**Exhibit 10.1**

 

**Wells Fargo Foothill, Inc.**

**2450 Colorado Ave., Suite 3000W**

**Santa Monica, CA 90404**

 

As of May 11, 2006

 

**155 EAST TROPICANA, LLC**

115East Tropicana Avenue

LasVegas, Nevada  89109

Attn:  Michael Hessling

FaxNo.:  (702) 739-7783

 

 

witha copy to:

Kummer Kaempfer Bonner &Renshaw

3800 Howard HughesParkway

Seventh Floor

Las Vegas, Nevada  89109

Attn:  Michael Bonner, Esq.

FaxNo.:  702-796-7181

 

 

Re:                               155East Tropicana, LLC

 

Reference is made hereby to that certain Credit Agreement, dated as of March 29, 2005 (the “CreditAgreement”), by and among the lenders identified on the signature pages thereof(such lenders, together with their respective successors and permitted assigns,are referred to hereinafter each individually as a “Lender” and collectively asthe “Lenders”), **WELLS FARGO FOOTHILL,INC.,**a California corporation, as the arranger and administrativeagent for the Lenders (in such capacity, together with its successors andassigns in such capacity, “Agent”), **155 EAST TROPICANA, LLC**,a Nevada limited liability company (“Parent”), and each of Parent’sSubsidiaries identified on the signature pages thereof (such Subsidiaries,together with Parent, are referred to hereinafter each individually as a “Borrower”,and individually and collectively, jointly and severally, as the “Borrowers”).Capitalized terms used herein andnot otherwise defined shall have the meaning ascribed thereto in the CreditAgreement.

 

Borrowershave  informed the Lender Group thatBorrowers have failed to comply with the financial covenants set forth in Section 6.16(a)(i) andSection 6.16(a)(ii) of the Credit Agreement with respect to minimumEBITDA and maximum Senior Leverage Ratio, respectively, for the fiscal quarterending March 31, 2006 (the “Designated Events of Default”).

 

Subject to (a) receipt by the Lender Group of acounterpart of this letter agreement duly executed and delivered by each Borrower,(b) minimum EBITDA for the 4 fiscal quarter period 

 

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endingMarch 31, 2006 not being less than $684,000, and (c) maximum SeniorLeverage Ratio measured as of March 31, 2006 being not more than 30.26:1:00,the Lender Group hereby waives the Designated Events of Default.

 

Each Borrower hereby represents and warrants that (a) theexecution, delivery, and performance of this letter agreement are within itscorporate or limited liability company powers, have been duly authorized by allnecessary corporate or limited liability company action, and are not incontravention of any law, rule, or regulation, or any order, judgment, decree,writ, injunction, or award of any arbitrator, court, or governmental authority,or of the terms of any of its organizational documents, or of any contract orundertaking to which it is a party or by which any of its properties may bebound or affected, (b) the representations and warranties in the Credit Agreementand the other Loan Documents are true and correct in all respects on and as ofthe date hereof, as though made on such date (except to the extent that suchrepresentations and warranties relate solely to an earlier date), and (c) otherthan the Designated Events of Default, no Default or Event of Default hasoccurred and is continuing on the date hereof or as of the date of theeffectiveness of this letter agreement.

 

The waiver herein is limited to the specifics hereof,shall not apply with respect to any Default or Event of Default other than theDesignated Events of Default, or any other facts or occurrences other thanthose on which the same are based, shall not excuse future non-compliance withthe Credit Agreement (as it may from time to time be amended), and, except asexpressly set forth herein, shall not operate as a waiver or an amendment ofany right, power, or remedy of the Lender Group, nor as a consent to or waiverof any further or other matter, under the Loan Documents.

 

Thisletter agreement shall constitute a Loan Document and shall be subject to theprovisions regarding governing law, waiver of jury trial, jurisdiction andvenue applicable to the Credit Agreement.

 

This letteragreement may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which when so executed anddelivered shall be an original, but all of which shall together constitute oneand the same instrument.  Delivery of anexecuted counterpart of this letter agreement by telefacsimile shall be equallyas effective as delivery of an original executed counterpart of this letteragreement.  Any party delivering anexecuted counterpart of this letter agreement by telefacsimile shall alsodeliver an original executed counterpart of this letter agreement, but thefailure to do so shall not affect the validity, enforceability or bindingeffect of this letter agreement.  This letteragreement shall be governed by the laws of the state of New York applicable tocontracts made and to be performed in the state of New York.

 

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Pleasehave the acknowledgement set forth below executed on behalf of Borrowers andreturn a fully executed copy to the Agent.

 

 

 
| ** ** | Very truly yours,                                                                   |
|------------|-------------------------------------------------------------------------------------|
| ** ** | ** **                                                                          |
| ** ** | **WELLS FARGO FOOTHILL, INC.**,  a California corporation, as Agent and as a Lender |
|       |                                                                                |   |
|       | By:                                                                                 | /s/ Kevin P. Smith |   |
|       | Title:                                                                              | Kevin P. Smith, Vice President |

 

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ACKNOWLEDGED AND AGREED:

 
| **155 EAST TROPICANA, LLC**,   a Nevada limited liability company, as a Borrower |
|----------------------------------------------------------------------------------|
|                                                                             |   |
| By:                                                                              | /s/ Deborah J. Pierce |   |
| Title:                                                                           | Chief Financial Officer |   |
|                                                                             |   |   |
| **155 EAST TROPICANA FINANCE CORP.**   a Nevada corporation, as a Borrower  |
|                                                                             |   |   |
| By:                                                                              | /s/ Deborah J. Pierce |   |
| Title:                                                                           | Chief Financial Officer |   |

 

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