Document:

Exhibit 10.3

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”)
is entered into on this 31st day of December, 2008 (the “Commencement Date”) by
and between Penn National Gaming, Inc., a Pennsylvania corporation (the “Company”),
and Peter M. Carlino, an individual residing in Pennsylvania (“Executive”).

 

WHEREAS, Executive and Company
are party to that certain Employment Agreement dated May 26, 2004 (the “Existing
Agreement”).

 

WHEREAS, the parties wish to
replace the Existing Agreement with the terms set forth below in this
Agreement, which are intended to be in compliance with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (“Section 409A”, see also
Section 21 hereof).

 

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 Chairman of the Board and Chief Executive Officer 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 of the Company (the “Board”).
Executive’s principal place of employment shall be in Wyomissing, Pennsylvania.

 

1.2.                              Term.
The term of this Agreement shall begin on the date hereof and shall terminate
at the close of business on May 26, 2009 (the “Initial Term”), unless
earlier terminated in accordance with Section 3 hereof.  The term of this Agreement may be renewed for
additional periods (each, a “Renewal Term” and, together with the Initial Term,
the “Employment Term”) only upon the execution of a written renewal by the
parties hereto.  Notwithstanding the
foregoing to the contrary, Sections 5 through 21 shall survive any termination
of the Employment Term until the expiration of any applicable time periods set
forth in Sections 5, 6 and 7.

 

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, or providing oversight with respect to his personal investments,
(including Carlino Development Group and its Affiliates) and the Carlino Family
Trust and its Affiliates, so long as such service does not materially interfere
with Executive’s duties hereunder.

 

CONFIDENTIAL

 

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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 at least One Million Five Hundred Sixty Thousand Dollars
($1,560,000), 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 increase in
Base Salary or other compensation shall be made at the discretion of the Board
or the compensation committee of the Board (the “Compensation Committee”).

 

2.2.                              Cash
Bonuses.  Executive shall participate
in the Company’s annual incentive compensation plan applicable to Peer
Executives.  Each annual bonus award
earned in a fiscal year shall be paid pursuant to the terms of the annual
incentive plan document (if any) by March 15 of the immediately following
fiscal year, unless the written bonus plan provides for a different payment
date or unless Executive shall elect to defer the receipt of such bonus award
pursuant to an arrangement that meets the requirements of Section 409A.

 

2.3.                              Equity
Compensation.  The Company may grant
to Executive options or other equity compensation pursuant to, and subject to
the terms and conditions of, the then current equity compensation plan of Penn
National Gaming, Inc.  The
Compensation Committee shall set the amount and terms of such options or other
equity compensation.

 

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.

 

2.5.                              Vacation,
Sick Leave and Holidays.  Executive
shall be entitled in each calendar year to four (4) weeks of paid vacation
time.  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
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 and
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. 
Such reimbursements shall be made in such manner and at such times as
provided in the reimbursement policies applicable to Peer Executives.

 

CONFIDENTIAL

 

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2.7.                              Automobile.  During the term of this Agreement, the
Company shall provide Executive with an automobile of such make and model
consistent with the Company’s policy for its provision of automobiles to Peer
Executives. The Company shall reimburse Executive for all expenses arising from
or related to the maintenance, repair and daily operation of such automobile in
carrying out Executive’s duties hereunder, including but not limited to, fuel,
service and insurance costs, provided that Executive presents vouchers
evidencing such expenses as required by the Company.

 

2.8.                              Perquisites.  The Company shall continue to reimburse
Executive for annual membership fees and assessments for a country club of
Executive’s choice.  The Company shall
pay the premiums for a life insurance policy in an amount to be determined by
the Company and Executive.

 

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.

 

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

 

(e)                                  With
Cause.  The Company may terminate
Executive’s employment 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 convicted of a felony or any misdemeanor involving allegations of
fraud, theft, perjury or conspiracy;

 

(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 material Company policy or any material term hereof, including,
without limitation, Sections 4 through 7 and, in each case, fails to cure such
breach within 15 days after receipt of written notice thereof; or

 

(iv)                              Executive misappropriates
corporate funds as determined in good faith by the Board.

 

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.

 

CONFIDENTIAL

 

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3.3.                              Termination
for Death or Disability.  In the
event of the death or total disability of Executive, Executive’s employment
shall terminate effective as of the date of Executive’s death or
disability.  The term “disability” shall
have the definition set forth in the Company’s Long Term Disability Insurance
Policy in effect at the time of such determination.

 

3.4.                              Payments
Due Upon Termination.

 

(a)                                  Already
Accrued Base Salary and Expense. 
Upon any termination of employment during the Employment Term, Executive
shall be entitled to receive any amounts due for Base Salary accrued but unpaid
through the effective date of termination, and such amounts shall be paid in
accordance with the Company’s then current payroll system for Peer
Executives.  Any expenses incurred but
not reimbursed through the effective date of termination shall be paid at such
time and in such manner as provided under the Company’s expense reimbursement
policy applicable to Peer Executives.

 

(b)                                 Severance
Pay and Benefits.  Subject to the
conditions in subsection (c) hereof, if Executive’s employment is
terminated under Section 3.1(a) or Section 3.3 or if Executive
delivers a written notice of resignation within 30 days after the expiration of
the Employment Term, the Company does not offer to renew the Employment Term
during such 30-day period on terms no less favorable in the aggregate to the
Executive than those contained herein and Executive thereupon terminates his
employment at the end of such 30-day period, then Executive will be entitled to
receive, and the Company will provide Executive with, the following severance
pay and benefits (in addition to any amounts payable under subsection (a) hereof);
provided, for purposes of Section 409A, each payment (whether an
installment or lump sum) of severance pay under this subsection (b) shall
be considered a separate payment:

 

(i)                                     Amount of Post-Employment Base Salary and
Bonus.  The
Company shall pay to Executive an amount equal to the product of (A) the
sum of (1) Executive’s monthly Base Salary at the highest rate in effect
during the 24-month period immediately preceding the date of Executive’s
termination of employment (the “Termination Date”), and (2) Executive’s
monthly bonus value (determined by dividing by 12 the highest amount of annual
cash bonus compensation paid to Executive in respect of either the first or
second full calendar year immediately preceding the Termination Date; and (B) the
greater of (1) the number of full and partial months remaining in the
Employment Term as of the Termination Date, and (2) 36 months (with the
period described in clause (B) hereof being referred to as the “Severance
Period”).

 

(ii)                                  Payment of
Post-Employment Base Salary and Bonus. 
The amount described in subsection (b)(i) shall be paid to Executive
in cash in two lump-sum payments as follows: (A) 75% of such amount shall
be paid within 15 days after the Termination Date but no later than March 15
of the calendar year following the year in which this payment vests; and (B) the
remaining 25% of such amount shall be paid in a lump sum by March 15 of
the calendar year following the calendar year in which this payment vests.

 

(iii)                               Continued Medical
Benefits Coverage.  During the
Severance Period, the Company shall provide Executive, and, if any, Executive’s
spouse and dependents with 

 

CONFIDENTIAL

 

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medical benefits coverage substantially similar to the coverage in
effect on the effective date of termination. 
After the Severance Period, Executive and his dependents will have the
opportunity under the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1986 (“COBRA”) to elect COBRA continuation coverage.  If elected in a timely manner, COBRA coverage
generally will commence as of the first day of the next calendar month after
the end of the Severance Period and will end on the last day of the 18th month thereafter (unless an earlier end date
or an extension is required under COBRA).

 

(iv)                              Vesting of Stock
Options.  All options granted to Executive
that would have vested during the Severance Period shall vest as of the
Termination Date, provided, however, that any such options may not be exercised
during the Severance Period until the same time(s) as such options would
have vested had Executive continued to be employed through the Severance
Period.  Any options that would not have
vested during the Severance Period shall terminate on the Termination Date.

 

(c)                                  Release
Agreement.  Executive’s entitlement
to any severance pay and benefit subsidies under Section 3(b) is
conditioned upon Executive’s first entering into a release agreement in
substantially the form attached hereto as Exhibit “A”; provided, such
release agreement shall be delivered to Executive within 7 days after the
Termination Date.  Any payment of
severance pay or benefit subsidies due under subsection (b) hereof shall
be delayed until after the expiration of the 7-day revocation period required
for an effective age-based release, and any amount otherwise due under said
subsection (b) before the end of such revocation period shall be paid upon
the day after the end of such period in a single lump-sum payment, but not
later than March 15 of the calendar year following the calendar year in
which the Termination Date occurs.

 

(d)                                 No
Other Payments or Benefits.  Except
as otherwise provided in this Section 3.4, Section 8 or Section 9,
no other payments or benefits shall be due under this Agreement to Executive

 

3.5.                              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
other employment that would materially 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.

 

CONFIDENTIAL

 

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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.

 

6.                                       Non-Competition.

 

(a)                                  As
used herein, the term “Restriction Period” shall mean a period equal to: (i) the
remainder of the Employment Term in effect on the effective date of termination
if Executive resigns other than for Good Reason, or (ii) the Severance
Period if Executive’s employment is terminated for one of the events specified
in Section 3.4(b).  In the event the
Executive is terminated by the Company for one of the events specified in Section 3.4(b),
during the Severance Period Executive may elect to terminate the Restriction
Period at any time by delivering written notice to the Company that Executive
has made such election and that, in consideration therefore, is forfeiting the
right to receive any payment or the right to receive any future payments under Section 3.4(b) or
an equivalent amount under Section 8; provided however, if Executive
elects to reduce the geographic limitation of this non-competition provision,
and Executive has already received payment pursuant to Section 3.4(b) or
an equivalent amount under Section 8, Executive shall reimburse the
Company for that portion of the severance payments already received by
Executive which relates to the number of days left in the Severance
Period.  For clarity, regardless of
whether Executive shall receive payments pursuant to Section 3.4(b) or
Section 8 of this Agreement in order to reduce the Restriction Period,
Executive shall only be required to forfeit or re-pay the amounts that
Executive would have received pursuant to Section 3.4(b).  In that case, Executive may nevertheless
receive payments and/or need not reimburse the Company for any amounts paid to
Executive pursuant to Section 8 which are in excess of the payments and
benefits that Executive would have been entitled to receive under Section 3.4(b).  If Executive terminates his employment for
good Reason, then Executive shall not be subject to the provisions of this Section 6.

 

(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, or is actively seeking to own or operate, a
gaming or pari-mutuel located within North America.

 

(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 

 

CONFIDENTIAL

 

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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.

 

(d)                                 Executive acknowledges that the covenants contained in
Sections 5 through 7 hereof 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 such covenants are reasonable given the nature of this Agreement and
the position that Executive will
hold within the Company.    Executive
further agrees to disclose the existence and terms of such covenants to any
employer that Executive works for during the Restriction Period.

 

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 executive or
management 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.                                       Change
of Control.

 

8.1.                              Consideration

 

(a)                                  Change
of Control.  In the event of a Change
of Control (as defined below), Executive shall be entitled to receive a cash
payment in an amount equal to the product of three times the sum of (i) the
highest annual rate of Base Salary in effect for Executive during the 24-month
period immediately preceding the effective date of the Change in Control (the “Trigger
Date”) and (ii) the highest amount of annual cash bonus compensation paid
to Executive in respect of either the first or second full calendar year
immediately preceding the Trigger Date.

 

(b)                                 Restrictive
Provisions.  As consideration for the
foregoing payments, Executive agrees not to challenge the enforceability of any
of the restrictions contained in Sections 5, 6 or 7 of this Agreement upon or
after the occurrence of a Change of Control.

 

8.2.                              Payment
Terms.  This change of control
payment shall be made in two lump sum payments as follows: (i) 75% of such
amount shall be paid to Executive in a lump-sum cash payment upon the Trigger
Date; and (ii) 25% of such amount shall be paid to Executive in a lump-sum
cash payment upon the 75th day following the Trigger Date, but not later
than March 15 of the calendar year following the calendar year in which
the Trigger Date occurs.  Notwithstanding
any of the foregoing to the contrary, the payment contemplated by clause (ii) shall
be paid immediately upon the earlier occurrence of any of the following: (a) Executive’s
employment is terminated by the Company; or (b) Executive terminates employment
for Good Reason (as defined below).

 

CONFIDENTIAL

 

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8.3.                              Certain
Other Terms.  In the event payments
are being made to Executive under this Section 8, no payments shall be due
under Section 3.4(b)(i) with respect to any termination of Executive’s
employment following a Change of Control. 
At the option of the Company, the Company may require Executive to
execute the release attached hereto as Exhibit A; provided, however, that
this requirement shall not in any way alter the timing of the payments to be
made under Section 8.2.  In the
event that the Company announces that it has signed a definitive agreement with
respect to a Change of Control, the provisions of this Section 8 shall
continue to apply to Executive if, during the period after the public
announcement and immediately preceding the date such transaction is consummated
or terminated, the Company terminates Executive’s employment without Cause or
due to a disability; provided, however, that, in such event, any amount payable
under this Section 8 shall be reduced by any payments received pursuant to
Section 3.4(b)(i).

 

8.4.                              Defined
Terms.

 

(a)                                  The
term Change of Control shall have the meaning given to such term in the Company’s
2008 Long Term Incentive Compensation Plan, as such may be amended or modified.

 

(b)                                 Good
Reason.  The occurrence of any of the
following events that the Company fails to cure within 10 days after receiving
written notice thereof from Executive: (i) assignment to Executive of any
duties inconsistent in any material respect with Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities or inconsistent with Executive’s legal or fiduciary
obligations; (ii) any reduction in Executive’s compensation or substantial
reduction in Executive’s benefits taken as a whole; (iii) any travel
requirements materially greater than Executive’s travel requirements prior to
the Change of Control; or (iv) breach of any material term of this
Agreement by the Company.

 

9.                                       Certain
Tax Matters.

 

9.1.                              Generally.  In the event Executive becomes entitled to
receive the payments (the “Severance Payments”) provided under Section 3
or Section 8 hereof or under any other plan or arrangement providing for
payments under circumstances similar to those contemplated by such sections,
and if any of the Severance Payments will be subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), the Company shall pay to Executive at the time specified
for such payments, an additional amount (the “Gross-Up Payment”) such that the
net amount retained by Executive shall be equal to the amount of the Severance
Payments after deducting normal and ordinary taxes but not deducting (a) the
Excise Tax and (b) any federal, state and local income tax and Excise Tax
payable on the payment provided for by this Section 9.

 

9.2.                              Illustration.  For example, if the Severance Payments are
$1,000,000 and if Executive is subject to the Excise Tax, then the Gross-Up
Payment will be such that Executive will retain an amount of $1,000,000 less
only any normal and ordinary taxes on such amount. The Excise Tax and federal,
state and local taxes and any Excise Tax on the payment provided by this Section 9
will not be deemed normal and ordinary taxes.

 

CONFIDENTIAL

 

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9.3.                              Certain
Terms.  For purposes of determining
whether any of the Severance Payments will be subject to the Excise Tax and the
amount of such Excise Tax, the following will apply:

 

(a)                                  Any
other payments or benefits received or to be received by Executive in
connection with a Change in Control of the Company or Executive’s termination
of employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company shall be treated as “parachute
payments” within the meaning of Section 280G(b)(2) of the Code, and
all “excess parachute payments” within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company’s Compensation Committee and acceptable to Executive,
such other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax;

 

(b)                                 The
amount of the Severance Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (y) the total amount of the Severance
Payments or (z) the amount of excess parachute payments within the meaning
of Section 280G(b)(1) (after applying subsection (a), above);
and

 

(c)                                  The
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with proposed,
temporary or final regulations under Sections 280G(d)(3) and (4) of
the Code or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of taxation
in the state and locality of Executive on the Trigger Date, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes; and

 

(d)                                 In
the event that the amount of Excise Tax attributable to Severance Payments is
subsequently determined to be less than the amount taken into account hereunder
at the time of determination then, subject to applicable law, appropriate
adjustments will be made with respect to future payment(s) hereunder (if
any).  If Executive becomes entitled to a
Gross-Up Payment in excess of the amount initially determined and paid under Section 9.1,
the Company shall pay the additional Gross-Up Payment within five (5) business
days of the date on which the Company is notified of the amount of the Gross-Up
Payment, but only to the extent that the Gross-Up Payment would be made by the March 15
following the calendar year in which the Executive would be considered to have
vested in the Gross-Up Payment for purposes of Section 409A.  To the extent any Gross-Up Payment is greater
than initially determined and paid under Section 9.1 and cannot be made by
the March 15 following the end of the calendar year in which the Executive
vests in such payment, then the Company shall instead make the payment promptly
following the date on which the Executive remits the taxes to which the
Gross-Up Payment relates to the applicable taxing authority, and in no event
later than the last day of the 

 

CONFIDENTIAL

 

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calendar year following the
calendar year in which such taxes are remitted; provided, however, that if the
Executive is a key employee (within the meaning of Section 409A) and the
Gross-Up Payment would be considered deferred compensation payable on account
of Executive’s separation from service (as defined in Section 409A),
payment will in no event be made prior to 6 months after the date of Executive’s
separation from service.

 

9.4.                              Fees
and Expenses.  The Company shall
reimburse Executive for all reasonable legal fees and expenses incurred by
Executive in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code or any
regulations pertaining thereto to any payment or benefit provided
hereunder.  Any expense reimbursements
made to satisfy the terms of this section shall be paid as soon as practicable
but no later than 90 days after Employee submits evidence of such expenses to
the Company (which payment date shall in no event be later than the last day of
the calendar year following the calendar year in which the expense was
incurred).  The amount of such
reimbursements during any calendar year shall not affect the benefits provided
in any other calendar year, and the right to any benefits under this paragraph
shall not be subject to liquidation or exchange for another benefit.

 

10.                                 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
employment.

 

11.                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws (and not the law
of conflicts) of the Commonwealth of Pennsylvania.

 

12.                                 Jurisdiction.  The parties hereby irrevocably consent to the
jurisdiction of the courts of the Commonwealth of Pennsylvania 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 Wyomissing, Pennsylvania, which shall
be the exclusive and only proper forum for adjudicating such a claim.

 

13.                                 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:

 

Penn National Gaming, Inc.

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

Fax: (610) 376-2842

Attention: President

 

CONFIDENTIAL

 

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If to
Executive, to:

 

His then current home address.

 

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.

 

14.                                 Contents
of Agreement; Amendment and Assignment.

 

14.1.                        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, including without
limitation, the Initial Agreement which is hereby terminated.  This Agreement cannot be changed, modified,
extended, waived or terminated except upon a written instrument signed by the
party against which it is to be enforced.

 

14.2.                        Executive may not assign any of his rights or
obligations under this Agreement.  The
Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of
its assets or business by means of liquidation, dissolution, merger, consolidation, transfer
of assets or otherwise.

 

15.                                 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 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.

 

16.                                 Remedies.

 

16.1.                        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.

 

16.2.                        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 discretion.

 

CONFIDENTIAL

 

11

 

16.3.                        Executive
acknowledges that money damages would not be a sufficient remedy for any breach
of this Agreement by Executive and that the Company shall be entitled to
specific performance and injunctive relief as remedies for any such breach, in
addition to all other remedies available at law or equity to the Company.

 

17.                                 Construction.  This
Agreement is the result of thoughtful negotiations and reflects an arms’ length
bargain between two sophisticated parties, each represented by counsel.  The parties agree that, if this Agreement
requires interpretation, neither party should be considered “the drafter” nor
be entitled to any presumption that ambiguities are to be resolved in his or
her favor.

 

18.                                 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.

 

19.                                 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.

 

20.                                 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.

 

21.                                 Section 409A.  This Agreement is intended to comply with the
requirements of Section 409A and shall be construed accordingly.  Any payments or distributions to be made to
Employee under this Agreement upon a separation from service (as defined in Section 409A)
of amounts classified as “nonqualified deferred compensation” for purposes of
Code Section 409A, shall in no event be made or commence until 6 months
after such separation from service.  Each
payment of nonqualified deferred compensation under this Agreement shall be
treated as a separate payment for purposes of Code Section 409A.  Any reimbursements made pursuant to this
Agreement shall be paid as soon as practicable but no later than 90 days after
Employee submits evidence of such expenses to Corporation (which payment date
shall in no event be later than the last day of the calendar year following the
calendar year in which the expense was incurred).  The amount of such reimbursements during any
calendar year shall not affect the benefits provided in any other calendar
year, and the right to any such benefits shall not be subject to liquidation or
exchange for another benefit.

 

CONFIDENTIAL

 

12

 

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

 

	
   

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Ippolito

  
	
   

  	
  Name:

  	
  Robert S. Ippolito

  
	
   

  	
  Title:

  	
  Vice President,
  Secretary and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Peter M. Carlino

  
	
   

  	
  Peter M. Carlino

  
				

 

CONFIDENTIAL

 

13

 

Exhibit A

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This is a Separation
Agreement and General Release (hereinafter referred to as the “Agreement”)
between
                          
(hereinafter referred to as the “Employee”) and Penn National Gaming, Inc.
(hereinafter referred to as the “Employer”). 
In consideration of the mutual promises and commitments made in this
Agreement, and intending to be legally bound, Employee, on the one hand, and
the Employer on the other hand, agree to the terms set forth in this Agreement.

 

1.                                       Employer and Employee hereby acknowledge that
[the Company notified Employee/Employee notified the Company on
                                      
that Executive’s employment pursuant to that certain Employment Agreement
executed on
                          
(“Employment Agreement”) would be terminated as of
[                    ].  Upon the termination of the Employment
Agreement, Employee will be subject to the obligations and be the beneficiary
of the surviving benefits, all as described in the Employment Agreement.  Employee’s last day of work will be
                        .

 

2.                                       (a)                                  When used in this Agreement, the word “Releasees”
means the Employer and all or any of its past and present parent, subsidiary
and affiliated corporations, companies, partnerships, joint ventures and other
entities and their groups, divisions, departments and units, and their past and
present directors, trustees, officers, managers, partners, supervisors,
employees, attorneys, agents and consultants, and their predecessors,
successors and assigns.

 

(b)                                 When used in this Agreement, the word “Claims”
means each and every claim, complaint, cause of action, and grievance, whether
known or unknown and whether fixed or contingent, and each and every promise,
assurance, contract, representation, guarantee, warranty, right and commitment
of any kind, whether known or unknown and whether fixed or contingent.

 

3.                                       In consideration of the promises
of the Employer set forth in this Agreement and the Employment Agreement, and
intending to be legally bound, Employee hereby irrevocably remises, releases
and forever discharges all Releasees of and from any and all Claims that he (on
behalf of either himself or any other person or persons) ever had or now has
against any and all of the Releasees, or which he (or his heirs, executors,
administrators or assigns or any of them) hereafter can, shall or may have
against any and all of the Releasees, for or by reason of any cause, matter,
thing, occurrence or event whatsoever through the effective date of this
Agreement.  Employee acknowledges and
agrees that the Claims released in this paragraph include, but are not limited
to, (a) any and all Claims based on any law, statute or constitution or
based on contract or in tort on common law, and (b) any and all Claims
based on or arising under any civil rights laws, such as any Pennsylvania
employment laws, or Title VII of the Civil Rights Act of 1964 (42 U.S.C. §
2000e et seq.), or the Federal Age Discrimination in Employment Act (29 U.S.C.
§ 621 et seq.) (hereinafter referred to as the “ADEA”), and (c) any and
all Claims under any grievance or complaint procedure of any kind, and (d) any
and all Claims based on or arising out of or related to his recruitment by,
employment with, the termination of his employment with, his performance of any
services in any capacity for, or any business transaction with, each or any of
the Releasees.  Employee also
understands, that by signing this Agreement, he is waiving all Claims against
any and all of the Releasees released by this Agreement; provided, however,
that as set forth in section 7 (f) (1) (c) of the ADEA, as added
by the Older Workers Benefit Protection Act of 1990, nothing in this Agreement
constitutes or shall (i) be construed to constitute a waiver by Employee
of any rights or claims that may arise after this Agreement is executed by
Employee, or (ii) impair Employee’s right to file a charge with the U.S.
Equal Employment Opportunity Commission (“EEOC”) or any state agency or to
participate in an investigation or proceeding conducted by the EEOC or any
state agency.

 

4.                                       In consideration of the promises of the
Employee set forth in this Agreement and the Employment Agreement and intending
to be legally bound, Employer hereby irrevocably remises, releases and forever
discharges Employee and his heirs, successors and assigns from any and all
Claims that the Employer ever had or now has though the effective date of this
Agreement.

 

CONFIDENTIAL

 

14

 

5.                                       Employee and Employer covenant
and agree not to sue each other or any of the Releasees for any Claims released
by this Agreement and to waive any recovery related to any Claims covered by
this Agreement.

 

6.                                       Employee agrees to provide
reasonable transition assistance to Employer (including without limitation
assistance on regulatory matters, operational matters and in connection with
litigation) for a period of one year from the execution of this Agreement at no
additional cost; provided, such assistance shall not unreasonably interfere
with Employee’s pursuit of gainful employment or result in Employee not having
a separation from service (as defined in Section 409A of the Internal
Revenue Code of 1986).  Any assistance
beyond this period will be provided at a mutually agreed cost.  Employee further agrees that he will return
to the Employer all property in his possession, including, but not limited to,
keys, identification cards and credit cards, files, records, publications,
address lists and documents that belong to each or any of the Releasees.  Such documents also include, without
limitation, any documents created or made by Employee during his employment
with the Employer.  

 

7.                                       Employee agrees that, except as
specifically provided in this Agreement and the Employment Agreement, there are
no compensation, benefits, or other payments due or owed to him by each or any
of the Releasees.

 

8.                                       Except where disclosure has been
made by the Company pursuant to applicable federal or state law, rule or
regulation, Employee agrees that the terms of this Agreement are confidential
and that he will not disclose or publicize the terms of this Agreement and the
amounts paid or agreed to be paid pursuant to this Agreement to any person or
entity, except to his spouse, his attorney, his accountant, and to a government
agency for the purpose of payment or collection of taxes or application for
unemployment compensation benefits. 
Employee agrees that his disclosure of the terms of this Agreement to
his spouse, his attorney and his accountant shall be conditioned upon his
obtaining agreement from them, for the benefit of the Employer, not to disclose
or publicize to any person or entity the terms of this Agreement and the
amounts paid or agreed to be paid under this Agreement. Further, Employer and
Employee agree not to make any false, misleading, defamatory or disparaging
communications about the other party (including without limitation Employer’s
products, services, partners, investors or personnel) and to refrain from
taking any action designed to harm the public perception of the other party or
the Releasees.  Employee further agrees
that he has disclosed to Employer all information, if any, in his possession,
custody or control related to any legal, compliance or regulatory obligations
of Employer and any failures to meet such obligations.

 

9.                                       The terms of this Agreement are
not to be considered as an admission on behalf of either party.  Neither this Agreement nor its terms shall be
admissible as evidence of any liability or wrongdoing by each or any of the
Releasees in any judicial, administrative or other proceeding now pending or
hereafter instituted by any person or entity. 
The Employer is entering into this Agreement solely for the purpose of
effectuating a mutually satisfactory separation of Employee’s employment.

 

10.                                 All provisions of this Agreement
are severable and if any of them is determined to be invalid or unenforceable
for any reason, the remaining provisions and portions of this Agreement shall
be unaffected thereby and shall remain in full force to the fullest extent
permitted by law.

 

11.                                 This Agreement shall be governed
by and interpreted under and in accordance with the laws of Pennsylvania.  Any suit, claim or cause of action arising
under or related to this Agreement shall be submitted by the parties hereto to
the exclusive jurisdiction of the courts of Pennsylvania or to the federal
courts located therein if they otherwise have jurisdiction.  The breach of any promise in this Agreement
by any party shall not invalidate this Agreement or the release and shall not
be a defense to the enforcement of the Agreement against any party.

 

12.                                 This Agreement constitutes a
complete and final agreement between the parties and supersedes and replaces
all prior or contemporaneous agreements, offer letters, negotiations, or
discussions relating to the subject matter of this Agreement.  With the exception of the Employment
Agreement, no other agreement shall be binding upon each or any of the
Releasees, including, but not limited to, any agreement made hereafter, unless
in writing and signed by an officer of the Employer, and only such agreement
shall be binding against the Employer.

 

13.                                 Employee is advised, and
acknowledges that he has been advised, to consult with an attorney before
signing this Agreement.

 

CONFIDENTIAL

 

15

 

14.                                 Employee acknowledges that he is
signing this Agreement voluntarily, with full knowledge of the nature and
consequences of its terms.

 

15.                                 All executed copies of this
Agreement and photocopies thereof shall have the same force and effect and
shall be as legally binding and enforceable as the original.

 

16.                                 Employee acknowledges that he has
been given up to twenty-one (21) days within which to consider this Agreement
before signing it.  Subject to paragraph
17 below, this Agreement will become effective on the date of Employee’s
signature hereof.

 

17.                                 For a period of seven (7) calendar
days following his signature of this Agreement, Employee may revoke the
Agreement, and the Agreement shall not become effective or enforceable until
the seven (7) day revocation period has expired.  Employee may revoke this Agreement at any
time within that seven (7) day period, by sending a written notice of
revocation to the
                                                        .  Such written notice must be actually received
by the Employer within that seven (7) day period in order to be
valid.  If a valid revocation is received
within that seven (7) day period, this Agreement shall be null and void
for all purposes.  Payment of the
severance pay amount set forth in the Employment Agreement will be paid in the
manner and at the time(s) described in the Employment Agreement.

 

IN WITNESS WHEREOF, the
Parties have read, understand and do voluntarily execute this Separation
Agreement and General Release which consists of four pages.

 

 

	
  EMPLOYER

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
						

 

CONFIDENTIAL

 

16Exhibit 10.4

 

EMPLOYMENT
AGREEMENT

 

This
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on this 31st day of
December, 2008 (the “Commencement Date”) by and between Penn National Gaming, Inc.,
a Pennsylvania corporation (the “Company”), and William J. Clifford, an
individual residing in Pennsylvania (“Executive”).

 

WHEREAS,
Executive and Company are party to that certain Employment Agreement dated June 10,
2005 (the “Existing Agreement”).

 

WHEREAS, the
parties wish to replace the Existing Agreement with the terms set forth below
in this Agreement, which are intended to be in compliance with the requirements
of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”,
see also Section 21 hereof).

 

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 Senior Vice President and Chief Financial Officer 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 Chief Executive Officer and the Board of
Directors of the Company (the “Board”). Executive’s principal place of
employment shall be in Wyomissing, Pennsylvania.

 

1.2.                              Term.
The term of this Agreement shall begin on the date hereof and shall terminate
at the close of business on June 10, 2011 (the “Initial Term”), unless
earlier terminated in accordance with Section 3 hereof.  The term of this Agreement may be renewed for
additional periods (each, a “Renewal Term” and, together with the Initial Term,
the “Employment Term”) only upon the execution of a written renewal by the
parties hereto.  Notwithstanding the
foregoing to the contrary, Sections 5 through 21 shall survive any termination
of the Employment Term until the expiration of any applicable time periods set
forth in Sections 5, 6 and 7

 

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, or providing oversight with respect to his personal investments,
so long as such service does not materially interfere with Executive’s duties
hereunder.

 

CONFIDENTIAL

 

1

 

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 at least Seven Hundred Twenty Eight Thousand Dollars
($728,000), 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 increase in
Base Salary or other compensation shall be made at the discretion of the Board
or the compensation committee of the Board (the “Compensation Committee”).

 

2.2.                              Cash
Bonuses.  Executive shall participate
in the Company’s annual incentive compensation plan applicable to Peer
Executives.  Each annual bonus award
earned in a fiscal year shall be paid pursuant to the terms of the annual
incentive plan document (if any) by March 15 of the immediately following
fiscal year, unless the written bonus plan provides for a different payment
date or unless Executive shall elect to defer the receipt of such bonus award
pursuant to an arrangement that meets the requirements of Section 409A.

 

2.3.                              Equity
Compensation.  The Company may grant
to Executive options or other equity compensation pursuant to, and subject to
the terms and conditions of, the then current equity compensation plan of Penn
National Gaming, Inc.  The
Compensation Committee shall set the amount and terms of such options or other
equity compensation.

 

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.

 

2.5.                              Vacation,
Sick Leave and Holidays.  Executive
shall be entitled in each calendar year to four (4) weeks of paid vacation
time.  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
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 and
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. 
Such reimbursements shall be made in such manner and at such times as
provided in the reimbursement policies applicable to Peer Executives.

 

CONFIDENTIAL

 

2

 

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’s employment at any time without Cause (as such term is defined in
subsection (b) below) upon 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’s employment 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 convicted of a felony or any misdemeanor involving allegations of
fraud, theft, perjury or conspiracy;

 

(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 material Company policy or any material term hereof, including,
without limitation, Sections 4 through 7 and, in each case, fails to cure such
breach within 15 days after receipt of written notice thereof; or

 

(iv)                              Executive misappropriates
corporate funds as determined in good faith by the Board.

 

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).

 

3.3.                              Termination
for Death or Disability.  In the
event of the death or total disability of Executive, Executive’s employment
shall terminate effective as of the date of Executive’s death or
disability.  The term “disability” shall
have the definition set forth in the Company’s Long Term Disability Insurance
Policy in effect at the time of such determination.

 

3.4.                              Payments
Due Upon Termination.

 

(a)                                  Already
Accrued Base Salary and Expense. 
Upon any termination of employment during the Employment Term, Executive
shall be entitled to receive any amounts due for Base Salary accrued but unpaid
through the effective date of termination, and such amounts shall be paid in
accordance with the Company’s then current payroll system for Peer
Executives.  Any expenses incurred but
not reimbursed through the effective date of termination shall be paid at such
time and in such manner as provided under the Company’s expense reimbursement
policy applicable to Peer Executives.

 

CONFIDENTIAL

 

3

 

(b)                                 Severance
Pay and Benefits.  Subject to the
conditions in subsection (c) hereof, if Executive’s employment is
terminated under Section 3.1(a) or Section 3.3 or if Executive
delivers a written notice of resignation within 30 days after the expiration of
the Employment Term, the Company does not offer to renew the Employment Term
during such 30-day period on terms no less favorable in the aggregate to the
Executive than those contained herein and Executive thereupon terminates his
employment at the end of such 30-day period, then Executive will be entitled to
receive, and the Company will provide Executive with, the following severance pay
and benefits (in addition to any amounts payable under subsection (a) hereof);
provided, for purposes of Section 409A, each payment (whether an
installment or lump sum) of severance pay under this subsection (b) shall
be considered a separate payment:

 

(i)                                     Amount of Post-Employment Base Salary and
Bonus.  The
Company shall pay to Executive an amount equal to the product of (A) the
sum of (1) Executive’s monthly Base Salary at the highest rate in effect
during the 24-month period immediately preceding the date of Executive’s
termination of employment (the “Termination Date”), and (2) Executive’s
monthly bonus value (determined by dividing by 12 the highest amount of annual
cash bonus compensation paid to Executive in respect of either the first or
second full calendar year immediately preceding the Termination Date; and (B) the
greater of (1) the number of full and partial months remaining in the
Employment Term as of the Termination Date, and (2) 24 (with the period
described in clause (B) hereof being referred to as the “Severance Period”).

 

(ii)                                  Payment of
Post-Employment Base Salary and Bonus. 
The amount described in subsection (b)(i) shall be paid to
Executive in cash in two lump-sum payments as follows: (A) 75% of such
amount shall be paid within 15 days after the Termination Date but no later
than March 15 of the calendar year following the year in which this
payment vests; and (B) the remaining 25% of such amount shall be paid in a
lump sum by March 15 of the calendar year following the calendar year in
which this payment vests.

 

(iii)                               Continued Medical
Benefits Coverage.  During the
Severance Period, the Company shall provide Executive, and, if any, Executive’s
spouse and dependents with medical benefits coverage substantially similar to
the coverage in effect on the effective date of termination.  After the Severance Period, Executive and his
dependents will have the opportunity under the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1986 (“COBRA”) to elect COBRA continuation
coverage.  If elected in a timely manner,
COBRA coverage generally will commence as of the first day of the next calendar
month after the end of the Severance Period and will end on the last day of the
18th month thereafter (unless an earlier end date
or an extension is required under COBRA).

 

(iv)                              Vesting of Stock
Options.  All options granted to
Executive that would have vested during the Severance Period shall vest as of
the Termination Date, provided, however, that any such options may not be
exercised during the Severance Period until the same time(s) as such
options would have vested had Executive continued to be employed through the
Severance Period.  Any options that would
not have vested during the Severance Period shall terminate on the Termination
Date.

 

CONFIDENTIAL

 

4

 

(c)                                  Release
Agreement.  Executive’s entitlement
to any severance pay and benefit subsidies under Section 3(b) is
conditioned upon Executive’s first entering into a release agreement in substantially
the form attached hereto as Exhibit “A”; provided, such release agreement
shall be delivered to Executive within 7 days after the Termination Date.  Any payment of severance pay or benefit
subsidies due under subsection (b) hereof shall be delayed until after the
expiration of the 7-day revocation period required for an effective age-based
release, and any amount otherwise due under said subsection (b) before the
end of such revocation period shall be paid upon the day after the end of such
period in a single lump-sum payment, but not later than March 15 of the
calendar year following the calendar year in which the Termination Date occurs.

 

(d)                                 No
Other Payments or Benefits.  Except
as otherwise provided in this Section 3.4, Section 8 or Section 9,
no other payments or benefits shall be due under this Agreement to Executive

 

3.5.                              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
other employment that would materially 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.

 

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.

 

CONFIDENTIAL

 

5

 

6.                                       Non-Competition.

 

(a)                                  As
used herein, the term “Restriction Period” shall mean a period equal to: (i) the
remainder of the Employment Term in effect on the effective date of termination
if Executive resigns other than for Good Reason, or (ii) the Severance
Period if Executive’s employment is terminated for one of the events specified
in Section 3.4(b).  In the event the
Executive is terminated by the Company for one of the events specified in Section 3.4(b),
during the Severance Period Executive may elect to terminate the Restriction
Period at any time by delivering written notice to the Company that Executive
has made such election and that, in consideration therefore, is forfeiting the
right to receive any payment or the right to receive any future payments under Section 3.4(b) or
an equivalent amount under Section 8; provided however, if Executive
elects to reduce the geographic limitation of this non-competition provision,
and Executive has already received payment pursuant to Section 3.4(b) or
an equivalent amount under Section 8, Executive shall reimburse the
Company for that portion of the severance payments already received by
Executive which relates to the number of days left in the Severance
Period.  For clarity, regardless of
whether Executive shall receive payments pursuant to Section 3.4(b) or
Section 8 of this Agreement in order to reduce the Restriction Period,
Executive shall only be required to forfeit or re-pay the amounts that
Executive would have received pursuant to Section 3.4(b).  In that case, Executive may nevertheless
receive payments and/or need not reimburse the Company for any amounts paid to
Executive pursuant to Section 8 which are in excess of the payments and
benefits that Executive would have been entitled to receive under Section 3.4(b).  If Executive terminates his employment for
good Reason, then Executive shall not be subject to the provisions of this Section 6.

 

(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, or is actively seeking to own or operate, a
gaming or pari-mutuel located within North America.

 

(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.

 

(d)                                 Executive acknowledges that the covenants contained in
Sections 5 through 7 hereof 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 such
covenants are reasonable given the nature of this Agreement and the position
that Executive will hold within 

 

CONFIDENTIAL

 

6

 

the Company.  Executive further agrees to disclose the
existence and terms of such covenants to any employer that Executive works for
during the Restriction Period.

 

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 executive or
management 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.                                       Change
of Control.

 

8.1.                              Consideration

 

(a)                                  Change
of Control.  In the event of a Change
of Control (as defined below), Executive shall be entitled to receive a cash
payment in an amount equal to the product of three times the sum of (i) the
highest annual rate of Base Salary in effect for Executive during the 24-month
period immediately preceding the effective date of the Change in Control (the “Trigger
Date”) and (ii) the highest amount of annual cash bonus compensation paid
to Executive in respect of either the first or second full calendar year
immediately preceding the Trigger Date.

 

(b)                                 Restrictive
Provisions.  As consideration for the
foregoing payments, Executive agrees not to challenge the enforceability of any
of the restrictions contained in Sections 5, 6 or 7 of this Agreement upon or
after the occurrence of a Change of Control.

 

8.2.                              Payment
Terms.  This change of control
payment shall be made in two lump sum payments as follows: (i) 75% of such
amount shall be paid to Executive in a lump-sum cash payment upon the Trigger
Date; and (ii) 25% of such amount shall be paid to Executive in a lump-sum
cash payment upon the 75th day following the Trigger Date, but not later
than March 15 of the calendar year following the calendar year in which
the Trigger Date occurs.  Notwithstanding
any of the foregoing to the contrary, the payment contemplated by clause (ii) shall
be paid immediately upon the earlier occurrence of any of the following: (a) Executive’s
employment is terminated by the Company; or (b) Executive terminates
employment for Good Reason (as defined below).

 

8.3.                              Certain
Other Terms.  In the event payments
are being made to Executive under this Section 8, no payments shall be due
under Section 3.4(b)(i) with respect to any termination of Executive’s
employment following a Change of Control. 
At the option of the Company, the Company may require Executive to
execute the release attached hereto as Exhibit A; provided, however, that
this requirement shall not in any way alter the timing of the payments to be
made under Section 8.2.  In the
event that the Company announces that it has signed a definitive agreement with
respect to a Change of Control, the provisions of this Section 8 shall
continue to apply to Executive if, during the period after the public
announcement and immediately preceding the date such transaction is consummated
or terminated, the Company terminates 

 

CONFIDENTIAL

 

7

 

Executive’s employment without
Cause or due to a disability; provided, however, that, in such event, any
amount payable under this Section 8 shall be reduced by any payments
received pursuant to Section 3.4(b)(i).

 

8.4.                              Defined
Terms.

 

(a)                                  The
term Change of Control shall have the meaning given to such term in the Company’s
2008 Long Term Incentive Compensation Plan, as such may be amended or modified.

 

(b)                                 Good
Reason.  The occurrence of any of the
following events that the Company fails to cure within 10 days after receiving
written notice thereof from Executive: (i) assignment to Executive of any
duties inconsistent in any material respect with Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities or inconsistent with Executive’s legal or fiduciary
obligations; (ii) any reduction in Executive’s compensation or substantial
reduction in Executive’s benefits taken as a whole; (iii) any travel
requirements materially greater than Executive’s travel requirements prior to
the Change of Control; or (iv) breach of any material term of this
Agreement by the Company.

 

9.                                       Certain
Tax Matters.

 

9.1.                              Generally.  In the event Executive becomes entitled to
receive the payments (the “Severance Payments”) provided under Section 3
or Section 8 hereof or under any other plan or arrangement providing for
payments under circumstances similar to those contemplated by such sections,
and if any of the Severance Payments will be subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), the Company shall pay to Executive at the time specified
for such payments, an additional amount (the “Gross-Up Payment”) such that the
net amount retained by Executive shall be equal to the amount of the Severance
Payments after deducting normal and ordinary taxes but not deducting (a) the
Excise Tax and (b) any federal, state and local income tax and Excise Tax
payable on the payment provided for by this Section 9.

 

9.2.                              Illustration.  For example, if the Severance Payments are
$1,000,000 and if Executive is subject to the Excise Tax, then the Gross-Up
Payment will be such that Executive will retain an amount of $1,000,000 less
only any normal and ordinary taxes on such amount. The Excise Tax and federal,
state and local taxes and any Excise Tax on the payment provided by this Section 9
will not be deemed normal and ordinary taxes.

 

9.3.                              Certain
Terms.  For purposes of determining
whether any of the Severance Payments will be subject to the Excise Tax and the
amount of such Excise Tax, the following will apply:

 

(a)                                  Any
other payments or benefits received or to be received by Executive in
connection with a Change in Control of the Company or Executive’s termination
of employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company shall be treated as “parachute
payments” within the meaning of Section 280G(b)(2) of the Code, and
all “excess parachute payments” within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the opinion of tax 

 

8

 

counsel selected by the Company’s
Compensation Committee and acceptable to Executive, such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of Section 280G(b)(3) of
the Code, or are otherwise not subject to the Excise Tax;

 

(b)                                 The
amount of the Severance Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (y) the total amount of the
Severance Payments or (z) the amount of excess parachute payments within
the meaning of Section 280G(b)(1) (after applying
subsection (a), above); and

 

(c)                                  The
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with proposed,
temporary or final regulations under Sections 280G(d)(3) and (4) of
the Code or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive on the Trigger Date, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes; and

 

(d)                                 In
the event that the amount of Excise Tax attributable to Severance Payments is
subsequently determined to be less than the amount taken into account hereunder
at the time of determination then, subject to applicable law, appropriate
adjustments will be made with respect to future payment(s) hereunder (if
any).  If Executive becomes entitled to a
Gross-Up Payment in excess of the amount initially determined and paid under Section 9.1,
the Company shall pay the additional Gross-Up Payment within five (5) business
days of the date on which the Company is notified of the amount of the Gross-Up
Payment, but only to the extent that the Gross-Up Payment would be made by the March 15
following the calendar year in which the Executive would be considered to have
vested in the Gross-Up Payment for purposes of Section 409A.  To the extent any Gross-Up Payment is greater
than initially determined and paid under Section 9.1 and cannot be made by
the March 15 following the end of the calendar year in which the Executive
vests in such payment, then the Company shall instead make the payment promptly
following the date on which the Executive remits the taxes to which the
Gross-Up Payment relates to the applicable taxing authority, and in no event
later than the last day of the calendar year following the calendar year in
which such taxes are remitted; provided, however, that if the Executive is a
key employee (within the meaning of Section 409A) and the Gross-Up Payment
would be considered deferred compensation payable on account of Executive’s
separation from service (as defined in Section 409A), payment will in no
event be made prior to 6 months after the date of Executive’s separation from
service.

 

9.4.                              Fees
and Expenses.  The Company shall
reimburse Executive for all reasonable legal fees and expenses incurred by
Executive in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code or any
regulations pertaining thereto to any payment or benefit provided
hereunder.  Any expense reimbursements

 

CONFIDENTIAL

 

9

 

made to satisfy the terms of this section shall be paid as soon as
practicable but no later than 90 days after Employee submits evidence of such
expenses to the Company (which payment date shall in no event be later than the
last day of the calendar year following the calendar year in which the expense
was incurred).  The amount of such
reimbursements during any calendar year shall not affect the benefits provided
in any other calendar year, and the right to any benefits under this paragraph
shall not be subject to liquidation or exchange for another benefit.

 

10.                                 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
employment.

 

11.                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws (and not the law
of conflicts) of the Commonwealth of Pennsylvania.

 

12.                                 Jurisdiction.  The parties hereby irrevocably consent to the
jurisdiction of the courts of the Commonwealth of Pennsylvania 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 Wyomissing, Pennsylvania, which
shall be the exclusive and only proper forum for adjudicating such a claim.

 

13.                                 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:

 

Penn National Gaming, Inc.

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

Fax: (610) 376-2842

Attention: Chairman

 

If to Executive, to:

 

His then current home address.

 

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.

 

CONFIDENTIAL

 

10

 

14.                                 Contents
of Agreement; Amendment and Assignment.

 

14.1.                        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, including
without limitation, the Initial Agreement which is hereby terminated.  This Agreement cannot be changed, modified,
extended, waived or terminated except upon a written instrument signed by the
party against which it is to be enforced.

 

14.2.                        Executive may not assign any of his rights or
obligations under this Agreement.  The
Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of
its assets or business by means of liquidation, dissolution, merger, consolidation, transfer
of assets or otherwise.

 

15.                                 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 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.

 

16.                                 Remedies.

 

16.1.                        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.

 

16.2.                        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 discretion.

 

16.3.                        Executive
acknowledges that money damages would not be a sufficient remedy for any breach
of this Agreement by Executive and that the Company shall be entitled to
specific performance and injunctive relief as remedies for any such breach, in
addition to all other remedies available at law or equity to the Company.

 

17.                                 Construction.  This
Agreement is the result of thoughtful negotiations and reflects an arms’ length
bargain between two sophisticated parties, each represented by counsel.  The parties agree that, if this Agreement
requires interpretation, neither party should be considered “the drafter” nor
be entitled to any presumption that ambiguities are to be resolved in his or
her favor.

 

CONFIDENTIAL

 

11

 

18.                                 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.

 

19.                                 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.

 

20.                                 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.

 

21.                                 Section 409A.  This Agreement is intended to comply with the
requirements of Section 409A and shall be construed accordingly.  Any payments or distributions to be made to
Employee under this Agreement upon a separation from service (as defined in Section 409A)
of amounts classified as “nonqualified deferred compensation” for purposes of
Code Section 409A, shall in no event be made or commence until 6 months
after such separation from service.  Each
payment of nonqualified deferred compensation under this Agreement shall be
treated as a separate payment for purposes of Code Section 409A.  Any reimbursements made pursuant to this
Agreement shall be paid as soon as practicable but no later than 90 days after
Employee submits evidence of such expenses to Corporation (which payment date
shall in no event be later than the last day of the calendar year following the
calendar year in which the expense was incurred).  The amount of such reimbursements during any
calendar year shall not affect the benefits provided in any other calendar
year, and the right to any such benefits shall not be subject to liquidation or
exchange for another benefit.

 

CONFIDENTIAL

 

12

 

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

 

 

	
   

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter M.
  Carlino

  
	
   

  	
  Name:

  	
  Peter M. Carlino

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ William J.
  Clifford

  
	
   

  	
  William J. Clifford

  
				

 

CONFIDENTIAL

 

13

 

Exhibit A

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This is a Separation
Agreement and General Release (hereinafter referred to as the “Agreement”)
between
                          
(hereinafter referred to as the “Employee”) and Penn National Gaming, Inc.
(hereinafter referred to as the “Employer”). 
In consideration of the mutual promises and commitments made in this
Agreement, and intending to be legally bound, Employee, on the one hand, and
the Employer on the other hand, agree to the terms set forth in this Agreement.

 

1.                                       Employer and Employee hereby acknowledge that
[the Company notified Employee/Employee notified the Company on
                                      
that Executive’s employment pursuant to that certain Employment Agreement
executed on
                          
(“Employment Agreement”) would be terminated as of
[                    ].  Upon the termination of the Employment
Agreement, Employee will be subject to the obligations and be the beneficiary
of the surviving benefits, all as described in the Employment Agreement.  Employee’s last day of work will be
                        .

 

2.                                       (a)                                  When used in this Agreement, the word “Releasees”
means the Employer and all or any of its past and present parent, subsidiary
and affiliated corporations, companies, partnerships, joint ventures and other
entities and their groups, divisions, departments and units, and their past and
present directors, trustees, officers, managers, partners, supervisors,
employees, attorneys, agents and consultants, and their predecessors,
successors and assigns.

 

(b)                                 When used in this Agreement, the word “Claims”
means each and every claim, complaint, cause of action, and grievance, whether
known or unknown and whether fixed or contingent, and each and every promise,
assurance, contract, representation, guarantee, warranty, right and commitment
of any kind, whether known or unknown and whether fixed or contingent.

 

3.                                       In consideration of the promises
of the Employer set forth in this Agreement and the Employment Agreement, and
intending to be legally bound, Employee hereby irrevocably remises, releases
and forever discharges all Releasees of and from any and all Claims that he (on
behalf of either himself or any other person or persons) ever had or now has
against any and all of the Releasees, or which he (or his heirs, executors,
administrators or assigns or any of them) hereafter can, shall or may have
against any and all of the Releasees, for or by reason of any cause, matter,
thing, occurrence or event whatsoever through the effective date of this
Agreement.  Employee acknowledges and
agrees that the Claims released in this paragraph include, but are not limited
to, (a) any and all Claims based on any law, statute or constitution or
based on contract or in tort on common law, and (b) any and all Claims
based on or arising under any civil rights laws, such as any Pennsylvania
employment laws, or Title VII of the Civil Rights Act of 1964 (42 U.S.C. §
2000e et seq.), or the Federal Age Discrimination in Employment Act (29 U.S.C.
§ 621 et seq.) (hereinafter referred to as the “ADEA”), and (c) any and
all Claims under any grievance or complaint procedure of any kind, and (d) any
and all Claims based on or arising out of or related to his recruitment by,
employment with, the termination of his employment with, his performance of any
services in any capacity for, or any business transaction with, each or any of
the Releasees.  Employee also
understands, that by signing this Agreement, he is waiving all Claims against
any and all of the Releasees released by this Agreement; provided, however,
that as set forth in section 7 (f) (1) (c) of the ADEA, as added
by the Older Workers Benefit Protection Act of 1990, nothing in this Agreement
constitutes or shall (i) be construed to constitute a waiver by Employee
of any rights or claims that may arise after this Agreement is executed by
Employee, or (ii) impair Employee’s right to file a charge with the U.S.
Equal Employment Opportunity Commission (“EEOC”) or any state agency or to
participate in an investigation or proceeding conducted by the EEOC or any
state agency.

 

4.                                       In consideration of the promises of the
Employee set forth in this Agreement and the Employment Agreement and intending
to be legally bound, Employer hereby irrevocably remises, releases and forever
discharges Employee and his heirs, successors and assigns from any and all
Claims that the Employer ever had or now has though the effective date of this
Agreement.

 

CONFIDENTIAL

 

14

 

5.                                       Employee and Employer covenant
and agree not to sue each other or any of the Releasees for any Claims released
by this Agreement and to waive any recovery related to any Claims covered by
this Agreement.

 

6.                                       Employee agrees to provide
reasonable transition assistance to Employer (including without limitation
assistance on regulatory matters, operational matters and in connection with
litigation) for a period of one year from the execution of this Agreement at no
additional cost; provided, such assistance shall not unreasonably interfere
with Employee’s pursuit of gainful employment or result in Employee not having
a separation from service (as defined in Section 409A of the Internal
Revenue Code of 1986).  Any assistance
beyond this period will be provided at a mutually agreed cost.  Employee further agrees that he will return
to the Employer all property in his possession, including, but not limited to,
keys, identification cards and credit cards, files, records, publications, address
lists and documents that belong to each or any of the Releasees.  Such documents also include, without
limitation, any documents created or made by Employee during his employment
with the Employer.  

 

7.                                       Employee agrees that, except as
specifically provided in this Agreement and the Employment Agreement, there are
no compensation, benefits, or other payments due or owed to him by each or any
of the Releasees.

 

8.                                       Except where disclosure has been
made by the Company pursuant to applicable federal or state law, rule or
regulation, Employee agrees that the terms of this Agreement are confidential
and that he will not disclose or publicize the terms of this Agreement and the
amounts paid or agreed to be paid pursuant to this Agreement to any person or
entity, except to his spouse, his attorney, his accountant, and to a government
agency for the purpose of payment or collection of taxes or application for
unemployment compensation benefits. 
Employee agrees that his disclosure of the terms of this Agreement to
his spouse, his attorney and his accountant shall be conditioned upon his
obtaining agreement from them, for the benefit of the Employer, not to disclose
or publicize to any person or entity the terms of this Agreement and the
amounts paid or agreed to be paid under this Agreement. Further, Employer and
Employee agree not to make any false, misleading, defamatory or disparaging
communications about the other party (including without limitation Employer’s
products, services, partners, investors or personnel) and to refrain from
taking any action designed to harm the public perception of the other party or
the Releasees.  Employee further agrees
that he has disclosed to Employer all information, if any, in his possession,
custody or control related to any legal, compliance or regulatory obligations
of Employer and any failures to meet such obligations.

 

9.                                       The terms of this Agreement are
not to be considered as an admission on behalf of either party.  Neither this Agreement nor its terms shall be
admissible as evidence of any liability or wrongdoing by each or any of the
Releasees in any judicial, administrative or other proceeding now pending or
hereafter instituted by any person or entity. 
The Employer is entering into this Agreement solely for the purpose of
effectuating a mutually satisfactory separation of Employee’s employment.

 

10.                                 All provisions of this Agreement
are severable and if any of them is determined to be invalid or unenforceable
for any reason, the remaining provisions and portions of this Agreement shall
be unaffected thereby and shall remain in full force to the fullest extent
permitted by law.

 

11.                                 This Agreement shall be governed
by and interpreted under and in accordance with the laws of Pennsylvania.  Any suit, claim or cause of action arising
under or related to this Agreement shall be submitted by the parties hereto to
the exclusive jurisdiction of the courts of Pennsylvania or to the federal
courts located therein if they otherwise have jurisdiction.  The breach of any promise in this Agreement
by any party shall not invalidate this Agreement or the release and shall not
be a defense to the enforcement of the Agreement against any party.

 

12.                                 This Agreement constitutes a
complete and final agreement between the parties and supersedes and replaces
all prior or contemporaneous agreements, offer letters, negotiations, or
discussions relating to the subject matter of this Agreement.  With the exception of the Employment
Agreement, no other agreement shall be binding upon each or any of the Releasees,
including, but not limited to, any agreement made hereafter, unless in writing
and signed by an officer of the Employer, and only such agreement shall be
binding against the Employer.

 

13.                                 Employee is advised, and
acknowledges that he has been advised, to consult with an attorney before
signing this Agreement.

 

CONFIDENTIAL

 

15

 

14.                                 Employee acknowledges that he is
signing this Agreement voluntarily, with full knowledge of the nature and
consequences of its terms.

 

15.                                 All executed copies of this
Agreement and photocopies thereof shall have the same force and effect and
shall be as legally binding and enforceable as the original.

 

16.                                 Employee acknowledges that he has
been given up to twenty-one (21) days within which to consider this Agreement
before signing it.  Subject to paragraph
17 below, this Agreement will become effective on the date of Employee’s
signature hereof.

 

17.                                 For a period of seven (7) calendar
days following his signature of this Agreement, Employee may revoke the Agreement,
and the Agreement shall not become effective or enforceable until the seven (7) day
revocation period has expired.  Employee
may revoke this Agreement at any time within that seven (7) day period, by
sending a written notice of revocation to the                                                   .  Such written notice must be actually received
by the Employer within that seven (7) day period in order to be
valid.  If a valid revocation is received
within that seven (7) day period, this Agreement shall be null and void
for all purposes.  Payment of the
severance pay amount set forth in the Employment Agreement will be paid in the
manner and at the time(s) described in the Employment Agreement.

 

IN WITNESS WHEREOF, the
Parties have read, understand and do voluntarily execute this Separation
Agreement and General Release which consists of four pages.

 

 

	
  EMPLOYER

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
							

 

CONFIDENTIAL

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}]]