CONTINGENT SEVERANCE AGREEMENT
THIS AGREEMENT dated __________ __, 19__, is made by
and between Caesars World, Inc., a Florida corporation or
any successor entity by way of merger or consolidation (the
"Company"), and (the "Executive").
WHEREAS, the Company considers it essential to the
best interests of its shareholders to foster the
recruitment and continuous employment of key management
personnel; and
WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many
publicly-held corporations, the possibility of a Change in
Control (as defined in Section 15 hereof) may exist and
that such possibility, and the uncertainty and questions
which it may raise among management, may result in the
departure or distraction of management personnel to the
detriment of the Company and its shareholders or interfere
with the ability of the Company to recruit qualified
executives; and
WHEREAS the Board has determined that appropriate
steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company's management, including the Executive, to their
assigned duties without distraction in the face of
potentially disturbing circumstances arising from the
possibility of a Change in Control of the Company, although
no such change is now anticipated;
NOW THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the Company and the
executive hereby agree as follows:
1. Defined Terms. Capitalized terms in this
Agreement are defined terms with special meanings, as used
in this Agreement. Their definitions are provided in
Section 15 hereof.
2. Term of Agreement. This Agreement shall commence
on the date hereof and shall continue in effect for ten
(10) years and this Agreement shall terminate upon the
termination of Executive's employment with the Company,
provided however, if a Change in Control shall have
occurred during the period of such employment, this
Agreement shall continue in effect for a period of thirty-
six (36) months beyond the month in which such Change in
Control occurred and shall then terminate except with
respect to obligations of either the Company or the
Executive which by their terms are to be performed
following termination of employment.
3. Company's Covenants Summarized. In order to
induce the Executive to remain in the employ of the Company
and in consideration of the Executive's covenants set forth
in Section 4 hereof, the Company agrees to pay the
Executive the "Severance Payments" described in Section
6(A) hereof, under the circumstances described therein, and
the other payments and benefits described herein under the
respective conditions described herein, in the event the
Executive's employment with the Company is terminated
following a Change in Control. Except as provided by the
second sentence of Section 6(A) hereof or the last sentence
of Section 9(A) hereof, no amount or benefit shall be
payable under this Agreement unless there shall have been a
termination of the Executive's employment with the Company
following a Change in Control. This Agreement shall not be
construed as creating an express or implied contract of
employment and, except as otherwise agreed in a written
instrument between the Executive and the Company which is
signed by the Executive and by an officer of the Company in
behalf of the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees
that, subject to the terms and conditions of this
Agreement, in the event of a potential Change in Control,
the Executive will remain in the employ of the Company
until the earliest of (i) a date which is six (6) months
from the occurrence of such Potential Change of Control,
(ii) the date of occurrence of a Change in Control, (iii)
the date of termination by the Executive of the Executive's
employment for Good Reason or by reason of death,
Disability or Retirement at or after age 65, or (iv) the
termination by the Company of the Executive's employment
for any reason. The executive agrees that, if any amount
or benefit becomes payable pursuant to Section 6 hereof,
then, during the Benefit Period, (i) the Executive will be
available to answer questions and provide advice to the
Company; provided, however, that such requirement shall not
unreasonably interfere with any other activities the
Executive is then pursuing; and (ii) the Executive will
retain in confidence any and all material confidential
information known to the Executive concerning the Company
and its businesses and shall not use or disclose such
information without the approval of the Company where such
disclosure would cause material financial loss to the
Company, except as required by law or to the extent such
information is already public or becomes otherwise disclosed.
5. Normal Compensation Related to Termination.
5(A) Following a Change in Control and during
the term of this Agreement, during any period that the
Executive fails to perform the Executive's full-time duties
with the Company as a result of incapacity due to physical
or mental illness, the Company shall pay the Executive's
full salary at the rate in effect at the commencement of
any such period, together with all compensation payable to
the Executive under any incentive compensation or bonus
plan maintained by the Company during such period, until
the Executive's employment is terminated by the Company for
Disability.
5(B) If the Executive's employment shall be
terminated for any reason following a Change in Control and
during the term of this Agreement, the Company shall pay
the Executive's full salary through the Date of Termination
at the rate in effect at the time the Notice of Termination
is given, together with all compensation payable to the
Executive under any compensation plan maintained by the
Company at such time.
5(C) If the Executive's employment shall be
terminated for any reason following a Change in Control and
during the term of this Agreement, the Executive's normal
post-termination benefits shall consist (just as they would
if such termination occurred prior to a Change in Control)
of (i) any vested, but previously unpaid, benefits of the
Executive under the Company's retirement, insurance and
other compensation programs in effect at any time, and (ii)
such additional benefits as shall be determined under the
Company's retirement, insurance and other compensation
programs then in effect. All post-termination benefits
shall be paid in accordance with the terms of the
applicable program. Unless Section 6(A), 6(C), 6(D), 7(C)
or 7(D) otherwise provides, the Company shall have no
further payment obligations to the Executive under this
Agreement.
6. Severance Payments and Reimbursement for Legal
Fees.
6(A) Subject to Section 6(B) hereof, if a Change
in Control shall have occurred, the Company shall provide
the Executive the payments and benefits described in this
Section 6(A) (the "Severance Payments") upon the
termination of the Executive's employment with the Company
following a Change in Control and during the term of this
Agreement unless such termination is (i) by the Company for
Cause or Disability, (ii) by the Executive without Good
Reason, or (iii) because of the Executive's death. For
purposes of the immediately preceding sentence, if a
termination of the Executive's employment occurs prior to a
Change in Control, but following a Potential Change in
Control in which a Person has entered into an agreement
with the Company the consummation of which will constitute
a Change in Control, such termination shall be deemed to
have followed a Change in Control and to have been (i) by
the Company without Cause, if the Executive's employment is
terminated without Cause at the direction of such Person,
or (ii) by the Executive with Good Reason, if the Executive
terminates his employment with Good Reason and the act (or
failure to act) which constitutes Good Reason occurs
following such Potential Change in Control and at the
direction of such Person.
(I) In lieu of any further salary
payments to the Executive for periods subsequent to the
Date of Termination and in lieu of any severance benefit
otherwise payable to the Executive, the Company shall pay
as severance pay to the Executive a lump sum severance
payment equal to the amount of salary the Executive would
have earned during the Benefit Period, at the greater of
the Executive's annual base salary in effect immediately
prior to the occurrence of the Change in Control or the
Executive's annual base salary in effect immediately prior
to the occurrence upon which the Notice of Termination is
based.
(II) Notwithstanding any provision of any
incentive compensation or bonus plan, the Company shall pay
to the Executive a lump sum amount equal to the product of
multiplying a fraction, the numerator of which is the
number of days in the Benefit Period and the denominator of
which is three hundred and sixty-five (365) days, times the
greater of (x) the amount of the bonus and incentive
compensation granted to or earned by the Executive for the
fiscal year immediately preceding the year in which the
Change in Control occurs, or (y) the bonus or incentive
compensation that would have been payable to the Executive
if the Company's earnings (determined in accordance with
the provisions of the applicable incentive compensation or
bonus plan as they existed immediately prior to the Change
in Control) for the portion of the fiscal year immediately
prior to the occurrence of the Change in Control were
annualized.
(III) Upon the Date of Termination, all ISOs and
Options held by the Executive pursuant to grants from the
Company which have been outstanding at least six (6) months
and one (1) day on the Date of Termination and which are
not canceled pursuant to the foregoing shall become fully
vested and exercisable by the Executive.
(IV) Upon the Date of Termination, all stock
grants and awards (including Derivative Assets as defined
therein) held by or with respect to the Executive under the
Company Key Employees Stock Bonus Plan, Key Employees Stock
Grant Plan and Key Employees Incentive Share Grant
Agreements shall become fully vested. All company shares
(and other assets, including Derivative Assets as therein
defined, if any) held in escrow for the Executive under the
Company Key Employees Stock Bonus Plan and Key Employees
Stock Grant Plan or distributable to Executive upon meeting
specified conditions under a Key Employee Incentive Share
Grant Agreement shall be then distributed to the Executive.
Unless a subsequent separate written agreement between the
Company and the Executive specifically so provides, this
Section 6(A)(IV) shall have no effect on, or application
to, grants or awards under any other stock compensation
plan established by the Company.
(V) If the Executive elects to continue Company
health and life insurance during the Benefit Period, the
Company shall reimburse Executive for the premiums paid by
the Executive for such insurance as such premiums are paid
until such time as the continued insurance terminates or
the Executive obtains replacement full time employment,
whichever occurs first. Such reimbursement shall be
reduced for an amount equivalent to the amounts charged
such Executive for health coverage prior to the Change in
Control.
(VI) If, immediately prior to the Change in
Control, the Executive received an auto allowance, the
Executive will receive such auto allowance during the
Benefit Period but all ancillary auto benefits such as
insurance, maintenance and repairs will cease.
6(B) In the event that any payment or benefit
received or to be received by the Executive in connection
with a Change in Control or the termination of the
Executive's employment with the Company (whether pursuant
to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, including, but
not limited to, the Company's 1983 Long-Term Stock
Incentive Program, and plans thereunder, the Company's
Executive Security Plan and the Company's 1985 Executive
Security Plan, or any other plan, arrangement or agreement
with any Person whose actions result in a Change in Control
or any Person affiliated with the Company or such Person)
(all such payments and benefits, including the Severance
Payments, being hereinafter called "Total Payments") would
not be deductible (in whole or part), as a result of
section 280G or Section 162(m) of the Code, by the Company,
an affiliate or other Person making such payment or
providing such benefit, then, to the extent necessary to
make such portion of the Total Payments deductible, (i) the
payment pursuant to Section 6(A)(V) hereof shall first be
reduced (if necessary, to zero), (ii) the payments pursuant
to Section 6(A)(III) and 6(A)(IV) (in that order) shall
then be reduced (if necessary, to zero), (iii) the
remaining Severance Payments shall next be reduced (if
necessary, to zero), (iv) all other payments pursuant to
this Agreement shall next be reduced (if necessary, to
zero) and, (v) other portions of the Total Payments shall
be reduced as necessary. For purposes of this limitation,
(i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively
waived in writing prior to the date of payment of the
Severance Payments shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to the
Executive does not constitute a "parachute payment" within
the meaning of section 280G(b)(2) of the Code, (iii) the
Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those
referred to in clauses (i) or (ii) in their entirety
constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the
Code or does not constitute applicable employee
remuneration with respect to a covered employee under
Section 162(m) of the Code in excess of $1 million or are
otherwise not subject to disallowance as deductions under
either Section 280G or Section 162(m), in the opinion of
the tax counsel referred to in clause (ii)); and (iv) the
value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code.
6(C) The payments and distributions provided for
in Section 6(A)(I), 6(A)(II), 6(A)(III), and 6(A)(IV)
hereof shall be made not later than the fifth day following
the Date of Termination, provided, however, that if the
amounts of such payments, and the limitation on such
payments set forth in Section 6(B) hereof, cannot be
finally determined on or before such day, the Company shall
pay to the Executive on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments
(together with interest at the rate provided in section
1274(d) of the Code, compounded quarterly) as soon as the
amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the
event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to the
Executive, repayable on the fifth day after demand by the
Company (together with interest a the rate provided in
section 1274(d) of the Code, compounded quarterly).
6(D) The Company also shall pay to the Executive
all reasonable expenses and legal fees incurred by the
Executive as a result of a termination in seeking to obtain
or enforce any right or benefit provided by this Agreement
or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder
(whether or not the Executive is successful in such audit
or proceeding or in obtaining or enforcing such right or
benefit), except to the extent that the payment of such
fees and expenses would not be, or would cause any other
portion of the Total Payments not to be, deductible by
reason of section 280G of the Code Such payments shall be
made at the later of the times specified in Section 6(C)
hereof, or within five (5) days after the Executive's
request for payment accompanied with such evidence of fees
and expenses incurred as the Company reasonably may
require.
6(E) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this
Section 6, the aggregate "parachute payments" paid to or
for the Executive's benefit are in an amount that would
result in any portion of such "parachute payments" not
being deductible by reason of section 280G of the Code,
then the Executive shall have an obligation to pay the
Company upon demand an amount equal to the sum of (i) the
excess of the Aggregate "parachute payments" paid to or for
the Executive's benefit over the aggregate "parachute
payments" that could have been paid to or for the
Executive's benefit without any portion of such "parachute
payments" not being deductible by reason of section 280G of
the Code; and (ii) interest on the amount set forth in
clause (i) of this sentence at the rate provided in section
1274(d) of the Code, compounded quarterly, from the date of
the Executive's receipt of such excess until the date of
such payment.
7. Termination Procedures and Compensation During
Dispute.
7(A) Notice of Termination. After a Change in
Control and during the term of this Agreement, any
purported termination of the Executive's employment shall
be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under
the provision so indicated.
7(B) Date of Termination. "Date of
Termination", with respect to any purported termination of
the Executive's employment after a Change in Control and
during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination
by the Company, shall not be less than thirty (30) days,
and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of
Termination is given).
7(C) Dispute Concerning Termination.
(I) If within fifteen (15) days after
any Notice of Termination for Good Reason is given by the
Executive, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7(C)(I)), the
Company notifies the Executive that a dispute exists
concerning the termination, the Date of Termination, shall
be the date on which the dispute is finally determined,
either by mutual written agreement of the parties or by a
final determination in accordance with Section 7(C)(II)
hereof; provided further that the Date of Termination shall
be extended by a notice of dispute from the Company only if
such notice is given in good faith and the Company pursues
the resolution of such dispute with reasonable diligence.
The Executive shall have the right to notify the Company
that a dispute exists within fifteen (15) days after any
Notice of Termination is given by the Company, or, if
later, prior to the Date of Termination determined pursuant
to Section 7(B) hereof; provided, however, that the
Executive shall have no right to dispute the termination
itself or the Date of the Termination, although the
Executive shall have the right to dispute any denial of the
payments and benefits described in this Agreement and to
dispute the amount of such payments and benefits.
(II) Except for matters covered under
Section 6(B) hereof, any disagreement, dispute,controversy
or claim arising out of or relating to this Agreement or
the interpretation hereof or any arrangements relating
hereto or contemplated herein or the breach, termination or
invalidity thereof shall be settled by arbitration in
accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration
Association (the "AAA") (except as otherwise provided in
this Agreement) in Los Angeles, California. The arbitral
tribunal shall consist of one arbitrator. In making any
decision, the arbitrator shall apply and follow the
substantive law of California. The parties to the
arbitration jointly shall directly appoint such arbitrator
within thirty (30) days of initiation of arbitration. If
the parties shall fail to appoint such arbitrator as
provided above, such arbitrator shall be appointed by the
AAA as provided in the Arbitration Rules. The parties
hereto agree that the arbitral award may be enforced
against the parties to the arbitration proceeding or their
assets wherever they may be found and that a judgment upon
the arbitral award may be entered in any court having
jurisdiction thereof. The Company shall pay all fees and
expenses of the Arbitrator regardless of the result and
shall provide all witnesses and evidence reasonably
required by the Executive to present the Executive's case.
The Company shall pay to the Executive all reasonable
arbitration expenses and legal fees incurred by the
Executive as a result of a termination in seeking to obtain
or enforce any right or benefit provided by this Agreement
(whether or not the Executive is successful in obtaining or
enforcing such right or benefit), except to the extent that
the payment of such fees and expenses would not be, or
would cause any other portion of the Total Payments not to
be, deductible by reason of section 280G of the Code. Such
payments shall be made at the later of the times specified
in Section 6(C) hereof, or within five (5) days after the
Executive's request for payment accompanied with such
evidence of fees and expenses incurred as the Company
reasonably may require.
(III) Except for matters covered under
Section 6(B) hereof and notwithstanding Section 7(C)(II)
hereof and any provisions of this Agreement which refer to
said Section 7(C)(II), the Executive shall have the right
to elect, in the Executive's sole discretion, to use the
Caesars World, Inc. Executive Security Plan Procedure for
Claims and Review of Denial of Claims (the "Claims
Procedure"), instead of the procedures set forth in Section
7(C)(II) hereof, to settle any disagreement, dispute,
controversy or claim arising out of or relating to this
Agreement or the interpretation thereof. Any such election
shall be made by a written notice given to the Company in
accordance with section 2 of the Claims Procedure. The
Executive shall be deemed to have waived his right to use
the Claims Procedure if the Executive initiates arbitration
regarding such matters pursuant to Section 7(C)(II) hereof.
If the Executive makes such an election to use the Claims
Procedure, any provisions in the Agreement referring to the
determination or settlement of disputes in accordance with
Section 7(C)(II) hereof shall be deemed to refer to this
Section 7(C)(III). The Claims Procedures shall be adapted
for use by the Executive as follows:
(i) The word "Participant," as used
therein, shall refer to the Executive;
(ii) The word "Plan," as used therein
shall refer to this Agreement;
(iii) All references therein to
"Beneficiary" shall be deleted; and
(iv) Such additional conforming changes
may be appropriate shall be made.
7(D) Compensation During Dispute.
(I) If a purported termination by the
Executive for Good Reason occurs following a Change in
Control and during the term of this Agreement, and such
termination is disputed in accordance with Section 7(C)
hereof, the Company shall continue to pay the Executive the
full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to
the dispute was given, until the dispute is finally
resolved in accordance with Section 7(C) hereof. Amounts
paid under this Section 7(D)(I) are in addition to all
other amounts due under this Agreement and shall not be
offset against or reduce any other amounts due under this
Agreement. The Executive agrees to remain in the employ of
the Company during the resolution of the dispute and to
continue to provide services unless the Executive's
employment is terminated earlier by death, Disability or
Retirement after the age of 65 years, or by action of the
Company. If the dispute is resolved by a determination
that the Executive did not have Good Reason, this
Agreement, in accordance with its terms, will continue to
apply to the circumstances of the Executive's employment by
the Company and any termination thereof.
(II) If there is a termination by the Company
followed by a dispute as to whether the Executive is
entitled to the payments and other benefits provided under
this Agreement, except a dispute covered under Section 6(B)
hereof, then, during the period of that dispute the Company
will pay the Executive fifty percent (50%) of the amount
specified in Sections 6(A)(I) and 6(A)(II) hereof, and the
Company will provide the Executive with the other benefits
provided in Section 6(A) hereof, if, but only if, the
Executive agrees in writing that if the dispute is resolved
against the Executive, the Executive will promptly refund
to the Company all payments the Executive receives under
Sections 6(A)(I) and 6(A)(II) hereof plus interest at the
rate provided in section 1274(d) of the Code, compounded
quarterly. If the dispute is resolved in the Executive's
favor, promptly after resolution of the dispute the Company
will pay the Executive the sum which was withheld during
the period of the dispute plus interest at the rate
provided in section 1274(d) of the Code, compounded
quarterly.
7(E) Executive's Termination Rights. The
Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's
incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act
or failure to act constituting Good Reason hereunder.
8. No Mitigation. The Company agrees that, if
the Executive's employment by the Company is terminated
during the term of this Agreement, the Executive is not
required to seek other employment or to attempt in any way
to reduce any amounts payable to the Executive by the
Company pursuant to Section 6 or Section 7(D) hereof.
Without limiting the foregoing, the amount of any payment
or benefit provided for in Section 6 or Section 7(D)
hereof, shall not be reduced by any compensation earned by
the Executive as the result of employment by another
employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company,
or otherwise.
9. Successors; Binding Agreement.
9(A) This Agreement shall not be terminated by
the Company's voluntary or involuntary dissolution or by
any merger or consolidation in which the Company is not the
surviving or resulting corporation, or on any transfer of
all or substantially all of the Company's assets. In the
event of any such merger, consolidation, or transfer of
assets, the provisions of this Agreement shall be binding
on and inure to the benefit of the surviving business
entity or the business entity to which such assets shall be
transferred. In addition to any obligations imposed by law
upon any successor to the Company, the Company will require
any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive
would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after
a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination.
9(B) This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable
to the Executive hereunder, if the Executive had continued
to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or
administrators of the Executive's estate. The Executive
may make a designation by a letter to the Company marked
"Attention: Secretary" signed by the Executive and the
Executive's spouse (if any) with the signature(s) being
acknowledged before a notary public.
10. Notices. For the purpose of this
Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested,
postage prepaid, addressed to the Company at its then-
current headquarters location and to the Executive at the
Executive's address shown in the Company's records at the
Date of Termination, or to such other address as either
party may have furnished to the other in writing in
accordance herewith, except that notice of change of
address shall be effective only upon actual receipt.
11. Miscellaneous. No agreements or
representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of California. All references to sections of
the Exchange Act or the Code shall be deemed also to refer
to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and
any additional withholding to which the Executive has
agreed. Any interest payment provided by this Agreement
shall be subject to the usury limits of applicable law, to
the extent such limits apply.
12. Waiver/Modification. No provision of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
13. Validity. The invalidity or
unenforceability or any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full
force and effect.
14. Counterparts. This Agreement may be
executed several counterparts, each of which shall be
deemed to be an original but all of which together will
constitute one and the same instrument.
15. Definitions. For purposes of this
Agreement, the following terms shall have the meanings
indicated below:
15(A) "AAA" shall mean the American Arbitration
Association.
15(B) "Arbitration Rules" shall mean the
Commercial Arbitration Rules.
15(C) "Beneficial Owner" shall have the meaning
defined in Rules 13d-3 and 13d-5(b) under the Exchange Act.
15(D) "Benefit Period" shall mean the period
beginning on the Date of Termination and ending upon the
later of two (2) years following a Change in Control or one
(1) year after the Date of Termination.
15(E) "Board" shall mean the Board of Directors
of the Company.
15(F) "Cause" for termination by the Company of
the Executive's employment, after any Change in Control (or
after any Potential Change in Control under the
circumstances described in the second sentence of Section
6(A) hereof), shall mean (i) the willful and continued
failure by the Executive to substantially perform the
Executive's duties with the Company (other than any such
failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of
Termination for Good Reason by the Executive pursuant to
Section 7(A)) after a written demand for substantial
performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially
performed the Executive's duties, or (ii) the willful
engaging by the Executive in conduct which is demonstrably
and materially injurious to the Company, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to
be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company.
15(G) "Change in Control" shall mean a change in
control of the Company, which shall be deemed to have
occurred upon the first fulfillment of the conditions set
forth in any one of the following four paragraphs:
(I) any Person, other than a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of
stock of the Company, is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of
the Company's then outstanding securities; or
(II) during any period of two consecutive
years (not including any period prior to the execution of
this Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered into
an agreement with the Company to effect a transaction
described in Section 15(G)(I) or 15(G)(III) hereof whose
election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(III) the shareholders of the Company
approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation,
or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all of substantially
all the Company's assets; or
(IV) any Person shall be or has become
the Beneficial Owner of securities of the Company
representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities
and (i) the identity of the Chief Executive Officer of the
Company is changed during the period beginning sixty (60)
days before the attainment of the twenty percent (20%)
beneficial ownership and ending two (2) years thereafter,
or (ii) individuals constituting at least one-third (1/3)
of the members of the Board at the beginning of such period
shall leave the Board during the period beginning sixty
(60) days before the attainment of the twenty percent (20%)
beneficial ownership and ending two (2) years thereafter.
15(H) "Code" shall mean the Internal Revenue Code
of 1986, as it may be amended from time to time.
15(I) "Company" shall mean Caesars World, Inc.
and, except in determining under Section 15(G) hereof
whether or not any Change in Control of the Company has
occurred in connection with such succession, it shall also
include any Person who is a successor to substantially all
assets of the Company whether by merger, consolidation,
liquidation, purchase, or otherwise and which assumes and
agrees or is legally bound to perform this Agreement by
operation of law, or otherwise.
15(J) "Company Shares" shall mean shares of
common stock, $0.10 par value, of the Company.
15(K) "Date of Termination" shall have the
meaning stated in Section 7(B) hereof.
15(L) "Disability" shall be deemed the reason for
the termination by the Company of the Executive's
employment, if, as a result of the Executive's incapacity
due to physical or mental illness, the Executive is unable
to perform the Executive's duties for a consecutive period
of at least one hundred twenty (120) days or for at least
one hundred fifty (150) days in a period of two hundred
(200) days.
15(M) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
15(N) "Executive" shall mean the individual named
in the first paragraph of this Agreement.
15(O) "Good Reason" for termination by the
Executive of the Executive's employment shall mean the
occurrence (without the Executive's express written
consent) after any Change in Control, or after any
Potential Change in Control under the circumstances
described in the second sentence of Section 6(A) hereof
(treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a
"Potential Change in Control"), of any one of the following
acts by the Company, or failures by the Company to act,
unless, in the case of any act or failure to act described
in paragraphs (I) through (VIII), inclusive, below, such
acts or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in
respect thereof:
(I) the assignment to the Executive of
any duties inconsistent with the Executive's status as an
executive officer of the Company or a substantial adverse
alteration in the nature or status of the Executive's
title, position, duties, function, working conditions or
responsibilities from those in effect immediately prior to
the Change in Control other than any such alteration
primarily attributable to the fact that the Company may no
longer be a public company, including, among other things,
removal or failure to nominate the Executive as a member of
the Board if the Executive is serving as such a member
immediately prior to the occurrence of a Change in Control;
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date
hereof or as the same may be increased from time to time;
(III) the relocation of the Company's
principal executive offices to a location more than twelve
(12) miles from the location of such offices immediately
prior to the Change in Control or the Company's requiring
the Executive to be based anywhere other than the Company's
principal executive offices except for required travel on
the Company's business to an extent substantially
consistent with the Executive's business travel obligations
immediately prior to the Change in Control;
(IV) the failure by the Company, without
the Executive's consent, to pay to the Executive any
portion of the Executive's current compensation or to pay
to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Company, within seven (7) days of the date such
compensation is due;
(V) the failure by the Company to
continue in effect any compensation plan in which the
Executive participates immediately prior to the Change in
Control which is material to the Executive's total
compensation, including but not limited to the Company's
incentive compensation plans and 1983 Long-Term Stock
Incentive Program, and plans thereunder, or any substitute
plans adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan,
or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the terms and
conditions of such benefits, including, without limitation,
the definition of "Net Profit" in any incentive
compensation plan, and the level of the Executive's
participation relative to other participants, as such
relative level existed at the time of the Change in
Control;
(VI) the failure by the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive
under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which
the Executive was participating at the time of the Change
in Control, the taking of any action by the Company which
would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the
Executive with the number of paid vacation days to which
the Executive is entitled on the basis of years of service
with the Company in accordance with the Company's normal
vacation policy in effect at the time of the Change in
Control;
(VII) the continuation or repetition,
after written notice of objection from the Executive, of
harassing or denigrating treatment inconsistent with the
Executive's position with the Company;
(VIII) the failure of the Company to obtain
a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section
9(A) hereof; or
(IX) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 7(A); provided, further, that, for purposes of this
Agreement, no such purported termination shall be
effective.
15(P) "ISOs" shall mean options qualifying as
incentive stock options under section 422A of the code.
15(Q) "Notice of Termination" shall have the
meaning stated in Section 7(A) hereof.
15(R) "Options" shall mean options for Company
Shares granted after July 1, 1984 to the Executive under
the Company's 1983 Long-Term Stock Incentive Program, plans
thereunder, and any substitute program or plan, other than
ISOs granted on or before the date of this Agreement.
15(S) "Person" shall have the same meaning as it
does in section 3(a)(9) (including the definition of
"Company" under section 3(a)(19)) including a group and any
other arrangement included as a "Person" under section
13(d)(3) of the Exchange Act, provided, a person shall not
include an underwriter temporarily holding securities
pursuant to an offering of such securities.
15(T) "Potential Change in Control" shall mean a
potential change in control of the Company, which shall be
deemed to have occurred if the conditions set forth in any
one of the following four paragraphs shall have been
satisfied:
(I) the Company enters into an
agreement, the consummation of which would result in the
occurrence of a Change in Control;
(II) any Person (including the Company)
publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a
Change in Control;
(III) any Person, other than a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of
stock of the Company, who is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
representing 9.9% or more of the combined voting power of
the Company's then outstanding securities, increases such
Person's beneficial ownership of such securities by 5% or
more over the percentage so owned by such Person on the
date hereof; or
(IV) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
15(U) "Retirement" shall mean any voluntary
termination of employment by the Executive pursuant to
which the Executive elects benefits under either the
Company's Executive Security Plan or 1985 Executive
Security Plan, whether normal retirement benefits under
Section 3.2 thereof, early retirement benefits under
Section 3.5 thereof, optional retirement benefits under
Section 3.7 thereof or termination benefits under Section
3.11 thereof.
15(V) "Severance Payments" shall mean those
payments described in Section 6(A) hereof.
15(W) "Total Payments" shall mean those payments
described in Section 6(A) hereof.
16. Special provisions applicable to subsidiary
employees. Notwithstanding anything to the contrary in
this Agreement, so long as the Executive is employed by a
subsidiary of the Company or a person qualifying as an
Employer under Section 16(A) instead of directly by the
Company itself, then the following provisions shall apply
to, and shall control the interpretation of, this
Agreement:
16(A) For purposes of this Agreement, including
without limitation Section 6(A), the Executive shall be
deemed to be continuously employed by the Company so long
as the Executive is employed by (i) the Company, or (ii) a
Person as to which the Company directly or indirectly owns
a majority of the voting stock of such Person or other
equity interests possessing comparable voting power with
respect to electing the governing body of such Person (such
Person shall be referred to as the "Employer").
16(B) In the event that, without the prior
occurrence of a Change in Control, the Company shall cease
to own a majority of the outstanding voting stock or other
voting interests of the Employer at a time when the
Executive is actually employed by the Employer, this
Agreement shall terminate on the date of such cessation of
ownership. If the Employer shall cease to be a majority-
owned Person (as described above) of the Company following
the occurrence of a Change in Control and either such
Person or any other Person acquiring such Person's business
or substantially all of its assets shall assume the
obligation of the Employer and the Company under this
Agreement ("Assuming Person") on or before the date of such
cessation of ownership, the change in ownership of such
Person or the transfer of Executive's employment to the
Assuming Person shall not be deemed a termination of
employment with the Company or the Employer for purposes of
this Agreement.
16(C) As used in this Agreement in Section 5,
paragraphs V and VI of Section 6(A) and Section 15(O)
except for paragraph VIII, "Company" shall only mean
Employer as defined above in Section 16(A) and the
definition of "Company" set forth in Section 15(I) of this
Agreement shall not apply.
16(D) As used in Sections 4 and 15(F) and clause
(i) of the first sentence of Section 6(A) of this
Agreement, "Company" shall be deemed to mean both the
Company (as defined in Section 15(I) hereof) and Employer,
as required by the circumstances of the Executive's actual
employment.
16(E) To the extent provisions of this Agreement
call for any payment or provision of any benefit from the
Employer or Company following a Change in Control, such
obligation shall be deemed satisfied if the Company, the
Employer or the Assuming Person, or any affiliate of the
Company, the Employer, or an Assuming Person shall make any
such payment. For purposes of the foregoing, "affiliate"
of any Person shall mean any Person which directly or
indirectly controls, or is under common control with, or is
controlled by such Person and "control" or "controls" as to
any Person for this purpose shall mean beneficially owning,
directly or indirectly, a majority of the voting stock of
such Person or other equity interests possessing comparable
voting power with respect to electing the governing body of
such Person.
16(F) To the extent any payment or the provision
of any benefit required under Section 5 of this Agreement
as modified by the foregoing redefinition of "Company" is
not made by the Employer or the Assuming Person, the
Company shall make such payment.
16(G) Notwithstanding such modified reference in
Section 15(O), "Board" for purposes of paragraph I of
Section 15(O) shall be deemed to be the board of directors
of the Company as defined in Section 15(I).
16(H) Any notices by Executive to the Company
required under the sections modified by the foregoing
provisions (including without limitation Section 7(A))
shall be required to be made both to the Employer and to
the Company. Notices to Executive required under this
Agreement (including without limitation under Section 7(A))
shall be sufficient if made by either the Company or
Employer.
CAESARS WORLD, INC.
By:
_________________________
Name:
_______________________
Title:
______________________
______________________________
Executive
12. Employment Agreement. Executive is a party to an
employment agreement dated September 15, 1986 with the
Company which has been amended by amendments dated August
1, 1988, February 22, 1989 and December 8, 1989. Such
employment agreement as amended and as it shall be amended
in the future shall be referred to as "the Employment
Agreement" in this Paragraph. Executive's participation in
both this Agreement and the Employment Agreement is not
intended to provide a duplication of benefits and,
accordingly, this Agreement shall be effective as to
Executive only upon receipt by the Secretary of the Company
of a written election by Executive to make this Agreement
effective as to such Executive and to waive Executive's
rights under Paragraphs 9.d. and e. of the Employment
Agreement. Until such election is made as provided above,
this Agreement shall not be applicable to Executive and
Executive shall be entitled to Executive's full rights
under the Employment Agreement. Executive may make such
election at any time during the term of this Agreement and
may also make such an election within a period of up to
thirty (30) days following a notice of termination by the
Company of Executive's employment or in Executive's notice
of termination pursuant to Paragraph 9.e. of the Employment
Agreement or notice of election to treat an act or omission
by the Company as a Wrongful Termination and terminate
under Paragraph 9.d. of the Employment Agreement. Nothing
in this Section 12 shall cause any post termination
benefits to be payable under Section 6(A) of this Agreement
except as provided in Section 6(A) or to cause a
duplication of any payments otherwise provided Executive
under the Employment Agreement.
12. Employment Agreement. In addition to this
Agreement, Executive is also a party to an employment
agreement with the Company dated September 15, 1986 which
has been amended by amendments dated August 1, 1988,
February 22, 1988 and December 8, 1989 (such employment
agreement as amended and as it shall be amended in the
future shall be referred to as the "Employment Agreement"
in this Paragraph). It is intended that Executive's
participation in both this Agreement and the Employment
Agreement should not produce a duplication of payments
derived from the same compensation or benefit items.
Accordingly, in the event that either Paragraph 9.d. or
9.e. of the Employment Agreement and Section 6(A) of this
Agreement are applicable to a termination of Executive's
employment with the Company, Executive shall be entitled to
the severance pay and benefits as an aggregate under
whichever of such provisions of the two agreements provides
a greater advantage to Executive. Such determination shall
be made by Executive and shall be effected by notice to the
Company within fifteen (15) business days following the
effective date of any termination of Executive which
qualifies as a termination under this Agreement.
(III) Upon the Date of Termination, all ISOs,
Options and stock appreciation rights issued under the
Company's 1983 Long-Term Stock Incentive Program held by
the Executive pursuant to awards from the Company which
have been outstanding at least six (6) months from the date
of such award on the Date of Termination and which are not
canceled pursuant to the foregoing shall become fully
vested and exercisable by the Executive.
"Change in Control" shall mean a change in
control of the Company, which shall be deemed to have
occurred upon the first fulfillment of the conditions set
forth below:
(I) any Person, other than a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of
stock of the Company, is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of
the Company's then outstanding securities other than in a
transaction directly with the Company or a subsidiary of
the Company; or
(II) any Person, other than a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of
stock of the Company, is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of
the Company's then outstanding securities and during any
period of two consecutive years (not including any period
prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and
any new director whose election by the Board was approved
by a vote of at least a majority of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute a majority thereof.