Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on this 28th day of
April, 2010 (the “Commencement Date”) by and between Penn National Gaming, Inc.,
a Pennsylvania corporation (the “Company”), and Peter M. Carlino, an individual
residing in Pennsylvania (“Executive”).

 

WHEREAS, Executive and Company previously entered into an Employment Agreement
dated December 31, 2008 (the “Prior Agreement”); and

 

WHEREAS, the parties wish to renew and update the Prior Agreement with the terms
set forth below in this Agreement.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

1.                                       EMPLOYMENT.  THE COMPANY HEREBY AGREES
TO EMPLOY EXECUTIVE AND EXECUTIVE HEREBY ACCEPTS SUCH EMPLOYMENT, IN ACCORDANCE
WITH THE TERMS, CONDITIONS AND PROVISIONS HEREINAFTER SET FORTH.

 

1.1.                              DUTIES AND RESPONSIBILITIES.  EXECUTIVE SHALL
SERVE AS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE COMPANY. 
EXECUTIVE SHALL PERFORM ALL DUTIES AND ACCEPT ALL RESPONSIBILITIES INCIDENT TO
SUCH POSITION AS MAY BE REASONABLY ASSIGNED TO HIM BY THE BOARD OF DIRECTORS OF
THE COMPANY (THE “BOARD”).  EXECUTIVE’S PRINCIPAL PLACE OF EMPLOYMENT SHALL BE
IN WYOMISSING, PENNSYLVANIA.

 

1.2.                              TERM.  THE TERM OF THIS AGREEMENT SHALL BEGIN
ON THE DATE HEREOF AND SHALL TERMINATE AT THE CLOSE OF BUSINESS ON THE FIFTH
ANNIVERSARY OF THE COMMENCEMENT DATE (THE “INITIAL TERM”), UNLESS EARLIER
TERMINATED IN ACCORDANCE WITH SECTION 3 HEREOF.  THE TERM OF THIS AGREEMENT MAY
BE RENEWED FOR ADDITIONAL PERIODS (EACH, A “RENEWAL TERM” AND, TOGETHER WITH THE
INITIAL TERM, THE “EMPLOYMENT TERM”) ONLY UPON THE EXECUTION OF A WRITTEN
RENEWAL BY THE PARTIES HERETO.  NOTWITHSTANDING THE FOREGOING TO THE CONTRARY,
SECTIONS 5 THROUGH 21 SHALL SURVIVE ANY TERMINATION OF THE EMPLOYMENT TERM UNTIL
THE EXPIRATION OF ANY APPLICABLE TIME PERIODS SET FORTH IN SECTIONS 5, 6 AND 7. 
IN ADDITION, THAT PORTION OF SECTION 3.4(B) RELATING TO THE PAYMENT OF SEVERANCE
UPON NON-RENEWAL OF THIS AGREEMENT WILL BE DEEMED TO SURVIVE THE EMPLOYMENT TERM
TO THE EXTENT NECESSARY TO ACCOMPLISH ITS INTENDED PURPOSE.

 

1.3.                              EXTENT OF SERVICE.  EXECUTIVE AGREES TO USE
EXECUTIVE’S BEST EFFORTS TO CARRY OUT EXECUTIVE’S DUTIES AND RESPONSIBILITIES
AND, CONSISTENT WITH THE OTHER PROVISIONS OF THIS AGREEMENT, TO DEVOTE
SUBSTANTIALLY ALL OF EXECUTIVE’S BUSINESS TIME, ATTENTION AND ENERGY THERETO. 
THE FOREGOING SHALL NOT BE CONSTRUED AS PREVENTING EXECUTIVE FROM SERVING ON THE
BOARD OF PHILANTHROPIC ORGANIZATIONS, OR PROVIDING OVERSIGHT WITH RESPECT TO HIS
PERSONAL INVESTMENTS (INCLUDING CARLINO DEVELOPMENT GROUP AND ITS AFFILIATES)
AND THE CARLINO FAMILY TRUST AND ITS AFFILIATES, SO LONG AS SUCH SERVICE DOES
NOT MATERIALLY INTERFERE WITH EXECUTIVE’S DUTIES HEREUNDER.

 

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2.                                       COMPENSATION.  FOR ALL SERVICES
RENDERED BY EXECUTIVE TO THE COMPANY, THE COMPANY SHALL COMPENSATE EXECUTIVE AS
SET FORTH BELOW.

 

2.1.                              BASE SALARY.  THE COMPANY SHALL PAY EXECUTIVE
A BASE SALARY (“BASE SALARY”), COMMENCING ON THE COMMENCEMENT DATE, AT THE
ANNUAL RATE OF AT LEAST ONE MILLION SIX HUNDRED FIFTY FIVE THOUSAND AND FOUR
DOLLARS ($1,655,004), PAYABLE IN INSTALLMENTS AT SUCH TIMES AS THE COMPANY
CUSTOMARILY PAYS ITS OTHER SENIOR EXECUTIVES (“PEER EXECUTIVES”).  EXECUTIVE’S
PERFORMANCE AND BASE SALARY SHALL BE REVIEWED ANNUALLY.  ANY INCREASE IN BASE
SALARY OR OTHER COMPENSATION SHALL BE MADE AT THE DISCRETION OF THE BOARD OR THE
COMPENSATION COMMITTEE OF THE BOARD (THE “COMPENSATION COMMITTEE”).

 

2.2.                              CASH BONUSES.  EXECUTIVE SHALL PARTICIPATE IN
THE COMPANY’S ANNUAL INCENTIVE COMPENSATION PLAN APPLICABLE TO PEER EXECUTIVES. 
EACH ANNUAL BONUS AWARD EARNED IN A FISCAL YEAR SHALL BE PAID PURSUANT TO THE
TERMS OF THE ANNUAL INCENTIVE PLAN DOCUMENT (IF ANY) BY MARCH 15 OF THE
IMMEDIATELY FOLLOWING FISCAL YEAR, UNLESS THE WRITTEN BONUS PLAN PROVIDES FOR A
DIFFERENT PAYMENT DATE OR UNLESS EXECUTIVE SHALL ELECT TO DEFER THE RECEIPT OF
SUCH BONUS AWARD PURSUANT TO AN ARRANGEMENT THAT MEETS THE REQUIREMENTS OF
SECTION 409A OF THE CODE (“SECTION 409A”).

 

2.3.                              EQUITY COMPENSATION.  THE COMPANY MAY GRANT TO
EXECUTIVE OPTIONS OR OTHER EQUITY COMPENSATION PURSUANT TO, AND SUBJECT TO THE
TERMS AND CONDITIONS OF, THE THEN CURRENT EQUITY COMPENSATION PLAN OF PENN
NATIONAL GAMING, INC.  THE COMPENSATION COMMITTEE SHALL SET THE AMOUNT AND TERMS
OF SUCH OPTIONS OR OTHER EQUITY COMPENSATION.

 

2.4.                              OTHER BENEFITS.  EXECUTIVE SHALL BE ENTITLED
TO PARTICIPATE IN ALL OTHER EMPLOYEE BENEFIT PLANS AND PROGRAMS, INCLUDING,
WITHOUT LIMITATION, HEALTH, VACATION, RETIREMENT, DEFERRED COMPENSATION OR SERP,
MADE AVAILABLE TO OTHER PEER EXECUTIVES, AS SUCH PLANS AND PROGRAMS MAY BE IN
EFFECT FROM TIME TO TIME AND SUBJECT TO THE ELIGIBILITY REQUIREMENTS OF THE EACH
PLAN.  NOTHING IN THIS AGREEMENT SHALL PREVENT THE COMPANY FROM AMENDING OR
TERMINATING ANY RETIREMENT, WELFARE OR OTHER EMPLOYEE BENEFIT PLANS OR PROGRAMS
FROM TIME TO TIME, AS THE COMPANY DEEMS APPROPRIATE.

 

2.5.                              VACATION, SICK LEAVE AND HOLIDAYS.  EXECUTIVE
SHALL BE ENTITLED IN EACH CALENDAR YEAR TO SIX (6) WEEKS OF PAID VACATION TIME. 
EACH VACATION SHALL BE TAKEN BY EXECUTIVE AT SUCH TIME OR TIMES AS AGREED UPON
BY THE COMPANY AND EXECUTIVE, AND ANY PORTION OF EXECUTIVE’S ALLOWABLE VACATION
TIME NOT USED DURING THE CALENDAR YEAR SHALL BE SUBJECT TO THE COMPANY’S PAYROLL
POLICIES REGARDING CARRYOVER VACATION.  EXECUTIVE SHALL BE ENTITLED TO HOLIDAY
AND SICK LEAVE IN ACCORDANCE WITH THE COMPANY’S HOLIDAY AND OTHER PAY FOR TIME
NOT WORKED POLICIES.

 

2.6.                              REIMBURSEMENT OF EXPENSES.  EXECUTIVE SHALL BE
PROVIDED WITH REIMBURSEMENT OF REASONABLE EXPENSES RELATED TO EXECUTIVE’S
EMPLOYMENT BY THE COMPANY ON A BASIS NO LESS FAVORABLE THAN THAT AUTHORIZED FROM
TIME TO TIME FOR PEER EXECUTIVES.  SUCH REIMBURSEMENTS SHALL BE MADE IN SUCH
MANNER AND AT SUCH TIMES AS PROVIDED IN THE REIMBURSEMENT POLICIES APPLICABLE TO
PEER EXECUTIVES.

 

2.7.                              AUTOMOBILE.  DURING THE TERM OF THIS
AGREEMENT, THE COMPANY SHALL PROVIDE EXECUTIVE WITH AN AUTOMOBILE OF SUCH MAKE
AND MODEL CONSISTENT WITH THE COMPANY’S POLICY FOR ITS PROVISION OF AUTOMOBILES
TO PEER EXECUTIVES.  THE COMPANY SHALL REIMBURSE EXECUTIVE FOR ALL EXPENSES
ARISING FROM OR RELATED TO THE MAINTENANCE, REPAIR AND DAILY OPERATION OF SUCH
AUTOMOBILE

 

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IN CARRYING OUT EXECUTIVE’S DUTIES HEREUNDER, INCLUDING BUT NOT LIMITED TO,
FUEL, SERVICE AND INSURANCE COSTS, PROVIDED THAT EXECUTIVE PRESENTS VOUCHERS
EVIDENCING SUCH EXPENSES AS REQUIRED BY THE COMPANY.

 

2.8.                              PERQUISITES.  THE COMPANY SHALL CONTINUE TO
REIMBURSE EXECUTIVE FOR ANNUAL MEMBERSHIP FEES AND ASSESSMENTS FOR A COUNTRY
CLUB OF EXECUTIVE’S CHOICE.  THE COMPANY SHALL PAY THE PREMIUMS FOR A LIFE
INSURANCE POLICY IN AN AMOUNT TO BE DETERMINED BY THE COMPANY AND EXECUTIVE.

 

3.                                       TERMINATION.  EXECUTIVE’S EMPLOYMENT
MAY BE TERMINATED PRIOR TO THE END OF THE EMPLOYMENT TERM IN ACCORDANCE WITH,
AND SUBJECT TO THE TERMS AND CONDITIONS, SET FORTH BELOW.

 

3.1.                              TERMINATION BY THE COMPANY.

 

(A)                                  WITHOUT CAUSE.  THE COMPANY MAY TERMINATE
EXECUTIVE’S EMPLOYMENT AT ANY TIME WITHOUT CAUSE (AS SUCH TERM IS DEFINED IN
SUBSECTION (B) BELOW) UPON DELIVERY OF WRITTEN NOTICE TO EXECUTIVE, WHICH NOTICE
SHALL SET FORTH THE EFFECTIVE DATE OF SUCH TERMINATION.

 

(B)                                 WITH CAUSE.  THE COMPANY MAY TERMINATE
EXECUTIVE’S EMPLOYMENT AT ANY TIME FOR CAUSE EFFECTIVE IMMEDIATELY UPON DELIVERY
OF WRITTEN NOTICE TO EXECUTIVE.  AS USED HEREIN, THE TERM “CAUSE” SHALL MEAN:

 

(I)                                     EXECUTIVE SHALL HAVE BEEN CONVICTED OF A
FELONY OR ANY MISDEMEANOR INVOLVING ALLEGATIONS OF FRAUD, THEFT, PERJURY OR
CONSPIRACY;

 

(II)                                  EXECUTIVE IS FOUND DISQUALIFIED OR NOT
SUITABLE TO HOLD A CASINO OR OTHER GAMING LICENSE BY A GOVERNMENTAL GAMING
AUTHORITY IN ANY JURISDICTION WHERE EXECUTIVE IS REQUIRED TO BE FOUND QUALIFIED,
SUITABLE OR LICENSED;

 

(III)                               EXECUTIVE MATERIALLY BREACHES ANY MATERIAL
COMPANY POLICY OR ANY MATERIAL TERM HEREOF, INCLUDING, WITHOUT LIMITATION,
SECTIONS 4 THROUGH 7 AND, IN EACH CASE, FAILS TO CURE SUCH BREACH WITHIN 15 DAYS
AFTER RECEIPT OF WRITTEN NOTICE THEREOF; OR

 

(IV)                              EXECUTIVE MISAPPROPRIATES CORPORATE FUNDS AS
DETERMINED IN GOOD FAITH BY THE BOARD.

 

3.2.                              TERMINATION BY THE EXECUTIVE.  EXECUTIVE MAY
VOLUNTARILY TERMINATE EMPLOYMENT FOR ANY REASON EFFECTIVE UPON 60 DAYS’ PRIOR
WRITTEN NOTICE TO THE COMPANY, UNLESS THE COMPANY WAIVES SUCH NOTICE REQUIREMENT
(IN WHICH CASE THE COMPANY SHALL NOTIFY EXECUTIVE IN WRITING AS TO THE EFFECTIVE
DATE OF TERMINATION).  THE COMPANY AND EXECUTIVE, HOWEVER, RECOGNIZE AND AGREE
THAT THEY MUTUALLY AGREED UPON THE TERM OF THIS AGREEMENT AND THAT EXECUTIVE IS
EXPECTED TO COMPLETE FULLY THE EMPLOYMENT TERM.

 

3.3.                              TERMINATION FOR DEATH OR DISABILITY.  IN THE
EVENT OF THE DEATH OR TOTAL DISABILITY OF EXECUTIVE, EXECUTIVE’S EMPLOYMENT
SHALL TERMINATE EFFECTIVE AS OF THE DATE OF EXECUTIVE’S DEATH OR DISABILITY. 
THE TERM “DISABILITY” SHALL HAVE THE DEFINITION SET FORTH IN THE COMPANY’S LONG
TERM DISABILITY INSURANCE POLICY IN EFFECT AT THE TIME OF SUCH DETERMINATION.

 

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3.4.                              PAYMENTS DUE UPON TERMINATION.

 

(A)                                  ALREADY ACCRUED BASE SALARY AND EXPENSE. 
UPON ANY TERMINATION OF EMPLOYMENT DURING THE EMPLOYMENT TERM, EXECUTIVE SHALL
BE ENTITLED TO RECEIVE ANY AMOUNTS DUE FOR BASE SALARY ACCRUED BUT UNPAID
THROUGH THE EFFECTIVE DATE OF TERMINATION, AND SUCH AMOUNTS SHALL BE PAID IN
ACCORDANCE WITH THE COMPANY’S THEN CURRENT PAYROLL SYSTEM FOR PEER EXECUTIVES. 
ANY EXPENSES INCURRED BUT NOT REIMBURSED THROUGH THE EFFECTIVE DATE OF
TERMINATION SHALL BE PAID AT SUCH TIME AND IN SUCH MANNER AS PROVIDED UNDER THE
COMPANY’S EXPENSE REIMBURSEMENT POLICY APPLICABLE TO PEER EXECUTIVES.

 

(B)                                 SEVERANCE PAY AND BENEFITS.  SUBJECT TO THE
CONDITIONS IN SUBSECTION (C) HEREOF, IF EXECUTIVE’S EMPLOYMENT IS TERMINATED
UNDER SECTION 3.1(A) OR SECTION 3.3, IF EXECUTIVE RESIGNS WITH GOOD REASON (AS
DEFINED BELOW), OR IF EXECUTIVE DELIVERS A WRITTEN NOTICE OF RESIGNATION WITHIN
30 DAYS AFTER THE EXPIRATION OF THE EMPLOYMENT TERM AND THE COMPANY DOES NOT
OFFER TO RENEW THE EMPLOYMENT TERM DURING SUCH 30-DAY PERIOD ON TERMS NO LESS
FAVORABLE IN THE AGGREGATE TO THE EXECUTIVE THAN THOSE CONTAINED HEREIN AND
EXECUTIVE THEREUPON TERMINATES HIS EMPLOYMENT AT THE END OF SUCH 30-DAY PERIOD,
THEN EXECUTIVE WILL BE ENTITLED TO RECEIVE, AND THE COMPANY WILL PROVIDE
EXECUTIVE WITH, THE FOLLOWING SEVERANCE PAY AND BENEFITS (IN ADDITION TO ANY
AMOUNTS PAYABLE UNDER SUBSECTION (A) HEREOF); PROVIDED, FOR PURPOSES OF
SECTION 409A, EACH PAYMENT (WHETHER AN INSTALLMENT OR LUMP SUM) OF SEVERANCE PAY
UNDER THIS SUBSECTION (B) SHALL BE CONSIDERED A SEPARATE PAYMENT:

 

(I)                                     AMOUNT OF POST-EMPLOYMENT BASE SALARY
AND BONUS.  THE COMPANY SHALL PAY TO EXECUTIVE AN AMOUNT EQUAL TO THE PRODUCT OF
(A) THE SUM OF (1) EXECUTIVE’S MONTHLY BASE SALARY AT THE HIGHEST RATE IN EFFECT
DURING THE 24-MONTH PERIOD IMMEDIATELY PRECEDING THE DATE OF EXECUTIVE’S
TERMINATION OF EMPLOYMENT (THE “TERMINATION DATE”), AND (2) EXECUTIVE’S MONTHLY
BONUS VALUE (DETERMINED BY DIVIDING BY 12 THE HIGHEST AMOUNT OF ANNUAL CASH
BONUS COMPENSATION PAID TO EXECUTIVE IN RESPECT OF EITHER THE FIRST OR SECOND
FULL CALENDAR YEAR IMMEDIATELY PRECEDING THE TERMINATION DATE; AND (B) THE
GREATER OF (1) THE NUMBER OF FULL AND PARTIAL MONTHS REMAINING IN THE EMPLOYMENT
TERM AS OF THE TERMINATION DATE, AND (2) 36 MONTHS (WITH THE PERIOD DESCRIBED IN
CLAUSE (B) HEREOF BEING REFERRED TO AS THE “SEVERANCE PERIOD”).

 

(II)                                  PAYMENT OF POST-EMPLOYMENT BASE SALARY AND
BONUS.  THE AMOUNT DESCRIBED IN SUBSECTION (B)(I) SHALL BE PAID TO EXECUTIVE IN
CASH IN TWO LUMP-SUM PAYMENTS AS FOLLOWS: (A) 75% OF SUCH AMOUNT SHALL BE PAID
WITHIN 15 DAYS AFTER THE TERMINATION DATE BUT NO LATER THAN MARCH 15 OF THE
CALENDAR YEAR FOLLOWING THE YEAR IN WHICH THIS PAYMENT VESTS; AND (B) THE
REMAINING 25% OF SUCH AMOUNT SHALL BE PAID IN A LUMP SUM BY MARCH 15 OF THE
CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THIS PAYMENT VESTS.

 

(III)                               CONTINUED MEDICAL BENEFITS COVERAGE.  DURING
THE SEVERANCE PERIOD, THE COMPANY SHALL PROVIDE EXECUTIVE, AND, IF ANY,
EXECUTIVE’S SPOUSE AND DEPENDENTS WITH MEDICAL BENEFITS COVERAGE SUBSTANTIALLY
SIMILAR TO THE COVERAGE IN EFFECT ON THE EFFECTIVE DATE OF TERMINATION.  AFTER
THE SEVERANCE PERIOD, EXECUTIVE AND HIS DEPENDENTS WILL HAVE THE OPPORTUNITY
UNDER THE PROVISIONS OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF
1986 (“COBRA”) TO ELECT COBRA CONTINUATION COVERAGE.  IF ELECTED IN A TIMELY
MANNER, COBRA COVERAGE GENERALLY WILL COMMENCE AS OF THE FIRST DAY OF THE NEXT
CALENDAR MONTH AFTER THE END OF THE SEVERANCE PERIOD

 

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AND WILL END ON THE LAST DAY OF THE 18TH MONTH THEREAFTER (UNLESS AN EARLIER END
DATE OR AN EXTENSION IS REQUIRED UNDER COBRA).

 

(IV)                              VESTING OF STOCK OPTIONS.  ALL OPTIONS AND
OTHER EQUITY INCENTIVE AWARDS GRANTED TO EXECUTIVE THAT WOULD HAVE VESTED DURING
THE SEVERANCE PERIOD SHALL VEST AS OF THE TERMINATION DATE, PROVIDED, HOWEVER,
THAT ANY SUCH OPTIONS MAY NOT BE EXERCISED DURING THE SEVERANCE PERIOD UNTIL THE
SAME TIME(S) AS SUCH OPTIONS WOULD HAVE VESTED HAD EXECUTIVE CONTINUED TO BE
EMPLOYED THROUGH THE SEVERANCE PERIOD.  EACH SUCH OPTION, AND ANY OTHER STOCK
OPTION THAT WAS ALREADY VESTED IMMEDIATELY PRIOR TO THE TERMINATION DATE, WILL
SURVIVE UNTIL THE LATER OF (A) THE END OF THE POST-TERMINATION EXERCISE PERIOD
OTHERWISE APPLICABLE UNDER THE TERMS OF THAT OPTION, OR (B) THE END OF THE
120TH DAY FOLLOWING THE END OF THE SEVERANCE PERIOD (BUT IN EITHER CASE, NO
LATER THAN THE END OF THE FULL ORIGINAL OPTION TERM).  ANY OTHERWISE UNVESTED
OPTION OR EQUITY INCENTIVE AWARD THAT WOULD NOT HAVE VESTED DURING THE SEVERANCE
PERIOD SHALL TERMINATE ON THE TERMINATION DATE.

 

(C)                                  RELEASE AGREEMENT.  EXECUTIVE’S ENTITLEMENT
TO ANY SEVERANCE PAY AND BENEFIT SUBSIDIES UNDER SECTION 3(B) IS CONDITIONED
UPON EXECUTIVE’S FIRST ENTERING INTO A RELEASE AGREEMENT IN SUBSTANTIALLY THE
FORM ATTACHED HERETO AS EXHIBIT “A”; PROVIDED, SUCH RELEASE AGREEMENT SHALL BE
DELIVERED TO EXECUTIVE WITHIN 7 DAYS AFTER THE TERMINATION DATE.  TO PROVIDE
SUFFICIENT TIME FOR EXECUTIVE TO REVIEW SUCH RELEASE, AND FOR SUCH RELEASE TO
BECOME IRREVOCABLE ONCE EXECUTED AND DELIVERED, ANY PAYMENT OF SEVERANCE PAY OR
BENEFIT SUBSIDIES SOONER DUE UNDER SUBSECTION (B) HEREOF SHALL BE DELAYED UNTIL
THE 35TH DAY FOLLOWING THE TERMINATION DATE.

 

(D)                                 NO OTHER PAYMENTS OR BENEFITS.  EXCEPT AS
OTHERWISE PROVIDED IN THIS SECTION 3.4, SECTION 8 OR SECTION 9, NO OTHER
PAYMENTS OR BENEFITS SHALL BE DUE UNDER THIS AGREEMENT TO EXECUTIVE.

 

3.5.                              NOTICE OF TERMINATION.  ANY TERMINATION OF
EXECUTIVE’S EMPLOYMENT SHALL BE COMMUNICATED BY A WRITTEN NOTICE OF TERMINATION
DELIVERED WITHIN THE TIME PERIOD SPECIFIED IN THIS SECTION 3.  THE NOTICE OF
TERMINATION SHALL (I) INDICATE THE SPECIFIC TERMINATION PROVISION IN THIS
AGREEMENT RELIED UPON, (II) BRIEFLY SUMMARIZE THE FACTS AND CIRCUMSTANCES DEEMED
TO PROVIDE A BASIS FOR A TERMINATION OF EMPLOYMENT AND THE APPLICABLE PROVISION
HEREOF, AND (III) SPECIFY THE TERMINATION DATE IN ACCORDANCE WITH THE
REQUIREMENTS OF THIS AGREEMENT.

 

4.                                       NO CONFLICTS OF INTEREST.  EXECUTIVE
AGREES THAT THROUGHOUT THE PERIOD OF EXECUTIVE’S EMPLOYMENT HEREUNDER OR
OTHERWISE, EXECUTIVE WILL NOT PERFORM ANY ACTIVITIES OR SERVICES, OR ACCEPT
OTHER EMPLOYMENT THAT WOULD MATERIALLY INTERFERE WITH OR PRESENT A CONFLICT OF
INTEREST CONCERNING EXECUTIVE’S EMPLOYMENT WITH THE COMPANY.  EXECUTIVE AGREES
AND ACKNOWLEDGES THAT EXECUTIVE’S EMPLOYMENT BY THE COMPANY IS CONDITIONED UPON
EXECUTIVE ADHERING TO AND COMPLYING WITH THE BUSINESS PRACTICES AND REQUIREMENTS
OF ETHICAL CONDUCT SET FORTH IN WRITING FROM TIME TO TIME BY THE COMPANY IN ITS
EMPLOYEE MANUAL OR SIMILAR PUBLICATION.  EXECUTIVE REPRESENTS AND WARRANTS THAT
NO OTHER CONTRACT, AGREEMENT OR UNDERSTANDING TO WHICH EXECUTIVE IS A PARTY OR
MAY BE SUBJECT WILL BE VIOLATED BY THE EXECUTION OF THIS AGREEMENT BY EXECUTIVE.

 

5.                                       CONFIDENTIALITY.  EXECUTIVE RECOGNIZES
AND ACKNOWLEDGES THAT EXECUTIVE WILL HAVE ACCESS TO CERTAIN CONFIDENTIAL
INFORMATION OF THE COMPANY AND THAT SUCH INFORMATION CONSTITUTES VALUABLE,
SPECIAL AND UNIQUE PROPERTY OF THE COMPANY (INCLUDING, BUT NOT LIMITED TO,
INFORMATION SUCH AS

 

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BUSINESS STRATEGIES, IDENTITY OF ACQUISITION OR GROWTH TARGETS, MARKETING PLANS,
CUSTOMER LISTS, AND OTHER BUSINESS RELATED INFORMATION FOR THE COMPANY’S
CUSTOMERS).  EXECUTIVE AGREES THAT EXECUTIVE WILL NOT, FOR ANY REASON OR PURPOSE
WHATSOEVER, DURING OR AFTER THE TERM OF EMPLOYMENT, DISCLOSE ANY OF SUCH
CONFIDENTIAL INFORMATION TO ANY PARTY, AND THAT EXECUTIVE WILL KEEP INVIOLATE
AND SECRET ALL CONFIDENTIAL INFORMATION OR KNOWLEDGE WHICH EXECUTIVE HAS ACCESS
TO BY VIRTUE OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, EXCEPT AS OTHERWISE MAY
BE NECESSARY IN THE ORDINARY COURSE OF PERFORMING EXECUTIVE’S DUTIES WITH THE
COMPANY.

 

6.                                       NON-COMPETITION.

 

(A)                                  AS USED HEREIN, THE TERM “RESTRICTION
PERIOD” SHALL MEAN A PERIOD EQUAL TO: (I) THE REMAINDER OF THE EMPLOYMENT TERM
IN EFFECT ON THE EFFECTIVE DATE OF TERMINATION IF EXECUTIVE RESIGNS OTHER THAN
FOR GOOD REASON, OR (II) THE SEVERANCE PERIOD IF EXECUTIVE’S EMPLOYMENT IS
TERMINATED FOR ONE OF THE EVENTS SPECIFIED IN SECTION 3.4(B) (OTHER THAN
RESIGNATION FOR GOOD REASON).  IN THE EVENT THE EXECUTIVE IS TERMINATED BY THE
COMPANY FOR ONE OF THE EVENTS SPECIFIED IN SECTION 3.4(B), DURING THE SEVERANCE
PERIOD EXECUTIVE MAY ELECT TO TERMINATE THE RESTRICTION PERIOD AT ANY TIME BY
DELIVERING WRITTEN NOTICE TO THE COMPANY THAT EXECUTIVE HAS MADE SUCH ELECTION
AND THAT, IN CONSIDERATION THEREFORE, IS FORFEITING THE RIGHT TO RECEIVE ANY
PAYMENT OR THE RIGHT TO RECEIVE ANY FUTURE PAYMENTS UNDER SECTION 3.4(B) OR AN
EQUIVALENT AMOUNT UNDER SECTION 8; PROVIDED HOWEVER, IF EXECUTIVE ELECTS TO
TERMINATE THE RESTRICTION PERIOD AND EXECUTIVE HAS ALREADY RECEIVED PAYMENT
PURSUANT TO SECTION 3.4(B) OR AN EQUIVALENT AMOUNT UNDER SECTION 8, EXECUTIVE
SHALL REIMBURSE THE COMPANY FOR THAT PORTION OF THE SEVERANCE PAYMENTS ALREADY
RECEIVED BY EXECUTIVE WHICH RELATES TO THE NUMBER OF DAYS LEFT IN THE SEVERANCE
PERIOD.  FOR CLARITY, REGARDLESS OF WHETHER EXECUTIVE SHALL RECEIVE PAYMENTS
PURSUANT TO SECTION 3.4(B) OR SECTION 8 OF THIS AGREEMENT IN ORDER TO REDUCE THE
RESTRICTION PERIOD, EXECUTIVE SHALL ONLY BE REQUIRED TO FORFEIT OR RE-PAY THE
AMOUNTS THAT EXECUTIVE WOULD HAVE RECEIVED PURSUANT TO SECTION 3.4(B).  IN THAT
CASE, EXECUTIVE MAY NEVERTHELESS RECEIVE PAYMENTS AND/OR NEED NOT REIMBURSE THE
COMPANY FOR ANY AMOUNTS PAID TO EXECUTIVE PURSUANT TO SECTION 8 WHICH ARE IN
EXCESS OF THE PAYMENTS AND BENEFITS THAT EXECUTIVE WOULD HAVE BEEN ENTITLED TO
RECEIVE UNDER SECTION 3.4(B).  IF EXECUTIVE TERMINATES HIS EMPLOYMENT FOR GOOD
REASON, THEN EXECUTIVE SHALL NOT BE SUBJECT TO THE PROVISIONS OF THIS SECTION 6.

 

(B)                                 DURING EXECUTIVE’S EMPLOYMENT BY THE COMPANY
AND FOR THE DURATION OF THE RESTRICTION PERIOD THEREAFTER, EXECUTIVE SHALL NOT,
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, DIRECTLY OR INDIRECTLY,
OWN, MANAGE, OPERATE, JOIN, CONTROL, FINANCE OR PARTICIPATE IN THE OWNERSHIP,
MANAGEMENT, OPERATION, CONTROL OR FINANCING OF, OR BE CONNECTED AS AN OFFICER,
DIRECTOR, EMPLOYEE, PARTNER, PRINCIPAL, AGENT, REPRESENTATIVE, CONSULTANT OR
OTHERWISE WITH, OR USE OR PERMIT EXECUTIVE’S NAME TO BE USED IN CONNECTION WITH,
ANY BUSINESS OR ENTERPRISE WHICH OWNS OR OPERATES, OR IS ACTIVELY SEEKING TO OWN
OR OPERATE, A GAMING OR PARI-MUTUEL LOCATED WITHIN NORTH AMERICA.

 

(C)                                  THE FOREGOING RESTRICTIONS SHALL NOT BE
CONSTRUED TO PROHIBIT EXECUTIVE’S OWNERSHIP OF LESS THAN 5% OF ANY CLASS OF
SECURITIES OF ANY CORPORATION WHICH IS ENGAGED IN ANY OF THE FOREGOING
BUSINESSES AND HAS A CLASS OF SECURITIES REGISTERED PURSUANT TO THE SECURITIES
EXCHANGE ACT OF 1934, PROVIDED THAT SUCH OWNERSHIP REPRESENTS A PASSIVE
INVESTMENT AND THAT NEITHER EXECUTIVE NOR ANY GROUP OF PERSONS INCLUDING
EXECUTIVE IN ANY WAY, EITHER DIRECTLY OR INDIRECTLY, MANAGES OR EXERCISES
CONTROL OF ANY SUCH CORPORATION, GUARANTEES ANY OF ITS FINANCIAL

 

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OBLIGATIONS, OTHERWISE TAKES ANY PART IN ITS BUSINESS, OTHER THAN EXERCISING
EXECUTIVE’S RIGHTS AS A SHAREHOLDER, OR SEEKS TO DO ANY OF THE FOREGOING.

 

(D)           EXECUTIVE ACKNOWLEDGES THAT THE COVENANTS CONTAINED IN SECTIONS 5
THROUGH 7 HEREOF ARE REASONABLE AND NECESSARY TO PROTECT THE LEGITIMATE
INTERESTS OF THE COMPANY AND ITS AFFILIATES AND, IN PARTICULAR, THAT THE
DURATION AND GEOGRAPHIC SCOPE OF SUCH COVENANTS ARE REASONABLE GIVEN THE NATURE
OF THIS AGREEMENT AND THE POSITION THAT EXECUTIVE WILL HOLD WITHIN THE COMPANY. 
EXECUTIVE FURTHER AGREES TO DISCLOSE THE EXISTENCE AND TERMS OF SUCH COVENANTS
TO ANY EMPLOYER THAT EXECUTIVE WORKS FOR DURING THE RESTRICTION PERIOD.

 

7.             NON-SOLICITATION.  DURING EXECUTIVE’S EMPLOYMENT BY THE COMPANY
AND FOR A PERIOD EQUAL TO THE GREATER OF THE RESTRICTION PERIOD OR ONE YEAR
AFTER THE EFFECTIVE DATE OF TERMINATION, EXECUTIVE WILL NOT, EXCEPT WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY, (I) DIRECTLY OR INDIRECTLY, SOLICIT OR
HIRE, OR ENCOURAGE THE SOLICITATION OR HIRING OF, ANY PERSON WHO IS, OR WAS
WITHIN A SIX MONTH PERIOD PRIOR TO SUCH SOLICITATION OR HIRING, AN EXECUTIVE OR
MANAGEMENT EMPLOYEE OF THE COMPANY OR ANY OF ITS AFFILIATES FOR ANY POSITION AS
AN EMPLOYEE, INDEPENDENT CONTRACTOR, CONSULTANT OR OTHERWISE OR (II) DIVERT OR
ATTEMPT TO DIVERT ANY EXISTING BUSINESS OF THE COMPANY OR ANY OF ITS AFFILIATES.

 

8.             CHANGE OF CONTROL.

 

8.1.          CONSIDERATION

 

(A)           CHANGE OF CONTROL.  IN THE EVENT OF A CHANGE OF CONTROL (AS
DEFINED BELOW), EXECUTIVE SHALL BE ENTITLED TO RECEIVE A CASH PAYMENT IN AN
AMOUNT EQUAL TO THE PRODUCT OF THREE TIMES THE SUM OF (I) THE HIGHEST ANNUAL
RATE OF BASE SALARY IN EFFECT FOR EXECUTIVE DURING THE 24-MONTH PERIOD
IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF THE CHANGE IN CONTROL (THE “TRIGGER
DATE”) AND (II) THE HIGHEST AMOUNT OF ANNUAL CASH BONUS COMPENSATION PAID TO
EXECUTIVE IN RESPECT OF EITHER THE FIRST OR SECOND FULL CALENDAR YEAR
IMMEDIATELY PRECEDING THE TRIGGER DATE.

 

(B)           RESTRICTIVE PROVISIONS.  AS CONSIDERATION FOR THE FOREGOING
PAYMENTS, EXECUTIVE AGREES NOT TO CHALLENGE THE ENFORCEABILITY OF ANY OF THE
RESTRICTIONS CONTAINED IN SECTIONS 5, 6 OR 7 OF THIS AGREEMENT UPON OR AFTER THE
OCCURRENCE OF A CHANGE OF CONTROL.

 

8.2.          PAYMENT TERMS.  THIS CHANGE OF CONTROL PAYMENT SHALL BE MADE IN
TWO LUMP SUM PAYMENTS AS FOLLOWS: (I) 75% OF SUCH AMOUNT SHALL BE PAID TO
EXECUTIVE IN A LUMP-SUM CASH PAYMENT UPON THE TRIGGER DATE; AND (II) 25% OF SUCH
AMOUNT SHALL BE PAID TO EXECUTIVE IN A LUMP-SUM CASH PAYMENT UPON THE 75TH DAY
FOLLOWING THE TRIGGER DATE, BUT NOT LATER THAN MARCH 15 OF THE CALENDAR YEAR
FOLLOWING THE CALENDAR YEAR IN WHICH THE TRIGGER DATE OCCURS.  NOTWITHSTANDING
ANY OF THE FOREGOING TO THE CONTRARY, THE PAYMENT CONTEMPLATED BY CLAUSE
(II) SHALL BE PAID IMMEDIATELY UPON THE EARLIER OCCURRENCE OF ANY OF THE
FOLLOWING: (A) EXECUTIVE’S EMPLOYMENT IS TERMINATED BY THE COMPANY; OR
(B) EXECUTIVE TERMINATES EMPLOYMENT FOR GOOD REASON (AS DEFINED BELOW).

 

8.3.          CERTAIN OTHER TERMS.  IN THE EVENT PAYMENTS ARE BEING MADE TO
EXECUTIVE UNDER THIS SECTION 8, NO PAYMENTS SHALL BE DUE UNDER
SECTION 3.4(B)(I) WITH RESPECT TO ANY TERMINATION OF EXECUTIVE’S EMPLOYMENT
FOLLOWING A CHANGE OF CONTROL.  AT THE OPTION OF THE COMPANY, THE COMPANY MAY
REQUIRE EXECUTIVE TO EXECUTE THE RELEASE ATTACHED HERETO AS EXHIBIT A; PROVIDED,
HOWEVER, THAT THIS REQUIREMENT SHALL NOT IN ANY WAY ALTER THE TIMING OF THE
PAYMENTS TO BE MADE UNDER SECTION 8.2.  IN THE EVENT THAT THE COMPANY ANNOUNCES
THAT IT HAS SIGNED A DEFINITIVE

 

7

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AGREEMENT WITH RESPECT TO A CHANGE OF CONTROL, THE PROVISIONS OF THIS SECTION 8
SHALL CONTINUE TO APPLY TO EXECUTIVE IF, DURING THE PERIOD AFTER THE PUBLIC
ANNOUNCEMENT AND IMMEDIATELY PRECEDING THE DATE SUCH TRANSACTION IS CONSUMMATED
OR TERMINATED, THE COMPANY TERMINATES EXECUTIVE’S EMPLOYMENT WITHOUT CAUSE OR
DUE TO A DISABILITY; PROVIDED, HOWEVER, THAT, IN SUCH EVENT, ANY AMOUNT PAYABLE
UNDER THIS SECTION 8 SHALL BE REDUCED BY ANY PAYMENTS RECEIVED PURSUANT TO
SECTION 3.4(B)(I).

 

8.4.          DEFINED TERMS.

 

(A)           THE TERM CHANGE OF CONTROL SHALL HAVE THE MEANING GIVEN TO SUCH
TERM IN THE COMPANY’S 2008 LONG TERM INCENTIVE COMPENSATION PLAN, AS SUCH MAY BE
AMENDED OR MODIFIED.

 

(B)           GOOD REASON.  THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:
(I) ASSIGNMENT TO EXECUTIVE OF ANY DUTIES INCONSISTENT IN ANY MATERIAL RESPECT
WITH EXECUTIVE’S POSITION (INCLUDING STATUS, OFFICES, TITLES AND REPORTING
REQUIREMENTS), AUTHORITY, DUTIES OR RESPONSIBILITIES OR INCONSISTENT WITH
EXECUTIVE’S LEGAL OR FIDUCIARY OBLIGATIONS; (II) ANY REDUCTION IN EXECUTIVE’S
COMPENSATION OR SUBSTANTIAL REDUCTION IN EXECUTIVE’S BENEFITS TAKEN AS A WHOLE;
(III) FOLLOWING ANY CHANGE OF CONTROL, ANY TRAVEL REQUIREMENTS MATERIALLY
GREATER THAN EXECUTIVE’S TRAVEL REQUIREMENTS PRIOR TO THE CHANGE OF CONTROL;
(IV) ANY FAILURE OF EXECUTIVE TO CONTINUE TO SERVE AS A MEMBER AND CHAIRMAN OF
THE BOARD, OTHER THAN AS A RESULT OF HIS VOLUNTARY RESIGNATION, REFUSAL TO STAND
FOR RE-ELECTION OR REMOVAL UNDER SECTION 4.05(C)(1) OR (C)(3)(A) OF THE
COMPANY’S BY-LAWS; OR (IV) BREACH BY THE COMPANY OF ANY MATERIAL TERM OF THIS
AGREEMENT, OR ANY OTHER AGREEMENT BETWEEN EXECUTIVE AND THE COMPANY.  THE
FOREGOING NOTWITHSTANDING, AN EVENT OR CONDITION WILL ONLY CONSTITUTE GOOD
REASON IF EXECUTIVE PROVIDES THE COMPANY WITH WRITTEN OBJECTION TO THE EVENT OR
CONDITION WITHIN 90 DAYS FOLLOWING THE OCCURRENCE THEREOF, THE EVENT OR
CONDITION IS NOT REVERSED OR OTHERWISE CURED BY THE COMPANY WITHIN 30 DAYS OF
RECEIPT OF THAT WRITTEN OBJECTION, AND EXECUTIVE RESIGNS HIS EMPLOYMENT WITHIN
240 DAYS FOLLOWING THE EXPIRATION OF THAT CURE PERIOD.

 

9.             CERTAIN TAX MATTERS.

 

9.1.          GENERALLY.  IN THE EVENT EXECUTIVE BECOMES ENTITLED TO RECEIVE THE
PAYMENTS PROVIDED UNDER SECTION 3 OR SECTION 8 HEREOF OR UNDER ANY OTHER PLAN OR
ARRANGEMENT PROVIDING FOR PAYMENTS (INCLUDING, WITHOUT LIMITATION, ACCELERATED
VESTING OF EQUITY INCENTIVE AWARDS) UNDER CIRCUMSTANCES SIMILAR TO THOSE
CONTEMPLATED BY SUCH SECTIONS (THE “SEVERANCE PAYMENTS”), AND IF ANY OF THE
SEVERANCE PAYMENTS WILL BE SUBJECT TO THE TAX (THE “EXCISE TAX”) IMPOSED BY
SECTION 4999 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THE
COMPANY SHALL PAY TO EXECUTIVE AT THE TIME SPECIFIED FOR SUCH PAYMENTS, AN
ADDITIONAL AMOUNT (THE “GROSS-UP PAYMENT”) SUCH THAT THE NET AMOUNT RETAINED BY
EXECUTIVE SHALL BE EQUAL TO THE AMOUNT OF THE SEVERANCE PAYMENTS AFTER DEDUCTING
NORMAL AND ORDINARY TAXES, BUT NOT DEDUCTING (A) THE EXCISE TAX AND (B) ANY
FEDERAL, STATE AND LOCAL INCOME TAX AND EXCISE TAX PAYABLE ON THE PAYMENT
PROVIDED FOR BY THIS SECTION 9.

 

9.2.          ILLUSTRATION.  FOR EXAMPLE, IF THE SEVERANCE PAYMENTS ARE
$1,000,000 AND IF EXECUTIVE IS SUBJECT TO THE EXCISE TAX, THEN THE GROSS-UP
PAYMENT WILL BE SUCH THAT EXECUTIVE WILL RETAIN AN AMOUNT OF $1,000,000 LESS
ONLY ANY NORMAL AND ORDINARY TAXES ON SUCH AMOUNT.  THE EXCISE TAX AND FEDERAL,
STATE AND LOCAL TAXES AND ANY EXCISE TAX ON THE PAYMENT PROVIDED BY THIS
SECTION 9 WILL NOT BE DEEMED NORMAL AND ORDINARY TAXES.

 

8

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9.3.          CERTAIN TERMS.  FOR PURPOSES OF DETERMINING WHETHER ANY OF THE
SEVERANCE PAYMENTS WILL BE SUBJECT TO THE EXCISE TAX AND THE AMOUNT OF SUCH
EXCISE TAX, THE FOLLOWING WILL APPLY:

 

(A)           ANY OTHER PAYMENTS OR BENEFITS RECEIVED OR TO BE RECEIVED BY
EXECUTIVE IN CONNECTION WITH A CHANGE IN CONTROL OF THE COMPANY OR EXECUTIVE’S
TERMINATION OF EMPLOYMENT (WHETHER PURSUANT TO THE TERMS OF THIS AGREEMENT OR
ANY OTHER PLAN, ARRANGEMENT OR AGREEMENT WITH THE COMPANY SHALL BE TREATED AS
“PARACHUTE PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE CODE, AND
ALL “EXCESS PARACHUTE PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(1) SHALL
BE TREATED AS SUBJECT TO THE EXCISE TAX, UNLESS IN THE OPINION OF TAX COUNSEL
SELECTED BY THE COMPANY’S COMPENSATION COMMITTEE AND ACCEPTABLE TO EXECUTIVE,
SUCH OTHER PAYMENTS OR BENEFITS (IN WHOLE OR IN PART) DO NOT CONSTITUTE
PARACHUTE PAYMENTS, OR SUCH EXCESS PARACHUTE PAYMENTS (IN WHOLE OR IN PART)
REPRESENT REASONABLE COMPENSATION FOR SERVICES ACTUALLY RENDERED WITHIN THE
MEANING OF SECTION 280G(B)(4) OF THE CODE IN EXCESS OF THE BASE AMOUNT WITHIN
THE MEANING OF SECTION 280G(B)(3) OF THE CODE, OR ARE OTHERWISE NOT SUBJECT TO
THE EXCISE TAX;

 

(B)           THE AMOUNT OF THE SEVERANCE PAYMENTS WHICH SHALL BE TREATED AS
SUBJECT TO THE EXCISE TAX SHALL BE EQUAL TO THE LESSER OF (Y) THE TOTAL AMOUNT
OF THE SEVERANCE PAYMENTS OR (Z) THE AMOUNT OF EXCESS PARACHUTE PAYMENTS WITHIN
THE MEANING OF SECTION 280G(B)(1) (AFTER APPLYING SUBSECTION (A) ABOVE); AND

 

(C)           THE VALUE OF ANY NON-CASH BENEFITS OR ANY DEFERRED PAYMENT OR
BENEFIT SHALL BE DETERMINED BY THE COMPANY’S INDEPENDENT AUDITORS IN ACCORDANCE
WITH PROPOSED, TEMPORARY OR FINAL REGULATIONS UNDER SECTIONS 280G(D)(3) AND
(4) OF THE CODE OR, IN THE ABSENCE OF SUCH REGULATIONS, IN ACCORDANCE WITH THE
PRINCIPLES OF SECTION 280G(D)(3) AND (4) OF THE CODE.  FOR PURPOSES OF
DETERMINING THE AMOUNT OF THE GROSS-UP PAYMENT, EXECUTIVE SHALL BE DEEMED TO PAY
FEDERAL INCOME TAXES AT THE HIGHEST MARGINAL RATE OF FEDERAL INCOME TAXATION IN
THE CALENDAR YEAR IN WHICH THE GROSS-UP PAYMENT IS TO BE MADE AND STATE AND
LOCAL INCOME TAXES AT THE HIGHEST MARGINAL RATE OF TAXATION IN THE STATE AND
LOCALITY OF EXECUTIVE ON THE TRIGGER DATE, NET OF THE MAXIMUM REDUCTION IN
FEDERAL INCOME TAXES WHICH COULD BE OBTAINED FROM DEDUCTION OF SUCH STATE AND
LOCAL TAXES; AND

 

(D)           IN THE EVENT THAT THE AMOUNT OF EXCISE TAX ATTRIBUTABLE TO
SEVERANCE PAYMENTS IS SUBSEQUENTLY DETERMINED TO BE LESS THAN THE AMOUNT TAKEN
INTO ACCOUNT HEREUNDER AT THE TIME OF DETERMINATION THEN, SUBJECT TO APPLICABLE
LAW, APPROPRIATE ADJUSTMENTS WILL BE MADE WITH RESPECT TO FUTURE
PAYMENT(S) HEREUNDER (IF ANY).  IF EXECUTIVE BECOMES ENTITLED TO A GROSS-UP
PAYMENT IN EXCESS OF THE AMOUNT INITIALLY DETERMINED AND PAID UNDER SECTION 9.1,
THE COMPANY SHALL PAY THE ADDITIONAL GROSS-UP PAYMENT WITHIN FIVE (5) BUSINESS
DAYS OF THE DATE ON WHICH THE COMPANY IS NOTIFIED OF THE AMOUNT OF THE GROSS-UP
PAYMENT, BUT ONLY TO THE EXTENT THAT THE GROSS-UP PAYMENT WOULD BE MADE BY
MARCH 15 OF THE FOLLOWING THE CALENDAR YEAR IN WHICH THE EXECUTIVE WOULD BE
CONSIDERED TO HAVE VESTED IN THE GROSS-UP PAYMENT FOR PURPOSES OF SECTION 409A. 
TO THE EXTENT ANY GROSS-UP PAYMENT IS GREATER THAN INITIALLY DETERMINED AND PAID
UNDER SECTION 9.1 AND CANNOT BE MADE BY MARCH 15 FOLLOWING THE END OF THE
CALENDAR YEAR IN WHICH THE EXECUTIVE VESTS IN SUCH PAYMENT, THEN THE COMPANY
SHALL INSTEAD MAKE THE PAYMENT PROMPTLY FOLLOWING THE DATE ON WHICH THE
EXECUTIVE REMITS THE TAXES TO WHICH THE GROSS-UP PAYMENT RELATES TO THE
APPLICABLE TAXING AUTHORITY, AND IN NO EVENT LATER THAN FIVE (5) BUSINESS DAYS
FOLLOWING THE DATE ON WHICH SUCH TAXES ARE REMITTED; PROVIDED, HOWEVER, THAT IF
THE EXECUTIVE IS A KEY EMPLOYEE (WITHIN THE MEANING OF SECTION 409A) AND THE
GROSS-UP PAYMENT WOULD BE CONSIDERED DEFERRED

 

9

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COMPENSATION PAYABLE ON ACCOUNT OF EXECUTIVE’S SEPARATION FROM SERVICE (AS
DEFINED IN SECTION 409A), PAYMENT WILL IN NO EVENT BE MADE PRIOR TO 6 MONTHS
AFTER THE DATE OF EXECUTIVE’S SEPARATION FROM SERVICE.

 

9.4.          FEES AND EXPENSES.  THE COMPANY SHALL REIMBURSE EXECUTIVE FOR ALL
REASONABLE LEGAL FEES AND EXPENSES INCURRED BY EXECUTIVE IN CONNECTION WITH ANY
TAX AUDIT OR PROCEEDING TO THE EXTENT ATTRIBUTABLE TO THE APPLICATION OF
SECTION 4999 OF THE CODE OR ANY REGULATIONS PERTAINING THERETO TO ANY PAYMENT OR
BENEFIT PROVIDED HEREUNDER.  ANY EXPENSE REIMBURSEMENTS MADE TO SATISFY THE
TERMS OF THIS SECTION SHALL BE PAID AS SOON AS PRACTICABLE BUT NO LATER THAN 90
DAYS AFTER EMPLOYEE SUBMITS EVIDENCE OF SUCH EXPENSES TO THE COMPANY (WHICH
PAYMENT DATE SHALL IN NO EVENT BE LATER THAN THE LAST DAY OF THE CALENDAR YEAR
FOLLOWING THE CALENDAR YEAR IN WHICH THE EXPENSE WAS INCURRED).  THE AMOUNT OF
SUCH REIMBURSEMENTS DURING ANY CALENDAR YEAR SHALL NOT AFFECT THE BENEFITS
PROVIDED IN ANY OTHER CALENDAR YEAR, AND THE RIGHT TO ANY BENEFITS UNDER THIS
PARAGRAPH SHALL NOT BE SUBJECT TO LIQUIDATION OR EXCHANGE FOR ANOTHER BENEFIT.

 

10.           DOCUMENT SURRENDER.  UPON THE TERMINATION OF EXECUTIVE’S
EMPLOYMENT FOR ANY REASON, EXECUTIVE SHALL IMMEDIATELY SURRENDER AND DELIVER TO
THE COMPANY ALL DOCUMENTS, CORRESPONDENCE AND ANY OTHER INFORMATION, OF ANY TYPE
WHATSOEVER, FROM THE COMPANY OR ANY OF ITS AGENTS, SERVANTS, EMPLOYEES,
SUPPLIERS, AND EXISTING OR POTENTIAL CUSTOMERS, THAT CAME INTO EXECUTIVE’S
POSSESSION BY ANY MEANS WHATSOEVER, DURING THE COURSE OF EMPLOYMENT.

 

11.           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
COMMONWEALTH OF PENNSYLVANIA.

 

12.           JURISDICTION.  THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE
JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA FOR ALL PURPOSES
IN CONNECTION WITH ANY ACTION OR PROCEEDING WHICH ARISES OUT OF OR RELATES TO
THIS AGREEMENT AND AGREE THAT ANY ACTION INSTITUTED UNDER THIS AGREEMENT SHALL
BE COMMENCED, PROSECUTED AND CONTINUED ONLY IN THE STATE OR FEDERAL COURTS
HAVING JURISDICTION FOR MATTERS ARISING IN WYOMISSING, PENNSYLVANIA, WHICH SHALL
BE THE EXCLUSIVE AND ONLY PROPER FORUM FOR ADJUDICATING SUCH A CLAIM.

 

13.           NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS REQUIRED OR
PERMITTED UNDER THIS AGREEMENT OR NECESSARY OR CONVENIENT IN CONNECTION HEREWITH
SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN GIVEN WHEN HAND DELIVERED,
DELIVERED BY GUARANTEED NEXT-DAY DELIVERY OR SENT BY FACSIMILE (WITH
CONFIRMATION OF TRANSMISSION) OR SHALL BE DEEMED GIVEN ON THE THIRD BUSINESS DAY
WHEN MAILED BY REGISTERED OR CERTIFIED MAIL, AS FOLLOWS (PROVIDED THAT NOTICE OF
CHANGE OF ADDRESS SHALL BE DEEMED GIVEN ONLY WHEN RECEIVED):

 

If to the Company, to:

 

Penn National Gaming, Inc.
825 Berkshire Boulevard, Suite 200
Wyomissing, PA 19610
Fax: (610) 376-2842
Attention: President

 

10

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If to Executive, to:

 

His then current home address.

 

or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

 

14.           CONTENTS OF AGREEMENT; AMENDMENT AND ASSIGNMENT.

 

14.1.        THIS AGREEMENT SETS FORTH THE ENTIRE UNDERSTANDING BETWEEN THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL
PRIOR OR CONTEMPORANEOUS AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THERETO,
INCLUDING WITHOUT LIMITATION, THE PRIOR AGREEMENT.  THIS AGREEMENT CANNOT BE
CHANGED, MODIFIED, EXTENDED, WAIVED OR TERMINATED EXCEPT UPON A WRITTEN
INSTRUMENT SIGNED BY THE PARTY AGAINST WHICH IT IS TO BE ENFORCED.

 

14.2.        EXECUTIVE MAY NOT ASSIGN ANY OF HIS RIGHTS OR OBLIGATIONS UNDER
THIS AGREEMENT.  THE COMPANY MAY ASSIGN ITS RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT TO ANY SUCCESSOR TO ALL OR SUBSTANTIALLY ALL OF ITS ASSETS OR BUSINESS
BY MEANS OF LIQUIDATION, DISSOLUTION, MERGER, CONSOLIDATION, TRANSFER OF ASSETS
OR OTHERWISE.

 

15.           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT OR APPLICATION
THEREOF TO ANYONE OR UNDER ANY CIRCUMSTANCES IS ADJUDICATED TO BE INVALID OR
UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT ANY OTHER PROVISION OR APPLICATION OF THIS AGREEMENT WHICH CAN BE GIVEN
EFFECT WITHOUT THE INVALID OR UNENFORCEABLE PROVISION OR APPLICATION AND SHALL
NOT INVALIDATE OR RENDER UNENFORCEABLE SUCH PROVISION OR APPLICATION IN ANY
OTHER JURISDICTION.  IF ANY PROVISION IS HELD VOID, INVALID OR UNENFORCEABLE
WITH RESPECT TO PARTICULAR CIRCUMSTANCES, IT SHALL NEVERTHELESS REMAIN IN FULL
FORCE AND EFFECT IN ALL OTHER CIRCUMSTANCES.  IN ADDITION, IF ANY COURT
DETERMINES THAT ANY PART OF SECTIONS 5, 6 OR 7 HEREOF IS UNENFORCEABLE BECAUSE
OF ITS DURATION, GEOGRAPHICAL SCOPE OR OTHERWISE, SUCH COURT WILL HAVE THE POWER
TO MODIFY SUCH PROVISION AND, IN ITS MODIFIED FORM, SUCH PROVISION WILL THEN BE
ENFORCEABLE.

 

16.           REMEDIES.

 

16.1.        NO REMEDY CONFERRED UPON A PARTY BY THIS AGREEMENT IS INTENDED TO
BE EXCLUSIVE OF ANY OTHER REMEDY, AND EACH AND EVERY SUCH REMEDY SHALL BE
CUMULATIVE AND SHALL BE IN ADDITION TO ANY OTHER REMEDY GIVEN UNDER THIS
AGREEMENT OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY.

 

16.2.        NO DELAY OR OMISSION BY A PARTY IN EXERCISING ANY RIGHT, REMEDY OR
POWER UNDER THIS AGREEMENT OR EXISTING AT LAW OR IN EQUITY SHALL BE CONSTRUED AS
A WAIVER THEREOF, AND ANY SUCH RIGHT, REMEDY OR POWER MAY BE EXERCISED BY SUCH
PARTY FROM TIME TO TIME AND AS OFTEN AS MAY BE DEEMED EXPEDIENT OR NECESSARY BY
SUCH PARTY IN ITS SOLE DISCRETION.

 

16.3.        EXECUTIVE ACKNOWLEDGES THAT MONEY DAMAGES WOULD NOT BE A SUFFICIENT
REMEDY FOR ANY BREACH OF THIS AGREEMENT BY EXECUTIVE AND THAT THE COMPANY SHALL
BE ENTITLED TO SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF AS REMEDIES FOR ANY
SUCH BREACH, IN ADDITION TO ALL OTHER REMEDIES AVAILABLE AT LAW OR EQUITY TO THE
COMPANY.

 

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16.4.        THE COMPANY WILL PROMPTLY REIMBURSE EXECUTIVE FOR ALL REASONABLE
LEGAL FEES AND EXPENSES INCURRED BY HIM IN GOOD FAITH IN CONNECTION WITH (A) THE
NEGOTIATION AND DRAFTING OF THIS AGREEMENT, AND (B) THE APPLICATION AND
ENFORCEMENT OF THIS AGREEMENT.

 

17.           CONSTRUCTION.  THIS AGREEMENT IS THE RESULT OF THOUGHTFUL
NEGOTIATIONS AND REFLECTS AN ARMS’ LENGTH BARGAIN BETWEEN TWO SOPHISTICATED
PARTIES, EACH REPRESENTED BY COUNSEL.  THE PARTIES AGREE THAT, IF THIS AGREEMENT
REQUIRES INTERPRETATION, NEITHER PARTY SHOULD BE CONSIDERED “THE DRAFTER” NOR BE
ENTITLED TO ANY PRESUMPTION THAT AMBIGUITIES ARE TO BE RESOLVED IN HIS OR HER
FAVOR.

 

18.           BENEFICIARIES/REFERENCES.  EXECUTIVE SHALL BE ENTITLED, TO THE
EXTENT PERMITTED UNDER ANY APPLICABLE LAW, TO SELECT AND CHANGE A BENEFICIARY OR
BENEFICIARIES TO RECEIVE ANY COMPENSATION OR BENEFIT PAYABLE UNDER THIS
AGREEMENT FOLLOWING EXECUTIVE’S DEATH BY GIVING THE COMPANY WRITTEN NOTICE
THEREOF.  IN THE EVENT OF EXECUTIVE’S DEATH OR A JUDICIAL DETERMINATION OF
EXECUTIVE’S INCOMPETENCE, REFERENCE IN THIS AGREEMENT TO EXECUTIVE SHALL BE
DEEMED, WHERE APPROPRIATE, TO REFER TO EXECUTIVE’S BENEFICIARY, ESTATE OR OTHER
LEGAL REPRESENTATIVE.

 

19.           WITHHOLDING.  ALL PAYMENTS UNDER THIS AGREEMENT SHALL BE MADE
SUBJECT TO APPLICABLE TAX WITHHOLDING, AND THE COMPANY SHALL WITHHOLD FROM ANY
PAYMENTS UNDER THIS AGREEMENT ALL FEDERAL, STATE AND LOCAL TAXES, AS THE COMPANY
IS REQUIRED TO WITHHOLD PURSUANT TO ANY LAW OR GOVERNMENTAL RULE OR REGULATION. 
EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THIS AGREEMENT, EXECUTIVE SHALL
BEAR ALL EXPENSE OF, AND BE SOLELY RESPONSIBLE FOR, ALL FEDERAL, STATE AND LOCAL
TAXES DUE WITH RESPECT TO ANY PAYMENT RECEIVED UNDER THIS AGREEMENT.

 

20.           REGULATORY COMPLIANCE.  THE TERMS AND PROVISIONS HEREOF SHALL BE
CONDITIONED ON AND SUBJECT TO COMPLIANCE WITH ALL LAWS, RULES, AND REGULATIONS
OF ALL JURISDICTIONS, OR AGENCIES, BOARDS OR COMMISSIONS THEREOF, HAVING
REGULATORY JURISDICTION OVER THE EMPLOYMENT OR ACTIVITIES OF EXECUTIVE
HEREUNDER.

 

21.           SECTION 409A.  THIS AGREEMENT IS INTENDED TO COMPLY WITH THE
REQUIREMENTS OF SECTION 409A AND SHALL BE CONSTRUED ACCORDINGLY.  IF A CESSATION
OF EMPLOYMENT OR SERVICE GIVING RISE TO PAYMENTS DESCRIBED IN
SECTION 3.4(B)(I) IS NOT A “SEPARATION FROM SERVICE” WITHIN THE MEANING OF
TREAS. REG. §1.409A-1(H)(1) (OR ANY SUCCESSOR PROVISION) (“SEPARATION FROM
SERVICE”), THEN THE AMOUNTS OTHERWISE PAYABLE PURSUANT TO THAT SECTION WILL BE
DEFERRED UNTIL THE EXECUTIVE EXPERIENCES A SEPARATION FROM SERVICE.  IN
ADDITION, TO THE EXTENT COMPLIANCE WITH THE REQUIREMENTS OF TREAS. REG.
§1.409A-3(I)(2) (OR ANY SUCCESSOR PROVISION) IS NECESSARY TO AVOID THE
APPLICATION OF AN ADDITIONAL TAX UNDER SECTION 409A OF THE CODE TO PAYMENTS DUE
TO THE EXECUTIVE UPON OR FOLLOWING HIS SEPARATION FROM SERVICE, THEN
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT (OR ANY OTHERWISE
APPLICABLE PLAN, POLICY, AGREEMENT OR ARRANGEMENT), ANY SUCH PAYMENTS THAT ARE
OTHERWISE DUE WITHIN SIX MONTHS FOLLOWING THE EXECUTIVE’S SEPARATION FROM
SERVICE (TAKING INTO ACCOUNT THE PRECEDING SENTENCE) WILL BE DEFERRED WITHOUT
INTEREST AND PAID TO THE EXECUTIVE IN A LUMP SUM IMMEDIATELY FOLLOWING THAT SIX
MONTH PERIOD.  EACH PAYMENT OF NONQUALIFIED DEFERRED COMPENSATION UNDER THIS
AGREEMENT SHALL BE TREATED AS A SEPARATE PAYMENT FOR PURPOSES OF CODE
SECTION 409A.  ANY REIMBURSEMENTS MADE PURSUANT TO THIS AGREEMENT SHALL BE PAID
AS SOON AS PRACTICABLE BUT NO LATER THAN 90 DAYS AFTER EMPLOYEE SUBMITS EVIDENCE
OF SUCH EXPENSES TO CORPORATION (WHICH PAYMENT DATE SHALL IN NO EVENT BE LATER
THAN THE LAST DAY OF THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE
EXPENSE WAS INCURRED).  THE AMOUNT OF SUCH REIMBURSEMENTS DURING ANY CALENDAR

 

12

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YEAR SHALL NOT AFFECT THE BENEFITS PROVIDED IN ANY OTHER CALENDAR YEAR, AND THE
RIGHT TO ANY SUCH BENEFITS SHALL NOT BE SUBJECT TO LIQUIDATION OR EXCHANGE FOR
ANOTHER BENEFIT.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement on the date first above written.

 

 

PENN NATIONAL GAMING, INC.

 

 

 

 

 

By:

/s/ Robert S. Ippolito

 

Name:

Robert S. Ippolito

 

Title:

Vice President, Secretary and Treasurer

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Peter M. Carlino

 

Peter M. Carlino

 

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Exhibit A

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This is a Separation Agreement and General Release (hereinafter referred to as
the “Agreement”) between                                          (hereinafter
referred to as the “Employee”) and Penn National Gaming, Inc. (hereinafter
referred to as the “Employer”).  In consideration of the mutual promises and
commitments made in this Agreement, and intending to be legally bound, Employee,
on the one hand, and the Employer on the other hand, agree to the terms set
forth in this Agreement.

 

1.                                       Employer and Employee hereby
acknowledge that [the Company notified Employee/Employee notified the Company on
                                         that Executive’s employment pursuant to
that certain Employment Agreement executed on
                                         (“Employment Agreement”) would be
terminated as of [                                        ].  Upon the
termination of the Employment Agreement, Employee will be subject to the
obligations and be the beneficiary of the surviving benefits, all as described
in the Employment Agreement.  Employee’s last day of work will be
                                        .

 

2.                                       (a)                                 
When used in this Agreement, the word “Releasees” means the Employer and all or
any of its past and present parent, subsidiary and affiliated corporations,
companies, partnerships, joint ventures and other entities and their groups,
divisions, departments and units, and their past and present directors,
trustees, officers, managers, partners, supervisors, employees, attorneys,
agents and consultants, and their predecessors, successors and assigns.

 

(b)                                 When used in this Agreement, the word
“Claims” means each and every claim, complaint, cause of action, and grievance,
whether known or unknown and whether fixed or contingent, and each and every
promise, assurance, contract, representation, guarantee, warranty, right and
commitment of any kind, whether known or unknown and whether fixed or
contingent.

 

3.                                       In consideration of the promises of the
Employer set forth in this Agreement and the Employment Agreement, and intending
to be legally bound, Employee hereby irrevocably remises, releases and forever
discharges all Releasees of and from any and all Claims that he (on behalf of
either himself or any other person or persons) ever had or now has against any
and all of the Releasees, or which he (or his heirs, executors, administrators
or assigns or any of them) hereafter can, shall or may have against any and all
of the Releasees, for or by reason of any cause, matter, thing, occurrence or
event whatsoever through the effective date of this Agreement.  Employee
acknowledges and agrees that the Claims released in this paragraph include, but
are not limited to, (a) any and all Claims based on any law, statute or
constitution or based on contract or in tort on common law, and (b) any and all
Claims based on or arising under any civil rights laws, such as any Pennsylvania
employment laws, or Title VII of the Civil Rights Act of 1964 (42 U.S.C. §2000e
et seq.), or the Federal Age Discrimination in Employment Act (29 U.S.C. §621 et
seq.) (hereinafter referred to as the “ADEA”), and (c) any and all Claims under
any grievance or complaint procedure of any kind, and (d) any and all Claims
based on or arising out of or related to his recruitment by, employment with,
the

 

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termination of his employment with, his performance of any services in any
capacity for, or any business transaction with, each or any of the Releasees. 
Employee also understands, that by signing this Agreement, he is waiving all
Claims against any and all of the Releasees released by this Agreement;
provided, however, that as set forth in section 7(f)(1)(c) of the ADEA, as added
by the Older Workers Benefit Protection Act of 1990, nothing in this Agreement
constitutes or shall (i) be construed to constitute a waiver by Employee of any
rights or claims that may arise after this Agreement is executed by Employee, or
(ii) impair Employee’s right to file a charge with the U.S. Equal Employment
Opportunity Commission (“EEOC”) or any state agency or to participate in an
investigation or proceeding conducted by the EEOC or any state agency. 
Notwithstanding the foregoing, this Agreement will not release any right of
Employee (x) in his capacity as a shareholder or owner in the Company or any of
its affiliates, (y) to be indemnified for any act or omission in his capacity as
an employee, officer or director of the Company or any of its affiliates
(whether arising under contract, the governing documents of the entity, state
law or otherwise), or (z) in respect of vested benefits under the Company’s
retirement or deferred compensation plans.

 

4.                                       In consideration of the promises of the
Employee set forth in this Agreement and the Employment Agreement and intending
to be legally bound, Employer hereby irrevocably remises, releases and forever
discharges Employee and his heirs, successors and assigns from any and all
Claims that the Employer ever had or now has though the effective date of this
Agreement.

 

5.                                       Employee and Employer covenant and
agree not to sue each other or any of the Releasees for any Claims released by
this Agreement and to waive any recovery related to any Claims covered by this
Agreement.

 

6.                                       Employee agrees to provide reasonable
transition assistance to Employer (including without limitation assistance on
regulatory matters, operational matters and in connection with litigation) for a
period of one year from the execution of this Agreement at no additional cost;
provided, such assistance shall not unreasonably interfere with Employee’s
pursuit of gainful employment or result in Employee not having a separation from
service (as defined in Section 409A of the Internal Revenue Code of 1986, as
amended).  Any assistance beyond this period will be provided at a mutually
agreed cost.  Employee further agrees that he will return to the Employer all
property in his possession, including, but not limited to, keys, identification
cards and credit cards, files, records, publications, address lists and
documents that belong to each or any of the Releasees.  Such documents also
include, without limitation, any documents created or made by Employee during
his employment with the Employer.

 

7.                                       Employee agrees that, except as
specifically provided in this Agreement and the Employment Agreement, there are
no compensation, benefits, or other payments due or owed to him by each or any
of the Releasees.

 

8.                                       Except where disclosure has been made
by the Company pursuant to applicable federal or state law, rule or regulation,
Employee agrees that the terms of this Agreement are confidential and that he
will not disclose or publicize the terms of this Agreement and the amounts paid
or agreed to be paid pursuant to this Agreement to any person or entity, except
to his spouse, his attorney, his accountant, and to a government agency for the
purpose of

 

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payment or collection of taxes or application for unemployment compensation
benefits.  Employee agrees that his disclosure of the terms of this Agreement to
his spouse, his attorney and his accountant shall be conditioned upon his
obtaining agreement from them, for the benefit of the Employer, not to disclose
or publicize to any person or entity the terms of this Agreement and the amounts
paid or agreed to be paid under this Agreement.  Further, Employer and Employee
agree not to make any false, misleading, defamatory or disparaging
communications about the other party (including without limitation Employer’s
products, services, partners, investors or personnel) and to refrain from taking
any action designed to harm the public perception of the other party or the
Releasees.  Employee further agrees that he has disclosed to Employer all
information, if any, in his possession, custody or control related to any legal,
compliance or regulatory obligations of Employer and any failures to meet such
obligations.

 

9.                                       The terms of this Agreement are not to
be considered as an admission on behalf of either party.  Neither this Agreement
nor its terms shall be admissible as evidence of any liability or wrongdoing by
each or any of the Releasees in any judicial, administrative or other proceeding
now pending or hereafter instituted by any person or entity.  The Employer is
entering into this Agreement solely for the purpose of effectuating a mutually
satisfactory separation of Employee’s employment.

 

10.                                 All provisions of this Agreement are
severable and if any of them is determined to be invalid or unenforceable for
any reason, the remaining provisions and portions of this Agreement shall be
unaffected thereby and shall remain in full force to the fullest extent
permitted by law.

 

11.                                 This Agreement shall be governed by and
interpreted under and in accordance with the laws of Pennsylvania.  Any suit,
claim or cause of action arising under or related to this Agreement shall be
submitted by the parties hereto to the exclusive jurisdiction of the courts of
Pennsylvania or to the federal courts located therein if they otherwise have
jurisdiction.  The breach of any promise in this Agreement by any party shall
not invalidate this Agreement or the release and shall not be a defense to the
enforcement of the Agreement against any party.

 

12.                                 This Agreement constitutes a complete and
final agreement between the parties and supersedes and replaces all prior or
contemporaneous agreements, offer letters, negotiations, or discussions relating
to the subject matter of this Agreement.  With the exception of the Employment
Agreement, no other agreement shall be binding upon each or any of the
Releasees, including, but not limited to, any agreement made hereafter, unless
in writing and signed by an officer of the Employer, and only such agreement
shall be binding against the Employer.

 

13.                                 Employee is advised, and acknowledges that
he has been advised, to consult with an attorney before signing this Agreement.

 

14.                                 Employee acknowledges that he is signing
this Agreement voluntarily, with full knowledge of the nature and consequences
of its terms.

 

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15.                                 All executed copies of this Agreement and
photocopies thereof shall have the same force and effect and shall be as legally
binding and enforceable as the original.

 

16.                                 Employee acknowledges that he has been given
up to twenty-one (21) days within which to consider this Agreement before
signing it.  Subject to paragraph 17 below, this Agreement will become effective
on the date of Employee’s signature hereof.

 

17.                                 For a period of seven (7) calendar days
following his signature of this Agreement, Employee may revoke the Agreement,
and the Agreement shall not become effective or enforceable until the seven
(7) day revocation period has expired.  Employee may revoke this Agreement at
any time within that seven (7) day period, by sending a written notice of
revocation to the                                         .  Such written notice
must be actually received by the Employer within that seven (7) day period in
order to be valid.  If a valid revocation is received within that seven (7) day
period, this Agreement shall be null and void for all purposes.  Payment of the
severance pay amount set forth in the Employment Agreement will be paid in the
manner and at the time(s) described in the Employment Agreement.

 

IN WITNESS WHEREOF, the Parties have read, understand and do voluntarily execute
this Separation Agreement and General Release which consists of four pages.

 

EMPLOYER

 

EMPLOYEE

 

 

 

By:

 

 

By:

 

 

 

 

Date:

 

 

Date:

 

 

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