Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of this 26th day
of May, 2004 (the “Commencement Date”) by and between Penn National Gaming,
Inc., a Pennsylvania corporation (the “Company”), and Kevin G. DeSanctis, an
individual residing in Pennsylvania (“Executive”).

 

WHEREAS, Executive and the Company are party to a certain Employment Agreement,
dated as of February 15, 2001 (as amended from time to time, the “Initial
Agreement”) which, by agreement among the parties has been extended pending
completion of this Agreement; and

 

WHEREAS, the parties now desire to terminate the Initial Agreement and to enter
into a new agreement reflecting, among other things, certain additional
covenants and consideration exchanged by the parties, all as more specifically
set forth herein.

 

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 President and Chief Operating 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 Chief Executive Officer and 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 third
anniversary of the Commencement Date (the “Initial Term”), unless earlier
terminated in accordance with Section 3 hereof.  This Agreement shall
automatically renew for additional three-year periods (each, a “Renewal Term”
and, together with the Initial Term, the “Employment Term”) unless either party
has delivered written notice of non-renewal at least 60 days prior to the start
of a Renewal Term or unless earlier terminated in accordance with Section 3
hereof.

 

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, so long as such service does not materially interfere with
Executive’s duties hereunder.

 

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 seven hundred twenty-eight

 

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thousand ($728,000), 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 compensation
committee of the Board (the “Compensation Committee”).

 

2.2.                              Cash Bonuses.  Executive shall participate in
the Company’s incentive compensation plan for senior management as such may be
adopted, amended and approved, from time to time, by the Compensation Committee.

 

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 four (4) 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.

 

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 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 maintain life
insurance on the life of Executive in the amount of $5,000,000, to the extent it
can be issued at standard rates, and Executive may name the beneficiary of such
policy.

 

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.

 

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3.1.                              Termination by the Company.

 

(a)                                  Without Cause.  The Company may terminate
Executive 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 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, this Agreement shall
terminate effective as of the date of Executive’s death or total disability. 
The term “total disability” shall have the definition set forth in the Company’s
Long Term Disability Insurance Policy in effect at the time of such
determination.

 

3.4.                              Payments Due Upon Termination.

 

(a)                                  Generally.  Upon any termination described
in Sections 3.1, 3.2 or 3.3 above, Executive shall be entitled to receive any
amounts due for Base Salary earned or expenses incurred through the effective
date of termination and any benefits accrued or earned on or prior to such date
in accordance with the terms of any applicable benefit plans and programs.

 

(b)                                 Certain Circumstances.  In the event the
Company terminates Executive’s employment without Cause or due to a total
disability or in the event that the Company elects not to renew this Agreement,
and subject to Executive executing the release attached hereto as Exhibit A,
Executive shall be entitled to receive the following in lieu of any other
severance:

 

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(i)                                     Executive shall receive a payment equal
to Executive’s monthly Base Salary at the highest rate in effect for Executive
during the 24-month period immediately preceding the effective date of
termination and Executive’s monthly bonus value (determined by dividing 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
effective date of termination by twelve) for a period equal to the greater of
(1) the number of months remaining in the Employment Term or (2) 24 months (the
“Severance Period”).

 

(ii)                                  Executive shall continue to receive the
health benefits coverage in effect on the effective date of termination (or as
the same may be changed from time to time for Peer Executives) for Executive
and, if any, Executive’s spouse and dependents for the Severance Period.  At the
option of the Company, the Company may elect to pay Executive cash in lieu of
such coverage in an amount equal to Executive’s after-tax cost of obtaining
generally comparable coverage for such period.

 

(iii)                               Executive shall continue to serve as a
non-officer employee of the Company during the Severance Period and, as such,
all options granted to Executive shall continue vesting for such period.

 

(c)                                  Payments.   Cash Payments due under this
Section 3.4 shall be made as follows: 75% shall be made within 15 days of the
effective date of termination and the balance shall be made in accordance with
the payroll practices in effect on the date of termination, unless, at the
Company’s sole option, the Company elects to make all such payments in a single
lump sum.  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

 

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such as 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 the greater of (i) the remainder of the
Employment Term in effect on the effective date of termination and (ii) the
Severance Period, if applicable; provided, however, that, if on or before the
Trigger Date, Executive has been terminated for one of the reasons contemplated
by Section 3.4(b), Executive may elect to terminate the Restriction Period at
any time following the first anniversary of the effective date of termination by
delivering written notice to the Company that Executive has made such election
and that, in consideration therefore, is waiving the right to receive any
continued payments under Section 3.4(b).

 

(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 a gaming or pari-mutuel
facility located within 150 miles of any gaming or pari-mutuel facility owned or
operated by the Company or any of its affiliates.

 

(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 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

 

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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. Executive and Company
acknowledge that, as additional consideration for the change of control
payments, Executive has also agreed to limit Executive’s ability to opt out of
the Restriction Period in Section 6(a) to periods prior to the Trigger Date.

 

8.2.                              Payment Terms.  This change of control payment
shall be made in two lump sum payments as follows: (i) 75% to Executive on the
Trigger Date; and (ii) 25% into a mutually acceptable escrow account on the
Trigger Date, payable to Executive on the 90th day following the Trigger Date. 
Notwithstanding any of the foregoing to the contrary, the payment contemplated
by clause (ii) shall be paid immediately upon the 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) of this Agreement 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.  The
provisions of this Section 8 shall continue to apply to Executive if, during the
24-month period immediately preceding the Trigger Date, the Company terminates
Executive’s employment without Cause or due to a total disability or the Company
elects not to renew this Agreement; provided, however, that, in such event, any
payments due under Section 8 shall be reduced by any prior payments made under
Section 3.4(b)(i).

 

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8.4.                              Defined Terms.

 

(a)                                  Change of Control.  The occurrence of one
or more of the following events:  (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (ii) the election of two (2) or
more persons to the Board who do not constitute Continuing Directors; or (iii)
the ownership or acquisition by any Person or Group of the power, directly or
indirectly, to vote or direct the voting of securities having more than forty
percent (40%) of the ordinary voting power for the election of directors of the
Company.

 

(b)                                 Good Reason.  The occurrence of any of the
following events that the Company fails to cure within 10 days after receiving
written notice thereof from Executive: (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) any travel
requirements materially greater than Executive’s travel requirements prior to
the Change of Control; or (iv) breach of any material term of this Agreement by
the Company.

 

(c)                                  Continuing Directors.  Any person who, as
of the date of determination, either (i) was a member of the Board as of the
date of this Agreement or (ii) was nominated for election or elected to the
Board with the affirmative vote of a majority of directors comprising the Board
or, if applicable, the Nominating Committee of the Board, who were Continuing
Directors immediately prior to such nomination or election.

 

(d)                                 Group.  Any group of related Persons for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.

 

(e)                                  Person.  Any individual, partnership, joint
venture, trust, corporation, limited liability entity, unincorporated
organization or other entity (including a governmental entity).

 

9.  Certain Tax Matters.

 

9.1.                              Generally.  In the event Executive becomes
entitled to receive the payments (the “Severance Payments”) provided under
Section 3 or Section 8 hereof or under any other plan or arrangement providing
for payments under circumstances similar to those contemplated by such sections,
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.

 

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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.

 

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
clause (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. 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 the
payments hereunder.

 

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.

 

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

 

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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: Chairman

 

If to Executive, to:

 

Kevin G. DeSanctis
c/o Penn National Gaming, Inc.
825 Berkshire Boulevard, Suite 200
Wyomissing, PA 19610
Fax: (610) 376-2842

 

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 Initial Agreement which is
hereby terminated.  This Agreement cannot be changed, modified, extended, waived
or

 

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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.

 

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.

 

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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.

 

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

 

 

 

PENN NATIONAL GAMING, INC.

 

 

 

 

 

By:

/s/ Peter M. Carlino

 

Name:

Peter M. Carlino

 

Title:

Chairman and Chief Executive
Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

/s/ Kevin DeSanctis

 

 

Kevin G. DeSanctis

 

 

11

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