KLERK CONTRIBUTION AND
AMENDMENT AGREEMENT
This Contribution and Amendment Agreement (the "Agreement") dated as of
February 26, 1998 is made between and among Aladdin Gaming, LLC (the "Company"),
Aladdin Gaming Holdings, LLC ("Gaming Holdings") and Cornelius T. Klerk (the
"Executive").
WHEREAS, the Company, Aladdin Holdings and the Executive entered into an
Employment Agreement effective as of July 1, 1997 (the "Employment Agreement");
WHEREAS, the Company is a subsidiary of Gaming Holdings; and
WHEREAS, the parties wish to enter into this Agreement to provide for the
Executive to contribute his Restricted Membership Interest (as defined in the
Employment Agreement) in the Company to Gaming Holdings in return for a
restricted membership interest in Gaming Holdings on the terms and conditions
herein and to amend the Employment and Consulting Agreement in connection
therewith.
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties agree as follows:
1. On the date hereof (a) the Executive shall contribute his 0.75%
Restricted Membership Interest in the Company to the capital of Gaming Holdings
and (b) in consideration therefor Gaming Holdings shall issue to the Executive a
restricted membership interest in the capital of Gaming Holdings (the "Holdings
Restricted Membership Interest") on the same terms and conditions as those which
governed the Executive's Restricted Membership Interest in the Company (taking
account of the amendments to the Employment Agreement herein and the fact that
the Holdings Restricted Membership Interest has been issued by Gaming Holdings),
such Holdings Restricted Membership Interest representing upon the vesting
thereof 0.75% of the issued and outstanding common shares of Gaming Holdings,
subject to adjustment as provided in the Employment Agreement as amended herein.
At the time of any vesting of any Holdings Restricted Membership Interest Gaming
Holdings shall establish or increase the capital account in respect thereof in
the amount of the proportion of the Holding Restricted Membership Interest that
is vesting at such time applied against $1.5 million.
2. The parties agree that Gaming Holdings is hereby added as a party to
the Employment Agreement as amended hereby.
3. Pursuant to Section 9(d) of the Employment Agreement, Sections
4(f)(1) and 4(f)(3) of the Employment Agreement are hereby amended to change the
reference to "Restricted Membership Interest" therein to "Holdings Restricted
Membership Interest" (as defined in that certain Klerk Contribution and
Amendment Agreement dated as of February 26, 1998). The Company and Gaming
Holdings hereby agree that if the Company purchases the unvested portion of the
Holdings Restricted Membership Interest pursuant to such amended Section 4(f)(3)
of the Employment Agreement, Gaming Holdings shall promptly thereafter purchase
such Holdings Restricted Membership Interest from the Company for a purchase
price of $1.
4. Pursuant to Section 9(d) of the Employment Agreement, the Employment
Agreement is hereby amended as follows:
(a) Section 4(f)(4) of the Employment Agreement is deleted
in its entirety and replaced with the following:
"(4) While Gaming Holdings remains a pass-through entity for
federal income tax purposes, Gaming Holdings will periodically
distribute cash, to the extent available, to Executive in an
amount equal to the increase in his cumulative tax liability
with respect to his interest in Gaming Holdings and Gaming
Holdings may, at the discretion of the Gaming Holdings Board,
periodically distribute additional cash, to the extent
available, to Executive to satisfy any additional tax liability
arising from his interest in Gaming Holdings in excess of
distributions otherwise receivable."
(b) Sections 4(g) and (h) of the Employment Agreement are
deleted in their entirety and replaced with the following:
"g. EXECUTIVE'S PUT RIGHT. Executive has the right but not the
obligation to sell his vested Holdings Restricted Membership
Interest (or shares exchanged by such Interest) back to Gaming
Holdings or to the Company only in the following circumstances:
(1) Gaming Holdings' IPO has not occurred upon expiration of
the original four-year term of this Agreement and Company does not
continue to employ Executive for reason(s) not constituting Cause as
defined in Section 5(d)(1-4) hereof or the Executive does not
continue his employment at the request of the Company for reason(s)
constituting Good Reason as defined in Section 5(d)(5). This Put
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right must be exercised in writing by Executive within thirty (30)
days of the expiration of the four-year term hereunder or it shall
become void and without further effect.
(2) Gaming Holdings' IPO has not occurred upon Executive
becoming 100% vested in Holdings Restricted Membership Interest.
This Put right must be exercised in writing by Executive within
thirty days of Executive being 100% vested or it shall become void
and without further effect.
The Put purchase price is the fair market value of such
Interest (or shares) on the Valuation Date. Under this Agreement,
the Valuation Date is: (i) the expiration of the four-year term of
this Agreement, in the event of a Put under Section 4(g)(i), or (ii)
the date Executive becomes 100% vested, in the event of a Put under
Section 4(g)(2). In either case of (i) or (ii) in the preceding
sentence, the fair market value shall be determined by an
independent appraisal firm mutually agreed to by Gaming Holdings and
Executive, with the cost of such appraisal being paid by the
Company. If Executive exercises the Put hereunder, and Gaming
Holdings does not satisfy its obligation to purchase the membership
interest or shares within seven days of Executive's written notice
of exercise of the Put, Executive shall have the right to require
the Company (rather than gaming Holdings) to purchase such
membership interest or shares at fair market value. If the Company
purchases such membership interest or shares, the Company and Gaming
Holdings hereby agree that Gaming Holdings shall promptly
thereafter purchase such membership interest or shares from the
Company for a purchase price of $1.
h. COMPANY'S CALL RIGHT. If, prior to the date of the Company's
IPO, the Company terminates Executive for Cause as defined in
Section 5(d) hereof (including Executive quitting without Good
Reason under Section 5(d)(5)), then Gaming Holdings and the Company
shall have the right but not the obligation to purchase any vested
membership interest (or shares exchanged by such interest) within
thirty days of the Termination Date at a price equal to two times
the price Executive originally paid Gaming Holdings for such
membership interest. The Call right must be exercised in writing by
Gaming Holdings or the Company within thirty days of the Termination
Date or it shall become void and without further effect. If Gaming
Holdings or the Company exercises the Call hereunder, Executive must
tender such membership interest or shares and otherwise complete the
transaction hereunder within thirty days of Gaming Holdings' or the
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Company's exercise of the Call. If the Company purchases such
membership interest or shares, the Company and Gaming Holdings
hereby agree that Gaming Holdings shall promptly thereafter purchase
such membership interest or shares from the Company for a purchase
price of $1."
(c) Sections 6(a), 9(a), (b), (d), (h) and (k) of the
Employment Agreement are hereby amended so that Gaming Holdings has the
same rights and obligations under such Sections as the Company.
5. GAMING LAW. Anything to the contrary herein or in the Employment and
Consulting Agreement notwithstanding, the parties hereto agree and acknowledge
that they are subject to and that they shall comply in all respects with the
gaming laws of the State of Nevada, including the Nevada Gaming Control Act and
(or any successor statute) the rules and regulations promulgated by the Nevada
Gaming Commission and the State Gaming Control Board. To the extent anything in
this Agreement or the Employment Agreement is inconsistent with any gaming laws
or regulations, the gaming laws and regulations shall control.
6. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of any successor of the Company or Gaming Holdings. Any such successor
of the Company or Gaming Holdings shall be deemed substituted for the Company or
Gaming Holdings under the terms of this Agreement for all purposes. As used
herein, "successor" shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly acquires all or substantially all of the assets or
business of the Company or Gaming Holdings and supercede any prior
understandings or agreements between the parties hereto and Aladdin Holdings,
LLC.
7. ENTIRE AGREEMENT. This Agreement and the Employment Agreement
represent the entire agreement and understanding between the Company, Gaming
Holdings, Aladdin Holdings, LLC and the Executive concerning the matters herein
and supercede any prior understandings or agreements between the parties hereto
and Aladdin Holdings, LLC.
8. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement may
only be amended, cancelled or discharged in writing signed by the Executive,
Gaming Holdings and the Company.
9. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Nevada.
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10. CAPITALIZED TERMS. Capitalized terms not defined herein shall have
the meanings described thereto in the Employment Agreement.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, but all such
counterparts shall together constitute but one and the same contract.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
ALADDIN GAMING, LLC
By: /s/ Ronald Dictrow
-------------------------------
Name: Ronald Dictrow
Title: Executive Vice
President/Secretary
ALADDIN GAMING HOLDINGS, LLC
By: /s/ Ronald Dictrow
-------------------------------
Name: Ronald Dictrow
Title: Executive Vice
President/Secretary
/s/ Cornelius T. Klerk
-------------------------------
CORNELIUS T. KLERK
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