Exhibit 10.1
Mr. George Toth
Sands Casino Hotel
136 South Kentucky Avenue
Atlantic City, NJ 08401
Dear Mr. Toth:
You (hereinafter referred to as the "Employee") and Atlantic Coast Entertainment
Holdings, Inc. (the "Company"), sole member of ACE Gaming LLC, dba Sands Casino
Hotel (the "Sands"), have agreed upon the terms of Employee's employment
agreement for the period commencing April 1, 2005. This letter (the "Agreement")
sets forth the terms upon which the Employee shall be employed by the Company.
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 of the Sands.
Employee shall serve in such capacity at the pleasure of the Company's
board of directors (the "Board"). Employee shall report to and be under
the supervision of the President and Chief Executive Officer of the
Company. During the Term of Employment, Employee shall devote all of
his professional attention to the business and affairs of the Company,
shall use his best efforts to advance the best interest of the Company
and shall comply with all of the policies of the Company, including,
without limitation, such policies with respect to conflicts of
interest, confidentiality and business ethics from time to time in
effect.
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 ("Person") as an employee, independent contractor or
otherwise. Notwithstanding the foregoing, nothing contained herein
shall restrict the Employee from rendering services to charitable
organizations in such manner as shall not interfere with the
performance by the Employee of his duties hereunder.
2. Term
The employment period shall commence as of April 1, 2005 and shall
continue through the period (the "Term of Employment") ending on March
31, 2008 (the "Expiration Date"), unless earlier terminated as set
forth in this Agreement.
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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 $400,000. The Base Salary shall be
payable in accordance with the normal payroll practice of the
Company (but no less frequently than bi-weekly), and shall be
subject to annual review and increase, but not decrease. Base
Salary increases will be reviewed under the normal performance
review process, which occurs in March of each year and shall
become effective during the first pay period in April, beginning
in April 2006.
(b) Bonus Compensation
In the event that, during the Term of Employment, the Company
shall develop a management incentive plan ("Bonus Compensation"),
Employee shall be eligible to participate in such plan, if any, on
the same terms as other members of executive management of the
Company.
(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 or local, state and
federal governments.
4. Termination
This Agreement shall terminate (subject to Section 9(f) below) 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;
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(c) The discharge of Employee by the Company with or without Cause (as
defined below); or
(d) The voluntary 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).
The Company may dismiss 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) willful personal
misconduct or insubordination; provided that such conduct shall
continue after notice by the Company, (ii) substance abuse, including
reporting for work under the influence of intoxicants; the illegal use,
manufacture, possession, distribution or dispensing of controlled
substances or alcohol (iii) negligence or failure to perform work
duties or obligations to the Company or such other acts involving
behavior by the Employee that harms the Sands, the Company or their
reputation, (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 turptitude or dishonesty relating to the discharge of his
responsibilities to the Company, (viii) failure to comply with any of
the terms of this Agreement after notice by the Company; (ix) willful
disclosure, not required by law or court order, of any trade secrets or
confidential corporate information of the Sands, the Company or any of
their affiliates to Persons not authorized to know same; (x) any
revocation or suspension by any state or local authority of Employee's
required license(s) to be the President and General Manager (or similar
position) of the Sands or the Company; or (xi) any other event which
causes the gaming authorities, having jurisdiction over the Sands, the
Company or any of their affiliates, to seek and redress or remedy
against the Employee, the Sands, the Company or any of their affiliates
as a result of Employee's act or failure to act.
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.
(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 Compensation due and unpaid to Employee
from the Company as of the Termination Date in question.
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(b) In the event that Employee's employment is terminated prior to the
Expiration Date due to the discharge of the Employee by the
Company without 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 applicable Termination Date:
i. any amounts of Base Salary and previously earned Bonus
Compensation due and unpaid to Employee from the Company
as of the Termination Date in question;
ii. a lump-sum payment in the amount equal to one year's Base
Salary; and
iii. all earned Bonus Compensation or other payments deferred
by the Employee and not yet paid by the Company.
For the purpose of this Paragraph 5, any Bonus Compensation shall be
deemed earned with respect to any year on the last business day of
February of the year following the year with respect to which the
relevant performance targets are computed. By way of example, any Bonus
Compensation with respect to 2005 performance targets shall be deemed
earned on February 28, 2006.
6. Non-Disclosure
During the Term of Employment and at all times thereafter, Employee
shall hold in a fiduciary capacity for the benefit of the Sands, the
Company and each of their 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 Sands, the Company or their affiliates, and their
respective business as, (i) obtained by Employee during Employee's
employment by the Company and (ii) not otherwise in the public domain
("Confidential Information"). Employee also agrees to keep confidential
and not disclose to any unauthorized Person any personal information
regarding any controlling Person of the Sands, the Company or any of
their affiliates and any member of the immediate family of any such
Person (and all such personal information shall be deemed "Confidential
Information" for the purposes of this Agreement). Employee shall not,
without prior written consent of the Company: (i) except to the extent
compelled pursuant to the order of a court or other body having
jurisdiction over such matter or based upon the advise of counsel,
communicate or divulge any Confidential Information to anyone other
than the Company and those designated by the Company; or (ii) use any
Confidential Information for any purpose other than the performance of
his duties pursuant to this Agreement. 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 any Confidential Information disclosed
pursuant to the terms of this Agreement.
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All processes, technologies, investments, contemplated investments,
business opportunities, valuation models and methodologies, and
invention (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
the Employee to the Company. Employee shall perform all necessary acts
(including, without limitations, 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 to the Company, at its expense, to secure and maintain domestic
and/or foreign patents or any other rights for such Inventions.
7. Non-Compete
Employee covenants and agrees with the Company and its subsidiaries
that, during the Term of Employment and, unless the Employee's
employment is terminated by the Company without Cause, continuing for
one (1) year thereafter:
(a) Employee will not, either directly or indirectly, as principal,
agent, owner, employee, partner, investor, shareholder (other than
solely as a holder of not more than 1% of the issued and
outstanding shares of any public corporation), consultant, advisor
or otherwise howsoever own, operate, carry on or engage in the
operation of or have any financial interest in or provide,
directly or indirectly, financial assistance to or lend money to
or guarantee the debts or obligations of any Person carrying on or
engaged in any business that is competitive with or similar to the
business conducted by the Company or any of its subsidiaries (the
"Business") which is located within Clark County, Nevada, Atlantic
City, NJ or within fifty (50) miles of these locations as long as
the Company or any of its affiliates are still doing business in
same.
(b) Employee shall not directly, or indirectly, for himself or for any
other Person:
i. solicit, interfere with or endeavor to entice away from
the Company or any of its subsidiaries or affiliates, any
customer, client or any Person in the habit of dealing
with any of the foregoing;
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ii. attempt to direct or solicit any customer or client away
from the Company or any of its subsidiaries or affiliates;
iii. interfere with, entice away or otherwise attempt to obtain
the withdrawal of any employee of the Company or any of
its subsidiaries or affiliates; or
iv. advise any Person not to do business with the Company or
any of its subsidiaries or affiliates.
Employee represents to the Company that the enforcement of the
restrictions contained in Section 6 and Section 7 (the Non-Disclosure
and Non-Compete sections respectively) would not be unduly burdensome
to Employee. Employee agrees that the remedy of damages for any breach
by Employee of the provisions of either of these sections 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.
8. 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; (ii) 15 business days paid vacation per
calendar year, at the rate of 1.25 days per each calendar month.
Vacation days must be used in the calendar year they are awarded or
within the first three months of the following year or shall be
forfeited unless the Company work requirements prohibit use, and (iii)
an auto allowance in the amount of $1000.00 per month payable with the
last paycheck of the month.
9. Miscellaneous
(a) If the Company awards to its executives stock options or
restricted stock in anticipation of a public offering, Employee
shall be eligible to receive an award of such options or
restricted stock; provided, however, that the amount of any such
award shall be subject to the review and approval of the Board, in
their sole and absolute discretion.
(b) 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.
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(c) This Agreement and all of the provisions hereof shall inure to the
benefit of and be binding upon the legal representative, 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.
(d) 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 New York.
(e) Employees covenants and represents that he is not a party to any
contract, commitment or agreement, nor 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.
(f) This Agreement and all of its provisions, other than provisions of
Section 5, Section 6 and Section 7 hereunder (which shall survive
termination), shall terminate upon Employee ceasing to be an
employee of the Company for any reason.
ATLANTIC COAST ENTERTAINMENT GEORGE TOTH:
HOLDINGS, INC.:
By: /s/ Richard P. Brown By: /s/ George Toth
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Richard P. Brown, CEO
Date: April 21, 2005 Date: April 21, 2005
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