Prepared by MERRILL CORPORATION

ALADDIN GAMING, LLC

William Timmins

-----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, RgdXax7ZvVbReeFZ1VoptuXRocybBgO6TQFbwNggSlC1g+XDaYI5TkbCQB2WEzfI X2txzoZNtzuREG60ogD3Cw== 0000912057-01-528811.txt : 20010816 0000912057-01-528811.hdr.sgml : 20010816 ACCESSION NUMBER: 0000912057-01-528811 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALADDIN GAMING ENTERPRISES INC CENTRAL INDEX KEY: 0001059128 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 880379695 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-49715 FILM NUMBER: 1713951 BUSINESS ADDRESS: STREET 1: 831 PILOT ROAD CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7027367114 MAIL ADDRESS: STREET 1: 831 PILOT ROAD CITY: LAS VEGAS STATE: NV ZIP: 89119 10-Q 1 a2055178z10-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:

/ /	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: 333-49715

ALADDIN GAMING ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		88-0379695 (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 September 30, 2000.


Class A Common Stock, no par value, 2,000,000 shares authorized		1,107,500 issued
Class B Common Stock, no par value, Non-voting, 8,000,000 shares authorized		2,215,000 issued

ALADDIN GAMING ENTERPRISES, INC.

INDEX

			Page No.
Part I		FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
		Balance Sheets June 30, 2001 (unaudited) and December 31, 2000	1
		Statements of Operations For the three months ended June 30, 2001 and June 30, 2000 (unaudited)	2
		For the six months ended June 30, 2001 and June 30, 2000 (unaudited)	3
		Statements of Cash Flows For the six months ended June 30, 2001 and June 30, 2000 (unaudited)	4
		Notes to the 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	20
Part II		OTHER INFORMATION	21
Signatures			22
Exhibit Index			23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALADDIN GAMING ENTERPRISES, INC.
BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000
(In Thousands)

	June 30, 2001			December 31, 2000
	(unaudited)
ASSETS
Cash and cash equivalents	$	1		$	1
Investment in unconsolidated affiliate		—			—

	$	1		$	1

LIABILITIES AND STOCKHOLDER'S EQUITY/(DEFICIT)
Payable to related party	$	6		$	6
Common Stock:
Class A, no par value, 2,000,000 shares authorized, 1,107,500 shares issued and outstanding as of June 30, 2001 and December 31, 2000
Class B, no par value and non-voting 8,000,000 shares authorized, 2,215,000 shares issued and outstanding, and 2,215,000 shares reserved pursuant to the warrant agreement as of June 30, 2001 and December 31, 2000		13,247			13,247
Additional paid-in capital		14,420			14,420
Accumulated deficit		(27,672	)		(27,672	)

	$	1		$	1

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

ALADDIN GAMING ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
(In Thousands except share data and per share data)

	For the three months ended June 30, 2001		For the three months ended June 30, 2000
	(unaudited)		(unaudited)
Other expense	$	—	$	—
Equity in loss of unconsolidated		—		3,687
Income tax expense (benefit)		—		—

Net loss	$	—	$	3,687

Basic and diluted loss per share	$	—	$	(1.11	)
Shares used in per share calculation		3,322,500		3,322,500

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

ALADDIN GAMING ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
(In Thousands except share data and per share data)

	For the six months ended June 30, 2001		For the six months ended June 30, 2000
	(unaudited)		(unaudited)
Other expense	$	—	$	1
Equity in loss of unconsolidated		—		6,069
Income tax expense (benefit)		—		—

Net loss	$	—	$	6,070

Basic and diluted loss per share	$	—	$	(1.83	)
Shares used in per share calculation		3,322,500		3,322,500

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

ALADDIN GAMING ENTERPRISES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
(In Thousands)

	For the Six months ended June 30, 2001		For the Six months ended June 30, 2000
	(unaudited)		(unaudited)
Cash flows from operating activities:
Net loss	$	—	$	—
Loss of unconsolidated affiliate		—		—
Increase in related party payable		—		—

Net cash used in operating activities		—		—
Cash flows used for investing activities:		—		—
Investment in unconsolidated affiliate		—		—
Cash flows from financing activities:		—		—
Proceeds from the issuance of stock		—		—
Proceeds from the issuance of warrants		—		—

Net cash provided by financing activities		—		—
Net increase in cash and cash equivalents		—		—
Cash and cash equivalents at beginning of period		1		1

Cash and cash equivalents at end of period	$	1	$	1

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

ALADDIN GAMING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001

1. Organization and Business

Aladdin Gaming Enterprises, Inc., a Nevada corporation ("Gaming Enterprises"), has no other business activity other than its investment in Aladdin Gaming Holdings, LLC ("Gaming Holdings") and Gaming Enterprises' sole material asset is 25% of the common membership interests of Gaming Holdings ("Holdings Common Membership Interests"). 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 June 30, 2001, 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 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 the "Company."

Much of the following information relates to Gaming Holdings and its subsidiaries and is included due to the relative significance of Gaming Holdings to Gaming Enterprises.

Until August 18, 2000, the operations of the Company had been primarily limited to the design, development and construction of the new Aladdin Resort and Casino ("Aladdin"). The Aladdin, which commenced operations on August 18, 2000, is the centerpiece of an approximately 35-acre world-class resort, casino and entertainment complex ("Complex") located at the center of Las Vegas Boulevard. The Aladdin includes a luxury themed hotel of approximately 2,600 rooms, an approximately 116,000 square foot casino and six restaurants.

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 newly renovated 7,000 seat Theater of 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.

Enterprises' interest in Gaming Holdings has been accounted for under the equity method. However, Enterprises has discontinued applying the equity method as the investment in Gaming Holdings has been reduced to zero. Enterprises will resume applying the equity method after cumulative net income exceeds the unrecognized losses.

This information should be read in conjunction with the financial statements set forth in Enterprises' Annual Report on Form 10-K for the year ended December 31, 2000.

Accounting policies utilized in the preparation of the financial information herein presented are the same as set forth in Enterprises' annual financial statements except as modified for interim accounting policies. The interim consolidated financial information is unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the results for the interim periods have been included. Interim results of operations are not necessarily indicative of the results of operations for the full year.

2. Income Taxes

Enterprises accounts for income taxes using the liability method as set forth in the Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the liability method, deferred taxes are provided based on the temporary differences between the financial reporting basis and the tax basis of Enterprises' assets and liabilities.

There was no income tax expense or benefit recorded for the period from January 1, 2001, through June 30, 2001, as the realization of any deferred tax asset is uncertain.

3. Impact of Recently Issued Accounting Standards

Enterprises does not hold any derivative instruments as of June 30, 2001. 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 June 30, 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 market 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 market value of its interest rate collars at that date with a corresponding cumulative effect adjustment in the condensed consolidated statements of operations. As of June 30, 2001, the fair value of Gaming's interest rate collars was a liability of $16.0 million, and Gaming recorded the net change in fair market to net interest rate collars income (expense) and corresponding liability in the condensed consolidated financial statements.

4. Liquidity

The following tables show estimated principal and interest payments on a cash basis for the next twelve months pursuant to the existing Bank Credit Facility and assuming execution of the Eighth Amendment to the Bank Credit Facility (the "Eighth Amendment"):

Existing Credit Facility

Due Date	Form	Amount
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
3/29/02	Principal	$	5.8 million
3/29/02	Interest	$	0.1 million
5/1/02	Interest	$	8.3 million
6/28/02	Principal	$	5.8 million
6/28/02	Interest	$	0.1 million
TOTAL		$	58.0 million

Eighth Amendment

Due Date	Form	Amount
7/31/01	Cash Interest	$	8.8 million
9/3/01	Cash Interest	$	3.1 million
10/1/01	Cash Interest	$	3.0 million
11/1/01	Cash Interest	$	3.1 million
12/3/01	Cash Interest	$	3.0 million
1/1/02	Cash Interest	$	3.2 million
2/1/02	Cash Interest	$	3.2 million
3/1/02	Cash Interest	$	3.2 million
4/1/02	Cash Interest	$	3.2 million
5/1/02	Cash Interest	$	3.1 million
6/3/02	Cash Interest	$	3.2 million
Total Cash Interest		$	40.1 million

Under the Eighth Amendment, a deferred principal payment (approximately $24.1 million) and the normal principal payment of approximately $7.0 million totaling approximately $31.1 million less any excess cash payments applied to principal pursuant to the Eighth Amendment will be due and payable September 30, 2002. There can be no assurances that excess cash flow will be generated for payment of the deferred principal.

The payout schedule does not include estimated payments under the Company's interest rate collars (see Note 7). Payments on the interest rate collars, using the current three-month LIBOR equivalents, are estimated at $2.8 million per quarter and will become due and payable to the Bank of Nova Scotia at the end of each quarter.

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

Due Date	Form	Amount
9/3/01	Principal	$	.65 million
9/3/01	Lease Payment	$	3.19 million
9/3/01	Interest	$	.41 million
12/3/01	Principal	$	.70 million
12/3/01	Lease Payment	$	3.19 million
12/3/01	Interest	$	.39 million
3/1/02	Principal	$	.70 million
3/1/02	Lease Payment	$	3.18 million
3/1/02	Interest	$	.37 million
6/3/02	Principal	$	.70 million
6/3/02	Lease Payment	$	3.22 million
6/3/02	Interest	$	.35 million

TOTAL		$	17.05 million

As of August 7, 2001, the Company had unrestricted funds available of approximately $9.0 million. The Company anticipates that it will need additional cash equity contributions from the Sponsors to fund its liquidity needs through September 15, 2001. If the Eighth Amendment (as defined below) does not become effective, the Company estimates that cash on hand and projected internally generated funds will not be sufficient to fund the Company's working capital requirements including 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 the 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 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 June 15, 2001 (effective as of May 29, 2001), Gaming and the lenders under the Bank Credit Facility amended the Bank Credit Facility to provide that, for the purpose of computing EBITDA to determine compliance with the fixed charge coverage ratio in the Bank Credit Facility for the fiscal quarter ending on March 31, 2001 (compliance with the leverage ratio (total debt to EBITDA), interest coverage ratio and minimum EBITDA covenants for that quarter previously having been waived by the lenders), Gaming would be deemed to have received cash contributions to capital in the amount of the entire First Quarter 2001 Keep-Well Payment (as defined below) if Gaming actually receives cash contributions to capital under the Keep-Well Agreement (as defined below) in an amount sufficient to permit it to make interest payments and principal repayments under the Bank Credit Agreement and the FF&E Financing required to be made on or before August 1, 2001, when due, and to pay certain other operating expenses of Gaming required to be paid on or before that date, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments.

On August 2, 2001, Gaming received from London Clubs, cash in the amount of approximately $7.1 million. That amount was utilized to make the interest payment under the Bank Credit Facility that was due on July 31, 2001.

On July 30, 2001 (effective as of June 30, 2001), Gaming and certain lenders under the Bank Credit Facility executed the Eighth Amendment, which provides that (a) Gaming's compliance with the leverage ratio, interest coverage ratio and minimum EBITDA covenants in the Bank Credit Facility are waived for all fiscal quarters ending on or prior June 30, 2002, (b) for the purpose of computing EBITDA to determine compliance with the fixed charge coverage ratio for each such quarter, Gaming will be deemed to have received cash contributions to capital in an amount sufficient to permit it to comply with such ratio if Gaming actually receives cash contributions to capital under the Keep-Well Agreement in amounts, and at times, sufficient to make interest payments and principal repayments under the Bank Credit Agreement and the FF&E Financing required to be made, when due, and to pay certain other operating expenses of Gaming, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments, (c) all required principal amortization payments under the Bank Credit Facility otherwise due on September 30, 2001, December 31, 2001, March 31, 2002 and June 30, 2002, are deferred until September 30, 2002 (all of such deferred principal amortization payments becoming due and payable on September 30, 2002), and (d) the interest rate applicable to loans outstanding under the Bank Credit Facility is increased to LIBOR plus 11.00% per annum (LIBOR plus 11.50% per annum, in the case of the Term D Loans) for the period from the effective date of the amendment to June 30, 2002. On August 8, 2001, one-month LIBOR was approximately 3.79% per annum, resulting in an interest rate of 14.79% per annum with respect to loans under the Bank Credit Facility (or 15.29% per annum with respect to the Term D Loans). The amendment provides that the increased interest rates may be reduced by a maximum of 3.50% (350 basis points) per annum upon the occurrence of certain events, so that, if all of such events occur, the interest rate applicable to the loans for the period from the effective date to June 30, 2002 would be LIBOR plus 7.50% per annum (or LIBOR plus 8.00% per annum, in the case of the Term D Loans). There is no assurance that any or all of the events that would result in such a reduction in interest rates will occur. The amendment further provides that accrued interest in excess of the amount that would accrue at a rate equal to LIBOR plus 4.00% per annum (or LIBOR plus 4.50% per annum, in the case of Term D Loans) is not required to be paid currently in cash, and, to the extent that it is not so paid in cash, such accrued interest will be added to the principal amount of the loans. The Company estimates that accrued interest will total approximately $26.3 million during the next twelve months.

An important condition precedent to the effectiveness of the Eighth Amendment has not been satisfied as of August 14, 2001; the consent of the lessors under the FF&E Financing has not been obtained. Gaming would be in default under the fixed charge coverage ratio, leverage ratio, interest coverage ratio and minimum EBITDA covenants in the Bank Credit Facility for the quarter ended June 30, 2001 if the Sponsors do not make the Second Quarter Keep-Well Payment on or prior to August 28, 2001, unless the Eighth Amendment becomes effective on or prior to that date. The Bank Credit Facility provides that, while a default under the Bank Credit Facility exists, the lenders thereunder can accelerate the maturity of all of the loans and otherwise exercise default remedies. If the lenders accelerate the maturity of the loans or commence the exercise of default remedies (which may include initiation of foreclosure of a mortgage lien encumbering the Aladdin), Gaming likely would seek protection from its creditors under Chapter 11 of the United States Bankruptcy Code. There can be no assurance that the conditions precedent to the effectiveness of the Eighth Amendment will be satisfied or that the Sponsors will make the Second Quarter Keep-Well Payment. The Company intends to file a current report on Form 8-K when the conditions precedent to the effectiveness of the Eighth Amendment are satisfied.

Gaming has received notice from a holder of Term A Loans outstanding under the Bank Credit Facility, that the lender believes that the holders of such loans are entitled to a class vote under the Bank Credit Facility with respect to deferral of principal amortization otherwise due with respect to such loans. Lenders holding a portion of the loans outstanding under the Bank Credit Facility sufficient to make the Eighth Amendment effective if no such class vote is required, have executed the Eighth Amendment. Those lenders, however, did not include lenders holding the requisite portion of the Term A Loans necessary to approve deferral of principal amortization payments otherwise due with respect to the Term A Loans, if a class vote is required under the Bank Credit Facility. The Bank of Nova Scotia, as administrative agent under the Bank Credit Facility, has advised the lender that gave such notice to the Company, that no class vote of the holders of the Term A Loans is required to make effective the deferral of the principal amortization payment requirements set forth in the Eighth Amendment to Credit Agreement. There can be no assurance, however, that, if one or more holders of Term A Loans initiates legal action on the basis of an alleged principal amortization payment default, that a court will determine that the deferral in the Eighth Amendment of Credit Agreement of principal amortization payments otherwise due, is effective without a class vote of the holders of Term A Loans.

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 to 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, approximately $13.3 million was 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 from the Sommer Trust; and $1.5 million from 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 was due on or before May 29, 2001. On June 15, 2001 (effective as of May 29, 2001), the Keep-Well Agreement was amended (the "Second Amendment to Keep-Well Agreement") to reduce the remaining amount of the First Quarter 2001 Keep-Well Payment to that amount which is necessary to permit Gaming to make interest and principal payments under the Bank Credit Facility and the FF&E Financing required to be

made on or before August 1, 2001, when due, and to pay certain other operating expenses of Gaming required to be paid on or before that date, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments. On August 2, London Clubs made a payment in the amount of approximately $7.1 million, which was utilized to make payment of interest that was due on July 31, 2001 under the Bank Credit Facility. Gaming is treating the $7.1 million received from London Clubs as a payment under the Keep-Well Agreement in satisfaction of the Sponsors' obligations thereunder for the fiscal quarter ended March 31, 2001.

An amendment to the Keep-Well Agreement (the "Third Amendment to Keep-Well Agreement") was executed by the Sponsors and requisite lenders under the Bank Credit Facility, which is to be effective as of June 30, 2001, which would reduce the Sponsors' payment obligations under the Keep-Well Agreement in respect of the fiscal quarters ending June 30, 2001, September 30, 2001, December 31, 2001 and March 31, 2002, to the amount necessary to permit Gaming to make interest and principal payments under the Bank Credit Agreement and the FF&E Financing required to be made, when due, and to pay certain other operating expenses of Gaming, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments. It is a condition precedent to the effectiveness of the Third Amendment to Keep-Well Agreement that the Eighth Amendment to Credit Agreement also becomes effective.

Based on Gaming's financial results for the quarter ended June 30, 2001, if the Third Amendment to Keep-Well Agreement does not become effective, it is estimated that approximately $8.0 million will be due from the Sponsors under the Keep-Well Agreement ("Second Quarter 2001 Keep-Well Payment"). If the Third Amendment to Keep-Well Agreement does not become effective, the Second Quarter 2001 Keep-Well Payment will be due and payable on August 28, 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. The Sommer Trust has advised Gaming that it does not now have sufficient liquidity to permit it to satisfy any material portion of the obligations of the Sponsors under the Keep-Well Agreement. Further, London Clubs has advised Gaming that its ability to satisfy the obligations of the Sponsors anticipated to become due under the Keep-Well Agreement is dependent upon continued financing of its capital contributions to Gaming by its own banks. London Clubs has further advised Gaming that the willingness of its banks to finance additional capital contributions to Gaming is conditioned upon the effectiveness of the Eighth Amendment.

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

The following discussion should be read in conjunction with, and is qualified in its entirety by, the various other reports which have been by Aladdin Gaming Enterprises, Inc. and Aladdin Gaming Holdings, LLC 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 Enterprises, Inc., a Nevada corporation ("Enterprises"), was formed on December 3, 1997. Enterprises owns a 25% interest in Aladdin Gaming Holdings, LLC (and including its subsidiaries, "Gaming Holdings"). Enterprises is wholly owned by Sommer Enterprises, LLC, a Nevada limited liability company ("Sommer Enterprises"). Aladdin Holdings, LLC, a Delaware limited liability company ("Holdings") holds a majority interest in Sommer Enterprises. The members of Holdings are the Trust Under Article Sixth u/w/o Sigmund Sommer ("Sommer Trust") which holds a 95% interest in Holdings, and GW Vegas, LLC, a Nevada limited liability company ("GW"), a wholly-owned subsidiary of Trust Company of the West ("TCW"), which holds a 5% interest in Holdings.

Enterprises has no business or activities other than its investment in Gaming Holdings, which 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 membership 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 Gaming Holdings 13¹/2% Senior Discount Notes ("Notes"). Capital does not have any material operations or assets and does not have any revenues. Gaming Holdings, through its subsidiaries, also owns 100% of Aladdin Music, LLC ("Aladdin Music").

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 2,110 slot machines, 66 table games, 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 on or about December 1, 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; 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

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 June 30, 2001, the Aladdin produced gross revenues of $84.4 million. Casino revenue (which includes both the main Casino and The London Club at Aladdin) represented 47% of gross revenue, hotel 30% of gross revenue, food and beverage 21% of gross revenue, and entertainment and other revenue 2% of gross revenue. The net loss for the quarter was $20.4 million including the recording of net income of $1.7 million for the interest rate collar related to the adoption of SFAS No. 133.

For the six months ended June 30, 2001, the Aladdin produced gross revenues of $166.9 million. Casino revenue (which includes both the main Casino and The London Club at Aladdin) represented 43% of gross revenue, hotel 32% of gross revenue, food and beverage 22% of gross revenue, and entertainment and other revenue 3% of gross revenue. The net loss for the six months ended June 30, 2001 was $67.5 million including the recording of an accumulated effect of change in accounting principle expense of $10.7 million and a net interest rate collar expense of $6.8 million related to the adoption of SFAS No. 133.

Revenues

Casino revenues for the quarter (inclusive of The London Club at Aladdin) of $39.3 million were derived $16.6 million from slot operations, $22.5 million from table games and $.2 million from other sources of gaming revenue.

For the six months ended June 30, 2001, casino revenues (inclusive of The London Club at Aladdin) were $72.5 million; $32.4 million from slot operations, $39.4 million from table games and $.7 million from other gaming.

The overall table games gross win percentage was 20.9% and 17.6% for the quarter and six months ended June 30, 2001, respectively, while the average daily win per table game was $2,964 and $2,547. The Company expects the normal gross win percentage to be approximately 17.5% for table games. For the three and six months ended June 30, 2001, the overall average slot gross daily win per unit was $93 and $90 respectively.

Casino marketing efforts have been focused on enhancing the customer database, implementing an aggressive direct mail program, increasing the number of special entertainment events in the Theater for Performing Arts and expanding the number of Casino events and promotions. Currently, the company operates approximately 2,195 slot machines and 96 table games. Slot gross daily win per unit improved during the quarter from $87 for the quarter ended March 31, 2001 to $93 for the quarter ended June 30, 2001. Table Games gross win per unit per day increased to $2,964 for the quarter ended June 30, 2001 compared to $2,130 for the quarter ended March 31, 2001. The Company estimates the new promotional programs and expanded database will improve Casino revenues during the next several quarters. There can be no assurances that such improvement will be significant or that other negative factors offsetting such improvement will not arise.

For the quarter ended June 30, 2001, hotel occupancy was at 96% with an average daily rate of $120. Hotel occupancy for the six months ended June 30, 2001 was 93% with an average daily rate of $126. Although the Company anticipates hotel occupancy to be approximately 96% during July and August 2001 the average daily rate is expected to decline to approximately $93. The decline in average daily rate is attributed to seasonal fluctuations in the market place and an increase in consumer sensitivity regarding room rates.

The Company's new media and advertising programs are being re-evaluated to target the ideal customer mix. On an annual basis, the Company targets the Hotel's occupancy with 25% casino customers, 25% convention groups, 25% leisure travelers and 25% "free and independent" travelers.

The company believes that this customer mix should maximize utilization of the Hotel consistent with the goal of maximization of profitability.

Management believes that Casino and restaurant revenues have been negatively impacted since opening due to the lack of nightly showroom entertainment in the facility. On July 2, 2001 the Company signed a lease agreement ("Showroom Lease") with Show Clubs of America, LLC ("SCA"). The Showroom Lease was deposited into escrow and will not become effective until certain conditions are met. SCA intends to design and build a 1,200 seat showroom that will facilitate two production shows nightly and an after hours nightclub. The Showroom Agreement provides a deadline for meeting the conditions by August 31, 2001. The Company has agreed to extend this date to September 30, 2001. There can be no assurance that the conditions required in order for the Showroom Lease to become effective will be met.

Costs and Expenses

The Company continued its cost containment and profit enhancement programs during the quarter ended June 30, 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 3,000 as of August 6, 2001. There can be no assurances that savings realized will be significant or that other negative factors will not 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 $16.0 million representing the fair market value of its interest rate collars at June 30, 2001. Corresponding to the adoption of SFAS No. 133, the Company recorded the $10.7 million accumulated effect of change in accounting principle and $6.8 million in net interest rate collar expense on the condensed consolidated statement of operations for the six months ended June 30, 2001.

Liquidity and Capital Resources

During the six months ended June 30, 2001, the Company used net cash of approximately $8.6 million for operating activities and raised $15.4 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 $11.2 million. The unrestricted cash balance during the period decreased approximately $6.3 million to $13.9 million as of June 30, 2001 (see the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2001, contained in this Form 10-Q).

As of June 30, 2001, the Company estimated that remaining project construction payables were $2.4 million. The Company anticipates final payments on construction payables to occur prior to 2001 year end.

Existing Credit Facility

Due Date	Form	Amount
7/31/01	Interest	$	8.8 million
9/28/01	Principal	$	5.8 million
9/28/01	Interest	$	0.1 million
0/31/01	Interest	$	8.8 million
2/31/01	Principal	$	5.8 million
2/31/01	Interest	$	0.1 million
1/31/02	Interest	$	8.5 million
3/29/02	Principal	$	5.8 million
3/29/02	Interest	$	0.1 million
5/1/02	Interest	$	8.3 million
6/28/02	Principal	$	5.8 million
6/28/02	Interest	$	0.1 million
TOTAL		$	58.0 million

Eighth Amendment

Due Date	Form	Amount
7/31/01	Cash Interest	$	8.8 million
9/3/01	Cash Interest	$	3.1 million
10/1/01	Cash Interest	$	3.0 million
11/1/01	Cash Interest	$	3.1 million
12/3/01	Cash Interest	$	3.0 million
1/1/02	Cash Interest	$	3.2 million
2/1/02	Cash Interest	$	3.2 million
3/1/02	Cash Interest	$	3.2 million
4/1/02	Cash Interest	$	3.2 million
5/1/02	Cash Interest	$	3.1 million
6/3/02	Cash Interest	$	3.2 million
Total Cash Interest		$	40.1 million

Under the Eighth Amendment, a deferred principal payment of (approximately $24.1 million) and the normal principal payment of approximately $7.0 million totaling approximately $31.1 less any excess cash payments applied to principal pursuant to the Eighth Amendment will be due and payable September 30, 2002. There can be no assurances that excess cash flow will be generated for payment of the deferred principal.

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

Due Date	Form	Amount
9/3/01	Principal	$	.65 million
9/3/01	Lease Payment	$	3.19 million
9/3/01	Interest	$	.41 million
12/3/01	Principal	$	.70 million
12/3/01	Lease Payment	$	3.19 million
12/3/01	Interest	$	.39 million
3/1/02	Principal	$	.70 million
3/1/02	Lease Payment	$	3.18 million
3/1/02	Interest	$	.37 million
6/3/02	Principal	$	.70 million
6/3/02	Lease Payment	$	3.22 million
6/3/02	Interest	$	.35 million

TOTAL		$	17.05 million

entire First Quarter 2001 Keep-Well Payment (as defined below) if Gaming actually receives cash contributions to capital under the Keep-Well Agreement (as defined below) in an amount sufficient to permit it to make interest payments and principal repayments under the Bank Credit Agreement and the FF&E Financing required to be made on or before August 1, 2001, when due, and to pay certain other operating expenses of Gaming required to be paid on or before that date, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments.

On August 2, Gaming received from London Clubs cash in the amount of approximately $7.1 million. That amount was utilized by Gaming to make the interest payment under the Bank Credit Facility that was due on July 31, 2001.

would seek protection from its creditors under Chapter 11 of the United States Bankruptcy Code. There can be no assurance that the conditions precedent to the effectiveness of the Eighth Amendment will be satisfied or that the Sponsors will make the Second Quarter Keep-Well Payment. The Company intends to file a current report on Form 8-K when the conditions precedent to the effectiveness of the Eighth Amendment are satisfied.

Trust; and $1.5 million from 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 was due on or before May 29, 2001. On June 15, 2001 (effective as of May 29, 2001), the Keep-Well Agreement was amended (the "Second Amendment to Keep-Well Agreement") to reduce the remaining amount of the First Quarter 2001 Keep-Well Payment to that amount which is necessary to permit Gaming to make interest and principal payments under the Bank Credit Facility and the FF&E Financing required to be made on or before August 1, 2001, when due, and to pay certain other operating expenses of Gaming required to be paid on or before that date, to the extent that cash generated from operations of Gaming or otherwise available to it is not sufficient to make such payments. On August 2, 2001, London Clubs made a payment in the amount of approximately $7.1 million, which was utilized to make payment of interest that was due on July 31, 2001 under the Bank Credit Facility. Gaming is treating the $7.1 million received from London Clubs as a payment under the Keep-Well Agreement in satisfaction of the Sponsors' obligations thereunder for the fiscal quarter ended March 31, 2001.

Market Risk

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 ($227.5 million at June 30, 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 ($157.6 million at June 30, 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 fair

market value of Gaming's interest rate derivative financial instruments as provided by the counterparty, is a net payable of approximately $16.0 million at June 30, 2001, which is included in the Company's condensed consolidated financial statements.

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		Seventh Amendment to Credit Agreement, dated as of June 15, 2001, effective as of May 29, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
10.02		Eighth Amendment to Credit Agreement, dated as of July 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
10.03		Second Amendment to Keep-Well Agreement, dated as of June 15, 2001, effective as of May 29, 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.
10.04		Agreement of Amendment No. 6, dated as of June 15, 2001, effective as of May 29, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and Aladdin Gaming, LLC.
10.05		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and William Timmins, Chief Operating Officer.
10.06		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and Tom Lettero, Chief Financial Officer.
10.07		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and Patricia Becker, Esq., Senior Vice President, Corporate-Legal Affairs.

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

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

EXHIBIT INDEX

Exhibit No.		Description
10.01		Seventh Amendment to Credit Agreement, dated as of June 15, 2001, effective as of May 29, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
10.02		Eighth Amendment to Credit Agreement, dated as of July 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.
10.03		Second Amendment to Keep-Well Agreement, dated as of June 15, 2001, effective as of May 29, 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.
10.04		Agreement of Amendment No. 6, dated as of June 15, 2001, effective as of May 29, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and Aladdin Gaming, LLC.
10.05		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and William Timmins, Chief Operating Officer.
10.06		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and Tom Lettero, Chief Financial Officer.
10.07		Retention Agreement dated as of June 11, 2001 between Aladdin Gaming, LLC and Patricia Becker, Esq., Senior Vice President, Corporate-Legal Affairs.

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ALADDIN GAMING ENTERPRISES, INC. INDEX
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Existing Credit Facility
Eighth Amendment
Existing Credit Facility
Eighth Amendment
SIGNATURES
EXHIBIT INDEX
EX-10.01 3 a2055178zex-10_01.htm EXHIBIT 10.01 Prepared by MERRILL CORPORATION
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Exhibit 10.01

SEVENTH AMENDMENT TO
CREDIT AGREEMENT

Dated as of June 15, 2001,
effective as of May 29, 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.

SEVENTH AMENDMENT TO CREDIT AGREEMENT

THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Seventh Amendment to Credit Agreement") is dated as of June 15, 2001, effective as of May 29, 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 (t) that certain Credit Agreement (the "CA") dated as of February 26, 1998, (u) that certain First Amendment to Credit Agreement (the "First Amendment to Credit Agreement") dated as of January 29, 1999, (v) 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, (w) that certain Third Amendment to Credit Agreement (the "Third Amendment to Credit Agreement") dated as of June 2, 2000, (x) that certain Fourth Amendment to Credit Agreement (the "Fourth Amendment to Credit Agreement") dated as of July 27, 2000, (y) that certain Fifth Amendment to Credit Agreement (the "Fifth Amendment to Credit Agreement") dated as of December 29, 2000 and (z) that certain Sixth Amendment to Credit Agreement (the "Sixth Amendment to Credit Agreement") dated as of March 30, 2001 (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, the Fifth Amendment to Credit Agreement and the Sixth Amendment to Credit Agreement shall be referred to herein as the "Credit Agreement"); and

WHEREAS, the Borrower has requested the Lenders to 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, but only upon the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION I.1. Certain Defined Terms. The following terms (whether or not italicized) when used in this Seventh Amendment to Credit Agreement and the Credit Agreement, as amended by this Seventh Amendment to Credit Agreement, including all preamble and recitals, shall, except where the context otherwise requires, have the following meanings:

"Effective Date" is defined in Section 3.1.

"Deemed Cash Equity Contribution" shall mean, for the sole purpose of calculating EBITDA for the Fiscal Quarter closing on March 31, 2001 and for no other purpose, a Cash Equity Contribution in the amount of $13,300,000 deemed to have been made by the Sponsors with respect to the Fiscal

Quarter ending March 31, 2001, but only if the Sponsors have made Cash Equity Contributions in the amount of the FQ2 Cash Equity Contributions in accordance with the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement and the Second Amendment to Keep-Well Agreement, and if such FQ2 Cash Equity Contributions have not been made in accordance with the Keep-Well Agreement, as so amended, then the Cash Equity Contributions with respect to the Fiscal Quarter ending March 31, 2001 actually made by the Sponsors in accordance with the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, on or before May 30, 2001 shall be the Deemed Cash Equity Contribution. In no event shall the Deemed Cash Equity Contribution apply to or in any way limit any obligation of the Sponsors under the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement and the Second Amendment to Keep-Well Agreement.

"Fifth Amendment to Credit Agreement" is defined in the first recital.

"FQ2 Cash Equity Contributions" is defined in the Second Amendment to Keep-Well Agreement.

"First Amendment to Credit Agreement" is defined in the first recital.

"First Amendment to Keep-Well Agreement" shall mean the First Amendment to Keep-Well Agreement dated as of March 30, 2001.

"Fourth Amendment to Credit Agreement" is defined in the first recital.

"Second Amendment to Credit Agreement" is defined in the first recital.

"Second Amendment to Keep-Well Agreement" is defined in clause (a) of Section 3.1.

"Seventh Amendment to Credit Agreement" is defined in the preamble.

"Sixth Amendment to Credit Agreement" is defined in the first recital.

"Sponsors" is defined in the Second Amendment to Keep-Well Agreement.

"Third Amendment to Credit Agreement" is defined in the first recital.

SECTION I.2. Other Defined Terms; Construction. For purposes of this Seventh 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 Seventh Amendment to Credit Agreement, and the rules of construction set forth in Article I of the CA shall apply to this Seventh Amendment to Credit Agreement.

ARTICLE II

AMENDMENTS

SECTION II.1. Amendments. The parties hereto hereby agree that from and after the Effective Date, the following amendments shall be made to the Credit Agreement:

(a) From and after the Effective Date, the definition of EBITDA in the Credit Agreement shall be deleted in its entirety and the following definition of EBITDA shall be substituted in its place:

"'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;

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 (i) 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, (ii) for purposes of determining the amount of Cash Equity Contributions made by the Sponsors with respect to the Fiscal Quarter ending March 31, 2001, the amount thereof shall be the Deemed Cash Equity Contributions, (iii) 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), (b), (c) and (d) 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 (iv) 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."

(b): From and after the Effective Date, the following proviso shall be added to the end of Section 8.1.4:

"; provided, however, in no event shall such 30 day notice period apply to any monetary obligation of the Sponsors under the Keep-Well Agreement, it being expressly understood that performance by the Sponsors thereunder shall be required in accordance with the terms of the Keep-Well Agreement."

ARTICLE III

CONDITIONS PRECEDENT AND COVENANT

SECTION III.1. Conditions to Effectiveness. This Seventh 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.

(a)

Deliveries. The Administrative Agent shall have received counterparts of (i) this Seventh 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 Second Amendment to Keep-Well Agreement of even date (the "Second Amendment to Keep-Well Agreement") from London Clubs, the Trust, ABH and AHL; (iv) an amendment to the GECC Facilities Agreement which amends the GECC Facilities Agreement substantially in accordance with the terms hereof; (v) a consent, if required, from the Discount Note Indenture Trustee to the execution and delivery hereof in form and content reasonably satisfactory to the Administrative Agent; and (vi) such other documents reasonably required by the Administrative Agent or any of the Lenders.

(b)

Second Amendment to Keep-Well Agreement. The Second Amendment to Keep-Well Agreement shall be 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 date of the Seventh 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 Seventh 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 Seventh 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 Second 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 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.

(d): 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

Seventh Amendment to Credit Agreement and the transactions contemplated herein shall have been paid in full.

(e)

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 reasonably satisfactory in form and substance to each Financing Party.

(f)

Default. After giving effect to this Seventh 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 has occurred 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.

(g)

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 Seventh 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 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 reasonably satisfactory to the Administrative Agent.

(h)

Delivery of Seventh Amendment to Credit Agreement, etc. The Borrower shall have delivered this Seventh 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.

(i)

Opinions. The Administrative Agent shall have received such opinions of counsel as it deems necessary, dated as of the date of the Seventh 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 Intercreditor Agreement or the Discount Note Indenture for the waivers, amendments or modifications set forth in this Seventh Amendment to Credit Agreement and shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce the Administrative Agent to enter into this Seventh Amendment to Credit Agreement on behalf of the Lenders, the Borrower hereby reaffirms, as of the date of this Seventh 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 IV.1. Matters Pertaining to the GECC Facilities Agreement and the Discount Note Indenture. The Borrower has performed in all material respects 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 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 IV.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of this Seventh Amendment to Credit Agreement and each other document executed or to be executed by it in connection with this Seventh 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 Seventh 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 IV.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 Seventh Amendment to Credit Agreement or any other document to be executed by it or any other Person in connection with this Seventh Amendment to Credit Agreement.

SECTION IV.4. Validity, etc. This Seventh Amendment to Credit Agreement constitutes, and each other document executed by the Borrower in connection with this Seventh 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.

SECTION IV.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 IV.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 IV.7. Release by the Borrower. (a) As an inducement to the Administrative Agent to enter into this Seventh 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 Seventh 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
(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 Seventh 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 V

MISCELLANEOUS PROVISIONS

SECTION V.1. Reservation of Rights. The Borrower agrees that neither this Seventh 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 Sponsors, 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.

SECTION V.2. Ratification of and References to the Credit Agreement. This Seventh Amendment to Credit Agreement shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended by this Seventh 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 Seventh Amendment to Credit Agreement.

SECTION V.3. Headings. The various headings of this Seventh Amendment to Credit Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Seventh Amendment to Credit Agreement or any provisions hereof.

SECTION V.4. Applicable Law. THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SEVENTH 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 V.5. Cross-References. References in this Seventh Amendment to Credit Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this Seventh Amendment to Credit Agreement.

SECTION V.6. Loan Document. This Seventh 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 V.7. Successors and Assigns. This Seventh Amendment to Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION V.8. Counterparts. This Seventh 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.

IN WITNESS WHEREOF, the parties hereto have executed this Seventh Amendment to Credit Agreement as of the day and year first above written.

		ALADDIN GAMING, LLC
		By:
				Name:
				Title:
		THE BANK OF NOVA SCOTIA, as the Administrative Agent
		By:
				Name:
				Title:

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SEVENTH AMENDMENT TO CREDIT AGREEMENT
EX-10.02 4 a2055178zex-10_02.htm EXHIBIT 10.02 Prepared by MERRILL CORPORATION
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EXHIBIT 10.02

EIGHTH AMENDMENT TO
CREDIT AGREEMENT

Dated as of July 30, 2001,

effective as of June 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.

EIGHTH AMENDMENT TO CREDIT AGREEMENT

THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (this "Eighth Amendment to Credit Agreement") is dated as of July 30, 2001, effective as of June 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").

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 (s) that certain Credit Agreement (the "CA") dated as of February 26, 1998, (t) that certain First Amendment to Credit Agreement (the "First Amendment to Credit Agreement") dated as of January 29, 1999, (u) 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, (v) that certain Third Amendment to Credit Agreement (the "Third Amendment to Credit Agreement") dated as of June 2, 2000, (w) that certain Fourth Amendment to Credit Agreement (the "Fourth Amendment to Credit Agreement") dated as of July 27, 2000, (x) that certain Fifth Amendment to Credit Agreement (the "Fifth Amendment to Credit Agreement") dated as of December 29, 2000, (y) that certain Sixth Amendment to Credit Agreement (the "Sixth Amendment to Credit Agreement") dated as of March 30, 2001 and (z) that certain Seventh Amendment to Credit Agreement (the "Seventh Amendment to Credit Agreement") dated as of June 15, 2001, effective as of May 29, 2001 (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, the Fifth Amendment to Credit Agreement, the Sixth Amendment to Credit Agreement and the Seventh Amendment to Credit Agreement shall be referred to herein as the "Credit Agreement"); and

WHEREAS, the Borrower has requested the Lenders to enter into certain additional amendments of the Credit Agreement; and

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 Eighth Amendment to Credit Agreement and the Credit Agreement, as amended by this Eighth Amendment to Credit Agreement, including all preambles and recitals, shall, except where the context otherwise requires, have the following meanings:

"Effective Date" is defined in Section 4.1.

"Eighth Amended to Credit Agreement" is defined in the preamble.

"Fifth Amendment to Credit Agreement" is defined in the first recital.

"First Amendment to Credit Agreement" is defined in the first recital.

"Fourth Amendment to Credit Agreement" is defined in the first recital.

"Second Amendment to Credit Agreement" is defined in the first recital.

"Seventh Amendment to Credit Agreement" is defined in the first recital.

"Sixth Amendment to Credit Agreement" is defined in the first recital.

"Third Amendment to Credit Agreement" is defined in the first recital.

"Third Amendment to Keep-Well Agreement" is defined in clause (a) of Section 4.1.

SECTION 1.2. Other Defined Terms; Construction. For purposes of this Eighth 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 Eighth Amendment to Credit Agreement, and the rules of construction set forth in Article I of the CA shall apply to this Eighth Amendment to Credit Agreement.

ARTICLE II

AMENDMENTS

SECTION 2.1. Amendments. The parties hereto hereby agree that from and after the Effective Date, the following amendments shall be made to the Credit Agreement:

(a): From and after the Effective Date, the definition of Applicable Base Rate Margin (as defined in the Sixth Amendment to Credit Agreement) shall be deleted in its entirety and the following definition of Applicable Base Rate Margin shall be substituted in its place:

"Applicable Base Rate Margin" means, (w) relative to any Term B Loan, (1) on any date prior to June 30, 2001, 2.50% per annum, (2) on any date from and after the Effective Date of the Eight Amendment to Credit Agreement and prior to June 30, 2002, 10.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event as set forth on Schedule I annexed to the Eighth Amendment to Credit Agreement, and (3) on any date from and after June 30, 2002, 2.50% per annum, (x) relative to any Term C Loan, (1) on any date prior to June 30, 2001, 3.00% per annum, (2) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 10.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event as set forth on Schedule I annexed to the Eighth Amendment to Credit Agreement, and (3) on any date from and after June 30, 2002, 3.00% per annum; (y) relative to any Term D Loan, (1) on any date prior to June 30, 2001, 3.50% per annum, (2) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 10.50% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event as set forth on Schedule I annexed to the Eighth Amendment to Credit Agreement, and (3) on any date from and after June 30, 2002, 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, (2) on any date from and after February 18, 2001 and prior to June 30, 2001, the per annum percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate, (3) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 10.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event as set forth on Schedule I annexed to the Eighth Amendment to Credit Agreement, and (4) on any date from and

after June 30, 2002, the per annum percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate:

Total Debt to EBITDA Ratio	Applicable Base Rate Margin
a 4.5:1	2.00	%
a 4.0:1 and < 4.5:1	1.75	%
a 3.5:1 and < 4.0:1	1.50	%
a 3.0:1 and < 3.5:1	1.00	%
a 2.5:1 and < 3.0:1	0.75	%
< 2.5:1	0.50	%"

(b): From and after the Effective Date, the definition of Applicable LIBO Rate Margin (as defined in the Sixth Amendment to Credit Agreement) shall be deleted in its entirety and the following definition of Applicable LIBO Rate Margin shall be substituted in its place:

"Applicable LIBO Rate Margin" means, (w) relative to any Term B Loan, (1) on any date prior to June 30, 2001, 3.50% per annum, (2) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 11.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event, and (3) on any date from and after June 30, 2002, 3.50% per annum, (x) relative to any Term C Loan, (1) on any date prior to June 30, 2001, 4.00% per annum, (2) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 11.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event, and (3) on any date from and after June 30, 2002, 4.00% per annum; (y) relative to any Term D Loan, (1) on any date prior to June 30, 2001, 4.50% per annum, (2) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 11.50% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event, and (3) on any date from and after June 30, 2002, 4.5%; and (z) relative to any Term A Loan, (1) on any date prior to February 18, 2001, 3.00% per annum, (2) on any date from and after February 18, 2001 and prior to June 30, 2001, the per annum percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate, (3) on any date from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, 11.00% per annum, as such rate may be reduced from time to time upon the occurrence of an Interest Reduction Event, and (4) on any date from and after June 30, 2002, the per annum percentage set forth below opposite the Total Debt to EBITDA Ratio set forth in the Current Compliance Certificate:

Total Debt to EBITDA Ratio	Applicable LIBO Rate Margin
a 4.5:1	3.00	%
a 4.0:1 and < 4.5:1	2.75	%
a 3.5:1 and < 4.0:1	2.50	%
a 3.0:1 and < 3.5:1	2.00	%
a 2.5:1 and < 3.0:1	1.75	%
< 2.5:1	1.50	%"

(c): From and after the Effective Date, the definition of Deemed Cash Equity Contribution (as defined in the Seventh Amendment to Credit Agreement) shall be deleted in its entirety and the following definition of Deemed Cash Equity Contribution shall be substituted in its place:

"Deemed Cash Equity Contribution" shall mean, for the sole purpose of calculating EBITDA (i) for the Fiscal Quarter closing on March 31, 2001 and for no other purpose, a Cash Equity Contribution in the amount of $13,300,000 and (ii) for the Fiscal Quarters closing on June 30, 2001, September 30, 2001, December 31, 2001 and March 31, 2002, and for no other purpose, a Cash Equity Contribution in the amount which, when added to the Borrower's EBITDA for the four quarter period ending on the

last day of such Fiscal Quarter, will result in the Borrower being in compliance with the Minimum Fixed Charge Coverage Ratio, but only if the Sponsors have made Cash Equity Contributions in the amount of the FQ2 Cash Equity Contributions (for the Fiscal Quarter closing on March 31, 2001) and in the amount of the FQ Cash Equity Contributions (for the Fiscal Quarters closing on June 30, 2001, September 30, 2001, December 31, 2001 or March 31, 2002 as the case may be), in accordance with the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, the Second Amendment to Keep-Well Agreement, and the Third Amendment to Keep-Well Agreement. If such FQ2 Cash Equity Contributions or any FQ Cash Equity Contributions have not been made in accordance with the Keep-Well Agreement, as so amended, then the Deemed Cash Equity Contributions for the Fiscal Quarter ending (x) March 31, 2001 shall be the Cash Equity Contributions actually made by the Sponsors in accordance with the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, on or before May 30, 2001 or (y) June 30, 2001, September 30, 2001, December 31, 2001 or March 31, 2002 shall be the Cash Equity Contributions actually made by the Sponsors for such Fiscal Quarter in accordance with the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, the Second Amendment to Keep-Well Agreement and the Third Amendment to Keep-Well Agreement. In no event shall the Deemed Cash Equity Contribution apply to or in any way limit any obligation of the Sponsors under the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, the Second Amendment to Keep-Well Agreement and the Third Amendment to Keep-Well Agreement."

(d): From and after the Effective Date, the definition of EBITDA in the Credit Agreement shall be deleted in its entirety and the following definition of EBITDA shall be substituted in its place:

" '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;

plus

(iii): depreciation of assets of the Borrower;

plus

(iv): amortization;

plus

(v): non-cash expense or income items of the Borrower under any Rate Protection Agreement;

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 (i) 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, (ii) for purposes of determining the amount of Cash Equity Contributions made by the Sponsors with respect to the Fiscal Quarters ending March 31, 2001, June 30, 2001, September 30, 2001, December 31, 2001 and March 31, 2002, the amount thereof shall be the Deemed Cash Equity Contributions, (iii) 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), (b), (c) and (d) 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 (iv) 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."

(e): From and after the Effective Date, the following definition shall be added to the Credit Agreement:

"Interest Reduction Event" is defined on Schedule I annexed to the Eighth Amendment to Credit Agreement.

(f): From and after the Effective Date, the words "Schedule II annexed to the Sixth Amendment to Credit Agreement" in clause (b) of Section 3.1.1 of the Credit Agreement, as amended by clause (gg) of Section 3.1 of the Fourth Amendment to Credit Agreement and clause (d) of Section 2.1 of the Fifth Amendment to Credit Agreement, shall be deemed to be deleted in their entirety and the words "Schedule II annexed to the Eighth Amendment to Credit Agreement" shall be substituted in their place.
(g): From and after the Effective Date, clause (c) of Section 3.1.1 of the Credit Agreement, as amended by clause (b) of Section 2.1 of the Sixth Amendment to Credit Agreement, shall be deemed to 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 Section 7.1.19 of the Credit Agreement and Schedule III annexed to the Eighth Amendment to Credit Agreement, the application of which shall be as set forth in items (ii) and (iii) of this clause (c).

(ii): On any date on which a Mandatory Prepayment consisting of Excess Cash 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 such 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 forward order among the Term A Loan, the Term B Loan, the Term C Loan and the Term D Loan.
(iii): On any date on which a Mandatory Prepayment consisting of the "Release Price" 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 such Mandatory Payment 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). Except as set forth in the proviso of the immediately preceding sentence, Mandatory Prepayments will be applied pro rata in forward order among the Term A Loan, the Term B Loan, the Term C Loan and the Term D Loan."
(h): From and after the Effective Date, Section 3.2.3 of the Credit Agreement shall be deemed to be deleted in its entirety and the following Section 3.2.3 shall be substituted in its place:

"SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be payable, without duplication:

(a): on the Stated Maturity Date therefor;
(b): on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan on the principal amount so paid or prepaid; provided, however, that from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, the minimum interest payable in cash with respect to any such prepayment shall be the applicable amount set forth in the proviso in clauses (c) and (d) on the principal amount so paid or prepaid and the balance of accrued and unpaid interest shall be added to the principal amount of the Loans as payment of such interest;
(c): with respect to Base Rate Loans, on each Quarterly Payment Date occurring after the Effective Date; provided, however, that from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002, (w) interest shall be due and payable on the first day of each and every calendar month, (x) the minimum interest payable in cash on Base Rate Loans that are Term A Loans, Term B Loans or Term C Loans shall be an calculated as though the Applicable Base Rate Margin was 3.00% per annum, (y) the minimum interest payable in cash on Base Rate Loans that are Term D Loans shall be an calculated as though the Applicable Base Rate Margin was 3.50% per annum, and (z) the balance of accrued and unpaid interest shall be added to the principal amount of the Loans as payment of such interest.
(d): with respect to LIBO Rate Loans, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on each Quarterly Payment Date during such Interest Period); provided, however, that from and after June 30, 2001 and prior to June 30, 2002, (w) interest shall be due and payable on the first day of each and every calendar month,

(x) the minimum interest payable in cash on LIBO Rate Loans that are Term A Loans, Term B Loans or Term C Loans shall be an calculated as though the Applicable LIBO Rate Margin was 4.00% per annum, (y) the minimum interest payable in cash on LIBO Rate Loans that are Term D Loans shall be an calculated as though the Applicable LIBO Rate Margin was 4.50% per annum and (z) the balance of accrued and unpaid interest shall be added to the principal amount of the Loans as payment of such interest;

(e): with respect to any Base Rate Loans converted into LIBO Rate Loans on a day when interest would not otherwise have been payable pursuant to clause (c), on the date of such conversion; provided, however, that from and after June 30, 2001 and prior to June 30, 2002, (x) the minimum interest payable in cash on Base Rate Loans that are Term A Loans, Term B Loans or Term C Loans shall be an calculated as though the Applicable Base Rate Margin was 3.00% per annum, (y) the minimum interest payable in cash on Base Rate Loans that are Term D Loans shall be an calculated as though the Applicable Base Rate Margin was 3.50% per annum and (z) the balance of accrued and unpaid interest shall be added to the principal amount of the Loans as payment of such interest; and
(f): on that portion of any Loan the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand and not added to principal."

ARTICLE III

WAIVERS BY THE LENDERS

SECTION 3.1. Waivers Pertaining to Financial Condition and Operations. The Borrower has not performed its covenants under clause (a), clause (b) and clause (d) of Section 7.2.4 of the Credit Agreement, as amended by the Sixth Amendment to Credit Agreement and as further amended by this Eighth Amendment to Credit Agreement, with respect to the Fiscal Quarters ending on or prior to June 30, 2001. 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 the Sixth Amendment to Credit Agreement and as further amended by this Eighth Amendment to Credit Agreement, with respect to the Fiscal Quarters ending on or prior to June 30, 2002. As of the Effective Date, the Lenders agree that the Borrower's failure to perform its covenants (x) under clause (a), clause (b) and clause (d) of Section 7.2.4 of the Credit Agreement, as amended by the Sixth Amendment to Credit Agreement and further amended by this Eighth Amendment to Credit Agreement, are hereby waived with respect to the Fiscal Quarters ending on or prior to June 30, 2002.

ARTICLE IV

CONDITIONS PRECEDENT AND COVENANT; AMENDMENT FEE

SECTION 4.1. Conditions to Effectiveness. This Eighth 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.

(a): Deliveries. The Administrative Agent shall have received counterparts of (i) this Eighth 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) if required, the Third Amendment to Deed of Trust, (iv) the Third Amendment to Keep-Well Agreement of even date (the "Third Amendment to Keep-Well Agreement") from London Clubs, the Trust, ABH and AHL; (v) an

amendment to the GECC Facilities Agreement which amends the GECC Facilities Agreement substantially in accordance with the terms hereof; (vi) a consent, if required, from the Discount Note Indenture Trustee to the execution and delivery hereof in form and content reasonably satisfactory to the Administrative Agent; and (vii) such other documents reasonably required by the Administrative Agent or any of the Lenders.

(b)

Third Amendment to Keep-Well Agreement. The Third Amendment to Keep-Well Agreement shall be 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 date of the Eighth 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 Eighth 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 Eighth 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 Third 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 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,

(d): 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 Eighth Amendment to Credit Agreement and the transactions contemplated herein shall have been paid in full.
(e): 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 reasonably satisfactory in form and substance to each Financing Party.

(f): Default. After giving effect to this Eighth 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 has occurred 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.
(g): 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 Eighth 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 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 reasonably satisfactory to the Administrative Agent.
(h): Delivery of Eighth Amendment to Credit Agreement, etc. The Borrower shall have delivered this Eighth 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.
(i): Opinions. The Administrative Agent shall have received such opinions of counsel as it deems necessary, dated as of the date of the Eighth 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 the amendment in clause (h) of Section 2.1 of this Eighth Amendment does not violate any applicable usury law or public policy, no approvals, waivers, amendments or modifications are required under the GECC Intercreditor Agreement or the Discount Note Indenture for the approvals, waivers, amendments or modifications set forth in this Eighth Amendment to Credit Agreement and shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

In order to induce the Administrative Agent to enter into this Eighth Amendment to Credit Agreement on behalf of the Lenders, the Borrower hereby reaffirms, as of the date of this Eighth 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 IV.

SECTION 5.1. Matters Pertaining to the GECC Facilities Agreement and the Discount Note Indenture. The Borrower has performed in all material respects 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 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 5.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of this Eighth Amendment to Credit Agreement and each other document executed or to be executed by it in connection with this Eighth 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 Eighth 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 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 the Borrower or any other Person of this Eighth Amendment to Credit Agreement or any other document to be executed by it or any other Person in connection with this Eighth Amendment to Credit Agreement.

SECTION 5.4. Validity, etc. This Eighth Amendment to Credit Agreement constitutes, and each other document executed by the Borrower in connection with this Eighth 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.

SECTION 5.5. 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 5.6. 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 5.7. Release by the Borrower. (a) As an inducement to the Administrative Agent to enter into this Eighth 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 Eighth 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
(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 Eighth 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 VI

MISCELLANEOUS PROVISIONS

SECTION 6.1. Reservation of Rights. The Borrower agrees that neither this Eighth 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 Sponsors, 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.

SECTION 6.2. Ratification of and References to the Credit Agreement. This Eighth Amendment to Credit Agreement shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended by this Eighth 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 Eighth Amendment to Credit Agreement.

SECTION 6.3. Headings. The various headings of this Eighth Amendment to Credit Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Eighth Amendment to Credit Agreement or any provisions hereof.

SECTION 6.4. Applicable Law. THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS EIGHTH 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 6.5. Cross-References. References in this Eighth Amendment to Credit Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this Eighth Amendment to Credit Agreement.

SECTION 6.6. Loan Document. This Eighth 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 6.7. Successors and Assigns. This Eighth Amendment to Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 6.8. Counterparts. This Eighth 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.

IN WITNESS WHEREOF, the parties hereto have executed this Eighth Amendment to Credit Agreement as of the day and year first above written.

ALADDIN GAMING, LLC
By:

Name:
Title:

THE BANK OF NOVA SCOTIA, as the
Administrative Agent
By:

Name: Alan Pendergast
Title: Managing Director

SCHEDULE I
To Eighth Amendment to Credit Agreement

The Applicable Base Rate Margin and the Applicable LIBO Rate Margin relative to any Term A Loan, Term B Loan, Term C Loan and Term D Loan shall be reduced from time to time by the percentage set forth below opposite the applicable event (each, an "Interest Reduction Event") upon the occurrence of any Interest Reduction Event from and after the Effective Date of the Eighth Amendment to Credit Agreement and prior to June 30, 2002:

Interest Reduction Event	Percentage Reduction
The date on which LCNI directly owns, free and clear of all Liens (other than Liens in favor of the Administrative Agent for the benefit of the Secured Parties), approximately 85% of the Holdings Common Membership Interests.	2.00	%
The Applicable Base Rate Margin shall be further reduced on the date on which the Administrative Agent shall deliver on behalf of the Lenders a release of the Music Project Parcel from the Deed of Trust in accordance with Section 7.1.19 and a Mandatory Prepayment is made in accordance with item (ii) of clause (c) of Section 3.1.1 provided that the Release Price is greater than or equal to $15,000,000.	1.00	%
The Applicable Base Rate Margin shall be further reduced on the date on which contributions to the Borrower made by or on behalf of the Sponsors from and after the Effective Date of the Eighth Amendment to Credit Agreement aggregate $15,000,000 or more, which contributions shall be in cash, not made as a loan and made on terms and conditions satisfactory to the Administrative Agent as determined on good faith in its sole discretion.	0.50	%

SCHEDULE II
To Eighth Amendment to Credit Agreement

Date	Scheduled Repayment of Term A Loan ($136MM)	Scheduled Repayment of Term B Loan ($114MM)	Scheduled Repayment of Term C Loan ($160MM)	Scheduled Repayment of Term D Loan ($50MM)
End of First Fiscal Quarter following the Conversion Date	4.00	0.30	0.40	None
End of Second Fiscal Quarter thereafter	4.0	0.30	0.40	0.125
End of Third Fiscal Quarter thereafter	4.0	0.30	0.40	0.125
End of Fourth Fiscal Quarter thereafter	0.0	0.0	0.0	0.0
End of Fifth Fiscal Quarter thereafter	0.0	0.0	0.0	0.0
End of Sixth Fiscal Quarter thereafter	0.0	0.0	0.0	0.0
End of Seventh Fiscal Quarter thereafter	0.0	0.0	0.0	0.0
End of Eighth Fiscal Quarter thereafter	24.00	1.5	2.0	0.625
End of Ninth Fiscal Quarter thereafter	7.00	0.30	0.40	0.125
End of Tenth Fiscal Quarter thereafter	7.00	0.30	0.40	0.125
End of Eleventh Fiscal Quarter thereafter	7.00	0.30	0.40	0.125
End of Twelfth Fiscal Quarter thereafter	7.00	0.30	0.40	0.125
End of Thirteenth Fiscal Quarter thereafter	8.00	0.30	0.40	0.125
End of Fourteenth Fiscal Quarter thereafter	8.00	0.30	0.40	0.125
End of Fifteenth Fiscal Quarter thereafter	8.00	0.30	0.40	0.125
End of Sixteenth Fiscal Quarter thereafter	8.00	0.30	0.40	0.125
End of Seventeenth Fiscal Quarter thereafter	10.00	0.30	0.40	0.125
End of Eighteenth Fiscal Quarter thereafter	10.00	0.30	0.40	0.125
End of Nineteenth Fiscal Quarter thereafter	10.00	0.30	0.40	0.125
End of Twentieth Fiscal Quarter thereafter	8.75	0.30	0.40	0.125
End of Twenty-First Fiscal Quarter thereafter		17.00	0.40	0.125
End of Twenty-Second Fiscal Quarter thereafter		17.00	0.40	0.125
End of Twenty-Third Fiscal Quarter thereafter		17.00	0.40	0.125
End of Twenty-Fourth Fiscal Quarter thereafter		17.00	0.40	0.125
End of Twenty-Fifth Fiscal Quarter thereafter		20.00	0.40	0.125
End of Twenty-Sixth Fiscal Quarter thereafter		20.00	0.40	0.125
End of Twenty-Seventh Fiscal Quarter thereafter			23.80	0.125
End of Twenty-Eighth Fiscal Quarter thereafter			23.80	0.125
End of Twenty-Ninth Fiscal Quarter thereafter			25.50	0.125
End of Thirtieth Fiscal Quarter thereafter			25.50	0.125
End of Thirty-First Fiscal Quarter thereafter			25.50	0.125
End of Thirty-Second Fiscal Quarter thereafter			25.50	0.125
End of Thirty-Third Fiscal Quarter therea				25.50
End of Thirty-Fourth Fiscal Quarter thereafter				20.625

SCHEDULE III
To Eighth Amendment to Credit Agreement

MANDATORY PAYMENTS AND PREPAYMENTS

Date		Percentage of Excess Cash Flow

End of each of the First Fiscal Quarter following the Conversion Date (October 31, 2000) and the Second Fiscal Quarter following the Conversion Date		75% of 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 Fiscal Quarter following the Conversion Date		100% of Excess Cash Flow shall be paid first to the Consenting Lenders (as defined in the Sixth Amendment to Credit Agreement) in accordance with Section 5.2 of the Sixth Amendment to Credit Agreement until the Sixth Amendment Fee has been paid in full; thereafter 75% 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 each of the Fourth Fiscal Quarter following the Conversion Date and the end of each Fiscal Quarter thereafter through the End of the Eighth Fiscal Quarter following the Conversion Date		100% of Excess Cash Flow shall be paid first to the Consenting 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 Fiscal Quarter following the Conversion Date and the end of each Fiscal Quarter thereafter		100% of Excess Cash Flow shall be paid first to the Consenting 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%.

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EIGHTH AMENDMENT TO CREDIT AGREEMENT
EIGHTH AMENDMENT TO CREDIT AGREEMENT
W I T N E S S E T H
ARTICLE I DEFINITIONS
ARTICLE II AMENDMENTS
ARTICLE III WAIVERS BY THE LENDERS
ARTICLE IV CONDITIONS PRECEDENT AND COVENANT; AMENDMENT FEE
ARTICLE V REPRESENTATIONS AND WARRANTIES
ARTICLE VI MISCELLANEOUS PROVISIONS
EX-10.03 5 a2055178zex-10_03.htm EXHIBIT 10.03 Prepared by MERRILL CORPORATION
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EXHIBIT 10.03

SECOND AMENDMENT TO
KEEP-WELL AGREEMENT

Dated as of June 15, 2001,
effective as of May 29, 2001

(amending the Keep-Well Agreement
dated as of
February 26, 1998)

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

SECOND AMENDMENT TO KEEP-WELL AGREEMENT

THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT (this "Second Amendment to Keep-Well Agreement") dated as of June 15, 2001, effective as of May 29, 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").

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, that certain Sixth Amendment to Credit Agreement dated as of March 30, 2001 and that certain Seventh Amendment to Credit Agreement (the "Seventh Amendment to Credit Agreement") of even date herewith and all other amendments and other modifications from time to time hereafter 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, and CIBC Oppenheimer Corp., as 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 Seventh 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 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 guarantee fully and unconditionally 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 Sponsors entered into that certain First Amendment to Keep-Well Agreement (the "First Amendment to Keep-Well Agreement") dated as of March 30, 2001; and

WHEREAS, the Sponsors have requested the Lenders to enter into certain additional amendments to the Keep-Well Agreement; and

WHEREAS, the Sponsors have duly authorized the execution, delivery and performance of this Second 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

–2–

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 Second 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 (as such term is defined in the Credit Agreement; each capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement) 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 follows:

ARTICLE 1

AMENDMENTS

SECTION 1.1 Amendments. The parties hereto hereby agree that from and after the Effective Date (as defined in Section 3.1) the following amendments shall be made to the Keep-Well Agreement, as amended by the First Amendment to Credit Agreement:

(a) The definition of "Keep-Well Termination Date" set forth in Section 1 of the Keep-Well Agreement, as amended by the First Amendment to 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 Seventh Amendment to Credit Agreement or to any other amendment of the Credit Agreement which became effective prior to the date of the Seventh 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."

(b) The following sentences shall be added after the second sentence of Section 2 of the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement:

"Notwithstanding the foregoing, with respect only to the Fiscal Quarter ending March 31, 2001, the amount of the Cash Equity Contributions for such Fiscal Quarter (the 'FQ2 Cash Equity Contributions') shall equal all Debt Service (including, without limitation, Debt Service payments due on or about June 29, 2001 and August 1, 2001) and such other amounts

–3–

reasonably required by the Board of Managers of the Borrower to perform in all material respects its covenants in the first four sentences of Section 7.1.3 of the Credit Agreement (without giving effect to any grace, notice or cure period granted to the Borrower under the Credit Agreement), in each case which is due and payable or otherwise required by the Borrower on or before August 1, 2001 and which has not been funded by the Borrower in accordance with the Loan Documents (without giving effect to any grace, notice or cure period granted to the Borrower under the Credit Agreement). With respect to such Debt Service which is due and payable on or before August 1, 2001, such Cash Equity Contributions shall be made by the Sponsors on or before the date that such amount is due and payable under the Loan Documents, in each case without giving effect to any grace, notice or cure period granted to the Borrower thereunder. With respect to amounts reasonably required by the Borrower to perform in all material respects its covenants in the first four sentences of Section 7.1.3 of the Credit Agreement, such Cash Equity Contributions shall be made within three Business Days after request therefor has been made by the Borrower, without giving effect to any grace, notice or cure period granted to the Borrower under the Loan Documents."

ARTICLE 2

RATIFICATION AND REAFFIRMATION

SECTION 2.1 Ratification and Reaffirmation. This Second Amendment to Keep-Well Agreement shall be deemed to be an amendment to the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, and the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement and this Second Amendment to Keep-Well Agreement, shall continue in full force and effect and is hereby ratified, approved and confirmed in each and every respect.

ARTICLE 3

CONDITIONS PRECEDENT AND COVENANT

SECTION 3.1 Conditions to Effectiveness. The amendments in Section 1.1 of this Second Amendment to Keep-Well Agreement 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 Second 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 Seventh Amendment to Credit Agreement executed by Authorized Representatives of the Borrower and the Administrative Agent and (iv) all documentation required by Section 3.1 of the Seventh Amendment to Credit Agreement.

(b) Seventh Amendment to Credit Agreement. The Seventh Amendment to Credit Agreement shall have 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 Second 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

–4–

force and effect on the date hereof, authorizing the execution, delivery and performance of this Second 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 Administrative Agent has received a further certificate of an Authorized Representative of such Sponsor canceling 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 Second 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 reasonably satisfactory in form and substance to each Financing Party and its counsel.

(e) Default. After giving effect to this Second Amendment to Keep-Well Agreement and the Seventh 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 Sponsors 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 Second 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 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 reasonably satisfactory to the Administrative Agent.

(g) Delivery of Second Amendment to Keep-Well Agreement. The Sponsor shall have delivered this Second 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 reasonably satisfactory to the Administrative Agent.

–5–

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

In order to induce each Financing Party to enter into this Second 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 the First Amendment to Keep-Well Agreement and this Second Amendment to 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 Second Amendment to Keep-Well Agreement and each other document executed or to be executed by it in connection with this Second 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 Second Amendment to Keep-Well Agreement or any other document to be executed by it in connection with this Second Amendment to Keep-Well Agreement.

SECTION 4.3 Validity, etc. This Second 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, as amended by the First Amendment to Credit Agreement and this Second Amendment to 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 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.

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.

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ARTICLE 5

MISCELLANEOUS PROVISIONS

SECTION 5.1 Headings. The various headings of this Second Amendment to Keep-Well Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Second Amendment to Keep-Well Agreement or any provisions hereof.

SECTION 5.2 Applicable Law. THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECOND 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 5.3 Cross-References. References in this Second Amendment to Keep-Well Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this Second Amendment to Keep-Well Agreement.

SECTION 5.4 Operative Document. This Second 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 5.5 Successors and Assigns. This Second 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 5.6 Counterparts. This Second 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.

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IN WITNESS WHEREOF, the parties hereto have executed this Second 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:

–8–

QuickLinks

SECOND AMENDMENT TO KEEP-WELL AGREEMENT
SECOND AMENDMENT TO KEEP-WELL AGREEMENT
W I T N E S S E T H
ARTICLE 1 AMENDMENTS
ARTICLE 2 RATIFICATION AND REAFFIRMATION
ARTICLE 3 CONDITIONS PRECEDENT AND COVENANT
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
ARTICLE 5 MISCELLANEOUS PROVISIONS
EX-10.4 6 a2055178zex-10_4.htm EXHIBIT 10.4 Prepared by MERRILL CORPORATION

Exhibit 10.04

AGREEMENT OF AMENDMENT NO. 6

THIS AGREEMENT OF AMENDMENT NO. 6 (this "Amendment") is dated as of June , 2001, effective as of May 29, 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.

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 Seventh Amendment to Credit Agreement, dated as of June 15, 2001, effective as of May 29, 2001 ("Seventh Amendment"), are hereby incorporated into the Facilities Agreement and the Agreements.

Section 1.2. The following proviso shall be added to the end of Section 12(a)(3):

SECTION 2. 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 2.1 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 Seventh Amendment executed by the Authorized Representative of the parties thereto; and (iii) delivery of such other items required by GE Capital and GMAC CMC.

Section 2.2 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 GE Capital,

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 2.3 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 the 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 2.4 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 reasonably satisfactory in form and substance to GE Capital and GMAC CMC.

Section 2.5 Defaults. After giving effect to the Seventh Amendment and 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 Credit Agreement, the Facilities Agreement and 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 2.6 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 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 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 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 reasonably satisfactory to GE Capital and GMAC CMC.

Section 2.7 Delivery of Amendment. Aladdin Gaming shall have delivered this Amendment to all Persons entitled under the Operative Documents to receive delivery hereof.

Section 2.8 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.

SECTION 3. 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 3.

Section 3.1 Matters Pertaining to the Facilities Agreement and the Discount Note Indenture. Aladdin Gaming has performed in all material respects its obligations under the Agreements and the Discount Note Indenture. After giving effect to this Amendment and the Seventh Amendment, 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 Credit Agreement, the Facilities 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 Facilities Agreement.

Section 3.2 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 GE Capital and GMAC CMC may conclusively rely on such representation and warranty.

Section 3.3 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 3.4 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 3.5 Limitation. Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Facilities 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 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 Aladdin Gaming or any other Person which would require the consent of GE Capital and GMAC CMC, or the Discount Note Indenture Trustee or any other Person.

Section 3.6 Offsets and Defenses. Aladdin Gaming has no offsets or defenses to its obligations under the Agreements and no claims or counterclaims against GE Capital or GMAC CMC.

Section 3.7 Release by Aladdin Gaming. (a) As an inducement to GE Capital and GMAC CMC to enter into this Amendment, Aladdin Gaming hereby releases and discharges GE Capital and GMAC CMC, 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 GE Capital and GMAC CMC, and/or their 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 Amendment (the "Released Claims").

(b) In order to induce GE Capital and GMAC CMC to accept the release set forth herein on behalf of, 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 execution and delivery of, and the performance and compliance by Aladdin Gaming with such release will 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 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 Amendment 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 herewith.

(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 4. MISCELLANEOUS PROVISIONS.

Section 4.1. Ratification of and References to the Facilities Agreement. This Amendment shall be deemed to be an amendment to the Facilities Agreement, and the Facilities Agreement, as amended by this Amendment, shall continue in full force and effect and is hereby ratified, approved and confirmed in each and every respect. All references to the Facilities Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Facilities Agreement, as amended by this Amendment.

Section 4.2 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 4.3 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.

Section 4.3 Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified, to such Article or Section of this Amendment.

Section 4.5 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 4.6 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 4.7 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 4.8 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.

IN WITNESS WHEREOF, this Agreement of Amendment No. 6 Agreement 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:		By:
Name:		Name:
Title:		Title:
		GMAC COMMERCIAL MORTGAGE CORPORATION
		By:
		Name:
		Title:

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 UNDERSIGN CONSENTS TO THE EXECUTION OF THE FOREGOING AMENDMENT BY ALADDIN GAMING, LLC.


		THE BANK OF NOVA SCOTIA, As Administrative Agent
		By:
		Name:
		Title:

EX-10.05 7 a2055178zex-10_05.htm EXHIBIT 10.05 Prepared by MERRILL CORPORATION

Exhibit 10.05

SENIOR EXECUTIVE RETENTION AGREEMENT

THIS AGREEMENT ("Agreement"), by and between ALADDIN GAMING, LLC a Nevada limited liability company (the "Company"), and William Timmins (the "Executive").

WITNESSETH:

WHEREAS, the Company and Executive entered into that certain employment agreement dated February 25, 2000, as amended ("Employment Agreement"), and has determined that the Executive is a key executive of the Company and it is the desire of the Company to assure itself of the availability of the services of the Executive and to provide assurances to the Executive of employment in the event of the commencement of a Chapter 11 case for the Company or in the event of a Change of Control (collectively an "Event");

WHEREAS, in the event that there occurs an Event, the Company believes it imperative that the Company be able to rely upon the Executive to continue in his position and, if required, to assess any proposal or transaction which would cause an Event and advise management and the Company as to whether such proposal or transaction would be in the best interest of the Company and its members, free from concern that his recommendations may adversely affect his continued employment:

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of his advice and counsel notwithstanding the possibility, threat or occurrence of an Event and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:

1. Services During Certain Events. The Executive agrees that he will not voluntarily leave the employ of the Company and will continue to render services to the Company as provided in the Employment Agreement until the later of 18 months from the date of this Agreement or an Event Completion, as hereinafter defined ("Expiration Date"), provided, however, if no Event occurs within 18 months from the date of this Agreement, the Expiration Date shall be 18 months from the date of this Agreement. In the event the Employment Agreement terminates prior to the Expiration Date, then the Employment Agreement shall be extended through the Expiration Date unless otherwise terminated as provided therein.

2. Incentive Bonus Payments. From the date of this Agreement until the earlier of (a) the Expiration Date, (b) the date the Company terminates the Executive with Cause or (c) the Executive quits the employ of the Company without Good Reason, the Company shall pay Executive, in addition to the Base Salary pursuant to the Employment Agreement, less customary payroll deductions, the following bonus(es):

(i)

If, for the calendar year 2001, the Company achieves $63 million in EBITDA (as defined and computed in accordance with the Company's Credit Agreement, dated February 26, 1998, (collectively, as amended, "Credit Agreement")), Executive shall be paid a bonus equal to 15% of the Executive's then-existing annual base salary, payable on or before March 31, 2002;

(ii)

For the calendar year 2002,

a.: If, for the First Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 5% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter;
b.: If, for the Second Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance

with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 10% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter;

c.: If, for the Third Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 15% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter; and
d.: If, for the entire Year 2002, the Company achieves "EBITDA" for the entire Year 2002 equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for the entire Year 2002, then the Company shall pay Executive a bonus equal to 50% of Executive's then-existing annual base salary, less the amounts, if any, previously paid to the Executive pursuant to Sections 2(ii)(a), (b) and/or (c), such net amount to be paid on or before 90 days after the end of that calendar quarter.

3. Retention Bonus Payment. If there is an Event prior to the Expiration Date, then upon the Payment Date, the Company shall pay to the Executive as compensation for services rendered to the Company cash in an amount equal to three (3) times his then-existing aggregate annual base salary, (excluding bonus or options) less customary payroll deductions; provided, however, the foregoing shall not apply if the Executive has quit without Good Reason or has been terminated by the Company with Cause prior to the Event's occurrence.

4. Definitions.

(a): "Cause" shall mean (i) conviction of a felony, (ii) embezzlement or misappropriation of money or property of the Company, (iii) denial, rejection, suspension or revocation of any gaming license or permit, (iv) Executive's material breach of Section 6 of the Employment Agreement which material breach has an adverse impact on the Company or (v) Executive quits without Good Reason, as defined herein.
(b): "Change of Control" means either: (i) if collectively the Trust under Article Sixth u/w/o Sigmund Sommer and London Clubs International, plc ("London Clubs"), through their respective subsidiaries own less than 50% of the equity of either the Company and/or Aladdin Gaming Holdings, LLC (for purposes of this section, collectively and/or individually hereinafter "Aladdin"); or (ii) if a third party acquires, directly or indirectly, control of Aladdin or substantially all of its assets.
(c): "Event Completion" means the effective date of a plan of reorganization for the Company or 90 days after a Change of Control.
(d): "Good Reason" shall mean (i) a material reduction in Executive's duties, authorities and responsibilities without his consent provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter, provided that a change in Executive's direct report shall not in and of itself constitute evidence of a material reduction in duties, authorities and responsibilities; or (ii) a reduction by the Company in the Executive's base salary, in effect immediately prior to such reduction, without his consent, provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter; and (iii) the failure of the Company to cause this Agreement to be assumed as provided for in paragraph 11 below.

(e): "Payment Date" shall mean the earlier of (i) the Event Completion, (ii) the date the Company terminates the Executive without Cause or (iii) the date the Executive quits with Good Reason.
(f): "Person" shall have the same meaning as such term has under section 13(d) of the Act and the regulations promulgated thereunder.

5. Indemnification. If litigation shall be brought to enforce or interpret any provision contained herein or to recover from the Executive any moneys paid pursuant to this Agreement, the Company, to the extent permitted by applicable law and the Company's Articles of Organization, hereby agrees to indemnify the Executive for his or her reasonable attorneys' fees and disbursements incurred in such litigation, and hereby agrees to pay any money judgment obtained from the Executive and prejudgment interest on any money judgment obtained from the Executive.

6. Payment Obligations Absolute. The Company's obligation to pay the Executive the payment and to make the arrangements provided for herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against him or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company will not seek to recover all or any part of such payment from the Executive or from whosoever may be entitled thereto, for any reason whatsoever. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company's obligations to make the payments and arrangements required to be made under this Agreement.

7. Continuing Obligations. The Executive shall retain in confidence any confidential information known to him concerning the Company and its respective businesses so long as such information is not publicly disclosed and otherwise comply with Section 6(a) of the Employment Agreement in all respects.

8. Successors. This Agreement shall be binding upon and inure to the benefit of the Executive and his estate and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.

9. Severability. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10. Prior Agreements. This Agreement supersedes any prior severance and retention agreement between the Executive and the Company. Notwithstanding the prior sentence, this Agreement does not supersede or amend the Employment Agreement except as to those provisions relating to retention and severance, and is a separate and independent contract between the Company and the Executive.

[Balance of Page Intentionally Left Blank]

11. Chapter 11 Case. In the event the Company commences a Chapter 11 case prior to the Expiration Date, the company shall file a motion within two (2) business days of the petition date for the Chapter 11 Case to assume this Agreement pursuant to Section 365 of the Bankruptcy Code. In the event an order is not entered by the Bankruptcy Court approving the assumption of this Agreement within thirty (30) days of the petition date, which order does not become a final, non-appealable order within fifteen (15) days thereof, Executive has the right to terminate his employment with the Company with good reason.

12. Controlling Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Nevada.

13. Termination. This Agreement shall terminate on the Expiration Date; however, the Company's obligations pursuant to Section 3, 5, 6 and 8 above and the Executive's obligations pursuant to Sections 6, 7 and 9(j) of the Employment Agreement, shall survive termination.

IN WITNESS WHEREOF, the parties have executed this Agreement on the 11^th day of June, 2001.

EX-10.06 8 a2055178zex-10_06.htm EXHIBIT 10.06 Prepared by MERRILL CORPORATION

Exhibit 10.06

SENIOR EXECUTIVE RETENTION AGREEMENT

THIS AGREEMENT ("Agreement"), by and between ALADDIN GAMING, LLC a Nevada limited liability company (the "Company"), and Thomas A. Lettero (the "Executive").

WITNESSETH:

WHEREAS, the Company and Executive entered into that certain employment agreement dated March 7, 2000 ("Employment Agreement"), and has determined that the Executive is a key executive of the Company and it is the desire of the Company to assure itself of the availability of the services of the Executive and to provide assurances to the Executive of employment in the event of the commencement of a Chapter 11 case for the Company or in the event of a Change of Control (collectively an "Event");

2. Incentive Bonus Payments. From the date of this Agreement until the earlier of (a) the Expiration Date, (b) the date the Company terminates the Executive with Cause or (c) the Executive quits the employ of the Company without Good Reason, the Company shall pay Executive, in addition to the Base Salary pursuant to the Employment Agreement, less customary payroll deductions, the following bonus(es):

(i)

(ii)

For the calendar year 2002,

a.: If, for the First Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 5% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter;
b.: If, for the Second Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance

c.: If, for the Third Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 15% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter; and
d.: If, for the entire Year 2002, the Company achieves "EBITDA" for the entire Year 2002 equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for the entire Year 2002, then the Company shall pay Executive a bonus equal to 50% of Executive's then-existing annual base salary, less the amounts, if any, previously paid to the Executive pursuant to Sections 2(ii)(a), (b) and/or (c), such net amount to be paid on or before 90 days after the end of that calendar quarter.

3. Retention Bonus Payment. If there is an Event prior to the Expiration Date, then upon the Payment Date, the Company shall pay to the Executive as compensation for services rendered to the Company cash in an amount equal to three (3) times his then-existing aggregate annual base salary, (excluding bonus or options) less customary payroll deductions; provided, however, the foregoing shall not apply if the Executive has quit without Good Reason or has been terminated by the Company with Cause prior to the Event's occurrence.

4. Definitions.

(a): "Cause" shall mean (i) conviction of a felony, (ii) embezzlement or misappropriation of money or property of the Company, (iii) denial, rejection, suspension or revocation of any gaming license or permit, (iv) Executive's material breach of Section 6 of the Employment Agreement which material breach has an adverse impact on the Company or (v) Executive quits without Good Reason, as defined herein.
(b): "Change of Control" means either: (i) if collectively the Trust under Article Sixth u/w/o Sigmund Sommer and London Clubs International, plc ("London Clubs"), through their respective subsidiaries own less than 50% of the equity of either the Company and/or Aladdin Gaming Holdings, LLC (for purposes of this section, collectively and/or individually hereinafter "Aladdin"); or (ii) if a third party acquires, directly or indirectly, control of Aladdin or substantially all of its assets.
(c): "Event Completion" means the effective date of a plan of reorganization for the Company or 90 days after a Change of Control.
(d): "Good Reason" shall mean (i) a material reduction in Executive's duties, authorities and responsibilities without his consent provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter, provided that a change in Executive's direct report shall not in and of itself constitute evidence of a material reduction in duties, authorities and responsibilities; or (ii) a reduction by the Company in the Executive's base salary, in effect immediately prior to such reduction, without his consent, provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter; and (iii) the failure of the Company to cause this Agreement to be assumed as provided for in paragraph 11 below.

(e): "Payment Date" shall mean the earlier of (i) the Event Completion, (ii) the date the Company terminates the Executive without Cause or (iii) the date the Executive quits with Good Reason.
(f): "Person" shall have the same meaning as such term has under section 13(d) of the Act and the regulations promulgated thereunder.

5. Indemnification. If litigation shall be brought to enforce or interpret any provision contained herein or to recover from the Executive any moneys paid pursuant to this Agreement, the Company, to the extent permitted by applicable law and the Company's Articles of Organization, hereby agrees to indemnify the Executive for his or her reasonable attorneys' fees and disbursements incurred in such litigation, and hereby agrees to pay any money judgment obtained from the Executive and prejudgment interest on any money judgment obtained from the Executive.

6. Payment Obligations Absolute. The Company's obligation to pay the Executive the payment and to make the arrangements provided for herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against him or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company will not seek to recover all or any part of such payment from the Executive or from whosoever may be entitled thereto, for any reason whatsoever. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company's obligations to make the payments and arrangements required to be made under this Agreement.

7. Continuing Obligations. The Executive shall retain in confidence any confidential information known to him concerning the Company and its respective businesses so long as such information is not publicly disclosed and otherwise comply with Section 6(a) of the Employment Agreement in all respects.

8. Successors. This Agreement shall be binding upon and inure to the benefit of the Executive and his estate and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.

9. Severability. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10. Prior Agreements. This Agreement supersedes any prior severance and retention agreement between the Executive and the Company. Notwithstanding the prior sentence, this Agreement does not supersede or amend the Employment Agreement except as to those provisions relating to retention and severance, and is a separate and independent contract between the Company and the Executive.

[Balance of Page Intentionally Left Blank]

12. Controlling Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Nevada.

IN WITNESS WHEREOF, the parties have executed this Agreement on the 11^th day of June, 2001.

EX-10.07 9 a2055178zex-10_07.htm EXHIBIT 10.07 Prepared by MERRILL CORPORATION

Exhibit 10.7

SENIOR EXECUTIVE RETENTION AGREEMENT

THIS AGREEMENT ("Agreement"), by and between ALADDIN GAMING, LLC a Nevada limited liability company (the "Company"), and Patricia Becker (the "Executive").

WITNESSETH:

WHEREAS, the Company and Executive entered into that certain employment agreement dated July 27, 2000 ("Employment Agreement"), and has determined that the Executive is a key executive of the Company and it is the desire of the Company to assure itself of the availability of the services of the Executive and to provide assurances to the Executive of employment in the event of the commencement of a Chapter 11 case for the Company or in the event of a Change of Control (collectively an "Event");

WHEREAS, in the event that there occurs an Event, the Company believes it imperative that the Company be able to rely upon the Executive to continue in her position and, if required, to assess any proposal or transaction which would cause an Event and advise management and the Company as to whether such proposal or transaction would be in the best interest of the Company and its members, free from concern that her recommendations may adversely affect her continued employment:

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of her advice and counsel notwithstanding the possibility, threat or occurrence of an Event and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:

1. Services During Certain Events. The Executive agrees that she will not voluntarily leave the employ of the Company and will continue to render services to the Company as provided in the Employment Agreement until the later of 18 months from the date of this Agreement or an Event Completion, as hereinafter defined ("Expiration Date"), provided, however, if no Event occurs within 18 months from the date of this Agreement, the Expiration Date shall be 18 months from the date of this Agreement. In the event the Employment Agreement terminates prior to the Expiration Date, then the Employment Agreement shall be extended through the Expiration Date unless otherwise terminated as provided therein.

(i)

(ii)

For the calendar year 2002,

a.: If, for the First Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 5% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter;
b.: If, for the Second Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance

c.: If, for the Third Quarter 2002, the Company achieves "EBITDA" equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for that quarter, then the Company shall pay Executive a bonus equal to 15% of Executive's then-existing annual base salary, payable on or before 45 days after the end of that calendar quarter; and
d.: If, for the entire Year 2002, the Company achieves "EBITDA" for the entire Year 2002 equal to or greater than the Company's "fixed charges" (both terms as defined and computed in accordance with the Credit Agreement) for the entire Year 2002, then the Company shall pay Executive a bonus equal to 50% of Executive's then-existing annual base salary, less the amounts, if any, previously paid to the Executive pursuant to Sections 2(ii)(a), (b) and/or (c), such net amount to be paid on or before 90 days after the end of that calendar quarter.

3. Retention Bonus Payment. If there is an Event prior to the Expiration Date, then upon the Payment Date, the Company shall pay to the Executive as compensation for services rendered to the Company cash in an amount equal to three (3) times her then-existing aggregate annual base salary, (excluding bonus or options) less customary payroll deductions; provided, however, the foregoing shall not apply if the Executive has quit without Good Reason or has been terminated by the Company with Cause prior to the Event's occurrence.

4. Definitions.

(a): "Cause" shall mean (i) conviction of a felony, (ii) embezzlement or misappropriation of money or property of the Company, (iii) denial, rejection, suspension or revocation of any gaming license or permit, (iv) Executive's material breach of Section 6 of the Employment Agreement which material breach has an adverse impact on the Company or (v) Executive quits without Good Reason, as defined herein.
(b): "Change of Control" means either: (i) if collectively the Trust under Article Sixth u/w/o Sigmund Sommer and London Clubs International, plc ("London Clubs"), through their respective subsidiaries own less than 50% of the equity of either the Company and/or Aladdin Gaming Holdings, LLC (for purposes of this section, collectively and/or individually hereinafter "Aladdin"); or (ii) if a third party acquires, directly or indirectly, control of Aladdin or substantially all of its assets.
(c): "Event Completion" means the effective date of a plan of reorganization for the Company or 90 days after a Change of Control.
(d): "Good Reason" shall mean (i) a material reduction in Executive's duties, authorities and responsibilities without her consent provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter, provided that a change in Executive's direct report shall not in and of itself constitute evidence of a material reduction in duties, authorities and responsibilities; or (ii) a reduction by the Company in the Executive's base salary, in effect immediately prior to such reduction, without her consent, provided Executive gives the Company written notice specifying such action and the Company has not cured or abated such action within twenty (20) days thereafter; and (iii) the failure of the Company to cause this Agreement to be assumed as provided for in paragraph 11 below.

(e): "Payment Date" shall mean the earlier of (i) the Event Completion, (ii) the date the Company terminates the Executive without Cause or (iii) the date the Executive quits with Good Reason.
(f): "Person" shall have the same meaning as such term has under section 13(d) of the Act and the regulations promulgated thereunder.

5. Indemnification. If litigation shall be brought to enforce or interpret any provision contained herein or to recover from the Executive any moneys paid pursuant to this Agreement, the Company, to the extent permitted by applicable law and the Company's Articles of Organization, hereby agrees to indemnify the Executive for her or her reasonable attorneys' fees and disbursements incurred in such litigation, and hereby agrees to pay any money judgment obtained from the Executive and prejudgment interest on any money judgment obtained from the Executive.

8. Successors. This Agreement shall be binding upon and inure to the benefit of the Executive and her estate and the Company and any successor of the Company, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.

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12. Controlling Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Nevada.

IN WITNESS WHEREOF, the parties have executed this Agreement on the 11^th day of June, 2001.

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