**Exhibit 10.23**

 

**EMPLOYMENT AGREEMENT**

** **

THISEMPLOYMENT AGREEMENT (the “**Agreement**”)is entered into on January 30, 2004, but effective as of March 1,2003 (the “**Effective Date**”), byand between John Hull (the “**Executive**”)and HCS I, Inc., a Louisiana corporation (the “**Company**”).

 

WHEREAS,the Company is a subsidiary of Hollywood Casino Corporation, a Delawarecorporation (“**HCC**”), and HCC is asubsidiary of Penn National Gaming, Inc., a Pennsylvania corporation (“**PNG**”).

 

WHEREAS,the Company desires to provide for the service and employment of the Executivewith the Company and the Executive wishes to perform services for the Company,all in accordance with the terms and conditions provided herein.

 

NOW,THEREFORE, in consideration of the mutual agreements hereinafter set forth, theExecutive and the Company hereby agree as follows:

 

Section 1.                    EMPLOYMENT.  The Company does hereby employ the Executiveand the Executive does hereby accept employment as President of theCompany.  The Executive shall have allthe duties, responsibilities and authority normally performed by the Presidentand shall render services consistent with such position on the terms set forthherein and shall report to the Board of Directors of the Company.  In addition, the Executive shall have suchother executive and managerial powers and duties with respect to the Companyand its subsidiaries as may reasonably be assigned to him by the Company, tothe extent consistent with his position and status as set forth above.  The Executive agrees to devote all of hisworking time and efforts to the business and affairs of the Company and anyparent, subsidiary or affiliated corporation or other legal entity of theCompany (the “**Company Affiliates**”),subject to periods of vacation or other leave to which he is entitled, andshall not engage in activities that substantially interfere with suchperformance.

 

Section 2.                    TERM OF AGREEMENT.  Subject to Section 5, the term (the “**Term**”) of this Agreement shall commence onthe Effective Date and shall continue through the earlier of (i) June 30,2004 or (ii) the consummation of an agreement with the bondholders of HollywoodCasino Shreveport (“**HCS**”) (whetherpursuant to a petition in bankruptcy or otherwise) that extinguishes orrestructures HCS’s indebtedness to the bondholders.  The Company may extend the Term of this Agreement for up to anadditional six months with thirty (30) days prior written notice to theExecutive of its desire to extend the Term.

 

Section 3.                    COMPENSATION.

 

(a)          BASE SALARY.  During the Term, the Company shall pay theExecutive an annual base salary (the “**BaseSalary**”) of $215,000, payable in accordance with the Company’spolicies relating to salaried employees.

 

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(1)                                  Employeewill also be President and CFO of HCS II, Inc. and HWCC-Louisiana, Inc.

 

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(b)         ANNUAL BONUS.  In addition to the Base Salary, the Companyshall pay to the Executive an annual bonus of $80,000 (the “**Bonus**”), payable as soon as reasonablypracticable after the close of the calendar year.  The Bonus shall be prorated for the actual time the Executive isemployed by the Company under this Agreement.

 

(c)          EMPLOYEEBENEFITS.  During theTerm, the Executive shall be entitled to participate in and receive the benefitof any pension plans, retirement plans, life insurance plans, medical and/orhospitalization plans and/or any and all other benefit plans of PNG that areavailable from time to time for PNG’s employees.  To the extent that such benefits are not available for employeesof the Company, the Company shall provide reasonably equivalent benefits to theExecutive.

 

(d)         EXPENSEREIMBURSEMENT.  During theTerm of this Agreement, the Company shall either pay directly or reimburse theExecutive for the Executive’s reasonable expenses incurred for the benefit ofthe Company in accordance with the Company’s general policy regardingreimbursement, as the same may be amended, modified or changed from time totime.  Prior to reimbursement, theExecutive shall provide the Company with sufficient detailed invoices of suchexpenses in accordance with the then applicable guidelines of the InternalRevenue Service so as to permit the Company to claim a deduction of suchexpense.

 

(e)          LICENSINGEXPENSES.  TheCompany shall pay all licensing fees and expenses incurred by the Executive insecuring and maintaining such licenses and permits required of the Executive inorder to perform his duties under this Agreement.

 

(f)            VACATION.  Commencing as of the Effective Date, theExecutive shall be entitled to annual paid vacation leave in accordance withthe Company’s standard policy therefore, to be taken at such times as selectedby the Executive and approved by the Company.

 

Section 4.                    LICENSING REQUIREMENTS.

 

(i)                                     The Company andExecutive hereby covenant and agree that this Agreement may be subject to theapproval of the Louisiana Gaming Control Board and any other jurisdiction inwhich the Company or the Company Affiliates conducts business (the “**Gaming Authorities**”) pursuant to theprovisions of the Louisiana Gaming Control Law and any other applicable law andthe regulations promulgated thereunder (the “**GamingActs**”).  In the event thisAgreement is required to be approved by the Gaming Authorities and is not soapproved by the Gaming Authorities, this Agreement shall immediately terminateand shall be null and void and of no further force or effect; provided,however, should this Agreement not be approved by the Gaming Authorities, theCompany and Executive shall hereby covenant and agree that, with the exceptionof the provisions of Section 3, this Agreement shall be deemed modifiedand amended so as to receive the appropriate approval from the GamingAuthorities.

 

(ii)                                  The Company andExecutive hereby covenant and agree that, in order for Executive to dischargethe duties required under this Agreement,

 

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Executive must continue tohold key gaming employee licenses (the “**Licenses**”)as issued by the Gaming Authorities pursuant to the terms of the Gaming Actsand as otherwise required by this Agreement. In the event that any of the Gaming Authorities objects to the renewalof Executive’s License, or either of the Gaming Authorities refuses to renewExecutive’s applicable License, the Company, at the Company’s sole cost andexpense, shall promptly defend such action and shall take such reasonable stepsas may be required to secure such Gaming Authority’s approval.  The foregoing notwithstanding, if suchGaming Authority’s refusal to renew Executive’s License arises as a result ofany of the events described in Section 5(e), the Company’s obligationsunder this Section 4 shall not be operative and Executive shall promptlyreimburse the Company upon demand for any expenses incurred by the Companypursuant to this Section 4.

 

Section 5.                    TERMINATION.

 

(a)          NOTICEOF TERMINATION.

 

(i)                                     “**Notice of Termination**” shall mean a noticethat shall indicate the specific termination provision in this Agreement reliedupon and shall set forth in reasonable detail the facts and circumstancesclaimed to provide a basis for termination of the Executive’s employment underthe provisions so indicated.

 

(ii)                                  Any purportedtermination of the Executive’s employment by the Company or by the Executiveshall be communicated by written Notice of Termination to the other party heretoin accordance with Section 10.

 

(b)         DATEOF TERMINATION.  “**Date ofTermination**” shall mean:

 

(i)                                     if theExecutive’s employment is terminated because of death, the date of theExecutive’s death,

 

(ii)                                  if theExecutive’s employment is terminated for any other reason, the date specifiedin the Notice of Termination, which shall not be a date prior to the date suchNotice of Termination is given or the expiration of any required notice period,or

 

(iii)                               if theExecutive’s employment is terminated by expiration of the Term.

 

(c)          ACCRUEDAND UNPAID BENEFITS.  Following the termination of the Executive’semployment with the Company for any reason, the Executive shall receive:

 

(i)                                     any earned, butunpaid, Base Salary;

 

(ii)                                  the Bonus,prorated through the Date of Termination;

 

(iii)                               the cashequivalent of any accrued, but unused, vacation;

 

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(iv)                              any accruedemployee benefits, subject to the terms of the applicable employee benefitplans; and

 

(v)                                 an amount equalto six (6) months of Base Salary.

 

The amounts payable undersubparagraphs 5(c)(i), (ii), (iii) and (iv) shall be paid within thirty (30)days following the Date of Termination.

 

(d)         DEATH.  In the event that theExecutive’s employment hereunder is terminated by reason of the Executive’sdeath, the Company shall pay the amounts described in Section 5(c) and allbenefits payable to the Executive, if any, under the terms of the Company’scompensation and benefit plans, programs or arrangements.

 

(e)          TERMINATIONFOR CAUSE.  The Company may terminate the Executive’semployment under this Agreement for Cause (as defined below) at any time, inwhich event, any rights of the Executive to continued employment under theAgreement shall thereupon cease.

 

(i)                                     As used herein,“**Cause**” shall mean the occurrenceof any of the following:

 

(A)                              that Executive shall have been convicted of, or pleads guilty ornolo contendere to, a felony;

 

(B)                                that the Executive shall have failed to perform his duties underthis Agreement with a reasonable degree of diligence, competence andeffectiveness;

 

(C)                                that Executive breaches or fails to perform under any of thematerial terms and covenants of this Agreement;

 

(D)                               that Executive fails to maintain in force and in good standing anyand all licenses, permits and/or approvals required of Executive by therelevant governmental authorities for the discharge of the obligations ofExecutive under this Agreement;

 

(E)                                 that Executive shall have engaged in conduct that constitutesgross neglect or willful misconduct (including misappropriation or embezzlementof property of, or fraud with respect to, the Company or the CompanyAffiliates) with respect to Executive’s employment duties that results inmaterial and demonstrable harm to the Company.

 

(ii)                                  For purposes ofthis Agreement, “**Cause**” shall alsoinclude circumstances beyond the control of the Company and without its faultor negligence that materially and adversely affect the ability of the Companyto continue the Company’s business operations. Such circumstances may include, but are not limited to, acts of god or apublic enemy, acts of terrorism, acts of government in either its sovereign or

 

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contractual capacity, fires,floods, natural disasters, epidemics, quarantine restrictions, strikes, riots,embargoes, extended power outages or unusually severe weather conditions.

 

(iii)                               Termination ofExecutive upon Disability shall not constitute Cause.  For this purpose, Executive’s “**Disability**”shall mean, after giving to Executive ninety (90) days prior written notice ofits intention to terminate Executive therefor, Executive’s illness or injurywhich substantially and materially limits the Executive from performing each ofthe essential functions of the Executive’s job, even with reasonableaccommodation, and he becomes entitled to receive disability benefits under theCompany’s long-term disability plan for exempt employees.

 

(f)            TERMINATIONOTHER THAN FOR CAUSE.  The Company may terminate the Executive’semployment under this Agreement without Cause at any time, in which event, anyrights of the Executive to continued employment under the Agreement shallthereupon cease.  In the event of such atermination, the Executive shall be entitled to the severance benefits asprovided in Section 5(c).

 

(g)         TERMINATIONBY THE EXECUTIVE.

 

(i)                                     For Good Reason.  The Executive may terminate his employmenthereunder for Good Reason (as defined below) upon at least thirty (30) daysprior written notice to the Company.

 

(ii)                                  Without GoodReason.  The Executive may terminatehis employment hereunder voluntarily without Good Reason upon at least thirty(30) days prior notice to the Company.

 

(iii)                               “Good Reason”.  The Executive shall have “**Good Reason**” to terminate his employmenthereunder upon any of the following:

 

(A)                              the assignment to Executive of any duties inconsistent in anymaterial respect with Executive’s position (including status, offices, titlesand reporting relationships), authority, duties or responsibilities ascontemplated hereunder, or any other action by the Company which results in asignificant diminution in such position, authority, duties or responsibilities,excluding any inadvertent action not taken in bad faith and which is remediedby the Company within fifteen (15) days after receipt of notice thereof givenby Executive; or/and

 

(B)                                any failure by the Company to comply with any of the materialprovisions of this Agreement other than an inadvertent failure not committed inbad faith and which is remedied by the Company within fifteen (15) days afterreceipt of notice thereof given by Executive.

 

Section 6.                    SEVERANCE.

 

(a)          MITIGATION.  The Executive shall notbe required to mitigate damages with respect to any payments made pursuant tothis Agreement, and no compensation

 

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received by Executive from otheremployment with respect to services rendered after the Date of Terminationshall reduce the obligations of the Company under this Agreement.

 

(b)         RELEASEOF EMPLOYMENT CLAIMS.  The Executive agrees, as a condition toreceipt of the payments and benefits provided for in Section 5(c), that hewill execute a release agreement, in a form attached hereto as Exhibit A,releasing any and all claims arising out of the Executive’s employment (otherthan enforcement of this Agreement and claims for benefits under any incentivecompensation and employee benefit plans in which the Executive participates).

 

Section 7.                    CONFIDENTIALITY; NON-COMPETITION.

 

(a)          CONFIDENTIALITY.  “**Confidential Information**” shall meannon-public information about the Company and Company Affiliates, and theirrespective clients and customers that is not disclosed by the Company or itssubsidiaries for financial reporting purposes and that was learned by theExecutive in the course of his employment with the Company, including, withoutlimitation, any proprietary knowledge, trade secrets, data, formulae,information and client and customer lists and all papers, resumes and records (includingcomputer records) of the documents containing such ConfidentialInformation.  Confidential Informationdoes not include information regarding the Executive’s own compensation andbenefits.

 

(i)                                     The Executiveacknowledges that in his employment with the Company, he will occupy a positionof trust and confidence.  The Executiveshall not, except as may be required to perform his duties hereunder or asrequired by applicable law, without limitation in time or until suchinformation shall have become public other than by the Executive’s unauthorizeddisclosure, disclose to others or use, whether directly or indirectly, anyConfidential Information.

 

(ii)                                  The Executiveacknowledges that all Confidential Information is specialized, unique in natureand of great value to the Company and its subsidiaries, and that suchConfidential Information gives the Company and its subsidiaries a competitiveadvantage.  The Executive agrees todeliver or return to the Company, at the Company’s request at any time or upontermination or expiration of his employment or as soon thereafter as possible,all documents, computer tapes and disks, records, lists, data, drawings,prints, notes and written information (and all copies thereof) furnished by oron behalf of or for the benefit of the Company and Company Affiliates orprepared by the Executive during the term of his employment by the Company, butexcluding documents relating to the Executive’s own compensation and benefits.

 

(b)         NON-COMPETITION.  During the Executive’semployment with the Company, the Executive shall not, directly or indirectly,whether as owner, consultant, employee, partner, venturer, agent, through stockownership, investment of capital, lending of money or property, rendering ofservices, or otherwise, compete with the Company or Company Affiliates in anybusiness in which any of them is engaged while the Executive is employed withCompany (such businesses are hereinafter referred to as the “**Business**”), or assist, become

 

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interested in or be connected with anycorporation, firm, partnership, joint venture, sole proprietorship or otherentity which so competes with the Business.

 

(c)          NON-SOLICITATIONOF CUSTOMERS AND SUPPLIERS.  During the Executive’s employment with theCompany and during the one (1) year period commencing on the Date ofTermination, the Executive shall not, directly or indirectly, influence orattempt to influence customers or suppliers of the Company or CompanyAffiliates to divert their business to any business, individual, partner, firm,corporation or other entity that is then a direct competitor of the Company orCompany Affiliates (each such competitor, a “**Competitor**”);provided, however, that if the Executive is employed by customersor suppliers of the Company following his termination of employment and suchemployment does not violate Section 7(b), the normal execution of hisduties in connection with such employment shall not constitute a violation ofthis Section 7(c).

 

(d)         NON-SOLICITATIONOF EMPLOYEES.

 

(i)                                     The Executiverecognizes that he will possess confidential information about other employeesof the Company and Company Affiliates relating to their education, experience,skills, abilities, compensation and benefits, and interpersonal relationshipswith customers of the Company and Company Affiliates.

 

(ii)                                  The Executiverecognizes that the information he will possess about these other employees isnot generally known, is of substantial value to the Company and its subsidiariesin developing their business and in securing and retaining customers, and willbe acquired by him because of his business position with the Company and itssubsidiaries.

 

(iii)                               The Executiveagrees that, during the Executive’s employment with the Company and during theone (1) year period commencing on the Date of Termination he will not, directlyor indirectly, solicit or recruit any employee of the Company or CompanyAffiliates for the purpose of being employed by him or by any Competitor onwhose behalf he is acting as an agent, representative or employee and that hewill not convey any such confidential information or trade secrets about otheremployees of the Company and Company Affiliates to any other person.

 

(e)          REMEDIES.  In the event of a breachor threatened breach of this Section 7, the Executive agrees that theCompany shall be entitled to injunctive relief in a court of appropriatejurisdiction to remedy any such breach or threatened breach, the Executiveacknowledging that damages would be inadequate and insufficient.

 

(f)            SURVIVALOF PROVISIONS.  The obligations contained in thisSection 7 shall, to the extent provided in this Section 7, survivethe termination or expiration of the Executive’s employment with the Companyand, as applicable, shall be fully enforceable thereafter in accordance withthe terms of this Agreement.  If it isdetermined by a court of competent jurisdiction in any state that anyrestriction in this Section 7 is excessive in duration or scope or isunreasonable or unenforceable under the laws of that state, it is the intentionof the

 

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parties that such restriction may bemodified or amended by the court to render it enforceable to the maximum extentpermitted by the law of that state.

 

Section 8.                    INDEMNIFICATION.  The Executive shall be indemnified by theCompany against liability as an officer of the Company and Company’s Affiliatesto the maximum extent permitted by applicable law.  The Executive’s rights under this Section 8 shall continueso long as he may be subject to such liability, whether or not his employmentmay have terminated prior thereto.

 

Section 9.                    WITHHOLDING.  The Company shall make such deductions andwithhold such amounts from each payment made to the Executive hereunder as maybe required from time to time by law, governmental regulation or order.

 

Section 10.              NOTICES.  All notices and other communications underthis Agreement shall be in writing and shall be given by hand, facsimile orfirst-class mail, certified or registered with return receipt requested, andshall be deemed to have been duly given upon delivery or three (3) days aftermailing or twenty-four (24) hours after transmission of a facsimile to therespective persons named below:

 
| (a)             | If to the Company:                                                                                                                                                                       |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                     |
|            | HCS I, Inc.                                                                                                                                                                              |
|            | c/o Penn National Gaming, Inc.                                                                                                                                                           |
|            | 825 Berkshire Blvd., Suite 200                                                                                                                                                           |
|            | Wyomissing, PA 19610                                                                                                                                                                     |
|            | Attn:  Jordan Savitch                                                                                                                                                               |
|            | Facsimile:  610-373-4710                                                                                                                                                            |
|            |                                                                                                                                                                                     |
| With a copy to: |
|            |                                                                                                                                                                                     |
|            | Rodrigo A. Guerra, Jr.                                                                                                                                                                   |
|            | Skadden, Arps, Slate, Meagher & Flom LLP                                                                                                                                             |
|            | 300 South Grand Avenue, Suite 3400                                                                                                                                                       |
|            | Los Angeles, CA 90071                                                                                                                                                                    |
|            | Facsimile:  213-687-5600                                                                                                                                                            |
|            |                                                                                                                                                                                     |
| (b)             | If to the Executive:                                                                                                                                                                     |
|            |                                                                                                                                                                                     |
|            | John Hull                                                                                                                                                                                |
|            | 6753 East Park Drive                                                                                                                                                                     |
|            | Fort Worth, Texas 76132                                                                                                                                                                  |
|            | Facsimile:                              |

 

Eitherparty may change such party’s address for notices by notice duly given pursuanthereto.

 

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Section 11.              DISPUTE RESOLUTION.  The Company and the Executive agree that anydispute arising as to the parties’ rights and obligations hereunder, other thanwith respect to Section 7, shall be resolved by binding arbitration inaccordance with the rules of the American Arbitration Association forresolution of employment disputes then in effect.

 

Section 12.              GOVERNING LAW.  This Agreement and the legal relations thuscreated between the parties hereto shall be governed by and construed under andin accordance with the laws of the State of Texas, without regard to itsconflicts of law principles.

 

Section 13.              TERMINATION OF PRIOR AGREEMENTS.  This Agreement terminates and supersedes anyand all prior agreements and understandings between the parties with respect tothe Executive’s employment and compensation by the Company or Company’sAffiliates.  As of the Effective Date,the Executive shall be employed by the Company under the terms and pursuant tothe conditions set forth in this Agreement.

 

Section 14.              WAIVER; MODIFICATION.  Failure to insist upon strict compliancewith any of the terms, covenants or conditions hereof shall not be deemed awaiver of such term, covenant or condition, nor shall any waiver orrelinquishment of, or failure to insist upon strict compliance with, any rightor power hereunder at any one or more times be deemed a waiver orrelinquishment of such right or power at any other time or times.  This Agreement shall not be modified in anyrespect except by a writing executed by each party hereto.

 

Section 15.              ASSIGNMENT; SUCCESSORS.  This Agreement is personal in its nature andneither of the parties hereto shall, without the consent of the other, assignor transfer this Agreement or any rights or obligations hereunder; providedthat, in the event of the merger, consolidation, transfer or sale of all orsubstantially all of the assets of the Company with or to any other individualor entity or any similar event, this Agreement shall, subject to the provisionshereof, be binding upon and inure to the benefit of such successor and suchsuccessor shall discharge and perform all the promises, covenants, duties andobligations of the Company hereunder.

 

Section 16.              SEVERABILITY.  Except as provided in Section 7(f), inthe event that a court of competent jurisdiction determines that any portion ofthis Agreement is in violation of any statute or public policy, only the portionsof this Agreement that violate such statute or public policy shall bestricken.  All portions of thisAgreement that do not violate any statute or public policy shall continue infull force and effect.  Furthermore, anycourt order striking any portion of this Agreement shall modify the strickenterms as little as possible to give as much effect as possible to theintentions of the parties under this Agreement.

 

Section 17.              HEADINGS; INCONSISTENCY.  Section headings in this Agreement areincluded herein for convenience of reference only and shall not constitute apart of this Agreement for any other purpose. In the event of any inconsistency between the terms of this Agreementand any form, award, plan or policy of the Company, the terms of this Agreementshall control.

 

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Section 18.              COUNTERPARTS.  This Agreement may be executed incounterparts (including counterparts delivered by facsimile), each of whichshall be deemed an original, but all of which taken together shall constituteone and the same instrument.

 

INWITNESS WHEREOF, the Company has caused this Agreement to be executed by itsduly authorized officer and the Executive has hereunto signed this Agreement onthe date first above written.

 
|   | HCS I, INC.         |
|--------|---------------------|
|   |                |
|   |                |
|   | /s/ Kevin DeSanctis |   |
|   | By:                 | Kevin DeSanctis |
|   | Title:              | Chief Executive Officer |
|   |                |
|   |                |
|   | EXECUTIVE           |
|   |                |
|   |                |
|   | /s/ John Hull       |   |
|   | John Hull           |
|        |                     |  |  |

 

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