SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 13, 2006
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Commission File Number 1-16791
Delaware |
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51-0414140 |
(State or other jurisdiction of incorporation) |
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(IRS Employer Identification No.) |
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1131 N. DuPont Highway, Dover, Delaware |
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19901 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (302) 674-4600
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On February 13, 2006, the Company entered into Amended and Restated Employment and Non-Compete Agreements with its four executive officers and an Amended and Restated Non-Compete Agreement with one of its directors.
Following is a summary of certain material terms of these agreements. The agreements are attached as exhibits to this Form 8-K.
Executive Officer Agreements
The employment and non-compete agreements entered into with our executive officers were entered into on February 13, 2006 (superseding the earlier agreements dated June 16, 2004) and are substantially identical in the following respects.
The agreements are only operative in the event of a Change in Control (as defined below). The agreements do not create an employment agreement between the Company and any executive officer providing for employment for any period of time prior to a Change in Control. All of our executive officers can be terminated at the will of the Company at any time prior to a Change in Control with or without Cause (as defined below). The agreements all have a two (2) year term and shall automatically renew for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee has discretion to terminate the automatic renewal provision. Change in Control is defined under the agreements to mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the stockholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
There are no other agreements or understandings between the Company and any executive officer which guarantee continued employment or guarantee any level of compensation, including incentive or bonus payments, to the executive officer.
In the event of a Change in Control during the term of the agreements and provided that the executive officer is employed by the Company when the Change in Control occurs, the Company must pay to the executive officer a certain Change in Control Fee in the amount described below. Each agreement specifies an Extension Period for a certain number of months, also as described below, during which the executive officer shall receive a monthly payment equal to one-twelfth of the sum of (a) the executive officers then-current annual base salary (excluding any incentive or bonus), and (b) the amount of any cash bonus awarded to the executive officer for the then-most recently concluded fiscal year of the Company (the Monthly Amount). The agreements for the Chief Executive Officer and the Executive Vice President provide that for purposes of calculating the Monthly Amount, the executive officers cash bonus shall be deemed to be not less than 75% and not greater than 125% of the average cash bonus awarded to the executive officer for the then most recently concluded fiscal year of the Company and the preceding two fiscal years. The executive officer shall also be entitled to health, welfare and certain fringe benefits no less favorable than those which he had prior to the Change in Control.
During the Extension Period, the executive officer agrees not to, directly or indirectly, engage in any capacity in the casino business or to assist any business that is in the casino business and that competes with the Company anywhere in the State of Delaware or within a 50 mile radius of the Companys facility in Dover, Delaware. The executive officer is also prohibited, during the Extension Period, from soliciting the Companys customers and employees.
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During the Extension Period, the executive officer shall continue as an employee. The Company is free to terminate the executive officer with or without Cause. If termination is without Cause, the Company shall continue to pay the Monthly Amount for the Extension Period. If the termination is for Cause, the Company shall continue to pay one-half of the Monthly Amount since the agreement allocates 50% of the Monthly Amount post-termination to severance and 50% is paid in consideration of the executive officers non-compete covenants. Cause is defined under the agreement to mean a unanimous determination by the Board of Directors that the executive officer has been convicted of a felony, has embezzled from or committed fraud against the Company, which embezzlement or fraud has a material adverse financial impact on the Company or gross insubordination which has continued after written notice of such from the Board of Directors which determination is upheld by a final, non-appealable arbitration award.
The executive officer shall be entitled to continue receiving the Monthly Amount during the Extension Period if he voluntarily terminates his employment for Good Reason. Good Reason is defined under the agreements to mean a (i) reduction in title, responsibilities, administrative support or support services, (ii) relocation of executive officers office, (iii) travel at a level that exceeds the travel requirements before the Change in Control, (iv) any breach by the Company of its obligations under the agreement, (v) any breach by the purchaser under a merger or acquisition agreement pursuant to which the Change in Control takes place relating to employee benefits or directors and officers insurance or indemnification provisions, or (vi) any reason whatsoever two months after the Change in Control.
Upon termination of the executive officers employment, he shall also be entitled to receive a pension benefit calculated on the Monthly Amount for the remainder of the Extension Period equal to the amount which he would have received under the Companys retirement program had he remained an employee eligible to participate in the retirement program, which benefit will be paid in a lump sum using actuarial assumptions under the retirement program and the discount rate which would be utilized for purposes of funding a plan termination.
To the extent that any of the payments or benefits due to the executive officer constitute an excess parachute payment under the Internal Revenue Code and result in the imposition of an excise tax, the agreement requires that the executive be paid the amount of such excise tax by the Company plus any additional amounts necessary to place the executive officer in the same after-tax position as he would have been had no excise tax been imposed.
The executive officers individual agreements provide for the following: Denis McGlynn, President and Chief Executive Officer $500,000 Change in Control Fee and 60 Month Extension Period. Mr. McGlynns agreement also requires that for a 24 month period following a Change in Control he will provide certain assistance to the Company with respect to legislative matters within the State of Delaware. Edward J. Sutor, Executive Vice President and Chief Operating Officer $250,000 Change in Control Fee and 24 Month Extension Period. Timothy R. Horne, Senior Vice President-Finance, Treasurer and Chief Financial Officer $250,000 Change in Control Fee and 24 Month Extension Period. Klaus M. Belohoubek, Senior Vice President-General Counsel and Secretary $250,000 Change in Control Fee and 24 Month Extension Period. Mr. Belohoubeks agreement also requires that the Company provide him with certain accommodations relative to office space and office equipment through January 2008.
Director Agreement
On February 13, 2006, we also entered into an Amended and Restated Non-Compete Agreement with one of our directors Patrick J. Bagley. This agreement is substantially identical to the Executive Officer Agreements described above in the following respects.
The Agreement is only operative in the event of a Change in Control. Change in Control is defined in the same manner as defined in the Executive Officer Agreements described above. The agreement has the same
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term as the Executive Officer Agreements described above.
In the event of a Change in Control during the term of Agreement and provided that the director serves as a director of the Company when the Change in Control occurs, the Company must pay to the director a Change in Control Fee in the amount of $100,000.
For the one (1) year period following the Change in Control, the director agrees not to compete with the Company in the casino business or to solicit the Companys customers and employees. The scope of the non-competition covenants and the territory covered are the same as provided in the Executive Officer Agreements described above.
The agreement contains no provisions relative to continuing the directors tenure with the Company for any fixed period of time prior to a Change in Control. There are no other agreements or understandings between the Company and the director which guarantee the directors continued tenure with the Company or guarantee any level of compensation, including incentive or bonus payments, to the director.
The agreement contains the same tax gross-up as provided in the Executive Officer Agreements described above to the extent that the payments to the director constitute an excess parachute payment under the Internal Revenue Code.
(c) Exhibits
10.1 Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Denis McGlynn dated February 13, 2006.
10.2 Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Edward J. Sutor dated February 13, 2006.
10.3 Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Timothy R. Horne dated February 13, 2006.
10.4 Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Klaus M. Belohoubek dated February 13, 2006.
10.5 Amended and Restated Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Patrick J. Bagley dated February 13, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Denis McGlynn |
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President and Chief Executive Officer |
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Dated: February 17, 2006 |
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EXHIBIT INDEX
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Number |
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Description |
10.1 |
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Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Denis McGlynn dated February 13, 2006. |
10.2 |
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Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Edward J. Sutor dated February 13, 2006. |
10.3 |
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Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Timothy R. Horne dated February 13, 2006. |
10.4 |
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Amended and Restated Employment and Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Klaus M. Belohoubek dated February 13, 2006. |
10.5 |
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Amended and Restated Non-Compete Agreement between Dover Downs Gaming & Entertainment, Inc. and Patrick J. Bagley dated February 13, 2006. |
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EXHIBIT 10.1
AMENDED & RESTATED
EMPLOYMENT AND NON-COMPETE AGREEMENT
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
AND
DENIS MCGLYNN
THIS AGREEMENT, is by and between Dover Downs Gaming & Entertainment, Inc. (the Company) and Denis McGlynn (the Executive), is effective as of this 13th day of February 2006 (the Effective Date), and amends and restates the Employment and Non-Compete Agreement between the parties dated June 16, 2004 (the Prior Agreement).
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by the Company or an affiliate thereof in an executive position; and
WHEREAS, the Executive has, in the course of his employment, developed relationships with employees and customers of the Company, and learned valuable and sensitive information concerning the Companys operations, policies and procedures; and
WHEREAS, the Executive has, in the course of his employment, been exposed to valuable and sensitive Company reports, files, memoranda, records, software, and other property; and
WHEREAS, the Company recognizes that the solicitation of its employees and customers, and the use or disclosure of the policies, procedures, information, documents, and property of the Company would be damaging to the Companys interests; and
WHEREAS, the Company has determined that it is in the best interests of the Company to protect its interests through the use of Employment and Non-Compete Agreements; and
WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders for the Company to agree to provide benefits under the circumstances described below to the Executive and other executives who agree to such an agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
Announcement shall mean a press release issued by the Company announcing the signing of an agreement whereby the Company will be acquired by or merge with any other entity or a tender offer for the shares of the Company stock will be initiated.
Board shall mean the Board of Directors of the Company or the ultimate corporate parent entity which owns the Company if the Company is not public.
Cause shall mean a unanimous determination by the Board that the Executive has been convicted of a felony, has embezzled from, or committed fraud against, the Company which embezzlement or fraud has a material adverse financial impact on the Company or gross insubordination which has continued after written notice of such from the Board which determination is upheld by a final, non-appealable arbitration award pursuant to Section 6.
Change in Control shall mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock following the Announcement or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the shareholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
Change in Control Fee shall mean $500,000.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company Information shall mean (i) confidential information including, without limitation, information received from third parties under confidential conditions, (ii) information subject to the Companys and its affiliates attorney-client or work-product privilege; and (iii) other technical, business, legal or financial information (including, without limitation, customer lists), the use or disclosure of which might reasonably be construed to be contrary to the Companys and its affiliates interests.
Date of Termination shall mean the date on which the Executives employment is terminated.
Employment Period shall mean the period of time during the Extension Period the Executive is an employee of the Company.
Extension Period shall mean the 60 month period following the Change in Control.
Good Reason shall mean a (i) reduction in title, responsibilities, administrative support or support services, (ii) relocation of Executives office, (iii) travel at a level that exceeds the travel requirements before the Change in Control, (iv) any breach by the Company of its obligations hereunder, (v) any breach by the purchaser under a merger or acquisition agreement pursuant to which the Change in Control takes place relating to employee benefits or directors and officers
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insurance or indemnification provisions, or (vi) any reason whatsoever two months after the Change in Control.
Monthly Amount shall be an amount equal to one-twelfth of the sum of (a) the Executives then current annual base salary (excluding any incentive or bonus), and (b) the amount of any cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company , provided that for purposes of this calculation only, the cash bonus shall be deemed to be (1) not less than 75% of the average cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company and the preceding two fiscal years, and (2) not greater than 125% of the average cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company and the preceding two fiscal years.
Non-Compete Monthly Amount shall mean the portion of the Monthly Amount which is paid in consideration of the Executives agreement to the restrictions and other provisions of Section 7, with the remainder of the Monthly Amount and other benefits under this Agreement paid after the Employment Period to be treated as severance. Executives Non-Compete Monthly Amount shall be calculated by multiplying the Monthly Amount by fifty percent.
Retirement Plan shall mean the Companys qualified defined benefit retirement plan(s) in which the Executive participates.
SERP shall mean any and all supplemental retirement plans in which the Executive participates (including, but not limited to, any benefit restoration plan(s) maintained by the Company from time to time).
This Agreement shall be effective as of the Effective Date and shall automatically terminate if the Executives employment is terminated. Renewal of this Agreement shall automatically occur for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee shall have the discretion to terminate this automatic renewal provision.
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In the event that Executives employment is terminated by the Company for Cause (and Executive was not capable of voluntarily terminating for Good Reason at or prior to such time) or if Executive voluntarily terminates without Good Reason, the Company shall remain obligated to pay the Non-Compete Monthly Amount but shall not be obligated to pay the balance of the Monthly Amount. Executive is free to terminate his employment for Good Reason.
Following a Change in Control, the Executive will, except as provided below, continue as an employee during the Extension Period. During the Employment Period:
Notwithstanding Executives ability to voluntarily terminate his employment under clauses (i) and (vi) under the definition of Good Reason, Executive agrees, for a 24 month period following the Change of Control, to assist the Company from time to time, at mutually agreeable times, with respect to legislative matters within the State of Delaware in terms of sharing his knowledge of the industry, key legislators and regulators and the legislative process in general and in terms of making appropriate introductions within the Delaware community, provided that
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Executive shall not be required to engage in lobbying activities or assist in day-to-day matters, and further provided that Executive retains the right to completely terminate his employment under any other clause defining Good Reason.
No breach or alleged breach of this Section 4 shall constitute grounds for, or otherwise entitle, the Company to offset payments otherwise owing to the Executive under this Agreement.
All payments provided for in this Agreement shall be paid in cash from the general funds of the Company; provided, however, that such payments shall be reduced by the amount of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or special or separate fund established by the Company to assure such payments. The Company shall not be required to establish a special or separate fund or other segregation of assets to assure such payments.
In addition to the Companys other obligations under this Agreement, the Company shall pay all legal fees and expenses incurred in a legal proceeding (including arbitration) by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement (including, without limitation, any rights to a tax gross-up). Such payments are to be made within five days after the Executives request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that if the Executive institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that the Executive has failed to prevail substantially, he shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on his behalf under this Section 6.
All disputes with respect to the subject matter of this Agreement and the enforcement of rights hereunder shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (the AAA). Each party hereto shall designate one arbitrator (who need not be impartial) within fifteen (15) days after notice of the dispute. The two arbitrators so designated shall endeavor to designate promptly a third, neutral arbitrator. If the two arbitrators have not designated the third arbitrator by the fifteenth (15 th ) day following the designation of the second arbitrator, or if a second arbitrator has not been designated by the (15 th ) day following the designation of the first, either Party may request the AAA to designate the remaining arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. The arbitrators shall have the power to render equitable relief as may be available in accordance with applicable law. Unless otherwise agreed by the parties, any such arbitration shall take place in such City within the United States as Executive may designate, and shall be conducted in accordance with the Rules of the AAA. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. The arbitrators award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the parties.
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If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the fullest extent consistent with law continue in full force and effect.
Except as provided below, this Agreement may not be terminated, modified or amended other than by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
The Company shall require (a) any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company and (b) the parent entity owning or controlling such successor expressly to assume and agree to perform under the terms of this Agreement in the same manner and to the same extent that the Company and its affiliates would be required to perform it if no such succession had taken place (provided that such a requirement to perform which arises by operation of law shall be deemed to satisfy the requirements for such an express assumption and agreement). Except as provided herein, the Executives rights hereunder shall not be assignable.
The Company may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
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This Agreement contains the entire understanding between the Company and the Executive with respect to the subject matter hereof and supersedes any prior agreement between the Company and the Executive regarding non-compete provisions, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided and not expressly dealt with in this Agreement. This Agreement supersedes the Prior Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Company and their respective permitted successors and assigns.
Nothing herein contained shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the Executive by the Company for any fixed period of time prior to a Change in Control. The Executives employment with the Company is terminable at will by the Company or Executive and each shall have the right to terminate Executives employment with the Company at any time, with or without Cause, subject to the Companys obligation to provide any benefits required hereunder. There are no other agreements or understandings between the Company and the Executive which guarantee continued employment to the Executive or guarantee any level of compensation, including incentive or bonus payments, to the Executive.
Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
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or to such address as either party shall have previously specified in writing to the other.
The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Delaware.
This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the Company through its officer duly authorized, and the
Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the Effective Date.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Klaus M. Belohoubek |
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Its: Senior Vice President-General Counsel |
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EXECUTIVE |
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/s/ Denis McGlynn |
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EXHIBIT 10.2
AMENDED & RESTATED
EMPLOYMENT AND NON-COMPETE AGREEMENT
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
AND
EDWARD J. SUTOR
THIS AGREEMENT, is by and between Dover Downs Gaming & Entertainment, Inc. (the Company) and Edward J. Sutor (the Executive), is effective as of this 13th day of February 2006 (the Effective Date), and amends and restates the Employment and Non-Compete Agreement between the parties dated June 16, 2004 (the Prior Agreement).
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by the Company or an affiliate thereof in an executive position; and
WHEREAS, the Executive has, in the course of his employment, developed relationships with employees and customers of the Company, and learned valuable and sensitive information concerning the Companys operations, policies and procedures; and
WHEREAS, the Executive has, in the course of his employment, been exposed to valuable and sensitive Company reports, files, memoranda, records, software, and other property; and
WHEREAS, the Company recognizes that the solicitation of its employees and customers, and the use or disclosure of the policies, procedures, information, documents, and property of the Company would be damaging to the Companys interests; and
WHEREAS, the Company has determined that it is in the best interests of the Company to protect its interests through the use of Employment and Non-Compete Agreements; and
WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders for the Company to agree to provide benefits under the circumstances described below to the Executive and other executives who agree to such an agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
Announcement shall mean a press release issued by the Company announcing the signing of an agreement whereby the Company will be acquired by or merge with any other entity or a tender offer for the shares of the Company stock will be initiated.
Board shall mean the Board of Directors of the Company or the ultimate corporate parent entity which owns the Company if the Company is not public.
Cause shall mean a unanimous determination by the Board that the Executive has been convicted of a felony, has embezzled from, or committed fraud against, the Company which embezzlement or fraud has a material adverse financial impact on the Company or gross insubordination which has continued after written notice of such from the Board which determination is upheld by a final, non-appealable arbitration award pursuant to Section 6.
Change in Control shall mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock following the Announcement or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the shareholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
Change in Control Fee shall mean $250, 000.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company Information shall mean (i) confidential information including, without limitation, information received from third parties under confidential conditions, (ii) information subject to the Companys and its affiliates attorney-client or work-product privilege; and (iii) other technical, business, legal or financial information (including, without limitation, customer lists), the use or disclosure of which might reasonably be construed to be contrary to the Companys and its affiliates interests.
Date of Termination shall mean the date on which the Executives employment is terminated.
Employment Period shall mean the period of time during the Extension Period the Executive is an employee of the Company.
Extension Period shall mean the 24 month period following the Change in Control.
Good Reason shall mean a (i) reduction in title, responsibilities, administrative support or support services, (ii) relocation of Executives office, (iii) travel at a level that exceeds the travel requirements before the Change in Control, (iv) any breach by the Company of its obligations hereunder, (v) any breach by the purchaser under a merger or acquisition agreement pursuant to which the Change in Control takes place relating to employee benefits or directors
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and officers insurance or indemnification provisions, or (vi) any reason whatsoever two months after the Change in Control.
Monthly Amount shall be an amount equal to one-twelfth of the sum of (a) the Executives then current annual base salary (excluding any incentive or bonus), and (b) the amount of any cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company, provided that for purposes of this calculation only, the cash bonus shall be deemed to be (1) not less than 75% of the average cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company and the preceding two fiscal years, and (2) not greater than 125% of the average cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company and the preceding two fiscal years.
Non-Compete Monthly Amount shall mean the portion of the Monthly Amount which is paid in consideration of the Executives agreement to the restrictions and other provisions of Section 7, with the remainder of the Monthly Amount and other benefits under this Agreement paid after the Employment Period to be treated as severance. Executives Non-Compete Monthly Amount shall be calculated by multiplying the Monthly Amount by fifty percent.
Retirement Plan shall mean the Companys qualified defined benefit retirement plan(s) in which the Executive participates.
SERP shall mean any and all supplemental retirement plans in which the Executive participates (including, but not limited to, any benefit restoration plan(s) maintained by the Company from time to time).
This Agreement shall be effective as of the Effective Date and shall automatically terminate if the Executives employment is terminated. Renewal of this Agreement shall automatically occur for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee shall have the discretion to terminate this automatic renewal provision.
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In the event that Executives employment is terminated by the Company for Cause (and Executive was not capable of voluntarily terminating for Good Reason at or prior to such time) or if Executive voluntarily terminates without Good Reason, the Company shall remain obligated to pay the Non-Compete Monthly Amount but shall not be obligated to pay the balance of the Monthly Amount. Executive is free to terminate his employment for Good Reason.
Following a Change in Control, the Executive will, except as provided below, continue as an employee during the Extension Period. During the Employment Period:
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No breach or alleged breach of this Section 4 shall constitute grounds for, or otherwise entitle, the Company to offset payments otherwise owing to the Executive under this Agreement.
All payments provided for in this Agreement shall be paid in cash from the general funds of the Company; provided, however, that such payments shall be reduced by the amount of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or special or separate fund established by the Company to assure such payments. The Company shall not be required to establish a special or separate fund or other segregation of assets to assure such payments.
In addition to the Companys other obligations under this Agreement, the Company shall pay all legal fees and expenses incurred in a legal proceeding (including arbitration) by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement (including, without limitation, any rights to a tax gross-up). Such payments are to be made within five days after the Executives request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that if the Executive institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that the Executive has failed to prevail substantially, he shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on his behalf under this Section 6.
All disputes with respect to the subject matter of this Agreement and the enforcement of rights hereunder shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (the AAA). Each party hereto shall designate one arbitrator (who need not be impartial) within fifteen (15) days after notice of the dispute. The two arbitrators so designated shall endeavor to designate promptly a third, neutral arbitrator. If the two arbitrators have not designated the third arbitrator by the fifteenth (15 th ) day following the designation of the second arbitrator, or if a second arbitrator has not been designated by the (15 th ) day following the designation of the first, either Party may request the AAA to designate the remaining arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. The arbitrators shall have the power to render equitable relief as may be available in accordance with applicable law. Unless otherwise agreed by the parties, any such arbitration shall take place in such City within the United States as Executive may designate, and shall be conducted in accordance with the Rules of the AAA. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. The arbitrators award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the parties.
7
8
If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the fullest extent consistent with law continue in full force and effect.
Except as provided below, this Agreement may not be terminated, modified or amended other than by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
The Company shall require (a) any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company and (b) the parent entity owning or controlling such successor expressly to assume and agree to perform under the terms of this Agreement in the same manner and to the same extent that the Company and its affiliates would be required to perform it if no such succession had taken place (provided that such a requirement to perform which arises by operation of law shall be deemed to satisfy the requirements for such an express assumption and agreement). Except as provided herein, the Executives rights hereunder shall not be assignable.
9
The Company may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
This Agreement contains the entire understanding between the Company and the Executive with respect to the subject matter hereof and supersedes any prior agreement between the Company and the Executive regarding non-compete provisions, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided and not expressly dealt with in this Agreement. This Agreement supersedes the Prior Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Company and their respective permitted successors and assigns.
Nothing herein contained shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the Executive by the Company for any fixed period of time prior to a Change in Control. The Executives employment with the Company is terminable at will by the Company or Executive and each shall have the right to terminate Executives employment with the Company at any time, with or without Cause, subject to the Companys obligation to provide any benefits required hereunder. There are no other agreements or understandings between the Company and the Executive which guarantee continued employment to the Executive or guarantee any level of compensation, including incentive or bonus payments, to the Executive.
Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
10
or to such address as either party shall have previously specified in writing to the other.
The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Delaware.
This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the Company through its officer duly authorized, and the
Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the Effective Date.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Its: President & Chief Executive Officer |
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EXECUTIVE |
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/s/ Edward J. Sutor |
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11
EXHIBIT 10.3
AMENDED & RESTATED
EMPLOYMENT AND NON-COMPETE AGREEMENT
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
AND
TIMOTHY R. HORNE
THIS AGREEMENT, is by and between Dover Downs Gaming & Entertainment, Inc. (the Company) and Timothy R. Horne (the Executive), is effective as of this 13th day of February 2006 (the Effective Date), is effective as of this 13th day of February 2006 (the Effective Date), and amends and restates the Employment and Non-Compete Agreement between the parties dated June 16, 2004 (the Prior Agreement).
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by the Company or an affiliate thereof in an executive position; and
WHEREAS, the Executive has, in the course of his employment, developed relationships with employees and customers of the Company, and learned valuable and sensitive information concerning the Companys operations, policies and procedures; and
WHEREAS, the Executive has, in the course of his employment, been exposed to valuable and sensitive Company reports, files, memoranda, records, software, and other property; and
WHEREAS, the Company recognizes that the solicitation of its employees and customers, and the use or disclosure of the policies, procedures, information, documents, and property of the Company would be damaging to the Companys interests; and
WHEREAS, the Company has determined that it is in the best interests of the Company to protect its interests through the use of Employment and Non-Compete Agreements; and
WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders for the Company to agree to provide benefits under the circumstances described below to the Executive and other executives who agree to such an agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
Announcement shall mean a press release issued by the Company announcing the signing of an agreement whereby the Company will be acquired by or merge with any other entity or a tender offer for the shares of the Company stock will be initiated.
Board shall mean the Board of Directors of the Company or the ultimate corporate parent entity which owns the Company if the Company is not public.
Cause shall mean a unanimous determination by the Board that the Executive has been convicted of a felony, has embezzled from, or committed fraud against, the Company which embezzlement or fraud has a material adverse financial impact on the Company or gross insubordination which has continued after written notice of such from the Board which determination is upheld by a final, non-appealable arbitration award pursuant to Section 6.
Change in Control shall mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock following the Announcement or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the shareholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
Change in Control Fee shall mean $250, 000.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company Information shall mean (i) confidential information including, without limitation, information received from third parties under confidential conditions, (ii) information subject to the Companys and its affiliates attorney-client or work-product privilege; and (iii) other technical, business, legal or financial information (including, without limitation, customer lists), the use or disclosure of which might reasonably be construed to be contrary to the Companys and its affiliates interests.
Date of Termination shall mean the date on which the Executives employment is terminated.
Employment Period shall mean the period of time during the Extension Period the Executive is an employee of the Company.
Extension Period shall mean the 24 month period following the Change in Control.
Good Reason shall mean a (i) reduction in title, responsibilities, administrative support or support services, (ii) relocation of Executives office, (iii) travel at a level that exceeds the travel requirements before the Change in Control, (iv) any breach by the Company of its obligations hereunder, (v) any breach by the purchaser under a merger or acquisition agreement pursuant to which the Change in Control takes place relating to employee benefits or directors and officers
2
insurance or indemnification provisions, or (vi) any reason whatsoever two months after the Change in Control.
Monthly Amount shall be an amount equal to one-twelfth of the sum of (a) the Executives then current annual base salary (excluding any incentive or bonus), and (b) the amount of any cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company.
Non-Compete Monthly Amount shall mean the portion of the Monthly Amount which is paid in consideration of the Executives agreement to the restrictions and other provisions of Section 7, with the remainder of the Monthly Amount and other benefits under this Agreement paid after the Employment Period to be treated as severance. Executives Non-Compete Monthly Amount shall be calculated by multiplying the Monthly Amount by fifty percent.
Retirement Plan shall mean the Companys qualified defined benefit retirement plan(s) in which the Executive participates.
SERP shall mean any and all supplemental retirement plans in which the Executive participates (including, but not limited to, any benefit restoration plan(s) maintained by the Company from time to time).
This Agreement shall be effective as of the Effective Date and shall automatically terminate if the Executives employment is terminated. Renewal of this Agreement shall automatically occur for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee shall have the discretion to terminate this automatic renewal provision.
3
4
5
In the event that Executives employment is terminated by the Company for Cause (and Executive was not capable of voluntarily terminating for Good Reason at or prior to such time) or if Executive voluntarily terminates without Good Reason, the Company shall remain obligated to pay the Non-Compete Monthly Amount but shall not be obligated to pay the balance of the Monthly Amount. Executive is free to terminate his employment for Good Reason.
Following a Change in Control, the Executive will, except as provided below, continue as an employee during the Extension Period. During the Employment Period:
No breach or alleged breach of this Section 4 shall constitute grounds for, or otherwise entitle, the Company to offset payments otherwise owing to the Executive under this Agreement.
All payments provided for in this Agreement shall be paid in cash from the general funds of the Company; provided, however, that such payments shall be reduced by the amount of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or special or separate fund established by the Company to assure such payments. The Company shall not be
6
required to establish a special or separate fund or other segregation of assets to assure such payments.
In addition to the Companys other obligations under this Agreement, the Company shall pay all legal fees and expenses incurred in a legal proceeding (including arbitration) by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement (including, without limitation, any rights to a tax gross-up). Such payments are to be made within five days after the Executives request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that if the Executive institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that the Executive has failed to prevail substantially, he shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on his behalf under this Section 6.
All disputes with respect to the subject matter of this Agreement and the enforcement of rights hereunder shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (the AAA). Each party hereto shall designate one arbitrator (who need not be impartial) within fifteen (15) days after notice of the dispute. The two arbitrators so designated shall endeavor to designate promptly a third, neutral arbitrator. If the two arbitrators have not designated the third arbitrator by the fifteenth (15 th ) day following the designation of the second arbitrator, or if a second arbitrator has not been designated by the (15 th ) day following the designation of the first, either Party may request the AAA to designate the remaining arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. The arbitrators shall have the power to render equitable relief as may be available in accordance with applicable law. Unless otherwise agreed by the parties, any such arbitration shall take place in such City within the United States as Executive may designate, and shall be conducted in accordance with the Rules of the AAA. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. The arbitrators award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the parties.
7
8
If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the fullest extent consistent with law continue in full force and effect.
Except as provided below, this Agreement may not be terminated, modified or amended other than by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
The Company shall require (a) any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company and (b) the parent entity owning or controlling such successor expressly to assume and agree to perform under the terms of this Agreement in the same manner and to the same extent that the Company and its affiliates would be required to perform it if no such succession had taken place (provided that such a requirement to perform which arises by operation of law shall be deemed to satisfy the requirements for such an express assumption and agreement). Except as provided herein, the Executives rights hereunder shall not be assignable.
The Company may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
This Agreement contains the entire understanding between the Company and the Executive with respect to the subject matter hereof and supersedes any prior agreement between the Company and the Executive regarding non-compete provisions, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided and not expressly dealt with in this Agreement. This Agreement supersedes the Prior Agreement
9
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Company and their respective permitted successors and assigns.
Nothing herein contained shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the Executive by the Company for any fixed period of time prior to a Change in Control. The Executives employment with the Company is terminable at will by the Company or Executive and each shall have the right to terminate Executives employment with the Company at any time, with or without Cause, subject to the Companys obligation to provide any benefits required hereunder. There are no other agreements or understandings between the Company and the Executive which guarantee continued employment to the Executive or guarantee any level of compensation, including incentive or bonus payments, to the Executive.
Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
or to such address as either party shall have previously specified in writing to the other.
The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
10
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Delaware.
This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the Company through its officer duly authorized, and the
Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the Effective Date.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Its: President & Chief Executive Officer |
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EXECUTIVE |
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/s/ Timothy R. Horne |
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11
EXHIBIT 10.4
AMENDED & RESTATED
EMPLOYMENT AND NON-COMPETE AGREEMENT
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
AND
KLAUS M. BELOHOUBEK
THIS AGREEMENT, is by and between Dover Downs Gaming & Entertainment, Inc. (the Company) and Klaus M. Belohoubek (the Executive), is effective as of this 13th day of February 2006 (the Effective Date), and amends and restates the Employment and Non-Compete Agreement between the parties dated June 16, 2004 (the Prior Agreement).
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by the Company or an affiliate thereof in an executive position; and
WHEREAS, the Executive has, in the course of his employment, developed relationships with employees and customers of the Company, and learned valuable and sensitive information concerning the Companys operations, policies and procedures; and
WHEREAS, the Executive has, in the course of his employment, been exposed to valuable and sensitive Company reports, files, memoranda, records, software, and other property; and
WHEREAS, the Company recognizes that the solicitation of its employees and customers, and the use or disclosure of the policies, procedures, information, documents, and property of the Company would be damaging to the Companys interests; and
WHEREAS, the Company has determined that it is in the best interests of the Company to protect its interests through the use of Employment and Non-Compete Agreements; and
WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders for the Company to agree to provide benefits under the circumstances described below to the Executive and other executives who agree to such an agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
Announcement shall mean a press release issued by the Company announcing the signing of an agreement whereby the Company will be acquired by or merge with any other entity or a tender offer for the shares of the Company stock will be initiated.
Board shall mean the Board of Directors of the Company or the ultimate corporate parent entity which owns the Company if the Company is not public.
Cause shall mean a unanimous determination by the Board that the Executive has been convicted of a felony, has embezzled from, or committed fraud against, the Company which embezzlement or fraud has a material adverse financial impact on the Company or gross insubordination which has continued after written notice of such from the Board which determination is upheld by a final, non-appealable arbitration award pursuant to Section 6.
Change in Control shall mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock following the Announcement or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the shareholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
Change in Control Fee shall mean $250,000.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company Information shall mean (i) confidential information including, without limitation, information received from third parties under confidential conditions, (ii) information subject to the Companys and its affiliates attorney-client or work-product privilege; and (iii) other technical, business, legal or financial information (including, without limitation, customer lists), the use or disclosure of which might reasonably be construed to be contrary to the Companys and its affiliates interests.
Date of Termination shall mean the date on which the Executives employment is terminated.
Employment Period shall mean the period of time during the Extension Period the Executive is an employee of the Company.
Extension Period shall mean the 24 month period following the Change in Control.
Good Reason shall mean a (i) reduction in title, responsibilities, administrative support or support services, (ii) relocation of Executives office, (iii) travel at a level that exceeds the travel requirements before the Change in Control, (iv) any breach by the Company of its obligations hereunder, (v) any breach by the purchaser under a merger or acquisition agreement pursuant to which the Change in Control takes place relating to employee benefits or directors and officers
2
insurance or indemnification provisions, or (vi) any reason whatsoever two months after the Change in Control.
Monthly Amount shall be an amount equal to one-twelfth of the sum of (a) the Executives then current annual base salary (excluding any incentive or bonus), and (b) the amount of any cash bonus awarded to the Executive for the then most recently concluded fiscal year of the Company.
Non-Compete Monthly Amount shall mean the portion of the Monthly Amount which is paid in consideration of the Executives agreement to the restrictions and other provisions of Section 7, with the remainder of the Monthly Amount and other benefits under this Agreement paid after the Employment Period to be treated as severance. Executives Non-Compete Monthly Amount shall be calculated by multiplying the Monthly Amount by fifty percent.
Retirement Plan shall mean the Companys qualified defined benefit retirement plan(s) in which the Executive participates.
SERP shall mean any and all supplemental retirement plans in which the Executive participates (including, but not limited to, any benefit restoration plan(s) maintained by the Company from time to time).
This Agreement shall be effective as of the Effective Date and shall automatically terminate if the Executives employment is terminated. Renewal of this Agreement shall automatically occur for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee shall have the discretion to terminate this automatic renewal provision.
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4
5
In the event that Executives employment is terminated by the Company for Cause (and Executive was not capable of voluntarily terminating for Good Reason at or prior to such time) or if Executive voluntarily terminates without Good Reason, the Company shall remain obligated to pay the Non-Compete Monthly Amount but shall not be obligated to pay the balance of the Monthly Amount. Executive is free to terminate his employment for Good Reason.
Following a Change in Control, the Executive will, except as provided below, continue as an employee during the Extension Period. During the Employment Period:
6
No breach or alleged breach of this Section 4 shall constitute grounds for, or otherwise entitle, the Company to offset payments otherwise owing to the Executive under this Agreement.
All payments provided for in this Agreement shall be paid in cash from the general funds of the Company; provided, however, that such payments shall be reduced by the amount of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or special or separate fund established by the Company to assure such payments. The Company shall not be required to establish a special or separate fund or other segregation of assets to assure such payments.
In addition to the Companys other obligations under this Agreement, the Company shall pay all legal fees and expenses incurred in a legal proceeding (including arbitration) by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement (including, without limitation, any rights to a tax gross-up). Such payments are to be made within five days after the Executives request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that if the Executive institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that the Executive has failed to prevail substantially, he shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on his behalf under this Section 6.
All disputes with respect to the subject matter of this Agreement and the enforcement of rights hereunder shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (the AAA). Each party hereto shall designate one arbitrator (who need not be impartial) within fifteen (15) days after notice of the dispute. The two arbitrators so designated shall endeavor to designate promptly a third, neutral arbitrator. If the two arbitrators have not designated the third arbitrator by the fifteenth (15 th ) day following the designation of the second arbitrator, or if a second arbitrator has not been designated by the (15 th ) day following the designation of the first, either Party may request the AAA to designate the remaining arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. The arbitrators shall have the power to render equitable relief as may be available in accordance with applicable law. Unless otherwise agreed by the parties, any such arbitration shall take place in such City within the United States as Executive may designate, and shall be conducted in accordance with the Rules of the AAA. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. The arbitrators award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the parties.
7
8
If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the fullest extent consistent with law continue in full force and effect.
Except as provided below, this Agreement may not be terminated, modified or amended other than by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
The Company shall require (a) any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company and (b) the parent entity owning or controlling such successor expressly to assume and agree to perform under the terms of this Agreement in the same manner and to the same extent that the Company and its affiliates would be required to perform it if no such succession had taken place (provided that such a requirement to perform which arises by operation of law shall be deemed to satisfy the requirements for such an express assumption and agreement). Except as provided herein, the Executives rights hereunder shall not be assignable.
The Company may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
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This Agreement contains the entire understanding between the Company and the Executive with respect to the subject matter hereof and supersedes any prior agreement between the Company and the Executive regarding non-compete provisions, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided and not expressly dealt with in this Agreement. This Agreement supersedes the Prior Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Company and their respective permitted successors and assigns.
Nothing herein contained shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the Executive by the Company for any fixed period of time prior to a Change in Control. The Executives employment with the Company is terminable at will by the Company or Executive and each shall have the right to terminate Executives employment with the Company at any time, with or without Cause, subject to the Companys obligation to provide any benefits required hereunder. There are no other agreements or understandings between the Company and the Executive which guarantee continued employment to the Executive or guarantee any level of compensation, including incentive or bonus payments, to the Executive.
Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
10
or to such address as either party shall have previously specified in writing to the other.
The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Delaware.
This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the Company through its officer duly authorized, and the
Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the Effective Date.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Its: President & Chief Executive Officer |
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EXECUTIVE |
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/s/ Klaus M. Belohoubek |
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11
Exhibit A Office Space
Office Space shall be Suite 203
Concord Plaza
3505 Silverside Road
Plaza Centre Bldg.,
Wilmington, DE 19810
Term shall be through initial lease term with Concord Properties expiring January 31, 2008
12
EXHIBIT 10.5
AMENDED AND RESTATED
NON-COMPETE AGREEMENT
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
AND
PATRICK J. BAGLEY
THIS AGREEMENT, is by and between Dover Downs Gaming & Entertainment, Inc. (the Company) and Patrick J. Bagley (the Director), is effective as of this 13th day of February 2006 (the Effective Date), and amends and restates the Employment and Non-Compete Agreement between the parties dated June 16, 2004 (the Prior Agreement).
W I T N E S S E T H:
WHEREAS, the Director is currently a director of the Company and employed by the Company or an affiliate thereof in an executive position; and
WHEREAS, the Director has, in the course of his tenure as a Director, developed relationships with employees and customers of the Company, and learned valuable and sensitive information concerning the Companys operations, policies and procedures; and
WHEREAS, the Director has, in the course of his tenure as a Director, been exposed to valuable and sensitive Company reports, files, memoranda, records, software, and other property; and
WHEREAS, the Company recognizes that the solicitation of its employees and customers, and the use or disclosure of the policies, procedures, information, documents, and property of the Company would be damaging to the Companys interests; and
WHEREAS, the Company has determined that it is in the best interests of the Company to protect its interests through the use of Employment and Non-Compete Agreements; and
WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders for the Company to agree to provide benefits under the circumstances described below to the Director and other executives who agree to such an agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
Announcement shall mean a press release issued by the Company announcing the signing of an agreement whereby the Company will be acquired by or merge with any other entity or a tender offer for the shares of the Company stock will be initiated.
Change in Control shall mean the earlier to occur of (a) ten (10) days following the closing of a tender offer for the Companys stock following the Announcement or (b) the closing of a merger or similar transaction (Transaction) of the Company and any other entity; provided, however, a Transaction the result of which is the shareholders of the Companys voting securities immediately prior to the Transaction own, directly or indirectly in substantially the same proportion, at least 60% of the voting securities of the survivor of such Transaction immediately following such Transaction shall not be a Change in Control.
Change in Control Fee shall mean $100,000.
Code shall mean the Internal Revenue Code of 1986, as amended.
This Agreement shall be effective as of the Effective Date and shall automatically terminate if the Director ceases serving as a director of the Company. Renewal of this Agreement shall automatically occur for successive two (2) year terms, provided that at any time prior to any such renewal, the Companys Compensation and Stock Incentive Committee shall have the discretion to terminate this automatic renewal provision.
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In addition to the Companys other obligations under this Agreement, the Company shall pay all legal fees and expenses incurred in a legal proceeding (including arbitration) by the Director in seeking to obtain or enforce any right or benefit provided by this Agreement
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(including, without limitation, any rights to a tax gross-up). Such payments are to be made within five days after the Directors request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that if the Director institutes a proceeding and the judge or other decision-maker presiding over the proceeding affirmatively finds that the Director has failed to prevail substantially, he shall pay his own costs and expenses (and, if applicable, return any amounts theretofore paid on his behalf under this Section).
All disputes with respect to the subject matter of this Agreement and the enforcement of rights hereunder shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (the AAA). Each party hereto shall designate one arbitrator (who need not be impartial) within fifteen (15) days after notice of the dispute. The two arbitrators so designated shall endeavor to designate promptly a third, neutral arbitrator. If the two arbitrators have not designated the third arbitrator by the fifteenth (15 th ) day following the designation of the second arbitrator, or if a second arbitrator has not been designated by the (15 th ) day following the designation of the first, either Party may request the AAA to designate the remaining arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. The arbitrators shall have the power to render equitable relief as may be available in accordance with applicable law. Unless otherwise agreed by the parties, any such arbitration shall take place in such City within the United States as Director may designate, and shall be conducted in accordance with the Rules of the AAA. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. The arbitrators award may be confirmed in, and judgment upon the award entered by, any federal or state court having jurisdiction over the parties.
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If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the fullest extent consistent with law continue in full force and effect.
Except as provided below, this Agreement may not be terminated, modified or amended other than by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
The Company may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
This Agreement contains the entire understanding between the Company and the Director with respect to the subject matter hereof and supersedes any prior agreement between the Company and the Director regarding non-compete provisions, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Director of any kind
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elsewhere provided and not expressly dealt with in this Agreement. This Agreement supersedes the Prior Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Director and the Company and their respective permitted successors and assigns.
Nothing herein contained shall be deemed to create an agreement between the Company and the Director providing for the Directors tenure with the Company to continue for any fixed period of time prior to a Change in Control. There are no other agreements or understandings between the Company and the Director which guarantee his continued tenure with the Company or guarantee any level of compensation, including incentive or bonus payments, to the Director.
Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
The Director acknowledges that he has read and understands the provisions of this Agreement. The Director further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
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The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Delaware.
This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the Company through its officer duly authorized, and the
Director both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the Effective Date.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Its: President & Chief Executive Officer |
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DIRECTOR |
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/s/ Patrick J. Bagley |
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