Document:

Exhibit 10.3

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered
into as of this 1st day of October, 2003 by and between Hollywood
Casino Shreveport, a Louisiana partnership (the “Company”), and Melvyn Thomas,
an individual residing in Nevada (“Executive”).

WHEREAS, Executive desires to become employed by the
Company, and the Company desires to employ Executive upon the terms and
conditions hereinafter set forth.

NOW, THEREFORE, the parties hereto, intending to be
legally bound, hereby agree as follows:

1.     Employment.  The
Company hereby agrees to employ Executive and Executive hereby accepts such
employment, in accordance with the terms, conditions and provisions hereinafter
set forth.

1.1.          Duties and Responsibilities.  Executive shall serve as General Manager of
the Company.  Executive shall perform
all duties and accept all responsibilities incident to such position as may be
reasonably assigned to him by the Board of Directors (the “Board”) of the
Company’s managing general partner. 
Executive’s principal place of employment shall be in Shreveport,
Louisiana.

1.2.          Term.

(a)           Initial Term.  The term of this Agreement shall begin on
October 1, 2003 (the “Commencement Date”), and shall terminate at the close of
business on the second anniversary of the Commencement Date (the “Initial
Term”), unless earlier terminated in accordance with Section 3 hereof.

 

(b)           Renewal
Terms.  This Agreement may be
renewed for such additional periods as the parties may agree (each, a “Renewal
Term” and, together with the Initial Term, the “Employment Term”) only upon
execution of a written renewal agreement signed by Executive and a duly
authorized officer of the Company.  In
the event the parties have not executed a renewal agreement prior to the
expiration of the Employment Term but Executive continues to be employed by the
Company after such time, Executive shall be deemed to be employed “at will” and
the parties will have no further obligations to each other under this Agreement
other than under Sections 3.1, 3.4(b), 5, 6, 7 and 9 through 19.

 

1.3.          Extent
of Service.  Executive agrees to use
Executive’s best efforts to carry out Executive’s duties and responsibilities
and, consistent with the other provisions of this Agreement, to devote
substantially all of Executive’s business time, attention and energy
thereto.  The foregoing shall not be
construed as preventing Executive from serving on the board of philanthropic
organizations (so long as such service does not materially interfere with
Executive’s duties hereunder) or investing assets in such form or manner as
will not require services on the part of Executive.

 

 

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2.             Compensation.  For all services rendered by Executive to
the Company, the Company shall compensate Executive as set forth below.

 

2.1.          Base
Salary.  The Company shall pay
Executive a base salary (“Base Salary”), commencing on the Commencement Date,
at the annual rate of $225,000, payable in installments at such times as the
Company customarily pays its other senior executives (“Peer Executives”).  Executive’s performance and Base Salary
shall be reviewed annually.  Any changes
in Base Salary or other compensation shall be made in the sole and absolute
discretion of the Board.

 

2.2.          Cash
Bonuses.

 

(a)           Annual
Bonus.  Executive shall be eligible
to receive an annual cash bonus of up to 100% of Base Salary if Executive
attains certain performance goals to be mutually established by the Board and
Executive.  Executive’s participation in
such plan shall be pro-rated during Executive’s first calendar year of
employment based on the number of days of actual employment.

 

(b)           Stay
Bonus.  Executive shall be eligible
to receive an additional cash bonus of $50,000 payable on the earlier of the
effective date of a recapitalization of the Company approved by the Board or
the second anniversary of the Commencement Date.  Such bonus shall be paid in accordance with the Company’s
standard payroll practices.

 

2.3.          Equity
Compensation.  Subject to obtaining
the necessary approvals, the Company shall cause to be granted to Executive
options pursuant to, and subject to the terms and conditions of, the then
current equity compensation plan of Penn National Gaming, Inc. for 15,000
shares of Penn National Gaming, Inc. common stock at an exercise price based on
the fair market value of the stock determined in accordance with the plan.  Such options will vest as follows:

 

i.              25%
on the first anniversary of the Commencement Date;

ii.             25%
on the second anniversary of the Commencement Date;

iii.            25%
on the third anniversary of the Commencement Date; and

iv.            25%
on the fourth anniversary of the Commencement Date.

 

2.4.          Other
Benefits.  Executive shall be
entitled to participate in all other employee benefit plans and programs, including,
without limitation, health, vacation, retirement, deferred compensation or
SERP, made available to other Peer Executives, as such plans and programs may
be in effect from time to time and subject to the eligibility requirements of
the each plan.  Nothing in this
Agreement shall prevent the Company from amending or terminating any
retirement, welfare or other employee benefit plans or programs from time to
time, as the Company deems appropriate and consistent with applicable law.  Executive shall be eligible for medical
coverage on the Commencement Date.

 

2.5.          Vacation,
Sick Leave and Holidays.  Executive
shall be entitled in each calendar year to vacation time in accordance with the
Company’s vacation policy for Peer Executives. 
Each vacation shall be taken by Executive at such time or times as
agreed upon by the Company and Executive, and any portion of Executive’s
allowable vacation time not used during the 

 

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calendar year shall be subject to the Company’s payroll policies
regarding carryover vacation.  Executive
shall be entitled to holiday and sick leave in accordance with the Company’s
holiday pay policy and its other pay-for-time-not-worked policies.

 

2.6.          Reimbursement
of Expenses.  Executive shall be
provided with reimbursement of reasonable expenses related to Executive’s
employment by the Company on a basis no less favorable than that authorized
from time to time for Peer Executives.

 

2.7.          Relocation
and Temporary Housing.  The Company
will pay, or reimburse Executive, for reasonable relocation and temporary
housing expenses for Executive and Executive’s immediate family.  Such payment/reimbursement will be based
upon the Company’s relocation and temporary housing policies in effect at such time,
which policies will be at least as favorable to Executive as those in effect
for affiliated entities.  Without
limiting the generality of the foregoing, the Company acknowledges that the
foregoing will include transportation of three automobiles.

 

3.             Termination.  Executive’s employment may be terminated
prior to the end of the Employment Term in accordance with, and subject to the
terms and conditions, set forth below.

 

3.1.          Termination
by the Company.

 

(a)           Without
Cause.  The Company may terminate Executive
at any time without Cause (as defined in subsection (b) below) upon the
delivery of written notice to Executive, which notice shall set forth the
effective date of such termination.

 

(b)           With
Cause.  The Company may terminate
Executive at any time for Cause effective immediately upon delivery of written
notice to Executive.  As used herein,
the term “Cause” shall mean:

 

(i)            Executive shall have been indicted
for, or convicted (based on a trial, a plea of guilty or nolo contendere, or
otherwise) of, any misdemeanor involving allegations of fraud, theft, perjury
or conspiracy or any felony;

 

(ii)           Executive is found disqualified or
not suitable to hold a casino or other gaming license by a governmental gaming
authority in any jurisdiction where Executive is required to be found
qualified, suitable or licensed;

 

(iii)          Executive materially breaches any
Company policy and fails to cure such breach within 15 days after receipt of
written notice thereof or Executive materially breaches the terms of Sections 5,
6 or 7 this Agreement; or

 

(iv)          Executive misappropriates corporate
funds or commits other acts of dishonesty as determined in good faith by the
Board.

 

 

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3.2.          Termination by the Executive.  Executive may voluntarily terminate
employment for any reason effective upon 60 days’ prior written notice to the
Company, unless the Company waives such notice requirement (in which case the
Company shall notify Executive in writing as to the effective date of termination).  The Company and Executive, however,
recognize and agree that they mutually agreed upon the term of this Agreement
and that Executive is expected to complete fully the Employment Term.

3.3.          Termination for Death or Disability.  In the event of the death or total
disability of Executive, this Agreement shall terminate effective as of the
date of Executive’s death, subject to any applicable federal or state
disability or leave laws, Disability. 
For purposes of this Agreement, Executive shall be deemed to have a
“Disability” if (i) for physical or mental reasons, Executive is, with or
without reasonable accommodation, unable to perform the essential functions of
his job duties for a period of not less than ninety (90) calendar days during
any twelve-month period, and (ii) Executive has a “total disability,” as that
term is defined in the Company’s Long Term Disability Insurance Policy in
effect at the time of such determination.

3.4.          Payments Due Upon Termination.

(a)           Generally.  Upon any termination described in Sections
3.1, 3.2 or 3.3 above, Executive shall be entitled to receive any amounts due
for Base Salary earned or expenses incurred through the effective date of
termination and any benefits accrued or earned on or prior to such date in
accordance with the terms of any applicable benefit plans and programs.

(b)           Without Cause.  In the event the Company terminates
Executive’s employment without Cause (either before or after expiration of the
Employment Term), and subject to Executive executing a mutual release in a form
reasonably acceptable to the Company and Executive, Executive shall be entitled
to receive the following in lieu of any other severance: 

(i)            Executive shall receive a cash
payment equal to Executive’s monthly Base Salary at the rate in effect on the
effective date of termination multiplied by the greater of (i) the number of
months remaining in the Initial Term or (ii) six months (the “Severance
Period”).

 

(ii)           Executive shall continue to receive
the health benefits coverage in effect on the effective date of termination (or
as the same may be changed from time to time for Peer Executives) for Executive
and, if any, Executive’s spouse and dependents for the Severance Period.  At the option of the Company, the Company
may elect to pay Executive cash in lieu of such coverage in an amount equal to
Executive’s after-tax cost of obtaining generally comparable coverage for such
period.

 

(c)           Death or Disability.  In the event the Company terminates
Executive’s employment due to the death or total disability of Executive,
Executive shall be entitled to receive the following in lieu of any other
severance:

(i)            Executive shall receive a cash
payment equal to 175% of Executive’s monthly Base Salary at the rate in effect
on the effective date of termination multiplied by the number of months
remaining in the Severance Period.

 

 

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(ii)           Executive shall continue to receive
the health benefits coverage in effect on the effective date of termination (or
as the same may be changed from time to time for Peer Executives) for Executive
and, if any, Executive’s spouse and dependents for the Severance Period.  At the option of the Company, the Company
may elect to pay Executive cash in lieu of such coverage in an amount equal to
Executive’s after-tax cost of obtaining generally comparable coverage for such
period.

 

(d)           Payments.   All payments due under this Section 3.4
shall be made within 15 days of the effective date of termination provided the
release, if applicable, has been executed by Executive.  Except as otherwise provided in this Section
3.4, no other payments or benefits shall be due under this Agreement to
Executive.

3.5.          Options.  Except as otherwise provided in the relevant
option plan or option agreement or as otherwise approved by the Board, all
options granted to Executive shall cease vesting on the effective date of
termination, regardless of the reason therefor.

3.6.          Notice of Termination.  Any termination of Executive’s employment
shall be communicated by a written notice of termination delivered within the
time period specified in this Section 3. 
The notice of termination shall (i) indicate the specific termination
provision in this Agreement relied upon, (ii) briefly summarize the facts and
circumstances deemed to provide a basis for a termination of employment and the
applicable provision hereof, and (iii) specify the termination date in
accordance with the requirements of this Agreement.

4.     No
Conflicts of Interest.  Executive agrees
that throughout the period of Executive’s employment hereunder or otherwise,
Executive will not perform any activities or services, or accept any other
employment relationship that would interfere with or present a conflict of
interest concerning Executive’s employment with the Company.  Executive agrees and acknowledges that
Executive’s employment by the Company is conditioned upon Executive adhering to
and complying with the business practices and requirements of ethical conduct
set forth in writing from time to time by the Company in its employee manual or
similar publication.  Executive
represents and warrants that no other contract, agreement or understanding to
which Executive is a party or may be subject will be violated by the execution
of this Agreement by Executive and/or by the performance of any of Executive’s
duties and obligations under this Agreement.

5.     Confidentiality.  Executive recognizes and acknowledges that
Executive will have access to certain confidential information of the Company
and that such information constitutes valuable, special and unique property of
the Company (including, but not limited to, information such as business
strategies, identity of acquisition or growth targets, marketing plans,
customer lists, and other business related information for the Company’s
customers).  Executive agrees that
Executive will not, for any reason or purpose whatsoever, during or after the
term of employment, disclose any of such confidential information to any party,
and that Executive will keep inviolate and secret all confidential information
or knowledge which Executive has access to by virtue of Executive’s employment
with the Company, except as otherwise may be necessary in the ordinary course
of performing Executive’s duties with the Company.

 

 

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6.     Non-Competition.

(a)           As
used herein, the term “Restriction Period” shall mean a period equal to the
remainder of the Employment Term in effect on the effective date of
termination; provided, however, that, in the event the Company terminates
Executive without Cause under Section 3.1(a), the Restriction Period shall be
deemed not to exceed the Severance Period. 
The Restriction Period shall never exceed two (2) years.

(b)           During
Executive’s employment by the Company and for the duration of the Restriction
Period thereafter, Executive shall not, except with the prior written consent
of the Company, directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with, or use or
permit Executive’s name to be used in connection with, any business or
enterprise which owns or operates a gaming or pari-mutuel facility located
within 50 miles of any gaming or pari-mutuel facility owned or operated by the
Company in any of the parishes in the State of Louisiana or any of the
municipalities in the other U.S. States specified in Exhibit A hereto.

(c)           The
foregoing restrictions shall not be construed to prohibit Executive’s ownership
of less than 5% of any class of securities of any corporation which is engaged
in any of the foregoing businesses and has a class of securities registered
pursuant to the Securities Exchange Act of 1934, provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly, manages
or exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than exercising
Executive’s rights as a shareholder, or seeks to do any of the foregoing.

7.     Non-Solicitation.  During Executive’s
employment by the Company and for a period equal to the greater of the
Restriction Period or one year after the effective date of termination,
Executive will not, except with the prior written consent of the Company, (i)
directly or indirectly, solicit or hire, or encourage the solicitation or
hiring of, any person who is, or was within a six month period prior to such
solicitation or hiring, an employee of the Company or any of its affiliates for
any position as an employee, independent contractor, consultant or otherwise or
(ii) divert or attempt to divert any existing business of the Company or any of
its affiliates.

8.     Document Surrender.  Upon the termination of Executive’s employment for any reason,
Executive shall immediately surrender and deliver to the Company all documents,
correspondence and any other information, of any type whatsoever, from the
Company or any of its agents, servants, employees, suppliers, and existing or
potential customers, that came into Executive’s possession by any means
whatsoever during the course of Executive’s employment with the Company.

9.     Governing Law.  This Agreement shall be
governed by and construed in accordance with the internal laws (and not the law
of conflicts) of the State of Louisiana.

 

 

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10.   Jurisdiction.  The
parties hereby irrevocably consent to the jurisdiction of the courts of
the State of Louisiana for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the state or
federal courts having jurisdiction for matters arising in Shreveport,
Louisiana, which shall be the exclusive and only proper forum for adjudicating
such a claim.

11.   Notices.  All notices and other communications required or permitted under
this Agreement or necessary or convenient in connection herewith shall be in
writing and shall be deemed to have been given when hand delivered, delivered
by guaranteed next-day delivery or sent by facsimile (with confirmation of
transmission) or shall be deemed given on the third business day when mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

If to the Company, to:

Hollywood Casino Shreveport
c/o HCS I, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
 
Attention: President

 

If to Executive, to:

Melvyn Thomas

900 South Meadows
Parkway, #3221

Reno, NV  89521

 

Fax:  775-852-2149

 

or to such other names or addresses as the Company or
Executive, as the case may be, shall designate by notice to each other person
entitled to receive notices in the manner specified in this Section.

12.           Contents of Agreement; Amendment
and Assignment.

12.1.        This Agreement sets forth the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior or contemporaneous agreements or understandings
with respect to thereto and cannot be changed, modified, extended, waived or
terminated except through a written instrument signed by the party against
which it is to be enforced.

12.2.        All
of the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and

 

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responsibilities of Executive under this Agreement are
of a personal nature and shall not be assignable or delegable in whole or in
part by Executive.

13.           Severability.  If any provision of this Agreement or
application thereof to anyone or under any circumstances is adjudicated to be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provision or application of this
Agreement which can be given effect without the invalid or unenforceable
provision or application and shall not invalidate or render unenforceable such
provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances. 
In addition, if any court determines that any part of Sections 5, 6 or 7
hereof (the “Covenants”) is unenforceable because of its duration, geographical
scope or otherwise, such court will have the power to modify such provision
and, in its modified form, such provision will then be enforceable.

 

14.   Remedies.

14.1.        No remedy conferred upon a party by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given under this Agreement or now or hereafter existing at law or in equity.

14.2.        No delay or omission by a party in
exercising any right, remedy or power under this Agreement or existing at law
or in equity shall be construed as a waiver thereof, and any such right, remedy
or power may be exercised by such party from time to time and as often as may
be deemed expedient or necessary by such party in its sole and absolute
discretion.

14.3.        If Executive breaches any term or
condition of the Covenants, and upon notification by the Company of the exact
nature of the breach Executive does not remedy the breach within fifteen days
(15) of such notification, then as liquidated damages for such breach,
Executive will pay the Company an amount in cash equal to 175% of the Base
Salary for a period equal to the greater of (i) the number of months remaining
in the Employment Term from the first breach of the Covenants (the “Earliest
Breach”) or (ii) six months.  Such
amount will be due immediately following the Earliest Breach and may be offset
from any obligation of the Company to the Executive; provided, however, that if
such amount is not promptly paid in full for any reason, interest will accrue
on the unpaid amount in the same manner and at the same rate(s) then applicable
under the Company’s primary credit facility. 
Executive acknowledges that the Covenants are reasonable and necessary
to protect the legitimate interests of the Company and its affiliates and, in
particular, that the duration and geographic scope of the Covenants are
reasonable given the nature of this Agreement and the position that Executive
will hold within the Company.  Executive
further acknowledges that, if he breaches the Covenants: (a) the actual damages
caused by that breach are likely to be significant, but difficult to determine
precisely and (b) the remedy specified in this paragraph is not intended as a
penalty, but rather is intended as a good faith attempt by the parties to
estimate the actual damages that would be caused by such breach.

 

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14.4.        Employee agrees to disclose the
existence and terms of the Covenants to any employer that he works for during
the period equal to the greater of the Restricted Period or the one-year period
following his termination of employment for any reason.

15.   Beneficiaries/References.  Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive’s death by giving the Company written notice
thereof.  In the event of Executive’s
death or a judicial determination of Executive’s incompetence, reference in
this Agreement to Executive shall be deemed, where appropriate, to refer to
Executive’s beneficiary, estate or other legal representative.

16.   Withholding.  All payments under this Agreement shall be made subject to
applicable tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes, as the Company is
required to withhold pursuant to any law or governmental rule or
regulation.  Except as specifically
provided otherwise in this Agreement, Executive shall bear all expense of, and
be solely responsible for, all federal, state and local taxes due with respect
to any payment received under this Agreement.

17.   Regulatory Compliance.  The terms and provisions hereof shall be
conditioned on and subject to compliance with all laws, rules, and regulations
of all jurisdictions, or agencies, boards or commissions thereof, having
regulatory jurisdiction over the employment or activities of Executive
hereunder.

18.   Legal Fees.  Each party shall bear its own costs and expenses with respect
hereto.

19.   Guarantee.  It is a condition of Executive’s employment
under this Agreement that the Company’s obligations to Executive under Section
3.4(b) be guaranteed by Hollywood Casino Corporation (“HCC”); provided,
however, that HCC shall have the right, but not the obligation, to secure
comparable employment for Executive at another of its or its affiliate’s
properties in lieu of making any payment by the Company under Section 3.4(b) or
by HCC under the guarantee.  To induce
HCC to issue such guarantee, the Company agrees to enter into an agreement with
HCC that provides for the Company to post cash collateral (or otherwise grant a
security interest in a deposit account of control account of the Company) to
secure the Company’s reimbursement obligation to HCC under the guarantee.

 

 

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IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed
this Agreement as of the date first above written.

 

	
   

  	
  HOLLYWOOD CASINO SHREVEPORT

  
	
   

  	
   

  	
   

  
	
   

  	
  By: HCS 1, INC., its managing

  
	
   

  	
   

  	
  General partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ John
  Hull

  
	
   

  	
  Name:  John Hull

  
	
   

  	
  Title:  President and Chief Operating

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
    /s/ Melvyn Thomas

  
	
   

  	
  Melvyn Thomas

  	
   

  
						

 

 

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EXHIBIT A

 

Set forth below is a list of parishes in Louisiana and
the municipalities in other jurisdictions in which the Company owns or operates
a gaming or pari-mutuel facility:

 

Caddo
Parish

Bossier
Parish

 

 

11Exhibit 10.4

ACKNOWLEDGEMENT
& WAIVER

 

Reference
is hereby made to that certain Employment Agreement, dated as of October 1,
2003 (the “Agreement”) by and
between Melvyn Thomas (“Executive”)
and Hollywood Casino Shreveport, a Louisiana general partnership (the “Company”). 
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Agreement.

Pursuant to Section 19 of the Agreement, it is a
condition of Executive’s employment that the Company’s obligations to Executive
under Section 3.4(b) of the Agreement be guaranteed (the “Guarantee”) by Hollywood Casino Corporation
(“HCC”); provided, however, that
HCC shall have the right, but not the obligation, to secure comparable
employment for Executive at another of its or its affiliate’s properties in
lieu of making any payment by the Company under Section 3.4(b) or by HCC under
the guarantee.

Such Section 19 further states that, in order to
induce HCC to issue such guarantee, the Company agrees to enter into an
agreement with HCC that provides for the Company to post cash collateral (or
otherwise grant a security interest in a deposit account of control account of
the Company) to secure the Company’s reimbursement obligation to HCC under the
guarantee (the “Reimbursement Security
Agreement”).

HCC
hereby acknowledges it obligation to provide the Guarantee and agrees to
provide the Guarantee in substantially the form of Exhibit A hereto or in such
other form as may be mutually agreed upon the Company, Executive and HCC.

HCC
hereby waives its rights, and releases the Company from providing, the
Reimbursement Security Agreement.

IN WITNESS WHEREOF, the undersigned, intending to be
legally bound, has executed this instrument as of this 12th day of
November 2003.

 

	
   

  	
  HOLLYWOOD CASINO CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robert Ippolito

  
	
   

  	
  Name:  Robert Ippolito

  
	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  Professional Center

  
	
   

  	
  825 Berkshire Blvd., Suite 200

  
	
   

  	
  Wyomissing, PA  19610

  
	
   

  	
  Attention:  President

  

 

EXHIBIT A

 

GUARANTY

This GUARANTY, dated as of
November __, 2003 (this “Guaranty”),
is entered into by Hollywood Casino Corporation, a Delaware corporation (“Guarantor”), in favor of Melvyn Thomas, an
individual residing in Nevada (“Guaranteed
Party”).

RECITALS

A.            Hollywood Casino Shreveport, a Louisiana general
partnership and indirect subsidiary of Guarantor (“Company”), desires to employ Guaranteed Party pursuant to the
terms and conditions of that certain Employment Agreement, dated as of October
1, 2003 (the “Employment Agreement”).

B.            It is a condition to Guaranteed Party entering into the
Employment Agreement that Company’s obligations thereunder be guaranteed by
Guarantor as provided in this Guaranty.

NOW, THEREFORE, based on the
foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and to induce the Guaranteed
Party to enter into the Employment Agreement, Guarantor hereby agrees as
follows:

SECTION 1.                                                    DEFINITION; INTERPRETATION

1.1          Definition.  In this Guaranty, “Guaranteed Obligations” means amounts owed
by Company to Guaranteed Party under Section 3.4(b) of the Employment
Agreement, on the same terms and conditions as set forth in such agreement.

1.2          Interpretation.  If any conflict or
inconsistency arises between the terms, conditions and provisions of this
Guaranty and the terms, conditions and provisions of the Employment Agreement,
the terms, conditions and provisions of this Guaranty shall prevail.  Section headings in this Guaranty are used
for convenience of reference only and do not constitute part of this Guaranty
for any other purpose.  The word
“including” and derivative terms are not limiting.  The word “or” is not exclusive. 
Terms defined in the singular may be used in the plural and vice versa.

SECTION 2.                                                    GUARANTY

2.1          Guaranty of the Guaranteed Obligations.  Guarantor
irrevocably and unconditionally guarantees the due and punctual payment in full
of all Guaranteed Obligations when the same shall become due, whether on demand
or otherwise.  In furtherance of the
foregoing, upon the failure of Company to pay any of the Guaranteed Obligations
when and as the same become due, Guarantor will upon demand pay, or cause to be
paid, in cash to Guaranteed Party the amount of the Guaranteed Obligations

 

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 then
remaining; provided that, in accordance with Section 19 of the Employment
Agreement, in lieu of making such payment, Guarantor may secure comparable
employment for Guaranteed Party at its or its affiliates’ properties (other
than Company).

 

2.2          Liability of Guarantor Absolute.  Guarantor agrees that its obligations
hereunder are irrevocable, absolute, independent and unconditional and shall
not be affected by any circumstance that constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guaranteed
Obligations (or the securing of comparable employment as provided in Section
2.1).  Guarantor agrees that this
Guaranty is a guaranty of payment when due and not of collectability.

2.3          Waivers.  Guarantor hereby waives notices, demands,
presentments, protests, notices of protest, notices of dishonor and notices of
any action or inaction, and any defenses or benefits that may be derived from
or afforded by law that limit the liability of or exonerate guarantors or
sureties, or that may conflict with the terms of this Guaranty.

2.4          Reinstatement.  The obligations of
Guarantor hereunder shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of Company or by any defense that Company may have by reason of
the order, decree or decision of any court or administrative body resulting
from any such proceeding, and shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that all or any part
of such payment is rescinded or recovered directly or indirectly from Guaranteed
Party as a preference, fraudulent transfer or otherwise, and any such payment
that is so rescinded or recovered shall constitute Guaranteed Obligations for
all purposes under this Guaranty.

SECTION 3.                                                    MISCELLANEOUS

3.1          Notices.  Any communications between Guaranteed Party
and Guarantor and any notices or requests provided herein may be given by
mailing the same, postage prepaid, or by facsimile transmission to each such
party at its address set forth on the signature pages hereof or to such other
addresses as each such party may in writing hereafter indicate.  Any notice, request or demand to or on
Guaranteed Party or Guarantor shall not be effective until received.

3.2          Expenses.  Each party shall
bear its own costs and expenses with respect hereto.

3.3          Severability.  In case any
provision in or obligation under this Guaranty shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

3.4          Amendments and Waivers.  No amendment,
modification, termination or waiver of any provision of this Guaranty, and no
consent to any departure 

 

3

 

by Guarantor therefrom, shall in any event be
effective without the written concurrence of Guaranteed Party and
Guarantor.  Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.

 

3.5          Successors and Assigns.  This Guaranty is a
continuing guaranty, and shall be binding on Guarantor and its successors and
assigns.  This Guaranty shall inure to
the benefit of Guaranteed Party and its successors, heirs and assigns.  Guarantor shall not assign this Guaranty or
any of its rights or obligations hereunder without the prior written consent of
Guaranteed Party.

3.6          Applicable Law.  THIS GUARANTY SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

[signature page follows]

 

4

 

IN WITNESS WHEREOF, the
undersigned Guarantor has caused this Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first written
above.

	
   

  	
  HOLLYWOOD CASINO CORPORATION,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  Professional Center

  	
   

  
	
   

  	
  825 Berkshire Blvd., Suite 200

  	
   

  
	
   

  	
  Wyomissing, PA  19610

  	
   

  
	
   

  	
  Attention:  President

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Melvyn Thomas,

  	
   

  	
   

  
	
  an individual

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  900 South Meadows Parkway, #322

  	
   

  	
   

  
	
  Reno, NV  89521

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