<PAGE>
 
                                                                   EXHIBIT 10(u)


October 25, 1995


Mr. Rodolfo E. Prieto
53 Quail Ridge Road
Quail Ridge Estates
Henderson, Nevada 89014

Dear Rudy:

This letter will serve to confirm our understanding and agreement pursuant to
which Trump Taj Mahal Associates ("TTMA") has agreed to employ you, and you have
agreed to be employed by TTMA commencing December 1, 1995 and expiring November
30, 1998 ("Expiration Date"), unless terminated earlier by TTMA pursuant to
Paragraph 12 hereof:

  1.  You shall be employed by TTMA in the capacity of Executive Vice President,
      Operations, upon approval of that position by the New Jersey Casino 
      Control Commission (the "Commission"), or such other position as 
      determined solely by TTMA to perform such duties as are commonly attendant
      upon such office and such further duties as may be specified, from time to
      time, by TTMA.

  2.  During the term of this Agreement, you shall be paid an annual base salary
      at the rate of Two Hundred Seventy-Five Thousand ($275,000.00) Dollars per
      annum, payable periodically in accordance with TTMA's regular payroll 
      practices.

  3.  On the first anniversary of your employment with TTMA and on all
      subsequent anniversary dates, your annual salary will be reviewed in 
      accordance with TTMA's regular policies therefor.  Any increase of your 
      annual salary shall be in TTMA's sole and absolute discretion.

  4.  You shall be afforded coverage under TTMA's employee insurance programs in
      such form and at such levels as TTMA, in its sole discretion, may 
      hereafter elect to provide for similarly situated executives.

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Mr. Rudy Prieto
Page 2
October 25, 1995



  5.  A.  You shall be entitled to participate in TTMA's executive benefit
      programs in such form and at such levels as TTMA, in its sole and absolute
      discretion, may hereafter elect to provide similarly situated executives.

      B.  You shall, in addition to monetary compensation, receive a car 
      allowance of Seven Hundred Fifty  ($750.00) Dollars per month or, in the 
      alternative, use of a company-owned or leased car.

      C.  You shall also have executive comping privileges at such levels, if 
      any, as TTMA in its sole and absolute discretion, shall establish from 
      time to time for similarly situated executives.

  6.  You hereby agree that throughout the term of this Agreement you shall
      devote your full time, attention and efforts to TTMA's business and shall
      not, directly or indirectly, work for, consult with or otherwise engage 
      in any other activities of a business nature for any other person or 
      entity, without TTMA's prior written consent.  You will promptly 
      communicate to TTMA, in writing when requested, all marketing strategies,
      technical designs and concepts, and other ideas pertaining to TTMA's 
      business which are conceived or developed by you, alone or with others, 
      at any time (during or after business hours) while you are employed by 
      TTMA.  You acknowledge that all of those ideas will be TTMA's exclusive 
      property.  You agree to sign any documents which TTMA deems necessary
      to confirm its ownership of those ideas, and you agree to otherwise 
      cooperate with TTMA in order to allow TTMA to take full advantage of 
      those ideas.

  7.  You acknowledge that you have access to information which is proprietary
      and confidential to TTMA.  This information includes, but is not limited
      to, (1) the identity of customers and prospects, (2) names, addresses and
      phone numbers of individual contacts, (3) pricing policies, marketing 
      strategies, product strategies and methods of operation, and (4) expansion
      plans, management policies and other business strategies and policies.  
      You acknowledge and understand that this information must be maintained 
      in strict confidence in order for TTMA to protect its business and its 
      competitive position in the marketplace. Accordingly, both during and 
      after termination of your employment, you agree that you will not disclose
      any of this information for any purpose or remove materials containing 
      this information from TTMA's premises.  Upon termination of your 
      employment, you will immediately return to TTMA all correspondence files,
      business card files, customer and prospect lists, price books, technical
<PAGE>
 
Mr. Rudy Prieto
Page 3
October 25, 1995



      data, notes and other materials which contain any of this information, 
      and you will not retain copies of those materials.

  8.  In the event this Agreement is terminated by you for any reason or by the 
      Company for Cause as defined in Paragraph 12, you agree that for a 
      period of one (1) year after termination of your employment, 
      you will not accept employment with or on behalf of any Atlantic City 
      casino hotel nor solicit or contact, directly or through any other 
      Atlantic City casino or any company affiliated with an Atlantic City 
      casino, any customers whom you have developed or continued to develop 
      during your tenure with TTMA.  This restriction shall not apply if Company
      terminates this Agreement without Cause.

  9.  You represent to TTMA that there are no restrictions or agreements to
      which you are a party which would be violated by our execution of this 
      Agreement and your employment hereunder.

 10.  You hereby agree to comply with all of the rules, regulations, policies
      and/or procedures adopted by TTMA during the term of this Agreement, as 
      well as all applicable state, federal and local laws, regulations and 
      ordinances.

 11.  You hereby represent that you presently hold the New Jersey Casino Control
      Commission license required in connection with your employment hereunder 
      and will take appropriate steps to renew said license in a timely manner.

 12.  You hereby understand and acknowledge that TTMA may terminate this
      Agreement in the event your Casino Control Commission license is 
      terminated and/or suspended or revoked by the Commission or if you shall
      commit an act constituting "Cause", which is defined to mean the 
      following:  a breach by you of any of the provisions of this Agreement 
      or any employee conduct rules; an act of dishonesty; the deliberate and 
      intentional refusal by you to perform your duties hereunder or your 
      failure, as determined solely by TTMA, to properly perform and execute
      your duties hereunder, any act which in TTMA's sole opinion would
      adversely reflect upon TTMA or impair your ability to effectively perform
      your duties hereunder, alcohol or drug abuse; your disability, which
      is defined to be any condition prohibiting you from performing your duties
      hereunder for a period in excess of thirty (30) days, or your death.
      In the event of a termination pursuant to this paragraph, TTMA shall pay 
      to you your salary earned to the date of termination and shall have no 
      further liability or obligation to you under this Agreement.

 13.  INTENTIONALLY BLANK
<PAGE>
 
Mr. Rudy Prieto
Page 4
October 25, 1995



 14.  A.  TTMA shall reimburse you for reasonable moving expenses incurred in
      connection with moving from Nevada to New Jersey.


      B.  In the event TTMA terminates this Agreement without cause, TTMA shall
      reimburse you for reasonable moving expenses incurred in moving back to 
      Nevada which shall not exceed the amount which TTMA paid to you in 
      reimbursement for moving expenses from Nevada to New Jersey as referred 
      to in subparagraph 14A above.  

      C.  In the event you terminate this Agreement, you shall not be entitled
      to the moving expenses referred to in subparagraph 14A above.

 15.  TTMA shall indemnify, defend and hold you harmless, including the payment
      of reasonable attorney fees, if TTMA does not directly provide your 
      defense, from and against any and all civil claims made by anyone, 
      including, but not limited to, a corporate entity, company, other 
      employee, agent, patron or member of the general public with respect to 
      any claim which asserts as a basis, any acts, omissions or other 
      circumstances involving the performance of your employment duties 
      hereunder unless such claim is based upon your gross negligence or any 
      willful and/or wanton act. This Paragraph 14 shall not apply in any 
      actions in which your interests are adverse to that of the Company.

 16.  You represent that you are a citizen of the United States or that you
      possess the proper visa and/or work permits necessary to perform your 
      functions hereunder.

 17.  You acknowledge that it would be extremely difficult to measure the 
      damages that might result from any breach by you of your promises in 
      Sections 6, 7 and 8 of the Employment Contract and that a breach may cause
      irreparable injury to TTMA which could not be compensated by money 
      damages.  Accordingly, TTMA will be entitled to enforce this Employment 
      Contract by obtaining a court order prohibiting you (and any others 
      involved) from breaching this Agreement.  If a court decides that any 
      part of this Agreement is too broad, the court may limit that part and 
      enforce it as limited.

<PAGE>
 
Mr. Rodolfo E. Prieto
Page 5
October 25, 1995


 18.  This Agreement shall be governed by and construed in accordance with the
      laws of the State of New Jersey and in any lawsuit involving this 
      Agreement, you consent to the jurisdiction and venue of any state or 
      federal court located in New Jersey.  This Agreement represents the 
      entire agreement between the parties and may not be modified or amended 
      without the written agreement of both parties.  This Agreement supersedes
      all other agreements between the parties.


  19. If any provision hereof is unenforceable, illegal or invalid for any 
      reason whatsoever, such fact shall not affect the remaining provisions 
      hereof.  If any of the provisions hereof which impose restrictions on 
      you are, with respect to such restrictions, determined by a final 
      judgment of any court of competent jurisdiction to be unenforceable or 
      invalid because of the geographic scope or time duration of such 
      restrictions, such provisions shall be deemed retroactively modified to 
      provide for the maximum geographic scope and time duration which would 
      make such provisions enforceable and valid.  However, no such retroactive
      modification shall affect any of Employer's rights hereunder arising out 
      of the breach of any such restrictive provisions, including without
      limitation, TTMA's rights to terminate this Agreement.

If the foregoing correctly sets forth our understanding, kindly sign and return
to me the duplicate copy of this letter enclosed herewith.

Very truly yours,

TRUMP TAJ MAHAL ASSOCIATES                   Agreed and Consented to:


/s/ Nicholas L. Ribis                        /s/ Rodolfo E. Prieto
_____________________________                ________________________________
NICHOLAS L. RIBIS                            RODOLFO E. PRIETO
Chief Executive Officer
                                             Date: 11/2/95
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