EXECUTION COPY
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT ("Agreement") is made this 26th day of March,
1998, by and between the Grand Prix Association of Long Beach, Inc., a
California Corporation (hereinafter called "Company"), and James P. Michaelian
(hereinafter called "the Executive").
In consideration of their respective undertakings as hereinafter set forth,
the parties hereto agree as follows:
1. Employment.
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Effective at such time as is set forth in Section 4, Company shall
employ the Executive as the Chief Operating Officer of Company and the Executive
agrees to such employment upon the terms and conditions hereinafter set forth.
2. Attention to Business; Duties.
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The Executive agrees to continue to devote all of his time, attention,
skill and efforts to the performance of his duties and responsibilities of
Company, and of any subsidiary or subsidiaries of Company, and to perform such
duties and responsibilities as are usual and customary for a Chief Operating
Officer, and in connection therewith shall report only to the chief executive
officer of the Parent. Additionally, Executive shall be under the supervision
and direction of the respective boards of directors and senior executive
officers of the Company and Parent, but nothing in this Agreement shall preclude
the Executive from devoting reasonable periods required for:
(i) serving as a director or member of a committee of any
organization involving no conflict of interest with the interest of Company and
with written consent of Company, said consent not to be unreasonably withheld;
(ii) engaging in professional organization and program
activities; and
(iii) managing his personal investments or engaging in any other
noncompeting business; provided that such activities do not materially interfere
with the regular performance of his duties and responsibilities under this
Agreement.
As requested by Parent, the Executive shall also be available to
consult with and assist other subsidiaries of Parent engaged in the motorsports
industry with respect to marketing, promotion and operational issues.
3. Confidential Information.
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Except as required by applicable law, the Executive shall not
disclose, either directly or indirectly, or use, whether during or after his
employment, any confidential information of Company not generally known to the
public or recognized as standard practice, with respect to any inventions,
improvements, machinery, equipment, devices, or formula, or the work or
investigations, or the identity of customers and any secret or confidential
information pertaining to such customers of Company. The Executive shall, at
all times, assist Company in keeping such information confidential and except as
required by applicable law shall not disclose any such information except at the
request, or with the consent, of Company.
4. Term.
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The term of this Agreement shall be five (5) years commencing at the
Effective Time (as defined in that certain Agreement and Plan of Merger between
the Company and Dover Downs Entertainment, Inc., a Delaware corporation
("Parent"), or Parent's exercise of its Option (as defined in that certain
Support Agreement (the "Support Agreement") between the Parent and certain
shareholders of the Company), whichever shall occur first. This agreement shall
be null and void should the merger or exercise of the Option contemplated
thereby not occur.
5. Compensation.
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For all services to be rendered by him in any capacity hereunder,
including services as an officer, director, member of any committee or
otherwise, Company agrees to pay the Executive so long as he shall be employed
hereunder, as follows:
(i) The Executive shall be entitled to a fixed base salary at
the rate of One Hundred Ninety Thousand and 00/100 Dollars ($190,000.00) per
annum payable in equal monthly or bi-weekly installments, with such
discretionary increases as may be granted from time to time by the Board of
Directors.
(ii) The Executive shall receive from Parent an option agreement
in the form attached hereto as Exhibit A.
(iii) The Executive shall receive incentive compensation as
provided in Exhibit B.
(iv) The Executive shall be a participant in, and beneficiary of,
any and all pension, 401k, qualified profit sharing, life, dental, medical, and
other group benefit plans provided by Parent during the term of this Agreement,
assuming he qualifies for coverage in these plans in accordance with provisions
of law or requirements of underwriters or third party plan sponsors. The
Executive shall also be provided such benefits as are set forth on Exhibit B.
(v) The Executive shall be furnished the use of an automobile as
shall be selected by Company and a reasonable allowance for automobile usage in
the performance of his
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duties hereunder. An automobile provided to the Executive from a Company sponsor
shall satisfy this requirement. In lieu of the foregoing, the Company may elect
to provide a monthly automobile allowance of $300.00, and a reasonable allowance
for automobile usage, including, without limitation, reimbursement for insurance
premiums as it relates to business use of the automobile.
(vi) The Executive shall be entitled to a vacation of five (5)
weeks per full calendar year, during which time, his compensation will be paid
in full. The Executive can "carry over" up to ten (10) weeks vacation into
succeeding years. Payment for unused vacation upon termination will be made in
accordance with relevant state laws.
(vii) The Executive shall be eligible for participation in any
supplemental executive retirement plan adopted by Parent during the term of this
Agreement.
(viii) The Executive shall be entitled to business first class air
travel paid for by the Company for all business-related air travel exceeding
more than two hours.
6. Expenses.
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The Executive shall also be entitled to reimbursement for all
reasonable expenses necessary incurred by him in the performance of his duties
upon presentation of a voucher indicating the amount and business purposes.
7. Non-Competition Covenant.
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The Executive shall not during the term of this Agreement and for a
period of eighteen (18) months after the termination of this Agreement, directly
or indirectly, in any manner or capacity, engage in or become financially
interested in any business entity which is in competition with the Company or
Parent within the Territory (as defined below) now or at any time through the
time of the termination of this Agreement (whether with respect to motor racing,
harness racing, gaming, concerts or other forms of entertainment; herein, the
"Business"). The foregoing prohibition shall specifically extend to (a)
soliciting any employees of the Company or Parent for any reason, and (b)
soliciting any customers, suppliers, sponsors or promoters of the Company or
Parent with respect to any activities similar to those engaged in by the Company
or Parent within the Territory (as defined below). The Executive shall not
during the term of this Agreement, directly or indirectly, in any manner or
capacity, acquire any financial or beneficial interest or ownership in any
entity of any type engaged in the Business, except publicly held business
entities in which the Executive shall own less than five percent and with which
the Executive shall have no executive, proprietary or policy authority or
responsibility. For purposes of this Section, (i) "Territory" shall mean a 300
mile radius surrounding any facility of Company or Parent whether now existing
or acquired or announced to be acquired prior to the termination of this
Agreement, and (ii) "Parent" shall include any subsidiary of Parent. This
Section shall not apply if this Agreement is terminated by Company other than
for Cause or if Executive
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terminates this Agreement for Good Reason.
8. Termination of Employment.
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(i) Disability.
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Company may terminate this Agreement for Disability if
within thirty (30) days after written notice of termination is given, the
Executive has not returned to full time performance of his duties. For purposes
of this Agreement, "Disability" shall mean if, as a result of incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with Company on a full time basis for one hundred twenty (120) consecutive
business days.
(ii) Cause.
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Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, Company shall have "Cause" to terminate the
employment of the Executive hereunder upon:
(a) the willful and continued failure by him to
substantially perform his duties with Company (other than any such failure
resulting from his incapacity due to physical or mental illness), after a
written demand for substantial performance and a notice of reasonable
opportunity to cure is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that he has not
substantially performed his duties, or
(b) the willful engaging by the Executive-in gross
misconduct materially and demonstrably injurious to Company, including without
limitation any material violation of this Agreement (including without
limitation, the provisions relating to non-competition). For purposes of this
Section subparagraph (ii), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
him not in good faith and without reasonable belief that his action or omission
was in the best interest of Company.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board held for the purpose (after reasonable notice to the Executive and an
opportunity for him, together with his counsel, to be heard before said Board),
finding that, in the good faith opinion of said Board, the Executive was guilty
of conduct set forth above in clauses (ii)(a) or (b) of this Section and
specifying the particulars thereof in detail.
(iii) Good Reason.
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The Executive may terminate his employment for Good Reason,
treat such termination as a termination without Cause and seek damages in
accordance with applicable law.
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For purposes of this Agreement, Good Reason shall mean:
(a) a reduction by Company in his base salary as in effect
on the date hereof; or
(b) a reduction by Company in the benefits package provided
to the Executive on the date hereof (taken as a whole); or
(c) the failure of Company to obtain the assumption of an
agreement to perform this Agreement by any successor; or
(d) any purported termination of the Executive's employment
which is not affected pursuant to a Notice of Termination satisfying the
requirements of this Section 8; and for purposes of this Agreement, no such
purported termination shall be effective; or
(e) Company's failure to act in good faith or failure to
comply with its duties and responsibilities hereunder; or
(f) without the express written consent of the Executive,
the assignment to him of any duties materially inconsistent with his positions,
duties, responsibilities and status with Company, or a material change in his
titles; or
(g) a change in control of Company or Parent (which for
these purposes shall mean that members of the Rollins family cease to exercise
control). In the event that the Executive terminates his employment under this
clause (g), the Executive shall be entitled to receive (as his exclusive remedy)
from the Company a lump sum payment equal to the greater of (a) twelve (12)
months or (b) the number of months remaining under the initial five (5) year
term hereof multiplied by (c) his then current monthly base salary.
(iv) Death.
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If the Executive dies during the term of his employment
hereunder, the Executive's legal representatives shall be entitled to receive:
(a) his fixed compensation provided in Section 5
subparagraph (i) hereof to the last day of the calendar month in which the
Executive's death shall have occurred; and
(b) additional compensation or benefits as provided in the
provisions of any plan in which the Executive participates.
(v) Notice of Termination.
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Any termination by Company pursuant to this Section
subparagraphs (i) or
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(ii) above or by the Executive pursuant to this Section subparagraphs (iii) or
(iv) above shall be communicated by written Notice of Termination to the other
party or parties hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
employment of the Executive under the provision so indicated.
9. Compensation Upon Termination or During Disability.
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(i) During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness,
the Executive shall be entitled to all compensation and benefits hereunder, less
the benefits he may receive in accordance with Company's disability insurance
plan, if any.
(ii) If the Executive's employment shall be terminated for Cause,
Company shall pay him the base salary and such other compensation as shall have
been earned through the Date of Termination at the rate in effect at the time
Notice of Termination is given and Company shall have no further obligations to
the Executive under this Agreement.
(iii) If the Executive's employment shall be terminated by Company
without Cause, the Executive may seek damages in accordance with applicable law.
10. Status as a Director of Company and Parent.
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Should Executive's employment hereunder cease for any reason,
Executive agrees that such termination will constitute a resignation from his
position, if any, as a director of Parent or any subsidiaries of Parent.
11. Successors: Binding Agreement.
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(i) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company, by agreement in form
and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Company
would be required to perform it if no such succession had taken place. Failure
to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to seek damages
from Company on the same terms as he would be entitled hereunder if the
Executive terminated his employment for Good Reason. As used in this section,
"Company" shall mean Company as hereinbefore defined, and any successor to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
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(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
12. Indemnity.
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The Company and Parent shall indemnify the Executive and hold him
harmless for any acts or decisions made by him in good faith while performing
services for Company and to use its best efforts to obtain coverage for him
under any insurance policy now in force or hereinafter obtained during the term
of this Agreement covering the officers and directors of Company against
lawsuits, and which policy shall cover all actions or inactions of the Executive
during the term of this Agreement, whether or not any such lawsuit is filed
during or after the term hereof. The Company will pay all expenses including
attorney's fees, actually and necessarily incurred by the Executive in
connection with the defense of such act, suit or proceeding and in connection
with any appeal thereon, including the amount and cost of settlements.
13. Notices.
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Any notice which either party may be required or may desire to give to
the other party must be in writing and may be given by personal delivery or by
mailing the same by United States mail to the party to whom the notice is
directed as hereinafter set forth:
Company: Grand Prix Association of Long Beach, Inc.
Attn.: Chairman of the Compensation Committee
3000 Pacific Avenue
Long Beach, CA 90803
With copies to:
Dover Downs Entertainment, Inc.
Attn.: Chief Executive Officer
1131 North DuPont Highway
Dover, Delaware 19901
Klaus M. Belohoubek, Esquire
Dover Downs Entertainment, Inc.
2200 Concord Pike
Wilmington, Delaware 19803
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The Executive: James P. Michaelian
3710 Aster
Seal Beach, CA 90740
subject to the right of either party to designate a different address for itself
or himself by notice immediately given. Any notice given by mail shall be deemed
given on the day after that on which the same is deposited in the United States
mail, addressed as above provided with postage thereon fully prepaid.
14. Injunctive Relief.
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In the event of any breach or threatened breach of any of the terms of
this Agreement by the Executive, the Company shall be entitled to injunctions,
both preliminary and final, enjoining and restraining such breach or threatened
breach, the Executive recognizing that such breach will result in immediate and
irreparable harm and injury to the Company. Such remedies shall be in addition
to any and all other remedies available at law or in equity, including the
Company's right to recover any and all damages that may be sustained as a result
of Executive's breach of contract. In addition to any other remedies, the
Company shall have the right to stop the Executive, by means of injunction, from
violating any part of this Agreement. In any litigation to interpret or enforce
this Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorney's fees.
15. Miscellaneous.
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This written Agreement contains the sole and entire agreement between
the parties, and shall supersede any and all other agreements, whether written
or oral, between the parties. No agreements or representations, oral or
otherwise, expressed or implied, with respect to the subject matter hereof have
been made by any party which are not set forth expressly in this Agreement.
No provisions of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing signed by
the Executive and such officers as may be specifically designated by the Board
of Directors of Company. No waiver by any party hereto at any time of the breach
by any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of Delaware and the parties agree
to the exclusive jurisdiction of state and federal courts located in Wilmington,
Delaware.
16. Validity.
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The invalidity or unenforceability of any provisions of this Agreement
shall not
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affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
17. Counterparts.
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This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
18. Legal Fees and Court Costs.
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In the event the Executive initiates legal action against Company
for an alleged breach of any provision of this Agreement, and, solely in the
event the Executive's action is finally adjudicated in his favor and against
Company, and only after such event, all reasonably necessary expenses incurred
by the Executive, including, without limitation, attorneys' fees pursuant to
such legal action will be reimbursed to the Executive by Company within ten (10)
days of the Executive presenting an invoice to Company. The provisions of this
Section shall survive any termination of this Agreement by Company or the
Executive and remain enforceable despite the nature of any contest between the
Executive and Company which may arise.
19. Sale Restriction.
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During the term hereof, the Executive agrees that in any calendar year
he shall not sell, gift, transfer or otherwise dispose of more than fifteen
percent (15%) of the shares of common stock of Parent which he beneficially owns
measured at the beginning of the year (or in the case of the first calendar
year, measured at the Effective Time), provided that with respect to transfers
within the Executive's immediate family, the percentage shall be increased by an
additional five percent (5%), and provided further that in the case of the first
calendar year, the aggregate allowable percentage shall be twenty-five percent
(25%).
IN WITNESS WHEREOF, the parties here have executed this Agreement the day
and year first above written.
Grand Prix Association of Long Beach, Inc.
By: /s/ James Sullivan
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Member of the Board of Directors
and Compensation Committee Chairman
By: /s/ James P. Michaelian
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James P. Michaelian
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Accepted and agreed to by Parent:
By: /s/ Denis McGlynn
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Denis McGlynn
President and Chief Executive Officer
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EXHIBIT A
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INCENTIVE STOCK OPTION AGREEMENT
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OPTION AGREEMENT made as of the _____ day of __________________, 1998 [the
Effective Time], between DOVER DOWNS ENTERTAINMENT, INC., a Delaware corporation
(hereinafter called "Company"), and JAMES P. MICHAELIAN, an employee of the
Company, or one or more of its subsidiaries (hereinafter called the "Employee").
WHEREAS, the Company desires to afford the Employee an opportunity to
purchase shares of its Common Stock at the par value of $.10 per share
(hereinafter called the "Common Stock"), pursuant to the terms and provisions of
the Company's 1996 Incentive Stock Option Plan (hereinafter called the "Plan"),
and as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and Employee's employment by the Company, the parties hereto agree as
follows:
1. THE PLAN. This Option Agreement is made pursuant to and in accordance
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with the terms and provisions of the Plan. Anything in this Option Agreement to
the contrary notwithstanding, the terms and provisions of the Plan, all of which
are incorporated herein by reference, shall be controlling in the event of any
inconsistency herewith.
2. GRANT OF OPTION. The Company hereby irrevocably grants to the
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Employee the right and option (hereinafter called the "Option"), to purchase all
or any part of an aggregate of ______ shares of Common Stock (subject to
adjustment as provided in Paragraph 8 hereof), on the terms and conditions
hereinafter set forth.
3. PURCHASE PRICE. The purchase price of the shares of the Common Stock
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covered by the Option shall be [the Average Closing Price per share as defined
in the Plan and
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Agreement of Merger].
4. TERM OF OPTION. The term of the Option shall be for a period of eight
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(8) full calendar years from the date hereof, subject to earlier termination as
provided in Paragraph 7 hereof. The Option may be exercised, from time to time,
but not after the expiration of eight (8) full calendar years from the date of
this Agreement, in accordance with the following vesting schedule:
Anniversary Percentage Number Cumulative
Date of of Number of
of this Total Grant Shares Shares
Agreement Exercisable Exercisable Exercisable
- ------------ ----------- ----------- -----------
First 20.0% 2,500 2,500
Second 20.0% 2,500 5,000
Third 20.0% 2,500 7,500
Fourth 20.0% 2,500 10,000
Fifth 20.0% 2,500 12,500
============ ===== ======
Total 100.0% 12,500 12,500
The Option shall be exercised by the Employee by giving written notice to
the Company specifying the number of full shares to be purchased. The purchase
price for the shares as to which the Option shall be exercised from time to time
shall be paid in full in cash at the time of exercise and no shares shall be
purchased if the Employee is not at the time of exercise in the employ of the
Company, or a subsidiary, except as provided in Paragraph 7.
5. ADMINISTRATION. The Plan shall be administered by the Compensation
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and Stock Option Committee of the Board of Directors of the Company, hereinafter
referred to as the "Committee". The Committee is authorized and empowered to
administer and interpret the Plan
and this Option Agreement. Any interpretations of this Option Agreement or of
the Plan made by the Committee shall be final and binding upon the parties
hereto.
6. NON-TRANSFERABILITY. The Option shall not be assignable nor
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transferable except by Will or by the laws of decent and distribution, provided
that this Section may be amended, at the sole and absolute discretion of the
Committee, to permit certain transfers on such terms and conditions as it deems
appropriate. During the lifetime of the Employee, the Option shall be
exercisable only by the Employee. After the death of the Employee, the Option
may be exercised prior to its termination as set forth in Paragraph 7 hereof,
and shall not be subject to execution, attachment or other process.
7. TERMINATION. This Option may not be exercised by the Employee unless
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he, at the time of the exercise, is in the employment of the Company, or a
subsidiary, except as follows:
(a) Prior to the expiration of ninety (90) days from the date of the
Employee's termination of employment other than by reason of death;
(b) Prior to the expiration of one (1) year from the date of the
Employee's death if his death occurs not later than ninety (90) days after the
Employee's termination of employment; and
(c) Prior to the termination of the Plan pursuant to Section 16 of
the Plan.
The termination of employment of an Employee by reason other than
death shall not accelerate or otherwise affect the number of shares with respect
to which this Option may be exercised, and this Option may only be exercised
with respect to that number of shares subject thereto at the date of such
termination. If the Employee's termination of employment is by reason
of death, then the number of shares with respect to which this Option may be
exercised shall be accelerated such that, any conditions of the Plan or this
Option notwithstanding, all unexercised shares subject to this Option shall be
exercisable as otherwise herein provided. In such event, the Option may be
exercised by a legatee or legatees of the Employee mentioned in his Last Will
and Testament, or by his personal representatives or distributees, provided,
notice of exercise of the Option is given to the Company by such person within
one (1) year following the date of Employee's death.
8. CHANGE IN CAPITALIZATION. If there are any changes in the
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capitalization of the Company affecting in any manner the number or kind of
outstanding shares of Common Stock of the Company, whether such changes have
been occasioned by declaration of stock dividend, stock split-ups,
reclassifications or recapitalizations of such stock, or because the Company has
merged or consolidated with some other corporation (and provided this Option
does not thereby become terminated pursuant to Section 9 hereof), or for any
other reason whatsoever, then the number and kind of shares then subject to this
Option and the price to be paid therefor shall be proportionately adjusted by
the Committee to whatever extent the Committee determines that any such change
equitably requires an adjustment. In no case shall the Company be required to
sell a fractional share of Common Stock, and the total adjustment as set forth
above shall be limited accordingly.
9. MERGERS OR CONSOLIDATIONS. If the Company at any time should elect to
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dissolve, undergo a reorganization or split-up of its stock or merge or
consolidate with any other corporation and the Company is not the surviving
corporation, then (unless in the case of a reorganization, stock split-up,
merger or consolidation, one or more of the surviving
corporations assumes the options under the Plan or issues substitute options in
place thereof) each Employee holding outstanding options not yet exercised shall
be notified of his right to exercise such options to the extent then exercisable
prior to such dissolution, reorganization, stock split-ups, merger or
consolidation. The Committee may, in its sole and absolute discretion and on
such terms and conditions as it deems appropriate, authorize the exercise of
such options with respect to all shares covered thereby. Any option shall
thereupon be deemed terminated, and simultaneously the Plan itself shall be
deemed terminated.
10. METHOD OF EXERCISING THE OPTION. The Employee may exercise this
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Option by written notice to the Company, substantially in the form attached as
Exhibit 1 hereto. Such notice shall state the Employee's intention to exercise
the Option and the number of shares in respect to which it is being exercised
and shall be signed by the Employee or a legatee or personal representative of
the Employee. Such notice shall be accompanied by payment of the full purchase
price of the shares and instructions shall be given as to the manner in which
the stock certificates shall be registered, i.e., in the name of an Employee or
in the name of the Employee and a close relative jointly, with the right of
survivorship, or in the name of his legatee or personal representative.
11. REQUIREMENTS OF LAW. If any law, regulation of the Securities and
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Exchange Commission, or any regulation of any other commission or agency having
jurisdiction shall require the Company or the Employee to take any action with
respect to the shares of Common Stock acquired by the exercise of this Option,
then the date upon which the Company shall deliver or cause to be delivered the
certificate or certificates for the shares of Common Stock shall be postponed
until full compliance has been made with all such requirements or law or
regulation. Further, at or before the time of the delivery of the shares with
respect to which exercise of this Option has been made, the Employee shall
deliver to the Company his written statement that he intends to hold the shares,
so acquired by him on exercise of this Option, for investment and not with a
view to resale or other distribution thereof to the public. Further, in the
event the Company shall determine that, in compliance with the Securities Act of
1933 or other applicable statute or regulation, it is necessary to register any
of the shares of Common Stock with respect to which an exercise of this Option
has been made, or to qualify any such shares for exemption for any of the
requirements of the Securities Act of 1933 or other applicable statute or
regulations, then the Company shall take such action at its own expense, but not
until such action has been completed shall the Option shares be delivered to the
Employee.
12. NO EFFECT ON EMPLOYMENT. Nothing herein shall be construed to limit
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or restrict the right of the Company or any of its subsidiaries to terminate an
Employee's employment at any time, with or without cause, or to increase or
decrease the compensation of the Employee from the rate in existence at the time
this Option is granted.
13. RESTRICTION ON RESALE. Whether or not the shares of Common Stock
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acquired upon exercise of an Option have been registered under the Securities
Act of 1933, Employee may not sell, transfer, assign, gift, pledge or otherwise
dispose of such shares for a one (1) year period commencing on the date of
acquisition of such shares.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly
executed by an authorized officer, and the Employee has hereunto set his hand
and seal, all as of the day and year first above written.
Signed, Sealed and Delivered Dover Downs Entertainment, Inc.
in the presence of:
BY:
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Denis McGlynn
President
Employee
BY: /s/ James P. Michaelian
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James P. Michaelian
NOTE: EXECUTIVE SHALL RECEIVE INCENTIVE STOCK OPTIONS TO THE EXTENT
PERMISSIBLE UNDER THE CODE AND SHALL RECEIVE NON-QUALIFIED STOCK OPTIONS FOR THE
BALANCE.
EXHIBIT 1
NOTICE FOR EXERCISING OPTION
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EMPLOYEE NAME
& ADDRESS
[Date]
To: Dover Downs Entertainment, Inc.
Attn: Michael B. Kinnard
Vice President - General Counsel
2200 Concord Pike
Wilmington, Delaware 19803
RE: EXERCISE OF STOCK OPTION
Dear Mr. Kinnard:
Reference is made to the 1996 Stock Option Plan of Dover Downs
Entertainment, Inc. (the "Company") and my Stock Option Agreement with the
Company dated ______________ governed by the 1996 Stock Option Plan.
I wish to exercise the following options currently exercisable under the
above Stock Option Agreement:
Number of Shares: ____________________________ shares of Common Stock
Exercise Price per Share: $__________________________
Enclosed is my check in the amount of $__________________________ in full
payment of the exercise price.
The shares should be issued to:
(Name(s), address, special instructions)
This will further advise you that said stock is being acquired for
investment and not with the view of resale or other distribution to the public.
I understand that shares may not be sold, transferred, assigned, gifted, pledged
or otherwise disposed of for a one (1) year period.
Sincerely yours,
(Signed)
Enclosure
EXHIBIT B
YEARLY INCENTIVE
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. 2.0% of increase in pre-tax earnings from prior year (or highest
previous year) attributable to Company's operations
. For fiscal year ending June 30, paid within 90 days after close of
fiscal year (this shall require financial statements for June 30, 1998
for Company)
. Pre-tax earnings calculated in accordance with GAAP
. Employee must be actively employed on June 30 to receive incentive
. The initial incentive hereunder shall be for fiscal year ending June
30, 1999 and shall be calculated based on a comparison of the pre-tax
earnings for the period from the Effective Time under the Plan and
Agreement of Merger to June 30, 1999 and the comparable period ending
June 30, 1998
. Employee shall receive a pro-rated incentive from Company under the
prior incentive plan for period beginning December 1, 1997 and ending
on the Effective Time
. Life insurance
Company shall continue providing split dollar coverage on
comparable terms as provided in the past (one policy with face amount
of $200,000; second policy with face amount of $209,583)
Company shall provide term coverage on comparable terms as
provided in the past (aggregate $500,000), subject to insurability of
Executive at regular rates
. Disability
Company shall continue to provide disability coverage on
comparable terms as provided in the past (aggregate 40% of base
salary). Company will pay to the Executive the difference between any
benefits paid by a Disability Insurance policy and his base salary for
the period for which benefits are paid and for any waiting period
before benefits are paid.
Note that in the event that Parent exercises its Option under the Support
Agreement, references to Effective Time shall mean either the date of
closing under Parent's subsequent tender offer or the effective date of the
subsequent merger effected between Parent and Company.