not require any authorization, consent, approval or other action by, or any notice to, or filing with any court or administrative body or any other Person pursuant to, any mortgage, deed of trust, loan agreement, trust agreement or other agreement or instrument to which the Borrower or any of its property is subject or any laws and other governmental requirements; and 18 (ii) the Borrower (A) has not sold, transferred, conveyed, abandoned or otherwise disposed of any of the Released Claims, whether or not known, suspected or claimed that the Borrower has, had or may have, against the Lenders, any Agent and/or any of their successors, predecessors (including, without limitation, all predecessors by virtue of merger) and assigns, as the case may be and (B) has sought the advice of counsel with respect to the execution and delivery of this Sixth Amendment to Credit Agreement and the Borrower understands the legal implications with respect to the release set forth herein and the other documents executed by the Borrower in connection herewith. (c) The Borrower hereby acknowledges that it may hereafter discover facts in addition to or different from those which it now knows or believes to be true with respect to the subject matter of the release set forth herein, but that it is the Borrower's intention to, and it does, hereby fully, finally and forever settle the Released Claims; in furtherance of such intention, the Borrower acknowledges that the release set forth herein shall be and remain in effect as a full and complete release, notwithstanding the subsequent discovery or existence of any such additional or different facts. ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 7.1. RESERVATION OF RIGHTS. The Borrower agrees that neither this Sixth Amendment to Credit Agreement nor the making of any Advance by the Disbursement Agent and the Administrative Agent's consent thereto either before or after the Effective Date shall constitute (w) an approval of all or any portion of any Advance Request, (x) a waiver or forbearance by the Disbursement Agent or the Administrative Agent under any of the Loan Documents, (y) the acceptance by the Disbursement Agent or the Administrative Agent of any course of conduct by the Borrower, the Completion Guarantors or any other Person or (z) an agreement by the Administrative Agent to amend any of the Loan Documents without all required approvals including, without limitation, approval from the Required Lenders. The Borrower further agrees that the Administrative Agent and the Disbursement Agent reserve all rights, remedies and options under the Loan Documents to require the Borrower to satisfy in all respects the conditions relating to each Advance and perform all of its obligations under the Loan Documents which are then due and owing or are susceptible of performance, as the case may be. 19 SECTION 7.2. RATIFICATION OF AND REFERENCES TO THE CREDIT AGREEMENT. This Sixth Amendment to Credit Agreement shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement, shall continue in full force and effect and is hereby ratified, approved and confirmed in each and every respect. All references to the Credit Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Credit Agreement, as amended by this Sixth Amendment to Credit Agreement. SECTION 7.3. TECHNICAL AMENDMENTS. The Borrower and the Administrative Agent acknowledge and agree that (i) the reference in clause (a) of Section 2.1 of the Third Amendment to Credit Agreement to "Section 7.19" should be to Section 7.1.9 of the Credit Agreement and (ii) the paragraph in clause (ee) of Section 3.1 of the Fourth Amendment to Credit Agreement which was added as Section 2.1.6 to the CA should be Section 2.1.7. SECTION 7.4. HEADINGS. The various headings of this Sixth Amendment to Credit Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Sixth Amendment to Credit Agreement or any provisions hereof. SECTION 7.5. APPLICABLE LAW. THIS SIXTH AMENDMENT TO CREDIT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SIXTH AMENDMENT TO CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES OF SUCH STATE. SECTION 7.6. CROSS-REFERENCES. References in this Sixth Amendment to Credit Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this Sixth Amendment to Credit Agreement. SECTION 7.7. LOAN DOCUMENT. This Sixth Amendment to Credit Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement. SECTION 7.8. SUCCESSORS AND ASSIGNS. This Sixth Amendment to Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 7.9. COUNTERPARTS. This Sixth Amendment to Credit Agreement may be executed by the parties hereto in any number of counterparts and on separate counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. 20 IN WITNESS WHEREOF, the parties hereto have executed this Sixth Amendment to Credit Agreement as of the day and year first above written. ALADDIN GAMING, LLC By: /s/ THOMAS A. LETTERO ------------------------------- Name: Thomas A. Lettero Title: Senior Vice President, CFO THE BANK OF NOVA SCOTIA, as the Administrative Agent By:/s/ ALAN PENDERGAST -------------------------------- Name: Alan Pendergast Title: Managing Director 21 SCHEDULE III To Sixth Amendment to Credit Agreement MANDATORY PAYMENTS AND PREPAYMENTS
============================================================================================== Date Percentage of Excess Cash Flow ============================================================================================== End of First Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 65% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Second Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 65% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Third Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 65% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Fourth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 65% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Fifth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 60% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than

============================================================================================== Date Percentage of Excess Cash Flow ============================================================================================== 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Sixth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 60% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Seventh Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 60% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Eighth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 60% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Ninth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 55% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Tenth Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 55% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Eleventh Quarter following 100% of Excess Cash Flow shall be paid to the Consenting the Conversion Date Lenders in accordance with SECTION 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 55% of

============================================================================================== Date Percentage of Excess Cash Flow ============================================================================================== remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause (c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - ----------------------------------------------------------------------------------------------- End of Twelfth Quarter following 100% of Excess Cash shall be paid to the Consenting Lenders the Flow Conversion Date in accordance with SECTION 5.2 of the Sixth Amendment to and thereafter Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 55% of remaining Excess Cash Flow shall be paid as a Mandatory Prepayment in accordance with clause(c) of Section 3.1.1 unless the Total Debt to EBITDA Ratio is greater than 3.50:1.0 in which case such percentage shall be 100%. - -----------------------------------------------------------------------------------------------
EX-10.2 3 a2046910zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.02 =============================================================================== FIRST AMENDMENT TO KEEP-WELL AGREEMENT Dated as of March 30, 2001 (amending the Keep-Well Agreement dated as of February 26, 1998) by LONDON CLUBS INTERNATIONAL, PLC, THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER ALADDIN BAZAAR HOLDINGS, LLC and ALADDIN HOLDINGS, LLC as the Sponsors, and THE BANK OF NOVA SCOTIA, as the Administrative Agent for various financial institutions as the Lenders, =============================================================================== FIRST AMENDMENT TO KEEP-WELL AGREEMENT THIS FIRST AMENDMENT TO KEEP-WELL AGREEMENT (this "FIRST AMENDMENT TO KEEP-WELL AGREEMENT") dated as of March 30, 2001, by and among LONDON CLUBS INTERNATIONAL, PLC, a company registered in England and Wales under company number 2862479 ("LCI"), THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER (the "TRUST"), ALADDIN BAZAAR HOLDINGS, LLC a Nevada limited-liability company ("ABH") and ALADDIN HOLDINGS, LLC, a Delaware limited liability company ("AHL"); AHL, ABH, the Trust and LCI are individually called a "SPONSOR" and collectively called the "SPONSORS") and THE BANK OF NOVA SCOTIA, as administrative agent (together with any successor thereto in such capacity, the "ADMINISTRATIVE AGENT") for the various financial institutions as are or may become parties hereto (individually, a "LENDER", and collectively, the "LENDERS".) In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: W I T N E S S E T H WHEREAS, pursuant to a Credit Agreement, dated as of February 26, 1998, (together with that certain First Amendment to Credit Agreement dated as of January 29, 1999, that certain Second Amendment to Credit Agreement dated as of April 5, 1999, effective as of March 10, 1999, that certain Third Amendment to Credit Agreement dated as of June 2, 2000, that certain Fourth Amendment to Credit Agreement dated as of July 27, 2000, that certain Fifth Amendment to Credit Agreement dated as of December 29, 2000 and that certain Sixth Amendment to Credit Agreement (the "SIXTH AMENDMENT TO CREDIT AGREEMENT") of even date herewith and all other amendments and other modifications from time to time hereinafter made thereto, the "CREDIT AGREEMENT"), among Aladdin Gaming, LLC, a Nevada limited-liability company (the "BORROWER"), the Lenders and the Administrative Agent, Merrill Lynch Capital Corporation, as the syndication agent (together with any successor thereto in such capacity, the "SYNDICATION AGENT"), and CIBC Oppenheimer Corp., as the documentation agent (together with any successor thereto in such capacity, the "DOCUMENTATION AGENT"), the Lenders have extended Commitments to make Loans to the Borrower and to issue Letters of Credit for the account of the Borrower; and WHEREAS, the Borrower has requested the Lenders to enter into the Sixth Amendment to Credit Agreement; and WHEREAS, LCI, ABH, and AHL executed and delivered a Keep-Well Agreement (the "KEEP-WELL AGREEMENT") in favor of the Lenders and the Administrative Agent dated as of February 26, 1998 pursuant to which the LCI, ABH and AHL agreed, INTER ALIA, to perform the obligations set forth in the Keep-Well Agreement and certain subsidiaries of LCI (the "SUBSIDIARY GUARANTORS") have agreed to fully and unconditionally guarantee the payment of LCI's obligations under the Keep-Well Agreement pursuant to a guaranty agreement dated February 26, 1998 (the "LCI SUBSIDIARY GUARANTY"); and WHEREAS, the Trust executed and delivered a Joinder Agreement and Consent (the "JOINDER AGREEMENT") in favor of the Lenders and the Administrative Agent dated as of July 27, 2000 pursuant to which the Trust agreed to become a Sponsor under the Keep-Well Agreement; and WHEREAS, the Borrower has requested the Sponsors to enter into certain amendments to the Keep-Well Agreement; and WHEREAS, the Sponsors have duly authorized the execution, delivery and performance of this First Amendment to Keep-Well Agreement and the Subsidiary Guarantors have duly authorized the execution, delivery and performance of a ratification, reaffirmation and consent agreement (the "RATIFICATION OF LCI SUBSIDIARY GUARANTY") with respect to the Subsidiary Guaranty, an executed counterpart of which is annexed hereto (the LCI Subsidiary Guaranty, together with the Ratification of LCI Subsidiary Guaranty and all other amendments and other modifications from time to time hereafter made thereto, the "SUBSIDIARY GUARANTY"); and WHEREAS, it is in the best interests of the Sponsors to execute this First Amendment to Keep-Well Agreement and the Subsidiary Guarantors to execute the Ratification of LCI Subsidiary Guaranty inasmuch as the Sponsors and the Subsidiary Guarantors have and will continue to derive substantial direct and indirect benefits from the Loans made to the Borrower by the Lenders pursuant to the Credit Agreement; and WHEREAS, each of the parties hereto is willing, on the terms and subject to the conditions hereinafter set forth, to so amend the Keep-Well Agreement upon the terms and conditions set forth below. NOW, THEREFORE, in consideration of the agreements contained herein, the parties hereto agree as follow: ARTICLE I AMENDMENT SECTION 1.1. AMENDMENTS. The parties hereto hereby agree that provided each of the Sponsors has delivered an opinion of counsel which conforms to the requirements of CLAUSE (h) OF SECTION 3.1 and which expressly provides, in relevant part, that no approval is required under -2- the "GECC FACILITIES AGREEMENT" (as defined in the Second Amendment to Credit Agreement), the "GECC INTERCREDITOR AGREEMENT" (as defined in the Second Amendment to Credit Agreement) or the "DISCOUNT NOTE INDENTURE" (as defined in the Credit Agreement; each capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement) for the amendments set forth below, the following amendments shall be made to the Keep-Well Agreement. The definition of "Keep-Well Termination Date" set forth in SECTION 1 of the Keep-Well Agreement shall be deleted in its entirety and the following definition of "KEEP-WELL TERMINATION DATE" shall be substituted in its place: "`KEEP-WELL TERMINATION DATE' shall mean the earliest of (i) the day on which full and indefeasible payment of the Obligations of the Borrower under the Credit Agreement has been made to reduce the Commitments of the Lenders thereunder to $145,000,000 or less, (ii) the last day of the period of six consecutive fiscal quarters from and after the Conversion Date during which the Borrower shall have satisfied each of the financial covenants set forth in the Credit Agreement (without giving effect to the Sixth Amendment to Credit Agreement or to any other amendment of the Credit Agreement which became effective prior to the date of the Sixth Amendment to Credit Agreement or to any payments to or investments by the Sponsors in or for the benefit of the Borrower), (iii) the date on which both of the following shall have been satisfied: (a) construction of the Aladdin Hotel and Casino and renovation of the Theater has been completed in accordance with all terms of the Credit Agreement and (b) the Commitments and the aggregate outstanding principal amount of the Obligations under the Credit Agreement shall have been reduced to an amount not in excess of the amount specified for such date on SCHEDULE 1 hereto, (iv) the date on which the Sponsors shall have made full payment of the Accelerated Payment Amount described under SECTION 4 below or (v) in the case of LCI only, the date on which it shall have made full payment of the Accelerated Payment Amount described under SECTION 13 below." The definition of "KEEP-WELL REDUCTION DATE" set forth in SECTION 1 of the Keep-Well Agreement shall be deleted in its entirety and the following definition of "KEEP-WELL REDUCTION DATE" shall be substituted in its place: "`KEEP-WELL REDUCTION DATE' shall mean March 31, 2002.'" SCHEDULE 4 to the Keep-Well Agreement shall be amended by replacing the phrase "ABH Ownership: 50% Member" which appears under the heading entitled "ABH's Subsidiaries" with the phrase: "ABH Ownership: 35.36%". -3- ARTICLE II CERTAIN CONFIRMATIONS SECTION 2.1. CONFIRMATION BY THE SPONSORS. The Sponsors acknowledge and agree that the Borrower is obligated to perform its covenants under Section 7.2.4 of the Credit Agreement commencing with the fiscal quarter which ended on December 31, 2000 whether or not the Sixth Amendment to Credit Agreement becomes effective in accordance with the terms thereof. The Sponsors agree that, except for the adjustment of the covenant levels in Section 7.2.4 of the Credit Agreement as set forth in the Sixth Amendment to Credit Agreement, their obligations under the Keep-Well Agreement are not amended, modified or affected by any amendment, modification or waiver of any provision of the Credit Agreement after the Closing Date. SECTION 2.2. CONFIRMATION BY THE ADMINISTRATIVE AGENT. The Borrower has advised the Sponsors and the Administrative Agent that the Borrower does not expect to comply with the Minimum Fixed Charge Coverage Ratio specified in the Credit Agreement (without giving effect to any amendment of the Credit Agreement after the Closing Date) for the period commencing on August 18, 2000 and ending on December 31, 2000 (the "YEAR 2000 OPERATING PERIOD"). Based upon the Borrower's projections for the Year 2000 Operating Period, the Sponsors expect to make a Cash Equity Contribution to the Borrower in the amount of U.S. $12,000,000 (the "PROJECTED CASH EQUITY CONTRIBUTION") which, when added to the Borrower's EBITDA for the Year 2000 Operating Period, will result in the Borrower being in compliance with the Minimum Fixed Charge Coverage Ratio for the Year 2000 Operating Period. On January 31, 2001, LCI made a Cash Equity Contribution to the Borrower in the amount of U.S. $5,000,000 as a partial funding the Projected Cash Equity Contribution. the Sponsors and the Administrative Agent agree that such $5,000,000 partial funding by LCI will be applied against LCI's obligations under the Keep-Well Agreement and will be deemed to be a payment made by LCI pursuant to the Keep-Well Agreement and not pursuant to the Completion Guaranty. ARTICLE III CONDITIONS PRECEDENT AND COVENANT SECTION 3.1. CONDITIONS TO EFFECTIVENESS. The amendments in SECTION 1.1 shall become effective on the date (the "EFFECTIVE DATE") on which each of the following conditions precedent shall have been satisfied. (a) EXECUTION OF DOCUMENTS. The Administrative Agent shall have received counterparts of (i) this First Amendment to Keep-Well Agreement executed by an Authorized Representative of the parties hereto, (ii) the Ratification of LCI Subsidiary Guaranty executed by the Authorized Representatives of the Subsidiary Guarantors and LCI, (iii) the Sixth Amendment to Credit Agreement executed by Authorized -4- Representatives of the Borrower and the Administrative Agent and the Required Lenders together with all documents required thereby and (iv) all documentation required by SECTION 5.1 of the Sixth Amendment to Credit Agreement. (b) SIXTH AMENDMENT TO CREDIT AGREEMENT. The Sixth Amendment to Credit Agreement shall become effective in accordance with its terms. (c) INCUMBENCY, ETC. The Administrative Agent shall have received (with copies for each Lender) a certificate, dated as of the Effective Date, of an Authorized Representative of each Sponsor certifying. (i) as to the incumbency and signatures of the Person or Persons authorized to execute and deliver this First Amendment to Keep-Well Agreement and any instruments or agreements required hereunder. (ii) as to an attached copy of one or more resolutions or other authorizations of the Sponsors certified by the Authorized Representative of each such Sponsor as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this First Amendment to Keep-Well Agreement and any instruments or agreements required hereunder, and (iii) that the Organizational Documents of such Sponsor have not been modified since the date on which they were last delivered to the Administrative Agent. upon which certificate the Administrative Agent and the Lenders (collectively, the "FINANCING PARTIES") may conclusively rely until the Administration Agent has received a further certificate of an Authorized Representative of such Sponsor cancelling or amending such prior certificate. (c) FEES. All reasonable fees and costs and expenses of Mayer, Brown & Platt and other professionals employed by the Administrative Agent and all other reasonable expenses of the Administrative Agent in connection with the negotiation, execution and delivery of this First Amendment to Keep-Well Agreement and the transactions contemplated herein shall have been paid in full. (d) SATISFACTORY LEGAL FORM. Each Financing Party and its counsel shall have received all information, approvals, opinions, documents or instruments as each Financing Party or its counsel may have reasonably requested, and all documents executed or submitted pursuant hereto by or on behalf of each Sponsor shall be satisfactory in form and substance to each Financing Party and its counsel. -5- (e) DEFAULT. After giving effect to the Sixth Amendment to Credit Agreement the following statements shall be true and correct: (i) to the best knowledge of each Sponsor, no act or condition exists which, with the giving of notice or passage of time would constitute a "DEFAULT" or "EVENT OF DEFAULT" (as defined in the Credit Agreement, the GECC Facilities Agreement and Discount Note Indenture) has occurred and is continuing as of the date hereof and (ii) no material adverse change in (A) the financial condition, business, property, prospects or ability of the Sponsor or the Borrower to perform in all material respects its respective obligations under any Operative Document or any of the documents evidencing and securing the FF&E Financing to which it is a party or (B) the financial condition, business, property, prospects and ability of any other Aladdin Party or, to the best knowledge of such Sponsor, LCNI to perform in all material respects its obligations under any Operative Document to which it is a party has occurred since the Closing Date. (f) CONSENTS AND APPROVALS. All approvals and consents required to be taken, given or obtained, as the case may be, by or from any Governmental Instrumentality or another Person, or by or from any trustee (including, without limitation, GECC and the Discount Note Indenture Trustee) or holder of any indebtedness or obligation of the Borrower or the Sponsor, that are necessary or, in the reasonable opinion of the Administrative Agent, advisable in connection with the execution, delivery and performance of this First Amendment to Keep-Well Agreement by all parties hereto, shall have been taken, given or obtained, as the case may be, shall be in full force and effect and the time for appeal with respect to any thereof shall have expired (or, if an appeal shall be been taken, the same shall have been dismissed) and shall not be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and shall be in form and substance satisfactory to the Administrative Agent. (g) DELIVERY OF FIRST AMENDMENT TO KEEP-WELL AGREEMENT. The Sponsor shall have delivered this First Amendment to Keep-Well Agreement to all Persons entitled thereto under the Operative Documents to receive delivery hereof. (h) OPINIONS. The Administrative Agent shall have received such opinions of counsel as it deems necessary, dated as of the Effective Date and addressed to the Administrative Agent and the Lenders which shall be in form and substance satisfactory to the Administrative Agent. ARTICLE IV REPRESENTATIONS AND WARRANTIES In order to induce each Financing Party to enter into this First Amendment to Keep-Well Agreement, each Sponsor, as to itself, reaffirms, as of the Effective Date, its representations and warranties contained in the Keep-Well Agreement (as amended by this First Amendment to -6- Keep-Well Agreement) and additionally represents and warrants, as to itself, unto each Financing Party as set forth in this ARTICLE IV. SECTION 4.1. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery and performance by each Sponsor of this First Amendment to Keep-Well Agreement and each other document executed or to be executed by it in connection with this First Amendment to Keep-Well Agreement are within such Sponsor's powers, have been duly authorized by all necessary action, and do not (a) contravene such Sponsor's Organizational Documents; (b) contravene any contractual restriction binding on or affecting such Sponsor; (c) contravene any court decree or order or Legal Requirement binding on or affecting such Sponsor, or (d) result in, or require the creation or imposition of, any Lien on any of such Sponsor's properties except as expressly contemplated by the Operative Documents, and the Financing Parties may conclusively rely on such representation and warranty. SECTION 4.2. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Sponsor of this First Amendment to Keep-Well Agreement or any other document to be executed by it in connection with this First Amendment to Keep-Well Agreement. SECTION 4.3. VALIDITY, ETC. This First Amendment to Keep-Well Agreement constitutes the legal, valid and binding obligations of the Sponsors enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights generally and by general principles of equity. SECTION 4.4. LIMITATION. Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Keep-Well Agreement and each other Operative Document shall remain unamended and unwaived and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments and modifications set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, amendment or modification of any other term or provision of the Keep-Well Agreement or other Instrument referred to therein or herein, or of any transaction or further or future action on the part of the Borrower or any other Person which would require the consent of the Agents, the Lenders, GECC or the Discount Note Indenture Trustee. -7- SECTION 4.5. OFFSETS AND DEFENSES. The Sponsors have no offsets or defenses to their obligations under the Loan Documents to which they are a party and no claims or counterclaims against any of the Agents or the Lenders. ARTICLE V MISCELLANEOUS PROVISIONS SECTION 5.1 RATIFICATION OF AND REFERENCES TO THE CREDIT AGREEMENT. This First Amendment to Keep-Well Agreement shall be deemed to be amendment to the Keep-Well Agreement and the Keep-Well Agreement, as amended by this First Amendment to Keep-Well Agreement, shall continue in full force and effect and is hereby ratified, approved and confirmed in each and every respect. All references to the Keep-Well Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Keep-Well Agreement, as amended by this First Amendment to Keep-Well Agreement. SECTION 5.2. HEADINGS. The various headings of this First Amendment to Keep-Well Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this First Amendment to Keep-Well Agreement or any provisions hereof. SECTION 5.3 APPLICABLE LAW. THIS FIRST AMENDMENT TO KEEP-WELL AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS FIRST AMENDMENT TO KEEP-WELL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES OF SUCH STATE. SECTION 5.4. CROSS-REFERENCES. References in this First Amendment to Keep-Well Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this First Amendment to Keep-Well Agreement. SECTION 5.5. OPERATIVE DOCUMENT. This First Amendment to Keep-Well Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement. SECTION 5.6. SUCCESSORS AND ASSIGNS. This First Amendment to Keep-Well Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 5.7. COUNTERPARTS. This First Amendment to Keep-Well Agreement may be executed by the parties hereto in any number of counterparts and on separate counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. -8- IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Keep-Well Agreement as of the day and year first above written. ALADDIN BAZAAR HOLDINGS, LLC By: ------------------------------------ Name: Title: ALADDIN HOLDINGS, LLC By: ------------------------------------ Name: Title: THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER By: ------------------------------------ Name: Title: Trustee By: ------------------------------------ Name: Title: Trustee LONDON CLUBS INTERNATIONAL PLC By: ------------------------------------ Name: Title: THE BANK OF NOVA SCOTIA, as the Administrative Agent By: ------------------------------------ Name: Title: EX-10.03 4 a2046910zex-10_03.txt EXHIBIT 10.03 EXHIBIT 10.03 AGREEMENT OF AMENDMENT NO. 5 THIS AGREEMENT OF AMENDMENT NO. 5 (this "Amendment") is made as of the 30th day of March, 2001, among GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS ("GE Capital"), GMAC COMMERCIAL MORTGAGE CORPORATION ("GMAC CMC"), and ALADDIN GAMING, LLC ("Aladdin Gaming"). GE Capital and Aladdin Gaming have heretofore executed that certain Facilities Agreement, dated as of June 26, 1998, as amended (the "Facilities Agreement"), and pursuant thereto that certain Master Lease Agreement dated as of June 26, 1998 (the "Lease Agreement"; and together with the Facilities Agreement being sometimes hereinafter collectively referred to as the "Agreements"). Capitalized terms used herein without definition shall have the meaning given them in the Agreements. GE Capital has heretofore assigned to GMAC CMC certain of its right, title, interest and obligations pursuant to the Agreements. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties agree as follows: SECTION 1. AMENDMENTS TO FACILITIES AGREEMENT. The Facilities Agreement is amended as follows: SECTION 1.1. The definitions, and any amendments thereto, contained in that certain Sixth Amendment, as defined below, are hereby incorporated into the Facilities Agreement and the Agreements. SECTION 1.2. Section 11(d) of the Facilities Agreement shall be deleted in its entirety and the following Section 11(d) shall be substituted in its place: (d) FINANCIAL CONDITION AND OPERATIONS. Aladdin Gaming will not, as of the close of any Fiscal Quarter, commencing with the applicable Fiscal Quarter set forth below, permit: (1) TOTAL DEBT TO EBITDA RATIO. The Total Debt to EBITDA Ratio at the close of the applicable Fiscal Quarter set forth below to exceed the ratio set forth opposite such Fiscal Quarter:
Total Debt to Fiscal Quarter EBITDA Ratio -------------- -------------- FQ 1 (closing on December 31, 2000) 4.1:1 FQ 2 6.4:1 FQ 3 6.0:1 FQ 4 6.0:1

Total Debt to Fiscal Quarter EBITDA Ratio -------------- -------------- FQ 5 5.1:1 FQ 6 3.60:1 FQ 7 3.60:1 FQ 8 3.25:1 FQ 9 3.25:1 FQ 10 2.85:1 FQ 11 2.85:1 FQ 12 2.55:1 FQ 13 2.55:1 FQ 14 2.40:1 FQ 15 2.40:1 FQ 16 2.25:1 FQ 17 2.25:1 FQ 18 2.15:1 FQ 19 2.15:1 FQ 20 and each Fiscal Quarter thereafter 2.00:1
(2) INTEREST COVERAGE RATIO. The Interest Coverage Ratio as of the close of the Fiscal Quarter set forth below to be less than the ratio set forth opposite such Fiscal Quarter.
Interest Fiscal Quarter Coverage Ratio -------------- -------------- FQ 1 (closing on December 31, 2000) 2.0:1 FQ 2 1.6:1 FQ 3 1.6:1 FQ 4 1.6:1 FQ 5 1.7:1 FQ 6 and each Fiscal Quarter thereafter 2.0:1
(3) NET WORTH. Net Worth as of the close of any calendar month, commencing on August 31, 2000, to be less than the sum of $100,000,000 PLUS 85% of positive Net 2 Income (after giving effect to the amount of Restricted Payments made by the Borrower in cash in accordance with clauses (1) and (3) of Section 11(f) hereof, subject to the terms thereof for the period, treated as one accounting period). (4) EBITDA. EBITDA at the close of any such Fiscal Quarter (determined for such Fiscal Quarter and the three immediately preceding such Fiscal Quarters or for any Fiscal Quarter ended on or prior to June 30, 2001, determined consistently with the PROVISO to the definition of the term `EBITDA' as defined in the Sixth Amendment) during any period set forth below to be less than the amount set forth below opposite such period:
Fiscal Quarters Amount --------------- ------- FQ 1 (closing on December 31, 2000) $105,000,000 FQ 2 $75,000,000 FQ 3 $80,000,000 FQ 4 $80,000,000 FQ 5 $90,000,000 each of FQ 6, FQ 7 and FQ 8 $110,000,000 each of FQ 9, FQ 10, FQ 11 and FQ 12 $120,000,000 each of FQ 13, FQ 14, FQ 15, and FQ 16 $125,000,000 each of FQ 17, FQ 18, FQ 19 and FQ 20 $130,000,000 FQ 21 and each Fiscal Quarter thereafter $140,000,000
(5) MINIMUM FIXED CHARGE COVERAGE. The Minimum Fixed Charge Coverage Ratio for the Fiscal Quarter closing on December 31, 2000 and on the close of each Fiscal Quarter thereafter to be less than 1.10:1. SECTION 1.3. Clause (8) of Section 11(f) of the Facilities Agreement is deleted in its entirety and the following clause (8) is substituted in its place: "(8) notwithstanding the provisions of clause (1) above, Aladdin Gaming shall be permitted to make Restricted Payments as dividends or distributions to its stockholders in any Fiscal Quarter following the Conversion Date, so long as (i) Aladdin Gaming shall have delivered to GE Capital (A) financial statements prepared on a pro forma basis to give effect to such Restricted Payment for the Fiscal Quarter (the "Base Fiscal Quarter") then last ended for which financial statements and the 3 Compliance Certificate relating thereto have been delivered to the GE Capital pursuant to Section 10(a) hereof, (B) a certificate of Aladdin Gaming executed by its chief financial or accounting Authorized Representative demonstrating that the financial results reflected in such financial statements would result in a Total Debt to EBITDA Ratio at the Close of any such Base Fiscal Quarter occurring during any period set forth below to be less than the ratio set forth opposite such period:
Total Debt to PERIOD OF FQS EBITDA RATIO ------------- -------------- FQ1 (closing on December 31, 3.50:1 2000) through FQ4 FQ5 through FQ8 3.25:1 FQ9 and thereafter 3.00:1; and
(ii) the aggregate amount of such Restricted Payment to be made by Aladdin Gaming pursuant to this clause (8), when added to the aggregate amount of all such Restricted Payments during the Fiscal Quarter in which such Restricted Payment would be made, does not exceed the lesser of (A) the sum of (1) 50% of Net Income for the Base Fiscal Quarter PLUS (2) the amount of Cash Contributions to Capital and (B) an amount equal to the excess of (1) Excess Cash Flow for the Base Fiscal Quarter over (2) the amount of Mandatory Prepayments required to have been made pursuant to clause (c) of Section 3.1.1 of the Senior Credit Agreement (without giving effect to the proviso to such Section) for the Base Fiscal Quarter;" SECTION 2. WAIVERS SECTION 2.1. WAIVERS PERTAINING TO FINANCIAL CONDITION AND OPERATIONS. Aladdin Gaming does not expect to perform its covenants under clause (1), clause (2) and clause (4) of Section 11(d) of the Facilities Agreement, as amended by this Agreement of Amendment No. 5, with respect to the Fiscal Quarters ending on or prior to December 31, 2000. As of the Effective Date, GE Capital and GMAC CMC hereby agree that (x) Aladdin Gaming's failure to perform its covenants under clause (1), clause (2) and clause (4) of Section 11(d) of the Facilities Agreement, as amended by this Agreement of Amendment No. 5, are hereby waived with respect to the Fiscal Quarters ending on or prior to March 31, 2001 and (y) the requirement in clause (3) of Section 10(a) of the Facilities Agreement that the annual audited financial statements under said clause shall not include any Impermissible Qualification is hereby waived with respect to Aladdin Gaming and its Subsidiaries and the other Aladdin Parties, as defined in the Senior Credit Agreement, for the Fiscal Year ending December 31, 2000. 4 SECTION 3. CERTAIN RESTRICTED PAYMENT AND CONSENTS SECTION 3.1. CERTAIN RESTRICTED PAYMENT. GE Capital and GMAC CMC hereby confirm that the Restricted Payment in clause (6) of Section 11(f) of the Facilities Agreement is an amount which is to be deducted in determining Net Income; PROVIDED, HOWEVER, the making of any such Restricted Payment by Aladdin Gaming shall be subject to the applicable provisions of Section 11(f) of the Facilities Agreement. SECTION 3.2. CONSENTS TO AMENDMENTS AND CONFIRMATION. GE Capital and GMAC CMC hereby consent to the amendments and waivers contained in that certain Sixth Amendment to Senior Credit Agreement ("Sixth Amendment"), by and among Aladdin Gaming, the various financial institutions as are or may become parties thereto, The Bank of Nova Scotia, as Administrative Agent for the Lenders (the "Administrative Agent"), Merrill Lynch Capital Corporation, as Syndication Agent for the Lenders, and CIBC Oppenheimer Corporation, as Documentation Agent for the Lenders. SECTION 4. CONDITIONS TO EFFECTIVENESS. This Amendment shall be and become effective on the date (the "Effective Date") on which each of the following conditions precedent shall have been satisfied. SECTION 4.1. EXECUTION OF DOCUMENTS. GE Capital and GMAC CMC have received counterparts of (i) this Amendment executed by Authorized Representatives of Aladdin Gaming and the Administrative Agent; (ii) the Sixth Amendment executed by the Authorized Representatives of the parties thereto; and (iii) delivery of such other items required by GE Capital and GMAC CMC. SECTION 4.2. INCUMBENCY, ETC. GE Capital and GMAC CMC shall have received a certificate, dated as of the date of this Amendment, of an Aladdin Gaming Authorized Representative (i) as to the incumbency and signatures of the Person or Persons authorized to execute and deliver this Amendment and any instruments or agreements required hereunder, (ii) as to an attached copy of one or more resolutions or other authorizations of the manager of Aladdin Gaming certified by the Authorized Representative of such manager as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment and any instruments or agreements required hereunder, and (iii) that the Organizational Documents of Aladdin Gaming have not been modified since the date on which they were last delivered to the Administrative Agent, and 5 upon which certificate GE Capital and GMAC CMC may conclusively rely until they shall have received a further certificate of an Authorized Representative of Aladdin Gaming canceling or amending such prior certificate. SECTION 4.3. FEES. All reasonable fees and costs and expenses of Ober, Kaler, Grimes & Shriver and other professionals employed by GE Capital and GMAC CMC and all other reasonable expenses of GE Capital and GMAC CMC in connection with the negotiation, execution and delivery of this Amendment and the transactions contemplated herein shall have been paid in full. SECTION 4.4. SATISFACTORY LEGAL FORM. GE Capital and GMAC CMC shall have received all information, approvals, opinions, documents or instruments as GE Capital and GMAC CMC may have reasonably requested, and all documents executed or submitted pursuant hereto by or on behalf of Aladdin Gaming shall be satisfactory in form and substance to GE Capital and GMAC CMC. SECTION 4.5. DEFAULT. After giving effect to this Amendment the following statements shall be true and correct: (i) to the best knowledge of Aladdin Gaming, no act or condition exists which, with the giving of notice or passage of time, would constitute a "DEFAULT" or "EVENT OF DEFAULT" (as defined in the Senior Credit Agreement, the Agreement or the Discount Note Indenture) and (ii) no material adverse change has occurred in the financial condition, business, property, prospects or ability of Aladdin Gaming to perform in all material respects its obligations under any Operative Document or any of the documents evidencing and securing the FF&E Financing to which it is a party. SECTION 4.6. CONSENTS AND APPROVALS. All approvals and consents required to be taken, given or obtained, as the case may be, by or from any Governmental Instrumentality or another Person, or by or from any trustee (including, without limitation, GE Capital and GMAC CMC and the Administrative Agent or itself and on behalf of the Lenders and the Discount Note Indenture Trustee) or holder of any Indebtedness or Obligation of Aladdin Gaming that are necessary or, in the reasonable opinion of GE Capital and GMAC CMC, advisable in connection with the execution, delivery and performance of this Amendment, by all parties hereto, shall have been taken, given or obtained, as the case may be, shall be in full force and effect and the time for appeal with respect to any thereof shall have expired (or, if an appeal shall have been taken, the same shall have been dismissed) and shall not be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and shall be in form and substance satisfactory to GE Capital and GMAC CMC. SECTION 4.7. DELIVERY OF AMENDMENT. Aladdin Gaming shall have delivered this Amendment to all Persons entitled under the Operative Documents to receive delivery hereof. SECTION 4.8. OPINIONS. GE Capital and GMAC CMC shall have received such opinions of counsel as it deems necessary, dated as of the date of this Amendment and addressed to GE Capital and GMAC CMC, which shall be in form and substance satisfactory to GE Capital and GMAC CMC. 6 SECTION 4.9. AMENDMENT FEE. As an inducement to GE Capital and GMAC CMC to consent to this Agreement of Amendment No. 5, Aladdin Gaming agrees to pay to GE Capital and GMAC CMC a non-refundable fee (the "Fifth Amendment Fee") which has been earned as of the date hereof equal to (i) the product of the outstanding Capitalized Lessor's Cost of the Equipment plus the outstanding principal balance of the Term Loan Facility on the date of this Agreement of Amendment No. 5 multiplied by .5% (.005) with the result thereof (ii) multiplied by 75% in the case of GE Capital and 25% in the case of GMAC CMC. The Fifth Amendment Fee shall be payable out of Excess Cash Flow as and when the Sixth Amendment Fee (as defined in the Sixth Amendment) commences to be paid. SECTION 5. REPRESENTATIONS AND WARRANTIES. In order to induce GE Capital and GMAC CMC to enter into this Amendment, Aladdin Gaming hereby reaffirms, as of the date of this Amendment, its representations and warranties contained in Section 8 of the Facilities Agreement and additionally represents and warrants unto GE Capital and GMAC CMC as set forth in this Section 5. SECTION 5.1. MATTERS PERTAINING TO THE GECC FACILITIES AGREEMENT AND THE DISCOUNT NOTE INDENTURE. Aladdin Gaming has performed all of its obligations under the Agreements and the Discount Note Indenture. After giving effect to this Amendment and the Sixth Amendment, to the best knowledge of the Borrower, no act or condition exists which, with the giving of notice or passage of time, would constitute a "DEFAULT" or "EVENT OF DEFAULT" (as defined in the Credit Agreement, the Agreement and the Discount Note Indenture). No material adverse change has occurred with respect to the financial condition, business, property, prospects or ability of Aladdin Gaming to perform in all material respects its obligations under any Operative Document or the Credit Agreement. SECTION 5.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery and performance by Aladdin Gaming of this Amendment and each other document executed or to be executed by it in connection with this Amendment are within Aladdin Gaming's powers, have been duly authorized by all necessary action, and do not (a) contravene Aladdin Gaming's Organizational Documents; (b) contravene any contractual restriction binding on or affecting any of the Aladdin Parties and/or the London Clubs Parties; (c) contravene any court decree or order or Legal Requirement binding on or affecting any of the Aladdin Parties and/or the London Clubs Parties; or (d) result in, or require the creation or imposition of, any Lien on any property of Aladdin Gaming, except as expressly permitted by the Operative Documents, and the GE Capital and GMAC CMC may conclusively rely on such representation and warranty. 7 SECTION 5.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by Aladdin Gaming or any other Person of this Amendment or any other document to be executed by it or any other Person in connection with this Amendment. SECTION 5.4. VALIDITY, ETC. This Amendment constitutes, and each other document executed by Aladdin Gaming in connection with this Amendment, on the due execution and delivery thereof, will constitute, the legal, valid and binding obligations of Aladdin Gaming enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights generally and by general principles of equity. SECTION 5.5. LIMITATION. Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Agreements and each other Operative Document shall remain unamended and unwaived and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments and modifications, consents and waivers set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, amendment of, consent to or modification of any other term or provision of the Agreement, any Operative Document, or other Instrument referred to therein or herein, or of any transaction or further or future action on the part of Aladdin Gaming or any other Person which would require the consent of the Administrative Agent, the Lender, GE Capital, GMAC CMC or the Discount Note Indenture Trustee. SECTION 5.6. OFFSETS AND DEFENSES. Aladdin Gaming has no offsets or defenses to its obligations under the Operative Documents or the documents evidencing and securing the FF&E Financing and no claims or counterclaims against any of GE Capital and GMAC CMC. SECTION 5.7. RELEASE BY ALADDIN GAMING. (a) As an inducement to GE Capital and GMAC CMC to enter into this Agreement of Amendment No. 5, Aladdin Gaming hereby releases and discharges GE Capital, GMAC CMC and their respective participants, successors and assigns, and all officers, directors, employees, agents, representatives, insurers and attorneys of each of them from all actions, counterclaims, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands whatsoever, in law, admiralty or equity, against GE Capital and GMAC CMC and/or their participants, successors and assigns which Aladdin Gaming ever had, now has or hereafter can, shall or may, have for, upon or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Agreement of Amendment No. 5 (the "Released Claims"). (b) in order to induce GE Capital and GMAC CMC to accept the release set forth herein, Aladdin Gaming represents that: (i) such release constitutes a legal, valid and binding obligation of Aladdin Gaming, enforceable against it in accordance with its terms. The 8 execution and delivery of, and the performance and compliance by Aladdin Gaming with such release shall not conflict with, or constitute on the part of Aladdin Gaming a violation or breach of, or a default under, and will not require any authorization, consent, approval or other action by, or any notice to, or filing with any court or administrative body or any other Person pursuant to, any mortgage deed of trust, loan agreement, trust agreement or other agreement or instrument to which Aladdin Gaming or any of its property is subject or any laws and other governmental requirements; and (ii) Aladdin Gaming (A) has not sold, transferred, conveyed, abandoned or otherwise disposed of any of the Released Claims, whether or not known, suspected or claimed that Aladdin Gaming has, had or may have against GE Capital and GMAC CMC and/or any of their participants, successors, predecessors (including, without limitation, all predecessors by virtue of merger) and assigns, as the case may be and (B) has sought the advice of counsel with respect to the execution and delivery of this Agreement of Amendment No. 5 and Aladdin Gaming understands the legal implications with respect to the release set forth herein and the other documents executed by Aladdin Gaming in connection therewith. (c) Aladdin Gaming hereby acknowledges that it may hereafter discover facts in addition to or different from those which it now knows or believes to be true with respect to the subject matter of the release set forth herein, but that it is Aladdin Gaming's intention to, and it does, hereby fully, finally and forever settle the Released Claims; in furtherance of such intention, Aladdin Gaming acknowledges that the release set forth herein shall be and remain in effect as a full and complete release, notwithstanding the subsequent discovery or existence of any such additional or different facts. SECTION 6. MISCELLANEOUS. SECTION 6.1. RATIFICATION OF AND REFERENCES TO THE AGREEMENT. This Amendment shall be deemed to be an amendment to the Agreements, and the Agreements, as amended by this Amendment, shall continue in full force and effect and are hereby ratified, approved and confirmed in each and every respect. All references to the Agreements in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Agreements, as amended by this Amendment. SECTION 6.2. HEADINGS. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION 6.3. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE. 9 SECTION 6.4. CROSS-REFERENCES. References in this Amendment Section are, unless otherwise specified, to such Section of this Amendment. SECTION 6.5. OPERATIVE DOCUMENT. This Amendment is an Operative Document executed pursuant to the Facilities Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Facilities Agreement. SECTION 6.6. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 6.7. COUNTERPARTS. This Amendment may be executed by the parties hereto in any number of counterparts and on separate counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. SECTION 6.8. RESERVATION OF RIGHTS. Aladdin Gaming agrees that this Amendment and GE Capital and GMAC CMC's consent thereto either before or after the date hereof shall not constitute (x) a waiver or forbearance by GE Capital and GMAC CMC under any of the Operative Documents, (y) the acceptance by GE Capital and GMAC CMC of any course of conduct by Aladdin Gaming, the Completion Guarantors or any other Person, or (z) an agreement by GE Capital and GMAC CMC to amend any of the Operative Documents or waive any of the provisions thereof without a corresponding amendment of the Senior Credit Agreement or waiver from the Administrative Agent on behalf of the Lenders, as the case may be. Aladdin Gaming further agrees that GE Capital and GMAC CMC reserve all rights, remedies and options under the Operative Documents to require Aladdin Gaming to satisfy in all respects the conditions relating to each Funding and perform all of its obligations under the Operative Documents which are then due and owing or are susceptible of performance, as the case may be. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 10 IN WITNESS WHEREOF, this Agreement of Amendment No. 5 has been duly executed as of the date first above written. ALADDIN GAMING, LLC GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS By: /s/ THOMAS A. LETTERO By: /s/ ANN NAEGELE ------------------------------- ----------------------------------- Name: Thomas A. Lettero Name: Ann Naegele Title: Senior Vice President Title: VP - Risk Manager and Chief Financial Officer GMAC COMMERCIAL MORTGAGE CORPORATION By: /s/ JOHN E. HOPKINS ------------------------------------ Name: John E. Hopkins Title: VP PURSUANT TO SECTION 5.1(C) OF THAT CERTAIN INTERCREDITOR AGREEMENT DATED AS OF JUNE 30, 1998, BY AND AMONG THE BANK OF NOVA SCOTIA, AS ADMINISTRATIVE AGENT, GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS, AND ALADDIN GAMING, LLC, THE UNDERSIGNED CONSENTS TO THE EXECUTION OF THE FOREGOING AMENDMENT BY ALADDIN GAMING, LLC. THE BANK OF NOVA SCOTIA, as Administrative Agent By: /s/ ALAN PENDERGAST -------------------------------- Name: Alan Pendergast Title: Managing Director 11 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~