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AMENDED
AND RESTATED
EMPLOYMENT
AGREEMENT
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT dated as of January 1, 2007
(this “Agreement”), between American Casino &
Entertainment Properties LLC (the “Company”),
having an address at 2000 Las Vegas Boulevard South, Las
Vegas, Nevada 89104, and Mr. Richard P. Brown
(“Employee”), having an address at 1795 Mezza
Court, Henderson, Nevada 89012. THIS AGREEMENT AMENDS AND
RESTATES IN ITS ENTIRETY THE EMPLOYMENT AGREEMENT BETWEEN THE
PARTIES DATED AS OF JANUARY 1, 2007.
1.
Employment
Upon
the terms and conditions hereinafter set forth, the Company
hereby agrees to employ Employee and Employee hereby agrees to
become employed by the Company. During the Term of Employment
(as hereinafter defined), Employee shall be employed in the
position of President and Chief Executive Officer of the
Company and shall also serve in other positions of affiliates
of the Company as may be designated (the “Designated
Affiliates”) from time to time by the board of directors
of the Company (the “Board”), provided that such
Designated Affiliates are engaged in businesses relating to
gaming, casino or resort operation or development
(collectively, the “Gaming Business”). Employee
shall perform such duties as are specified from time to time
by the Company, the Board and the Designated Affiliates.
Employee shall serve in such capacities at the pleasure of the
Board. Employee shall report to and be under the supervision
of the Company’s Board. Employee will also meet and work
with executives of American Property Investors, Inc.
(“API”) and members of the board of directors of
API.
During
the Term of Employment, Employee shall devote all of his
professional attention, on a full time basis, to the business
and affairs of the Company and the Designated Affiliates,
shall use his best efforts to advance the best interest of the
Company and the Designated Affiliates and shall comply with
all of the policies of the Company and the Designated
Affiliates, including, without limitation, such policies with
respect to legal compliance, conflicts of interest,
confidentiality and business ethics as are from time to time
in effect.
Except
as specifically provided herein, during the Term of
Employment, Employee shall not, without the prior written
consent of the Company, directly or indirectly (i) render
services to, or otherwise act in a business or professional
capacity on behalf of or for the benefit of, any other Person
(as hereinafter defined) as an employee, advisor, independent
contractor, agent, consultant, representative or otherwise,
whether or not compensated, (ii) plan, negotiate or have
discussions with any Person regarding, or otherwise attempt to
secure, future employment with any Person other than the
Company or the Acquiring Person (as hereinafter defined) or
(iii) plan, take any actions in furtherance of, or otherwise
devote any time to, any future business opportunity (except as
otherwise provided in this Agreement), whether sponsored by
Employee or any other Person (the “Exclusivity
Obligation”). However, nothing contained herein shall
restrict Employee from being involved in the business of horse
racing/breeding of thoroughbred horses (“Other
Activity”), provided that (a) Employee devotes his full
professional attention to the business affairs of the Company,
its subsidiaries and of any affiliated entities to which the
Company has made his services available, (b) the Other
Activity does not interfere with, and Employee is otherwise in
compliance with, Employee’s professional duties and
responsibilities hereunder, and (c) Employee otherwise
cooperates with the Company in connection with any information
regarding the Other Activity that may be requested or required
by any licensing or other regulatory authorities.
2.
Term
The
employment period shall commence as of January 1, 2007 and
shall continue through the period (the “Term of
Employment”) ending on December 31, 2008 (the
“Expiration Date”), unless earlier terminated as
set forth in this Agreement.
3.
Compensation
For
all services to be performed by Employee under this Agreement,
during the Term of Employment, Employee shall be compensated
in the following manner:
(a)
Base Compensation
The
Company will pay Employee a salary (the “Base
Salary”) at an annual rate of $625,000. The Base Salary
shall be payable in accordance with the normal payroll
practice of the Company (but no less frequently than
bi-weekly).
(b)
Bonus Compensation
During
the Term of Employment, Employee shall be eligible to receive
an annual bonus, as determined in the sole discretion of the
Board (the “Bonus Compensation”). The Bonus
Compensation, if any, shall be computed based upon the
following formula of performance targets
(“Targets”):
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(i)
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2007
bonus is conditioned on ACEP’s four current properties having
aggregate EBITDA of not less than $106.0 million, in each case for
the fiscal year ended December 31, 2007;
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a.
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If
the aggregate 2007 EBITDA equals or exceeds $106.0 million but is
less than $111.0 million then the 2007 bonus shall be
$93,750.
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b.
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If
the aggregate 2007 EBITDA equals or exceeds $111.0 million but is
less than $113.95 million then the 2007 bonus shall be $93,750 +
$75,000 for a total of $168,750.
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1 Employee
and the Company acknowledge and agree that these Targets are based
upon EBITDA forecasted in the 2007 budget submitted by the
Company’s management to API.
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c.
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If
the aggregate 2007 EBITDA equals or exceeds $113.95 million but is
less than $121.9 million then the 2007 bonus shall be $93,750 +
$75,000 + $93,750 for a total of $262,500; and
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d.
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If
the 2007 EBITDA equals or exceeds $121.9 million then the 2007
bonus shall be $262,500 + $ $125,000, for a total bonus of
387,500;
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(ii)
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Targets
for 2008 EBITDA
and amount
of 2008 bonus shall be determined by the Company in January
2008.
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All
calculations and determinations of any of the foregoing
matters (including the amount of Bonus Compensation, or any
component thereof, including but not limited to EBITDA or the
achievement of any Target) will be made by the Company in its
reasonable discretion and will be final and binding on
Employee, and provided further will be adjusted by the Company
to exclude the impact, as it may determine, of extraordinary
accounting items.
The
allocation of the Bonus Compensation shall be deemed earned
and to become due on (i) December 31, 2007, with respect to
2007 Targets, provided that Employee is employed in good
standing as of such date, and provided further that the Bonus
Compensation with respect to the 2007 Targets shall not be
payable by the Company until February 28, 2008, and (ii)
December 31, 2008, with respect to 2008 Targets, provided that
Employee is employed in good standing as of such date, and
provided further that the Bonus Compensation with respect to
the 2008 Targets shall not be payable by the Company until
February 28, 2009.
(c)
Taxes
All
amounts paid by the Company to Employee under or pursuant to
this Agreement, including, without limitation, the Base Salary
and any Bonus Compensation, or any other compensation or
benefits, whether in cash or in kind, shall be subject to
normal withholding and deductions imposed by any one or more
local, state or federal governments.
(d)
Change of Control
(i)
In
the event that the Company enters into a binding contract for
a Change of Control transaction during the Term of Employment
and Employee is employed in good standing as of such date,
then, if Employee has complied with the requirements of clause
(ii) below
and Employee:
(x) has not been terminated for Cause or resigned prior to the
Closing Date; or (y) if the Election (as defined in clause (ii)
below) has occurred, Employee has not been terminated for Cause or
resigned prior to the expiration of the Transition Period, then
Employee shall be paid a lump-sum bonus of $1,000,000 (the
“Change of Control Payment”), subject to and in
accordance with Section 5(b) below.
(ii)
Employee
acknowledges and agrees that, in the event of a Change of
Control as a result of: (x) an acquisition of the equity of
the Company or its direct or indirect parent (whether by sale
of equity interests, merger or otherwise), then this Agreement
will remain the obligation of the Company (or its successor)
and Employee ’s
obligations hereunder will
remain in full force and effect; or (y) a transfer of assets
of the Company or its subsidiaries and in connection therewith
this Agreement is assigned by the Company, then this Agreement
will become the obligation of the assignee and
Employee’s obligations hereunder will (as such) remain
in full force and effect. If, prior to the Closing Date, the
Company so elects (the “Election”) by giving
written notice thereof to Employee, then Employee shall
provide, on a full time basis and in a professional manner,
during the Transition Period, such services to the Company,
the acquiring Person in such Change of Control transaction
(the “Acquiring Person”) and their respective
designees as are necessary in all respects to permit a smooth,
professional transition of management (which may include,
without limitation, continuing to provide the services
specified in this Agreement or such other executive services
as may be specified from time to time by the Company, the
Acquiring Person or their respective designees).
(iii)
It
is understood and agreed that: (aa) if Employee becomes,
directly or indirectly, an employee of the Acquiring Person,
then all of Employee’s salary, benefits and other
compensation shall be paid by the Acquiring Person; and (bb)
if Employee has entered into a new employment agreement with
the Acquiring Person then the term “Cause” shall
be deemed for purposes of the foregoing provision to have the
meaning given such term in such new employment
agreement.
(iv)
Notwithstanding
any provision of this Agreement to the contrary, (x) following
a Change of Control Employee shall not accrue any additional
Bonus Compensation under Section 3(b) for the calendar year
2007, and (y) any Bonus Compensation or other benefits for the
year commencing January 1, 2008 shall be established in the
sole and absolute discretion of the Board of Directors of the
Company.
4.
Termination
This
Agreement shall terminate (subject to Section 10(g) below) and
the Term of Employment shall end, on the first to occur of
(each a “Termination Event”):
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(b)
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The
death of Employee or the total or partial disability that, in the
judgment of the Company, renders Employee, with or without
reasonable accommodation, unable to perform his essential job
functions for the Company for a period of at least 90 consecutive
business days;
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(c)
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The
discharge of Employee by the Company with or without Cause (as
hereinafter defined);
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(d)
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The
resignation of Employee (and without limiting the effect of such
resignation, Employee agrees to provide the Company with not less
than 30 days prior written notice of his resignation);
or
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(e)
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Upon
the later of: (x) a Change of Control; or (y) if the Election has
been delivered to Employee, then upon the expiration of the
Transition Period.
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The
Company may discharge Employee at any time, for any reason or
no reason, with or without Cause, in which event Employee
shall be entitled only to such payments as are set forth in
Section 5 below. As used herein, “Cause” is
defined as Employee’s: (i) failure to (x) perform the
duties assigned to him or (y) comply with the instructions
given to him; (ii) personal misconduct or insubordination;
(iii) impairment due to alcohol or substance abuse; (iv)
conviction of a crime or being charged with a felony; (v)
violation of a federal or state securities law or regulation;
(vi) commission of an act of moral turpitude or dishonesty
relating to the performance of his duties hereunder; (vii)
failure to comply with any of the terms of this Agreement;
(viii) breach of the Exclusivity Obligation or any of his
obligations set forth in Section 6 or Section 7 below; (ix)
any revocation or suspension by any state or local authority
of Employee’s required license(s) to serve in his
position(s) with the Company; or (x) any act or failure to act
by Employee which causes any gaming or other regulatory
authority having jurisdiction over the Company, the Designated
Affiliates or any of their affiliates to seek any redress or
remedy against Employee, the Company, any Designated Affiliate
or any of their affiliates. In the case of clauses (i) and
(vii) above, the Company will give Employee a written notice
of the alleged “Cause” and a 20-day period to cure
prior to termination, to the extent that the Company, in its
sole discretion, determines such conduct is
curable.
5.
Effect of Termination
In
the event of termination of Employee’s employment
hereunder, all rights of Employee under this Agreement,
including all rights to compensation, shall end and Employee
shall only be entitled to be paid the amounts set forth in
this Section 5 below.
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(a)
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In
the event that the Term of Employment ends (i) for the reason set
forth in Section 4(a) above (i.e., Expiration Date), or (ii) for
any of the reasons set forth in Section 4(b) above (i.e. death or
disability), or (iii) for the reason set forth in Section 4(d)
above (i.e. resignation), or (iv) due to the discharge of Employee
by the Company for Cause, then, in lieu of any other payments of
any kind (including, without limitation, any Severance Payment or
Change of Control Payment), Employee shall be entitled to receive,
within fifteen (15) days following the date on which the
Termination Event in question occurred (the “Clause (a)
Termination Date”) any amounts of: (A) Base Salary due and
unpaid to Employee from the Company as of the Clause (a)
Termination Date; and (B) Bonus Compensation earned, vested, due
and unpaid to Employee from the Company as of the Clause (a)
Termination Date (as determined below, and not on a pro rata
basis); and (C) any compensation due to Employee in respect of any
accrued vacation days that were not taken by Employee prior to the
Clause (a) Termination Date.
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(b)
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In
the event that the Term of Employment ends for the reason set forth
in Section 4(e) above (i.e., Change of Control or Election), then,
in lieu of any other payments of any kind (including, without
limitation, any Severance Payment), Employee shall be entitled to
receive: (A) within fifteen (15) days following the Closing Date,
any amounts of Base Salary due and unpaid to Employee from the
Company as of the Clause (b) Termination Date, ; and (B) any
compensation due to Employee in respect of any accrued vacation
days that were not taken by Employee prior to the Clause (b)
Termination Date; and (B) sixty (60) days following the Closing
Date (if Employee has complied with the requirements of clause (ii)
of Section 3(d) above), (1) Bonus Compensation earned, vested, due
and unpaid to Employee from the Company as of the Clause (b)
Termination Date (as determined below) and (2) the Change of
Control Payment, payment of which shall be conditioned upon
Employee’s execution of an Employee Severance and Release
Agreement in a form similar to that shown in Exhibit A of this
Agreement; provided that the Change of Control Payment shall
not be
payable to Employee if either of the following events has occurred:
(1) if the Company has delivered the Election to Employee, but
Employee has been terminated for Cause or resigns prior to the
expiration of the Transition Period; or (2) if Employee has been
terminated for Cause or resigns prior to the Closing
Date.
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For
purposes of this Section 5(b), Bonus Compensation shall be
determined by revising the final paragraph of Section 3(b) to
provide that if a Change of Control occurs in 2007, a pro rata
determination of the Bonus Compensation for such year, based
on the period between January 1, 2007 and the Closing Date,
shall be made as shown in the examples on Schedule 1
hereto.
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(c)
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In
the event that the Term of Employment ends due to the discharge of
Employee by the Company without Cause (which the Company is free to
do at any time in its sole and absolute discretion) then, in lieu
of any other payments of any kind (including, without limitation,
any Change of Control Payment), Employee shall be entitled to
receive, within fifteen (15) days following the date on which the
Termination Event in question occurred (the “Clause (c)
Termination Date”): (A) any amounts of Base Salary due and
unpaid to Employee from the Company as of the Clause (c)
Termination Date; (B) any amounts of Bonus Compensation earned,
vested, due and unpaid to Employee from the Company as of the
Clause (c) Termination Date (as determined below, and not on a pro
rata basis); (C) any compensation due to Employee in respect of any
accrued vacation days that were not taken by Employee prior to the
Clause (c) Termination Date; and (D) a lump-sum payment in the
amount equal to one year’s then current Base Salary (the
“Severance Payment”), payment of which shall be
conditioned upon Employee’s execution of an Employee
Severance and Release Agreement in a form similar to that shown in
Exhibit A of this Agreement. Notwithstanding the foregoing, if all
of the following occur, then Employee shall be entitled to receive,
within fifteen (15) days following the Closing Date, an additional
payment equal to the difference between $1,000,000 and the
Severance Payment that was previously paid to Employee: (i)
Employee is employed in good standing with the Company through and
including the date that the Company enters into a binding contract
for a Change of Control transaction (the “Execution
Date”); and (ii) Employee is terminated without Cause either
(1) after the Execution Date but prior to the Closing Date, or (2)
after the Election is made but prior to the end of the Transition
Period; and (iii) Employee has complied with clause (ii) of Section
3(d) from the beginning of a sale or auction process that is
reasonably likely to lead to a Change of Control (the “Sale
Process”) through the date of termination of Employee’s
employment; and (iv) the Closing Date occurs on or prior to
December 31, 2008; and (v) the party with whom the Company engages
in a Change of Control transaction is a party with respect to which
the Employee was actively involved in the negotiation of the Sale
Process prior to the date of termination of Employee’s
employment; provided further that the Employee shall execute and
deliver a “bring down” release as a condition for the
receipt of such payment.
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For
the purpose of this Paragraph 5, any Bonus Compensation shall
be deemed earned, vested and to become due, (a) with respect
to the 2007 Targets, on December 31, 2007, provided that
Employee is employed in good standing by the Company as of
such date, and provided further that the Bonus Compensation
with respect to the 2007 Targets shall not be payable by the
Company to Employee until February 28, 2008, and (b) with
respect to the 2008 Targets, on December 31, 2008, provided
Employee is employed in good standing by the Company as of
such date, and provided further that the Bonus Compensation
with respect to the 2008 Targets shall not be payable by the
Company to Employee until February 28, 2009.
Employee
acknowledges and agrees that, notwithstanding any provisions
to the contrary contained in this Agreement, in the event that
Employee becomes entitled to: (x) a Change of Control Payment,
then Employee shall not be entitled to any payments under
Section 5(a)
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