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Exhibit 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 30th day of July, 2001, between
Penn National Gaming, Inc., a Pennsylvania corporation with its principal
offices at 825 Berkshire Boulevard, Wyomissing, PA, ("Company") and William
Clifford ("Executive"), 122 Oak Hill Lane, Wyomissing, PA 19610.
BACKGROUND
From and after July 30, 2001, Company wishes to employ Executive and
Executive wishes to enter into the employ of Company on the terms and conditions
contained in this Employment Agreement.
The parties are entering into this Employment Agreement for the purpose
of setting forth the terms and conditions under which Company agrees to employ
Executive and Executive agrees to accept such employment.
There are no other agreements either oral or in writing between the
parties.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises and covenants contained herein, Company and Executive agree as follows:
1. Employment.
Company hereby employs Executive and Executive accepts such employment
on the terms and conditions hereinafter set forth.
2. Term.
The term ("Term") of this Employment Agreement shall begin on July 30,
2001, (the "Commencement Date") and shall terminate at 11:59 PM on July 30,
2003, provided that, no earlier than 90 days, but not later than 60 days prior
to that date, either party gives written notice to the other that it or he
desires the Agreement to terminate. Absent such notice, the Agreement shall
renew for one (1) year periods. Said additional periods are governed by these
same notice requirements.
In the event that the Company, without cause, elects not to continue
this Agreement beyond the initial term or elects, without cause, not to offer an
"at will" employment relationship, Executive will receive, on the date of
termination, a severance allowance in an amount equal to the full amount of Base
Salary and health insurance benefits that would be due to Executive for a period
of six (6) months.
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3. Service to Company.
3.1 Executive's Responsibilities. On the terms and subject to
the conditions set forth in this Employment Agreement, the Company shall employ
Executive to serve as Chief Financial Officer of the Company. Executive shall
report to the President/Chief Operating Officer of the Company and perform all
duties customarily attendant to the position of Chief Financial Officer of the
Company. Executive shall perform such services and duties commensurate with
Executive's position as may from time to time be reasonably prescribed by the
President/COO. It is understood and agreed that the President/COO may prescribe
additional duties and responsibilities for the Executive that may expand the
scope of Executive's duties and responsibilities and may result in the Executive
supervising more personnel than the Executive presently is supervising.
3.2 Full Time. Executive shall devote his full business time,
attention, energies and best efforts to the performance of his duties hereunder
and to the promotion of the business and interests of the Company. The foregoing
shall not be construed, however, as preventing Executive from serving on the
board of philanthropic organizations (so long as his service does not materially
interfere with his duties hereunder) or investing his assets in such form or
manner as will not require services on the part of Executive in the operations
of the business in which such investment is made. If such business has a class
of securities registered under the Securities Exchange Act of 1934 then the
interest of Executive therein is solely that of an investor owning not more than
3% of any class of the outstanding equity securities of such business.
4. Financial Matters.
4.1 Base Salary. Executive shall be paid a salary at the rate
of $275,000 per year (the "Base Salary"). The Base Salary shall be paid in
installments in arrears in accordance with Company's regular payroll practices.
Company may, in its discretion, increase Executive's Base Salary and Executive's
other compensation provided for herein, upon the annual performance review of
the Executive to be completed by the anniversary date of the Commencement Date
hereof.
4.2 Bonus. In addition to the Base Salary, Company may pay to
Executive a bonus of up to 50% of his Base Salary based upon Executive's
performance keyed to standards established by Company, and at such times as the
President/COO may, from time to time, determine in recognition of Executive's
exemplary services.
4.3 Stock Options. As additional consideration for Executive
entering into this Employment Agreement, Penn will issue options pursuant to its
1994 Stock Option Plan for fifty thousand (50,000) shares of Penn National
Gaming, Inc. common stock at an exercise price of $18.95 per share, which is the
closing on July 30, 2001, Executives first day of employment by Company. Such
options will vest as follows:
i. 25% on the first anniversary of the date of grant
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ii. 25% on the second anniversary of the date of grant
iii. 25% on the third anniversary of the date of grant
iv. 25% on the fourth anniversary of the date of grant
4.4. Fringe Benefits. Executive shall be entitled to
participate in all insurance, and other fringe benefit programs of Company to
the extent and on the same terms and conditions as are accorded to other
similarly situated executives of Company, provided, however, that nothing herein
shall be deemed to require grants and awards to Executive under any benefit
plans which provide for awards or grants at the discretion of the Board of
Directors of the Company or of any committee thereof. Executive shall be
entitled in each calendar year to four weeks paid vacation, prorated for 2001,
to be taken by the Executive at such time or times as agreed upon by the Company
and Executive.
4.5 Business Expenses. Company will pay, or reimburse the
Executive for, all ordinary and reasonable out-of-pocket business expenses
incurred by Executive in connection with his performance of services hereunder
during the Term in accordance with Company's expense authorization and approval
procedures then in effect.
4.6 Relocation Expenses. Company will pay, or reimburse the
Executive for moving expenses related to his and his immediate family's
relocation. Such payment/reimbursement will be based upon Penn National Gaming,
Inc.'s "Relocation Policy" dated June 2001.
5. Death or Total Disability of Executive.
5.1 Death. In the event of the death of this Executive during
the Term of this Employment Agreement, this Employment Agreement shall terminate
effective as of the date of Executive's death, and Company shall not have any
further obligation or liability hereunder except that Company shall pay to
Executive's designated beneficiary or, if none, his estate the portion, if any,
of Executive's Base Salary for the period up to Executive's date of death which
remains unpaid and the amount of any unreimbursed expenses subject to the
requirements of subsection 4.5 above.
5.2 Total Disability. In the event of the total disability of
Executive during the term of this Employment Agreement, this Employment
Agreement shall terminate effective as of the date of Executive's total
disability, and Company shall pay to Executive the portion, if any, of
Executive's Base Salary for the period up to Executive's date of disability
which remains unpaid and the amount of any unreimbursed expenses subject to the
requirements of subsection 4.5 above. The term "Total Disability" when used
herein, shall have the definition set forth in Company's Long Term Disability
Insurance Policy in effect at the time of any such determination.
6. Termination of Employment by Company for Cause.
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In addition to termination pursuant to Section 5, Company may discharge
Executive and thereby terminate Executive's employment hereunder for the
following reasons (for "Cause"): (i) habitual intoxication; (ii) drug addiction;
(iii) conviction of a felony; (iv) 15 days after written notice of continued
insubordination or material violation of any rule or regulation that may be
established by Company from time to time for the conduct of Company's business;
(v) misappropriation of corporate funds or other acts of dishonesty; or (vi)
loss by Executive of any casino or gaming license or registration or finding of
suitability required in the conduct of the performance of Executive's duties
hereunder.
In the event that Company shall discharge Executive pursuant to Section
6, Company shall not have any further obligations or liability to Executive
under this Employment Agreement, except that Company shall pay to Executive the
portion, if any, of Executive's Base Salary for the period up to Executive's
date of discharge which remains unpaid and the amount of any unreimbursed
expenses subject to the requirements of subsection 4.5 above.
7. Termination of Employment for Non-Performance.
Company will make periodic evaluations of Executive's work
performance and communicate the results of these evaluations to Executive,
normally verbally. In the event that Executive's work performance is held to
be substandard/unacceptable, Employer will communicate this in writing to
Executive, along with specific recommendations as to how Executive can
improve his/her performance to an acceptable level. A reassessment of
Executive's performance will occur thirty (30) days following the date of the
written notice. If the performance improvements requested by Company have
occurred, Executive will be notified, in writing, that his/her performance is
perceived by Company to be acceptable. If the performance improvements
requested by Employer have not occurred during the initial thirty (30) day
period, Company will notify Executive, in writing, of this fact, along with
specific recommendations as to how Executive's performance can be brought to
an acceptable level. Such written notice will include a last and final
warning that failure to achieve an acceptable performance level during the
next thirty (30) days will result in his termination. A reassessment of
Executive's performance will occur thirty (30) days following the date of
said second written notice. If the performance improvements requested by
Employer have occurred, Executive will be notified, in writing, that his
performance is perceived by Employer to be acceptable. If the performance
improvements requested by Company have not occurred, Executive will be
notified in writing of his termination, along with the performance related
reasons therefor.
In the event that Company shall discharge Executive pursuant to Section
7, Company shall not have any further obligations or liability to Executive
under this Employment Agreement, except that Company shall pay to Executive the
portion, if any, of Executive's Base Salary for the period up to the Executive's
date of discharge which remains unpaid and the amount of any unreimbursed
expenses subject to the requirements of Subsection 4.5 above.
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8. Non-Solicitation.
Executive agrees that during the entire Term of this Agreement, and for
one year after Executive ceases to be employed by Company for any reason
whatsoever, Executive shall not directly or indirectly solicit for employment
and will not hire during any period for which Company is paying severance or in
any other fashion hire any of the employees of Company or any of its affiliated
companies.
9. Non-Compete.
Executive agrees that during the term of employment by Company, and for
any period following employment by Company during which Executive is receiving
severance payments from Company, employee will not, directly or indirectly,
individually, or as a partner, stockholder, officer, director, principal, agent,
employee, or in any other capacity or relation, enter into any business or
employment in competition with the employer.
10. Notices.
All notices, requests, demands, claims, and other communications
hereunder will be in writing and addressed to the intended recipient as set
forth below. Any party hereto shall give any notice, request, demand, claim or
other communication hereunder by registered or certified mail, return receipt
requested, or delivery by hand or any nationally recognized courier service that
requires a return receipt or signature for delivery. Any party hereto may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner herein set forth.
If to the Company:
Joseph A. Lashinger, Jr., Esq.
Vice President & General
Counsel
Penn National Gaming, Inc.
825 Berkshire Blvd., Suite 200
Wyomissing, PA 19610
If to Executive:
William Clifford
122 Oak Hill Lane
Wyomissing, PA 19610
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11. No Conflicts of Interest.
Executive agrees that throughout the period of Executive's employment
hereunder, Executive will not perform any activities or services, or accept
other employment relationship that would interfere with or present a conflict of
interest concerning Executive's employment with the Company. Executive agrees
and acknowledges that Executive's employment by the Company is conditioned upon
Executive adhering to and complying with the business practices and requirements
of ethical conduct set forth in writing from time to time by the Company in its
employee manual or similar publication.
12. Confidentiality.
Executive recognizes that Company and its affiliated companies has
and will continue to develop business strategies, marketing plans, customer
lists and other related business information for its customers. Company
considers this information as its trade secrets. Executive agrees that he
will not, directly or indirectly, during the course of his employment and
forever thereafter, upon termination of this employment for any reason
whatsoever, divulge to any other person, firm or corporation, without
Company's consent, any information acquired by Executive by any means
whatsoever during the employment by Company, relating to or concerning any
phase of Company's operations.
13. Document Surrender.
Executive, at the expiration of his employment for any reason
whatsoever, shall surrender and deliver to employer all documents,
correspondence and any other information, of any type whatsoever, from
Company or any of its agents, servants, employees, suppliers, and existing or
potential customers, that come into employee's possession by any means
whatsoever, during the course of employment.
14. Governing Law, Venue and Jurisdiction.
This Employment Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. This Employment
Agreement shall be enforceable in the Court of Common Pleas of the County of
Berks, Pennsylvania. Should federal jurisdiction apply then venue shall be in
the United States District Court, Eastern District of Pennsylvania.
15. Contents of Agreement: Amendment and Assignment.
This Employment 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 between
Executive and Company with respect to such subject matter. This Employment
Agreement cannot be changed, modified or terminated except upon written
amendment duly executed by the parties hereto. All of the terms and
provisions of this Employment Agreement shall be binding
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upon and inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the parties hereto, including, but
not limited to, any successor to the business of Company regardless of the
forum of the transaction, except that the duties and responsibilities of
Executive hereunder are of a personal nature and shall not be assignable in
whole or in part by Executive.
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties on the date first above written.
Penn National Gaming, Inc.
a Pennsylvania Corporation
By: ________________________
Attest: __________________
Kevin DeSanctis
President/COO
By: ________________________
Attest: __________________
William Clifford
Executive