December 10, 1999
London Clubs International, p.l.c.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Clubs Nevada Inc.
c/o Aladdin Gaming, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Aladdin Gaming Holdings, LLC Capital Restructuring
Ladies and Gentlemen:
This letter, when fully executed, shall be a binding legal agreement.
Reference is made to the following agreements:
1. Guaranty of Performance and Completion ("Completion Guaranty")
dated February 26, 1998, by London Clubs International, plc. ("LCI"), the
Trust under Article Sixth u/w/o of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Trust") and Aladdin
Bazaar Holdings, LLC in favor of the Administrative Agent and the lenders, as
amended;
2. Contribution Agreement ("Contribution Agreement") dated
February 26, 1998 by and among the Trust, Aladdin Holdings, LLC, ▇▇▇▇▇▇
Enterprises, LLC ("▇▇▇▇▇▇ Enterprises"), LCI and London Clubs Nevada Inc.
("LCNI");
3. Operating Agreement ("Operating Agreement") of Aladdin Gaming
Holdings, LLC ("Gaming Holdings") dated February 26, 1998 by and among ▇▇▇▇▇▇
Enterprises, LCNI, Aladdin Gaming Enterprises, Inc. ("Gaming Enterprises")
and GAI, LLC ("GAI"); and
4. Indenture ("Indenture") dated February 26, 1998 by and among
Gaming Holdings, Aladdin Capital Corp. and State Street Bank and Trust
Company, as Trustee.
Capitalized terms used but not defined herein shall have the
meanings assigned to them in the above listed agreements. The Trust, LCI,
LCNI, ▇▇▇▇▇▇ Enterprises, Gaming Enterprises, GAI and Gaming Holdings hereby
agree as follows:
I. RESTATEMENT OF OPERATING AGREEMENT AND CONTRIBUTION AGREEMENT
In 1999 to and until September 30, 1999 the Guarantors under the
Completion Guaranty have contributed directly and indirectly $46,150,572 to
the capital of Gaming Holdings as Completion Guaranty Payments. Of this
amount, LCI has contributed $41,817,539 and the Trust has contributed
$4,333,034. It is anticipated that additional Completion Guaranty Payments
will be required.
The Operating Agreement and the Contribution Agreement provide terms
and conditions with respect to Completion Guaranty Payments, Completion
Guaranty Excess Amounts and Delinquent Amounts. The Guarantors acknowledge
and agree that in connection with the current status of construction of the
Aladdin Hotel and Casino and the amounts of Completion Guaranty Payments,
Completion Guaranty Excess Amounts and Delinquent Amounts currently
anticipated, the Guarantors believe that the existing mechanism for
contributing such amounts is not adequate. Accordingly, the Guarantors and
the undersigned parties wish to and hereby restate the Operating Agreement
and the Contribution Agreement as appropriate and enter into a new agreement
with respect to Completion Guaranty Payments.
II 1999 COMPLETION GUARANTY PAYMENTS PRIOR TO OCTOBER 1, 1999.
A. CAPITAL CONTRIBUTIONS. Each Completion Guaranty Payment made by
a Guarantor directly or indirectly to Gaming Holdings from January 1, 1999
through September 30, 1999 shall be treated as contributed to the capital of
Gaming Holdings at the time actually made, and as made by, and credited to
the Capital Account of, the Guarantor or the affiliate of the Guarantor that
actually advanced the funds.
B. THE EXCESS CONTRIBUTION PREFERRED RETURN. For purposes of
this Agreement, the Excess Contribution Preferred Return ('ECPR") shall mean
the total preferred return which accumulated from January 1, 1999 through
September 30, 1999 on LCI's Completion Guaranty Excess Amounts originating
prior to October 1, 1999, computed at the rate of 20% per annum. It is
determined and agreed that the total ECPR is $ 2,534,519.61.
For all purposes of the Operating Agreement, the ECPR shall be
treated as accrued and unpaid cumulative preferred return at September 30,
1999.
C. SERIES C CONVERTIBLE PREFERRED SHARES. 1. Series C Convertible
Preferred Shares are hereby authorized and shall be issued to LCNI as of
October 1, 1999, as described and with the rights and properties set forth
below.
a. Series C Convertible Preferred shares shall be issued to LCNI in
exchange for LCNI's capital contribution of $30,000,000 which shall be
treated as made with respect to the total Completion Guaranty Excess Amount
made by LCI in 1999 prior to October 1, 1999.
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b. The Series C Convertible Preferred Shares shall earn a return
equal to twenty percent (20%) per annum, cumulative and compounded
semi-annually from October 1, 1999.
2. LCI shall have the option to cause the conversion of all (but
not less than all) of the Series C Convertible Preferred Shares into Common
Shares at any time on or before April 30, 2000; the Series C Convertible
Preferred Shares shall cease earning a return on April 4, 2000. Such
conversion shall be effected as follows, with effect on and from the date
immediately following the date of conversion:
a. Series C Convertible Preferred Shares relating to the $30,000,000
capital contribution shall be converted into Common Shares. Such transaction
shall have no effect on the LCNI Capital Account.
b. The Percentage Interest of LCNI shall be increased by 15
percentage points, and the Percentage Interest of ▇▇▇▇▇▇ Enterprises shall be
decreased by 15 percentage points. The shift of Percentage Interest shall
constitute a transfer of a profits interest in Gaming Holdings with respect
to periods after the date of conversion, and will not involve or require any
transfer of or change in Capital Account amounts at the date of conversion.
c. Series CC Preferred Shares are hereby authorized and shall be
issued to LCNI in exchange for the accrued and unpaid cumulative preferred
return on the Series C Convertible Preferred Shares from October 1, 1999
through the date of conversion. The unamortized amount relating to such
Series CC Preferred Shares shall continue to constitute accrued but unpaid
cumulative preferred return until such amounts are earned by Gaming Holdings
and are both allocated and distributed to the holder. The Series CC Preferred
Shares shall earn a return equal to twenty percent (20 %) per annum,
cumulative and compounded semi-annually.
D. SERIES D PREFERRED SHARES. 1. Series D Preferred Shares are
hereby authorized and shall be issued to LCNI or the Trust or a wholly owned
subsidiary of the Trust or ▇▇▇▇▇▇ Enterprises to be designated by the Trust,
as the case may be, as of October 1, 1999, as described and with the rights
and properties set forth below. Series D Preferred Shares and Series A
Preferred Shares shall be issued:
a. to LCNI with respect to the accrued and unpaid preferred return
of $2,534,519.61 owed to LCI as of September 30, 1999;
b. to LCNI with respect to the amount of capital contributions of
$471,157.25 made by LCI on behalf of the Trust in excess of $30,000,000;
c. to LCNI with respect to the amount of Completion Guaranty
Payments of $11,346,382 made by LCI prior to October 1, 1999 for its own
account; and
d. with respect to Completion Guaranty Payments made after October
1, 1999, as set forth in Article III, below. Series D Preferred Shares shall
earn a return equal to eighteen percent (18%) per annum, cumulative and
compounded semi-annually
2. REASONABLE COMMERCIAL EFFORTS. LCI and the Trust will use all
reasonable commercial efforts to cause the Series D Preferred Shares issued
to them
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to be redeemable by Gaming Holdings as soon as practicable after the Opening
Date (subject to the terms of the Indenture) so as to facilitate a
refinancing of Gaming Holdings. LCI and the Trust shall keep each other and
their respective financial advisors informed of their efforts in this
respect. The Series A and D Preferred Shares shall be subject to a Redemption
Agreement between the Trust, LCNI, LCI and Gaming Holdings as provided in
Article VI herein.
E. SERIES E PREFERRED SHARES. Series E Preferred Shares are hereby
authorized and shall be issued to the Trust or a wholly owned subsidiary of
the Trust or ▇▇▇▇▇▇ Enterprises to be designated by the Trust as of October
1, 1999 with respect to Completion Guaranty Payments made by the Trust in
1999 prior to October 1, 1999 for its own account. The Trust or a wholly
owned subsidiary of the Trust or ▇▇▇▇▇▇ Enterprises to be designated by the
Trust shall be issued Series E Preferred Shares in exchange for the Trust's
capital contributions of $4,333,034. Series E Preferred Shares shall replace
any Series A Preferred Shares that may have been issued to ▇▇▇▇▇▇ Enterprises
with respect to Completion Guaranty Payments. Series E Preferred Shares shall
earn a return equal to thirty percent (30%) per annum, cumulative and
compounded semi-annually.
III COMPLETION GUARANTY PAYMENTS AFTER OCTOBER 1, 1999
Series A Preferred Shares and Series D Preferred Shares shall be
issued to LCNI and the Trust or a wholly owned subsidiary of the Trust or
▇▇▇▇▇▇ Enterprises to be designated by the Trust in consideration of all
Completion Guaranty Payments made after October 1,1999 by LCI and the Trust,
respectively.
IV. ALLOCATIONS OF PROFITS AND LOSSES, AND DISTRIBUTIONS
With respect to the allocations of Profits and Losses, and
Distributions including distributions in liquidation, the Operating Agreement
is hereby amended to provide the following order of priority of Preferred
Shares: Series A Preferred Shares, Series D Preferred Shares, Series C
Convertible and Series CC Preferred Shares, and, collectively (pari passu)
Series E and B Preferred Shares.
V. CONTRIBUTION PERCENTAGE
The Contribution Agreement is amended to provide that effective
October 1, 1999, "Contribution Percentage" shall mean, for the purposes of
Completion Guaranty Payments, (a) 60% in the case of the Trust and (b) 40% in
the case of LCI.
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VI. REDEMPTION AGREEMENT
Gaming Holdings, the Trust, LCNI and LCI hereby enter into a
Redemption Agreement with regard to their respective rights to redeem or
purchase, as the case may be, the Series A and D Preferred Shares (as a unit
consisting of one Series A Preferred Share and one Series D Preferred
Share)("Redeemable Preferred Shares")) as follows:
A. REDEMPTION BY GAMING HOLDINGS. 1. Gaming Holdings shall have
the right, subject to and in conformity with the provisions of the Indenture
(and in any event, as soon as practicable after the Notes (as defined in the
Indenture) are paid in full), to redeem any amount of Redeemable Preferred
Shares at an amount equal to the fully accreted value of such shares at the
time of redemption, together with a "make whole" agreement (which shall be
comparable to the financing terms obtained by LCI and the Trust, as the case
may be, on an all reasonable commercial efforts basis, which efforts LCI and
the Trust will keep the other party and its financial advisors informed of),
whereby the holder of the Redeemable Preferred Shares being redeemed shall be
made whole by Gaming Holdings with respect to the holder's costs and expenses
incurred in financing the Redeemable Preferred Shares and making them
available for redemption by Gaming Holdings.
2. The parties agree that all disputes concerning redemption of
Redeemable Preferred Shares by Gaming Holdings pursuant to VI.A.1. shall be
submitted to an expedited dispute resolution procedure.
B. PURCHASE BY THE TRUST OF REDEEMABLE PREFERRED SHARES HELD BY LCI.
1. If the Trust, ▇▇▇▇▇▇ Enterprises or a wholly owned subsidiary
of the Trust or ▇▇▇▇▇▇ Enterprises to be designated by the Trust is in a
position to offer payment to LCI or LCNI at the fully accreted value on the
date of offer to buy Redeemable Preferred Shares of Gaming Holdings held by
LCI and LCNI, the Trust, ▇▇▇▇▇▇ Enterprises or a wholly owned subsidiary of
the Trust or ▇▇▇▇▇▇ Enterprises to be designated by the Trust shall have the
right from time to time but not the obligation to purchase from LCI and LCNI
an amount of such shares so that the total Redeemable Preferred Shares held
by the Trust, ▇▇▇▇▇▇ Enterprises or a wholly owned subsidiary of the Trust or
▇▇▇▇▇▇ Enterprises to be designated by the Trust and all its Affiliates
(including such Redeemable Preferred shares they may have held) would be up
to 60% of all outstanding Redeemable Preferred Shares at a price equal to
their then fully accreted value. LCI agrees to negotiate in good faith with
the Trust and/ or ▇▇▇▇▇▇ Enterprises any terms in connection with the above
contemplated purchase not specified herein.
2. Purchase by the Trust of any Redeemable Preferred Shares held
by LCI or LCNI shall include a "make whole" payment by the Trust to LCI or
LCNI consisting of (i) the Trust's applicable proportionate share of all
fees, transaction costs, call premiums and other expenses borne by LCI or
LCNI in connection with the financing of the acquisition of the Redeemable
Preferred Shares (but solely with respect to the proportionate share of the
proceeds from such financing which are directly invested in the Aladdin Hotel
and Casino project) and their purchase by the Trust including interest at the
rate of prime plus two percent (2%)per annum
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from the time expenses were incurred by LCI to the time of the make whole
payment; and (ii) 100% of any increased tax consequences to LCI or LCNI
resulting from the purchase of the Redeemable Preferred Shares by the Trust
as opposed to redemption by Gaming Holdings.
3. Upon purchase by the Trust, and at its option to be
exercised at the time of purchase, the Redeemable Preferred Shares purchased
from LCI or LCNI may either (i) (a) be subordinated to those Redeemable
Preferred Shares still held by LCI or LCNI, but rank ahead of all other
Preferred Shares, and (b) earn a reduced unit return to be no greater than
twenty percent (20%) or less than fifteen percent (15%) per annum, cumulative
and compounded semi-annually to be determined no later than the time the
parties enter into formal amendments to the Operating and Contribution
Agreements; or (ii) (a) be PARI PASSU with the Redeemable Preferred Shares
still held by LCI or LCNI and (b) earn a reduced unit return equal to the
yield to worst on the Senior Discount Notes at the time of purchase by the
Trust plus 100 basis points, such return to be per annum, cumulative and
compounded semi-annually.
4. In the event that the Trust is in the position to offer
payment as set forth in Article VI. B (I) and (2) above, and makes a good
faith offer to purchase up to 60% of the Redeemable Preferred Shares but LCI
or LCNI, as the case may be, is unable to sell such shares for any reason,
LCI will negotiate in good faith with the Trust a "make whole" agreement
whereby the Trust shall be compensated no more than its actual losses, taking
account of the full costs including financing costs and "make whole" payments
it would have incurred in acquiring and holding such shares, and in any event
no more than the return it would have received by owning the Redeemable
Preferred Shares it offered to purchase from LCI or LCNI and exercising the
option set forth in VI. B(3)(i), less the return the Trust would receive if
it acquired an equivalent amount of United States Treasury securities, at the
then prevailing rate.
C. In the event that the terms of the financing arrangements
obtained by LCI with respect to financing future Completion Guaranty Payments
requires a transfer of Gaming Holdings common equity or profits interest to
LCI's lenders in the form of non-voting warrants, or otherwise ("Equity
Transfer"), LCNI shall be diluted by the initial one-half percent (1/2%) with
respect to the initial Equity Transfer. For the next nine (9) quarters after
the date of the initial Equity Transfer, ▇▇▇▇▇▇ Enterprises and LCNI shall
bear any dilution such that with respect to each of the nine (9) quarters,
▇▇▇▇▇▇ Enterprises and LCNI shall be diluted in a ratio of 1.5 to 1.2,
respectively. For the following nine (9) quarters, LCNI shall bear the full
dilutive effect of all additional Equity Transfers not to exceed an equity
dilution of 2.7% for such period and not to exceed a total equity dilution of
4.4% for eighteen (18) quarters. The dilution percentages set forth in this
section are with respect to LCI's and the Trust's current understanding that
a transfer of 5.9% of the common equity of Gaming Holdings is required as
part of the cost of LCI's bank financing in the manner set forth above. If
such requirements are modified, the foregoing provision shall be modified by
agreement of the parties hereto.
VII. TRANSFER OF SHARES
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A. The Operating Agreement is amended to provide that any
holder of any class of Preferred Shares of Gaming Holdings shall have the
right to Transfer all or part of its Preferred Shares, and all or part of its
Common Shares, subject to receipt of all necessary approvals required by the
Nevada Gaming Authorities and to the rights of the Lenders, and in no event
to a Prohibited Transferee and providing the Trust, ▇▇▇▇▇▇ Enterprises, LCI
or LCNI, as the case may be, the right of first offer and last refusal as set
forth in the Operating Agreement.
B. The parties further agree that the definitions of
Permitted Transferee and Prohibited Transferee in the Operating Agreement,
respectively, are amended to provide as follows:
1. PERMITTED TRANSFEREE: The definition of "Permitted
Transferee" is expanded to include all institutional investors, and every
potential investor identified on the list prepared by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Company, dated May 3, 1999, as modified from time to time, by the mutual
agreement of LCI and the Trust.
2. PROHIBITED TRANSFEREE: The definition of "Prohibited
Transferee" is amended such that all institutional investors, and every
potential investor identified on the list prepared by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Company dated May 3, 1999, as modified from time to time, by the mutual
agreement of LCI and the Trust, shall not be Prohibited Transferees.
C. If any holder of any class of Preferred or Common
Shares of Gaming Holdings has discussions with any prospective transferee of
all or any part of such Shares, the holder shall give written notice to each
other holder of Shares promptly after such discussions.
VIII. BOARD OF MANAGERS
A. GAMING HOLDINGS. The Operating Agreement is amended to provide
that the Board of Managers shall be expanded to seven Board Members and
appointed as follows: (i) Aladdin Enterprises shall appoint three Board
Members and (ii) LCNI shall appoint four Board Members. As of the date of
this Agreement, the Board Members shall be: ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as Aladdin Enterprises appointees and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, G. ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and one other appointee who
shall be an officer, director or employee of LCI still to be named as LCNI
appointees. This Letter Agreement shall not modify or amend any provision of
the Operating Agreement or the Employment and Consulting Agreement relating
to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
B. ALADDIN GAMING, LLC. The Board of Managers of Aladdin Gaming,
LLC shall be identical to the Board of Managers of Gaming Holdings.
C. ALADDIN MUSIC HOLDINGS, LLC AND ALADDIN MUSIC, LLC. The Board
of Managers of Aladdin Music Holdings, LLC and Aladdin Music, LLC shall each
have six
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Board Members appointed as follows: (i) the Trust shall appoint three Board
Members and (ii) LCI shall appoint three Board Members.
D. FAILURE TO CONTRIBUTE. The Operating Agreement is amended to
provide that the failure of either the Trust or LCI to pay its pro rata share
of Completion Guaranty Payments (i) shall not result in the removal by LCNI,
if LCI has failed to pay its pro rata share, or Aladdin Enterprises, if the
Trust has failed to pay its pro rata share, of one of their respective
designated Board Members and (ii) shall not result in the replacement of ▇▇▇▇
▇▇▇▇▇▇ as Chairman of the Board.
E. MEMBER VOTING. The Operating Agreement is amended to eliminate
the requirement of the vote or consent in writing of a Supermajority to take
the following action: any declaration setting aside or payment of any
Distribution with respect to Series A Preferred Shares. All other
Supermajority rights shall remain in effect.
IX. CONSENTS AND APPROVALS
To the extent that any part of this Agreement may require
the consent or approval of any person not a party hereto, this Agreement or
such part thereof shall not be effective until the obtaining of such consent
or approval, and the Parties agree to cooperate and use all reasonable
commercial efforts to obtain such consents or approvals.
X. MISCELLANEOUS
A. SUBSIDIARY. The Operating Agreement is amended to include
Music within the definition of Subsidiary of Gaming Holdings.
B. LCI SECOND HOTEL OPTIONS. Section 6.7 (b), (c) and (d)of
the Amended and Restated Purchase Agreement dated as of February 26, 1998
between LCNI, LCI, Gaming Holdings, Gaming, Aladdin Holdings, LLC, ▇▇▇▇▇▇
Enterprises and the Trust, is hereby deleted.
C. RESPONSIBILITY FOR CONSENTS. Each party hereto shall be
solely obliged to obtain any consent, if necessary, (i) from any member,
shareholder, partner of, or other holder of a beneficial interest in, such
party, or (ii) related directly to or arising because of such party and not
applicable to Gaming Holdings in its own capacity.
D. FORMAL AMENDMENTS. The Parties agree to enter into a
formal amendment of the Operating Agreement and Contribution Agreement, in
accordance with this Agreement and the November 30, 1998 Letter Agreement and
the March 30, 1999 Letter Agreement (and such further conforming
modifications or amendments to these and other agreements as the parties
mutually agree are necessitated as a result thereof, including the admission
of the Trust (or a designated wholly-owned subsidiary of the Trust or ▇▇▇▇▇▇
Enterprises) as a member of Gaming Holdings, and a more
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formal Redemption Agreement as promptly as possible after the date hereof; it
being the intention of the parties hereto, that, notwithstanding the
foregoing, the modifications, amendments and agreement provided for herein
shall be effective as of the date hereof. LCNI shall take all necessary
action to discontinue its security interest in any Shares held by the Trust
or ▇▇▇▇▇▇ Enterprises.
E. NON-DISQUALIFIED STOCK In any event, the terms of all
Preferred Shares described herein shall include such terms as are necessary
so that such Preferred Shares are not Disqualified Stock pursuant to, and as
defined in, the Indenture.
F. COUNTERPARTS. This 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.
G. NON WAIVER CLAUSE. This Agreement is intended by
the Parties to replace the existing mechanism for Completion Guaranty
Payments. Except as expressly provided herein, or as may be expressly
provided in the formal amendments to the Operating Agreement and Contribution
Agreement, this Agreement shall not modify any right, duty, privilege,
obligation or remedy, in contract or law arising out of or related to the
Completion Guaranty, the Contribution Agreement, the Operating Agreement, the
Indenture, and/or any other contracts or agreements related to the
development, construction or operation of the Aladdin Hotel and Casino
including, but not limited to, any agreements or contracts with a third
party, nor shall entering into this Agreement, or any other act or failure to
act, constitute a waiver of any such right, duty, privilege, obligation or
remedy.
H. EFFECTIVENESS. Notwithstanding any other provision in this
Agreement, if the Parties are unable for any reason to effect a transfer of
fifteen percent (15%) of the Common Shares of Gaming Holdings to LCNI upon
conversion of the Series C Convertible Preferred Shares, no part of this
Agreement shall be effective.
I. OUTSTANDING LIABILITY. The Trust acknowledges a debt to
LCI of approximately $66,000 bearing interest at the rate of twenty percent
(20%) per annum (the precise amount of the principal indebtedness to be
confirmed by Gaming Holdings) which shall be paid to LCI as soon as
practicable.
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Please indicate your agreement to the provisions of this
Agreement by signing the enclosed copy as indicated.
Very truly yours,
TRUST UNDER ARTICLE SIXTH u/w/o
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee and not
Individually
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇, as Trustee and not
Individually
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as Trustee and not
Individually
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AGREED TO this 10th day of
December, 1999
LONDON CLUBS INTERNATIONAL, P.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
LONDON CLUBS NEVADA INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
ALADDIN GAMING HOLDINGS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ENTERPRISES, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
ALADDIN GAMING ENTERPRISES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
GAI, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
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With respect to Article X. B only;
AGREED to this 10th day of December, 1999
ALADDIN HOLDINGS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
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February 23, 2000
London Clubs International, plc
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Clubs Nevada Inc.
c/o Aladdin Gaming, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Re: (i) Restructure Letter Agreement ("Restructure Agreement"), dated
as of December 12, 1999, between the Trust under Article Sixth u/w/o
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Trust"), Aladdin Holdings, LLC ("Aladdin
Holdings"), London Clubs International, plc ("LCI"), London Clubs
Nevada ("LCNI"), Aladdin Gaming Holdings, LLC ("Gaming Holdings") ,
▇▇▇▇▇▇ Enterprises, LLC ("▇▇▇▇▇▇ Enterprises") Aladdin Gaming
Enterprises, Inc. ("Gaming Enterprises") and GAI, LLC (GAI"); (ii)
Operating Agreement, as amended, ("Operating Agreement") of Gaming
Holdings, dated as of February 26, 1998 and (iii) Contribution
Agreement, as amended, ("Contribution Agreement"), dated as of
February 26, 1998 between the Trust, Aladdin Holdings, ▇▇▇▇▇▇
Enterprises, LCI and LCNI.
----------------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to that certain Facilities Agreement ("Facilities
Agreement"), dated as of June 26, 1998, as amended, between General Electric
Capital Corporation ("GECC") for itself and as agent for certain
participants, and Aladdin Gaming, LLC ("Gaming"). Capitalized terms used but
not defined herein shall have the meanings assigned to them in the relevant
above listed agreements.
The Facilities Agreement provides for $80 million of FF&E financing
consisting of a term loan of $20 million and operating leases of $60 million;
no funding has occurred pursuant to the Facilities Agreement. Gaming needs to
begin purchasing certain FF&E items as soon as practicable. Said items are to
be ordered by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Company ("▇▇▇▇▇▇"). Prior to ordering the items,
▇▇▇▇▇▇ requires that Gaming
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deliver letters of credit in the total amount of $5 million (the "LCs") and
to make cash deposits in the combined amount of approximately $900,000 (the
"Cash Deposit", and together with the LCs, the "Deposit Amounts"). In
connection with the payment of the above Deposit Amounts, the Trust, LCI,
LCNI, ▇▇▇▇▇▇ Enterprises, GAI and Gaming Holdings hereby agree as follows:
1. The Trust and LCI shall pay the Deposit Amounts, and all costs
and expenses directly related to the payment of the Deposit Amounts,
including, without limitation, bank fees, in proportion to their respective
Contribution Percentage set forth in the Contribution Agreement with respect
to Completion Guaranty Payments (i.e., 60% in the case of the Trust and 40%
in the case of LCI).
2. The Trust acknowledges that as of the date of this Agreement it
is not able to contribute any portion of the Deposit Amounts. The Trust
repeats, reiterates and confirms its explicit contractual agreement to use
all reasonable efforts and use all available resources to liquefy, reassign
or monetize its assets so that it may fulfil its obligation to pay its
proportionate share of the Deposit Amounts.
3. On behalf of Gaming, LCI shall cause the following four LCs to
be opened when required, for the benefit of ▇▇▇▇▇▇:
(i) in the amount of $1 million, expiring on May 31, 2000;
(ii) in the amount of $1 million, expiring on June 30, 2000;
(iii) in the amount of $1 million, expiring on July 31, 2000; and
(iv) in the amount of $2 million, expiring on August 17, 2000.
On behalf of Gaming, LCI shall also cause the Cash Deposit to be paid when
required to ▇▇▇▇▇▇ or as directed by ▇▇▇▇▇▇. The Cash Deposit and any amounts
drawn on the LC shall be repaid to LCI by GECC pursuant to the Facilities
Agreement or by ▇▇▇▇▇▇.
4. The Trust agrees that if at any time prior to the expiration of
any one or more of the LCs it has liquefied its assets sufficiently or
otherwise has put itself in a position to contribute all or part of its pro
rata share of the Deposit Amounts, it shall immediately reimburse LCI for
that amount up to sixty (60%) percent of the amounts, if any, which have been
drawn down under the LCs, and, to the extent that the Trust is in a position
to do so, produce LCs in an amount up to sixty (60%) percent of the then
outstanding LCs.
5. The Deposit Amounts shall be treated as, but shall not be
deemed, Completion Guaranty Payments pursuant to the Restructure Agreement
and the Operating Agreement. Specifically, the Operating Agreement is amended
to provide:
(i) If all or any part of the Cash Deposit is not repaid to
LCI, by GECC or otherwise, on or before thirty (30) days after the Opening
Date ("Deposit Due Date"), Series A and D Preferred Shares of Gaming Holdings
shall be issued to LCNI in an amount corresponding to the outstanding amount
(the "Deposit Delinquent Amount") as if the Series A and D Preferred Shares
had been issued on the date or dates the
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Deposit Delinquent Amount(s) were paid to ▇▇▇▇▇▇ or as directed by ▇▇▇▇▇▇.
LCNI's Capital Account with respect to Series A Preferred Shares shall be
increased by the Deposit Delinquent Amount.
(ii) If all or any part of the LCs are drawn upon by ▇▇▇▇▇▇
and such drawn upon amount (the "Drawn Amount") is not repaid to LCI, by GECC
or otherwise, by the Deposit Due Date, Series A and D Preferred Shares of
Gaming Holdings shall be issued to LCNI in an amount that shall correspond to
the Drawn Amount(s) as if the Series A and D Shares had been issued on the
respective date or dates on which the LC was drawn down. LCNI's Capital
Account with respect to Series A Preferred Shares shall be increased by the
Drawn Amount(s).
(iii) In the event that LCI is reimbursed for all or any part
of the Deposit Delinquent Amount or Drawn Amount ("Reimbursed Amount") after
the Deposit Due Date, and Series A and D Preferred Shares have been issued to
LCNI as set forth in (i) and (ii) above, LCI and LCNI shall have the option
either (x) to refuse the Reimbursed Amount, retain Series A and D Preferred
Shares held by LCNI in an amount equal to the Reimbursed Amount (which shares
shall continue to be subject to the redemption rights set forth in paragraph
VI of the Restructure Agreement) and have no adjustment made to LCNI's
Capital Account with respect to the Series A and D Preferred Shares; or (y)
to accept the Reimbursed Amount in redemption of Series A and D Preferred
Shares held by LCNI in an amount equal to the Reimbursed Amount, or in the
event that the Trust has paid the Reimbursed Amount, to cause Series A and D
Preferred Shares in an amount equal to the Reimbursed Amount to be
transferred to the Trust or ▇▇▇▇▇▇ Enterprises (or other Trust Affiliate
designated by the Trust). In either case, LCNI shall retain the Series A and
D Preferred Returns with respect to the shares, whether previously
distributed or not, through the date of payment of the Reimbursed Amount.
(iv) In the event that the issuance of the Series A and D
Preferred Shares as set forth in this section shall not be permitted in
accordance with the Discount Note Indenture, the parties hereto shall provide
for some equivalent manner of evidencing such contributions mutually
agreeable to the parties.
6. The Operating Agreement and the Restructure Agreement are both
amended to provide that in all situations where Series A and D Preferred
Shares are issued, such shares shall provide a combined preferred return
equal to the return earned on the Series E Preferred Shares (I.E., thirty
(30%) percent).
7. Upon receipt of evidence thereof, the Trust shall promptly
reimburse LCI for sixty (60%) percent of all costs and expenses of LCI
directly related to the payment of the Deposit Amounts (other than the
Deposit Amounts themselves), including, without limitation, bank fees, and
the reasonable fees and expenses of counsel incurred in connection with the
negotiation and documentation of this letter agreement.
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8. The parties hereto agree to enter into a formal amendment to
the Operating Agreement, in accordance with Paragraph 3 hereof (and such
further conforming modifications as the parties mutually agree are
necessitated as a result thereof, if any), as promptly as possible after the
date hereof; it being the intention of the parties hereto that,
notwithstanding the foregoing, the modifications provided for herein shall be
effective as of the date hereof.
This letter 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.
[The remainder of this page has been left blank intentionally.]
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Please indicate your agreement to the provisions of this letter
agreement by signing the enclosed copy as indicated.
Very truly yours,
TRUST UNDER ARTICLE SIXTH u/w/o
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, as trustee and not
individually
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, as trustee and not
individually
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Agreed to this 23rd day of
February, 2000
LONDON CLUBS INTERNATIONAL, P.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
LONDON CLUBS NEVADA INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
ALADDIN GAMING HOLDINGS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ENTERPRISES, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
ALADDIN GAMING ENTERPRISES, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
GAI, LLC
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
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