Exhibit 99.2
LETTER OF UNDERSTANDING
This letter of understanding among Caesars Entertainment, Inc. (the
"Company"), Xxxxxx'x Entertainment, Inc. ("Xxxxxx'x") and Xxxxxxx X. XxXxxx,
Xx. (the "Executive" and, together with the Company and Xxxxxx'x, the
"Parties") is entered into as of October 6, 2004. The Parties acknowledge that
the Executive is party to an Employment Agreement with the Company, dated May
26, 2004 (the "Employment Agreement") and a Change of Control Agreement with
the Company, dated May 26, 2004 (the "Change of Control Agreement"). Except as
otherwise defined herein, any capitalized terms used herein shall have the
meaning ascribed to such term in the Change of Control Agreement.
The Parties desire to set forth their understanding regarding the
severance payments and benefits to which the Executive shall be entitled if,
during the Employment Period and on or following consummation of the merger
contemplated by the Merger Agreement by and among the Company, Xxxxxx'x
Operating Company, Inc. and Xxxxxx'x, dated as of July 14, 2004, (i) the
Executive terminates his employment for Good Reason or (ii) the Company
terminates his employment other than for death, Disability or Cause (a
termination described in clause (i) or (ii) above being referred to as a
"Qualifying Termination").
The Parties hereby agree as follows:
1. Upon a Qualifying Termination, the Executive shall not be entitled
to receive any payments or benefits under the Employment Agreement.
2. Upon a Qualifying Termination, the Executive shall be entitled to
receive from the Company or its successor:
(a) in full satisfaction of the Executive's rights to
severance under 6(d)(i)(C) of the Change of Control Agreement, a
lump-sum cash payment equal to the sum of (1) the product of 2 times
his current Annual Base Salary plus (2) the product of 1 times the
Executive's annual bonus in respect of fiscal year 2004, such lump-sum
payment to be made not later than 30 days following the date of the
Qualifying Termination;
(b) in full satisfaction of the Executive's rights to
severance under 6(d)(i)(D) of the Change of Control Agreement, a
lump-sum cash payment equal to the sum of (1) the product of 1 times
his current Annual Base Salary plus (2) the product of 1 times the
Executive's annual bonus in respect of fiscal year 2004, such lump-sum
payment to be made not later than 30 days following the date of the
Qualifying Termination; provided, that such payment shall be
conditioned upon the Executive's compliance with Paragraph 3, below,
in lieu of compliance with Section 10(b) of the Change of Control
Agreement;
(c) all other compensation and benefits to which he is
entitled under Section 6(d) of the Change of Control Agreement; and
(d) if necessary, payments pursuant to Section 9 of the
Change of Control Agreement.
2. In lieu of the restrictions set forth in Section 10(b) of the
Employment Agreement, for a period of one year following the date of the
Qualifying Termination, except as set forth in the immediately succeeding
sentence, the Executive shall not be associated with Ameristar Casinos, Inc.,
Argosy Gaming Company, Pinnacle Entertainment, Inc., Penn National Gaming,
Inc., or Isle of Capri Casinos, Inc., LLC or any affiliate of the foregoing
companies, or any company that in the future operates any of the assets of the
foregoing companies (the "Restricted Competitors"). Notwithstanding the
foregoing, the Executive may (i) own up to 1% of the stock of any Restricted
Competitor that is a publicly-traded corporation; (ii) serve on the board of
directors of any Restricted Competitor; or (iii) serve as a part-time
consultant to any Restricted Competitor. The Executive shall not be restricted
from associating with any entity that is not a Restricted Competitor.
3. Nothing herein shall be construed as effecting or limiting in any
way the compensation or benefits to which the Executive may become entitled
under the Change of Control Agreement or the Employment Agreement in connection
with any termination of his employment that does not constitute a Qualifying
Termination.
IN WITNESS WHEREOF, the Parties have duly executed this Letter of Understanding
effective as of the date first referred to above.
CAESARS ENTERTAINMENT, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxx Xxxx
Title: Exec. V.P. Human Resources &
Admin., Authorized Signator
for Caesars Entertainment
XXXXXX'X ENTERTAINMENT, INC.
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Sr. Vice President Human Resources
Xxxxxx'x Entertainment, Inc.
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx, Xx.
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