Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as
of this 5th day of February, 2008 by and between Penn National Gaming, Inc.
(the “Company”) and Tim Wilmott (“Executive”).

 

WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment and Executive desires to enter
into this Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.

 

NOW, THEREFORE, in consideration of the
promises and mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are mutually acknowledged,
the Company and Executive 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 the President and Chief Operating 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 Peter M. Carlino or the Board of Directors
of the Company (the “Board”). 
Executive also agrees to serve as an officer and/or director of any
subsidiary of the Company, without additional compensation.  Executive’s principal place of employment
shall be in Wyomissing, Pennsylvania.

 

1.2.          Term.  The initial term of this Agreement (the “Initial
Term”) shall begin on February 4, 2008 (the “Commencement Date”) and shall
terminate at the close of business on the fifth (5th) anniversary of
the Closing Date (as such term is defined in that certain Agreement and Plan of
Merger by and among the Company, PNG Acquisition Company Inc., and PNG Merger
Sub Inc., dated as of June 15, 2007), unless earlier terminated in
accordance with Section 3 hereof. 
This Agreement shall automatically renew for additional one-year periods
(each, a “Renewal Term” and, together with the Initial Term, the “Employment
Term”) unless either party has delivered written notice of non-renewal
at least sixty (60) days prior to the start of the next Renewal Term or unless
earlier terminated in accordance with Section 3 hereof.

 

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.

 

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 one million 

 

 

two hundred and fifty thousand
dollars ($1,250,000), 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 and his Base Salary may be increased, but not decreased,
at the discretion of the compensation committee of the Board (the “Compensation
Committee”).

 

2.2.          Cash
Bonuses.  Executive shall
participate in the Company’s incentive compensation plan for senior management
as such may be adopted, amended and approved, from time to time, by the
Compensation Committee.  Executive’s
target bonus for each calendar year shall be determined by the Compensation
Committee within ninety (90) days following the start of each calendar year.

 

2.3.          Other
Benefits and Perquisites. 
Executive shall be entitled to participate in all other employee benefit
plans and programs, including, without limitation, health, vacation and
retirement, 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. 
Executive shall be entitled to such other perquisites as are made
available generally to other Peer Executives from time to time.

 

2.4.          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.

 

2.5.          Life
Insurance.  During the
Employment Term, the Company will maintain, at its sole cost and expense, a
term life insurance policy for Executive with a face value equal to three (3) times
Executive’s Base Salary.  Executive shall
have the right to name the beneficiary of such term life insurance policy.

 

2.6.          Reimbursement
of Expenses.  Executive is
authorized to incur reasonable business expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall promptly reimburse
him for all such reasonable business expenses incurred in connection with
carrying out the business of the Company, subject to documentation in
accordance with the Company’s policy, as in effect from time to time.

 

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

 

3.1.          Termination by the Company.

 

(a)             Without Cause.  The Company may terminate Executive at any
time without Cause (as such term is defined in subsection (b) below)
upon 

 

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delivery of written notice to
Executive, which notice shall set forth the effective date of such termination.

 

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

 

(i)            acts of personal dishonesty, gross
negligence or willful misconduct on the part of Executive in the course of, and
directly relating to, his employment hereunder;

 

(ii)           any failure or refusal by Executive to
perform in any material respect his duties or responsibilities under this
Agreement that is not cured by Executive within ten (10) days after receipt
of written notice of such failure or refusal;

 

(iii)          misappropriation by Executive of any assets
or business opportunities of the Company or any of its subsidiaries;

 

(iv)          any embezzlement or fraud against the Company
or any of its affiliates committed by Executive, at his direction, or with his
prior personal knowledge;

 

(v)           a final finding that Executive is
disqualified from holding, 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;

 

(vi)          Executive’s conviction by a court of
competent jurisdiction of, or pleading “guilty” or “no contest” to, (A) a
felony, or (B) any other criminal charge (other than minor traffic violations)
that has, or could be reasonably expected to have, an adverse impact on the
performance of Executive’s duties to the Company or any of its subsidiaries or
affiliates or otherwise result  in
material injury to the reputation or business of the Company or any of its
subsidiaries; or

 

(vii)         Executive’s breach of any material provision
of this Agreement or any other agreement with the Company or its affiliates to
which the Executive is a party that is not cured by Executive within ten (10) days
after receipt of written notice of such breach.

 

3.2.          Termination
by the Executive. 
Executive may voluntarily terminate employment for any reason effective
upon sixty (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.

 

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3.3.          Termination
for Death or Disability. 
In the event of the death or total disability of Executive, this
Agreement shall terminate effective as of the date of Executive’s death or
total disability.  The term “total
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)           Generally.  Upon any termination described in
Sections 3.1, 3.2 or 3.3 above or in the event that Executive’s employment
is terminated following Executive’s election not to renew this Agreement,
Executive shall be entitled to receive any amounts due for Base Salary earned
or expenses incurred through the effective date of termination and any benefits
accrued or earned on or prior to such date in accordance with the terms of any
applicable benefit plans and programs (the “Accrued Obligations”).

 

(b)           Certain
Circumstances.  In the
event Executive’s employment with the Company is terminated (A) by the
Company without Cause, (B) by Executive for Good Reason (as defined in Section 3.4(e) below),
(C) upon the expiration of the Employment Term following the Company’s
election not to renew this Agreement, or (D) voluntarily by Executive,
within thirty (30) days following the third (3rd) anniversary of the
Commencement Date, in the event that Executive is not appointed as the Chief
Executive Officer of the Company prior to such anniversary, Executive shall be
entitled to receive the following in lieu of any other severance provided under
any other plan or agreement:

 

(i)            During the twelve (12) month period
immediately following such termination (the “Severance Period”),
Executive shall receive a monthly payment equal to one and a half (1.5) times
the sum of (A) Executive’s monthly Base Salary at the highest rate in
effect for Executive during the twenty-four (24) month period immediately
preceding the effective date of termination and (B) Executive’s monthly
bonus value (determined by dividing 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 effective date of termination (or, in
the event that such termination occurs prior to the payment of any annual
bonus, the target bonus for the year of termination as determined by the
Compensation Committee in accordance with Section 2.2 herein) divided by
twelve).  Each installment of the payments
due pursuant to this Section 3.4(b)(i) shall be deemed to be a
separate payment for purposes of Section 409A of the Code; and

 

(ii)           Executive
shall continue to receive the health benefits coverage in effect on the effective date of termination (or as the same may
be changed from time to time for Peer Executives) for Executive and, if any,
Executive’s spouse and dependents until the earlier of (A) the third (3rd)
anniversary of such termination of employment, or (B) the date on which
Executive accepts employment with or provides service to, in any
capacity, any other business or entity (the earlier of (A) and (B) being,
the “Benefits Expiration Date”).  Following the Benefits Expiration Date,
Executive and, if any, Executive’s spouse and dependents shall be permitted to
participate in the Company’s group health insurance plan (as may be in effect
from time to time) at Executive’s sole expense for the remainder of Executive’s
life (the “Life Coverage Period”). 
Notwithstanding anything in 

 

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the
previous sentence to the contrary, if, during the Life Coverage Period, (x) Executive
engages in any of the activities described in Sections 5, 6(b) or 7
herein, or (y) Executive accepts employment with or provides service
to, in any capacity, any other business or entity, the entitlement of Executive and his then-eligible dependents
(including his spouse) to participate in the Company’s group health insurance
plan shall terminate automatically, without any further action or notice by
either party, subject to COBRA rights, which shall commence on the date of
Executive’s termination of employment. 
Additionally, in the event that Executive becomes eligible for Medicare
coverage, the Company’s group health insurance plan shall become secondary to
Medicare.

 

(c)             Disability.  In the event Executive’s employment with the
Company is terminated due to a “total disability”, Executive shall be entitled
to receive, in lieu of any other severance provided under any other plan or
agreement, (i) the greater of (A) during the remainder of the
Employment Term, a monthly payment equal to sixty percent (60%) of Executive’s
monthly Base Salary at the highest rate in effect for Executive during the
twenty-four (24) month period immediately preceding the effective date of
termination, and (B) the payments set forth in Section 3.4(b)(i) above,
and (ii) the benefits set forth in Section 3.4(b)(ii) above.

 

(d)             Upon a termination of Executive’s
employment for any reason, except as otherwise provided in this Section 3.4,
or Section 9, no other payments or benefits shall be due under this
Agreement to Executive.

 

(e)             For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following events, without
the Executive’s written consent, that the Company fails to cure within ten (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; or (iii) breach
of any material term of this Agreement by the Company.

 

(f)              Notwithstanding any provision herein to
the contrary, the Company may require that, prior to payment of any amount or
provision of any benefit pursuant to Section 3.4(b) or (c) (other
than the Accrued Obligations), Executive shall have executed, on or prior to
the Release Expiration Date, a customary general release in favor of the
Company and its affiliates and related parties in substantially the form
attached hereto as Exhibit A, and any waiting periods contained in such
release shall have expired.  In the event
that Executive fails to execute a customary general release in favor of the
Company and its affiliates and related parties on or prior to the Release
Expiration Date, Executive shall not be entitled to any payments or benefits
pursuant to Section 3.4(b) (other than the Accrued Obligations).  For purposes of this Agreement, “Release
Expiration Date” shall mean the date which is twenty-one (21) days
following the Executive’s termination of employment, or, in the event that such
termination of employment is “in connection with an exit incentive or other employment termination
program” (as such phrase is defined in the Age Discrimination 

 

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in Employment Act of 1967), the
date which is forty-five (45) days following the Executive’s termination of
employment.

 

(g)             Notwithstanding the foregoing, the
payments and benefits described in Section 3.4(b) (other than the
Accrued Obligations) shall immediately terminate, and the Company shall have no
further obligations to Executive with respect thereto, in the event that
Executive breaches any provision of Sections 5, 6, 7 or 8 hereof.

 

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.  At any time during and after the end of the
term of this Agreement, without the prior written consent of the Board, except
to the extent required by an order of a court having jurisdiction or under
subpoena from an appropriate government agency, in which event, Executive shall
use his best efforts to consult with the Board prior to responding to any such
order or subpoena, and except as required in the performance of his duties
hereunder, Executive shall not disclose to or use for the benefit of any third
party any Confidential Information.  For
purposes of this Agreement, “Confidential Information” shall mean
confidential or proprietary trade secrets, client lists, client identities and
information, business strategies, identity of acquisition or growth targets,
marketing plans, information regarding service providers, investment
methodologies, marketing data or plans, sales plans, management organization
information, operating policies or manuals, business plans or operations or
techniques, financial records or data, or other financial, commercial, business
or technical information (i) relating to the Company or any of its
affiliates, or (ii) that the Company or its affiliates may receive
belonging to suppliers, customers or others who do business with the Company or
any of its affiliates, but shall exclude any information that is in the public
domain or hereafter enters the public domain, in each case without the breach
by Executive of this Section 5.

 

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6.             Non-Competition.

 

(a)           As used herein, the
term “Restriction Period” shall mean the period commencing on the date
that Executive’s employment with the Company is terminated and ending on the
date which is twelve (12) months thereafter.

 

(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, Executive, partner, principal, agent, representative, consultant or
otherwise with, or use or permit Executive’s name to be used in connection
with, any business or enterprise which owns or operates a gaming or pari-mutuel
facility located within the United States of America or any other country in
which any gaming or pari-mutuel facility is owned or operated by the Company or
any of its affiliates, as of the date of termination.

 

(c)           The foregoing restrictions shall not be
construed to prohibit Executive’s ownership of less than five percent (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 (the “Exchange Act”), 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 8 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 of twelve (12) months thereafter, 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.             Works
for Hire.  Executive
agrees that the Company shall own all right, title and interest throughout the
world in and to any and all inventions, original works of authorship,
developments, concepts, know-how, improvements or trade secrets, whether or not
patentable or registerable under copyright or similar laws, which Executive may
solely or 

 

7

 

jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice during the Employment Term, whether or not during regular working
hours, provided they either (i) relate at the time of conception or
development to the actual or demonstrably proposed business or research and
development activities of any member of the Company Group; (ii) result
from or relate to any work performed for any member of the Company Group; or (iii) are
developed through the use of Confidential Information and/or resources of the
Company or any of its affiliates or in consultation with personnel of the
Company or any of its affiliates (collectively referred to as “Developments”).  Executive hereby assigns all right, title and
interest in and to any and all of these Developments to the Company.  Executive agrees to assist the Company, at
the Company’s expense, to further evidence, record and perfect such
assignments, and to perfect, obtain, maintain, enforce, and defend any rights
specified to be so owned or assigned. 
Executive hereby irrevocably designates and appoints the Company and his
agents as attorneys-in-fact to act for and on Executive’s behalf to execute and
file any document and to do all other lawfully permitted acts to further the
purposes of the foregoing with the same legal force and effect as if executed
by Executive.  In addition, and not in
contravention of any of the foregoing, Executive acknowledges that all original
works of authorship which are made by him (solely or jointly with others)
within the scope of employment and which are protectable by copyright are “works
made for hire,” as that term is defined in the United States Copyright Act (17
USC Sec. 101).  To the extent allowed by
law, this includes all rights of paternity, integrity, disclosure and
withdrawal and any other rights that may be known as or referred to as “moral
rights.”  To the extent Executive retains
any such moral rights under applicable law, Executive hereby waives such moral
rights and consents to any action consistent with the terms of this Agreement
with respect to such moral rights, in each case, to the full extent of such
applicable law.  Executive will confirm
any such waivers and consents from time to time as requested by the Company.

 

9.             Change of Control.

 

9.1.          Consideration

 

(a)             Change
of Control.  In the event
of a Change of Control (as defined below) and either (i) Executive is
terminated without Cause within twelve (12) months after the effective date of
the Change in Control, or (ii) Executive resigns for Good Reason within
twelve (12) months after the effective date of the Change in Control, Executive
shall be entitled to receive a lump-sum cash payment in an amount equal to two (2) times
the sum of (i) the highest annual rate of Base Salary in effect for
Executive during the twenty-four (24) month period immediately preceding the
effective date of the Change in Control, 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 date of termination (or,
in the event that such termination occurs prior to the payment of any annual
cash bonus compensation, the target bonus for the year of termination as
determined by the Compensation Committee in accordance with Section 2.2
herein), payable within ten (10) days of such termination.

 

(b)             Restrictive
Provisions.  As
consideration for the foregoing payments, Executive agrees not to challenge the
enforceability of any of the 

 

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restrictions contained in
Sections 5, 6, 7 or 8 of this Agreement upon or after the occurrence of a
Change of Control.

 

9.2.          Certain
Other Terms.

 

(a)             In the event payments are being made to
Executive under this Section 9, no payments shall be due under Section 3.4(b)(i) of
this Agreement.  For the avoidance of
doubt, Executive shall be entitled to the benefits set forth in Section 3.4(b)(ii) of
this Agreement upon a termination pursuant to Section 9.1(a) herein.

 

(b)             Notwithstanding any provision herein to
the contrary, the Company may require that, prior to payment of any amount or
provision of any benefit pursuant to Section 9.1, Executive shall have
executed, on or prior to the Release Expiration Date, a customary general
release in favor of the Company and its affiliates and related parties in
substantially the form attached hereto as Exhibit A, and any waiting
periods contained in such release shall have expired.  In the event that Executive fails to execute
a customary general release in favor of the Company and its affiliates and
related parties on or prior to the Release Expiration Date, Executive shall not
be entitled to any payments or benefits pursuant to Section 9.1.

 

9.3.          Defined Terms.

 

(a)             Change
of Control.  Change in
Control shall mean (i) prior to an initial public offering of any class of
the Company’s securities registered under the Securities Act of 1933 pursuant
to an effective registration statement (an “IPO”), the sale or
disposition, in one or a series of related transactions, of the voting stock of
the Company, as a result of which Centerbridge Partners, L.P., Fortress
Investment Group LLC and their respective affiliates (the “Investors”)
(either directly or indirectly) hold less than fifty percent (50%) of the total
voting power of the voting stock of the Company (other than pursuant to an
IPO); (ii) on or following an IPO, the sale or disposition, in one or a
series of related transactions, of the voting stock of the Company, as a result
of which the Investors (either directly or indirectly) (A) are
collectively no longer the single largest holder of voting stock of the
Company, or (B) hold less than twenty percent (20%) of the total voting
power of the voting stock of the Company; or (iii) the sale or
disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Company to any “person” or “group” (as
such terms are defined in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) other than the Investors. 
For the avoidance of doubt, an IPO shall not by itself result in a
Change in Control for purposes of this Agreement unless, immediately following
the IPO, the Investors (either directly or indirectly) (A) are
collectively no longer the single largest holder of voting stock of the
Company, or (B) hold less than twenty percent (20%) of the total voting
power of the voting stock of the Company. 
Additionally, the consummation of the transactions contemplated by that
certain Agreement and Plan of Merger by and among the Company, PNG Acquisition
Company Inc. and PNG Merger Sub Inc., dated as of June 15, 2007 shall
not constitute a Change in Control for purposes of this Agreement.

 

10.           Document
Surrender.  Upon the
termination of Executive’s employment for any reason, Executive shall
immediately surrender and deliver to the 

 

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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 (whether or not such documents
contain Confidential Information).

 

11.           Representations and
Warranties of Executive.

 

11.1.        Executive represents and warrants to the
Company that:

 

(a)             Executive is entering into this Agreement
voluntarily and that his employment hereunder and compliance with the terms and
conditions hereof will not conflict with or result in the breach by him of any
agreement to which he is a party or by which he may be bound;

 

(b)             Executive has not violated, and in
connection with his employment with the Company will not violate, any
non-solicitation or other similar covenant or agreement by which he is or may
be bound; and

 

(c)             in connection with his employment with the
Company he will not use any confidential or proprietary information he may have
obtained in connection with employment with any prior employer.

 

12.           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.

 

13.           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.

 

14.           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

 

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Attention: 
Peter Carlino, Chief Executive Officer

 

If to Executive, to:

 

                Tim
Wilmott

c/o Penn National Gaming, Inc.

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

Fax:  (610) 376-2842

 

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.

 

15.           Contents of Agreement; Amendment and Assignment.

 

15.1.        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. 
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.

 

15.2.        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.

 

16.           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 7 or 8 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.

 

17.           Remedies.

 

17.1.        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.

 

17.2.        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 

 

11

 

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.

 

17.3.        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.

 

18.           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.

 

19.           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.

 

20.         Delay in Payment.  Notwithstanding anything to the contrary in this Agreement, if
Executive is a “specified employee” as determined pursuant to Section 409A
of the Code, and its implementing regulations (“Section 409A”) as
of the date of Executive’s “separation from service” as defined in Treasury
Regulation Section 1.409A-1(h) (or any successor regulation) and if
any payments or entitlements provided for in this Agreement constitute a “deferral
of compensation” within the meaning of Section 409A and cannot be paid or
provided in the manner provided herein without subjecting Executive to
additional tax, interest or penalties under Section 409A, then any such
payment and/or which is payable during the first six months following Executive’s
“separation from service” shall be paid or provided to Executive in a cash
lump-sum on the first business day of the seventh calendar month immediately
following the month in which Executive’s “separation from service”
occurs.  In addition, any payments or benefits due hereunder upon a
termination of Executive’s employment which are a “deferral of compensation”
within the meaning of Section 409A shall only be payable or provided to
Executive (or his estate) upon a “separation from service” as defined in Section 409A. 
Finally, for the purposes of this Agreement, amounts payable under Section 3
and/or Section 9 hereof shall be deemed not to be a “deferral of
compensation” subject to Section 409A to the extent provided in the
exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term
deferrals”) and (b)(9) (“separation pay plans,” including the exception
under subparagraph (iii)) and other applicable provisions of Treasury
Regulation Section 1.409A-1 - A-6.

 

21.           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 

 

12

 

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.

 

22.           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.

 

23.           Survival
of Operative Sections. 
Upon any termination of Executive’s employment, the provisions of Section 3,
Section 5 through Section 8, and Section 10 through Section 23
of this Agreement (together with any related definitions set forth herein)
shall survive to the extent necessary to give effect to the provisions thereof.

 

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/ Tim
  Wilmott

  	
   

  	
   

  
	
   

  	
   

  	
  Tim Wilmott

  
									

 

13

 

EXHIBIT A

 

GENERAL RELEASE OF CLAIMS

 

This General
Release of Claims (this “Release”),
dated as of
              ,
20    , confirms the following understandings and
agreements between Penn National Gaming, Inc. (the “Company”)
and Tim Wilmott (hereinafter referred to as “you”
or “your”).

 

In
consideration of the promises set forth in the that certain Employment
Agreement between you and the Company, dated as of February     ,
2008 (the “Employment Agreement”), as
well as any promises set forth in this Release, you and the Company agree as
follows:

 

1.             Opportunity for Review and Revocation.  You have twenty-one (21) days to review and
consider this Release.  Notwithstanding
anything contained herein to the contrary, this Release will not become
effective or enforceable for a period of seven (7) calendar days following
the date of its execution, during which time you may revoke your acceptance of
this Release by notifying
                                    ,
in writing.  To be effective, such
revocation must be received by the Company no later than 5:00 p.m. on the
seventh calendar day following its execution. 
Provided that the Release is executed and you do not revoke it, the
eighth (8th) day
following the date on which this Release is executed shall be its effective
date (the “Effective Date”).  In the event of your revocation of this
Release pursuant to this Section 1, this Release will be null and void and
of no effect, and the Company will have no obligations hereunder.

 

2.             Release and Waiver
of Claims.

 

(a)             As used in this Release, the term “claims”
will include all claims, covenants, warranties, promises, undertakings,
actions, suits, causes of action, obligations, debts, accounts, attorneys’
fees, judgments, losses and liabilities, of whatsoever kind or nature, in law,
equity or otherwise.

 

(b)             For and in consideration of the payments
and benefits described in the Section 3.4(b) or Section 9.1 of
the Employment Agreement, and other good and valuable consideration (the “Consideration”), you, for and
on behalf of yourself and your heirs, administrators, executors and assigns,
effective the date hereof, do fully and forever release, remise and discharge
the Company, its direct and indirect parents, subsidiaries and affiliates,
together with their respective officers, directors, partners, shareholders,
employees and agents (collectively, and with the Company, the “Group”) from any and all
claims whatsoever up to the date hereof which you had, may have had, or now
have against the Group, for or by reason of any matter, cause or thing
whatsoever, including any claim arising out of or attributable to your
employment or the termination of your employment with the Company, whether for
tort, breach of express or implied employment contract, intentional infliction
of emotional distress, wrongful termination, unjust dismissal, defamation,
libel or slander, or under any federal, state or local law dealing with
discrimination based on age, race, sex, national origin, handicap, religion,
disability or sexual orientation.  This
release of claims includes, but is not limited to, all claims arising under the
Age Discrimination in Employment Act (“ADEA”),
Title VII of the Civil Rights Act, the Americans with Disabilities Act, the
Civil Rights Act of 1991, the Family Medical Leave Act, and the Equal Pay Act,
each as may be amended from time to time, and all other federal, state and
local laws, the common law and any other purported restriction on an employer’s
right to terminate the employment of employees.

 

 

(c)             You acknowledge and agree that as of the
Effective Date, you have no knowledge of any facts or circumstances that give
rise or could give rise to any claims under any of the laws listed in the
preceding paragraph.

 

(d)             You specifically release all claims
relating to your employment and its termination under ADEA, a United States
federal statute that, among other things, prohibits discrimination on the basis
of age in employment and employee benefit plans.

 

(e)             Notwithstanding any provision of this
Release to the contrary, by executing this Release, you are not releasing any
claims relating to: (i) your rights with respect to the Consideration, and
(ii) any indemnification rights you may have as a former officer or
director of the Company or its subsidiaries in accordance with the Company’s or
such subsidiary’s bylaws, as the case may be.

 

3.             Knowing and
Voluntary Waiver.  You expressly
acknowledge and agree that you:

 

(a)             Are able to read the language, and
understand the meaning and effect, of this Release;

 

(b)             Have no physical or mental impairment of
any kind that has interfered with your ability to read and understand the
meaning of this Release or its terms, and that your not acting under the
influence of any medication, drug or chemical of any type in entering into this
Release;

 

(c)             Are specifically agreeing to the terms of
the release contained in this Release because the Company has agreed to pay you
the Consideration.  The Company has
agreed to provide the Consideration because of your agreement to accept it in
full settlement of all possible claims you might have or ever had, and because
of your execution of this Release;

 

(d)             Understand that, by entering into this
Release, you do not waive rights or claims under ADEA that may arise after the
Effective Date;

 

(e)             Had or could have had 21 calendar days in
which to review and consider this Release;

 

(f)              Were advised to consult with your
attorney regarding the terms and effect of this Release; and

 

(g)             Have signed this Release knowingly and
voluntarily.

 

4.             No
Suit.  You represent that you have not filed
or permitted to be filed against the Group, individually or collectively, any complaints or lawsuits arising out of
your employment, or any other matter arising on or prior to the date hereof.

 

5.             Successors and
Assigns.  The provisions hereof shall
enure to the benefit of your heirs, executors, administrators, legal personal
representatives and assigns and shall be 

 

15

 

binding upon your heirs,
executors, administrators, legal personal representatives and assigns.

 

6.             Severability.  If any provision of this Release shall be
held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect.  The illegality or unenforceability of such
provision, however, shall have no effect upon and shall not impair the
enforceability of any other provision of this Release.

 

7.             Non-Disparagement.  You agree that you will make no disparaging
or defamatory comments regarding the Company in any respect or make any
comments concerning any aspect of your relationship with the Company or the
conduct or events which precipitated your termination of employment from the
Company.  Your obligations under this Section 7
shall not apply to disclosures required by applicable law, regulation or order
of a court or governmental agency.

 

8.             Non-Admission.  Nothing contained in this Release will be
deemed or construed as an admission of wrongdoing or liability on the part of
you or the Company.

 

9.             Governing
Law.  This Release shall be governed
by and construed in accordance with Federal law and the laws of the
Commonwealth of Pennsylvania, applicable to releases made and to be performed
in that Commonwealth.

 

IN WITNESS WHEREOF, the parties hereto have executed this Release as of
the date first written above.

 

	
   

  	
   

  	
  PENN NATIONAL GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TIM WILMOTT

  

 

16Exhibit 4.3

 

IMPORTANT:  PLEASE READ CAREFULLY BEFORE SIGNING.

SIGNIFICANT REPRESENTATIONS ARE
CALLED FOR HEREIN.

 

SUBSCRIPTION AGREEMENT

and

LETTER OF INVESTMENT INTENT

 

Mauna Kea Enterprises, Inc.

1701 Pearl Street

Boulder, CO  80302

 

Gentlemen:

 

                The undersigned (the “Subscriber”)
hereby tenders this subscription for the purchase of the number of shares of
common stock, $.001 par value per share (“Common Stock” or “Securities”),
of Mauna Kea Enterprises, Inc., dba CrowdFunder (the “Company”).  The Subscriber understands that a
subscription for the Securities may be rejected for any reason and that, in the
event that this subscription is rejected, the funds delivered herewith will be
promptly returned, without interest thereon or deduction therefrom.  By execution below, the Subscriber
acknowledges that the Company is relying upon the accuracy and completeness of
the representations contained herein in complying with their obligations under
applicable securities laws.

 

                1.             Subscription Commitment.  The Subscriber acknowledges that the minimum
subscription is 75,000 shares of Common Stock or $24,750 (which amount may be
waived by the Company in its sole discretion). 
The Subscriber hereby subscribes for the purchase of the number of
Securities specified below and, as full payment therefor, agrees to pay in
cash, the amount set forth below by check made payable to “CrowdFunder Escrow Account,” or by wire
transfer to the escrow account of the Company.

 

                

	
  76,000

  	
   

  	
  At $0.33 per share for

  
	
  Number of Shares of Common Stock

  	
   

  	
  an aggregate of $ 25,080

  

 

                The Subscriber understands that
this subscription is not binding on the Company until accepted by the Company,
which acceptance is at the discretion of the Company and is to be evidenced by
the Company’s execution of this Subscription Agreement where indicated.  If the subscription is rejected, or if the
minimum offering amount of 300,000 shares of Common Stock ($99,000) (the “Minimum
Offering”) is not achieved on or before January 31, 2008, 2008 (the “Offering
Period”), the Company shall return to the Subscriber, without interest or
deduction, any payment tendered by the Subscriber, and the Company and the
Subscriber shall have no further obligation to each other hereunder.  Unless and until rejected by the Company, or
the Minimum Offering is not achieved within the Offering Period, this
subscription shall be deposited into a non-interest bearing escrow account and
shall be irrevocable by the Subscriber. 
The Subscriber understands that the Company may, in the event that more
than 1,515,151 shares of Common Stock ($500,000) are subscribed, reduce this
subscription in any amount and to any extent, whether or not pro rata
reductions are made of any other investor’s subscription, or accept all such
over-subscriptions.

 

                2.             Representations and Warranties.  In order to induce the Company to accept this
subscription, the Subscriber hereby represents and warrants to, and covenants
with, the Company as follows:

 

 

                (a)           The Subscriber been given access to full and complete
information regarding the Company and has utilized such access to the
Subscriber’s satisfaction for the purpose of obtaining such information
regarding the Company as the Subscriber has reasonably requested; and,
particularly, the Subscriber has been given reasonable opportunity to ask
questions of, and receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and to
obtain any additional information, to the extent reasonably available;

 

                (b)           The Subscriber acknowledges and agrees that no
representations or warranties have been made to the Subscriber by the Company,
any selling agent of the Company, or any agent, employee, or affiliate of the
Company or such selling agent.

 

                (c)           The Subscriber believes that an investment in the
securities is suitable for the Subscriber based upon the Subscriber investment
objectives and financial needs.  The
Subscriber (i) has adequate means for providing for the Subscriber’s
current financial needs and personal contingencies; (ii) has no need for
liquidity in this investment; (iii) at the present time, can afford a
complete loss of such investment; and (iv) does not have an overall
commitment to investments which are not readily marketable that is
disproportionate to the Subscriber’s net worth, and the Subscriber’s investment
in the Securities will not cause such overall commitment to become excessive.

 

                (d)           The Subscriber, in reaching a decision to subscribe, has
such knowledge and experience in financial and business matters that the
Subscriber  is capable of reading and interpreting
financial statements and evaluating the merits and risk of an investment in the
Securities and has the net worth to undertake such risks.

 

                (e)           The Subscriber was not offered or sold the Securities,
directly or indirectly, by means of any form of general advertising or general
solicitation, including, but not limited to, the following:  (1) any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar medium
of or broadcast over television or radio; or (2) to the knowledge of the
undersigned, any seminar or meeting whose attendees had been invited by any
general solicitation or general advertising.

 

                (f)            The Subscriber has obtained, to the extent the Subscriber
deems necessary, the Subscriber’s own personal professional advice with respect
to the risks inherent in the investment in the securities, and the suitability
of an investment in the Securities in light of the Subscriber’s financial
condition and investment needs;

 

                (g)           The information contained in this agreement is true,
complete and correct in all material respects as of the date hereof; the
Subscriber understands that the Company’s determination that the exemption from
the registration provisions of the Securities Act of 1933, as amended (the “Act”),
which is based upon non-public offerings and applicable to the offer and sale
of the Securities, is based, in part, upon the representations, warranties, and
agreements made by the Subscriber herein; and the Subscriber consents to the
disclosure of any such information, and any other information furnished to the
Company, to any governmental authority, self-regulatory organization, or, to
the extent required by law, to any other person.

 

                (h)           The Subscriber realizes that (i) the purchase of the
Securities is a long-term investment; (ii) the purchaser of the Securities
must bear the economic risk of investment for an indefinite period of time
because the Securities have not been registered under the Securities Act of
1933 or under the securities laws of any state and, therefore, the Securities
cannot be resold unless they are subsequently registered under said laws or
exemptions from such registrations are available;  (iii) there is presently no public
market for the Securities and the Subscriber may be unable to liquidate the
Subscriber’s investment in the event of an emergency, or pledge the Securities
as collateral for a loan; and (iv) the transferability 

 

 

of
the Securities is restricted and (A) requires conformity with the
restrictions contained in paragraph 2 below and (B) legends will be placed
on the certificate(s) representing the Securities referring to the
applicable restrictions on transferability; and

 

                (i)            The Subscriber certifies, under penalties of perjury,
that the Subscriber is NOT subject to the backup withholding provisions of Section 3406(a)(i)(C) of
the Internal Revenue Code.

 

                (j)            Stop transfer instructions will be placed with the
transfer agent for the Securities, and a legend may be placed on any
certificate representing the Securities substantially to the following effect:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE
ACT AND REGULATION D UNDER THE ACT.  AS
SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF
INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION.  THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY
OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT
OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, WITHOUT THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE
PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE
COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT
REQUIRED.

 

                3.             Restricted Nature of the Securities. The
Subscriber has been advised and understands that (a) the Securities have
not been registered under the Securities Act of 1933 or applicable state
securities laws and that the securities are being offered and sold pursuant to
exemptions from such laws; (b) the offering may not have been filed with
or reviewed by certain state securities administrators because of the limited
nature of the offering; (c) the Company is under no obligation to register
the Securities under the Act or any state securities laws, or to take any
action to make any exemption from any such registration provisions available.
The Subscriber represents and warrants that the Securities are being purchased
for the Subscriber’s own account and for investment purposes only, and without the
intention of reselling or redistributing the same; the Subscriber has made no
agreement with others regarding any of the Securities; and the Subscriber’s
financial condition is such that it is not likely that it will be necessary to
dispose of any of such Securities in the foreseeable future.  The Subscriber is aware that, in the view of
the Securities and Exchange Commission, a purchase of such securities with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market value, or any change in the condition of the
Company, or in connection with a contemplated liquidation settlement of any
loan obtained for the acquisition of such securities and for which such
securities were pledged, would represent an intent inconsistent with the
representations set forth above.  The
Subscriber further represents and agrees that if, contrary to the foregoing
intentions, the Subscriber should later desire to dispose of or transfer any of
such securities in any manner, the Subscriber shall not do so unless and until (i) said
Securities shall have first been registered under the Act and all applicable
securities laws; or (ii) the Subscriber shall have first delivered to the
Company a written notice declaring such holder’s intention to effect such
transfer and describe in sufficient detail the manner and circumstances of the
proposed transfer, which notice shall be accompanied either by a written
opinion of legal counsel who shall be reasonably satisfactory to the Company,
which opinion shall be addressed to the Company and reasonably satisfactory in
form and substance to the Company’s counsel, to the effect that the proposed
sale or 

 

 

transfer
is exempt from the registration provisions of the Act and all applicable state
securities laws, or by a “no action” letter from the Securities and Exchange
Commission to the effect that the transfer of the Securities without
registration will not result in recommendation by the staff of the Commission
that action be taken with respect thereto.

 

                4.             Residence. 
The Subscriber represents and warrants that the Subscriber is a bona
fide resident of, is domiciled in and received the offer and made the decision
to invest in the Securities in the state set forth on the signature page hereof,
and the Securities are being purchased by the Subscriber in the Subscriber’s
name solely for the Subscriber’s own beneficial interest and not as nominee
for, or on behalf of, or for the beneficial interest of, or with the intention
to transfer to, any other person, trust or organization, except as specifically
set forth in paragraph 15 of this Subscription Agreement and Letter of
Investment Intent.

 

                5.             Investor Qualification.  The Subscriber represents and warrants that
the Subscriber or the purchaser of the Securities named in paragraph 15  comes within at least one category marked
below, and that for any category marked the Subscriber has truthfully set forth
the factual basis or reason the Subscriber comes within that category.  ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH
WILL BE KEPT STRICTLY CONFIDENTIAL.  The
Subscriber agrees to furnish any additional information which the Company deems
necessary in order to verify the answers set forth below.

 

	
  Category I

  	
  X

  	
   

  	
  The Subscriber is an individual (not a
  partnership, corporation, etc.) whose individual net worth, or joint net
  worth with the Subscriber’s spouse, presently exceeds $1,000,000.

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  Explanation. In calculation of net worth the Subscriber
  may include equity in personal property and real estate, including the
  Subscriber’s principal residence, cash, short term investments, stocks and
  securities. Equity in personal property and real estate should be based on
  the fair market value of such property less debt secured by such property.

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Category II

  	
  X

  	
   

  	
  The Subscriber is an individual (not a
  partnership, corporation, etc.) who had an individual net income in excess of
  $200,000 in each of the last two years, or joint income with his/her spouse
  in excess of $300,000 in each of the last two years, and has a reasonable
  expectation of reaching the same income level in the current year.

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Category III

  	
   

  	
   

  	
  The Subscriber is an executive officer or
  director of the Company.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	 

	
  Category IV

  	
   

  	
   

  	
  The Subscriber is a bank; savings and loan;
  insurance company; registered broker or dealer; registered investment
  company; registered business development company; licensed small business
  investment company (“SBIC”); or employee benefit plan within the
  meaning of Title I of ERISA whose plan fiduciary is either a bank, savings and
  loan, insurance company or registered investment advisor or whose total
  assets exceed $5,000,000; or a self-directed employee benefit plan with
  investment decisions made solely by persons that are accredited investors.

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

 

 

	
  Category V

  	
   

  	
   

  	
  The Subscriber is a private business
  development company as defined in

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  (describe entity)

  
	
   

  	
   

  	
   

  	
   

  	 

	
  Category VI

  	
   

  	
   

  	
  The Subscriber is an entity with total assets
  in excess of $5,000,000 which was not formed for the purpose of
  investing in the Securities and which is one of the following:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  a corporation; or

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  a partnership; or

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  a business trust; or

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  a tax-exempt organization described in
  Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  (describe entity)

  
	
   

  
	
  Category VII

  	
   

  	
   

  	
  The Subscriber is a trustee for a trust that
  is revocable by the grantor at any time (including an IRA) and the grantor
  qualifies under either Category I or Category II above. A copy of the
  declaration of trust or trust agreement and a representation as to the net
  worth or income of the grantor is enclosed.

  	 

								

 

 

	
  Category VIII

  	
   

  	
   

  	
  The Subscriber is an entity all the equity
  owners of which are “accredited investors” within one or more of the above
  categories, other than Category IV or Category V. [If
  relying upon this category alone, each equity owner must complete a separate
  copy of this Agreement.]

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  (describe entity)

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Category IX

  	
   

  	
   

  	
  The Subscriber is a trust with total assets in
  excess of $5,000,000, not formed for the specific purpose of acquiring the
  Securities, whose purchase is directed by a person who has such knowledge and
  experience in financial and business matters that he is capable of evaluating
  the merits and risks of the prospective investment.

  	 

	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  NASD
  Questionnaire.

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
   

  	
  Are
  you a member(1) of the NASD,  a person associated with a member(2) of
  the NASD, or an affiliate

  	 

	
  of a member?

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Yes

  	
   

  	
   

  	
  No  X

  
	
   

  	
   

  	
   

  
	
  If
  “Yes,” please list any members of the NASD with whom you are associated or
  affiliated.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
													

 (1)          The
NASD defines a “member” as being either any broker or dealer admitted to
membership in the NASD or any officer or partner of such a member, or the
executive representative of such a member or the substitute for such
representative.

 

 (2)          The
NASD defines a “person associated with a member” as being every sole
proprietor, general or limited partner, officer, director or branch manager or
such member, or any natural person occupying a similar status or performing
similar functions, or any natural person engaged in the investment banking or
securities business who is directly or indirectly controlling or controlled by
such member (for example, any employee), whether or not any such person is
registered or exempt from registration without the NASD.  Thus, “person associated with a member”
includes a sole proprietor, general or limited partner, officer, director or
branch manager or an organization of any kind (whether a corporation,
partnership or other business entity) which itself is a “member” or a “person
associated with a member.”  In addition,
an organization of any kind is a “person associated with a member” if its sole
proprietor or anyone of its general or limited partners, officers, director or
branch managers is a “member” or “person associated with a member.”

 

 

	
   

  	
  (b)

  	
  If you are a corporation are any of your
  officers, directors or 5% shareholders a member of the NASD, a

  	 

	
  person associated with a member of the NASD
  or an affiliate of a member?

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Yes

  	
   

  	
   

  	
  No

  	 

	
   

  	 

	
  If “Yes,” please list the name of the
  respective officer, director, or 5% share holder and any members of the NASD
  with whom they are associated of affiliated

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  7.

  	
  Additional Representations. The undersigned, if other than an
  individual, makes the following additional 

  	 

	
  representations:

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  (a)

  	
   

  	
  The Subscriber was not organized for the
  specific purpose of acquiring the Securities; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  (b)

  	
   

  	
  This Subscription Agreement and Letter of
  Investment Intent has been duly authorized by all necessary

  
	
  action on the part of the Subscriber, has been
  duly executed by an authorized officer or representative of the Subscriber,
  and is a legal, valid and binding obligation of the Subscriber enforceable in
  accordance with its terms.

  	 

	
   

  	 

	
   

  	
  8.

  	
  Sophistication. The Subscriber further represents and
  warrants that he has such knowledge and experience in 

  	 

	
  financial and business matters so as to be
  capable of evaluating the merits and risks of an investment in the Securities
  and protecting the Subscriber’s own interests in this transaction, and does
  not desire to utilize the services of any other person in connection with
  evaluating such merits 

  	 

	
   

  	 

	
   

  	
  9.

  	
  Reliance on Representations. The Subscriber understands the
  meaning and legal consequences of the 

  	 

	
  representations, warranties, agreements,
  covenants, and confirmations set out above and agrees that the subscription
  made hereby may be accepted in reliance thereon. The Subscriber agrees to
  indemnify and hold harmless the Company and any selling agent (including for
  this purpose their employees, and each person who controls either of them
  within the meaning of Section 20 of the Securities Exchange Act of 1934,
  as amended) from and against any and all loss, damage, liability or expense,
  including reasonable costs and attorney’s fees and disbursements, which the
  Company, or such other persons may incur by reason of, or in connection with,
  any representation or warranty made herein not having been true when made,
  any misrepresentation made by the Subscriber or any failure by the Subscriber
  to fulfill any of the covenants or agreements set forth herein, in the
  Purchaser Questionnaire or in any other document provided by the Subscriber
  to the Company.

  	 

	
   

  	 

	
   

  	
  10.

  	
  Transferability and Assignability. Neither this Subscription Agreement
  nor any of the rights of the Subscriber

  	 

	
  hereunder may be transferred or assigned by
  the Subscriber. The Subscriber agrees that the Subscriber may not cancel,
  terminate, or revoke this Subscription Agreement or any agreement of the
  Subscriber made hereunder (except as otherwise specifically provided herein)
  and that this Subscription Agreement shall survive the death or disability of
  the Subscriber and shall be binding upon the Subscriber’s heirs, executors,
  administrators, successors, and assigns.

  	 

	
   

  	 

	
   

  	
  11.

  	
  Escrow Account. Until such time as the Minimum Offering has
  been subscribed, the cash received for the 

  	 

	
  subscriptions will be held in a non-interest
  bearing account (“Escrow Account”) in  

  	 

												

 

 

	
  the name of the Company at
                                    .
  Subscribers may not withdraw funds from the Escrow Account, and subscriptions
  may not be revoked, canceled or terminated by the Subscriber. Subsequent to
  acceptance by the Company of subscriptions for at least the Minimum Offering,
  the Escrow Account will be terminated, and additional offering proceeds
  relating to accepted subscriptions may be utilized by the Company immediately
  upon acceptance by the Company. If the Minimum Offering is not sold prior to
  the expiration of the Offering Period, the offering will terminate and the
  Company will withdraw the offering, whereupon each Subscriber will receive a
  refund of any subscription paid, without interest or deduction. Upon such
  termination of the offering by the Company, the Subscriber’s subscription
  will be automatically canceled and the undersigned will have no further
  rights or obligations under this Agreement, and the Company shall have no
  liability or other obligation to the Subscriber.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.

  	
  Survival. The representations and warranties of the
  Subscriber set forth herein shall survive the sale of the 

  
	
  Securities pursuant to this Subscription
  Agreement.

  
	
   

  
	
   

  	
  13.

  	
  Notices. All notices or other communications
  hereunder shall be in writing and shall be deemed to have been 

  
	
  duly given if delivered personally or mailed by
  certified or registered mail, return receipt requested, postage prepaid, as
  follows: if to the Subscriber, to the address set forth below; and if to the
  Company to the address at the beginning of this letter, or to such other
  address as the Company or the Subscriber shall have designated to the other
  by like notice.

  
	
   

  
	
   

  	
  14.

  	
  (Applicable to FLORIDA
  residents only.)
  The Subscriber has been informed and recognizes that (a) the

  
	
  Securities have not been registered under the
  Florida Securities Act, and (b) under Section 517.061(12) of the
  Florida Securities Act, the Subscriber may void the sale of any Securities
  within three (3) days after the tender of this Subscription Agreement
  and payment hereunder to the Company.

  
	
   

  
	
   

  	
  15.

  	
  Counterparts. This Agreement may be executed in one or
  more counterparts, each of which shall be 

  
	
  deemed an original, but all of which together
  shall constitute one and the same document.

  
	
   

  
	
  IN NO EVENT WILL THE COMPANY OR ANY OF ITS
  AFFILIATES OR THE PROFESSIONAL ADVISORS ENGAGED BY THEM BE LIABLE IF FOR ANY
  REASON RESULTS OF OPERATIONS OF THE COMPANY ARE NOT AS PROJECTED IN THE
  DOCUMENTS. INVESTORS MUST LOOK SOLELY TO, AND RELY ON, THEIR OWN ADVISORS
  WITH RESPECT TO THE TAX CONSEQUENCES OF INVESTING IN THE SECURITIES.

  

 

 

	
   

  	
   

  	
  16.

  	
  Title. Manner in Which Title is To Be Held.

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  Place an “X” in one space below:

  	 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a) X

  	
  Individual Ownership

  
	
   

  	
   

  	
   

  	
  (b)

  	
  Community Property

  
	
   

  	
   

  	
   

  	
  (c)

  	
  Joint Tenant with Right of Survivorship (both
  parties must sign)

  
	
   

  	
   

  	
   

  	
  (d)

  	
  Partnership

  
	
   

  	
   

  	
   

  	
  (e)

  	
  Tenants in Common

  
	
   

  	
   

  	
   

  	
  (f)

  	
  Corporation

  
	
   

  	
   

  	
   

  	
  (g)

  	
  Trust

  
	
   

  	
   

  	
   

  	
  (h)

  	
  Other (Describe):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Please print above the exact
  name(s) in which the Securities are to be held.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17.

  	
  State of Residence. My state of residence and the state
  in which I received the offer to invest and made the 

  	 

	
  decision to invest in the Securities is
  Colorado.

  
	
   

  
	
   

  	
  18.

  	
  Date of Birth. My date of birth is:

  	 

								

 

SIGNATURE PAGE ON NEXT PAGE

 

 

SIGNATURES

 

The
Subscriber hereby represents he has read this entire Subscription Agreement
dated October 31, 2007.

 

Dated:                                                                 
                   

 

INDIVIDUAL

 

	
   

  	
   

  	
  Address to Which Correspondence

  
	
   

  	
   

  	
  Should
  be Directed

  
	
   

  	
   

  	
   

  
	
  /s/ Gregory P. Hauptmann

  	
   

  	
   

  
	
  Signature (Individual)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature (All record holders should sign)

  	
   

  	
  City, State and Zip Code

  
	
   

  	
   

  	
   

  
	
  Gregory P. Hauptmann

  	
   

  	
   

  
	
  Name(s) Typed or Printed

  	
   

  	
  Tax Identification or Social Security Number

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (        )

  
	
   

  	
   

  	
  Telephone Number

  

 

 

CORPORATION, PARTNERSHIP, TRUST,
OR OTHER ENTITY

 

	
   

  	
   

  	
  Address to Which Correspondence

  
	
   

  	
   

  	
  Should be Directed

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Entity

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  *Signature

  	
   

  	
  City, State and Zip Code

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
  Tax Identification or Social Security Number

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (        )

  
	
  Name Typed or Printed

  	
   

  	
  Telephone Number

  
					

	
  *If Securities are being subscribed for by an
  entity, the Certificate of Signatory must also be completed.

  

 

CERTIFICATE OF SIGNATORY

 

To be completed if Securities are
being subscribed for by an entity.

 

                I,                                                                                              ,
am the                                                  of

 

                                                                                                                                (the
“Entity”).

 

                I certify that I am empowered
and duly authorized by the Entity to execute and carry out the terms of the
Subscription Agreement and Letter of Investment Intent and to purchase and hold
the Securities, and certify that the Subscription Agreement and Letter of
Investment Intent has been duly and validly executed on behalf of the Entity
and constitutes a legal and binding obligation of the Entity.

 

                IN WITNESS WHEREOF, I have
hereto set may hand this
             day of
              ,
2007.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  

 

 

ACCEPTANCE

 

This
Subscription Agreement is accepted as of October 31, 2007.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  MAUNA KEA ENTERPRISES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Mark Kreloff

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Mark Kreloff

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Date: October 31, 2007

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]