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Exhibit 10.39    
  

 
 

EMPLOYMENT AGREEMENT    
  

        THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of the 1st day of February, 2002, by and between PARK PLACE ENTERTAINMENT CORPORATION, a Delaware
corporation (the "Company"), and KIM SINATRA ("Executive"). 

        In
consideration of the premises and of the covenants and agreements herein contained, the parties agree as follows: 

 1.    Employment.  

        A. The Company hereby employs Executive in the capacity of Executive Vice President and Chief Legal Officer, and such other capacity or capacities of equal status
and responsibility as the Chief Executive Officer of the Company (the "CEO") shall determine, reporting directly and solely to the CEO of the Company, and Executive hereby accepts such employment, all
upon and subject to the terms and conditions herein set forth. 

        B.
During the term of her employment hereunder Executive shall devote her best efforts to such employment and perform such duties as are reasonably assigned or delegated to her by the
CEO, consistent with her position and capacities hereunder and such other related positions(s) and capacity or capacities as the CEO shall from time to time determine. While it is understood and
agreed that Executive's job capacities may change at the Company's discretion during the Term (hereafter defined) of this Agreement, her general level of responsibility shall not be substantially
reduced at any time. Furthermore, Executive agrees that the Company may direct her to perform some or all of her duties hereunder for the benefit of subsidiaries and affiliates of the Company.
Executive shall devote her entire working time and attention to the business and related interests of, and shall be loyal to, the Company and its subsidiaries and affiliates, and Executive agrees to
render services hereunder on behalf of the Company and/or on behalf of such subsidiaries and affiliates. 

        C.
During the term of her employment hereunder Executive shall not: 

        (1)  Render
services of a business, professional or commercial nature to any person or entity, directly or indirectly, whether for compensation or otherwise, except that this
prohibition shall not be construed to prevent Executive from investing her assets in such form or manner as will not require any services on the part of Executive in the operation of the affairs of
the companies in which such investments are made and which are not in violation of (2) immediately below, or from engaging in charitable activities so long as such activities do not interfere
with the performance of her duties hereunder. 

        (2)  Engage
in any activity competitive with or adverse to the welfare of business or related interests of the Company or any of its subsidiaries or affiliates, whether
alone, as a partner, officer, director, employee or shareholder of any other corporation or other entity, or otherwise, directly or indirectly, except that the ownership of not more than one percent
of the stock of any one or more publicly traded corporations shall not be deemed a violation of this subparagraph (2); 

        (3)  Be
engaged by any person or entity which conducts business with or acts as a consultant or advisor to the Company or any of its subsidiaries or affiliates, whether
alone, as a partner, officer, director, employee or shareholder of any other corporation or entity, or otherwise, directly or indirectly, except that ownership of not more than one percent of the
stock of any one or more publicly traded corporations shall not be deemed a violation of this subparagraph (3). 

 

        D.
Executive acknowledges and agrees that she shall perform her duties hereunder at the corporate headquarters of the Company in Las Vegas, NV and such other locations as may be required
by the nature of Executive's responsibilities. 

 2.    Term.  

        The term of this Agreement (the "Term") shall begin on the effective date stated above and shall continue until January 31, 2005. The Term shall
automatically renew beginning February 1, 2005 for
successive periods of one year unless the Company or the Executive gives written notice to the other at least six months prior to the end of the then applicable term, that the Agreement shall not be
further extended. Otherwise, this Agreement may be terminated as specifically provided below. 

 3.    Compensation.  

        A. In consideration of the services to be rendered by Executive hereunder, the Company agrees to pay or cause to be paid to Executive, and Executive agrees to
accept, the sum of $500,000 (the "Base Salary") for the initial twelve month period following the effective date of this Agreement during the Term, which shall be paid in accordance with the regular
payroll practices of the Company. During the Term, the Base Salary shall be reviewed for possible increase (but not decrease) annually in accordance with the Company's then applicable merit policies
or as otherwise determined by the CEO and the Board in its discretion. 

        B.
In addition to Base Salary, the Executive shall be entitled to participate in the Company's annual incentive plan for senior executives (the "Annual Bonus"). The target amount of any
Annual Bonus shall be set at 100% of Base Salary depending upon company and individual performance and shall be subject to the discretion of the CEO and the Board. The Executive will be eligible for
additional special bonus awards if and when determined by the Board in its sole discretion. 

        C.
In addition to Base Salary and Annual Bonus, the Executive shall be entitled to participate in the Company's Long-Term Incentive Plans as in effect from time to time in
accordance with the terms of such Plans. Prior to the date hereof, Executive has been granted 45,000 stock retention units pursuant to the provisions of the Company's Supplemental Retention Plan dated
November 1, 2001. In consideration of Executive's agreement to enter into this Agreement and the provisions contained herein, Executive has been granted an additional 25,000 stock retention
units pursuant to such Plan. Executive shall be eligible for additional annual grants in the discretion of CEO and the Board. The provisions of that Plan shall govern such units. 

        D.
Prior to the date hereof, Executive was granted options to purchase an aggregate of 200,000 shares of the Company's Common Stock. In addition, for all years during the Term, Executive
shall be entitled to annual grants of stock options in accordance with the Company's Stock Option Plan in effect from time to time as and when granted for other senior executives. The amount of any
such grants shall be subject to the absolute discretion of the Board. In consideration of Executive's agreement to enter into this Agreement and the provisions contained herein, Executive has been
granted options to purchase an aggregate of 45,000 shares of the Company's common stock in accordance with the Stock Option Agreement dated February 1, 2002 between the Company and the
Executive. Such options shall vest and be governed by the provisions of the Option Plan and such Option Agreement. 

 4.    Vacation and Other Benefits.  

        A. Executive shall be entitled to reasonable paid vacation annually, as well as other employment benefits, including death and retirement plans, and group
insurance programs for 

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medical, hospitalization, life, and long term disability, and the like, afforded in general to senior executives of the Company of comparable status and tenure, and consistent with the Company's
policies for executive employment benefits. The Company may, in its sole discretion, change such benefits policies from time to time. 

        B.
So long as Executive is employed hereunder, the Company shall maintain in full force and effect a policy of term insurance on the life of Executive in an amount as provided by the
applicable policy of the Company. Executive shall promptly advise the Company of the designated beneficiary or beneficiaries of such policy. Upon termination of Executive's employment, to the extent
permitted under the policy, Executive shall have the right to transfer such policy to her own name or the name of a beneficiary thereof, provided Executive shall pay all premiums for such policy as
shall accrue thereafter. 

 5.    Expenses.  

        The Company shall pay or cause to be paid all reasonable expenses incurred by Executive in the performance of her responsibilities and duties for the Company
hereunder, as well those reasonably incurred in the promotion of the Company's business, including but not limited to the costs of licensing or qualification as may be required by any gaming
jurisdiction. Executive shall submit to the Company periodic statements of all expenses so incurred in accordance with the Company's policy. Subject to such audits as the Company may deem appropriate,
the Company shall, promptly and in the ordinary course, reimburse Executive the full amount of any such expenses advanced by Executive. 

 6.    Covenants; Confidential Information.  

        A. Executive agrees that, for the applicable period specified below, she shall not, directly or indirectly, do any of the following: 

        (1)  Own,
manage, control, or participate in the ownership, management or control of, or be employed or engaged by, or otherwise affiliated or associated with, as a
consultant, independent contractor or otherwise, any other corporation, partnership, proprietorship, firm, association or other business entity,
or otherwise engage in any business that is competitive with any business or enterprise in which the Company is engaged at the time Executive's employment ceases including, without limitation, any
gaming venture, Indian gaming, river boat gaming or other within any country or any state (or any metropolitan area involving multiple jurisdictions) in which there is located any gaming facility
owned, managed or under development to be owned or managed by the Company, determined as of the date Executive ceases to be employed hereunder. 

        (2)  Solicit
or induce any person who is an employee, officer, consultant or agent of the Company or of any subsidiary or affiliate of the Company, to terminate such
relationship. 

        (3)  Employ,
assist in employing, or otherwise be associated in business with any present or former employee or officer of the Company or of any subsidiary or affiliate of
the Company, including without limitation those who commence such positions with the Company or any such subsidiary or affiliate, after the effective date hereof. 

        (4)  Disclose,
divulge, discuss, copy or otherwise use or suffer to be used in any manner, the customer lists, proprietary and confidential inventions, ideas, discoveries,
marketing methods, product research or other data or any other methodologies of the Company (collectively, "Confidential Information"), it being acknowledged by Executive that all such Confidential
Information compiled or obtained by, or furnished to, Executive while she is or 

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was employed by or associated with the Company, is confidential and proprietary information which is the exclusive property of the Company. 

        B.
The provisions of subparagraphs 6A(1) through 6A(4) hereof shall be operative throughout the Term and for so long as Executive is receiving compensation (other than benefit
continuation) from the Company thereafter, except as provided in the following sentences. In the event that Executive is terminated pursuant to paragraph 8 hereof, for Cause, the provisions of
subparagraphs 6A(1), 6A(2) and 6A(3) shall be operative during the Term and for a period of one year thereafter. In the event that Executive is terminated pursuant to paragraph 8, without
Cause, the provisions of subparagraphs 6A(1), 6A(2) and 6A(3) shall be operative for a period of six months after the termination date. All obligations created by the terms of subparagraph 6A(4) are
of a continuing nature and shall remain in effect at all times during Executive's period of employment hereunder and for a period of five years thereafter;  provided that if at any time following the
termination of this Agreement any Confidential Information shall become part of the public domain through no
fault of Executive, then the restrictions and limitations of subparagraph 6A(4) shall not apply to such particular information. 

        C.
The Executive acknowledges and agrees that the restrictions contained in this paragraph are reasonable and necessary to protect and preserve the legitimate interests, properties,
goodwill and business of the Company, that the Company would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by the Company should
the Executive breach any of those provisions. Executive represents and acknowledges that (i) the Executive
has been advised by the Company to consult Executive's own legal counsel in respect of this Agreement, and (ii) that the Executive has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with the Executive's counsel. The Executive further acknowledges and agrees that a breach of any of the restrictions in this paragraph cannot be
adequately compensated by monetary damages. 

        D.
The Company agrees to give the Executive written notice of any action taken by the Executive that it believes in good faith to constitute a violation of the Executive's undertakings
under Paragraph 6 and to give the Executive at least 10 days thereafter to cease any such action which, if she complies with such request, will preclude any further action or any
recovery by the Company. In the event that the Executive fails to do so, the Executive agrees that the Executive's right to any payment pursuant to Paragraph 8 shall be forfeited (but only to
the extent of those portions not previously received) and the Executive's right to exercise the stock options shall cease. In addition, in the case of any violation of the provisions of this
paragraph 6, the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any violation of this paragraph (with appropriate credit for the amounts forfeited by the Executive and the
non-exercisability of the stock options), which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. 

        E.
In the event that any of the provisions of this Paragraph 6 should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum time, geographic, service, or other limitations permitted by applicable law,
that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise be enforced to the maximum extent permitted by law. The Executive
irrevocably and unconditionally (x) agrees that any suit, action or other legal proceeding arising out of this Paragraph, including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be brought (without posting a bond) in the United States District Court for the District of Nevada, or if such court does
not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Las 

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Vegas, NV, (y) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (z) waives any objection which the Executive may have
to the laying of venue of any such suit, action or proceeding in any such court. The Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other
papers in a manner permitted by the notice provisions of Paragraph 12 hereof. 

        F.
For purposes of this Paragraph 6, the term "Company" shall be deemed to mean the Company and/or any of its subsidiaries or affiliates, together with their respective successors
or assigns. 

 7.    Illness, Incapacity or Death During Employment.  

        A. If Executive is unable to perform services hereunder by reason of illness or incapacity resulting in a failure to discharge her duties under this Agreement as
determined by the Company in the manner described in Paragraph 5(A) of the Company's form of Change of Control Agreement applicable to Executive, for six or more consecutive months, then upon
30 days notice, the Company may terminate the employment of Executive and the Term under this Agreement, and upon such termination Executive shall be paid (i) her Base Salary on a
pro-rata basis to the date of termination through the 30-day period; (ii) an amount equal to her prior year's Annual Bonus on a pro-rata basis to the date of
termination through the 30-day notice period; (iii) reimbursement of all expenses reasonably incurred by Executive in performing her responsibilities and duties for the Company
prior to and including such date; and (iv) applicable insurance and other group benefits proceeds. In the event of termination pursuant to 7(A), 

        (1)  Executive
shall have the right to the assignment of any and all of the Company group insurance policies or health protection plans if and to the extent that such
policies and plans permit assignment out of the group to the individual Executive, and 

        (2)  Executive
shall be entitled to a salary continuation benefit equal to 60% of her Base Salary, reduced by the value of any salary continuation received (whether in lump
sum or periodically) under the Company's Long Term Disability Plan or any other applicable insurance or other group benefits provided by the Company. This salary continuation benefit shall be payable
for the same period as benefits would be provided to a similarly situated senior officer of the Company under the Plan. 

        B.
In the event of Executive's death, this Agreement shall automatically terminate; provided that the Company shall pay to the Executive's estate (i) her Base Salary on a
pro-rata basis to the date of death; (ii) an amount equal to her prior year's Annual Bonus on a pro-rata basis to the date of death; (iii) reimbursement of all
expenses reasonably incurred by Executive in performing her responsibilities and duties for the Company prior to and including such date; and (iii) applicable insurance and other group benefits
proceeds. 

 8.    Termination for Cause or without Cause.  

        A. The employment of Executive under this Agreement, and the Term hereof, may be terminated by the Company for Cause at any time. If the Company properly
terminates Executive's employment hereunder for Cause, it shall be without liability to Executive except for all amounts and benefits accrued and due but not paid to the date of such termination. For
all purposes of this Agreement, the term "Cause" means: 

        (1)  Executive's
material fraud, dishonesty, willful misconduct or gross negligence in the performance of her duties hereunder, including willful failure to perform such
duties as may properly be assigned her hereunder; 

        (2)  Executive's
material breach of any provision of this Agreement; or 

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        (3)  Executive's
failure to qualify (or having so qualified being thereafter disqualified or suspended) under any suitability or licensing requirement to which Executive may
be subject by reason of her position with the Company or any of its affiliates or subsidiaries, under the laws of Nevada or New Jersey, except that any
such failure to qualify or disqualification or suspension resulting from Executive's corporate conduct, rather than individual conduct, shall not constitute "Cause" hereunder. 

        B.
Any termination for Cause shall not be in limitation of any other right or remedy the Company may have under law, pursuant to this Agreement or otherwise. 

        C.
In the event that the Company exercises its right to terminate this Agreement for Cause, Executive shall have the right to challenge such action by seeking arbitration in the manner
provided in Paragraph 9. 

        D.
The employment of Executive under this Agreement may be terminated without Cause at any time upon written notice to Executive. (A non-renewal of the Term shall not be
treated as a Termination without Cause.) In such case the Company shall have no liability arising out of such termination except as follows: 

        (1)  Executive
shall be paid (a) the Base Salary for the balance of the Term or for a period of twelve months, whichever is greater, paid in accordance with the
regular payroll practices of the Company, plus (b) a lump sum amount equal to the greater of the average of the Annual Bonuses, if any, paid to the Executive for the three prior years or the
amount of the Annual Bonus, if any, paid for the prior year; 

        (2)  Any
remaining unvested options or stock retention units shall be vested, and 

        (3)  Executive
shall be entitled to continuation of health and dental benefits for the remaining portion of the otherwise applicable Term. 

Fifty
percent of amounts paid after termination hereunder shall be consideration for the Executive's undertaking not to breach the terms of the covenants contained in Paragraph 6 hereof. The
Company shall also pay to the Executive, in a lump sum in cash within ten (10) days after the date of termination, the Executive's accrued but unpaid cash compensation (the "Accrued
Obligations"), which shall include but not be limited to: (1) any portion of the Executive's Annual Base Salary through the date of termination that has not yet been paid and an amount
representing the Annual Bonus for the year of termination determined at the target rate under the Company's then applicable incentive bonus plan, and multiplying that amount by a fraction, the
numerator of which is the number of days in the current fiscal year through the date of termination, and the denominator of which is 365 (the "Annual Bonus Amount"); (2) any compensation
previously deferred by the Executive (together with any accrued interest or earnings thereof) that has not yet been paid; (3) any earned but unpaid vacation pay; and (4) similar unpaid
items that have accrued or to which the Executive has become entitled as of the date of termination, including declared but unpaid bonuses and unreimbursed employee business expenses, and provided
further that the Company's obligation to make any payments under this Section, to the extent that any such payment shall not have accrued as of the day before the date of termination shall also be
conditioned upon the Executive's execution, and non-revocation, of a written release, substantially in the form attached hereto as Annex 1 (the "Release"), of any and all claims against
the Company and all related parties with respect to all matters arising out of the Executive's employment by the Company (other than any entitlements under the terms of this Agreement or under any
other plans or programs of the Company in which the Executive participated and under which the Executive has accrued or become entitled to a benefit), or the termination thereof. 

        E.
In the event of a Change of Control (as defined in the Change of Control Agreement), Executive shall have certain rights as set forth in a separate agreement (a "Change of Control
Agreement") of even date herewith by and between Executive and the Company. 

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 9.    Arbitration.  

        The Company and the Executive mutually consent to the resolution by arbitration by a panel of three arbitrators, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association, to be held in Las Vegas, Nevada, of all claims or controversies arising out of the Executive's employment (or its
termination) that the Company may have against the Executive or that the Executive may have against the Company or against its officers, directors, shareholders, employees or agents in their capacity
as such other than a claim which is primarily for an injunction or other equitable relief. The Company shall pay the fees and costs of the arbitrators and all other costs in connection with any
arbitration, including reasonable legal fees and expenses, unless the arbitrators shall determine that such claim or controversy was without reasonable basis or that payment such legal fees and
expenses would otherwise be unfair to the Company. 

 10.  Severable Provisions.  

        The provisions of this Agreement are severable, and if any one or more provisions hereof may be determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable, shall nevertheless be binding and enforceable. 

 11.  Binding Agreement.  

        The rights and obligations of the Company and Executive under this Agreement shall be binding upon and inure to the benefit of, and be enforceable by and against,
the parties hereto and their respective heirs, personal representations, and successors and assigns. 

 12.  Notices.  

        Any notice, request, demand, waiver, consent, approval or other communication (a "Notice") that is required or permitted hereunder shall be in writing as
referenced below. All Notices may be delivered by telecopier or similar device, with a true copy thereof sent the same day by Federal Express, DHL Courier, or other similar overnight delivery service
providing receipt against delivery, and shall be deemed given or made upon receipt thereof. All Notices are to be given or made to the parties at the following addresses (or to such other address as
any party may designate by a Notice given in accordance with the provisions of this Paragraph 12): 

	

If to the Company:	
 	

Park Place Entertainment Corporation

3930 Howard Hughes Parkway

Las Vegas, NV 89109

Attention: General Counsel
	

If to Executive:	
 	

Kim Sinatra

9409 Fontainbleu Drive

Las Vegas, NV 89145

 13.  Waiver.  

        Either party's failure to enforce any provision(s) of this Agreement shall not in any way be construed as a waiver of any such provision(s) as to any future
violations(s) thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative, and the waiver by a
party of any single remedy shall not 

7

 

constitute a waiver of such party's right to assert all other legal remedies available to her or it under the circumstances. 

 14.  Governing Law.  

        This Agreement shall be governed by and construed and interpreted according to the internal laws of the State of Nevada, without reference to such State's
principles of conflict of laws. 

 15.  Tax Withholding.  

        Notwithstanding anything the to contrary set forth in this Agreement, the Company may withhold from amounts payable under this Agreement, all federal, state,
local and foreign income and employment taxes that are required to be withheld by applicable laws or regulations. 

 16.  Captions and Paragraph Headings.  

        Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it. 

 17.  Entire Agreement.  

        This Agreement constitutes the entire agreement between the Company and Executive with respect to the subject matter hereof, and may not be modified or terminated
orally. No modification, termination or attempted waiver of this Agreement shall be valid unless in writing and signed by the party against whom the same is sought to be enforced. 

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

	 	 	The Company:
	

 	
 	

PARK PLACE ENTERTAINMENT CORPORATION
	

 	
 	

By:	
 	

/s/ THOMAS E. GALLAGHER

	

 	
 	

Executive:
	

 	
 	

/s/ KIM SINATRA

	 	 	Kim Sinatra

8

 
 
 

ANNEX 1    
  

        GENERAL RELEASE

        1.    I,
                        , for and in consideration of certain payments to be made and the benefits to be provided to me
under Section 8 of
my Employment Agreement dated as of February 1, 2002 (the "Employment Agreement") with Park Place Entertainment Corporation (the "Company"), and conditioned upon such
payments and provisions, do hereby REMISE, RELEASE, AND FOREVER DISCHARGE the Company and each of its subsidiaries and affiliates, their officers, directors, shareholders, partners, employees and
agents, their respective successors and assigns, heirs, executors and administrators (hereinafter collectively included within the term the "Company"), acting in any capacity whatsoever, of and from
any and all manner of actions and causes of actions, suits, debts, claims and demands whatsoever in law or in equity, which I ever had, now have, or hereafter may have, or which my heirs, executors or
administrators hereafter may have, by reason of any matter, cause or thing whatsoever from the beginning of my employment with Park Place Entertainment Corporation to the date of these presents
arising from or relating in any way to my employment relationship and the termination of my employment relationship with Park Place Entertainment Corporation, including but not limited to, any claims
which have been asserted, could have been asserted, or could be asserted now or in the future under any federal, state or local laws, including any claims under the Age Discrimination in Employment
Act ("ADEA"), 29 U.S.C. §621 et seq., Americans with Disabilities Act ("ADA"), 42 U.S.C. §2000e et
seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq., any contracts between the Company and me
and any common law claims now or hereafter recognized and all claims for counsel fees and costs; provided, however, that this General Release shall not apply to any entitlements under the terms of the
Employment Agreement or under any other plans or programs of the Company in which I participated and under which I have accrued and become entitled to a benefit. 

        2.    Subject
to the limitations of paragraph 1 above, I expressly waive all rights afforded by any statute that expressly limits the effect of a release with respect to
unknown claims. I understand the significance of this release of unknown claims and the waiver of statutory protection against a release of unknown claims which provides as follows: 

A
general release does not extend to claims which the creditor does not know or suspect to exist in her favor at the time of executing the release, which if known by her must have materially affected
her settlement with the debtor. 

        3.    I
hereby agree and recognize that my employment by the Company was permanently and irrevocably severed on
                        ,
             and the Company has no obligation, contractual or otherwise to me to hire, rehire or re-employ me in the future. I acknowledge that the terms
of the Employment Agreement provide me with payments and benefits which are in addition to any amounts to which I otherwise would have been entitled. 

        4.    I
hereby agree and acknowledge that the payments and benefits provided by the Company are to bring about an amicable resolution of my employment arrangements and are not
to be construed as an admission of any violation of any federal, state or local statute or regulation, or of any duty owed by the Company and that this Agreement and General Release is made
voluntarily to provide an amicable resolution of my employment relationship with the Company and the termination of the Employment Agreement. 

        5.    I
hereby certify that I have read the terms of this General Release, that I have been advised by the Company to discuss it with my attorney, and that I understand its
terms and effects. I acknowledge,
further, that I am executing this General Release of my own volition with a full understanding of its terms and effects and with the intention of releasing all claims recited herein in exchange for
the 

9

 

consideration described in the Employment Agreement, which I acknowledge is adequate and satisfactory to me. None of the above-named parties, nor their agents, representatives, or attorneys have made
any representations to me concerning the terms or effects of this General Release other than those contained herein. 

        6.    I
hereby acknowledge that I have been informed that I have the right to consider this General Release for a period of 21 days prior to execution. I also understand
that I have the right to revoke this General Release for a period of seven days following execution by giving written notice to the Company at 3930 Howard Hughes Parkway, Las Vegas, NV 89101,
Attention: General Counsel. 

        Intending
to be legally bound hereby, I execute the foregoing General Release this              day of
                        ,
20    . 

	

	
 	

	Witness	 	 

10

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Exhibit 10.39

EMPLOYMENT AGREEMENT

ANNEX 1QuickLinks
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Exhibit 10.40    
  

 
 

THE RESTATED
  PARK PLACE ENTERTAINMENT CORPORATION
  EXECUTIVE DEFERRED COMPENSATION PLAN
  As Restated and Amended Effective January 1, 2000    
  

THE RESTATED

PARK PLACE ENTERTAINMENT CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN  

        WHEREAS, Park Place Entertainment Corporation (the "Company") established the Park Place Entertainment Corporation Executive Deferred Compensation Plan (the
"Plan") effective January 1, 1999 in order to provide supplemental retirement income benefits for a select group of management and highly compensated employees of the Company and affiliated
employers of the Company participating under the Plan, through deferrals of salary and through the contributions to be made by the Company and the participating employers; 

        WHEREAS,
the Plan is intended to be an unfunded arrangement for the purposes of providing deferred compensation for a select group of management or highly compensated employees for
purposes of Title I of the Employee Retirement Income Security Act of 1974, and 

        WHEREAS,
the Company wishes to amend and restate the Plan effective as of January 1, 2000 in order to reflect certain changes in the design and operation of the Plan. 

        NOW,
THEREFORE, the Plan is hereby amended and restated as follows: 

 
ARTICLE I

TITLE AND DEFINITIONS  

        1.1    Title.    

        This
Plan shall be known as the Park Place Entertainment Corporation Deferred Compensation Plan. 

        1.2    Definitions.    

        Whenever
the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below. 

        "Account" or "Accounts" shall mean a Participant's Deferral Account and/or Company
Contribution Account, 

        "Base Compensation" shall mean the total salary that is payable by the Employer to the Eligible Employee in a Plan Year. Base Compensation
shall not include any bonuses that are payable to an Eligible Employee. 

        "Base Compensation Company Contribution Amount" shall mean the amount described in paragraph (b) of Section 4.2. 

        "Beneficiary" or "Beneficiaries" shall mean the person or persons, including a trustee,
personal representative or other fiduciary, last designated in writing by a Participant in accordance with procedures established by the Committee to receive the benefits specified hereunder in the
event of the Participant's death. No Beneficiary designation shall become effective until it is filed with the Committee. If there is no Beneficiary designation in effect, or if there is no surviving
designated Beneficiary, then the Participant's surviving spouse shall be the Beneficiary. If there is no surviving spouse to receive any benefits payable in accordance with the preceding sentence, the
duly appointed and currently acting personal representative of the participant's estate (which shall include either the Participant's probate estate or living trust) shall be the Beneficiary. In any
case where there is no such personal representative of the Participant's estate duly appointed and acting in that capacity within 90 days after the Participant's death (or such extended period
as the Committee determines is reasonably necessary to allow such personal representative to be appointed, but not to exceed 180 days after the Participant's death), then Beneficiary shall mean
the person or persons who can verify by affidavit or court order to the satisfaction of the Committee that they are legally entitled to receive the benefits specified hereunder. In the event any
amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead be paid (1) to that person's living parent(s) to act as custodian, (2) if that person's
parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, or (3) if no parent of that person is then living, to a custodian selected by the Committee to
hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the Committee decides not to select
another custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the
minor. 

        "Board of Directors" or "Board" shall mean the Board of Directors of the Company 

        "Bonus Compensation" shall mean any compensation designated as a bonus or gratuity that is payable by the Employer to the Eligible
Employee in a Plan Year. 

        "Bonus Compensation Company Contribution Amount" shall mean the amount described in paragraph (c) of Section 4.2. 

2

 

        "Change in Control" shall mean the first to occur of any of the following events: 

        (a)  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the "outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c); or 

        (b)  Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the board; or 

        (c)  Consummation
of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 70% of, respectively, the
then outstanding shares of common stock and the combined voting power or the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without limitation, a corporation, which as a result of such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or 

        (d)  Approval
by the shareholders of the Company of a complete liquidation or dissolution of the Company. 

        "Caesars Plan Account" shall mean the separate bookkeeping account maintained by the Committee for certain Participants in accordance with
Section 1 of Appendix A. 

        "Code" shall mean the Internal Revenue Code of 1986, as amended. 

3

 

        "Committee" shall mean the Committee appointed by the Board to administer the Plan in accordance with Article IX. 

        "Company" shall mean Park Place Entertainment Corporation, and any successor corporation. 

        "Company Contribution Account" shall mean the separate bookkeeping account maintained by the Committee for each Participant in accordance
with Section 4.2. 

        "Compensation" shall mean the total Base Compensation and Bonus Compensation that is payable by the Employer to the Eligible Employee in a
Plan Year. 

        "Competitor" shall mean any employer or person who is in the same primary business or provides the same primary services as those
primarily conducted or provided by the Company and all other Employers, considered as a single enterprise, as reasonably determined by the Committee, 

        "Deferral Account" shall mean the separate bookkeeping account maintained by the Committee for each Participant in accordance with
Section 4. 1. 

        "Disabled" or "Disability" shall mean that a Participant is disabled due to sickness or
injury which qualifies the Participant for disability payments under the Employer's long term disability plan. A Participant shall be considered totally and permanently disabled on the date he or she
qualifies for such long term disability payments. 

        "Effective Date" shall mean January 1, 1999. 

        "Eligible Employee" shall mean (i) any Employee who participated or was eligible to participate in the Hilton Plan on
December 31, 1998, (ii) any Employee who is an officer of the Employer at the Vice President level or higher, and (iii) any other officers and highly compensated Employees who are
designated by the Committee (or its delegate) in its sole discretion to participate in the Plan pursuant to Section 2. 1. 

        "Employee" shall mean an employee of an Employer. 

        "Employer" or "Employers" shall mean individually or collectively as may be stated or
indicated from the context, the Company or any subsidiary or affiliate of the Company which is designated by the Board to be a participating Employer in the Plan and which adopts the Plan. 

        "Fund" or "Funds" shall mean one or more of the investments selected by the Committee
pursuant to Section 3.2(a). 

        "Hilton Plan" shall mean the Hilton Hotels Executive Deferred Compensation Plan as in effect on December 31, 1998. 

        "Participant" shall mean any Eligible Employee who either (i) was a "Participant" in the Hilton Plan (as such term is defined in
Section 1.2 of the Hilton Plan) on December 31, 1998, (ii) was a Participant in the Plan on the Restatement Effective Date or (iii) elects to defer Compensation in
accordance with Section 3.1 

        "Plan" shall mean the restated Park Place Entertainment Corporation Executive Deferred Compensation Plan set forth herein, as amended from
time to time. It is intended that the Plan be all unfunded arrangement for the purposes of providing deferred compensation for a select group of management or highly compensated employees for purposes
of Title I of the Employee Retirement Income Security Act of 1974. 

        "Plan Year" shall mean the 12 consecutive month period beginning on each January 1. 

        "Restatement Effective Date" shall mean January 1, 2000 

4

 

        "Year of Vesting Service" shall mean as follows: 

        (a)  For
Plan Years commencing prior to January 1, 2000, any Plan Year in which a Participant is both (i) credited with 1,000 Hours of Service in accordance
with the provisions of the tax-qualified plan maintained by the Participant's Employer and (ii) employed by an Employer on December 31 of such plan Year For purposes of this
provision, Hours of Service shall be given the same meaning as in such tax-qualified plan. Any period of time during which a Participant was employed by (i) Hilton Hotels Corporation or
any affiliate thereof prior to the Effective Date, (ii) Bally Entertainment Corp. or any affiliate thereof ("Bally") prior to Bally being merged with the Hilton Hotels Corporation or
(iii) Grand Casinos, Inc. or any affiliate thereof prior to the Effective Date, shall be considered as employment with an Employer for purposes calculating such Participant's Years of
Vesting Service under the Plan; and 

        (b)  For
Plan Years commencing on or after January 1, 2000, any Plan Year during which a Participant has been employed by one or more Employers throughout such Plan
Year (January 1 through December 31); provided however, that any Participant who is first eligible to defer Compensation under the Plan after January 1 of a Plan Year shall be credited with a
Year of Vesting Service for such Plan Year, if such Participant is employed by one or more Employers from the date on which he or she is first eligible to defer Compensation through December 31
of such Plan Year. 

ARTICLE II

PARTICIPATION  

        2.1    Participation.    

        (a)  Any
Eligible Employee who was a participant in the Hilton Plan on December 31, 1998 became a Participant in the Plan on the Effective Date. 

        (b)  Any
Eligible Employee who is a Participant in the Plan on the Restatement Effective Date shall continue as a Participant subject to the terms hereunder. 

        (c)  Any
Eligible Employee who is not a Participant on the Restatement Effective Date shall become a Participant in the Plan by electing to defer a portion of his or her
Compensation in accordance with Section 3.1. 

ARTICLE III

DEFERRAL ELECTIONS  

        3.1    Elections to Defer Base Compensation.    

        (a)  Each
Eligible Employee may elect to defer up to 100% of their Base Compensation by filing with the Committee an election that conforms to the requirements of this
Section 3.1, on a form provided by the Committee, prior to the last business day of the year preceding the Plan Year for which the election is to become effective (or such earlier date as the
Committee may in its sole discretion determine). Persons who first become Eligible Employees on or after January 1, but before July 1 of any Plan Year, may elect to defer Base
Compensation effective July 1 of such Plan Year by filing with the Committee an election that conforms to the requirements of this Section 3.1, on a form provided by the Committee, no
later than June 30 of such Plan Year (or such earlier date as the Committee in its sole discretion may determine). Persons who were employed by Caesars World, Inc. or any affiliate
thereof immediately prior to the acquisition of Caesars World, Inc. and its affiliates by the Company, and who become Eligible Employees prior to July 1, 2000, may elect to defer Base
Compensation effective as of July 1, 2000 by filing with the Committee an election that conforms to the requirements of this Section 3.1, on a form provided by the Committee, no later
than June 30, 2000 (or such earlier date as the Committee in its sole discretion may determine). Notwithstanding the 

5

 

foregoing, no Eligible Employee shall be permitted to defer Base Compensation which the Committee (or its delegate) reasonably determines is required to pay the Eligible Employee's portion of payroll
taxes and contributions towards benefits provided to the Eligible Employee and his or her dependents. 

        (b)  Any
deferral election made under paragraph (a) of this Section 3.1 shall remain in effect and be irrevocable, notwithstanding any change in the
Participant's Base Compensation, for the entire Plan Year for which it is effective. Subject to the provisions of this Section 3.1, a Participant shall file a new election each year with
the Committee prior to the last business day of such year (or such earlier date as the Committee in its sole discretion may determine), for Base Compensation earned during the Plan Year beginning on
January 1, of the immediately following year. 

        (c)  Notwithstanding
the above, if the Committee in its sole discretion determines that a Participant has incurred a financial hardship during a Plan Year, such Participant
may file a new election with the Committee, on a form provided by the Committee, during such Plan Year to terminate his or her Base Compensation deferral election then in effect, thereby
reducing such Participant's Base Compensation deferral percentage for the remainder of the Plan Year to 0%. If such an election is made, the
Participant shall make no further deferrals under this Plan for that Plan Year. Such election shall be valid as soon as administratively feasible following its receipt by the Committee. 

        3.2    Elections to Defer Bonus Compensation.    

        Each
Eligible Employee may separately elect to defer up to 100% of their Bonus Compensation by filing with the Committee an election that conforms to the requirements of this
Section 3.2, on a form provided by the Committee, prior to the last business day of the year preceding the Plan Year in which the Bonus Compensation is payable to the Eligible Employee (or such
earlier date as the Committee may in its sole discretion determine). Notwithstanding the foregoing, no Eligible Employee shall be permitted to defer any portion of their Bonus Compensation which the
Committee (or its delegate) reasonably determines is required to pay the Eligible Employee's portion of payroll taxes and contributions towards benefits provided to the Eligible Employee and his or
her dependents. 

        3.3    Investment Elections.    

        (a)  At
the time of making the deferral elections described in Section 3.1 and 3.2, the Participant shall designate, in a manner prescribed by the Committee, the Funds
in which the Participant's Accounts shall be deemed to be invested for purposes of determining the amount of earnings to be credited, and/or losses to be debited, to such Accounts under
Article IV. The Funds shall consist of the investment vehicles selected by the Committee from time to time in its sole discretion. 

        (b)  In
making the designation pursuant to this Section 3.3, the Participant may specify that all or any whole percentage of his Accounts be deemed to be invested in
one or more of the Funds. A Participant may change the designation made under this Section 3.3, in a manner prescribed by the Committee, effective as of the next business day following the date
on which such change is made. 

        (c)  Notwithstanding
any other provision of this Plan that may be interpreted to the contrary, the Funds are to be used only for purposes of determining the amount of
earnings to be credited and/or losses to be debited to a Participant's Account, and a Participant's designation of any such Fund, the allocation to his or her Accounts thereof, the calculation of
earnings and the crediting or debiting of such earnings to a Participant's Accounts shall not be considered or construed in any manner as an actual investment of his or her Accounts in any such Fund.
In the event that the Company or any trustee of a Trust described in Section 6.6, in its sole discretion, decides to invest any amounts in any or all of the Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the foregoing, a Participant's Accounts shall at all times be a bookkeeping entry only and shall not represent any investment made on his
or her behalf by the Company or any trustee. 

        (d)  Notwithstanding
the foregoing provisions of this Section 3.3, the Committee may retain the overriding discretion regarding the Participant's designation of Funds
under this Section 3.3. If a
Participant fails to designate any Fund under this Section 3.3, the Participant shall be deemed to have designated a money market Fund. 

6

   
        (e)  Each Participant shall bear full responsibility for all results associated with his or her designation of Funds under this Section 3.3, and neither the Employer
nor the Committee shall have any responsibility or liability with respect to any Participant's designation of' such Funds. 

ARTICLE IV

ACCOUNTS  

        4.1    Deferral Account.    

        The
Committee shall establish and maintain a Deferral Account for each Participant under the Plan. Each Participant's Deferral Account shall be further divided into separate subaccounts
("subaccounts"), each of which corresponds to a Fund elected by the Participant pursuant to Section 3.3(a). A Participant's Deferral Account shall be credited as follows: 

        (a)  If
a Participant was a participant in the Hilton Plan on December 31, 1998, the subaccounts of the Participant's Deferral Account were credited with an amount
equal the value of his or her "Deferral Account" under the Hilton Plan (as such term is defined in Section 1.2 of the Hilton Plan) as of December 31, 1998; 

        (b)  As
soon as practicable after the last day of each payroll period, the subaccounts of the Participant's Deferral Account shall be credited with an amount equal to the
Base Compensation deferred by the Participant during such payroll period in accordance with the Participant's elections under Section 3.1(a) and Section 3.3(a); that is, the portion of
the Participant's Base Compensation that the Participant has elected to defer and be deemed invested in a certain Fund shall be credited to the subaccount corresponding to that Fund; 

        (c)  As
soon as practicable after the day on which Bonus Compensation would be payable to a Participant, the subaccounts of the Participant's Deferral Account shall be
credited with an amount equal to the portion of the Bonus Compensation deferred by the Participant in accordance with the Participant's elections under Section 3.2 and Section 3.3(a); that is,
the portion of the Participant's Bonus Compensation that the Participant has elected to defer and be deemed invested in a certain Fund shall be credited to the subaccount corresponding to that Fund;
and 

        (d)  Each
subaccount of a Participant's Deferral Account shall be credited with earnings and debited with losses at the time and in a manner determined by the Committee. 

        4.2    Company Contribution Account.    

        The
Committee shall establish and maintain a Company Contribution Account for each Participant under the Plan. Each Participant's Company Contribution Account shall be further divided
into separate subaccounts corresponding to the Fund elected by the Participant pursuant to Section 3.3(a). A Participant's Company Contribution Account shall be credited in accordance with the
following provisions: 

        (a)  If
a Participant was a participant in the Hilton Plan on December 31, 1998, the subaccounts of the Participant's Company Contribution Account were credited with
an amount equal the value of his or her "Company Contribution Account" under the Hilton Plan (as such term is defined in Section 1.2 of the Hilton Plan) as of December 31, 1998; 

        (b)  As
soon as practicable after the last day of each payroll period, the subaccounts of the Participant's Company Contribution Account shall be credited with an amount
equal to the portion of the Base Compensation Company Contribution Amount, if any, which the Participant elected to be deemed to be invested in a specific Fund. A Participant's Base Compensation
Company Contribution Amount for any payroll period shall be equal to 50% of the Base Compensation deferred by the Participant during such payroll period in accordance with the Participant's election
under 

7

 

Section 3.1(a), disregarding any such deferral in excess of 10% of the Participant's Base Compensation for such payroll period; 

        (c)  As
soon as practicable after the day on which Bonus Compensation would be payable to a Participant, the subaccounts of the Participant's Company Contribution Account
shall be credited with an amount equal to the portion of the Bonus Compensation Company Contribution Amount, if any, which the Participant elected to be deemed to be invested in a specific Fund. A
Participant's Bonus Compensation Company Contribution Amount with respect to any Bonus Compensation shall be equal to 50% of portion of the Bonus Compensation deferred by the Participant in accordance
with the
Participant's election under Section 3.2, disregarding any such deferral in excess of 10% of the Participant's Bonus Compensation; 

        (d)  Each
subaccount of a Participant's Company Contribution Account shall be credited with earnings or debited with losses at the time and in a manner determined by the
Committee; 

        (e)  As
of the date on which a Participant receives or commences to receive the payment of the amount credited to his or her Accounts, the amount of any forfeitures that
occur under Section 5.2 with respect to any such Participant's Company Contribution Account shall be subtracted from his or her Company Contribution Account; 

        (f)    Notwithstanding
the above paragraphs of this Section 4.2, from time to time and in its sole discretion, the Committee (or its delegate) may provide that
additional Base Compensation Company Contribution Amounts and/or Bonus Compensation Company Contribution Amounts shall be credited to some or all Participants according to the terms and conditions
determined by the Board; and 

        (g)  Notwithstanding
the above paragraphs of this Section 4.2, the Committee (or its delegate) may in its sole discretion determine that a Participant's Accounts shall
not be credited with any Base Compensation Company Contribution Amounts and/or any Bonus Compensation Company Contribution Amounts. 

ARTICLE V

VESTING  

        5.1    Deferral Account.    

        A
Participant's Deferral Account shall be 100% vested at all times. 

        5.2    Company Contribution Account.    

        (a)  Amounts
that are credited to a Participant's Company Contribution Account prior to January 1, 2000 shall become nonforfeitable in the following increments:
(1) 25% upon the Participant's completion of two Years of Vesting Service, (2) an additional 25% (50% total) upon completion of three Years of Vesting Service, (3) an additional
25% (75% total) upon completion of four Years of Vesting Service, and (4) in its entirety after the Participant's completion of five Years of Vesting Service. Notwithstanding the foregoing, any
amounts credited to a Participant's Company Contribution Account that are attributable to "Company Matching Contributions" (as such term was defined in the Bally Entertainment Corporation Management
Retirement Savings Plan (the "Bally Plan")) that were credited to such Participant under the Bally Plan prior to 1997, shall become nonforfeitable in accordance with the vesting schedule provided for
under the Bally Plan. 

        (b)  Effective
for Plan Years commencing on or after January 1, 2000, a Participant shall vest in the Base Compensation Company Contribution Amount and Bonus
Compensation Company Contribution Amount (collectively the "Company Contribution Amount") that are credited to the Participant's Company Contribution Account in a Plan Year (plus earnings thereon),
upon the completion of the applicable vesting period for such Company Contribution Amount. The vesting 

8

 

period for each Plan Year's Company Contribution Amount shall commence with the Plan Year in which the Company Contribution Amount is credited, with the Participant vesting in
(i) 331/3% of the applicable Company Contribution Amount upon being credited with a Year of Vesting Service (as defined under paragraph (b) of the definition of Year of
Service) for the Plan Year for which the Company Contribution Amount is credited, (ii) 331/3% of the applicable Company Contribution Amount upon being credited with a Year of
Vesting Service for the immediately following Plan Year and (iii) 331/3% of the applicable Company Contribution Amount upon being credited with a Year of Vesting Service for the
next following Plan Year. 

        (c)  Notwithstanding
paragraphs (a) and (b) of this Section 5.2, a Participant's Company Contribution Account shall become 100% vested should:
(1) the Participant die while employed by the Employer, (2) the Participant become Disabled while employed by the Employer, or (3) there occur a Change of Control. If a
Participant retires on or after attaining age 55 and does not become employed by a Competitor during the six month period immediately following his or her retirement (the "Six Month Period"),
such Participant's Company Contribution Account shall become 100% vested upon the completion of the Six-Month Period (irrespective of the form of payment elected by the Participant) and
such Participant shall receive or commence to receive payment of the amount credited to his or her Accounts in accordance with Section 6.1(e). 

        (d)  If
a Participant who is not 100% vested in his or her Company Contribution Account retires on or after attaining age 55 and becomes employed by a Competitor during the
Six-Month Period, the portion of such Participant's Company Contribution Account which is not vested shall immediately be forever forfeited and the Employer shall have no obligation to the
Participant (or Beneficiary) with respect to such forfeited amount 

        (e)  If
a Participant who is not 100% vested in his or her Company Contribution Account receives or commences to receive the payment of the amount credited to his or her
Accounts, the portion of such
Participant's Company Contribution Account which is not vested shall immediately be forever forfeited and the Employer shall have no obligation to the Participant (or Beneficiary) with respect to such
forfeited amount. 

        (f)    The
Committee shall have the sole and absolute discretion to waive, limit, or condition any forfeiture of benefits under this Section 5.2 with respect to any
Participant. 

ARTICLE VI

DISTRIBUTIONS  

        6.1    Distribution of Deferred Compensation.    

        (a)  A
Participant may elect, on the form provided by the Committee to defer Compensation under Section 3.1 and Section 3.2, to receive one of the optional
forms of payment described in Section 6.1(c). If such an election is made in a timely fashion, as set forth in Section 6.1(c), it shall be effective for all of the Participant's
Accounts, subject to the Participant timely electing a new optional form of payment pursuant to Section 6.1(c). 

        (b)  The
amount credited to a Participant's Deferral Account and the vested portion of the amount credited to his or her Company Contribution Account shall be paid to the
Participant in the form of payment that the Participant has timely elected (or, in the case of the Participant's death, to the Participant's Beneficiary in accordance with Article VII). If no
such timely election is made, the payment shall be made in the form of a cash lump sum payment generally within 180 days following the Participant's termination of employment. 

9

 

        (c)  A
Participant may elect one of the following optional forms of payment provided that such optional form of payment may not be made or commence before his or her
termination date: 

        (1)  A
lump sum payment which shall be paid generally within 180 days of the Participant's termination of employment, or 

        (2)  Substantially
equal annual installments over five, ten, or fifteen years, to begin generally within 180 days of the Participant's termination of employment. 

        A
Participant's election is timely only if the election is filed with the Committee in the manner prescribed by the Committee at least one year prior to the date the Participant's
employment with the Company terminates. 

        (d)  If
installment payments are paid to a Participant under this Plan, the unpaid portion of a Participant's Accounts shall continue to be credited monthly with earnings
and/or losses pursuant to Article IV of the Plan until all amounts credited to his or her Accounts under the Plan have been distributed. 

        (e)  If
a Participant becomes 100% vested in his or her Company Contribution Account under Section 5.2(c) on account of the Participant's retirement on or after
attaining age 55, then, notwithstanding paragraphs (b) and (c) of this Section 6.1, such Participant shall receive or commence to receive payment of the amount credited to his or
her Deferral Account and Company Contribution Account as soon as administratively feasible following completion of the six month period which follows such Participant's retirement (or any longer or
shorter period which the Committee in its sole discretion may determine). 

        6.2    Inability to Locate Participant.    

        In
the event that the Committee is unable to locate a Participant or Beneficiary within two years following the date the Participant was to commence receiving payment, the entire amount
allocated to the Participant's Deferral Account and Company Contribution Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit
shall be reinstated without interest or earnings from the date payment was to commence under Section 6.1. 

        6.3    Loans.    

        There
shall be no loans permitted under the Plan. 

        6.4    Distributions on Disability.    

        If
a Participant becomes Disabled, such Participant's vested Account shall be distributed pursuant to Section 6.1(b), 

        6.5    Early Distributions.    

        Notwithstanding
any provision of this Plan to the contrary, payments to Participants and Beneficiaries shall be made before such payments are otherwise due under the terms of this Plan
if the Employer determines, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a
regulation issued by the Secretary of the Treasury or his delegate, a decision by a court of competent jurisdiction involving a Participant or Beneficiary, or a closing agreement involving a
Participant or Beneficiary made under Section 7121 of the Code that is approved by the Commissioner, that a Participant or Beneficiary has recognized or will recognize income for state, local
or federal income tax purposes with respect to amounts that are or will be payable to the Participant or Beneficiary under the Plan before they otherwise would be paid to the Participant or
Beneficiary. The payments to be made pursuant to the preceding sentence shall not exceed the tax estimated to be due with respect to the amount of income described therein that is recognized or to be
recognized by a Participant or Beneficiary prior to 

10

 

the receipt of payments under this Plan, and shall be made at the time income is recognized by the Participant or Beneficiary or as soon as possible thereafter. 

        6.6    Trust.    

        (a)  The
Company may make contributions to a trust (hereinafter referred to as the "Trust") in such amounts as are determined by the Committee to be necessary to provide for
the payment to the Participants of the benefits which are the responsibility of the Company and other Employers under this Plan. The Trust is intended to be a grantor trust within the meaning of
subpart E, part 1, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be construed accordingly. 

        (b)  A
Participant shall have no preferred claim on, or any beneficial interest in, any assets of the Trust. Any assets held by the Trust shall be subject to (i) the
claims of general creditors of the Company and (ii) the claims of general creditors of each Employer other than the Company (but only to the extent of the assets of the Trust and earnings
thereon attributable to the Participants employed by such Employer), under Federal and state law in the event of the "insolvency" of the Company or other Employer,  i.e., the Company or other Employer is
unable to pay its debts as they become due or is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code. 

ARTICLE VII

DEATH BENEFITS  

        7.1    In General.    

        Upon
the death of a Participant before the amount credited to his or her Account has been paid in full (either in a lump sum or installment payments), his or her Beneficiary shall
receive the balance of the Participant's vested Account as of the date of death in accordance with Section 7.2 

        7.2    Payment of Death Benefits.    

        The
death benefit payable pursuant to Section 7.1 shall be paid to the Participant's Beneficiary in a lump sum payment within 180 days of the Participant's death. 

ARTICLE VIII

CLAIMS PROCEDURE  

        8.1    Determination of Benefits, Claims Procedure and Administration.    

        (a)  Claim. A person who believes that he or she is being denied a benefit to which he or she is entitled under the Plan
(hereinafter referred to as a "Claimant") may file a written request for such benefit with the Committee, setting forth his or her claim. The request must be addressed to the Committee of the
Park Place Entertainment Corporation Executive Deferred Compensation Plan, 3930 Howard Hughes Parkway, Las Vegas, Nevada 89109, or to such Committee representative as may be designated by the
Committee from time to time. 

        (b)  Claim Decision. Upon receipt of a claim, the Committee (or its representative) shall advise the Claimant that a reply
will be forthcoming within ninety (90) days and shall, in fact, deliver such reply
within such period. The Committee (or its representative) may, however, extend the reply period for an additional ninety (90) days for reasonable cause. 

        If
the claim is denied in whole or in part, the Committee (or its representative) shall issue a written opinion, using language calculated to be understood by the Claimant, setting
forth: 

          (i)  The
specific reason or reasons for such denial; 

11

  

        (ii)  The
specific reference to pertinent provisions of the Plan on which such denial is based; 

        (iii)  A
description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information
is necessary; 

        (iv)  Appropriate
information as to the steps to be taken if the Claimant wishes to submit the claim for review; and 

        (v)  The
time limits for requesting a review under subsection "c" and for review under subsection "d" hereof. 

        (c)  Request for Review. Within sixty (60) days after the receipt by the Claimant of the written opinion described
above, the Claimant may request in writing that the Committee review its determination. Such request must be addressed to the Committee at the then principal place of business of the Company or to
other such person as may be designated by the Committee. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a review of the Committee's determination within such sixty (60) day period, the Claimant he shall be barred and
estopped from challenging the Committee's determination. 

        (d)  Review of Decision. Within sixty (60) days after the Committee's receipt of a request for review as provided
above, the Committee will review its determination. After considering all materials presented by the Claimant, the Committee will render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of the Plan on which the decision is based. If special
circumstances require that the sixty (60) day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review. 

ARTICLE IX

ADMINISTRATION  

        9.1    Committee.    

        A
Committee shall be appointed by, and serve at the pleasure of, the Board of Directors. The number of members comprising the Committee shall be determined by the Board which may from
time to time vary the number of members. A member of the Committee may resign by delivering a written notice of resignation to the Board. The Board may remove any member by delivering a certified copy
of its resolution of removal to such member. Vacancies in the membership of the Committee shall be filled promptly by the Board. 

        9.2    Committee Action.    

        The
Committee shall act at meetings by affirmative vote of a majority of the members of the Committee. Any action permitted to be taken at a meeting may be taken without a meeting if,
prior to such action, a written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant. The Chairman or any other member or members of the Committee designated by the Chairman may
execute any certificate or other written direction on behalf of the Committee. 

12

 

        9.3    Powers and Duties of the Committee.    

        (a)  The
Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms, shall be charged with the general
administration of the Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following: 

        (1)  To
select the investment vehicles in accordance with Section 3.3(a) hereof; 

        (2)  To
construe and interpret the terms and provisions of this Plan; 

        (3)  To
compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries; 

        (4)  To
maintain all records that may be necessary for the administration of the Plan; 

        (5)  To
provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as
shall be required by law; 

        (6)  To
make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof; 

        (7)  To
appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may
from time to time prescribe; and 

        (8)  To
select those officers and highly compensated Employees who shall be Eligible Employees. 

        9.4    Construction and Interpretation.    

        The
Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretation or construction shall be final and binding on all parties,
including but not limited to the Employers and any Participant or Beneficiary. In the event of a conflict between (i) this Plan and (ii) any booklet or other document summarizing or
otherwise describing this Plan or any agreement or notice filed under this Plan, the terms of this Plan shall be controlling. The Committee shall administer such terms and provisions in a uniform and
nondiscriminatory manner and in full accordance with any and all laws applicable to the Plan. 

        9.5    Information    

        To
enable the Committee to perform its functions, the Employers shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants,
their
death, Disability, or other cause of termination, and such other pertinent facts as the Committee may require. 

        9.6    Compensation, Expenses and Indemnity.    

        (a)  The
Committee is authorized at the expense of the Company to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder.
Expenses and fees in connection with the administration of the Plan shall be paid by the Company. 

        (b)  To
the extent permitted by applicable state law, the Company shall indemnify and save harmless the Committee and each member thereof, the Board of Directors and any
delegate of the Committee who is an employee of any Employer against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of
their discharge in good faith of responsibilities under or incident to the Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Company or provided by the Company under any by-law, agreement or otherwise, as such indemnities arc permitted under state
law. 

13

 

        9.7    Quarterly Statements.    

        Under
procedures established by the Committee, a Participant shall receive a statement with respect to such Participant's Accounts on a quarterly basis as of each March 31,
June 30, September 30 and December 31. 

ARTICLE X

MISCELLANEOUS  

        10.1    Participating Employers.    

        (a)  The
Board shall designate each Employer which shall become a participating Employer under the Plan. 

        (b)  As
a condition to participating in the Plan, each participating Employer shall be deemed to have authorized the Committee to act for it in all matters arising under or
with respect to the Plan and shall comply with such other terms and conditions as may be imposed by the Committee. 

        (c)  Each
participating Employer hereby irrevocably grants the Company full and exclusive power to exercise, enforce or waive any right which such Employer might otherwise
have under the terms of the Plan, and each participating Employer irrevocably appoints the Company as its agent for such purpose. 

        (d)  Each
Employer shall be responsible for the benefits under this Plan with respect to each Participant employed by such Employer. 

        (e)  Notwithstanding
paragraph (d) of this Section 10.1, the Company may assume the obligations of any Employer to provide benefits to Participants under the
Plan. 

        (f)    Each
participating Employer may cease to participate in the Plan with respect to its employees by resolution of its governing body, if authorized to do so by the
Company. 

        10.2    Unsecured, General Creditor.    

        (a)  Participants
and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of
any such Participant's Employer or the Company. Any rights created under this Plan with respect to a Participant shall be mere unsecured contractual rights of the Participant against the Employer (or
the Employers if a Participant has been employed by more than one Employer) responsible for the Participant's benefits or the Company. 

        (b)  In
the event that the trustee under the Trust (or any Employer) purchases (i) an insurance policy or policies insuring the lives of Participants or
(ii) any other property to allow any Employer to recover the costs of any payments required to be made by them under this Plan, no Participant nor any of his or her designated Beneficiaries
shall have or acquire any right whatsoever therein or in the proceeds therefrom. The trustee under the Trust (or, if applicable the Employer) shall be the sole owner of any such policy or policies,
and, as such, shall possess and may exercise all incidents of ownership. 

        10.3    Restriction Against Assignment.    

        Except
as may otherwise be required under applicable law, the Company or the Employer shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not
to any other person or corporation. Except as may otherwise be required under applicable law, no part of a Participant's Accounts shall be liable for the debts, contracts, or engagements of any
Participant, his or her Beneficiary, or successors in interest, nor shall a Participant's Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable
proceeding, nor shall any such 

14

 

person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in
interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the
Committee, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct. 

        10.4    Withholding.    

        There
shall be deducted from each payment made under the Plan or any other compensation payable to the Participant (or Beneficiary) all taxes which are required to be withheld by the
Employer in respect to such payment or this Plan. The Employer shall have the right to reduce any payment (or compensation) by the amount of cash sufficient to provide the amount of said taxes. 

        10.5    Amendment, Modification, Suspension or Termination.    

        The
Company may amend, modify, suspend or terminate the Plan in whole or in part, except that (a) no amendment, modification, suspension or termination shall have any retroactive
effect to reduce any amounts allocated to a Participant's Accounts, and (b) Section 8.1 may not be amended with respect to any Participant or Beneficiary following the date the
Participant or Beneficiary makes a claim for benefits under the Plan. In the event that this Plan is terminated, the amounts credited to a Participant's Accounts (including any previously uninvested
amounts) shall be distributed to the Participant or, in the event of his or her death, his or her Beneficiary, in a lump sum within sixty (60) days following the date of termination. 

        10.6    Governing Law.    

        This
Plan shall be construed, governed and administered in accordance with the laws of the State of Nevada. 

        10.7    Receipt or Release.    

        Any
payment to a Participant or the Participant's Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against
the Committee, the Employer and the trustee of any grantor trust that holds assets for purposes of making benefit payments under the Plan. The Committee may require such Participant or Beneficiary, as
a condition precedent to such payment, to execute a receipt and release to such effect. 

        10.8    Payment on Behalf of Persons Under Incapacity.    

        In
the event that any amount becomes payable under the Plan to a person who, in the sole judgement of the Committee, is considered by reason of physical or mental condition to be unable
to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgement, to have assumed the care of such person. Any payment
made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company. 

        10.9    Termination of Participation and/or Deferrals.    

        If
the Committee determines in its sole discretion that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, for purposes of the
Employee Retirement Income Security Act of 1974, the Committee shall have the right, in its sole discretion to (i) terminate any deferral election the Participant has made for the remainder of
the Plan Year in which the Participant's membership status changes, (ii) prevent the Participant from making future deferral elections, and/or (iii) immediately distribute in the form of
a lump sum cash payment, the vested portion of the amount credited to the Participant's Accounts and terminate the Participant's 

15

 

participation in the Plan (with the unvested portion being forfeited or, at the discretion of the Committee, treated as vested). 

        10.10    Headings, etc. Not Part of Agreement.    

        Headings
and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof. 

        This
Plan is hereby executed by a duly authorized officer of the Company effective as of January 1, 2000, 

	 	 	PARK PLACE ENTERTAINMENT CORPORATION
	

 	
 	

By:	
 	

/s/ WALLACE R. BARR

	

 	
 	

Title:	
 	

EVP/COO

16

  

 
 

Appendix A    
  

        SPECIAL RULES FOR CERTAIN INDIVIDUALS

WHO WERE PARTICIPANTS IN THE

CAESARS WORLD INC. EXECUTIVE SECURITY PLAN  

        Effective July 1, 2001 (the "Transfer Date"), the assets held by the Trust shall include assets that were previously held by a trust under the Caesars
World Inc. Executive Security Plan (the "Caesars Plan") for purposes of paying benefits to participants under the Caesars Plan ("Caesars Participants") who are (i) Caesars Participants
who are employed by an Employer; (ii) Caesars Participants who are receiving monthly benefits under the Caesars Plan on the Transfer Date; or (iii) terminated Caesars Participants who
are vested in their accrued benefit under the Caesars Plan, but are not entitled to receive payment of their benefits under the Caesars Plan on the Transfer Date, because two years have not elapsed
since their termination of employment. 

        For
purposes of this Appendix A, any term used herein (or incorporated by reference herein) that is not separately defined in this Appendix shall have the meaning set forth
elsewhere in the Plan. 

        The
following special rules shall apply to Caesars Participants: 

        1.    Caesars Plan Participants who are Employed by an Employer.    

        (a)  The
Committee shall establish and maintain a "Caesars Plan Account" for each Caesars Participant who is an Employee of an Employer on the Transfer Date; and each such
Caesars Participant for whom a Caesars Plan Account is established shall become a Participant under the Plan on the Transfer Date if not already a Participant pursuant to Section 2.1 herein.
Each such Participant's Caesars Plan Account shall be further divided into separate subaccounts corresponding to the Fund elected by the Participant pursuant to paragraph (b). The subaccounts
of the Participant's Caesars Plan Account shall collectively be credited as of the Transfer Date with an amount equal to the present value of the Participant's accrued benefit under the Caesars Plan
as of the date on which such Participant's benefit under the Caesars Plan was frozen, as determined by the Administrative Committee under the Caesars Plan in
accordance with the applicable provisions of the Caesars Plan (such amount being hereinafter referred to as a Participant's "Caesars Plan Benefit"). In the event that a Terminated Caesars Participant
(as defined in Section 3(a) of this Appendix) becomes employed by an Employer prior to receiving payment of his Caesars Plan Benefit under Section 3 herein, the Committee shall establish
and maintain a Caesars Plan Account for such Participant and the subaccounts of such Participant's Caesars Plan Account shall be credited on the date on which the Terminated Caesars Participant
becomes employed by an Employer, with an amount equal to the Participant's Caesars Plan Benefit. Each subaccount of a Participant's Caesars Plan Account shall be credited with earnings and debited
with losses at the time and in a manner determined by the Committee. 

        (b)  Prior
to the Transfer Date, the Participant shall designate, in a manner prescribed by the Committee, the Funds in which the Participant's Caesars Plan Account shall be
deemed to be invested for purposes of determining the amount of earnings to be credited, and/or losses to be debited to the Caesars Plan Account under paragraph (a). The provisions of Sections
3.3(b), (c), (d) and (e) shall apply to the designation of Funds by the Participant pursuant to this paragraph. 

        (c)  (i)    The
amount that is credited to a Participant's Caesars Plan Account shall be or become nonforfeitable if the Participant has completed or completes five
years of Continuous Employment. For purposes of this paragraph, Continuous Employment shall mean a Participant's continuing years and full months of service as an Employee, commencing with the date on
which the employee became a participant in the Caesars Plan, which shall include service with Caesars World Inc. and its affiliates prior to the acquisition of Caesars World Inc. by the
Company. In determining the number of years of 

17

 

Continuous Employment completed by a Participant, each full month of Continuous Employment shall be counted as one-twelfth of a year of Continuous Employment. 

        (ii)  If
a Participant who has Accounts under the Plan and is not vested in his or her Caesars Plan Account, receives or commences to receive the payment of the amount
credited to his or her Accounts pursuant to paragraph (f) herein, such Participant's Caesars Plan Account shall immediately be forever forfeited and neither the Company nor the Participant's Employer
shall have any obligation to the Participant (or the Participant's Beneficiary) with respect to such forfeited amount. 

        (iii)  If
a Participant who does not have Accounts under the Plan and is not vested in his or her Caesars Plan Account, terminates employment with all Employers, such
Participant's Caesars Plan Account shall immediately be forever forfeited and neither the Company nor the Participant's Employer shall have any obligation to the Participant (or the Participant's
Beneficiary) with respect to such forfeited amount. 

        (iv)  Notwithstanding
subparagraph (i) of this paragraph, a Participant's Caesars Plan Account shall become fully vested if the Participant becomes Disabled while
employed by the Employer. 

        (v)  Notwithstanding
any provisions contained herein, a Participant's Caesars Plan Account shall be immediately forfeited and no benefits attributable to the Participant's
Caesars Plan Account shall be payable (or if payments attributable to the Participant's Caesars Plan Account have commenced, no further benefits shall be paid) if: 

        (x)  the
Participant is terminated by the Employer for a material act of dishonesty, disclosure of confidential information, gross carelessness, significant neglect of duty,
breach of fiduciary duty to the Employer or Company, misappropriation of assets, commission of an illegal act or any action that has a direct, substantial, and adverse affect on the reputation or
business of the Employer, Company or any affiliate; or 

        (y)  the
Participant has terminated employment with the Employer and, before two years have elapsed after such termination, such Participant becomes an employee of or a
consultant to a Competitor or such Participant becomes a Competitor; or 

        (z)  the
Participant discloses or uses without prior approval of an officer of the Company, any confidential information of the Company or any Employer including, without
limitation, data and information concerning customers, marketing strategies, trade representatives, employees, and any risk or exposure confronting the Company or any Employer where such use or
disclosure adversely affects the financial condition, business or reputation of the Company, Employer or any affiliate thereof. 

        (vi)  The
Committee shall have the sole and absolute discretion to waive, limit, or condition any forfeiture of benefits under this paragraph (c) with respect to any
Caesars Participant. 

        (d)  If
a Participant has made an election to defer Base Compensation pursuant to Section 3.1 or Bonus Compensation pursuant to Section 3.2, the amount credited
to such Participant's Caesars Plan Account shall be paid in the form of payment in which the Participant receives payment of the amount credited to his or her Accounts under Section 6.1. 

        (e)  If
a Participant has not elected to defer or is not eligible to elect to defer Base Compensation pursuant to Section 3.1 or Bonus Compensation pursuant to
Section 3.2, such Participant must elect, on the form provided by the Committee, to receive payment of the amount credited to his or her Caesars Plan Account in one of the optional forms of
payment described in Section 6.1(c). The form in which a Participant receives payment of his or her Caesars Plan Account shall be subject to the rules provided for under Section 6.1. 

18

 

        (f)    The
amount credited to a Participant's Caesars Plan Account shall generally be paid or commence to be paid within 180 days of the Participant's termination of
employment with all Employers; provided, however, that if a Participant has not attained age 65 on or prior to the date on which such Participant would otherwise receive or commence to receive payment
of the amount credited to his or her Caesars Plan Account, such Participant shall receive or commence to receive payment of the amount credited to his or her Caesars Plan Account as soon as
administratively feasible following the completion of the two-year period which follows such Participant's termination of employment with all Employers or, if earlier, following the date
on which the Participant attains age 65 (unless the Participant's Caesars Plan Account is forfeited pursuant to subparagraph (v) of paragraph (e) herein). 

        2.    Caesars Participants who were Receiving Monthly Payments Prior to the Transfer Date.    

        If,
on the Transfer Date, a Caesars Participant is receiving payment of monthly benefits under the Caesars Plan, all remaining benefits to be paid under the Caesars Plan to such Caesars
Participant on or after the Transfer Date shall be paid under the Plan. All such benefits shall be paid to any such Caesars Participant at the same time and in the same manner as such benefits would
have been paid to such Caesars Participant under the Caesars Plan. 

        3.    Terminated Vested Caesars Plan Participants.    

        (a)  If,
on the Transfer Date, a terminated Caesars Participant who has not attained age 65, is vested in his or her Caesars Plan Benefit (as defined in Section 1(a)
of this Appendix), but is not entitled to receive payment of such benefit under the Caesars Plan on the Transfer Date, solely because two years have not elapsed since such Caesars Participant's
termination of employment (any such Caesars Participant being hereinafter referred to as a "Terminated Caesars Participant"), such Terminated Caesars Participant shall receive payment of his or her
Caesars Plan Benefit under this Plan in accordance with paragraph (b) of this Section 3. 

        (b)  A
Terminated Caesars Participant shall receive payment of his or her Caesars Plan Benefit in the form of a lump sum payment (or some other form of payment which may be
determined by the Committee in its sole discretion) as soon as administratively feasible following the completion of the two-year period which follows such Participant's termination of
employment with Caesars World Inc. and its affiliates or any other Employer (the "Two-Year Period") or, if earlier, following the date on which the Participant attains age 65. 

        (c)  Notwithstanding
any provisions contained herein, the Caesars Plan Benefit of a Terminated Caesars Participant shall be immediately forfeited and no Caesars Plan Benefit
shall be payable to a Terminated Caesars Participant (or if payments have commenced, no further benefits shall be paid) if: 

        (i)    the
Terminated Caesars Participant becomes an employee of or a consultant to a Competitor or such Terminated Caesars Participant becomes a Competitor before the
completion of the Two-Year Period, or 

        (ii)  the
Terminated Caesars Participant discloses or uses without prior approval of an officer of the Company, any confidential information of the Company or any Employer
including, without limitation, data and information concerning customers, marketing strategies, trade representatives, employees, and any risk or exposure confronting the Company or any Employer where
such use or disclosure adversely affects the financial condition, business or reputation of the Company, Employer or any affiliate thereof. 

        (d)  The
Committee shall have the sole and absolute discretion to waive, limit, or condition any forfeiture of benefits under paragraph (c) of this Section 3
with respect to any Terminated Caesars Participant. 

19

 
 

EXHIBIT B
  PARTICIPATING EMPLOYERS
  RESTATED DEFERRED COMPENSATION PLAN AND DEATH BENEFIT PLAN    
  

Grand
Casinos, Inc. (Minnesota) 

BL
Development Corp. (Minnesota) 

Grand
Casinos of Mississippi, Inc.—Biloxi (Minnesota) 

Grand
Casinos of Mississippi, L.L.C.—Gulfport (Minnesota) 

Bally's
Park Place, Inc. (New Jersey) 

Atlantic
City Country Club, Inc. (New Jersey) 

GNOC,
Corp. (New Jersey) 

Parball
Corporation (Nevada) 

FHR
Corporation (Nevada) 

Flamingo
Hilton-Laughlin, Inc. (Nevada) 

LVH
Corporation (Nevada) 

Belle
of Orleans, L.L.C. (Louisiana) 

Bally's
Olympia Limited Partnership (Delaware) 

Caesars
World, Inc. 

Boardwalk
Regency Corporation 

Desert
Palace, Inc. 

Roman
Holding Corporation of Indiana 

Sheraton
Tunica Corporation. 

  

 
 

EXHIBIT A
  PARTICIPATING EMPLOYERS
  RESTATED SAVINGS PLAN    
  

FHR
Corporation (Nevada) 

Flamingo
Hilton-Laughlin, Inc. (Nevada) 

LVH
Corporation (Nevada) 

Parball
Corporation (Nevada) 

Bally's
Park Place, Inc. (New Jersey) 

Atlantic
City Country Club, Inc. (New Jersey) 

GNOC,
Corp. (New Jersey) 

5

 
 
 

EXHIBIT B
  PARTICIPATING EMPLOYERS
  RESTATED DEFERRED COMPENSATION PLAN AND DEATH BENEFIT PLAN    
  

Grand
Casinos, Inc. (Minnesota) 

BL
Development Corp. (Minnesota) 

Grand
Casinos of Mississippi, Inc.—Biloxi (Minnesota) 

Grand
Casinos of Mississippi, L.L.C.—Gulfport (Minnesota) 

Bally's
Park Place, Inc. (New Jersey) 

Atlantic
City Country Club, Inc. (New Jersey) 

GNOC,
Corp. (New Jersey) 

Parball
Corporation (Nevada) 

FHR
Corporation (Nevada) 

Flamingo
Hilton-Laughlin, Inc. (Nevada) 

LVH
Corporation (Nevada) 

Belle
of Orleans, L.L.C. (Louisiana) 

Bally's
Olympia Limited Partnership (Delaware) 

Caesars
World, Inc. 

Boardwalk
Regency Corporation 

Desert
Palace, Inc. 

Roman
Holding Corporation of Indiana 

Sheraton
Tunica Corporation. 

6

QuickLinks

Exhibit 10.40

THE RESTATED PARK PLACE ENTERTAINMENT CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN As Restated and Amended Effective January 1, 2000

Appendix A

EXHIBIT B PARTICIPATING EMPLOYERS RESTATED DEFERRED COMPENSATION PLAN AND DEATH BENEFIT PLAN

EXHIBIT A PARTICIPATING EMPLOYERS RESTATED SAVINGS PLAN

EXHIBIT B PARTICIPATING EMPLOYERS RESTATED DEFERRED COMPENSATION PLAN AND DEATH BENEFIT PLAN

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