EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into
this 7th day of March 2000, by and between Aladdin Gaming, LLC ("Company"),
Aladdin Gaming Holdings, LLC ("Gaming Holdings") and Thomas A. Lettero
("Executive").
WHEREAS, the Company considers it important and in its best interest
and the best interest of its owners to foster the employment of key
management personnel and desires to retain the services of Executive on the
terms and subject to the conditions of this Agreement;
WHEREAS, the Executive desires to accept employment with the Company
to render services to the Company on the terms and subject to the conditions
of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the following
mutual covenants and agreements, the parties agree as follows:
1. EMPLOYMENT.
a. The Company hereby employs Executive as Senior Vice President and
Chief Financial Officer of Gaming Holdings and the Company and
Executive shall serve as a member on the Company's Executive
Committee. Executive hereby accepts such employment and positions
for the compensation and subject to the terms and conditions in
this Agreement.
b. Notwithstanding anything to the contrary contained in this
Agreement, this Agreement shall only be effective upon the earlier
of: (i) the lawful termination of Mr. Lettero's current employment
agreement and any and all obligations therein; or (ii) the date
upon which Mr. Lettero's current employer waives in writing the
notification and termination provisions of his current employment
agreement ("Effective Date").
2. TERM. The term of the Executive's employment under this Agreement
("Term") shall commence on the Effective Date ("Commencement Date") and shall
continue for three (3) years unless earlier terminated as provided in this
Agreement. (The date of any termination of this Agreement as provided herein
is the "Termination Date.")
3. DUTIES AND RESPONSIBILITIES. During the Term, Executive will serve
as Senior Vice President and Chief Financial Officer of Gaming Holdings and
the Company and Executive shall serve as a member on the Company's Executive
Committee. Executive will have such authority, responsibilities and duties as
are customarily associated with this position. At all times Executive shall
faithfully and to the best of his abilities perform his duties and
responsibilities hereunder to the reasonable satisfaction of the Board of
Directors. In addition, Executive shall devote his full time, efforts and
attention to the business and affairs of the Company, use his best efforts to
further the interest of the Company and at all times conduct himself in a
manner which reflects credit upon the Company.
1
4. COMPENSATION.
a. SALARY. For his services hereunder, the Company shall pay Executive a
base salary of Three Hundred Thousand Dollars ($300,000) ("Base
Salary") for each consecutive 12-month period during the Term beginning
with the Commencement Date subject, however, to Section 4(b)(ii). (Each
such consecutive 12 month period is an "Employment Year"). Executive's
Base Salary will be prorated for any partial Employment Year. On each
year after the Commencement Date, the Board of Directors will consider
an increase in the Base Salary based upon criteria determined by the
Board of Directors and applicable to other members of the executive
management group. Any such increases, however, shall be in the sole
discretion of the Board of Directors. There shall be no reduction in
Base Salary during the Term. The Base Salary shall be payable in equal
periodic installments subject to customary deductions for social
security, other taxes and amounts customarily withheld from salaries of
employees of the Company, all in accordance with the Company's usual
and customary payroll practices.
b. SIGNING BONUS.
(i) Subject to the terms and conditions of this
Agreement, including, without limitation, the
provisions of Section 4(b)(ii) below, the Company
shall pay to the Executive, on the Commencement Date,
a signing bonus ("Signing Bonus") in the amount of
$300,000.
(ii) In the event that this Agreement is terminated pursuant
Section 5(c) or (d) below, the Executive shall pay to the
Company (a) in the event that the Termination Date with
respect such termination occurs prior to the second
anniversary of the Commencement Date, an amount equal to the
net after-tax amount of the Signing Bonus received by the
Executive and (b) in the event that the Termination Date with
respect such termination occurs after the second anniversary
of the Commencement Date, an amount equal to the product of
(x) the net after-tax amount of the Signing Bonus received by
the Executive times (y) a fraction (1) the numerator of which
shall be the remainder of (A) 365 minus (B) the number of days
elapsed from the second anniversary of the Commencement Date
to the date of such termination and (2) the denominator of
which shall be 365; provided, that during the third Employment
Year only, the Base Salary shall be reduced by the amount of
the Signing Bonus. In the event that this Agreement is
terminated other than pursuant to Section 5(c) or (d) below,
the Executive shall be entitled to retain the full amount of
the Signing Bonus.
c. ANNUAL BONUS. From and after the date the Company opens and begins
operating the Aladdin Resort & Casino ("Operational Date"). Executive
is eligible to receive from the Company an annual cash bonus, provided
Executive is employed by the Company on the date the Board of Directors
grants the bonus. The Board of Directors will determine such criteria
and standards in a bonus plan, which will be competitive with industry
standards and applicable to other members of the executive management
group. Executive's bonus
2
will be prorated accordingly if the Aladdin Resort & Casino is only
open and operating during a portion of the bonus year.
d. BENEFITS. During the Term, Executive shall be entitled to receive from
the Company such health, pension, retirement and other employee
benefits as the Company provides to other members of the executive
management group. During the Term, the Company, at its expense, will
provide Executive with term life insurance in the amount of Executive's
annual Base Salary. During the Term, the Company, at its expense, will
provide Executive with long-term disability coverage under a group
long-term disability plan the Company provides other members of the
executive management group.
e. VACATION. Executive shall be entitled to two (2) weeks paid vacation
for each Employment Year, prorated for any partial Employment
Year. The Board of Directors in its discretion may increase Executive's
vacation entitlement. The timing and duration of specific vacations
will take into account the business needs of the Company and will be
mutually agreed to by the parties. In the event any such vacation is
not used by Executive in any Employment Year, the Executive has a right
to accumulate and carry forward such number of unused vacation days
from year to year as may be consistent with the Company's policy for
other members of the executive management group. Upon termination of
employment, all unused vacation time shall be paid to Executive.
f. REIMBURSEMENT OF EXPENSES. The Company shall pay all reasonable
expenses incurred by Executive in the performance of his duties and
responsibilities for the Company. Executive shall submit to the Company
statements and documentation reflecting such expenses incurred, with
such detail, backup and confirmation as the Company may reasonably
require. Subject to any audit Company deems necessary, the Company
shall promptly reimburse Executive the full amount of any such expenses
incurred by Executive.
g. EQUITY INTEREST. Executive will receive a restricted membership
interest of one percent (1.0%), or the economic equivalent thereof,
in Gaming Holdings which Gaming Holdings is currently evaluating
which may include, but not be limited to, a "profits only interest,"
"option," or "phantom stock" (collectively, "Equity"). Such Equity
arrangement shall include the right to receive one percent (1%)
of the distributions which are made to the holders of Gaming Holdings
Common Membership Interests. When Gaming Holdings finalizes the
Equity arrangement, the parties will amend this Agreement so that the
Executive shall participate in such program substantially in the form
previously presented to the Executive. Such Equity arrangement shall
vest 1/3 on each anniversary of the Commencement Date as that upon
the completion of the 3-year term of the Agreement, such Equity
arrangement shall be fully vested. If Gaming Holdings does not create
an Equity arrangement by the Operational Date, the parties will
negotiate in good faith to establish a compensation arrangement in lieu
of an Equity arrangement, which would have the same economic benefit to
the Executive.
h. AUTO ALLOWANCE. During the Term, the Company shall pay Executive an
auto allowance of Five Hundred Dollars ($500) per month.
3
5. TERMINATION. This Agreement shall terminate in accordance with the
following provisions:
a. EXPIRATION OF THE TERM. Unless earlier terminated in accordance with
the provisions hereof, this Agreement shall terminate on expiration of
the term as provided in Section 2.
b. DEATH. If the Executive dies during the Term, this Agreement shall
terminate, with the Termination Date being the date of the Executive's
Death.
c. DISABILITY. If the Executive has been absent from service to the
Company as required in this Agreement for a period of ninety (90) days
or more during any one hundred eighty (180) day period during the Term
as a result of any physical or mental disability, the Company has the
right to terminate this Agreement, the Termination Date being ten (10)
days after notice thereof is given to Executive.
d. TERMINATION BY COMPANY FOR CAUSE. The Company has the right to
terminate this Agreement for Cause as defined herein, the Termination
Date being the date upon which the Company delivers notice thereof to
the Executive. For purposes of this Agreement, Cause shall mean
Executive's: (1) conviction of any felony; (2) embezzlement or
misappropriation of money or property of the Company; (3) denial,
rejection, suspension or revocation of any gaming license or permit;
(4) Executive's material breach of section 6 hereof which material
breach has an adverse impact on the Company; and (5) Executive quits
his employment with the Company without Good Reason. Good Reason is
defined as: (i) the assignment to Executive of duties materially
inconsistent with his position and title without his consent; or (ii) a
material reduction in Executive's duties, authorities and
responsibilities without his consent; or (iii) a reduction by the
Company in Executive's Base Salary, in effect immediately prior to such
reduction, without his consent, provided Executive gives the Company
written notice specifying such assignment or reduction and the Company
has not cured or abated such assignment or reduction within twenty (20)
days thereafter; or (iv) the Operational Date has not occurred within
365 calendar days from the Effective Date.
e. TERMINATION BY COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE WITH
GOOD REASON OR UPON A CHANGE OF CONTROL. Subject to the provisions of
Section 8(e), (i) the Company has the right to terminate this
Agreement without Cause, (ii) the Executive has the right to terminate
this Agreement for Good Reason and (iii) the Executive has the right to
terminate this Agreement upon a Change of Control by giving the other
party written notice thereof. In each case above, the Termination Date
being the date upon which notice of termination is delivered by the
terminating party to the other party. For purposes of this Agreement, a
Change of Control shall be deemed to occur only if collectively the
Sommer Family Trust and London Clubs International, plc, through their
affiliates, own less than fifty percent (50%) of the membership
interests of either Gaming Holdings or the Company.
6. EXECUTIVE'S COVENANTS. The Executive acknowledges that the Company and
Gaming Holdings have substantial, legitimate and continuing interest in the
protection of their
4
business relationships with others including, without limitation,
current and prospective employees, consultants, advisors, customers,
vendors, suppliers, partners or joint venturers and financing sources,
and in the protection of their Confidential Information and have
invested substantial sums, time and effort and will continue to invest
substantial sums, time and effort to develop, maintain and protect such
relationships and Confidential Information. Accordingly, Executive
covenants and agrees as follows:
a. CONFIDENTIALLY. During the Term and thereafter, Executive shall keep
secret and retain in strictest confidence and shall not, without the
prior written consent of the Company or Gaming Holdings, furnish, make
available or disclose to any third party or use for the benefit of
himself or any third party any Confidential Information. Confidential
Information is information related to or concerning Gaming Holdings,
the Company and their businesses which is confidential, proprietary or
not generally known to and cannot be readily ascertained through proper
means by persons or entities (including Gaming Holdings' and the
Company's present or future competitors), who can obtain any type of
value from its disclosure or use. Confidential Information includes all
secret, confidential or proprietary information, knowledge or data
specifically relating to Gaming Holdings and the Company, such as,
without limitation, finances and financing methods, sources, proposals
or plans; operational methods; marketing or development proposals,
plans or strategies; pricing strategies; business or property
acquisition or development proposals or plans; new personnel
acquisition proposals or plans; customer lists and any descriptions or
data concerning current or prospective customers. While employed by the
Company and in furtherance of the business and for the benefit of
Gaming Holdings and the Company, Executive may provide Confidential
Information as appropriate to attorneys, accountants, financial
institutions, and other persons or entities engaged in business with
the Company and to Executive's personal attorney and/or accountant to
the extent necessary to advise Executive; provided, however, such
individual(s) will be similarly bound to maintain the confidentiality
of the information disclosed.
b. NON-COMPETITION.
1) Executive covenants and agrees that he will not compete with the
Company, its affiliates or subsidiaries at any time during the
Term, or for one (1) year from the Termination Date upon a
Termination by the Company for Cause under Section 5(d) (including
Executive quitting without Good Reason under Section 5(d)(5)).
Under this paragraph, Executive agrees that he will not, directly
or indirectly, whether as employee, owner, partner, agent,
director, officer, consultant, independent consultant or
stockholder (except as the beneficial owner of not more than 2% of
the outstanding shares of a corporation, any of the capital stock
of which is listed on any national or regional securities exchange
or quoted in the daily listing of over-the-counter market
securities and, in each case, in which the Executive does not
undertake any management or operational or advisory role) or in
any other capacity, for his own account or for the benefit of any
other person or entity, establish, engage, work for or be
connected in any manner with any person or entity which is, at the
time, engaged in a business which is in competition with the
business of the Company (or any of its subsidiaries or
affiliates); it being understood that for purposes of this Section
6(b), the business of owning, managing, operating or financing a
casino or similar gaming
5
activities in Clark County, Nevada, shall be deemed to be
business in which the Company is engaged; provided, however,
nothing herein prohibits Executive from a working for a
competing business outside Clark County, Nevada.
2) Notwithstanding anything to the contrary contained herein,
Executive shall not be subject to the non-competition provisions
of this Agreement, if this Agreement is terminated other than
pursuant to the provisions of Section 5(d).
c. EMPLOYEES OF THE COMPANY. For one (1) year following the Termination
Date, Executive shall not, directly or indirectly, solicit, or cause
others to solicit, for employment by any person or entity other than
the Company, any employee of the Company or encourage any such employee
to leave the employment of the Company.
d. PROPERTY OF THE COMPANY. Executive acknowledges and agrees that all
memoranda, notes, lists, records and other documents or papers,
including copies thereof, containing or reflecting Confidential
Information (whether or not such items are kept or stored in computer
memories, microfiche, hard copy or any other manner) made or compiled
by Executive or made available to Executive are and remain the property
of the Company ("Company Property") and shall be delivered to the
Company promptly upon any termination of this Agreement. Under Section
5 hereof, Executive shall retain no copies of Company Property
following the Termination Date.
e. REASONABLENESS AND SEVERABILITY OF COVENANTS. The Executive
acknowledges and agrees that the Executive's covenants herein are
necessary for the protection of the Company's legitimate interests, are
reasonable and valid in duration and geographical scope, and in all
other respects. If any court determines that any of the Executive
covenants or any part thereof, invalid or unenforceable, the remainder
of the restrictive covenants shall not thereby be affected and shall be
given full effect without regard to the invalid portions.
f. BLUE-PENCILLING. If any court determines that any of the Executive's
covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, such court shall have
the power to reduce the duration or scope of such provision, as the
case may be, and, in its reduced form, such provision shall then be
enforceable.
7. NON-DISPARAGEMENT. Each of the parties agrees that after the Termination
Date, neither shall, publicly or privately, disparage or make any
statements (written or oral) that could impugn the integrity, acumen
(business or otherwise), ethics or business practices of the other, except
in each case, to the extent (but solely to the extent) necessary: (i) in
any judicial or arbitral action to enforce the provisions of this
Agreement; or (ii) in connection with any judicial or administrative
proceeding to the extent required by applicable law.
8. EFFECT OF TERMINATION. The following provisions shall apply in the event of
the termination of this Agreement as provided in Section 5 above, and
neither party shall have any further liability or obligation to the other,
except as provided herein:
6
a. EXPIRATION OF TERM. Upon expiration of the term under Section 5(a)
hereof, this agreement shall terminate and be of no further force and
effect, except as provided in Sections 4(b)(ii), 6(a), 6(c), 6(d),
6(e), 6(f) and 7; provided that, subject to the provisions of Section
4(b)(ii), the Executive shall be entitled to such salary, bonus and
benefits then accrued or vested to the Termination Date, and any
expense reimbursement amounts accrued to the Termination Date;
b. DEATH. Upon termination of this Agreement as provided in Section 5(b)
hereof, this Agreement shall terminate and be of no further force and
effect; provided, further, that the Company shall pay to Executive's
estate any salary, bonus and benefits then accrued or vested to the
Termination Date, and any expense reimbursement amounts accrued to the
Termination Date;
c. DISABILITY. Upon termination of this Agreement as provided in Section
5(c) hereof, this Agreement shall terminate and be of no further force
and effect, except as provided in Sections 6(a), 6(c), 6(d), 6(e), 6(f)
and 7; provided that Executive shall be entitled to such salary, bonus
and benefits then accrued or vested to the Termination Date, and any
expense reimbursement amounts accrued to the Termination Date;
d. TERMINATION PURSUANT TO SECTION 5(d). Upon termination of this
Agreement as provided in Section 5(d) hereof, this Agreement shall
terminate and be of no further force and effect, except as provided in
Sections 6 and 7; provided that Executive shall be entitled to such
salary, bonus and benefits then accrued or vested to the Termination
Date, and any expense reimbursement amounts accrued to the Termination
Date;
e. TERMINATION PURSUANT TO SECTION 5(e). Upon termination of this
Agreement as provided in Section 5(e) hereof, this Agreement shall
terminate and be of no further force and effect, except as provided in
Sections 6(a), 6(c), 6(d), 6(e), 6(f) and 7; provided, further, that
Executive shall be entitled to such salary, bonus and benefits
including but not limited to health benefits and expense reimbursements
to which Executive would have been entitled for the remainder of the
Term or twelve (12) months, whichever is longer, as if there had been
no earlier termination.
9. GENERAL PROVISIONS.
a. ASSIGNMENT. Neither this Agreement nor any right or interest hereunder
shall be assignable by the Executive, or the Company or Gaming Holdings
without prior written consent of the other; provided, that (1) in the
event of the Executive's Death during the Term, the Executive's estate
and his heirs, executors, administrators, legatees and distributees
shall have the rights and obligations set forth herein, as provided
herein, and (2) nothing contained in this Agreement shall limit or
restrict the Company's ability (A) to merge or consolidate or effect
any similar transaction with any other entity, irrespective or whether
the Company is the surviving entity (including a split up, spin off or
similar type transaction), provided, that one or more of such surviving
entities shall continue to be bound by the provisions hereof binding
upon the Company, (B) to assign this Agreement in conjunction with a
sale of all or substantially all of the Company's
7
assets, or (C) an assignment of this Agreement to an affiliate
controlled by or under common control with the Company. Gaming
Holdings has the same rights and obligations under this Section as the
Company.
b. BINDING AGREEMENT. Except as otherwise provided in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the
Executive, Gaming Holdings and the Company and their respective heirs,
executors, administrators, legatees and distributees, successors and
permitted assigns. 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 or
the assets or business or the Company or Gaming Holdings and supercedes
any prior understandings or agreements between the parties hereto.
c. AMENDMENT OF AGREEMENT. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
d. SEVERABILITY. If, for any reason, any provision of this Agreement is
determined to be invalid or unenforceable, such invalidity or lack of
enforceability shall not affect any other provision of this Agreement
not so determined to be invalid or unenforceable, and each such other
provision shall, to the full extent consistent with applicable law,
continue in full force and effect, irrespective of such invalid or
unenforceable provision. Gaming Holdings has the same rights and
obligations under this Section as the Company.
e. ENTIRE AGREEMENT. Except for those matters detailed in Section 4(f),
this Agreement represents the entire agreement and understanding
between the Company, Gaming Holdings and the Executive concerning the
matters herein and supercede any prior understandings or agreements
between the parties.
f. INDEMNIFICATION. Notwithstanding the termination of this Agreement, the
Company shall indemnify and hold Executive harmless to the full extent
permitted by Chapter 86 of the Nevada Revised Statutes against costs,
expenses, liabilities and losses, including reasonable attorney's fees
and disbursements of counsel, incurred or suffered by him in connection
with his service as an employee of the company during the Term of this
Agreement.
g. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (1) when delivered, if sent by
telecopy or by hand, (2) one business day after sending, if sent by
reputable overnight courier service, such as Federal Express, or (3)
three business days after being mailed, if sent by United States
certified or registered mail, return receipt requested, postage
prepaid. Notices shall be sent by one of the methods described above;
provided, that any notice sent by telecopy shall also be sent by any
other method permitted above. Notices shall be sent:
8
If to the Executive: Thomas A. Lettero
8704 Castle View Avenue
Las Vegas, NV 89129
If to the Company Aladdin Gaming Holdings, LLC
and/or Gaming Aladdin Gaming, LLC
Holdings: 831 Pilot Road
Las Vegas, NV 89119
Attn: Richard Goeglein
With a copy to: Aladdin Gaming Holdings, LLC
Aladdin Gaming, LLC
831 Pilot Road
Las Vegas, Nevada 89119
Attn: General Counsel
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
h. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. Gaming Holdings
has the same rights and obligations under this Section as the Company.
i. INDULGENCES, ETC. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any
other occurrence.
j. BINDING ARBITRATION. Except for an action by the company for injunctive
or other equitable relief, any dispute or controversy arising under or
in connection to this Employment Agreement shall be resolved through
binding arbitration, conducted in Las Vegas, Nevada, in accordance with
the rules of the American Arbitration Association. Judgment may be
entered on the arbitration award in any court of competent
jurisdiction.
k. HEADINGS. The headings of sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement. Gaming
Holdings has the same rights and obligations under this Section as the
Company.
l. NEUTRAL CONSTRUCTION. Each party to this Agreement has had the
opportunity to retain counsel, and to review and participate in the
drafting of this Agreement, and, accordingly, the normal rule of
construction to the effect that any ambiguities are to be resolved
9
against the drafting parties will not be employed or used in any
interpretation of enforcement of this Agreement.
m. GAMING LAW. Anything to the contrary herein 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 the rules and
regulations promulgated by the Nevada Gaming Commission and the Gaming
Control Board. To the extent anything in this Agreement is inconsistent
with any gaming laws or regulations, the gaming laws and regulations
shall control.
n. GOVERNING LAW. This Agreement has been executed and delivered in the
state of Nevada, and its validity, interpretation, performance, and
enforcement shall be governed by the laws of such state, without regard
to principles of conflicts of laws.
ALADDIN GAMING, LLC
By: /s/ Richard J. Goeglein
------------------------------------
Richard J. Goeglein
President and Chief
Executive Officer
ALADDIN GAMING HOLDINGS, LLC
By: /s/ Richard J. Goeglein
------------------------------------
Richard J. Goeglein
President and Chief
Executive Officer
EXECUTIVE
/s/ Thomas A. Lettero
----------------------------------------
Thomas A. Lettero
10