FORM 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EHeFUbAKi81h/0w5pHG1Cdauuunri6kBQmrX+yag5djFFjw7hFJUNbFWDCnxnQnW c6GrAVU+0d4ykUqu7xq+Kg== 0000950123-08-013947.txt : 20081030 0000950123-08-013947.hdr.sgml : 20081030 20081030165101 ACCESSION NUMBER: 0000950123-08-013947 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20081023 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081030 DATE AS OF CHANGE: 20081030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: American Casino & Entertainment Properties LLC CENTRAL INDEX KEY: 0001297735 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 200573058 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52975 FILM NUMBER: 081151607 BUSINESS ADDRESS: STREET 1: 2000 LAS VEGAS BOULEVARD SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89104 BUSINESS PHONE: 702-383-5242 MAIL ADDRESS: STREET 1: 2000 LAS VEGAS BOULEVARD SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89104 8-K 1 y72253e8vk.htm FORM 8-K FORM 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): October 23, 2008

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

(Exact name of registrant as specified in its charter)


Delaware	000-52975	20-0573058

(State of Incorporation)	(Commission	(I.R.S. Employer
	File Number)	Identification No.)

2000 Las Vegas Boulevard South
Las Vegas, NV 89104

(Address of principal executive offices)(Zip code)

(702) 383-5242

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

TABLE OF CONTENTS


	Item 1.01 Entry into a Material Definitive Agreement.
	Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EX-10.01: EMPLOYMENT AGREEMENT WITH ARTHUR KEITH
EX-10.02: EMPLOYMENT AGREEMENT WITH EDWARD W. MARTIN, III
EX-10.03: ECONOMIC PARTICIPATION AGREEMENT
EX-10.04: ECONOMIC PARTICIPATION AGREEMENT

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

On October 23, 2008, our subsidiary Stratosphere Gaming LLC (the “Company”) entered into an employment agreement with Arthur Keith, the President of Stratosphere Gaming LLC (the “Keith Employment Agreement”). Under the terms of the Keith Employment Agreement, Mr. Keith will receive an annual base salary of $425,000, subject to review on an annual basis for increase under our normal performance review process. Mr. Keith shall be eligible to receive an annual bonus, as may, from time to time, be determined in the sole discretion of the board of the Company. In addition, during the term of employment, Mr. Keith is eligible to receive a second tier bonus, as defined in the Keith Employment Agreement, as may, from time to time, determined in the sole discretion of the Board. Any second tier bonus is subject to vesting over 24 months. Mr. Keith will also be entitled to receive certain healthcare and similar employee welfare benefits comparable to those received by employees of the Company at a similar pay level and/or position. The Keith Employment Agreement is effective as of October 23, 2008 and continues through October 22, 2011.

According to its terms, the Keith Employment Agreement will terminate on the first of the following events to occur: (1) October 22, 2011; (2) death or disability of Mr. Keith; (3) the discharge of Mr. Keith with or without cause (as defined in the Keith Employment Agreement); or (4) Mr. Keith’s resignation. In the event, Mr. Keith is terminated without cause, Mr. Keith will receive all amounts earned, vested, due, and unpaid as of the termination date, plus a lump sum payment, within fifteen (15) days, equal to one (1) year of base compensation.

The Keith Employment Agreement further provides that during the term of employment and at all times thereafter, Mr. Keith will hold all confidential information in a fiduciary capacity for benefit of the Company. The Keith Employment Agreement also restricts Mr. Keith from soliciting customers or employees of the Company during his employment and for a period of one year thereafter.

The Keith Employment Agreement also provides that, for a period of six (6) months following his last day of employment by the Company, Mr. Keith will not, 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 obligation of any person carrying on or engaged in the hotel or casino business in or within one hundred (100) miles of the Stratosphere Hotel and Casino.

The foregoing description of the Keith Employment Agreement is qualified in its entirety by reference to such document, which is filed herewith as Exhibit 10.01 and incorporated herein by reference.

On October 23, 2008, American Casino and Entertainment Properties LLC entered into an employment agreement with Edward W. Martin III, our Chief Financial Officer (the “Martin Employment Agreement”). Under the terms of the Martin Employment Agreement, Mr. Martin will receive an annual base salary of $300,000, subject to review on an annual basis for increase under our normal performance review process. Mr. Martin shall be eligible to receive an annual bonus, as may, from time to time, be determined in the sole discretion of our board. Mr. Martin will also be entitled to receive certain healthcare and similar employee welfare benefits comparable to those received by our employees at a similar pay level and/or position. The Martin Employment Agreement is effective as of October 23, 2008 and continues through October 22, 2011.

According to its terms, the Martin Employment Agreement will terminate on the first of the following events to occur: (1) October 22, 2011; (2) death or disability of Mr. Martin; (3) the discharge of Mr. Martin with or without cause (as defined in the Martin Employment Agreement); or (4) Mr. Martin’s resignation. In the event, Mr. Martin is terminated without cause, Mr. Martin will receive all amounts earned, vested, due, and unpaid as of the termination date, plus a lump sum payment, within fifteen (15) days, equal to one (1) year of base compensation.

The Martin Employment Agreement further provides that during the term of employment and at all times thereafter, Mr. Martin will hold all confidential information in a fiduciary capacity for our benefit. The Martin Employment Agreement also restricts Mr. Martin from soliciting customers or employees of the Company during his employment and for a period of one year thereafter.

The Martin Employment Agreement also provides that, for a period of six (6) months following his last day of employment by the American Casino and Entertainment Properties LLC, Mr. Martin will not, 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 obligation of any person carrying on or engaged in the hotel or casino business in or within one hundred (100) miles of the Stratosphere Hotel and Casino.

The foregoing description of the Martin Employment Agreement is qualified in its entirety by reference to such document, which is filed herewith as Exhibit 10.02 and incorporated herein by reference.

Mr. Keith and Mr. Martin also entered into economic participation agreements effective February 20, 2008 with companies affiliated with us, W2007 Finance Sub LLC and Whitehall Parallel Global Real Estate Limited Partnership 2007, (collectively referred to herein as “Whitehall”).

Under the terms of his economic participation agreement Mr. Keith may receive Incentive Distributions (as defined in the agreement) on the following terms: When and if Whitehall has achieved a 15% Internal Rate of Return (as defined in the agreement) with respect to its investments in W2007/ACEP Holdings LLC, Mr. Keith shall be entitled to a cash payment in the amount of $750,000 to be paid within five business days of notice from Whitehall. In addition to the foregoing, when and if Whitehall has achieved a 20% Internal Rate of Return (as defined in the agreement) with respect to its investments in W2007/ACEP Holdings LLC , then Mr. Keith shall be entitled to (a) a cash payment in the amount of $750,000 to be paid within five business days of notice from Whitehall.

The foregoing description of Mr. Keith’s economic participation agreement is qualified in its entirety by reference to such document, which is filed herewith as Exhibit 10.03 and incorporated herein by reference.

Under the terms of his economic participation agreement Mr. Martin may receive Incentive Distributions on the following terms: When and if Whitehall has achieved a 15% Internal Rate of Return (as defined in the agreement) with respect to its investments in W2007/ACEP Holdings LLC , then Mr. Martin shall be entitled to a cash payment in the amount of $1,000,000 to be paid within five business days of notice from Whitehall. In addition to the foregoing, when and if Whitehall has achieved a 20% Internal Rate of Return (as defined in the agreement) with respect to its investments in W2007/ACEP Holdings LLC , then Mr. Martin shall be entitled to (b) a cash payment in the amount of $1,500,000 to be paid within five business days of notice from Whitehall.

The foregoing description of Mr. Martin’s economic participation agreement is qualified in its entirety by reference to such document, which is filed herewith as Exhibit 10.04 and incorporated herein by reference.

Section 5 — Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

The disclosure under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits


10.01		Employment Agreement, dated as of October 23, 2008, between Stratosphere Gaming LLC and Arthur Keith.

10.02		Employment Agreement dated as of October 23, 2008, between American Casino and Entertainment Properties LLC and Edward W. Martin, III.

10.03		Economic Participation Agreement, dated as of October 23, 2008, between W2007 Finance Sub LLC, Whitehall Parallel Global Real Estate Limited Partnership 2007 and Arthur Keith.

10.04		Economic Participation Agreement, dated as of October 23, 2008, between W2007 Finance Sub LLC, Whitehall Parallel Global Real Estate Limited Partnership 2007 and Edward W. Martin, III.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC (Registrant)
	By:	/s/ Frank V. Riolo
		Frank V. Riolo
		President

Date: October 30, 2008

EX-10.01 2 y72253exv10w01.htm EX-10.01: EMPLOYMENT AGREEMENT WITH ARTHUR KEITH EX-10.01

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement dated as of October 23, 2008 (this “Agreement”), between Stratosphere Gaming, LLC( the “Company”), having an address at 2000 Las Vegas Boulevard South, Las Vegas, Nevada 89104, and Arthur Keith(“Employee”), of Las Vegas, Nevada.

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 Company and shall also serve in other positions of the 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 and the Board. 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.

During the Term of Employment, Employee shall devote 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 and gaming 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 individual, entity, company or group (hereinafter

referred to as “Person”) 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” ).

2. Term

The employment period shall commence as of October 23, 2008 and shall continue through the period (the “Term of Employment”) ending on October 22, 2011 (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 $425,000. 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 may, from time to time, be determined in the sole discretion of the Board (the “Bonus Compensation”).

During the Term of Employment, Employee shall be eligible to receive a Second Tier Bonus, as may, from time to time, be

determined in the sole discretion of the Board (the “Second Tier Bonus”). Any Second Tier Bonus, if determined to be paid to Employee, will vest as follows: a) one-third immediately upon date a that a Second Tier Bonus is granted by the Board (“Grant Date”), b) one-third on the expiration of twelve (12) months from the Grant Date, and c) one-third on the expiration of twenty four (24) months from the Grant Date

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.

4. Termination

This Agreement shall terminate (subject to Section 9(g) 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, 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;

	(c)		The discharge of Employee by the Company with (i) Cause (as hereinafter defined) or (ii) without Cause;

	(d)		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

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 perform the duties assigned to him; (ii) chronic impairment due to alcohol or substance abuse; (iii) conviction of a Serious Crime or being charged with a felony (for purposes of this Agreement a “Serious Crime” is a crime that the Company believes could prohibit the Employee from obtaining or maintaining any work card, license, or finding of compliance suitability necessary for Employee to maintain employment with Company) ; (iv) violation of a federal or state securities law or regulation; (v) negligent conduct, error or omission in the carrying out of his duties under this Agreement; (vi) conduct that causes damage to the reputation of the Company(vii) breach of the Exclusivity Obligation or any of the obligations set forth in Section 6 or Section 7 below; (viii) 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 (ix) 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.

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 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) for the reason set forth in Section 4(c)(i) (with Cause), then, in lieu of any other payments of any kind, 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.

(b) In the event that the Term of Employment ends (i) for the reasons set forth in Section 4(c)(ii) above (without Cause) then, in lieu of any other payments of any kind, Employee shall be entitled to receive, within fifteen (15) days following the date on which the Termination Event in question occurred (the “Clause (b) Termination Date”) any amounts of: (A) Base Salary due and unpaid to Employee from the Company as of the Clause (b) Termination Date; (B) Bonus Compensation earned, vested, due and unpaid to Employee from the Company as of the Clause (b) Termination Date; (C) Severance Payment equal to one (1) year of Base Compensation.

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 Company, each Designated Affiliate and each of their affiliates, respectively, all secret or confidential information, knowledge or data, including, without limitation, trade secrets, identity of investments, identity of contemplated investments, business opportunities, valuation models and methodologies, relating to the business of the Company, the Designated Affiliates or their affiliates, and their respective business as, (i) obtained by Employee at any time 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 the Designated Affiliates 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 the 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 advice of counsel that such disclosure is legally required, 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 as an employee of the Company. 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.

In no event shall Employee during or after his employment hereunder, disparage the Company, the Designated Affiliates, any controlling Person of the Company, the Designated Affiliates, their respective affiliates and family members or any of their respective officers, directors or employees.

All processes, technologies, intellectual property and inventions (collectively, “Inventions”) 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 Inventions 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

(a) During the Term of Employment and, unless Employee’s employment is terminated for the reason set forth in Section 4(a) above (i.e., Expiration Date), in which case this Section 7(a) shall terminate automatically and without notice, for a period of six (6) months following the last day of Employee’s employment by the Company, 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 the hotel or casino business in or within one hundred (100) miles of the Stratosphere Hotel and Casino.

Notwithstanding the foregoing, nothing in this Agreement will prohibit Employee from investing in the securities of private companies in which he does not participate in the management (either as an employee, officer or director), provided that such investment has been cleared in accordance with all investment or insider trading policies applicable to Employee or to the Other Activity as outlined in Section 1 of this Agreement.

(b) Employee covenants and agrees with the Company and its subsidiaries that, during Employee’s employment by the Company and for one (1) year following the last day of Employee’s employment by the Company, 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, any Designated Affiliate or any of their subsidiaries or affiliates, any customer, client or any Person in the habit of dealing with any of the foregoing;

	(ii)		interfere with, entice away or otherwise attempt to obtain the withdrawal of any employee of the Company, any Designated Affiliate or any of their subsidiaries or affiliates; or

	(iii)		advise any Person not to do business with the Company, any Designated Affiliate or any of their subsidiaries or affiliates.

Employee represents to and agrees with 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 and that such restrictions are reasonably necessary to protect the legitimate interests of the Company. 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. In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. 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 to receive certain healthcare and other similar employee welfare benefits (including eligibility to participate in the Executive Medical Reimbursement Plan provided by the Company) comparable to those received by other employees of the Company at a similar pay level and/or position with the Company as such may be provided by the Company in its sole and absolute discretion from time to time within thirty (30) days hereof. In the event that, during the Term of Employment, 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 comparable to that received by other employees at a similar pay level and/or position with the Company; provided, however, that the decision to make any such award to Employee and the amount of any such award shall be subject to the review and approval of the Board, in its sole and absolute discretion.

9. 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, distributees, 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, which may be withheld in its sole and absolute discretion. If elected by the Company, upon any such assignment, all references herein to the Company shall be deemed instead to be references to the assignee and/or its designee(s).

	(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, 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, including without limitation any contract, commitment, agreement, rule or regulation relating to the Other Activity.

	(e)		Employee acknowledges that he has had the assistance of legal counsel in reviewing and negotiating this Agreement.

	(f)		This Agreement shall be deemed drafted equally by both the

parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.

	(g)		This Agreement and all of its provisions, other than the provisions of Section 5, Section 6, Section 7 and Section 9 hereunder (which shall survive termination), shall terminate upon Employee ceasing to be an employee of the Company for any reason.

	(h)		In the event of the death of Employee during the Term of Employment, Employee’s heir shall be entitled to receive all payments otherwise earned, vested, due and unpaid to Employee from the Company pursuant to the terms and conditions of this Agreement as of the date of Employee’s death.

	(i)		Employee acknowledges and agrees that he shall be solely responsible for the payment of all federal, state and other income taxes, excise taxes and other taxes that may be payable from time to time by Employee with respect to all payments or benefits earned or received by or payable to Employee under this Agreement (whether consisting of Base Salary, Bonus Compensation, Severance Payment, or otherwise) and shall not be entitled to receive any “gross-up payments” or other additional payments from the Company or its affiliates on account of, with respect to, in mitigation of, or as a set-off against, such taxes. Without limiting the foregoing, if it is determined that any amount, right or benefit paid or payable (or otherwise provided or to be provided) to Employee by the Company or any of its affiliates under this Agreement or any other plan, program or arrangement under which Employee participates or is a party (whether consisting of Base Salary, Bonus Compensation, Severance

Payment, or otherwise), would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, as amended (the “Code”), subject to the excise tax imposed by Section 4999 of the Code, as amended from time to time (the “Excise Tax”), then Employee shall be solely responsible for the payment of the Excise Tax and shall not be entitled to receive any “gross-up payments” or other additional payments from the Company or its affiliates on account of, with respect to, in mitigation of, or as a set-off against, such Excise Tax.


American Casino & Entertainment Properties, LLC
By:	/s/ Frank V. Riolo
	Name:	Frank V Riolo
	Title:	President of American Casino & Entertainment Properties LLC

EMPLOYEE:
By:	/s/ Arthur Keith
	Name:	Arthur Keith

EX-10.02 3 y72253exv10w02.htm EX-10.02: EMPLOYMENT AGREEMENT WITH EDWARD W. MARTIN, III EX-10.02

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement dated as of October 23, 2008 (this “Agreement”), between American Casino & Entertainment Properties, LLC (the “Company”), having an address at 2000 Las Vegas Boulevard South, Las Vegas, Nevada 89104, and Edward W. Martin, III (“Employee”), of Las Vegas, Nevada.

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 Chief Financial Officer of the Company and shall also serve in other positions of the 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 and the Board. 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.

referred to as “Person”) as an employee, advisor, independent contractor, agent, consultant, representative or otherwise, whether or not compensated, or (ii) 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 as a member of the Board of Directors of Bank of Nevada (“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 the Company or any licensing or other regulatory authorities.

2. Term

The employment period under this Agreement shall commence as of October 23, 2008 and shall continue through the period (the “Term of Employment”) ending on October 22, 2011 (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 $300,000. 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 may, from time to time, be determined in the sole discretion of the Board (the “Bonus Compensation”).

4. Termination

This Agreement shall terminate (subject to Section 9(g) 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, 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;

	(c)		The discharge of Employee by the Company with (i) Cause (as hereinafter defined) or (ii) without Cause;

	(d)		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

5. Effect of Termination

6. Non-Disclosure

During the Term of Employment and for a period of two years from the Employees last day of employment with the Company , Employee shall hold in a fiduciary capacity for the benefit of the Company, each Designated Affiliate and each of their affiliates, respectively, all secret or confidential information, , including, without limitation, statistical data, trade secrets, identity of investments, identity of contemplated investments, business opportunities, valuation models and methodologies, relating to the business of the Company, the Designated Affiliates or their affiliates, and their respective business as, (i) obtained by Employee at any time 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 the Designated Affiliates 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 the 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 advice of counsel that such disclosure is legally required, 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 as an employee of the Company. 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.

In no event shall Employee during or after his employment hereunder, disparage the Company, the Designated Affiliates, the Designated Affiliates, their respective affiliates and family members or any of their respective officers, directors or employees.

7. Non-Compete

	(i)		solicit, interfere with or endeavor to entice away from the Company, any Designated Affiliate or any of their subsidiaries or affiliates, any customer, client or any Person in the habit of dealing with any of the foregoing;

	(ii)		interfere with, entice away or otherwise attempt to obtain the withdrawal of any employee of the Company, any Designated Affiliate or any of their subsidiaries or affiliates; or

	(iii)		advise any Person not to do business with the Company, any Designated Affiliate or any of their subsidiaries or affiliates.

Employee represents to and agrees with 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 and that such restrictions are reasonably necessary to protect the legitimate interests of the Company. 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. In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. 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

9. 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, distributees, 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, which may be withheld in its sole and absolute discretion. If elected by the Company, upon any such assignment, all references herein to the Company shall be deemed instead to be references to the assignee and/or its designee(s).

	(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, 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, including without limitation any contract, commitment, agreement, rule or regulation relating to the Other Activity.

	(e)		Employee acknowledges that he has had the assistance of legal counsel in reviewing and negotiating this Agreement.

	(f)		This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall

not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.

	(g)		This Agreement and all of its provisions, other than the provisions of Section 5, Section 6, Section 7 and Section 9 hereunder (which shall survive termination), shall terminate upon Employee ceasing to be an employee of the Company for any reason.

	(h)		In the event of the death of Employee during the Term of Employment, Employee’s heir shall be entitled to receive all payments otherwise earned, vested, due and unpaid to Employee from the Company pursuant to the terms and conditions of this Agreement as of the date of Employee’s death.

	(i)		Employee acknowledges and agrees that he shall be solely responsible for the payment of all federal, state and other income taxes, excise taxes and other taxes that may be payable from time to time by Employee with respect to all payments or benefits earned or received by or payable to Employee under this Agreement (whether consisting of Base Salary, Bonus Compensation, Severance Payment, or otherwise) and shall not be entitled to receive any “gross-up payments” or other additional payments from the Company or its affiliates on account of, with respect to, in mitigation of, or as a set-off against, such taxes. Without limiting the foregoing, if it is determined that any amount, right or benefit paid or payable (or otherwise provided or to be provided) to Employee by the Company or any of its affiliates under this Agreement or any other plan, program or arrangement under which Employee participates or is a party (whether consisting of Base Salary, Bonus Compensation, Severance Payment, or otherwise), would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, as amended (the “Code”),

subject to the excise tax imposed by Section 4999 of the Code, as amended from time to time (the “Excise Tax”), then Employee shall be solely responsible for the payment of the Excise Tax and shall not be entitled to receive any “gross-up payments” or other additional payments from the Company or its affiliates on account of, with respect to, in mitigation of, or as a set-off against, such Excise Tax.


American Casino & Entertainment Properties, LLC
By:	/s/ Frank V. Riolo
	Name:	Frank V Riolo
	Title:	President of American Casino & Entertainment Properties LLC


EMPLOYEE:
By:	/s/ Edward W. Martin, III
	Name:	Edward W. Martin, III

EX-10.03 4 y72253exv10w03.htm EX-10.03: ECONOMIC PARTICIPATION AGREEMENT EX-10.03

Exhibit 10.3

ECONOMIC PARTICIPATION AGREEMENT

THIS ECONOMIC PARTICIPATION AGREEMENT (this “Agreement”), dated as of 23^th day of October, 2008, but effective as of February 20, 2008 (the “Effective Date”), is entered into by and among W2007 Finance Sub, LLC, a Delaware limited liability company (“Whitehall Finance”), Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“Whitehall Parallel”, and together with Whitehall Finance, “Whitehall”), and Arthur Keith, a natural person residing at Las Vegas, NV. (“Participant”).

WITNESSETH:

WHEREAS, Whitehall Finance, Whitehall Parallel and Strat Hotel Investor, L.P., a Delaware limited partnership, are party to that certain Amended and Restated Limited Liability Company Agreement of W2007/ACEP Holdings, LLC (the “Company”), dated as of February 20, 2008 (the “Company LLC Agreement”);

WHEREAS, pursuant to the Company LLC Agreement, Whitehall is entitled to receive certain Proceeds (as defined below) in respect of its membership interests in the Company; and

WHEREAS, Whitehall wishes to grant to Participant and Participant wishes to accept from Whitehall, a participation in the membership interests in the Company held by Whitehall, subject to, and in accordance with, the terms and conditions of this Agreement.

NOW, THEREFORE, the undersigned in consideration of the promises, covenants and agreement contained herein, do hereby agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“1/4 Vesting Milestone” means the first anniversary of the Effective Date.

“3/4 Vesting Milestone” means the third anniversary of the Effective Date

“1/2 Vesting Milestone” means the second anniversary of the Effective Date.

“Additional Cash Investment” has the meaning set forth in Section 3(a).

“Additional Investment” has the meaning set forth in Section 3(a).

“Additional Participating Investment” has the meaning set forth in Section 3(a).

“Agreement” has the meaning set forth in the introductory paragraph hereof.

“Capital Event Proceeds” means (i) any proceeds received by the Company from the sale or other disposition of any property or asset held, directly or indirectly, by the

Company or (ii) financing proceeds received by the Company from a loan or similar financing transaction under which the repayment obligations are secured by a pledge, directly or indirectly, of Whitehall’s interest in the Company or any of its subsidiaries, the Company’s direct or indirect interest in any of its subsidiaries, or any of the properties or other assets of the Company or its subsidiaries, in the case of each of (i) and (ii) net of all out-of-pocket transaction costs (as determined by Whitehall), which, for certainty, shall include any such costs payable to affiliates of Whitehall. Notwithstanding the forgoing, in no event shall the definition of “Capital Event Proceeds” hereunder include any proceeds that are borrowed pursuant to the Initial Financing or pursuant to a loan that is (x) fully recourse to any of Whitehall Finance, Whitehall Parallel or Whitehall Street Global Real Estate Limited Partnership 2007 (“Whitehall Street”) or (y) is secured by a significant portion of the assets of Whitehall Finance, Whitehall Parallel or Whitehall Street (which significant portion, for certainty, shall not be comprised only of Whitehall’s interest in the Company).

“Cash Interest Entitlement” is equal to the Cash Percentage Interest multiplied by the applicable Proceeds.

“Cash Percentage Interest” has the meaning set forth in Section 3(b).

“Cause” means Employees (i) failure to perform the duties assigned to him; (ii) chronic impairment due to alcohol or substance abuse; (iii) conviction of a Serious Crime or being charged with a felony (for purposes of this Agreement a “Serious Crime” is a crime that the Company believes could prohibit the Employee from obtaining or maintaining any work card, license, or finding of compliance suitability necessary for Employee to maintain employment with Company) ; (iv) violation of a federal or state securities law or regulation; (v) negligent conduct, error or omission in the carrying out of his duties under this Agreement; (vi) conduct that causes damage to the reputation of the Company(vii) breach of the Exclusivity Obligation or any of the obligations set forth in Section 6 or Section 7 below; (viii) 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 (ix) 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.

“Cause Termination” mean the circumstance wherein Participant is no longer an employee of the Company or any subsidiary thereof for reason of removal or termination from such employment for Cause.

“Company” has the meaning set forth in the recitals hereof.

“Company LLC Agreement” has the meaning set forth in the recitals hereof.

“Current Portion” is equal to the vesting percentage as of such date (as determined in accordance with the vesting provisions set forth in Section 4 hereof) multiplied by the Participating Investment Entitlement.

“Effective Date” has the meaning set forth in the introductory paragraph hereof.

“Employment Agreement” means that certain Employee Agreement between Participant and American Casino & Entertainment Properties, LLC, dated as of October 23, 2008.

“Full Vesting Milestone” mean the earlier of (i) the fourth (4^th) anniversary of the Effective Date and (ii) the date on which Whitehall no longer owns any direct or indirect interest in the Company.

“Funding Portion” has the meaning set forth in Section 5(a) or 5(b), as applicable.

“Incentive Distributions” has the meaning set forth in Section 6.

“Initial Financing” means the first, and only the first, financing entered into by one or more of the Company’s subsidiaries and secured by a pledge of such subsidiaries’ assets.

“Initial Investment” has the meaning set forth in Section 2(b).

“Initial Participating Investment” has the meaning set forth in Section 2(b).

“Internal Rate of Return” means, with respect to any investment, a return of all capital invested in such investment plus a cumulative, quarterly compounded, return on such invested capital at a rate per annum equal to the applicable percentage specified herein. An investment shall be deemed to have produced a specified Internal Rate of Return when the total cash in-flows invested from time to time in such investment produces cash out-flows in amount sufficient to cover the cash in-flows together with an annual return equal to such specified percentage calculated commencing on the date such cash in-flows are funded and compounded quarterly to the extent not paid on a current basis, and all previous cash out-flows produced by such investment. For purposes of computing such Internal Rate of Return, any cash in-flows invested in such investment, any forfeiture of any capital invested and any cash out-flows from such investment at any time during a month shall be deemed to be invested, forfeited or produced on the first day of such month.

“Investment” has the meaning set forth in Section 3(a).

“Operating Proceeds” means proceeds received by the Company and from the operation of property and assets held, directly or indirectly, by the Company, net of interest and other finance charges paid by Whitehall under any financing(s).

“Participant” has the meaning set forth in the introductory paragraph hereof.

“Participating Investment” means, as of any date, the Initial Participating Investment plus the aggregate of all Additional Participating Investments.

“Participating Investment Entitlement”:

(X) with respect to Operating Proceeds is equal to (i) (A) Participant’s Participating Percentage Interest multiplied by the applicable Proceeds minus (B) the Unfunded Carry multiplied by (ii) if the Unfunded Participating Investment is greater than zero, 75%; and

(Y) with respect to Capital Event Proceeds is equal to (i) (A) Participant’s Participating Percentage Interest multiplied by the applicable Proceeds minus (B) the Unfunded Carry.

“Participating Percentage Interest” has the meaning set forth in Section 3(b).

“Percentage Interest” has the meaning set forth in Section 3(b).

“Proceeds” means, collectively, Capital Event Proceeds and Operating Proceeds.

“Qualifying Circumstance” means the circumstance wherein Participant is no longer an employee of the Company or any subsidiary thereof for any reason whatsoever except for a Cause Termination, including, without limitation, any removal from such employment without Cause, any resignation by Participant or Participant’s ceasing to be an employee due to Participant’s death or disability.

“Redemption Price” means a cash amount (determined as of the date of redemption) equal to the Participant’s Initial Cash Investment less the amount of any Cash Distributions received by the Participant.

“Redemption Right” has the meaning set forth in Section 7.

“Tax Shortfall Amount” has the meaning set forth in Section 8.

“Total Whitehall Contribution” means, as of any date, the total amount Whitehall has contributed to the Company’s common equity, net of the financing proceeds, if any, received by Whitehall prior to such date pursuant to the Initial Financing.

“Unfunded Carry” as of any date means an amount, when added to all other amounts attributed to Unfunded Carry, is sufficient to cover a return of 7% p.a. on the Unfunded Participating Investment calculated commencing on the date such Unfunded Participating Investment is funded and compounded quarterly to the extent not paid on a current basis.

“Unfunded Participating Investment” as of any date means an amount (which shall not be less than zero) equal to the Initial Participating Investment plus all Additional

Participating Investment minus the cumulative amounts of all Funding Portions previously credited pursuant to Section 5(a) and 5(b).

“Vesting Milestone” means each of the 1/4 Vesting Milestone, the 1/2 Vesting Milestone, the 3/4 Vesting Milestone and the Full Vesting Milestone.

“Whitehall” has the meaning set forth in the introductory paragraph hereof.

“Whitehall Finance” has the meaning set forth in the introductory paragraph hereof.

“Whitehall Parallel” has the meaning set forth in the introductory paragraph hereof.

2. Initial Investment.

(a) Within five business days of the date of this Agreement, Participant shall make a payment in cash to Whitehall in the amount of $0.00 (no Cash Investment to be made) (the “Cash Investment”). For all purpose herein, Participant will be treated as having made the Cash Investment as of the Effective Date.

(b) Upon receipt of the Cash Investment, subject to the vesting provisions set forth in Section 4, Participant shall be credited with an additional investment in the amount of 200% of the Cash Investment (such additional investment, the “Initial Participating Investment”, and the Cash Investment together with the Initial Participating Investment, the “Initial Investment”). For example, if Participant’s Cash Investment is $50,000, his or her Initial Participating Investment would be $100,000 and his or her Initial Investment would be $150,000.

3. Additional Investments; Percentage Interests.

(a) If and when Whitehall contributes additional common equity capital to the Company, so long as no Qualifying Circumstance or Cause Termination has occurred, Participant will have the right to elect to make an additional investment (such additional investment, together with the Additional Participating Investment (defined below) in respect of such additional investment, an “Additional Investment”) in the amount required to maintain Participant’s then-current Percentage Interest (as defined below), it being understood that Participant may only exercise this option with respect to the full amount contemplated herein and Participant will not be entitled to make a partial election. Whitehall shall give Participant written notice of an upcoming contribution to the Company’s common equity and Participant shall have five business days from the date of that notice to advise Whitehall in writing whether or not Participant will make the Additional Investment (and failure to respond within that time period will be deemed to be an election to not make the Additional Investment). If Participant timely elects to make an Additional Investment, Participant shall, within five business days of the date on which he or she notified Whitehall of his or her election, make a payment in cash to Whitehall in an amount equal to one-third of the Additional Investment (an “Additional Cash

Investment”). Upon receipt of the Additional Cash Investment, subject to the vesting provisions set forth in Section 4, Participant shall be credited with an additional investment in the amount of 200% of the Additional Cash Investment (such additional investment, the “Additional Participating Investment”). If Participant does not timely elect to make an Additional Investment or does not have the right to make such Additional Investment due to the occurrence of a Qualifying Circumstance or Cause Termination, Participant recognizes that his or her Percentage Interest will be diluted as a result of the additional investment made by Whitehall to fund the capital call. The “Investment” means the Initial Investment together with any Additional Investment(s).

(b) Participant’s “Percentage Interest” means, as of any date of determination, the percentage obtained by dividing Participant’s aggregate Investment as of such date by the Total Whitehall Contribution. Participant’s “Cash Percentage Interest” means, as of any date of determination, the percentage obtained by dividing Participant’s aggregate Cash Investment as of such date by the Total Whitehall Contribution. Participant’s “Participating Percentage Interest” means, as of any date of determination, the percentage obtained by dividing Participant’s Participating Investment as of such date by the Total Whitehall Contribution. As of the date hereof, the Total Whitehall Contribution is $___ and Participant’s initial Percentage Interest, Cash Percentage Interest and Participating Percentage Interest are, respectively, 0.___%, 0.___% and 0.___%.

4. Vesting.

(a) Participant’s rights hereunder with respect to the Cash Investment are fully vested as of the Effective Date. Provided that no Qualifying Circumstance or Cause Termination has occurred on or prior to the applicable Vesting Date, Participant’s rights hereunder with respect to the Participating Investment and the Incentive Distributions shall vest in accordance with the following schedule:

(i) between the Effective Date and the 1/4 Vesting Milestone, Participant’s vesting percentage shall be 0%;

(ii) from and after the 1/4 Vesting Milestone up to the 1/2 Vesting Milestone, Participant’s vesting percentage shall be 25%;

(iii) from and after the 1/2 Vesting Milestone up to the 3/4 Vesting Milestone, Participant’s vesting percentage shall be 50%;

(iv) from after the 3/4 Vesting Milestone up to the Full Vesting Milestone, Participant’s vesting percentage shall 75% and

(v) from and after the Full Vesting Milestone, Participant’s vesting percentage shall be 100%.

(b) Notwithstanding Section 4(a) above, if a Qualifying Circumstance occurs, Participant shall be entitled to retain the vesting percentage with respect to the

Participating Investment and the Incentive Distributions that vested prior to the occurrence of such Qualifying Circumstance, but such vesting percentage shall not thereafter increase. For example, if a Qualifying Circumstance should occur after the 1/2 Vesting Milestone but prior to the 3/4 Vesting Milestone, Participant’s vesting percentage with respect to the Participating Investment and the Incentive Distributions shall be 50% (but shall in no event increase to 75% or 100% thereafter). Notwithstanding Section 4(a) above, if a Cause Termination occurs, effective as of the date of such Cause Termination, Participant’s Vesting Percentage with respect to the Participating Investment and the Incentive Distributions shall be reduced to 0%.

(c) Provided that no Cause Termination has occurred on or prior to the applicable Vesting Date: (i) on the 1/4 Vesting Milestone, 25% of any amounts which Participant is entitled to receive under Sections 5 or 6 and which are then held in escrow shall be payable to the Participant in cash (as a Cash Distribution); (ii) on the 1/2 Vesting Milestone, 50% of any amounts which Participant is entitled to receive under Sections 5 or 6 and which are then held in escrow shall be payable to the Participant in cash (as a Cash Distribution); (iii) on the 3/4 Vesting Milestone, 75% of any amounts which Participant is entitled to receive under Sections 5 or 6 and which are then held in escrow shall be payable to the Participant in cash (as a Cash Distribution) and (iv) on the Full Vesting Milestone, 100% of any amounts which Participant is entitled to receive under Sections 5 or 6 and which are then held in escrow shall be payable to the Participant in cash (as a Cash Distribution). If a Cause Termination occurs, Participant shall immediately forfeit all rights to all amounts which Participant would otherwise have been entitled to receive under Sections 5 or 6 and which are then held in escrow, and all such escrowed amounts shall promptly be returned to Whitehall.

5. Participation in Proceeds.

(a) Operating Proceeds. As and when Whitehall receives Operating Proceeds, Participant shall be entitled to receive an amount equal to (i) the Cash Interest Entitlement plus (ii) the Participating Investment Entitlement. The Cash Interest Entitlement and the Current Portion of the Participating Investment Entitlement will be payable to the Participant in cash within five business days of Whitehall’s receipt of such Operating Proceeds (as a Cash Distribution) and the remainder of the Participating Investment Entitlement will be escrowed and distributed to Participant in accordance with the vesting provisions set forth in Section 4 hereof. In addition, as of such date, to the extent there is then an Unfunded Participating Investment, Participant will be credited with a reduction of the Unfunded Participating Investment in an amount of the Funding Portion with respect to such Operating Proceeds. If the Unfunded Participating Investment is greater than zero, the “Funding Portion” under this Section 5(a) shall be equal to 25% multiplied by (A) Participant’s Participating Percentage Interest multiplied by such Operating Proceeds minus (B) the Unfunded Carry and, if the Unfunded Participating Investment is zero, the “Funding Portion” shall be zero.

Participating Investment Entitlement that Participant is entitled to receive pursuant to clause (ii) above will be payable to the Participant in cash within five business days of Whitehall’s receipt of such Capital Event Proceeds (as a Cash Distribution) and the remainder of such Participating Investment Entitlement will be escrowed and distributed to Participant in accordance with the vesting provisions set forth in Section 4 hereof. In addition, as of such date, to the extent there is then an Unfunded Participating Investment, Participant will be credited with a reduction of the Unfunded Participating Investment in an amount of the Funding Portion with respect to such Capital Event Proceeds. If the Unfunded Participating Investment is greater than zero, the “Funding Portion” under this Section 5(b) shall be equal to (A) Participant’s Participating Percentage Interest multiplied by such Capital Event Proceeds minus (B) the Unfunded Carry and, if the Unfunded Participating Investment is zero, the “Funding Portion” shall be zero.

(c) The parties agree that the provisions of Sections 5(a) and 5(b) are intended to achieve the same economics as if Participant had borrowed an amount equal to the Participating Investment from Whitehall on the Effective Date (or such applicable later date with respect to an Additional Participating Investment) and paid interest to Whitehall on such amount at a rate of 7% p.a. until such amount was repaid in full.

6. Incentive Distributions.

(a)When and if Whitehall has achieved a 15% Internal Rate of Return with respect to its investments in the Company, then Participant shall be entitled to a cash payment in the amount of $750,000 to be paid to Participant within five business days of notice from Whitehall.

(b) In addition to the foregoing, when and if Whitehall has achieved a 20% Internal Rate of Return with respect to its investments in the Company, then Participant shall be entitled to (b) a cash payment in the amount of $750,000 to be paid to Participant within five business days of notice from Whitehall (the cash payments in the foregoing clauses 6(a) and 6(b) shall be known as “Incentive Distributions”).

7. Redemption Rights. Each of Participant and Whitehall acknowledge and agree that if a Cause Termination occurs, Whitehall shall have the right (but not the obligation), at Whitehall’s election at any time after the occurrence of such Cause Termination, to redeem the Initial Cash Investment at the Redemption Price (such right shall be known as the “Redemption Right”). Whitehall shall pay Participant the Redemption Price within 90 days of the date on which Whitehall notifies Participant in writing of its intention to exercise its Redemption Right.

8. Tax Distributions. If the amount of Cash Distributions received by Participant pursuant to Section 5 in any fiscal year is not sufficient to cover Participant’s tax liabilities in respect to the amount Participant is entitled to receive under Section 5 in such fiscal year (such difference, the “Tax Shortfall Amount”), then Whitehall shall, subject to Participant’s execution and delivery of a promissory note in the form of Exhibit A in favor of Whitehall in the amount of the Tax Shortfall Amount, within 60 days after the close of the fiscal year, lend an amount of cash to Participant equal to the Tax Shortfall Amount.

9. No Admission; No Fiduciary or other Relationship. It is agreed and understood by the parties hereto that Whitehall shall continue to hold its membership interests in the Company, and that it is not the intention of the parties to admit Participant as a substituted member or to otherwise admit Participant as a member of the Company. Each of Whitehall and Participant confirms and agrees that the relationship between Whitehall, on the one hand, and Participant, on the other hand, is strictly limited to the contractual arrangement set out in this Agreement, that the relationship is one of arm’s-length contracting parties and is not one of employer and employee or of any other similar arrangement, and further that that neither of the parties is, or should for any purpose be construed as being, a partner or affiliate of the other or has, or should for any purpose be construed as having, any duty (fiduciary or otherwise) to the other or has, or should be construed as having, any other responsibility to the other except to the extent specifically set forth in the terms of this Agreement.

10. Representations and Warranties. Participant represents, warrants and acknowledges, as a material inducement to Whitehall entering into this Agreement, as follows:

(a) Participant is acquiring his or her Investment for his or her own account for investment purposes only and not with a view to the distribution or resale thereof, in whole or in part, and agrees that he or she will not transfer, sell, pledge, hypothecate, encumber, assign or consent to any transfer, sale, pledge, hypothecation, encumbrance, assignment, or solicit offers to buy from or otherwise approach or negotiate in respect thereof with any person or persons whomsoever, all or any portion of his or her Investment in any manner that would violate or cause the Company to violate any applicable federal or state securities laws;

(b) Participant is financially able to bear the economic risk of his or her investment in the Investment, including the total loss thereof;

(c) No Person has at any time expressly or impliedly represented, guaranteed, or warranted to Participant that a percentage of profit and/or amount or type of consideration will be realized as a result of his or her Investment, that past performance or experience of the Company or its subsidiaries or assets in any way indicates the future results of the ownership of his or her Investment or of the Company business, that any cash distributions from Company operations or otherwise will be made by any specific date or will be made at all, or that any specific tax benefits will accrue as a result of the Investment;

(d) The Investment is an illiquid investment with an indeterminate length, and no Person has at any time expressly or impliedly represented, guaranteed, or warranted that the Investment will be realized, redeemed or redeemable within a specific period of time;

(e) Participant’s execution and delivery of this Agreement and the performance of his or her obligations hereunder will not conflict with, result in a breach of or constitute a default (or any event that, with notice or lapse of time, or both, would constitute a default) or result in the acceleration of any obligation under any of the terms, conditions or provisions of any other agreement or instrument to which Participant is a party or by which Participant is bound or to which any of Participant’s property or assets are subject, or violate any statute or any order, rule or regulation of any court or governmental or regulatory agency,

body or official, that would materially and adversely affect the performance of his or her duties hereunder; and Participant has obtained any consent, approval, authorization or order of any court or governmental agency or body required for the execution, delivery and performance by Participant of his or her obligations hereunder;

(f) There is no action, suit or proceeding pending against Participant or, to Participant’s knowledge, threatened in any court or by or before any other governmental agency or instrumentality which would prohibit Participant from entering into or performing his or her obligations under this Agreement;

(g) Neither Participant nor any of Participant’s affiliates has employed any broker or finder, or incurred any liability therefor, in connection with this Agreement or the transactions contemplated hereby;

(h) This Agreement is a binding agreement on the part of Participant enforceable in accordance with its terms against Participant;

(i) Participant acknowledges and agrees that Sullivan & Cromwell LLP serves as counsel to Whitehall, and that Sullivan & Cromwell LLP does not serve as counsel to any other Party. Participant acknowledges and agrees that he or she does not have an attorney-client relationship with Sullivan & Cromwell LLP, and that no such relationship will arise in the course of the Company’s existence or dissolution by any means. Participant represents and warrants that, in the event of litigation or arbitration between Whitehall and Participant, Participant will not seek the removal of Sullivan & Cromwell LLP as counsel to Whitehall for any purported conflict of interest or attorney-client relationship allegedly existing between Sullivan & Cromwell LLP and Participant. Participant has been advised to and has engaged his or her own counsel and any other advisers Participant deems necessary and appropriate. By reason of Participant’s business or financial experience, or by reason of the business or financial experience of Participant’s own attorneys, accountants and financial advisors, Participant is capable of evaluating the risks and merits of the Investment and of protecting his or her own interests in connection with Investment; and

(j) Participant has consulted with his or her own accountants and financial advisors regarding all tax and financial matters concerning the Investment and the tax consequences of the Investment. Participant acknowledges that the tax consequences of the Investment will depend on Participant’s particular circumstances, and neither the Company, Whitehall, nor the partners, shareholders, members, managers, fiduciaries, agents, officers, directors, employees, affiliates, or consultants of any of them will be responsible or liable for the legal, tax, or financial consequences to Participant of the Investment. Participant will solely look to, and rely upon, his or her own advisers with respect to the legal, tax, and financial consequences of the Investment.

Participating Percentage and Incentive Distributions, with Whitehall holding such membership and profits interests as a nominee on behalf of Participant, (b) Participant shall be treated for U.S. federal income tax purposes in the same manner as if he or she (i) had purchased and is holding a common equity membership interest in the Company equal to Participant’s Percentage Interest, and (ii) is holding a profits interest in the Company equal to Participant’s Participating Percentage and Incentive Distributions, (c) Whitehall shall timely deliver to the Company the statement described in Treas. Regs. Section 1.6031(c)-1T(a)(1)(ii) with respect to the portion of the membership interests in the Company that is treated as purchased by Participant pursuant to this Agreement, (d) Participant shall provide Whitehall with a properly completed IRS Form W-9 or W-8, as applicable, and any other information, forms or documents as may be reasonably requested by Whitehall acting in its role as nominee and (e) Participant shall make a Section 83(b) election in respect of his or her Investment.

12. Confidentiality. Participant agrees to hold the terms of this Agreement and any information relating to the Company or Whitehall that Participant obtains during the term of this Agreement strictly confidential and not to disclose the same to any third party, provided, however, that Participant may disclose such information only (a) as required by applicable law and then only to the extent required by such law, (b) at the express direction of any court or other governmental authority with jurisdiction over Participant or (c) pursuant to subpoena or other process of a court or other governmental authority having jurisdiction over Participant.

13. Future Cooperation. Each of the parties hereto agrees to cooperate at all times from and after the date hereof with respect to all of the matters described herein, and to execute such further assignments, releases, assumptions, notifications and other documents as may be reasonably requested for the purpose of giving effect to, or evidencing or giving notice of, the transaction contemplated by this Agreement.

14. Termination. Participant’s rights under this Agreement automatically shall terminate and expire upon the sooner of (i) the closing of the exercise of Whitehall’s Redemption Rights as provided in Section 7 above and (ii) the date that Whitehall no longer owns any direct or indirect interest in the Company.

15. Notice. Unless otherwise expressly agreed in writing, any notice, consent or other document required to be sent pursuant to this Agreement shall be in writing and shall be deemed to be validly given by the delivery thereof to its recipient, either personally with a receipt, by registered mail, via reputable overnight courier, or via facsimile transmission if such facsimile provides confirmation of sending followed by a reputable overnight courier that provides confirmation of delivery to the sender. Notices shall be sent as follows:

If to the Company, then to:

W2007/ACEP Holdings, LLC
c/o Goldman, Sachs & Co.
85 Broad St.
New York, NY 10004

Attention: Whitehall Chief Financial Officer & Whitehall General Counsel

with a copy to:

Whitehall Street Global Real Estate Limited Partnership 2007
c/o Goldman, Sachs & Co.
85 Broad St.
New York, NY 10004
Attention: Whitehall Chief Financial Officer & Whitehall General Counsel

and a copy to:

Sullivan & Cromwell, LLP
125 Broad Street
New York, NY 100004
Attention: Anthony J. Colletta, Esq.

If to Participant, then to:

Arthur Keith
2000 Las Vegas Blvd, South
Las Vegas, NV 89104

Any written notice is deemed to have been received: (a) if sent by personal delivery, registered mail or prepaid overnight courier, at the time of its delivery; (b) if sent by prepaid mail, on the fifth (5th) business day following its sending; or (c) if transmitted by facsimile transmission or other electronic means as may be permitted by this Agreement or otherwise mutually agreed, on the first business day following its sending.

16. Rights Personal to Participant. The rights and privileges described in this Agreement are personal to Participant and may not be sold, assigned, pledged or otherwise transferred or encumbered (other than testamentary transfers to Participant’s spouse or heirs), directly or indirectly, by Participant without Whitehall’s prior written consent, which consent Whitehall may grant or withhold in Whitehall’s sole and absolute discretion. Any pledge or other transfer of all or any portion of Participant’s rights under this Agreement without Whitehall’s prior written consent shall be void ab initio, and if Participant attempts to effect any such transfer then at any time following such attempt Whitehall shall have the right to redeem Participant’s interest at a redemption price equivalent to the Redemption Price provided for in Section 7 above.

17. Binding Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

18. Execution in Counterparts. This Agreement may be (a) executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one

and the same instrument and (b) transmitted by telecopy or other facsimile signature (which shall be deemed an original for all purposes).

19. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, and all rights and remedies hereunder shall be governed by such laws without regard to principles of conflict of law.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.



By:	/s/ ARTHUR KEITH
	Arthur Keith

	WHITEHALL PARALLEL GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007, a Delaware limited partnership By: WH PARALLEL ADVISORS, L.L.C. 2007, its General Partner

By:	/s/ Jonathan A Langer
	Name:	Jonathan A Langer
	Title:	Manager

W2007 FINANCE SUB, LLC, a Delaware limited liability company By: WHITEHALL STREET GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007, its Managing Member
By:	WH ADVISORS, L.L.C. 2007, its General Partner

By:	Jonathan A Langer
	Name:	Jonathan A Langer
	Title:	Manager

EX-10.04 5 y72253exv10w04.htm EX-10.04: ECONOMIC PARTICIPATION AGREEMENT EX-10.04

Exhibit 10.4

ECONOMIC PARTICIPATION AGREEMENT

THIS ECONOMIC PARTICIPATION AGREEMENT (this “Agreement”), dated as of October 23, 2008, but effective as of February 20, 2008 (the “Effective Date”), is entered into by and among W2007 Finance Sub, LLC, a Delaware limited liability company (“Whitehall Finance”), Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“Whitehall Parallel”, and together with Whitehall Finance, “Whitehall”), and Edward W. Martin, III, a natural person residing at Las Vegas, NV. (“Participant”).