Exhibit 10.1

 

PENN NATIONAL GAMING, INC.

 

NOTICE OF STOCK APPRECIATION RIGHT AWARD

 

The purpose of this Notice is to inform you that a Stock Appreciation Right
(SAR) Award has been made to you by Penn National Gaming, Inc. (the “Company”)
pursuant to the Penn National Gaming, Inc. 2008 Long Term Incentive Compensation
Plan, as amended (the “Plan”), as follows:

 

Name and Address of Grantee:

 

 

 

 

 

Date of Grant:

 

                        , 20    

 

 

 

Type of Grant:

 

Stock Appreciation Right (SAR) Award

 

 

 

Number of SARs (shares covered by the SAR Award):

 

 

 

 

 

Base Amount:

 

$                              

 

 

 

Vesting Date(s):

 

                   shares on                 , 20     
                   shares on                 , 20    
                   shares on                 , 20     
                   shares on                 , 20

 

 

 

Expiration Date:

 

                        , 20    

 

Each vested SAR represents the right to receive a cash payment upon exercise
equal to the amount by which the fair market value (as defined in the Plan) of
one share of Common Stock of the Company on the date of exercise exceeds the
Base Amount of the SAR.

 

The SAR Award is subject to all the terms and conditions of the Plan, which is
available upon request, and the Award Agreement attached hereto.

 

 

PENN NATIONAL GAMING, INC.

 

 

 

 

 

 

 

By:

 

Title:

 

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PENN NATIONAL GAMING, INC.

STOCK APPRECIATION RIGHT (SAR) AWARD AGREEMENT

 

All Stock Appreciation Right Awards are subject to the provisions of the 2008
Long Term Incentive Compensation Plan, as amended (the “Plan”), and any
rules and regulations established by the Compensation Committee of the Board of
Directors of Penn National Gaming, Inc.  A copy of the Plan is available upon
request.  Unless specifically defined herein, words used herein with initial
capitalized letters are defined in the attached Notice of Stock Appreciation
Right Award (the “Notice”) or the Plan.

 

The terms provided herein are applicable to the Stock Appreciation Right Award
specified in the attached Notice.  Different terms may apply to any prior or
future awards under the Plan.

 

1.                                      Grant of Stock Appreciation Rights.

 

Effective as of the Date of Grant identified on the Notice, the Company has
granted and issued to you an Award of Stock Appreciation Rights (SARs).  The
number of SARs granted to you is equal to the number of shares of Common Stock
subject to the SAR Award, and is identified in the Notice.  Each vested SAR
represents the right to receive a cash payment upon exercise equal to the amount
by which the Fair Market Value of a share of Common Stock on the date of
exercise exceeds the Base Amount for the SAR.

 

2.                                      Vesting and Exercisability.

 

The SARs shall vest on the dates and with respect to the number of shares of
Common Stock set forth in the attached Notice, provided that you are employed by
the Company or a Subsidiary or serving as a Director, as applicable, on the
vesting date, except as otherwise provided in Paragraph 3 below.  In addition,
the SARs shall vest upon the occurrence of a Change in Control.

 

The SARs, or a portion thereof, shall be exercisable during the period beginning
on the applicable vesting date and ending on the Expiration Date, subject to
earlier termination in the event of a termination of your employment or service
as a Director under certain circumstances, as provided in Paragraph 3.

 

3.                                      Termination of Employment or Service.

 

If you cease to be an employee of the Company and all Subsidiaries or if you
cease to be a Director, as the case may be, for any reason (other than as
specified in clauses (i), (ii) or (iii) below), then the SARs that are vested as
of your termination or cessation date shall be exercisable until the end of the
120th day after that date, and the SARs that are not vested as of your
termination or cessation date shall be forfeited and cancelled immediately;
except that, in cases where your termination of employment or cessation of
service is a result of your:

 

(i) death or Disability, any unvested SARs shall thereupon become vested and
exercisable and the SARs shall remain exercisable until the Expiration Date;

 

(ii) resignation (other than for Retirement), any vested SARs shall be cancelled
and forfeited at the end of the 30th day after your termination or cessation
date; and

 

(iii) termination for Cause by the Company, a Subsidiary, or the Board, any SARs
then outstanding, whether or not then vested, shall be cancelled and forfeited
as of such termination date.

 

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You will receive no payment for any SARs that are cancelled and forfeited.

 

4.                                      Exercise.

 

You may exercise your vested SARs by providing notice of exercise to the
Company, in a form and manner acceptable to the Company.

 

5.                                      Payment of Taxes.

 

Upon the issuance of any cash payment in accordance with the foregoing, the
Company shall withhold all applicable tax-related items legally payable by you
from such cash payment.

 

6.                                      Nature of SARs.

 

SARs are used solely as a device to measure and determine the cash amount that
will be paid to you upon exercise of the vested SARs.  SARs are not treated as
property or as a trust fund of any kind.  Nothing in this Award Agreement, and
no action taken pursuant to its provisions, will create or be construed to
create a trust of any kind or a fiduciary relationship between you and the
Company or any other person.  All amounts attributable to SARs shall be and
remain the sole property of the Company, and your rights under this Award
Agreement and the Plan are limited to the right to receive cash following the
dates the SARs vest.  You have no right to receive shares of Common Stock under
this Award Agreement.

 

7.                                      No Right To Continued Service.

 

This SAR Award does not give you the right to continue in service with the
Company in any capacity.  The Company reserves the right to terminate your
services at any time, with or without cause, subject to any employment agreement
or other contract.

 

8.                                      Inalienability of Rights.

 

The SARs may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of or otherwise encumbered except in accordance with
Section 12.8 of the Plan.

 

9.                                      Applicable Law.

 

This Award Agreement will be interpreted and enforced under the laws of the
Commonwealth of Pennsylvania, without regard to its choice of law provisions.

 

10.                               Effect and Construction of this Award
Agreement.

 

The text of the Plan is incorporated in this Award Agreement by reference.

 

This Award Agreement and the Plan govern the terms and conditions of this Award.
Any prior agreements, commitments or negotiations concerning this Award are
superseded.  This Award Agreement may be amended in a way that is adverse to you
or your beneficiaries only by another written agreement, signed by both parties,
otherwise, the rights of the Board or Grantor as set forth in the Plan control
as to any modification, alteration or amendment of this Award Agreement.

 

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Penn National Gaming, Inc.
Understanding How Stock Appreciation Rights Work

 

Congratulations on receiving a Penn National Gaming, Inc. (“PNG”) Stock
Appreciation Right (SAR) Award.  These SARs are designed so that you may share
in the Company’s success.

 

How Do SARs Work?

 

A SAR is the right, subject to certain conditions, to receive a cash payment
equal to the appreciation, if any, in the value of a share of PNG Common Stock
between the date the SAR is granted and the date you exercise the SAR.  This
payment is not automatically made; you must exercise a vested SAR to receive it.

 

The value of a share of PNG Common Stock on the grant date is the Base Amount;
it does not change for the life of the SAR (except in certain limited
circumstances determined in the Compensation Committee’s discretion, as
described in the Plan).  However, the market price of PNG stock changes and will
ultimately determine the value, if any, you receive from your SARs.  If the
value of PNG stock increases, the value of your SARs will increase.  For
example, if you have been granted 100 SARs (in other words, SARs covering 100
shares of PNG stock) with a Base Amount of $30 and the market price of PNG stock
has grown to $40 on the date you choose to exercise, you would receive a gross
cash payment equal to $1,000.  You will be subject to Federal income tax with
respect to the SARs when you exercise the SARs and the amount paid to you will
be net of any required state and federal tax withholding and any other amounts
required to be withheld under applicable tax laws.  YOU SHOULD CONSULT WITH YOUR
OWN TAX ADVISOR FOR MORE INFORMATION REGARDING THE TAX RULES APPLICABLE TO SARS.

 

SAR Basics

 

The Base Amount is equal to the closing sales price of a share of PNG Common
Stock on the business day immediately preceding the date the SARs are granted.

 

The vesting period is the waiting period from the Date of Grant to the Vesting
Dates during which you cannot exercise your SARs, or the portion of your SARs
for which the Vesting Date has not been reached.

 

The exercise period is the time from the Vesting Date until the Expiration Date,
during which you can exercise your vested SARs.

 

Your SARs can no longer be exercised after the Expiration Date, which is seven
(7) years after the Date of Grant.  The SARs will expire sooner if you leave PNG
under certain circumstances.  For example, if you were granted SARs covering 100
shares of PNG Common Stock, and you remain employed by PNG for seven (7) years,
the SARs are exercisable as follows:

 

Number of
shares

 

Vesting Period

 

Exercise Period

 

 

 

 

 

25 shares

 

Date of Grant -First Anniversary of Date of Grant

 

First Anniversary of Date of Grant - Seventh Anniversary of Date of Grant

25 shares

 

Date of Grant - Second Anniversary of Date of Grant

 

Second Anniversary of Date of Grant - Seventh Anniversary of Date of Grant

25 shares

 

Date of Grant - Third Anniversary of Date of Grant

 

Third Anniversary of Date of Grant - Seventh Anniversary of Date of Grant

25 shares

 

Date of Grant - Fourth Anniversary of Date of Grant

 

Fourth Anniversary of Date of Grant - Seventh Anniversary of Date of Grant

 

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