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


115
East Tropicana Avenue


Las
Vegas, Nevada  89109


Attn:  Michael Hessling


Fax
No.:  (702) 739-7783


 


 


with
a copy to:


Kummer Kaempfer Bonner &
Renshaw


3800 Howard Hughes
Parkway


Seventh Floor


Las Vegas, Nevada  89109


Attn:  Michael Bonner, Esq.


Fax
No.:  702-796-7181


 


 


Re:                               155
East Tropicana, LLC


 


Reference is made hereby to that certain Credit Agreement, dated as of March 29, 2005 (the “Credit
Agreement”), 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 as
the “Lenders”), WELLS FARGO FOOTHILL,
INC., a California corporation, as the arranger and administrative
agent for the Lenders (in such capacity, together with its successors and
assigns in such capacity, “Agent”), 155 EAST TROPICANA, LLC,
a Nevada limited liability company (“Parent”), and each of Parent’s
Subsidiaries 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 and
not otherwise defined shall have the meaning ascribed thereto in the Credit
Agreement.


 


Borrowers
have  informed the Lender Group that
Borrowers have failed to comply with the financial covenants set forth in Section 6.16(a)(i) and
Section 6.16(a)(ii) of the Credit Agreement with respect to minimum
EBITDA and maximum Senior Leverage Ratio, respectively, for the fiscal quarter
ending March 31, 2006 (the “Designated Events of Default”).


 


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


 

















 


ending
March 31, 2006 not being less than $684,000, and (c) maximum Senior
Leverage 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) the
execution, delivery, and performance of this letter agreement are within its
corporate or limited liability company powers, have been duly authorized by all
necessary corporate or limited liability company action, and are not in
contravention 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 or
undertaking to which it is a party or by which any of its properties may be
bound or affected, (b) the representations and warranties in the Credit Agreement
and the other Loan Documents are true and correct in all respects on and as of
the date hereof, as though made on such date (except to the extent that such
representations and warranties relate solely to an earlier date), and (c) other
than the Designated Events of Default, no Default or Event of Default has
occurred and is continuing on the date hereof or as of the date of the
effectiveness 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 the
Designated Events of Default, or any other facts or occurrences other than
those on which the same are based, shall not excuse future non-compliance with
the Credit Agreement (as it may from time to time be amended), and, except as
expressly set forth herein, shall not operate as a waiver or an amendment of
any right, power, or remedy of the Lender Group, nor as a consent to or waiver
of any further or other matter, under the Loan Documents.


 


This
letter agreement shall constitute a Loan Document and shall be subject to the
provisions regarding governing law, waiver of jury trial, jurisdiction and
venue applicable to the Credit Agreement.


 


This letter
agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  Delivery of an
executed counterpart of this letter agreement by telefacsimile shall be equally
as effective as delivery of an original executed counterpart of this letter
agreement.  Any party delivering an
executed counterpart of this letter agreement by telefacsimile shall also
deliver an original executed counterpart of this letter agreement, but the
failure to do so shall not affect the validity, enforceability or binding
effect of this letter agreement.  This letter
agreement shall be governed by the laws of the state of New York applicable to
contracts made and to be performed in the state of New York.


 

















 


Please
have the acknowledgement set forth below executed on behalf of Borrowers and
return 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

  



 

















 


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