Document:

Exhibit 10.3

 

PENN NATIONAL GAMING, INC.

 

NOTICE OF AWARD OF PHANTOM STOCK UNIT

 

The purpose of this Notice is to inform you that a Phantom Stock Unit Award has been made to you by Penn National Gaming, Inc. (the “Company”) pursuant to the Penn National Gaming, Inc. 2018 Long Term Incentive Compensation Plan, as amended (the “Plan”), as follows:

 

	
Name and Address
    	
 
    
	
of Grantee:
    	
 
    
	
 
    	
 
    
	
Date of Grant:
    	
                                     ,   20      
    
	
 
    	
 
    
	
Type of Grant:
    	
Phantom Stock Unit   Award
    
	
 
    	
 
    
	
Number of units:
    	
 
    
	
 
    	
 
    
	
Vesting Date
    	
                  units   on                    ,   20
    
	
 
    	
                  units   on                    ,   20
    
	
 
    	
                  units   on                    ,   20
    
	
 
    	
                  units   on                    ,   20
    
	
 
    	
                  units   on                    ,   20
    

 

Each vested Phantom Stock Unit is payable in cash in an amount equal to the fair market value (as defined in the Plan) of one share of Common Stock of the Company, determined as of the vesting date.  You have no right to receive shares of Common Stock of the Company under this Award.

 

The Award is subject to all the terms and conditions of the Penn National Gaming, Inc. 2018 Long Term Incentive Compensation Plan, as amended, which is available upon request, and the Award Agreement attached hereto.

 

	
 
    	
PENN NATIONAL   GAMING, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    
	
 
    	
Title:
    

 

 

PENN NATIONAL GAMING, INC.

PHANTOM STOCK UNIT AWARD AGREEMENT

 

All Phantom Stock Unit Awards are subject to the provisions of the 2018 Long Term Incentive Compensation Plan, as amended (the “Plan”) and any rules and regulations established by the Compensation Committee of the Board of Directors of Penn National Gaming, Inc.  A copy of the Plan is available upon request.  Unless specifically defined herein, words used herein with initial capitalized letters are defined in the attached Notice of Award of Phantom Stock Unit (the “Notice”) or the Plan.

 

The terms provided herein are applicable to the Phantom Stock Unit Award specified in the attached the Notice.  Different terms may apply to any prior or future awards under the Plan.

 

1.                                      Grant of Phantom Stock Unit.

 

Effective as of the Date of Grant identified on the Notice, the Company has granted and issued to you an Award of Phantom Stock Units (“PSUs”).  The number of PSUs subject to the Award is identified in the Notice.  Each PSU represents the right to a cash payment upon vesting of the PSU equal to the Fair Market Value on the vesting date of one share of the Company’s Common Stock.

 

2.                                      Vesting.

 

The PSUs shall vest on the dates and in the number of units set forth in the attached Notice, provided that you are employed by the Company or a Subsidiary or serving as a Director, as applicable, on the vesting date.  In addition, the PSUs shall vest upon termination of your employment after a Change of Control in accordance with the Plan, or in the event your employment terminates due to death or Disability.  If your service as an Employee or Director of the Company, as applicable, terminates for any other reason, then all of the PSUs that remain unvested at such time shall be cancelled and forfeited.  This means that you will receive no payment for any PSU that is forfeited.

 

3.                                      Payment Date.

 

The Company will deliver to you a cash payment for each vested and outstanding PSU within thirty (30) days following the vesting date, subject to the terms of this Award Agreement.

 

4.                                      Payment of Taxes.

 

Upon the issuance of any cash payment in accordance with the foregoing, the Company shall withhold all applicable tax-related items legally payable by you from such cash payment.

 

5.                                      Nature of Phantom Stock Units.

 

PSUs are used solely as a device to measure and determine the cash amount that will be paid to you following the date on which the PSUs vest.  PSUs are not treated as property or as a trust fund of any kind.  Nothing in this Award Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.  All amounts attributable to the PSUs shall be and remain the sole property of the Company, and your rights under this Award Agreement

 

2

 

and the Plan are limited to the right to receive cash following the date the PSUs vest.  You have no right to receive shares of Common Stock under this Award Agreement.

 

6.                                      No Right To Continued Service.

 

This PSU Award does not give you the right to continue in service with the Company in any capacity.  The Company reserves the right to terminate your services at any time, with or without cause, subject to any employment agreement or other contract.

 

7.                                      Inalienability of Rights.

 

The PSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or otherwise encumbered except in accordance with Section 12.8 of the Plan.

 

8.                                      Applicable Law.

 

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

 

9.                                      Effect and Construction of this Award Agreement.

 

The text of the Plan is incorporated in this Award Agreement by reference.

 

This Award Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award.  Any prior agreements, commitments or negotiations concerning this Award are superseded.  This Award Agreement may be amended in a way that is adverse to you or your beneficiaries only by another written agreement, signed by both parties, otherwise, the rights of the Board or Grantor as set forth in the Plan control as to any modification, alteration or amendment of this Award Agreement.

 

3Exhibit 10.4

 

PENN NATIONAL GAMING, INC.

 

NON-QUALIFIED STOCK OPTION CERTIFICATE

 

This certifies that an option to purchase shares of Common Stock of Penn National Gaming, Inc. has been granted pursuant to the Penn National Gaming, Inc. 2018 Long Term Incentive Compensation Plan, as amended, as follows:

 

	
Name   and Address 
    	
 
    
	
of   Optionee:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date   of Grant:
    	
          ,   20  
    
	
 
    	
 
    
	
Type   of Option:
    	
Non-Qualified Stock   Option
    
	
 
    	
 
    
	
Number of shares   subject to Option:
    	
 
    
	
 
    	
 
    
	
Option   Price:
    	
$            
    
	
 
    	
 
    
	
Vesting   Date(s):
    	
          shares on           , 20
    
	
 
    	
shares   on           , 20
    
	
 
    	
shares   on           , 20
    
	
 
    	
shares   on           , 20
    
	
 
    	
 
    
	
Expiration   Date:
    	
          ,   20  
    

 

The option is subject to all the terms and conditions of the Penn National Gaming, Inc. 2018 Long Term Incentive Compensation Plan, as amended, a copy of which is available upon request.

 

	
Date:
    	
 
    	
 
    	
PENN NATIONAL GAMING, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    
	
 
    	
Title:
    

 

 

PENN NATIONAL GAMING, INC.

STOCK OPTION TERMS

 

All Stock Options are subject to the provisions of the 2018 Long Term Incentive Compensation Plan, as amended (the “Plan”) and any rules and regulations established by the Compensation Committee of the Board of Directors of Penn National Gaming, Inc. (“PNG”).  A copy of the Plan is available upon request.  Words used herein with initial capitalized letters are defined in the attached Non-Qualified Stock Option Certificate or the Plan.

 

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

 

I.                                        OPTION PERIOD

 

You may exercise your Stock Options during the Option Period, which begins on the Vesting Dates and ends on the Expiration Date.  The Stock Options vest in 25% installments on each Vesting Date.  The Vesting Dates are the first, second, third and fourth anniversaries of the Date of Grant.  Thus, you may exercise up to 25% of your Stock Options on the first Vesting Date, up to another 25% of your Stock Options on the second Vesting Date, and so on.  The Expiration Date is ten (10) years from the Date of Grant.  However, the Option Period may end sooner if your employment is terminated under certain circumstances.

 

II.                                   TERMINATION OF EMPLOYMENT

 

If you cease to be an Employee or Director of the Company and all Subsidiaries, as the case may be, for any reason (other than as specified in clauses (i), (ii) or (iii) below), then your Stock Options that are exercisable as of the termination or cessation date shall be cancelled and forfeited at the end of the 120th day after such date and all Stock Options that are not exercisable as of the termination or cessation date shall be forfeited and cancelled as of such date; except that, in cases of where such termination of employment or cessation of service is a result of (i) death or Disability, in which case the Stock Options that are not then exercisable shall thereupon become exercisable and all Stock Options shall remain exercisable for the balance of their respective terms, (ii) resignation (other than for Retirement), in which case the Stock Options that are exercisable as of such termination or cessation date shall be cancelled and forfeited at the end of the 30th day after such date, and (iii) termination for Cause by the Company, a Subsidiary, or the Board, in which case all of the Stock Options, whether or not then exercisable, shall be cancelled and forfeited as of such termination date.

 

III.                              TRANSFERABILITY

 

In general, Stock Options may be exercised during your lifetime only by you and may not be assigned or otherwise transferred to anyone else; provided, however, that Options are transferable to family members, subject to certain restrictions and with certain tax implications.  Options are transferable upon your death by will or the laws of distribution and descent.

 

IV.                               PAYMENT

 

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

 

 

Penn National Gaming, Inc.
 Understanding How Non-Qualified Stock Options Work

 

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

 

How Do Stock Options Work?

 

A stock option is the right, subject to certain conditions, to purchase shares of PNG Common Stock at a fixed price.  The per share price at which Shares of Common Stock may be purchased when the Stock Option is exercised is referred to as the Option Price.  The Option Price is fixed on the Date of Grant and does not change for the life of the Stock Option.  However, the market price of PNG stock changes and will ultimately determine the gain, if any, from your Stock Option.  If the value of PNG stock increases, you will be able to buy PNG stock below the market price at the time of exercise.  For example, if you have been granted Stock Options to purchase 100 shares, at an Option Price of $25 and the price of PNG stock has grown to $40 on the date you choose to exercise, you would be able to purchase shares that are worth $4,000 for only $2,500, a pre-tax gain of $15 per share.  You will be subject to Federal income tax with respect to the Stock Option when you exercise your Stock Option.  THE TAX RULES APPLICABLE TO NON-QUALIFIED STOCK OPTIONS ARE COMPLEX.  YOU SHOULD CONSULT WITH YOUR FINANCIAL ADVISOR FOR MORE INFORMATION.

 

Stock Option Basics

 

The Option Price is set at the closing sales price of a share of Common Stock of PNG stock on the immediately preceding business day of the date the Stock Option is awarded.

 

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

 

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

 

Your Stock Option can no longer be exercised after the Expiration Date, which is ten (10) years after the Date of Grant.  The Stock Option will expire sooner if you leave PNG under certain circumstances.  For example, if you were granted a Stock Option to purchase 100 shares of PNG Common Stock, and you remain employed by PNG for ten (10) years, the Stock Option is exercisable as follows:

 

	
Number of Shares
    	
 
    	
Vesting Period
    	
 
    	
Option Period
    
	
25 shares
    	
 
    	
Date of Grant -
   First Anniversary
   of Date of Grant
    	
 
    	
First Anniversary of   Date of Grant -
   Tenth Anniversary of Date of Grant
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
25 shares
    	
 
    	
Date of Grant -
   Second Anniversary
   of Date of Grant
    	
 
    	
Second Anniversary of   Date of Grant -
   Tenth Anniversary of Date of Grant
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
25 shares
    	
 
    	
Date of Grant -
   Third Anniversary
   of Date of Grant
    	
 
    	
Third Anniversary of   Date of Grant -
   Tenth Anniversary of Date of Grant
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
25 shares
    	
 
    	
Date of Grant -
   Fourth Anniversary
   of Date of Grant
    	
 
    	
Fourth Anniversary of   Date of Grant -
   Tenth Anniversary of Date of Grant

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