January 23, 1998
CONFIDENTIAL
Aladdin Gaming, LLC
3667 Las Vegas Blvd. South
Las Vegas, NV 89109
Attn: Mr. Cornelius T. Klerk
Chief Financial Officer
Re: $80,000,000 Financing Facility from General Electric Capital
Corporation ("GE Capital") to Aladdin Gaming, LLC (the "Obligor")
Ladies and Gentlemen:
Obligor has advised GE Capital that Obligor is seeking up to $80 million of
financing (the "Financing") for the proposed purchase by Obligor of new
furniture and equipment, and gaming equipment, for the Aladdin Hotel Casino (the
"Transaction").
We anticipate that Obligor is a domestic operating company that will
directly own and operate the assets used in its business.
You have asked that the Financing include: $60 million to purchase new
furniture and equipment (other than gaming equipment) for the Aladdin Hotel
Casino (the "Synthetic Lease Facility") and a $20 million term loan to purchase
gaming equipment for the Aladdin Hotel Casino (the "Term Loan Facility"; and
together with the Synthetic Lease Facility being referred to, collectively, as
the "Facilities").
Based on our understanding of the Transaction as described above and the
information which you have provided to us, GE Capital is pleased to advise you
(a) of its commitment to provide the Financing described in this letter (the
"Commitment Letter") in the amount of $60 million, and (b) of the commitment of
Credit Suisse First Boston Corporation ("First Boston") to provide the financing
described in this letter in the amount of $20 million, subject to the following
terms and conditions. GE Capital's affiliate, GECC Capital Markets Group, Inc.
("GECMG") will seek to arrange for a portion of the Financing to be syndicated
to other financial institutions on the terms and conditions more fully described
herein.
Aladdin Gaming, LLC
Page 2
CO-AGENTS: GE Capital and First Boston
SYNDICATION AND
DOCUMENTATION AGENT: GECMG
SUMMARY OF PROPOSED TERMS FOR SYNTHETIC LEASE FACILITY
TRANSACTION TYPE: The Synthetic Lease Facility is structured as a lease
intended for security ("Lease"). The parties
acknowledge that it is the intention of Obligor to be
considered the owner of the Lease Property (as
hereinafter defined) for tax purposes, and it is the
desire of Obligor to structure the Synthetic Lease
Facility as an operating lease for accounting purposes.
LESSOR: GE Capital and other parties acceptable to GE Capital
and to Obligor (which acceptance by Obligor shall not
unreasonably be withheld, delayed or conditioned)
LESSEE: Aladdin Gaming, LLC.
AMOUNT: $60 million.
BASIC LEASE TERM
COMMENCEMENT DATE: Same as Construction Completion Date (as hereinafter
defined).
BASIC LEASE TERM: Three (3) years from Basic Lease Term Commencement
Date.
RENEWAL LEASE TERM: At Obligor's option, up to two (2) one-year renewal
periods from the end of the Basic Lease Term.
PAYMENTS/AMORTIZATION: Payments shall be made quarterly, in arrears,
calculated such that there will be eighty percent (80%)
amortization of principal at the end of the Basic Lease
Term and the maximum two (2) Renewal Lease Terms. The
remaining balloon payment will be twenty percent (20%)
of the principal.
LEASE RENTAL FACTOR: Calculated to be 5.6639% of the Lease Funding Amount
(as hereinafter defined) per quarter. The quarterly
rental installment shall consist of distinct principal
and interest components. The Lease Rental Factor was
calculated at an interest rate of 10.1875% which
represents a spread of 425 basis points over the Base
Index (as hereinafter defined) (5.9375%). Five (5)
days prior
Aladdin Gaming, LLC
Page 3
to the Basic Lease Term Commencement Date, the Lease
Rental Factor will be calculated on the basis of the
floating rate Base Index plus the higher of (a) 425
basis points, or (b) the weighted average spread used
to calculate the interest rate on Obligor's Senior
Credit Facility (as hereinafter defined) plus 125 basis
points; and such spread shall be fixed throughout the
Basic Lease Term and any available Renewal Lease Terms.
The Lease Rental Factor will be adjusted quarterly
based on changes to the Base Index.
BASE INDEX: The reserve-adjusted 90-day London Interbank Offering
Rate.
LEASE PROPERTY: GE Capital shall be secured by a first priority
security interest in specified assets (but not the
income generated therefrom), mutually agreed upon by
Obligor and GE Capital, selected from a pool of new
furniture and equipment (other than gaming equipment),
substantially similar to the types of furniture and
equipment described on Exhibit A attached hereto, with
an estimated cost of $60 million, including freight,
installation, sales tax and other costs not to exceed
twelve percent (12%) of total cost.
EQUIPMENT LOCATION: The Aladdin Hotel Casino located in Las Vegas, Nevada.
LEASE FUNDING AMOUNT: 100% of Obligor's acquisition cost of the Lease
Property, up to $60 million.
INTERIM LEASE
FUNDING AMOUNT: Up to $60 million, subject to no default then having
occurred and be continuing under any of Obligor's
financing, construction or other material agreements
(subject to the rights with respect to assumption
and/or cure of the lenders under Obligor's Senior
Credit Facility, as set forth in an intercreditor
agreement to be negotiated between such lenders and
GE Capital (the "Intercreditor Agreement")), and
satisfaction of all conditions precedent to funding as
outlined herein and as defined in the definitive
documents between the parties. Advances of the Interim
Lease Funding Amount shall be made once per month
during the Interim Funding Period.
Any Interim Lease Funding Amount advanced under the
Synthetic Lease Facility shall be made under an interim
schedule, which shall be converted to a final schedule
under the Lease on the Basic Lease Term Commencement
Date.
INTERIM LEASE
REPAYMENT TERMS: Floating rate interest-only payments due monthly in
arrears
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Page 4
during the Interim Funding Period (as hereinafter
defined) based on the Interim Lease Funding Amount. At
Obligor's option, interest will be calculated at either
(a) 30-Day LIBOR plus the higher of (1) 425 basis
points, or (2) the weighted average spread used to
calculate the interest rate on Obligor's Senior Credit
Facility plus 125 basis points, or (b) the Prime Rate
(as hereinafter defined) plus 275 basis points; and
such spread shall be fixed throughout the Interim
Funding Period, and 30-Day LIBOR or the Prime Rate will
be adjusted monthly based on changes thereto. For
purposes hereof, "30-Day LIBOR" shall mean the
reserve-adjusted 30-day London Interbank Offering Rate
on the date of determination. For purposes hereof, the
"Prime Rate" shall mean the prime rate of interest
published in THE WALL STREET JOURNAL on the date of
determination. Obligor shall elect such option prior
to the initial Interim Lease Funding Date and such
election shall remain in effect during the Interim
Funding Period.
OPTIONS AT LEASE
TERM EXPIRATION: Subject to the Fixed Purchase Price provisions set
forth below, at the end of the Basic Lease Term or any
Renewal Lease Term, Obligor may: (i) purchase all, but
not less than all, of the Lease Property at the
purchase price calculated as specified below (the
"Fixed Purchase Price"), estimated to represent the
Lease Property's then fair value, (ii) renew the Lease
for all, but not less than all, of the Lease Property
for up to two (2) additional one-year terms (with
respect to the end of the Basic Lease Term) at the
Lease Rental Factor set forth above, subject to the
conditions set forth above in the Renewal Lease Term
section, or (iii) return all but not less than all, of
the Lease Property to GE Capital subject to
GE Capital's return conditions and the payment to
GE Capital of the Fixed Purchase Price as outlined
below.
FIXED PURCHASE PRICE: If Obligor elects to return the Lease Property at the
expiration of the Basic Lease Term or any subsequent
Renewal Lease Term, Obligor would pay to GE Capital a
rent payment equal to the Fixed Purchase Price.
Obligor and GE Capital would then arrange for the sale
of the Lease Property. Upon the sale of all of the
Lease Property, GE Capital would return to Obligor an
amount equal to the Lessor's Residual Risk Amount (as
hereinafter calculated) plus any net sale proceeds in
excess of the GE Capital's Residual Risk Amount, less
reasonable remarketing and carrying costs (which amount
to be returned by GE Capital to Obligor may be subject
to a security interest grated by Obligor to the Lenders
under Obligor's Senior Credit Facility).
Fixed Lessee's Lessor's Residual
End of Year Purchase Price* Obligations* Risk Amount*
----------- --------------- ------------ ------------
-------------------------------------------------------------------
3 56.8849 43.2267 13.6582
-------------------------------------------------------------------
4 39.3693 33.0159 6.3534
-------------------------------------------------------------------
5 20.0000 15.6029 4.3971
-------------------------------------------------------------------
Aladdin Gaming, LLC
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(*expressed as a percentage of the Funding Amount)
LESSOR'S RESIDUAL
RISK AMOUNT: Lessor's Residual Risk Amount as outlined above,
provided there is no default under the Lease (as
defined in the definitive financing documents to be
executed between the parties), is non-recourse to
Obligor, i.e. GE Capital will look solely to the value
of the Lease Property for repayment.
CONTINGENT RENTAL: Upon termination of the Lease at the end of the Basic
Lease Term or any Renewal Lease Term, should the Lease
Property be returned to GE Capital by Obligor,
GE Capital will calculate a Contingent Rental for the
full lease term, on a quarterly basis, equal to the sum
of (a) 85% of the per annum increase in the United
States Consumer Price Index reported in each quarter as
currently calculated, or a replacement index with a
similar calculation acceptable to GE Capital,
multiplied by the Lease Funding Amount, and (b) an
amount to be determined based on the differential
between (1) the average annual revenues generated at
the Aladdin Hotel Casino for the period from November
1, 1992 through termination of current operations
(estimated to be November 25, 1997), and (2) the
average annual revenues generated at the Aladdin Hotel
Casino for the period from the Construction Completion
Date through and including the subsequent sixty (60)
months. The total amount of Contingent Rental will be
capped at a maximum percentage of the Lease Funding
Amount as follows:
Floating Rate
Lease Termination Maximum
at End of Year Contingent Rental*
----------------- ------------------
------------------------------------------------------
3 13.66%
------------------------------------------------------
4 6.36%
------------------------------------------------------
5 4.40%
------------------------------------------------------
(*expressed as a percentage of the Funding Amount)
Upon completion of the sale of the Lease Property to a
third party, Lessee shall pay to Lessor that portion
(if any) of the Lessor's Residual Risk Amount not
satisfied by application of the net sale proceeds;
provided, however, that in no event shall the amount of
Contingent Rent required to be paid by Obligor to
GE Capital exceed the Floating Rate Maximum Contingent
Rental specified above.
Aladdin Gaming, LLC
Page 6
SUMMARY OF PROPOSED TERMS FOR TERM LOAN FACILITY
LENDER: GE Capital and other parties acceptable to GE Capital
and to Obligor (which acceptance by Obligor shall not
unreasonably be withheld, delayed or conditioned).
BORROWER: Aladdin Gaming, LLC
AMOUNT: $20 million
TERM: Five (5) years.
TERM LOAN
COMMENCEMENT DATE: Same as Construction Completion Date.
PAYMENTS/AMORTIZATION: Payments shall be made quarterly, in arrears,
calculated such that principal will be amortized as
follows:
Quarter Percent Amortization
------- --------------------
1-4 3.25
5-8 3.5
9-12 4.0
13-16 4.5
17-19 4.75
20 24.75
INTEREST RATE: The interest rate will be calculated five (5) days
prior to the Term Loan Commencement Date on the basis
of the floating rate Base Index plus the higher of
(a) 425 basis points, or (b) the weighted average
spread used to calculate the interest rate on Obligor's
Senior Credit Facility on such date plus 125 basis
points; and such spread shall be fixed throughout the
Term. The Interest Rate will be adjusted quarterly,
based on changes to the Base Index, if applicable.
COLLATERAL: GE Capital shall be secured by a first priority
security interest in specified new gaming equipment,
mutually agreed upon by Obligor and GE Capital with an
estimated cost of $20 million, including freight,
installation, sales tax and other costs not to exceed
twelve percent (12%) of total cost. The Lender shall
not be considered the owner of
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the Collateral for Nevada regulatory purposes.
COLLATERAL LOCATION: The Aladdin Hotel Casino located in Las Vegas, Nevada.
TERM LOAN
FUNDING AMOUNT: One hundred percent (100%) of Obligor's acquisition
cost of the Collateral, up to $20 million.
INTERIM TERM LOAN
FUNDING AMOUNT: Up to $20 million, subject to no default then having
occurred and be continuing under any of Obligor's
financing, construction or other material agreements
(subject to the rights with respect to assumption
and/or cure of the lenders under Obligor's Senior
Credit Facility, as set forth in the Intercreditor
Agreement), and satisfaction of all conditions
precedent to funding as outlined herein and as defined
in the definitive documents between the parties.
Advances of the Interim Term Loan Funding Amount shall
be made once per month during the Interim Funding
Period.
Any Interim Term Loan Funding Amount advanced under the
Term Loan Facility shall be evidenced by an interim
promissory note, which shall be converted to a final
promissory note on the Term Loan Commencement Date.
INTERIM TERM LOAN
REPAYMENT TERMS: Floating rate interest-only payments due monthly in
arrears during the Interim Funding Period based on the
Interim Term Loan Funding Amount. At Obligor's option,
interest will be calculated at either (a) 30-Day LIBOR
plus the higher of (1) 425 basis points, or (2) the
weighted average spread used to calculate the interest
rate on Obligor's Senior Credit Facility plus 125 basis
points, or (b) the Prime Rate plus 275 basis points;
and such spread shall be fixed throughout the Interim
Funding Period, and 30-Day LIBOR or the Prime Rate will
be adjusted monthly based on changes thereto. Obligor
shall elect such option prior to the Interim Funding
Date and such election shall remain in effect during
the Interim Funding Period.
SUMMARY OF GENERAL TERMS
CONSTRUCTION Trust Under Article 6 u/w/o Sigmund Sommer (the
"Trust"),
COMPLETION GUARANTORS: London Clubs International PLC ("LCI"), and Aladdin
Bazaar Holdings, LLC ("Bazaar Holdings").
Aladdin Gaming, LLC
Page 8
CONSTRUCTION
COMPLETION DATE: The date on which construction of the Aladdin Hotel
Casino reasonably can be expected to be completed.
INTERIM FUNDING DATE: Subject to the satisfaction of the conditions precedent
and to there being no default, GE Capital will commence
funding of deliveries of the Lease Property and/or the
Collateral up to six (6) months prior to the
Construction Completion Date upon delivery to
GE Capital on a monthly basis of such substantiation
with respect to the Lease Property and the Collateral,
and of the delivery thereof to Obligor, as may be
required by GE Capital. GE Capital's construction
consultant will certify to GE Capital that the
Construction Completion Date is reasonably anticipated
to occur not more than six (6) months after the Initial
Funding Date.
INTERIM FUNDING PERIOD: The Interim Funding Date through the Construction
Completion Date.
VOLUNTARY TERMINATION: Obligor will not have the ability to terminate the
Lease within the first twelve (12) months after the
Basic Lease Term Commencement Date. Obligor will not
have the ability to prepay the Term Loan within the
first twelve (12) months after the Term Loan
Commencement Date. Thereafter, voluntary early
termination and/or prepayment will be subject to the
following penalties:
TERMINATION/PREPAYMENT DATE PENALTY*
--------------------------- --------
> 12 months and < 24 months 2.0%
-
> 24 months and < 48 months 1.0%
-
> 48 months 0%
-
(*expressed as a percentage of the Funding Amount)
DEFAULT RATE: From and after the occurrence of a default, the
interest rate will be increased by 200 basis points per
annum over the implicit interest rate until the default
or defaults are cured.
USE OF PREMISES: In the event of a default which leads to a liquidation
of the Lease Property and/or the Collateral, subject
to the provisions of the Intercreditor Agreement,
Obligor would provide GE Capital with a time period of
up to twelve (12) months in which to sell the Lease
Property and/or the Collateral on site, without cost to
GE Capital.
FEES: As described in that certain fee letter of even date
herewith.
TRANSACTION EXPENSES: All reasonable and necessary documented transaction
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expenses including, but not necessarily limited to,
expenses of counsel (including counsel for GE Capital),
due diligence, lien searches, UCC filings, and field
audit(s), etc., would be for the account of Obligor.
SECURITY INTEREST: The security interest granted by Obligor will be a
first priority security interest in the Lease Property
and the Collateral (but not the income generated
therefrom), and assignment of all improvements and/or
additions to the Lease Property and the Collateral
hereafter acquired. The Lease Property and the
Collateral shall be free of all junior liens or
encumbrances. Any and all existing and to be issued
obligations of Obligor shall acknowledge the Facilities
as senior indebtedness of Obligor. During the Interim
Funding Period, Obligor shall assign to GE Capital its
rights under the purchase contracts for the Lease
Property.
DOCUMENTATION: The Financing documentation will contain
representations and warranties; conditions precedent;
indemnities; events of default and remedies as required
by GE Capital. Relevant documents shall include, but
not be limited to, inter-creditor agreements and other
material agreements, to be acceptable to GE Capital and
shall contain cross-default and cross-acceleration
provisions with all other indebtedness, and
affirmative, negative and financial covenants similar
to those contained in Obligor's Senior Credit Facility.
Financial reporting requirements shall be included in
such documentation, as required from time to time, as
specified therein, including (without limitation) a
compliance certificate with supporting covenant
computation signed by an authorized representative of
Obligor. It is understood and agreed that GE Capital's
counsel will draft all documentation (other than the
Intercreditor Agreement) to be used in the Transaction.
SYNDICATION: GECMG will syndicate the Financing with the assistance
of Obligor. Such assistance shall include, but not be
limited to (i) prompt assistance in the preparation of
an information memorandum to include any and all
information pertinent to the syndication of the
Financing ("Information Memorandum") and the
verification of the completeness and accuracy of the
information contained therein; (ii) preparation of
offering materials and projections by Obligor and its
advisors taking into account the proposed Transaction
and Financing; (iii) providing GECMG with all
information reasonably deemed necessary by GECMG to
successfully complete the syndication;
(iv) confirmation as to the accuracy and completeness
of such offering materials, information and
projections; (v) participation of the senior management
of Obligor and its affiliates in
Aladdin Gaming, LLC
Page 10
meetings and conference calls with potential
participants at such times and places as GECMG
reasonably may request; and (vi) using best efforts to
ensure that the syndication efforts benefit from
existing lending relationships of Obligor and its
affiliates.
GE Capital shall not commence the syndication of the
Facilities until the earlier of (a) the completion of
the Syndication of Obligor's Senior Credit Facility
(but not before the closing thereof), or (b) three (3)
months from the date on which Obligor's Senior Credit
Facility is closed.
OTHER TERMS: The Financing of the Facilities will require, among
other things, deliveries of, or compliance with
covenants pertaining to, the following all in form and
substance satisfactory to GE Capital:
- If necessary, Obligor and GE Capital shall
negotiate and put in place an Agency Agreement
whereby Obligor may acquire Lease Property as
agent for GE Capital ("Agency Agreement").
- Obligor shall bear all risk of loss and damage to
the Lease Property and the Collateral. Obligor is
responsible for keeping the Lease Property and the
Collateral insured with commercially reasonable
insurance protection for Obligor's industry, size
and risk and GE Capital's collateral protection
(terms, underwriter, scope, and coverage to be
acceptable to GE Capital); GE Capital named as
loss payee (property/casualty) and additional
insured (liability); and
non-renewal/cancellation/amendment endorsements to
provide thirty (30) days' advance notice to
GE Capital; plus breach of warranty and waiver of
subrogation endorsements. Any co-insurance
coverage would be reviewed by GE Capital for
acceptability.
- GE Capital shall require, on an itemized basis,
fixed asset lists with complete descriptions of
the Lease Property and the Collateral, including
make (manufacturer), model numbers, serial numbers
(if available), and original cost breakdown.
GE Capital shall also be granted the right to
review purchase orders and
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Page 11
invoices for the Lease Property and the Collateral
to verify payment. It is understood that such
information shall, within five (5) days of any
request by GE Capital, be provided by Obligor
and/or its equipment vendor to GE Capital.
- Obligor will have the right to remove
predetermined Lease Property and Collateral and
substitute with like equipment equal to or greater
in value and utility upon such further terms and
conditions as Obligor and GE Capital shall agree.
- GE Capital shall require Obligor to indemnify it
against any liability for environmental risks or
hazards and any legal proceedings (etc.) as a
result of an environmental related action or
incident.
- Obligor shall maintain the Lease Property and the
Collateral in accordance with standards consistent
with manufacturer's specifications and customary
to industry practice. Maintenance programs may be
reviewed by GE Capital.
- The Facilities will be a net financing. Without
limiting the generality of the foregoing, Obligor
shall be responsible for all expenses,
maintenance, insurance and taxes (other than taxes
based solely upon the net income of GE Capital)
relating to the purchase, lease, possession, use
or rental of the Lease Property and the
Collateral.
- All obligations of Obligor under the Facilities
will be cross-defaulted to each other and to all
other material indebtedness of Obligor. In
addition, all such obligations under the
Facilities shall be cross-collateralized with each
other.
- Limitations on commercial transactions, management
agreements, service agreements, and borrowing
transactions between its officers, directors,
employees and affiliates and intercompany loans
among
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Page 12
Obligor and its affiliates.
- Limitations on, or prohibitions of, cash
dividends, other distributions to equity holders,
payments in respect of subordinated debt, payment
of management fees to affiliates and redemption of
membership interests, common stock and preferred
stock of Obligor or Construction Completion
Guarantors (other than dividends issued with
respect to the preferred stock of Aladdin Gaming
Holdings, LLC ("Holdings") and reasonable
management fees).
- Prohibitions of mergers, acquisitions, sale of
Obligor, its stock membership interests or
material portion of assets.
- Prohibitions of a direct or indirect change in
control of Obligor.
- Financial covenants similar to those included in
Obligor's Senior Credit Facility.
- Governing law: New York
CONDITIONS PRECEDENT Closing of the Financing will be conditioned upon
receipt or satisfaction (all to GE Capital's
TO CLOSING: satisfaction) of conditions precedent customary for
these types of credit facilities and others to be
reasonably specified by GE Capital, including (without
limitation) the following:
- Execution and delivery of all Transaction
documents to GE Capital in a timely manner on or
before March 31, 1998. The Transaction shall have
been consummated on terms satisfactory to
GE Capital.
- Obligor shall have obtained financing of a senior
credit facility in the amount of $410 million
("Senior Credit Facility"), on terms and
conditions substantially the same as the terms and
conditions contained in that certain commitment
letter dated December 4, 1997, as
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amended to date, issued by The Bank of Nova Scotia
and Merrill Lynch Capital Corporation to Obligor,
Holdings, and LCI (the "Senior Credit Facility
Commitment Letter").
- Obligor shall have received a cash equity
contribution from Holdings of $110 million,
accomplished by the sale of membership interests
of Obligor, on terms and conditions substantially
the same as the terms and conditions contained in
the Holdings' offering memorandum (draft dated
January 14, 1998) (the "Offering Memorandum").
- Contribution of an additional $50 million in cash
equity to Obligor by LCI, on terms and conditions
substantially the same as the terms and conditions
contained in the Offering Memorandum.
- Contribution of land (the "Site") as equity in the
amount of $77 million, satisfactory in all
respects to GE Capital, in the Aladdin Hotel
Casino, on terms and conditions substantially the
same as the terms and conditions contained in the
Offering Memorandum.
- Construction of the Aladdin Hotel Casino shall be
substantially completed as defined by the parties
and GE Capital's construction consultant shall
provide to GE Capital a certificate confirming
such substantial completion (at Obligor's
expense).
- Completion by GE Capital of all legal due
diligence with results satisfactory to GE Capital.
Without limiting the foregoing, such due diligence
shall include: review by GE Capital of, and
GE Capital's reasonable satisfaction with, (i) the
final capital (debt and equity) and legal
structure of the Aladdin Hotel Casino (the
"Project"), (ii) the final sources and uses of
funds to be used to consummate the Project,
(iii) a market study, (iv) cash flow projections,
(v) the Project budget, and (vi) other
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debt instruments and material contracts relating
to the Project.
- If and to the extent requested by GE Capital,
environmental surveys or reviews in scope and
form, by firms, and with results, acceptable to
GE Capital.
- An independent appraiser shall substantiate the
Lease Property's remaining useful economic life
and requisite values at selected points throughout
the Basic Lease Term and Renewal Lease Terms,
including GE Capital's residual value assumptions.
The appraisal shall be commissioned by and
acceptable to GE Capital. The cost of such
appraisal shall be paid by Obligor.
- A letter from a certified public accounting firm
acceptable to GE Capital regarding Obligor's
solvency at closing after taking into account the
Transaction.
- GE Capital shall have received Obligor's projected
pro-forma income statements, balance sheets and
cash flow statements for five (5) years.
- The execution of a Keep-Well Agreement by
Holdings, LCI and Bazaar Holdings in form and
substance satisfactory to GE Capital (provided,
however, that it is acknowledged that GE Capital
is not a direct beneficiary thereof and has no
rights with respect thereto, including no right to
bring a cause of action with respect thereto).
Aladdin Gaming, LLC
Page 15
- The execution of a Guaranty of Performance and
Completion by the Trust, LCI and Bazaar Holdings
in favor of each of the Administrative Agent and
the Lenders under Obligor's Senior Credit
Facility, in form and substance satisfactory to
GE Capital (provided, however, that it is
acknowledged that GE Capital is not a direct
beneficiary thereof and has no rights with respect
thereto, including no right to bring a cause of
action with respect thereto).
- The execution of a Guaranty of Performance and
Completion by the Trust, LCI and Bazaar Holdings
in favor of the Noteholders with respect to
Holdings' senior discount notes and the Contingent
Guarantor (specified therein) in form and
substance satisfactory to GE Capital (provided,
however, that it is acknowledged that GE Capital
is not a direct beneficiary thereof and has no
rights with respect thereto, including no right to
bring a cause of action with respect thereto).
- Obligor shall have obtained all permits, licenses,
and similar governmental authorizations then
required to have been obtained in connection with
the development and construction of the Project,
and any other required permits, licenses or
governmental authorizations which have not then
been obtained are of a type that are routinely
granted on application and no facts or
circumstances exist which indicate that any such
required permit, license or governmental
authorization will not be timely obtainable by
Obligor without material difficulty, expense or
delay prior to the time that it is required to
have been obtained; and the Project shall be in
compliance with any and all applicable gaming and
regulatory requirements.
- At no time prior to a foreclosure of the Leased
Property and/or the Collateral shall GE Capital or
any other Lessor or Lender with respect to the
Facilities be required to obtain any gaming or
related licenses as a result of the Transaction
(assuming no repossession of the Leased Property
and/or the Collateral upon the occurrence of an
event of default). GE Capital shall receive a
favorable written opinion of counsel for Obligor,
acceptable to GE Capital, regarding such licenses,
in form and substance reasonably satisfactory to
GE Capital, at Obligor's expense.
- Other satisfactory closing certificates and
opinions of counsel in form and substance
reasonably satisfactory to GE Capital, at
Obligor's expense.
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- GE Capital shall have received all fees and
expenses required to be paid.
- There shall exist no pending or threatened
material litigation, proceedings or investigations
which (x) contest the consummation of the
Transaction or the Project, or (y) could
reasonably be expected to have a material adverse
effect on the Transaction, the Project or on the
financial condition, operations, assets, business,
properties or prospects of Obligor, Holdings, LCI
or Bazaar Holdings.
- All representations and warranties of Obligor in
the Transaction documents shall be true, correct
and complete in all material respects and Obligor
shall deliver a certificate pursuant to which all
such representations and warranties are reaffirmed
in full and without material modification from
such representations and warranties as originally
made in the Transaction documents.
- No default or event which, with the giving of
notice or the lapse of time, or both, would
constitute a default by Obligor under the Senior
Credit Facility, under any other agreement
relating to the Transaction or the Project, or
with respect to the Financing, shall have occurred
and be continuing (subject to the rights with
respect to assumption and/or cure of the lenders
under Obligor's Senior Credit Facility, as set
forth in the Intercreditor Agreement).
- A certified copy of the organizational documents
and operating agreement of Obligor, together with
a good standing certificate issued by the
Secretary of State of Nevada with respect to
Obligor.
- Certified resolutions and incumbency with respect
to Obligor.
- All corporate proceedings required in connection
with the Transaction on the part of Obligor shall
be reasonably
Aladdin Gaming, LLC
Page 17
satisfactory in form and substance to GE Capital.
- Evidence of insurance with respect to the
coverages required by the Financing documents.
- Execution, delivery and filing or recording, as
appropriate (at Obligor's expense), of all Uniform
Commercial Code financing statements and other
security documents (including lien releases) as
may be required by GE Capital to perfect a first
priority security interest in the Leased Property
and the Collateral.
- GE Capital's construction consultant's certificate
confirming that construction of the Project
reasonably can be expected to be completed within
six (6) months after the Interim Funding Date.
- The lenders with respect to the Senior Credit
Facility, GE Capital and any other Lessor or
Lender with respect to the Facilities or the
Project shall have entered into the Inter-creditor
Agreement, the form and content of which shall be
satisfactory to GE Capital in its sole discretion
and to the Administrative Agent under the Senior
Credit Facility in its sole discretion. The
Intercreditor Agreement shall include, among other
provisions, (1) that for a period of up to six (6)
months after the date on which the lenders under
Obligor's Senior Credit Facility (or their
nominee) take possession or assume control of the
Aladdin Hotel & Casino, GE Capital shall have the
right to sell the Leased Property and/or
Collateral, on site, without cost to GE Capital;
and (2) during such six (6) month period, the
lenders under Obligor's Senior Credit Facility may
cause the Leased Property and/or the Collateral to
be placed in safe, secure storage on site or shall
cause the then prevailing payments required to be
paid under the Lease and the Term Loan to be paid
to GE Capital unless and until GE Capital causes
the Leased Property and/or the Collateral to be
removed from the Aladdin Hotel & Casino.
- At all times, the funds then available to Obligor
from all
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Page 18
sources shall be sufficient to pay all remaining
costs anticipated to be incurred in connection
with the completion of the Project, including
(without limitation) interest payments and fees
due to GE Capital and other Lessors and Lenders
with respect to the Facilities during the period
through the Construction Completion Date.
- The Financing shall not violate any law,
governmental rule or regulation, including
(without limitation) Regulation G, Regulation T,
Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System.
- There shall have been no material adverse change
in the financial condition, operations, assets,
business, properties or prospects of Holdings or
LCI since the date of their most recent audited
financial statements delivered to GE Capital
(subject to the rights with respect to assumption
and/or cure of the lenders under Obligor's Senior
Credit Facility, as set forth in the Intercreditor
Agreement).
- The specified conditions must be satisfied with
respect to the initial closing of the Financing
and with respect to each funding of the Financing,
including the provision of such bring-down
certificates, opinions and confirmations as may be
required by GE Capital.
GE Capital's commitment hereunder is further subject to the execution and
delivery of final legal, documentation reasonably acceptable to GE Capital and
its counsel incorporating, without limitation, the terms set forth in this
Commitment Letter, and completion of other customary conditions to GE Capital
and its counsel's reasonable satisfaction.
You agree that GECMG will act as the sole syndicate agent for the
Transaction and that no additional agents, co-agents or arrangers will be
appointed, or other titles conferred, without GECMG's consent.
To ensure an orderly and effective syndication of the Financing, you agree
that until the termination of the syndication, as determined by GECMG, you will
not attempt to syndicate or issue, announce or authorize the announcement of the
syndication of or issuance of, or engage in
Aladdin Gaming, LLC
Page 19
discussions concerning the syndication or issuance of, any debt facility or debt
security (including any renewals thereof) (other than with respect to the Senior
Credit Facility and the offering of Holdings' senior discount notes pursuant to
the Offering Memorandum, which shall be closed not later than March 31, 1998),
the financing of the Theater of the Performing Arts, the development on the Site
of a retail project and another hotel project known as the Audrie/Harmon
Project), without the prior written consent of GECMG.
By signing this Commitment Letter, each party acknowledges that this
Commitment Letter supersedes any and all discussions and understandings, written
or oral, between or among GE Capital and any other person as to the subject
matter hereof, including, without limitation, the proposal letter dated
September 17, 1997 between GE Capital and Obligor (the "Proposal Letter"). No
amendments, waivers or modifications of this Commitment Letter or any of its
contents shall be effective unless expressly set forth in writing and executed
by the parties hereto.
This Commitment Letter is being provided to you on the condition that,
except as required by law and except to the extent required in connection with
the Offering Memorandum, neither it, the Proposal Letter, nor their contents
will be disclosed publicly or privately except to those individuals who have a
need to know of them as a result of their being specifically involved in the
Transaction under consideration and then only on the condition that such matters
may not, except as required by law, be further disclosed. No person to whom
this Commitment Letter may be shown in violation of the above provisions is
entitled to rely upon this Commitment Letter or any of its contents. Without
limiting the generality of the foregoing, none of such persons shall, except as
required by law, use the name of, or refer to, GE Capital, or any of its
affiliates, in any correspondence, discussions, advertisement or disclosure made
in connection with the Transaction without the prior written consent of
GE Capital.
Regardless of whether the Transaction or the Financing closes, Obligor
agrees to pay upon demand to GE Capital all out-of-pocket expenses which may be
incurred by GE Capital, First Boston or GECMG in connection with the Financing
or the Transaction (including all reasonable legal, environmental, and other
consultant costs and fees incurred in the preparation of this Commitment Letter,
the Proposal Letter, and evaluation of any documenting of the Financing and the
Transaction). Regardless of whether the Transaction or the Financing closes,
Obligor shall indemnify and hold harmless each of GE Capital, First Boston,
GECMG, their respective affiliates, and the directors, officers, employees,
agents, attorneys and representatives of any of them (each, an "Indemnified
Person"), from and against all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including, but not limited to, attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal), which may be instituted or asserted against or
incurred by any such Indemnified Person in connection with, or arising out of,
this Commitment Letter, the Proposal Letter, the Financing or the Transaction
under consideration, the documentation related thereto, any other financing
Aladdin Gaming, LLC
Page 20
related thereto, any actions or failures to act in connection therewith, and any
and all environmental liabilities and legal costs and expenses arising out of or
incurred in connection with any disputes between or among any parties to any of
the foregoing, and any investigation, litigation, or proceeding related to any
such matters. Notwithstanding the preceding sentence, the indemnitors shall not
be liable for any indemnification to an Indemnified Person to the extent that
any such suit, action, proceeding, claim, damage, loss, liability or expense
results solely from that Indemnified Person's gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction. Under
no circumstances shall GE Capital, First Boston, GECMG, or any of their
respective affiliates be liable to you or any other person for any punitive,
exemplary, consequential or indirect damages which may be alleged to result from
this Commitment Letter, the Proposal Letter, the Transaction, the Financing, the
documentation related thereto or any other financing, regardless of whether the
Transaction or the Financing closes.
Each party hereby expressly waives any right to trial by jury of any claim,
demand, action or cause of action arising under this Commitment Letter, the
Proposal Letter, any transaction relating hereto or thereto, or any other
instrument, document or agreement executed or delivered in connection herewith
or therewith, whether sounding in contract, tort or otherwise. Each party
hereto consents and agrees that the state or federal courts located in New York
County, City of New York, New York, shall have exclusive jurisdiction to hear
and determine any claims or disputes between or among any of the parties hereto
pertaining to this Commitment Letter, the Proposal Letter, the Financing or the
Transaction under consideration, any other financing related thereto, and any
investigation, litigation, or proceeding related to or arising out of any such
matters, PROVIDED, that the parties hereto acknowledge that any appeals from
those courts may have to be heard by a court located outside of such
jurisdiction. Each party hereto expressly submits and consents in advance to
such jurisdiction in any action or suit commenced in any such court, and hereby
waives any objection which such party may have based upon lack of personal
jurisdiction, improper venue or inconvenient forum.
This Commitment Letter is governed by and shall be construed in accordance
with the internal laws (as opposed to conflicts of law provisions) of the State
of New York.
GE Capital shall have access to all relevant facilities, personnel and
accountants of Obligor and its affiliates, and copies of all documents of
Obligor and its affiliates which GE Capital may request, including business
plans, financial statements (actual and pro forma), books, records, and other
documents.
This Commitment Letter shall be of no force and effect unless and until
(a) this Commitment Letter is executed and delivered to GE Capital on or before
5:00 p.m. Eastern Standard Time on January 30, 1998, at 777 Long Ridge Road,
Building B - First Floor, Stamford, Connecticut 06927, and (b) such delivery is
accompanied by payment of the initial portion of the Commitment Fee and any
other fees or deposits due and payable to GE Capital as
Aladdin Gaming, LLC
Page 21
herein provided. Once effective, GE Capital's obligation to provide financing
in accordance with the terms of this Commitment Letter shall cease if the
Transaction does not close, or the funding of the Financing is not completed for
any reason, on or before that date which is twenty-six (26) months after
Obligor's Senior Credit Facility closes (if no FORCE MAJEURE has then occurred;
provided that such date may be extended for up to twelve (12) months if a FORCE
MAJEURE has then occurred) (unless extended beyond such date with the prior
written consent of GE Capital and First Boston, at their sole discretion); and
GE Capital, First Boston and their affiliates shall not have any liability to
any person in connection with its refusal to fund the Financing or any portion
thereof after such date.
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We look forward to continuing to work with you toward completing this
transaction.
Sincerely,
GENERAL ELECTRIC CAPITAL CORPORATION
CAPITAL FUNDING, INC.
By:
------------------------------------
Daniel P. Gioia
Senior Risk Analyst
AGREED AND ACCEPTED this
23rd day of January, 1998
ALADDIN GAMING, LLC
By:
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Its:
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