Document:

Exhibit 10.2(b)

 

PENN NATIONAL GAMING, INC.

 

INCENTIVE STOCK OPTION
CERTIFICATE

 

This certifies
that an option to purchase shares of Common Stock of Penn National Gaming, Inc.
has been granted pursuant to the Penn National Gaming, Inc. 2003 Long Term
Incentive Compensation Plan, as follows:

 

	
  Name and Address

  of Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  Incentive Stock Option

  
	
   

  	
   

  	
   

  
	
  Number of shares

  subject to Option:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Date(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
   

  

 

The option is
subject to all the terms and conditions of the Penn National Gaming, Inc.
2003 Long Term Incentive Compensation Plan, a copy of which is available upon
request.

 

 

	
  Date: 

  	
   

  	
   

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

PENN NATIONAL
GAMING, INC.

STOCK OPTION TERMS

 

All
Stock Options are subject to the provisions of the 2003 Long Term Incentive
Compensation Plan and any rules and regulations established by the
Compensation Committee of the Board of Directors of Penn National Gaming, Inc.
(“PNG”).  A copy of the Plan is available
upon request.  Words used herein with
initial capitalized letters are defined in the attached Incentive Stock Option
Certificate or the Plan.

 

The
terms provided here are applicable to the Stock Option specified in the
attached certificate.  Different terms
may apply to any prior or future stock option grants.

 

I.                                         OPTION PERIOD

 

You may
exercise your Stock Options during the Option Period, which begins on the
Vesting Dates and ends on the Expiration Date. 
The Stock Options vest in 25% installments on each Vesting Date.  The Vesting Dates are the first, second,
third and fourth anniversaries of the Date of Grant.  Thus, you may exercise up to 25% of your
Stock Options on the first Vesting Date, up to another 25% of your Stock
Options on the second Vesting Date, and so on. 
The Expiration Date is          
(  ) years from the Date of Grant.  However, the Option Period may end sooner if
your employment is terminated under certain circumstances.

 

II.                                     TERMINATION OF EMPLOYMENT

 

A.                                                            Unvested Options. 
If your employment is terminated for any reason, unvested Stock Options
will be forfeited on the termination date.

 

B.                                                            Vested Options.  If you voluntarily resign or your employment
is terminated for Cause before your Retirement, your vested Stock Options will
be forfeited on the 30th day following the date of termination.  If your employment terminates for any other
reason, including Retirement, Reduction in Force, your transfer to a Related
Entity, your Disability or your Death, your vested Stock Options will continue
to be exercisable until the Expiration Date.

 

III.                                 TRANSFERABILITY

 

In general,
Stock Options may be exercised during your lifetime only by you and may not be
assigned or otherwise transferred to anyone else.  Options are transferable upon your death by
will or the laws of distribution and descent.

 

IV.                                PAYMENT

 

When you exercise your Stock Options, you may pay the Option Price in
cash, by check, with previously issued shares of PNG Common Stock (under
certain circumstances), in accordance with a “cashless exercise program” or
with a combination of the foregoing.

 

 

Penn National
Gaming, Inc.

Understanding How Incentive Stock Options Work

 

Congratulations
on receiving a Penn National Gaming, Inc. (“PNG”) Incentive Stock
Option.  These Stock Options are designed
so that you may share in the Company’s success.

 

How Do
Stock Options Work?

 

A stock option
is the right, subject to certain conditions, to purchase shares of PNG Common
Stock at a fixed price.  The per share price
at which Shares of Common Stock may be purchased when the Stock Option is
exercised is referred to as the Option Price. 
The Option Price is fixed on the Date of Grant and does not change for
the life of the Stock Option.  However,
the market price of PNG stock changes and will ultimately determine the gain,
if any, from your Stock Option.  If the
value of PNG stock increases, you will be able to buy PNG stock below the
market price at the time of exercise. 
For example, if you have been granted Stock Options to purchase 100
shares, at an Option Price of $25 and the price of PNG stock has grown to $40
on the date you choose to exercise, you would be able to purchase shares that
are worth $4,000 for only $2,500, a pre-tax gain of $15 per share.  If you exercise your Stock Option and hold
the stock for at least one year after exercise and at least two years
after the Date of Grant, you will not be subject to Federal income tax with
respect to the Stock Option until you sell the stock.  Generally, however, this favorable tax
treatment applies only if you were an employee of PNG at the time of exercise
or had left the Company less than three months before the exercise.  THE TAX
RULES APPLICABLE TO INCENTIVE STOCK OPTIONS ARE COMPLEX.  YOU SHOULD CONSULT WITH YOUR FINANCIAL
ADVISOR FOR MORE INFORMATION.

 

Stock
Option Basics

 

The Option Price is set
at the market price of PNG stock on the date the Stock Option is awarded.

 

The vesting period is the
waiting period from the Date
of Grant to the Vesting Date during which you cannot exercise your Stock
Option.

 

The Option Period is the
time from the Vesting
Date until the Expiration Date, during which you can exercise your
Stock Options, which means you can purchase shares of PNG stock at the Option
Price.

 

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

 

	
  Number of
  Shares

  	
   

  	
  Vesting Period

  	
   

  	
  Option Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25 shares

  	
   

  	
  Date of Grant -

  First Anniversary

  of Date of Grant

  	
   

  	
  First Anniversary of Date of Grant -

          Anniversary of Date of
  Grant

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25 shares

  	
   

  	
  Date of Grant -

  Second Anniversary

  of Date of Grant

  	
   

  	
  Second Anniversary of Date of Grant -

          Anniversary of Date of
  Grant

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25 shares

  	
   

  	
  Date of Grant -

  Third Anniversary

  of Date of Grant

  	
   

  	
  Third Anniversary of Date of Grant -

          Anniversary of Date of
  Grant

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25 shares

  	
   

  	
  Date of Grant -

  Fourth Anniversary

  of Date of Grant

  	
   

  	
  Fourth Anniversary of Date of Grant -

          Anniversary of Date of
  GrantExhibit 10.2(c)

 

PENN NATIONAL
GAMING, INC.

 

NOTICE OF
GRANT OF RESTRICTED STOCK

 

This is to
notify you that an award of restricted shares of Common Stock of Penn National
Gaming, Inc. (the “Company”) has been granted pursuant to the Penn
National Gaming, Inc. 2003 Long Term Incentive Compensation Plan, as
follows:

 

	
  Name and Address of Grantee:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Type of Grant:

  	
   

  	
  Restricted Stock Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Number of shares:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fair market value per share:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total fair market value of award:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Restricted Period ends:

  	
   

  	
   

  	
   

  

 

 

The grant is
subject to all the terms and conditions of the Penn National Gaming, Inc.
2003 Long Term Incentive Compensation Plan, a copy of which is available upon
request.

 

	
   

  	
  GRANTEE 

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  
	
   

  	
  Title:

  

 

 

 

 

PENN NATIONAL
GAMING, INC.

RESTRICTED STOCK AWARD AGREEMENT

 

All
Restricted Stock is subject to the provisions of the 2003 Long Term Incentive
Compensation Plan (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 or the Plan.

 

The
terms provided here are applicable to the Restricted Stock specified in the
attached Notice.  Different terms may
apply to any prior or future awards under the Plan.

 

I.                                         PAYMENT FOR SHARES

 

No payment is
required for the Restricted Stock you receive.

 

II.                                     VESTING

 

The Restricted
Stock vests on                                  ,
if you continuously provide service as an employee through such date.  In addition, the Restricted Stock vests as of
the occurrence of one of the following events:

 

A.                                    Your service as an employee of
the Company terminates because of death, Disability or Retirement;

 

B.                                    The Company is subject to a
Change of Control (as defined in the Plan); or

 

C.                                    The Company is subject to a
“change in control” (as defined in your employment agreement dated (                  )
that occurs on or after the first anniversary of the Date of Grant.

 

No additional
shares of Restricted Stock vest after your service as an employee of the
Company has terminated for any other reason.

 

III.                                 SHARES RESTRICTED

 

Unvested
shares will be considered “Restricted Stock.” 
You may not sell, transfer, pledge or otherwise dispose of any
Restricted Stock.

 

IV.                                FORFEITURE

 

If your service as an employee of the Company terminates for any
reason, then your Restricted Stock will be forfeited to the extent that they
have not vested before the termination date and do not vest as a result of the
termination.  This means that the
Restricted Stock will immediately

 

 

revert to the Company.  You will receive no payment for shares of
Restricted Stock that are forfeited.

 

V.                                    LEAVES OF ABSENCE

 

For purposes of this grant, your service does not terminate when you go
on a leave of absence recognized under the Plan.  Your service will terminate when the leave of
absence ends, however, unless you immediately return to active work.

 

VI.                                STOCK CERTIFICATES

 

Your Restricted Stock will be held for you by the Company.  After those shares have vested, a stock
certificate for those shares will be released to you.

 

VII.                            VOTING AND DIVIDEND RIGHTS

 

You may vote your Restricted Stock and you will receive any dividends
paid with respect to your Restricted Stock even before they vest.

 

VIII.                        WITHHOLDING TAXES

 

No stock certificates will be released or issued to you unless you have
made acceptable arrangements to pay any withholding taxes that may be due as a
result of this grant or the vesting of the shares.  Those arrangements may include withholding
shares of Company stock that otherwise would be released to you when they
vest.  These arrangements may also
include surrendering shares of Company stock that you already own.  The fair market value of the shares you
surrender, determined as of the date when taxes otherwise would have been
withheld in cash, will be applied as a credit against the withholding taxes.

 

IX.                                RESTRICTIONS ON RESALE

 

By signing this Agreement, you agree not to sell any shares at a time
when applicable laws or Company policies prohibit a sale.  This restriction will apply as long as you
are an employee of the Company.

 

X.                                    NO RETENTION RIGHTS

 

Neither your grant nor this Agreement give you
the right to be employed or retained by 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.

 

XI.                                ADJUSTMENTS

 

In the event of a stock split, a stock dividend or a similar change in
Company stock, the number of Restricted Shares that remain subject to
forfeiture will be adjusted accordingly.

 

 

XII.                            APPLICABLE LAW

 

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

 

XIII.                        THE PLAN AND OTHER AGREEMENTS

 

The text of the Penn National Gaming, Inc. 2003 Long Term Incentive
Compensation Plan is incorporated in this Agreement by reference.

 

This Agreement and the Plan constitute the entire understanding between
you and the Company regarding this grant. 
Any prior agreements, commitments or negotiations concerning this grant
are superseded.  This Agreement may be
amended only by another written agreement, signed by both parties.

 

BY
SIGNING THE ATTACHED NOTICE,

YOU
AGREE TO ALL OF THE TERMS AND CONDITIONS

DESCRIBED
ABOVE AND IN THE PLAN.

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