Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (the “Agreement”) is made this 3rd
day of October, 2006, by and between Penn National Gaming, Inc., a Pennsylvania
corporation (the “Employer”) and Kevin DeSanctis (the “Executive”).

BACKGROUND

A.   Executive is currently employed by Employer as its President and Chief
Operating Officer pursuant to that certain employment agreement between Employer
and Executive, dated as of May 26, 2004 (the “Employment Agreement”), which
agreement expires on May 26, 2007 (the “Expiration Date”).

B.   In order to effect an orderly transition of Executive’s responsibilities
prior to the Expiration Date, Executive and Employer have now mutually agreed
that Employer may elect to terminate the employment relationship after the date
hereof in accordance with Section 1 of this Agreement.

C.   Executive and Employer desire to set forth the terms of the separation and
to provide for mutual general releases, all as more specifically set forth
herein.

NOW, THEREFORE, in consideration of the foregoing preambles, the mutual
covenants and agreements set forth below and other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

1.             TRANSITION SERVICES.

1.1           OFFICER TRANSITION SERVICES.  IN ORDER TO ASSIST EMPLOYER WITH AN
ORDERLY TRANSITION OF EXECUTIVE’S RESPONSIBILITIES, EXECUTIVE AGREES TO CONTINUE
TO SERVE IN HIS CURRENT CAPACITY AS PRESIDENT AND CHIEF OPERATING OFFICER OF
EMPLOYER UNTIL THE EARLIER OF (I) EMPLOYER’S WRITTEN NOTICE (SUCH NOTICE TO BE
NOT LESS THAN FIVE (5) BUSINESS DAYS) TO EXECUTIVE THAT IT HAS COMPLETED AN
ORDERLY TRANSITION OF EXECUTIVE’S OFFICER RESPONSIBILITIES, (II) THIRTY (30)
DAYS AFTER THE FIRST DATE OF EMPLOYMENT OF EXECUTIVE’S SUCCESSOR OR (III)
DECEMBER 31, 2006 (THE “OFFICER TERMINATION DATE”).  DURING THE PERIOD FROM THE
DATE HEREOF UNTIL THE OFFICER TERMINATION DATE, EXECUTIVE SHALL CONTINUE TO
REPORT TO THE CORPORATE HEADQUARTERS IN WYOMISSING, PENNSYLVANIA AND SHALL, AT
EMPLOYER’S REQUEST, CONTINUE TO PERFORM HIS ROLES AND RESPONSIBILITIES IN THE
SAME MANNER AS PRIOR TO THE DATE HEREOF.  EFFECTIVE AS OF THE CLOSE OF BUSINESS
ON THE OFFICER TERMINATION DATE AND WITHOUT ANY FURTHER ACTION BY EITHER PARTY,
EXECUTIVE SHALL BE DEEMED TO HAVE RESIGNED FROM ALL POSITIONS HELD AS AN OFFICER
OR DIRECTOR OF

 

--------------------------------------------------------------------------------

EMPLOYER AND ANY OF ITS AFFILIATES (AS SUCH TERM IS DEFINED UNDER RULE 144
PROMULGATED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED).

1.2           NON-OFFICER TRANSITION SERVICES.  FOLLOWING THE OFFICER
TERMINATION DATE, EXECUTIVE AGREES TO CONTINUE TO SERVE AS A NON-OFFICER
EMPLOYEE OF EMPLOYER UNTIL FEBRUARY 9, 2007 (THE “TERMINATION DATE”).  DURING
THE PERIOD FROM THE OFFICER TERMINATION DATE UNTIL THE TERMINATION DATE,
EXECUTIVE SHALL NOT BE REQUIRED TO REPORT TO THE CORPORATE HEADQUARTERS ON A
REGULAR BASIS BUT SHALL MAKE HIMSELF REASONABLY AVAILABLE TO ASSIST EMPLOYER ON
SUCH MATTERS AS THE PARTIES MAY MUTUALLY DETERMINE REQUIRE THE ASSISTANCE OF
EXECUTIVE.  EFFECTIVE AS OF THE CLOSE OF BUSINESS ON THE TERMINATION DATE AND
WITHOUT ANY FURTHER ACTION BY EITHER PARTY, EXECUTIVE’S EMPLOYMENT WITH EMPLOYER
SHALL BE DEEMED TO BE TERMINATED.

1.3           Employment Agreement.  The Employment Agreement shall remain in
full force and effect until the Officer Termination Date.  In the event of any
conflict between the terms of the Employment Agreement and the terms hereof, the
provisions of this Agreement shall control.  After the Officer Termination Date,
this Agreement shall solely govern the relationship between the parties.

2.             COMPENSATION.

2.1           COMPENSATION.  EMPLOYER WILL CONTINUE TO PAY EXECUTIVE HIS CURRENT
BASE SALARY UNTIL THE OFFICER TERMINATION DATE.  DURING THE PERIOD FROM THE
OFFICER TERMINATION DATE UNTIL THE TERMINATION DATE, EMPLOYER WILL PAY EXECUTIVE
$1,000 PER WEEK.

2.2           BONUS PAYMENT.  TO THE EXTENT THE COMPENSATION COMMITTEE
DETERMINES THAT EMPLOYER’S PERFORMANCE FOR 2006 MERITS THE PAYMENT OF AN ANNUAL
BONUS TO LEVEL I EMPLOYEES, THEN EXECUTIVE SHALL BE ENTITLED TO A PRO-RATA BONUS
(BASED ON THE NUMBER OF DAYS ELAPSED THROUGH THE OFFICER TERMINATION DATE) BASED
ON THE SAME PERCENTAGE OF BASE SALARY RECEIVED BY OTHER LEVEL I EMPLOYEES.  SUCH
PAYMENT WILL BE MADE WITHIN THIRTY (30) DAYS OF THE TERMINATION DATE, SUBJECT TO
EXECUTIVE EXECUTING A BRING-DOWN OF THE RELEASES SET FORTH IN SECTION 6 OF THIS
AGREEMENT.

2.3           EXPENSES; PAID TIME OFF.  EXECUTIVE SHALL BE REIMBURSED IN THE
NORMAL COURSE FOR ALL REASONABLE BUSINESS-RELATED EXPENSES INCURRED BY HIM IN
ACCORDANCE WITH EMPLOYER’S POLICIES ON OR BEFORE THE TERMINATION DATE AND
SUBMITTED WITHIN FORTY-FIVE (45) DAYS AFTER THE TERMINATION DATE.  EXECUTIVE
SHALL CONTINUE TO BE ENTITLED TO FOUR (4) WEEKS OF PAID VACATION TIME IN EACH
CALENDAR YEAR THROUGH THE TERMINATION DATE, AND EXECUTIVE SHALL ALL BE PAID FOR
ANY EARNED BUT UNUSED VACATION AND OTHER PERSONAL DAYS IN ACCORDANCE WITH
EMPLOYER’S POLICIES.

2.4           BENEFITS.  EXECUTIVE SHALL CONTINUE TO PARTICIPATE IN EMPLOYER’S
MEDICAL PLANS, DEFERRED COMPENSATION PLAN, 401(K) AND OTHER MEDICAL AND SAVINGS
PLANS THROUGH

 

2

--------------------------------------------------------------------------------

THE TERMINATION DATE.  EMPLOYER CONFIRMS THAT AS OF THE DATE OF THIS AGREEMENT,
EXECUTIVE IS 100% VESTED IN HIS 401(K) ACCOUNT AND HIS BENEFITS UNDER EMPLOYER’S
NON-QUALIFIED DEFERRED COMPENSATION PLAN.  AFTER THE TERMINATION DATE, EXECUTIVE
WILL BE ENTITLED TO CONTINUE HIS HEALTH BENEFITS AT HIS EXPENSE AS PROVIDED BY
COBRA.  IN ADDITION, EMPLOYER AND EXECUTIVE WILL TAKE SUCH ACTION AS IS
NECESSARY TO TRANSFER TO EXECUTIVE THE OWNERSHIP OF, AND THE OBLIGATIONS ARISING
UNDER, THE $5,000,000 LIFE INSURANCE POLICY ON THE LIFE OF EXECUTIVE AND THE
LEASE OF EXECUTIVE’S EMPLOYER PROVIDED AUTOMOBILE.

2.5           EQUITY COMPENSATION.  ALL EQUITY COMPENSATION AWARDS HELD BY
EXECUTIVE SHALL CONTINUE TO VEST UNTIL THE TERMINATION DATE IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS, INCLUDING, WITHOUT LIMITATION, SECTION 14.4 OF
EMPLOYER’S 2003 LONG TERM INCENTIVE COMPENSATION PLAN (THE “PLAN”), WHICH
SECTION SHALL APPLY TO ALL EQUITY COMPENSATION AWARDS HELD BY EXECUTIVE.  A
DETAILED VESTING SCHEDULE IS SET FORTH ON EXHIBIT A HERETO.  FOLLOWING THE
TERMINATION DATE AND NOTWITHSTANDING ANY PROVISION OF THE PLAN OR ANY OPTION
AGREEMENT OR CERTIFICATE TO THE CONTRARY, ALL VESTED STOCK OPTIONS SHALL REMAIN
EXERCISABLE UNTIL THE EARLIER OF AUGUST 9, 2007 OR THE EXPIRATION OF THE TERM OF
THE OPTION (OTHER THAN ANY OPTIONS WHICH ARE INCENTIVE STOCK OPTIONS, WHICH
SHALL REMAIN EXERCISABLE IN ACCORDANCE WITH THEIR TERMS), AND ALL UNVESTED
EQUITY COMPENSATION (INCLUDING ALL RESTRICTED STOCK GRANTS) AWARDS SHALL BE
DEEMED TERMINATED.  EMPLOYER HEREBY AGREES TO AMEND EXECUTIVE’S STOCK OPTIONS TO
THE EXTENT NECESSARY TO CONFORM TO THIS SECTION 2.5.

2.6           NO OTHER COMPENSATION.  OTHER THAN AS SPECIFICALLY SET FORTH IN
THIS AGREEMENT, EXECUTIVE SHALL NOT BE ELIGIBLE FOR ANY OTHER COMPENSATION FOR
SERVICES RENDERED PRIOR TO THE TERMINATION DATE INCLUDING, WITHOUT LIMITATION,
BONUS, FURTHER STOCK OPTION GRANTS OR OTHER INCENTIVE COMPENSATION, RELATED TO
HIS EMPLOYMENT WITH EMPLOYER.  THIS PROVISION DOES NOT AFFECT EXECUTIVE’S
ENTITLEMENT TO CONTINUED BENEFITS UNDER EMPLOYER’S EMPLOYEE BENEFIT PLANS IN
ACCORDANCE WITH THEIR TERMS THROUGH THE TERMINATION DATE.

3.             COVENANTS.

3.1           REGULATORY MATTERS; FURTHER ASSURANCES.  THE PARTIES WILL
COOPERATE IN GOOD FAITH WITH EACH OTHER IN TERMINATING OR TRANSFERRING ANY
LICENSES PRESENTLY HELD BY EXECUTIVE THAT WERE ISSUED IN CONNECTION WITH HIS
EMPLOYMENT WITH EMPLOYER AND IN TAKING SUCH OTHER ACTIONS AS ARE NECESSARY TO
EFFECT THE PURPOSES SET FORTH HEREIN.  EXECUTIVE AGREES TO EXECUTE AND DELIVER
SUCH INSTRUMENTS AND DOCUMENTS IN HIS CAPACITY AS A REGISTERED PERSON WITH ANY
REGULATORY AGENCY REQUIRED TO BE FILED BY EMPLOYER UNTIL HIS SUCCESSOR HAS BEEN
DULY QUALIFIED, SO LONG AS SUCH DOCUMENTS ARE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO EXECUTIVE.

3.2           INDEMNIFICATION.  NOTWITHSTANDING ANYTHING IN SECTION 6.2 BELOW
AND TO THE EXTENT PERMITTED PURSUANT TO THE PENNSYLVANIA BUSINESS CORPORATION
LAW OF 1988, AS

 

3

--------------------------------------------------------------------------------

AMENDED, AND THE BYLAWS OF EMPLOYER, EMPLOYER SHALL DEFEND AND INDEMNIFY
EXECUTIVE WITH RESPECT TO ACTS OR OMISSIONS OF EXECUTIVE AS AN EMPLOYEE, AGENT,
OFFICER OR DIRECTOR OF EMPLOYER OR ITS AFFILIATES OCCURRING ON OR PRIOR TO THE
TERMINATION DATE.

3.3           CORPORATE PROPERTY.  EXECUTIVE AGREES THAT ON OR BEFORE THE
OFFICER TERMINATION DATE, HE WILL RETURN TO EMPLOYER ALL PROPERTY OF EMPLOYER OR
ITS AFFILIATES IN HIS POSSESSION INCLUDING, BUT NOT LIMITED TO, KEYS, ACCESS
CARDS, IDENTIFICATION CARDS, CREDIT CARDS, FILES (INCLUDING FILES PERTAINING TO
POTENTIAL ACQUISITIONS, PARTNERSHIPS AND OTHER STRATEGIC OPPORTUNITIES),
RECORDS, PUBLICATIONS, CUSTOMER OR VENDOR LISTS, COMPUTERS, TELEPHONES OR OTHER
ELECTRONIC DEVICES AND ANY REPORTS OR COMPENDIA MADE BY EXECUTIVE OR ANY OTHER
PERSON CONCERNING EMPLOYER OR ITS BUSINESS OR PROSPECTS AND ANY COPIES IN ANY
FORMAT OF ANY OF THE FOREGOING.

3.4           CONFIDENTIALITY.  EXECUTIVE HEREBY ACKNOWLEDGES THAT AS A RESULT
OF HIS EMPLOYMENT BY EMPLOYER HE HAS HAD ACCESS TO, OBTAINED, OR DEVELOPED
CERTAIN CONFIDENTIAL OR LEGALLY PRIVILEGED INFORMATION (INCLUDING BUT NOT
LIMITED TO TRADE SECRETS, METHODS AND PRACTICES, FINANCIAL INFORMATION,
INFORMATION TECHNOLOGY SYSTEMS, TECHNICAL AND RESEARCH DATA, NEW PRODUCT
DEVELOPMENT INFORMATION, PRICING INFORMATION, BUSINESS AND MARKETING PLANS,
LOBBYING ACTIVITIES, ACQUISITION PROSPECTS AND STRATEGIES AND COMPLIANCE
MATTERS) OF EMPLOYER AND ITS AFFILIATES (COLLECTIVELY “INFORMATION”), AND THAT
SUCH INFORMATION CONSTITUTES VALUABLE, SPECIAL AND UNIQUE PROPERTY OF EMPLOYER
AND ITS AFFILIATES.  EXECUTIVE AGREES THAT HE SHALL HOLD INVIOLATE AND KEEP
SECRET ALL SUCH INFORMATION AND WILL NOT FOR ANY REASON OR PURPOSE USE, PERMIT
TO BE USED, OR DISCLOSE TO ANY PARTY ANY INFORMATION.  NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THE FOREGOING, EXECUTIVE MAY DIVULGE ANY INFORMATION REQUIRED
BY LAW TO BE DIVULGED BY HIM TO ANY GOVERNMENT COMMISSION, AGENCY OR OTHER
REGULATORY BODY OR PURSUANT TO A SUBPOENA; PROVIDED, HOWEVER, THAT, UNLESS IT IS
NOT FEASIBLE UNDER THE CIRCUMSTANCES, PRIOR TO DIVULGING ANY SUCH INFORMATION,
EXECUTIVE SHALL ADVISE EMPLOYER’S GENERAL COUNSEL THAT A REQUEST HAS BEEN MADE
AND COOPERATE WITH EMPLOYER, IF REQUESTED, IN EMPLOYER’S EFFORTS TO SEEK
PROTECTIVE RELIEF AGAINST THE DIVULGENCE OF ANY SUCH INFORMATION.  IN ANY EVENT,
UNLESS PROHIBITED BY LAW, EXECUTIVE WILL KEEP EMPLOYER FULLY ADVISED OF ANY
CONTACTS FROM ANY SUCH GOVERNMENT AGENCY, COMMISSION OR REGULATORY BODY, AND ANY
INFORMATION GIVEN BY HIM TO THE SAME.

3.5           DISPARAGING REMARKS.  EXECUTIVE AND EMPLOYER AGREE THAT NEITHER
SHALL DIRECTLY OR INDIRECTLY MAKE DISPARAGING REMARKS ABOUT THE OTHER PARTY OR
THEIR RESPECTIVE EMPLOYERS, EMPLOYEES, DIRECTORS, OFFICERS, PRODUCTS OR SERVICES
(AS APPLICABLE) TO ANY PERSON OR ENTITY OR DIRECTLY OR INDIRECTLY MAKE OR
SOLICIT ANY COMMENTS, STATEMENTS OR THE LIKE TO THE MEDIA OR OTHER THIRD PARTIES
WHICH MAY BE CONSIDERED DEROGATORY OR DETRIMENTAL.  THIS PROVISION SHALL NOT
APPLY TO SWORN TESTIMONY GIVEN IN A COURT PROCEEDING OR COMPELLED UNDER
SUBPOENA.

 

4

--------------------------------------------------------------------------------

4.             NON-COMPETITION & NON-SOLICITATION.

4.1           NON-COMPETITION.

4.1.1        WITHOUT LIMITING THE GENERALITY OF ANY OTHER PROVISION HEREOF, THE
PARTIES ACKNOWLEDGE AND AGREE THAT THE NON-COMPETITION PROVISIONS IN SECTION 6
OF THE EMPLOYMENT AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL THE
OFFICER TERMINATION DATE; PROVIDED, HOWEVER, THAT, EMPLOYER AGREES THAT
EXECUTIVE MAY SPEND A REASONABLE AMOUNT OF TIME, DURING BUSINESS HOURS OR
OTHERWISE, ON THE FORMATION OF HIS NEW BUSINESS SO LONG AS SUCH EFFORTS DO NOT
UNREASONABLY INTERFERE WITH HIS DUTIES HEREUNDER AND ARE LIMITED TO SUCH MATTERS
AS MAY BE MUTUALLY AGREED UPON BY EMPLOYER AND EXECUTIVE.

4.1.2        FOLLOWING THE OFFICER TERMINATION DATE, EXECUTIVE SHALL HAVE NO
RESTRICTIONS ON HIS ABILITY TO COMPETE WITH EMPLOYER EXCEPT WITH RESPECT TO
CERTAIN OPPORTUNITIES THAT MAY BE MUTUALLY AGREED UPON BY EMPLOYER AND
EXECUTIVE.

4.2           NON-SOLICITATION.  FROM THE DATE HEREOF THROUGH THE SECOND
ANNIVERSARY OF THE TERMINATION DATE, EXECUTIVE WILL NOT, EXCEPT WITH THE PRIOR
WRITTEN CONSENT OF EMPLOYER, 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 EMPLOYER OR ANY OF ITS AFFILIATES FOR ANY POSITION AS AN EMPLOYEE,
INDEPENDENT CONTRACTOR, CONSULTANT OR OTHERWISE , OR INDUCE ANY SUCH PERSON TO
TERMINATE HIS OR HER EMPLOYMENT RELATIONSHIP WITH EMPLOYER OR ANY OF ITS
AFFILIATES OR TO BREACH HIS OR HER EMPLOYMENT AGREEMENT WITH EMPLOYER OR ANY OF
ITS AFFILIATES.

5.             NO ADMISSIONS.  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
EITHER PARTY OR ANY OF THE RELEASEES IN ANY JUDICIAL, ADMINISTRATIVE OR OTHER
PROCEEDING NOW PENDING OR HEREAFTER INSTITUTED BY ANY PERSON OR ENTITY. 
EMPLOYER IS ENTERING INTO THIS AGREEMENT SOLELY FOR THE PURPOSE OF EFFECTUATING
A MUTUALLY SATISFACTORY SEPARATION OF EXECUTIVE’S EMPLOYMENT.  BOTH PARTIES
ACKNOWLEDGE AND AGREE THAT EMPLOYER AND EXECUTIVE SHALL BE PERMITTED TO FILE
THIS AGREEMENT WITH THE SECURITIES EXCHANGE COMMISSION AND SUCH OTHER REGULATORY
BODIES AS EITHER PARTY MAY DEEM APPROPRIATE OR NECESSARY.

6.             RELEASE AND COVENANT NOT TO SUE.

6.1           DEFINITIONS.

6.1.1        WHEN USED IN THIS AGREEMENT, THE WORD “RELEASEES” MEANS EMPLOYER
AND ALL OR ANY OF ITS PAST AND PRESENT SUBSIDIARY AND AFFILIATED CORPORATIONS,
COMPANIES, PARTNERSHIPS, JOINT VENTURES AND OTHER ENTITIES AND THEIR GROUPS,
DIVISIONS, DEPARTMENTS AND UNITS,

 

5

--------------------------------------------------------------------------------

AND THEIR PAST AND PRESENT DIRECTORS, TRUSTEES, OFFICERS, MANAGERS, PARTNERS,
SUPERVISORS, EMPLOYEES, ATTORNEYS, AGENTS AND CONSULTANTS, AND THEIR
PREDECESSORS, SUCCESSORS AND ASSIGNS.

6.1.2        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.

6.2           RELEASE OF EMPLOYER.  IN CONSIDERATION OF THE PROMISES OF EMPLOYER
SET FORTH IN THIS AGREEMENT, AND INTENDING TO BE LEGALLY BOUND, EXECUTIVE 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, NOW HAS OR MAY HAVE 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 BY
REASON OF ANY CAUSE, MATTER, THING, OCCURRENCE OR EVENT WHATSOEVER RELATING TO
OR ARISING OUT OF HIS EMPLOYMENT WITH EMPLOYER.  EXECUTIVE ACKNOWLEDGES AND
AGREES THAT THE CLAIMS RELEASED IN THIS SECTION 6.2 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, (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, THE FEDERAL AGE DISCRIMINATION IN
EMPLOYMENT ACT (THE “ADEA”), THE AMERICANS WITH DISABILITIES ACT, THE FAMILY AND
MEDICAL LEAVE ACT, THE OCCUPATIONAL SAFETY AND HEALTH ACT, AND SIMILAR STATE AND
LOCAL STATUTES, LAWS AND ORDINANCES, (C) ANY AND ALL CLAIMS PERTAINING TO
DISCRIMINATION, HARASSMENT, OR RETALIATION, WHETHER BASED ON RACE, COLOR,
RELIGION, GENDER, AGE, SEXUAL ORIENTATION, HANDICAP AND/OR DISABILITY, NATIONAL
ORIGIN, WHISTLE-BLOWING OR ANY OTHER LEGALLY PROTECTED CLASS, (D) ANY AND ALL
CLAIMS UNDER ANY GRIEVANCE OR COMPLAINT PROCEDURE OF ANY KIND, (E) ANY AND ALL
CLAIMS BASED ON OR ARISING OUT OF OR RELATED TO HIS RECRUITMENT BY, EMPLOYMENT
WITH, THE 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
AND (F) ANY AND ALL CLAIMS FOR ATTORNEYS’ FEES, INCLUDING LITIGATION COSTS AND
EXPENSES IN CONNECTION ANY OF THE FOREGOING.  EXECUTIVE 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 BE CONSTRUED TO
CONSTITUTE A WAIVER BY EXECUTIVE OF ANY RIGHTS OR CLAIMS THAT MAY ARISE AFTER
THE DATE HEREOF; PROVIDED, FURTHER, THAT THE FOREGOING IS NOT INTENDED TO
RELEASE ANY CLAIM THAT EXECUTIVE MAY HAVE TO (I) INDEMNIFICATION OR DIRECTORS
AND OFFICERS LIABILITY INSURANCE COVERAGE, (II) PAYMENT OF THE BENEFITS PROVIDED
UNDER THIS AGREEMENT (INCLUDING ACCRUED AND UNPAID VACATION, BASE SALARY AND
BONUS THROUGH THE DATE OF TERMINATION OF EMPLOYMENT), (III) ACCRUED AND VESTED
BENEFITS UNDER ANY RETIREMENT PLAN OR DEFERRED COMPENSATION ACCOUNT OR PLAN AND
(IV) BENEFITS TO WHICH EXECUTIVE IS ENTITLED UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED.  

 

6

--------------------------------------------------------------------------------

IN ADDITION, EXECUTIVE WAIVES ANY RIGHT TO INITIATE OR OTHERWISE VOLUNTARILY
PARTICIPATE IN ANY SHAREHOLDERS’ DERIVATIVE ACTION WITH RESPECT TO EMPLOYER AND
ITS MAJORITY-OWNED SUBSIDIARIES BY REASON OF ANY ACT OR OMISSION PRIOR TO THE
DATE OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, BEING A NAMED PLAINTIFF
IN OR CAUSING TO BE FILED ON EXECUTIVE’S BEHALF OR AS A CLASS ACTION ANY SUCH
DERIVATIVE ACTION.

6.3           RELEASE BY EMPLOYER.  EMPLOYER AND ITS MAJORITY CONTROLLED
SUBSIDIARIES HEREBY IRREVOCABLY REMISE, RELEASE AND FOREVER DISCHARGE EXECUTIVE
FROM ANY CLAIMS ARISING PRIOR TO THE DATE HEREOF, EXCEPT ANY CLAIM ARISING UNDER
THIS AGREEMENT.

6.4           COVENANT NOT TO SUE.  EXECUTIVE COVENANTS AND AGREES NOT TO SUE
THE RELEASEES AND EACH OR ANY OF THEM FOR ANY CLAIMS RELEASED BY THIS AGREEMENT
AND TO WAIVE ANY RECOVERY RELATED TO ANY CLAIMS COVERED BY THIS AGREEMENT. 
EMPLOYER AND ITS MAJORITY CONTROLLED SUBSIDIARIES COVENANT AND AGREE NOT TO SUE
EXECUTIVE FOR ANY CLAIMS RELEASED BY THIS AGREEMENT AND TO WAIVE ANY RECOVERY
RELATED TO ANY CLAIMS COVERED BY THIS AGREEMENT.

7.             REVIEW AND CONSIDERATION PERIOD. EXECUTIVE ACKNOWLEDGES THAT HE
HAS BEEN INSTRUCTED TO AND HAS HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT WITH
AN ATTORNEY AND/OR ANY PERSON OF HIS CHOOSING BEFORE SIGNING IT. EXECUTIVE
FURTHER ACKNOWLEDGES THAT HE HAS HAD TWENTY-ONE (21) DAYS TO CONSIDER THIS
AGREEMENT. BY EXECUTING THIS AGREEMENT, EXECUTIVE ACKNOWLEDGES THAT, AS OF THE
DATE OF EXECUTION, HE HAS EITHER CONSIDERED THE AGREEMENT FOR TWENTY-ONE (21)
DAYS, OR HAS, ON THE ADVICE OF COUNSEL, WAIVED THE TWENTY-ONE (21) DAY
CONSIDERATION PERIOD.

8.             REVOCATION RIGHT. EXECUTIVE SHALL HAVE SEVEN (7) DAYS AFTER
SIGNING THIS AGREEMENT TO REVOKE IT. THIS AGREEMENT SHALL NOT BE EFFECTIVE NOR
WILL ANY CONSIDERATION BE PROVIDED UNTIL AFTER THE REVOCATION PERIOD HAS PASSED.
A REVOCATION OF THIS AGREEMENT SHALL BE WRITTEN AND SHALL NOT BE EFFECTIVE
UNLESS ACTUALLY RECEIVED BY THE CHAIRMAN OR GENERAL COUNSEL OF EMPLOYER ON OR
BEFORE THE 7TH DAY AFTER THIS AGREEMENT HAS BEEN SIGNED.

9.             NOTICES. ALL NOTICES, REQUESTS, DEMANDS, CLAIMS, AND OTHER
COMMUNICATIONS HEREUNDER WILL BE IN WRITING AND ADDRESSED TO THE INTENDED
RECIPIENT AS SET FORTH BELOW. ANY PARTY HERETO MAY GIVE ANY NOTICE, REQUEST,
DEMAND, CLAIM OR OTHER COMMUNICATION HEREUNDER BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, OR DELIVERY IN PERSON OR BY ANY NATIONALLY KNOWN
OVERNIGHT COURIER SERVICE THAT REQUIRES A RETURN RECEIPT OR SIGNATURE FOR
DELIVERY.  ANY PARTY HERETO MAY CHANGE THE ADDRESS TO WHICH NOTICES, REQUESTS,
DEMANDS, CLAIMS, AND OTHER COMMUNICATIONS HEREUNDER ARE TO BE DELIVERED BY
GIVING THE OTHER PARTY HERETO NOTICE IN THE MANNER HEREIN SET FORTH.

 

7

--------------------------------------------------------------------------------

If to Executive:                 Kevin DeSanctis
2 Woods Way
Wyomissing, PA 19610

If to Employer:                  Penn National Gaming, Inc.
825 Berkshire Blvd., Suite 200
Wyomissing, PA 19610
Attention: General Counsel

10.           REMEDIES.  NO REMEDY CONFERRED UPON EITHER PARTY BY THIS AGREEMENT
IS INTENDED TO BE EXCLUSIVE OF ANY OTHER REMEDY, AND EACH AND EVERY SUCH REMEDY
SHALL BE CUMULATIVE AND IN ADDITION TO AND NOT IN DEROGATION OF ANY OTHER REMEDY
OR RIGHT GIVEN HEREUNDER OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY,
INCLUDING, WITHOUT LIMITATION, ANY REMEDIES CONFERRED UPON EITHER PARTY BY
VIRTUE OF THEIR PRIOR EMPLOYMENT RELATIONSHIP.  NO DELAY OR OMISSION BY EITHER
PARTY IN EXERCISING ANY RIGHT, REMEDY OR POWER HEREUNDER 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 ANY EITHER PARTY FROM TIME TO TIME AND AS OFTEN AS MAY
BE DEEMED EXPEDIENT OR NECESSARY BY THE PARTY IN ITS SOLE DISCRETION.  EXECUTIVE
ACKNOWLEDGES THAT MONEY DAMAGES WOULD NOT BE A SUFFICIENT REMEDY FOR ANY BREACH
OF THIS AGREEMENT BY EXECUTIVE AND THAT EMPLOYER 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 EMPLOYER.

11.           ENFORCEABILITY. IF ANY PROVISION OF THIS AGREEMENT SHALL BE
INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART, THEN SUCH PROVISION SHALL BE
DEEMED TO BE MODIFIED OR RESTRICTED TO THE EXTENT AND IN THE MANNER NECESSARY TO
RENDER THE SAME VALID AND ENFORCEABLE, OR SHALL BE DEEMED EXCISED FROM THIS
AGREEMENT, AS THE CASE MAY REQUIRE, AND THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED TO THE MAXIMUM EXTENT PERMITTED BY LAW, AS IF SUCH PROVISION HAD BEEN
ORIGINALLY INCORPORATED HEREIN AS SO MODIFIED OR RESTRICTED, OR AS IF SUCH
PROVISION HAD NOT BEEN ORIGINALLY INCORPORATED HEREIN, AS THE CASE MAY BE;
PROVIDED, HOWEVER, THAT IF THE MODIFICATION OR RESTRICTION OF SOME PROVISION OF
THIS AGREEMENT DEPRIVES ANY PARTY HERETO OF THE SUBSTANTIAL BENEFIT OF HIS OR
ITS BARGAIN AS SET FORTH HEREIN, THEN SUCH MODIFICATION OR RESTRICTION SHALL BE
DEEMED INEFFECTIVE.

 

8

--------------------------------------------------------------------------------

12.           EXECUTIVE’S ACKNOWLEDGMENT.  EXECUTIVE ACKNOWLEDGES THAT HE HAS
CAREFULLY READ THIS AGREEMENT AND THAT HE HAS EXECUTED IT VOLUNTARILY AND WITH
FULL KNOWLEDGE AND UNDERSTANDING OF ITS SIGNIFICANCE, MEANING AND BINDING
EFFECT.  EXECUTIVE FURTHER DECLARES THAT HE IS COMPETENT TO UNDERSTAND THE
CONTENT AND EFFECT OF THIS AGREEMENT AND THAT HIS DECISION TO ENTER INTO THIS
AGREEMENT HAS NOT BEEN INFLUENCED IN ANY WAY BY FRAUD, DURESS, COERCION, MISTAKE
OR MISLEADING INFORMATION AND THAT HE HAS NOT RELIED ON ANY INFORMATION EXCEPT
WHAT IS SET FORTH HEREIN.

13.           GOVERNING LAW.  EXECUTIVE AND EMPLOYER AGREE THAT THE TERMS OF
THIS AGREEMENT SHALL BE INTERPRETED UNDER AND CONSISTENT WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA.  IN ANY LEGAL PROCEEDING, INVOLVING DIRECTLY OR
INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT, EACH OF THE
PARTIES HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURT OF
COMMON PLEAS OF BERKS COUNTY, PENNSYLVANIA OR THE FEDERAL COURT OF THE EASTERN
DISTRICT OF PENNSYLVANIA AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH
JURISDICTION OR TO MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING, AND SERVICE
OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED BY MAILING A COPY
THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, OR BY HAND DELIVERY OR BY A
NATIONALLY RECOGNIZED OVERNIGHT DELIVERY SERVICE TO EACH PARTY THERETO.

14.           ENTIRE AGREEMENT.  THIS AGREEMENT SETS FORTH ALL OF THE PROMISES,
COVENANTS, AGREEMENTS, CONDITIONS AND UNDERSTANDINGS BETWEEN THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND, EXCEPT AS MAY OTHERWISE BE SET FORTH
HEREIN, SUPERSEDES ALL PRIOR AGREEMENTS, COVENANTS, AND UNDERSTANDINGS,
INDUCEMENTS OR CONDITIONS PERTAINING THERETO, EXPRESS OR IMPLIED, ORAL OR
WRITTEN.

15.           AMENDMENT AND ASSIGNMENT; SUCCESSORS AND ASSIGNS. THIS AGREEMENT
MAY NOT BE MODIFIED, ALTERED, SUPPLEMENTED, TERMINATED OR AMENDED EXCEPT BY A
WRITING SIGNED BY THE PARTIES. ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE
RESPECTIVE HEIRS, REPRESENTATIVES, SUCCESSORS, ASSIGNS AND AFFILIATES OF THE
PARTIES HERETO.

IN WITNESS WHEREOF, the parties have executed this Separation Agreement and
General Release on date first set forth above.

 

EXECUTIVE

 

PENN NATIONAL GAMING, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ KEVIN DESANCTIS

 

 

By:

/s/ PETER M. CARLINO

 

Kevin DeSanctis

 

Peter M. Carlino, Chairman

 

9

--------------------------------------------------------------------------------