Exhibit
10.24


CLAIM
SETTLEMENT AGREEMENT


This Claim
Settlement Agreement (hereafter, the “Agreement”) is executed this 16th  day of January 2007, by and
between (1)  Penn National Gaming, Inc.
(hereafter, “Penn National” as further defined in Paragraph 1.a., below) and
(2) those insurers of Penn National listed in Appendix A hereto severally
underwriting shares of Penn National’s all-risk property insurance program as
shown in Appendix A for the period from August 8, 2005 to August 8, 2006
(hereafter collectively, the “Insurers” as further defined in Paragraph 1.b.
below and individually as “Insurer”). 
Penn National and the Insurers are referred to from time to time
collectively as the “Parties” and individually as a “Party.”


RECITATIONS


WHEREAS, Penn
National’s real and personal property located in Mississippi sustained physical
loss or damage arising out of Hurricane Katrina/Catastrophe #49 on or about
August 29, 2005 and Penn National sustained directly related time element loss
and expense for which it gave notice of claim to its all-risk property insurers
(all such first-party interests claimed collectively referred to hereafter as
the “Katrina/Catastrophe #49 Claim”, a term further defined in 1.c. below);


WHEREAS, the
Insurers severally underwrote limits of the first-party insurance policies
listed in Appendix A, which constituted all the all-risk property insurance
placed by Penn National for the policy period August 8, 2005 to August 8, 2006
(collectively hereafter, the “Policies”);


WHEREAS, the
Insurers appointed representatives to adjust the Katrina/Catastrophe #49 Claim
under a full reservation of rights, and, prior to the date of this Agreement, a
total of One Hundred Twenty-Five Million Dollars (US) ($125,000,000) had been
paid on account 













to Penn National by
Insurers underwriting the insurance limits up to that level (collectively
hereafter, the “Prior Payments”)


WHEREAS, Penn
National and the Insurers underwriting limits excess of One Hundred Twenty-Five
Million Dollars (US) ($125,000,000) recently engaged in good faith discussions
concerning possible grounds for resolving any and all open elements of the
Katrina/Catastrophe #49 Claim and have reached a settlement-in-principle
reflected herein for a full and final resolution of the Katrina/Catastrophe #49
Claim;


WHEREAS, Penn
National and the Insurers make this compromise Agreement as a commercial
resolution without prejudice to the respective positions previously taken
during the adjustment or in any other or future claim between or among them or
with others;


WHEREAS, Penn
National and the Insurers reached an agreement in principle in December 2006,
which is now recorded in full by this Claim Settlement Agreement.


NOW, THEREFORE, in
consideration of the foregoing and of the mutual agreements herein contained,
and intending to be now legally bound, the Parties agree as follows:


1.             Further Scope and Definitions.


a.            Penn
National.  The term “Penn National”  means Penn National Gaming, Inc. and any and
all other entities that were, are now, or in the future claim to be insured or
have rights under the Policies, including but not limited to any and all
additional insureds, mortgagees, loss payees and other parties or entities
claiming an interest in Prior Payments or in the additional amount to be paid under
Paragraph 3 below upon execution of this Agreement by all Parties.


b.           Insurers.  The term “Insurers” means all Insurers listed
in Appendix A, including without limitation (i) Insurers who made the Prior
Payments to 



 2
 









Penn National; (ii) Insurers undertaking to pay the additional amount
under Paragraph 3 below; and (iii) Insurers given notice of the
Katrina/Catastrophe #49 Claim and participating in the adjustment and
settlement discussions from which this Agreement arose.  The Parties intend that all subscribers to
the Policies shall be fully and finally released and indemnified under this
Agreement to the extent and on the terms set forth in Paragraph 6.


c.            Katrina/Catastrophe
#49 Claim.  The term “Katrina/Catastrophe
#49 Claim”  means any and all matters,
whether known or unknown, whether involving wind or flood or any direct or
indirect consequence alleged or shown, whether relating to property, earnings
or expense, whether subject to notice or not, however arising or characterized,
and wherever located or transpiring that relate in any way, directly or
indirectly, to Hurricane Katrina/Catastrophe #49, and encompasses any and all
direct or indirect consequence(s) to Penn National and any and all
provision(s), section(s), and type(s) of insurance provided by or under the
Policies.  The Parties intend by this
Agreement to fully and finally resolve all matters arising from or relating in
any way to Hurricane Katrina/Catastrophe #49 under the Policies, leaving no
matter open or subject to further claim, discussion or adjustment, now or in
the future.


d.           Settlement
Share(s).  The term “Settlement Share”
means the allocated amount to be paid to Penn National upon complete execution
of this Agreement by each of the Insurers listed in Appendix B.  Each Settlement Share is several to the
listed Insurer and not joint, and each amount is in addition to prior payments
by these or other Insurers, and the total payments 



 3
 









satisfy and fully discharge all obligations under this Agreement.  Penn National shall not require any Insurer
to pay more than the share listed in Appendix B for this Agreement to be
effective as to that Insurer.  Each
Settlement Share may be paid to Penn National individually or collectively with
other Settlement Shares, and all transmissions of funds to Penn National shall
be accompanied by a written description of the Insurer(s) and the Settlement
Share(s) being paid.


2.             Permanent and Binding Resolution.  This Agreement is a permanent and binding
accord and resolution of the rights and obligations of the Parties with respect
to all matters which are the subject of this Agreement or the Release attached
hereto.


3.             Payment.  On or before January 30, 2007, or within five
(5) business days of the Insurers’ receipt of the Parties’ final agreement
signed by Penn National, whichever is later (the “Payment Date”), the Insurers
listed in Appendix B shall pay their respective Settlement Shares totaling One
Hundred Million Dollars (US) ($100,000,000) (the “Final Settlement Payments”)
by wire transfer to:


	
   

  	
  Bank:

  	
   

  	
  Wachovia Bank

  
	
   

  	
  ABA:

  	
   

  	
  031-201-467

  
	
   

  	
  Beneficiary:

  	
   

  	
  Penn National Gaming, Inc.

  
	
   

  	
  Account:

  	
   

  	
  2000-5062-85903

  
	
   

  	
  Reference:

  	
   

  	
  Attention Risk Management — Katrina

  
	
   

  	
   

  	
   

  	
  Funding

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Mailing Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Wachovia Bank, NA of NJ/PA/NY

  
	
   

  	
   

  	
   

  	
  Funds Transfer Department

  
	
   

  	
   

  	
   

  	
  1525 West W.T Harris Blvd.

  
	
   

  	
   

  	
   

  	
  Charlotte, NC 28288

  



 



 4
 









The payment of the
Settlement Amount under this Section shall be net to Penn National and shall
not be reduced by depreciation or chargebacks of any kind, including, without
limitation, retrospective premiums, reinstatement premiums, deductibles,
retentions or any other potentially-applicable reductions.


4.             Representation and Warranty
Re:  Payment and Related Indemnity.   Penn National represents and warrants
that:  (i) it is fully entitled to
receive the Prior Payments and the Final Settlement Payments; (ii) it has not
at any time transferred or assigned to any third party a claim, right or cause
of action under, pursuant to, or in connection with the Prior Payments or the Final
Settlement Payments; (iii) it is not aware of any circumstance or reason why
Penn National would not be entitled to receive in full the entire Prior
Payments or Final Settlement Payments or why the Insurers would not be fully
and finally released on the terms set forth in Paragraph 6 upon delivery of the
Final Settlement Payments in accordance with Penn National’s instructions on
the terms set forth in Paragraph 3 above; and (iv) it is not aware of any
all-risk property insurance policy covering Penn National in effect on August
29, 2005 other than the Policies.


Penn National
agrees to indemnify and defend the Insurers for and against all reasonable
costs, damages, liabilities or other expense (including, without limitation,
any attorneys’ fees) incurred by the Insurers as a result of any inaccuracy or
incorrectness in any respect of any of these representations and
warranties.  Penn National further agrees
to indemnify and defend the Insurers for and against all reasonable costs,
damages, liabilities or other expense (including, without limitation, any
attorneys’ fees) incurred by the Insurers as the result of any inaccuracy or
error in the foregoing representations or warranties and arising from a claim
or assertion by any person, entity or public or private organization that (i)
it is entitled to receive the proceeds or any other benefits of the Policies;
(ii) Penn National is not 



 5
 









fully entitled to receive
the Prior Payments and the Final Settlement Payments; or (iii) any Insurer was
not fully and finally released upon delivery of that payment in accordance with
Penn National’s instructions on the terms set forth in Paragraph 3 above.  Penn National’s undertaking includes, but is
not limited to, its agreement to indemnify and defend the Insurer Releasees as
defined in Paragraph 6 below in connection with, related to, or arising out of
the Insurer Releasees’ Prior Payments or Final Settlement Payments to Penn
National.  Notwithstanding any other
provision or term of this Agreement, Penn National’s obligation to defend and
indemnify any Insurer is limited to an aggregate amount equivalent to the Prior
Payments or Final Settlement Payments of the Insurer, no matter how many claims
are made against that Insurer.  The costs
and expenses of defense for any such claim under this paragraph exhaust and
count against the limit set forth above in this paragraph.  It is acknowledged and agreed by each Insurer
that under no circumstances will Penn National have any obligations to any
Insurer under this paragraph in excess of their Settlement Share, inclusive of
all costs of defense for the claim(s).


The Insurers
represent and warrant that they are not aware of any claim that could trigger
Penn National’s indemnity and/or defense obligations, nor are they aware of any
facts or circumstances that are reasonably likely to lead to such a claim.


Notwithstanding
any other provision or term of this Agreement, Penn National shall have no
obligation to indemnify or defend the Insurers in connection with any claim
concerning reinsurance or retrocession of the Katrina/Catastrophe 49 Claim.


5.             Proof of Loss.  By entering into and signing this Agreement,
Penn National verifies and swears as it would in a separate proof of loss that
it has sustained, for its own interest, insured loss or damage from Hurricane
Katrina/Cat. #49 that, if there had been final adjustment, would have exceeded
the total of:  (i) applicable
deductibles; (ii) any applicable 



 6
 









underlying insurance
limits; and (iii) the amount of the Final Settlement Payments.  Penn National further verifies and swears
that the insured loss or damage includes physical loss or damage to property
that occurred on August 29, 2005 and ongoing time element loss and expense for
which it has made commercially reasonable efforts to mitigate its claim.


6.             Penn National’s Release and
Covenant.  In consideration of the
mutual promises herein, Penn National, on behalf of (i) itself; (ii) its
present and former affiliates of any kind; (iii) all present and former agents,
officers, directors, and attorneys of Penn National or any of its affiliates;
and (iv) any and all successors, assigns, executors and/or heirs of the
foregoing persons and entities (the “Penn National Releasors”), hereby
irrevocably remise, release, and forever discharge each of (i) the Insurers;
(ii) all of their affiliates to the extent of their interest in the Policies;
(iii) all of their present and former agents, officers, directors, employees,
adjusters, experts, consultants, and attorneys; and (iv) any and all
successors, assigns, executors and/or heirs of the aforementioned persons or
entities (the “Insurer Releasees”), of and from all debts, demands, actions,
causes of action, suits, costs, expenses, sums of money, accounts, specialties,
covenants, contracts, controversies, agreements, promises, omissions,
variances, damages (including punitive or exemplary damages), penalties,
executions, and liabilities (including but not limited to taxes, assessments,
recoveries or other sums) and any and all other claims of every type or kind
(including but not limited to bad faith or claims handling), whether presently
known or unknown, that the Penn National Releasors or anyone acting in their
name now have or ever had, or may have in the future against the Insurer
Releasees arising from or relating to the Katrina/Catastrophe #49 Claim.


The Penn National
Releasors further covenant not to sue or initiate arbitration or other dispute
resolution process (or to permit such action in their name) against the Insurer




 7
 









Releasees in connection with
the Katrina/Catastrophe #49 Claim.  Penn
National acknowledges that the filing of any such action would be a material
breach of this Agreement.


Notwithstanding
anything to the contrary in this Paragraph 6, the Penn National Releasors do
not remise, release, or discharge any right to enforce this Agreement.


7.             Insurers’ Release and Covenant.  In consideration of the mutual promises
herein, the Insurers, on behalf of (i) themselves; (ii) their present and
former affiliates of any kind; (iii) all present and former agents, officers,
directors, and attorneys of any of the Insurers or their affiliates; and (iv)
any and all successors, assigns, executors and/or heirs of the foregoing
persons and entities (the “Insurer Releasors”), hereby irrevocably remise, release,
and forever discharge each of (i) Penn National; (ii) all of its affiliates to
the extent of their interest in the Policies; (iii) all of its present and
former agents, officers, directors, employees, experts, consultants, and
attorneys; and (iv) any and all successors, assigns, executors and/or heirs of
the aforementioned persons or entities (the “Penn National Releasees”), of and
from all debts, demands, actions, causes of action, suits, costs, expenses,
sums of money, accounts, specialties, covenants, contracts, controversies,
agreements, promises, omissions, variances, damages (including punitive or
exemplary damages), penalties, executions, and liabilities (including but not
limited to subrogation, taxes, assessments, recoveries or other sums) and any
and all other claims of every type or kind, whether presently known or unknown,
that Insurer Releasors or anyone acting in their name now have or ever had, or
may have in the future against the Penn National Releasees arising under, out
of, or in connection with the Katrina/Catastrophe #49 Claim.


The Insurer
Releasors further covenant not to sue or initiate arbitration or other dispute
resolution process (or to permit such action in their name) against the Penn
National 



 8
 









Releasees in connection
with the Katrina/Catastrophe #49 Claim. 
The Parties acknowledge that the filing of any such action would be a
material breach of this Agreement.


Notwithstanding
anything to the contrary in this Paragraph 7, the Insurer Releasors do not
remise, release or discharge any right to enforce the Agreement.


8.             Incorporation.  The Parties are informed commercial entities
entering into this Agreement with the intent that each of the undertakings is
valid and fully enforceable as written.   
If any provision of this Agreement shall be construed by a court or
arbitration panel of competent jurisdiction to be invalid or unenforceable the
remainder of this Agreement shall remain in effect and be interpreted so as
best to reasonably effect the intent of the Parties.  The Parties further waive any claim or
argument that this Agreement was or is void, invalid, or without the effect
stated.


Without limiting
the generality of the foregoing statement, the Parties specifically agree that
any citation, words or phrases required to invoke an unqualified,
unconditional, and unlimited release and waiver of future or unknown claims as
provided in this Agreement is incorporated as if it appeared fully in
text.  The Parties stipulate and agree
that California Civil Code Section 1542 does not apply to this Agreement.  The Parties waive any right they have to
assert any such requirement in any matter involving the scope and effect of the
release set forth in Paragraphs 6 and 7 above.


9.             Individual Diligence and Counsel.  Each of the Parties undertook its own
diligence in deciding that this settlement is appropriate and consulted with
counsel of its choice when entering into this Agreement.


10.           Confidentiality.  The Parties agree to the confidentiality of
this Agreement, all of the terms and information contained herein, all of the
negotiations leading to it, all of the communications generated pursuant to it,
and the implementation hereof (collectively, 



 9
 









“Confidential Compromise
Material”).  The Confidential Compromise
Material shall not be disclosed to any person, corporation, or other entity not
a Party to this Agreement except: 
(i) disclosures necessary or appropriate under securities laws or
other disclosures to regulators or government agencies; (ii) disclosures to
lenders, reinsurers, retrocessionaires, auditors or regulators; (iii) other
financial disclosures required by law; (iv) disclosures in response to a
judicial order compelling disclosure or as may otherwise be required by law or
be necessary to defend or assert claims by or against any party hereto in a
judicial proceeding; (v) disclosures to subsidiary, affiliate, associated,
or parent companies of the Parties and their counsel; (vi) disclosures to
any company engaged to make payments to Penn National on behalf of the Insurers;
or (vii) disclosures necessary and appropriate to enforce this Agreement;
provided, however, that any Party making a disclosure pursuant to subparts (ii)
through (vi) above shall make reasonable and good faith efforts to obtain
appropriate assurances or circumstances of confidentiality.  The Parties shall cooperate to protect the
Confidential Compromise Material.  In the
event of a request, motion or application seeking disclosure of the
Confidential Compromise Material, the Party with knowledge of such request,
motion or application shall notify the other Parties in writing immediately so
that the other Parties may oppose such request, motion or application if they
choose to do so.  The Confidential
Compromise Material shall be deemed to fall within the protection afforded
compromises and offers to compromise by Rule 408 of the Federal Rules of
Evidence and parallel state provisions.


11.           Notices.  Unless another person is designated in
writing for receipt of any notice required hereunder, every notice shall be
sent electronically to the Parties, with a copy sent by certified mail, postage
prepaid, to the persons identified in Appendix C.


 



 10















12.           Commercial Resolution and
Construction of Agreement.  This
Agreement is a commercial resolution of issues discussed by the Parties with
respect to the scope of coverage, the measurement of confirmed loss, and the
timing of payments under the Policies.  This resolution does not constitute a
precedent of any kind between the Parties in any other matter or with respect
to anyone else; nor shall it be construed as a waiver, modification, or
retraction of the positions of the Parties with respect to interpretation of
the Policies.  This Agreement constitutes
a settlement and compromise subject to state and federal rules protecting
against discovery and use by anyone other than the Parties.  This Agreement shall be admissible in a suit,
action or other proceeding only in order to enforce the terms of the Agreement.
The Parties specifically disavow any intention to create rights or interests
for anyone not a Party to this Agreement.


It is agreed that in
entering into and performing under this Agreement, the Parties are not acting
as volunteers, nor are they acting under any form of duress.  Penn National agrees that the sums paid
pursuant to this Agreement represent a compromise of Penn National’s rights
under and arising from the Policies for first-party losses.


The Parties acknowledge
that each has been advised by counsel in reaching this commercial resolution
and that all Parties have reviewed and had the opportunity to revise this
Agreement.  This Agreement is the product
of arms-length negotiations between the Parties with the benefit of the advice
of counsel and involves commercial compromises of the Parties’ respective
positions.  In any proceeding to enforce
the terms, this Agreement shall be interpreted without presumption for any
Party and applied to effectuate the intent of the Parties stated herein.


13.           Governing Law.   This Agreement shall be interpreted under
and governed by the laws applicable to the respective Policies without regard
to general principles of choice of 



 11
 









law which might otherwise
call for the application of a different state’s law.  Any dispute between Penn National and an
Insurer arising out of or relating to this Agreement shall be resolved through
the dispute resolution procedure provided in the respective Policy(ies)
underwritten by that Insurer.


14.           Change or Modification.  No change or modification of this Agreement
shall be valid unless it is contained in writing and signed by the Parties.


15.           Continuing Effect.  This Agreement shall be binding upon and
inure to the benefit of the Parties and those whose interests depend on them,
including but not limited to the Parties’ respective successors, assigns,
shareholders or other capital providers, principals, agents, servants, legal
representatives, directors, officers, employees and affiliates of any kind.


16.           No Additional Undertakings.  The Parties have not made any undertakings
with respect to the Katrina/Catastrophe #49 Claim not expressly set forth in
this Agreement.  Each of the Parties
shall bear its own attorney’s fees and costs arising from or related in any way
to the Katrina/Catastrophe #49 Claim, this Agreement, or both.


17.           Integration.  This Agreement, including without limitation
the Recitations which are a material part hereof, constitutes the entire
agreement between the Parties with respect to the subject matter hereof, and
supersedes all prior discussions, agreements, and understandings, both written
and oral, between the Parties with respect hereto.


18.           Penn National’s Representations at
Execution.  Penn National represents
and warrants that: (i) the person executing this Agreement on Penn National’s
behalf has full authority to do so and no other consents are required; (ii)
Penn National is solvent and fully competent on its own to enter into this
binding contract; (iii) Penn National has not relied upon any representation by
or on behalf of the Insurers, other than those specifically set forth 



 12
 









in the Agreement, in
executing, delivering, and performing under this Agreement; (iv) the terms and
conditions of this Agreement will not be disclosed except as provided herein;


19.           Insurers’ Representations at
Execution.  Each Insurer represents
and warrants that: (i) the person executing this Agreement on the Insurer’s
behalf has full authority to do so and no other consents are required; (ii) the
Insurer is solvent and fully competent on its own to enter into this binding
contract and to pay its respective Settlement Share; (iii) the Insurer has not
relied upon any representation by or on behalf of Penn National, other than those
specifically set forth in the Agreement, in executing, delivering, and
performing under this Agreement; and (iv) the terms and conditions of this
Agreement will not be disclosed except as provided hereunder.


20.           Other Assurances.  In the event that either Party seeks
confirmation that the settlement was effective and/or in good faith, the
Parties, shall reasonably cooperate and assist each other in obtaining said
good faith settlement determination.  In
the event any claim or action is brought against the Insurers by any person
with respect to liabilities or obligations released hereunder, Penn National
agrees that it will not take any position that is inconsistent with the
position of the Insurers that no such claim will now lie against the Insurers.


21.           Waiver of Joinder.  The Parties expressly waive any requirement
that the joinder of all the Parties is necessary to enforce this Agreement
against any particular Party or Parties.


22.           Execution.  This Agreement may be executed in
counterparts, and the signature pages may be exchanged electronically or by
telecopy.  The text of the Agreement,
together with accurate copies of the relevant Parties’ signatures, shall have
the force and effect of an original as between those Parties.



 13
 









23.           Effective Date.  The effective date of this Agreement is
December 31, 2006.



 14
 









 


	
  

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Ippolito

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  VP/ Sec/Treas

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/16/07

  



 


	
  STATE OF Pennsylvania

  
	
  Berks

  	
   

  	
  COUNTY

  



 


Before me, the
undersigned Notary Public of the State and County aforesaid, personally
appeared Robert S. Ippolito, with whom I am personally acquainted (or
provided to me on the basis of satisfactory evidence) and who, upon oath,
acknowledged himself or herself to be the VP - Secretary - Treasurer        
of Penn National Gaming, Inc. as defined herein and that he or she, as such
officer, executed the foregoing instrument for the purposes therein contained
and with full authority to do so by signing the name of the corporation as
officer.


WITNESS my hand and
notary seal, at office this 16 day of January         ,
2007.


	
   

  	
  /s/ Susan M. Montgomery

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  
	
   

  	
  My Commission
  Expires: June 7, 2007

  	
   

  
	
   

  	
  [Notarial Seal]

  	
   

  



 



 15