Exhibit 10.4
AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
2000 Las Vegas Boulevard South
Las Vegas, Nevada 89104
May __, 2004, as of April 1, 2004
Mr. Richard P. Brown
Stratosphere Corporation
2000 Las Vegas Boulevard South
Las Vegas, Nevada 89104
Dear Mr. Brown:
Effective March 31, 2004, your employment agreement, entered into in December
2002, with Stratosphere Corporation expired. You and American Casino &
Entertainment Properties LLC (the "Company"), the parent of, among others,
Stratosphere Corporation, have agreed upon the terms of your employment
agreement for the period commencing April 1, 2004. This letter (the "Agreement")
sets forth the terms upon which you shall be employed by the Company.
You ("Employee") and the Company agree as follows:
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 each of its operating subsidiaries, and such other executive positions with
the Company and/or any of its subsidiaries as are decided upon from time to time
by the Board of Directors of the Company ("Board"). Employee shall serve in all
such capacities at the pleasure of the Board. Employee shall report to and be
under the supervision of the Board. During the Term of Employment, Employee
shall devote his professional attention to the business and affairs of the
Company and its subsidiaries, shall use his best efforts to advance the best
interests of the Company and shall comply with the reasonable policies of the
Company, including, without limitation, such policies with respect to conflict
of interest, confidentiality and business ethics from time to time in effect.
Employee understands that the Company may make Employee's time, skill and
services available to affiliated entities of the Company, including GB Holdings,
Inc. and its subsidiaries and should it do so, the Company would be entitled to
be reimbursed therefore by the affiliated entity.
Except as specifically provided herein, during the Term of Employment, the
Employee shall not, without the prior written consent of the Company, render
services, whether or not compensated, to any other person or entity as an
employee, independent contractor or otherwise, provided, however, that nothing
contained herein shall restrict the Employee from rendering services in
charitable organizations, or being involved in the business of racing/breeding
of thoroughbred horses (provided that Employee devotes his full professional
attention to the business and affairs of the Company, its subsidiaries and of
any affiliated entities to which the Company has made his services available)
subject to the terms and conditions set forth herein and in such manner as shall
not interfere with the performance by the Employee of this duties hereunder.
2. Term
The employment period shall commence as of April 1, 2004 ("Commencement
Date") and shall continue, unless the parties otherwise agree in writing,
throughout the term (the "Term of Employment") ending on March 31, 2006
("Expiration Date" or "expiration") or such later date as the parties may
agree upon in writing.
3. Compensation
For all services to be performed by Employee under this Agreement, during
the Term of Employment, the Employee shall be compensated in the following
manner:
(a) Base Compensation
The Company will pay Employee a salary (the "Base Salary") initially
at an annual rate of $500,000. 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 entitled to
receive an annual bonus (the "Annual Bonus"), if any, as computed
based upon the following formula:
For the purposes of computing the bonus, the EBITDA for
Stratosphere, Fresca LLC, Arizona Charlie's LLC and GB Holdings,
Inc. shall be added together. For calendar 2004, the EBITDA Plan
shall be $74.5 million. For calendar 2005, the EBITDA Plan shall be
that number as is agreed between Employee and the Company prior to
December 31, 2004, or, if they cannot agree, then such number as
determined by the Board.
Employee shall be paid his annual bonus on March 31, 2005 and
2006 as follows:
If Combined EBITDA equals or exceeds EBITDA Plan by less than
7.5%, the bonus shall be equal to $75,000. If Combined EBITDA
exceeds EBITDA Plan by 7.5% but less than 15%, the bonus shall be
equal to $150,000. If Combined EBITDA exceeds EBITDA Plan by 15% or
more, the bonus shall be $250,000.
The allocation of the bonus expense shall be made by the Audit
Committee of the General Partner of American Real Estate Partners,
LP among all or some of the four properties, as determined to be
fair and equitable by the Audit Committee. If the Audit Committee
fails, for whatever reason, to make such allocation, it shall be
made by the Board of Directors of the General Partner of American
Real Estate Partners, LP.
(c) Taxes
All amounts paid by the Company to Employee under or pursuant to
this Agreement, including, without limitation, Base Salary and
Bonuses, 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 of local, state and federal
governments.
4. Termination
This Agreement shall terminate and the Term of Employment shall end, on
the first to occur of (each a "Termination Event"):
(a) The Expiration Date;
(b) The death of Employee or the total or partial disability that
renders Employee unable to perform in his position with the Company
for a period of at least 90 consecutive business days; The discharge
of Employee by the Company with or without Cause (as defined below);
or
(c) The voluntary resignation of Employee (and without limiting the
effect of such resignation, Employee agrees to provide the Company
with not less than 21 days prior written notice of his resignation).
As used herein, "Cause" is defined as Employee's: (i) personal misconduct, (ii)
substance abuse, (iii) negligence or failure to perform work duties or other
obligations to the Company, (iv) conviction of a crime or being charged with a
felony, (v) commission of a fraudulent act; (vi) federal or state criminal
indictment for securities law violation, (vii) commission of an act of moral
ineptitude or dishonesty, (viii) failure to comply with any of the terms of this
Agreement; (ix) willful disclosure, not required by any law or court order, of
any trade secrets or confidential corporate information of the Company to
persons not authorized to know same; (x) any revocation or suspension by any
state or local authority of Employee's license to be the Chief Executive Officer
(or similar position) of any of the Company's subsidiary or affiliated entity or
(xi) any other event which could cause the gaming authorities, having
jurisdiction over the Company or its affiliates, to seek any redress or remedy
against Employee, the Company or its affiliates as a result of Employee's acts
or failure to not.
5. Effect of Termination
(a) In the event that Employee's employment is terminated prior to the
Expiration Date (i) for any of the reasons set forth in Section 4(b)
above (i.e., death or disability) or (ii) for any of the reasons set
forth in Section 4(d) above (i.e., voluntary resignation) or (iii)
due to the discharge of Employee by the Company with Cause; then, in
lieu of any other payments of any kind (including, without
limitation, any severance payments), Employee shall be entitled to
receive, within thirty (30) days following the date on which the
Termination Event in question occurred (the "Termination Date") any
amounts of Base Salary and previously earned bonus due and unpaid to
Employee from the Company as of the Termination Date in question.
(b) In the event that Employee's employment is terminated prior to the
Expiration Date (i) due to the discharge of Employee by the Company
without Cause or (ii) in the event that Employee ceases to be
employed by the Company except such cessation of employment that is
(A) due to the discharge of Employee by the Company with Cause or
(B) for any of the reasons set forth in Section 4(b) above (i.e.,
death or
disability) or in Section 4(d) above (i.e., voluntary resignation);
then, in lieu of any other payments of any kind (including, without
limitation, any severance payments), Employee shall be entitled to
receive, within thirty (30) days following the applicable
Termination Date ____________________ cessation of employment date:
i. any amounts of Base Salary and previously earned bonus due and
unpaid to Employee from the Company as of the Termination Date
in question; and
ii. a lump-sum payment in the amount equal to then current Base
Salary.
For the purpose of this Paragraph 5, the annual bonus shall be deemed earned
with respect to any year on the last business day of March of the year following
the year with respect to which the Combined EBITDA is computed, so that by way
of example, the bonus with respect to the 2004 Combined EBITDA shall be deemed
earned on March 31, 2005.
6. Non-Disclosure
During the term of this Agreement and at all times thereafter, Employee
shall hold in a fiduciary capacity for the benefit of the Company and its
affiliates, respectively, all secret or confidential information,
knowledge or data, including without limitation trade secrets,
investments, contemplated investments, business opportunities, valuation
models and methodologies, relating to the business of the Company or its
affiliates, and their respective businesses, (i) obtained by Employee
during Employee's employment by the Company and (ii) not otherwise in the
public domain. Employee shall not, without prior written consent of the
Company, except to the extent compelled pursuant to the order of a court
or other body having jurisdiction over such matter or based upon the
advice of counsel; communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by the
Company, provided, however, that Employee will assist the Company, at the
Company's expense, in obtaining a protective order, other appropriate
remedy or other reliable assurance that confidential treatment will be
accorded such information disclosed pursuant too the terms of this
Agreement.
All processes, technologies, investments, contemplated investments,
business opportunities, valuation models and methodologies, and inventions
(collectively, "Inventions"), including without limitation new
contributions, improvements, ideas, business plans, discoveries,
trademarks and trade names, conceived, developed, invented, made or found
by Employee, alone or with others, during the Term of Employment, whether
or not patentable and whether or not on the Company's time or with the use
of the Company's facilities or materials, shall be the property of the
Company and shall be promptly and fully disclosed by Employee to the
Company. Employee shall perform all necessary acts (including, without
limitation, executing and delivering any confirmatory assignments,
documents, or instruments requested by the Company) to vest title to any
such Invention in the Company and to enable the Company, at its expense,
to secure and maintain domestic and/or foreign patents or any other rights
for such Inventions. Employee also agrees to keep confidential and not
disclose to third persons any personal information regarding any
controlling person of the Company and any member of the immediate family
of such person.
Employee is scheduled to receive potential bonuses and base salary
increases under this Agreement, which will benefit Employee based upon the
performance of the Company's business. Employee represents to the Company
that the enforcement of the restrictions contained in this section would
not be unduly burdensome to Employee. Employee agrees that the remedy at
law for any breach by Employee of the provisions of this section may be
inadequate and that the Company shall be entitled to injunctive relief,
without posting any bond. This section constitutes an independent and
separable covenant that shall be enforceable notwithstanding any right or
remedy that the Company may have under any other provision of this
Agreement or otherwise.
From the date hereof through March 31, 2007, Employee agrees that he will
not, if he is, for whatever reason, no longer employed by the Company or
any of its affiliates, employ or offer employment to or suggest to or
cause any other entity to employ or offer employment to any person who is
then employed by the Company or any of its affiliates or who was employed
by the Company or any of its affiliates during any period that Employee
was so employed and whose employment by the Company or any such affiliate
has ceased for a period of less than one year. This provision shall not
apply to Joanne Lamond, Employee's current secretary.
7. Benefits
During the Term of Employment, Employee shall be entitled (i) to receive
certain healthcare and other employee benefits comparable to those
received by other employees at a similar pay level and/or position with
the Company; and (ii) 20 business days paid vacation per calendar year, at
the rate of 1.67 days per each calendar month.
8. Miscellaneous
(a) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all
previous written, and all previous or contemporaneous oral
negotiations, understandings, arrangements, and agreements.
(b) This Agreement and all of the provisions hereof shall inure to the
benefit of and be binding upon the legal representatives, heirs,
distributes, successors (whether by merger, operation of law or
otherwise) and assigns of the parties hereto; provided, however,
that Employee may not delegate any of Employee's duties hereunder,
and may not assign any of Employee's rights hereunder, without the
prior written consent of the Company.
(c) This Agreement will be interpreted and the rights of the parties
determined in accordance with the laws of the United States
applicable thereto and the internal laws of the State of Nevada.
(d) Employee covenants and represents that he is not a party to any
contract, commitment or agreement, not is he subject to, or bound
by, any order, judgment, decree, law, statute, ordinance, rule,
regulation or other restriction of any kind or character, which
would prevent or restrict him from entering into and performing his
obligations under this Agreement.
(e) This Agreement and all of its provisions, other than provisions of
Section 5 and Section 6 hereunder, shall terminate upon Employee
ceasing to be Employee of the Company for any reason.
AMERICAN CASINO & ENTERTAINMENT
PROPERTIES LLC
By: American Entertainment Properties
Corp., it's sole member
By: /s/ Keith Meister
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KEITH MEISTER, DIRECTOR
EMPLOYEE:
/s/ Richard Brown
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RICHARD BROWN