OF THE INDIVIDUALS AND ENTITLES WHO WERE THE BENEFICIAL
OWNERS, RESPECTIVELY OF THE OUTSTANDING COMPANY COMMON STOCK AND OUTSTANDING
COMPANY VOTING SECURITIES IMMEDIATELY PRIOR TO THE SALE OR OTHER DISPOSITION IN
SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP, IMMEDIATELY PRIOR TO THE
SALE OR OTHER DISPOSITION, OF THE OUTSTANDING COMPANY COMMON STOCK AND
OUTSTANDING COMPANY VOTING SECURITIES, AS THE CASE MAY BE; (B) NO PERSON
(EXCLUDING THE COMPANY AND ANY EMPLOYEE BENEFIT PLAN OR RELATED TRUST OF THE
COMPANY OR THE CORPORATION AND ANY PERSON BENEFICIALLY OWNING, IMMEDIATELY PRIOR
TO THE SALE OR OTHER DISPOSITION, DIRECTLY OR INDIRECTLY, 25% OR MORE OF THE
OUTSTANDING COMPANY COMMON STOCK OR OUTSTANDING COMPANY VOTING SECURITIES, AS
THE CASE MAY BE) BENEFICIALLY OWNS, DIRECTLY OR INDIRECTLY, 25% OR MORE OF,
RESPECTIVELY, THE THEN OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION AND
THE COMBINED VOTING POWER OF THE THEN OUTSTANDING VOTING SECURITIES OF THE
CORPORATION ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS; AND (C) AT
LEAST A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE CORPORATION
WERE MEMBERS OF THE INCUMBENT BOARD AT THE TIME OF THE EXECUTION OF THE INITIAL
AGREEMENT OR ACTION OF THE BOARD PROVIDING FOR SUCH SALE OR OTHER DISPOSITION OF
THE ASSETS OF THE COMPANY.
1.12
"CLAIMANT" HAS THE MEANING SET FORTH IN SECTION
14.1.
1.13
"CODE" MEANS THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED FROM TIME TO TIME.
1.14
"COMMITTEE" MEANS THE COMMITTEE DESCRIBED IN
ARTICLE 12.
1.15
"COMPANY" MEANS PENN NATIONAL GAMING, INC., A
PENNSYLVANIA CORPORATION, AND ANY SUCCESSOR TO ALL OR SUBSTANTIALLY ALL OF THE
COMPANY'S ASSETS OR BUSINESS.
1.16
"COMPANY CONTRIBUTION ACCOUNT" MEANS (A) THE SUM
OF THE PARTICIPANT'S ANNUAL COMPANY CONTRIBUTION AMOUNTS, PLUS (B) AMOUNTS
CREDITED IN ACCORDANCE WITH ALL THE APPLICABLE CREDITING PROVISIONS OF THIS PLAN
THAT RELATE TO THE PARTICIPANT'S COMPANY
4
CONTRIBUTION ACCOUNT, LESS (C) ALL DISTRIBUTIONS MADE TO THE PARTICIPANT OR HIS
OR HER BENEFICIARY PURSUANT TO THIS PLAN THAT RELATE TO THE PARTICIPANT'S
COMPANY CONTRIBUTION ACCOUNT.
1.17
"COMPENSATION" MEANS ALL CASH REMUNERATION PAID
TO THE EMPLOYEE BY THE COMPANY WHICH IS REQUIRED TO BE REPORTED AS COMPENSATION
ON THE EMPLOYEE'S FORM W-2 AND SHALL ALSO INCLUDE COMPENSATION WHICH IS NOT
CURRENTLY INCLUDIBLE IN GROSS INCOME BY REASON OF THE APPLICATION OF CODE
SECTIONS 125, 402(E)(3) AND 402(H)(1)(B); PROVIDED, HOWEVER, THAT COMPENSATION
SHALL NOT INCLUDE ANY INCOME RECOGNIZED AS A RESULT OF AN EMPLOYEE EXERCISING A
NONQUALIFIED STOCK OPTION.
1.18
"DEDUCTION LIMITATION" MEANS THE FOLLOWING
DESCRIBED LIMITATION ON A BENEFIT THAT MAY OTHERWISE BE DISTRIBUTABLE PURSUANT
TO THE PROVISIONS OF THIS PLAN.
EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS
LIMITATION WILL BE APPLIED TO ALL DISTRIBUTIONS THAT ARE "SUBJECT TO THE
DEDUCTION LIMITATION" UNDER THIS PLAN.
IF AN EMPLOYER DETERMINES IN GOOD FAITH
PRIOR TO A CHANGE IN CONTROL THAT THERE IS A REASONABLE LIKELIHOOD THAT ANY
COMPENSATION PAID TO A PARTICIPANT FOR A TAXABLE YEAR OF THE EMPLOYER WOULD NOT
BE DEDUCTIBLE BY THE EMPLOYER SOLELY BY REASON OF THE LIMITATION UNDER CODE