Exhibit 10.2

 

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”) and is effective as of this
16th day of June, 2004 (the “Effective Date”).

 

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 Company’s 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 Company’s
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:

 

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SECTION 1
DEFINITIONS

 

“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 Company’s 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 Company’s 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 Company’s 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 Company’s and its affiliates’ interests.

 

“Date of Termination” shall mean the date on which the Executive’s 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 Executive’s
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
Executive’s 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 Executive’s 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.  Executive’s Non-Compete Monthly Amount shall be
calculated by multiplying the Monthly Amount by fifty percent.

 

“Retirement Plan” shall mean the Company’s 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).

 

SECTION 2
TERM OF AGREEMENT

 

This Agreement shall be effective as of the Effective Date but shall
automatically terminate if no Announcement occurs within two (2) years of the
Effective Date or if the Executive’s employment is terminated prior to an
Announcement.  Renewal of this Agreement for successive two (2) year terms shall
require approval of the Company’s Compensation and Stock Incentive Committee.

 

SECTION 3
BENEFITS

 

(A) ON THE DATE OF A CHANGE IN CONTROL, THE COMPANY SHALL PAY TO THE EXECUTIVE
IN CASH THE CHANGE IN CONTROL FEE.

 

(B) DURING THE EXTENSION PERIOD, THE COMPANY SHALL PAY TO THE EXECUTIVE THE
MONTHLY AMOUNT, PAYABLE ON THE FIRST DAY OF EACH MONTH, PRORATED FOR PARTIAL
MONTHS.

 

(C) IF THE EXECUTIVE’S EMPLOYMENT IS TERMINATED DURING THE EXTENSION PERIOD,
THEN,

 

(I)            WITHIN FIVE BUSINESS DAYS AFTER THE DATE OF TERMINATION, THE
COMPANY SHALL PAY TO THE EXECUTIVE (OR IF THE EXECUTIVE DIES, TO THE ESTATE OF
THE EXECUTIVE) IN CASH ALL ACCRUED BUT UNPAID SALARY, EARNED BUT UNPAID BONUSES,
AND ACCRUED BUT UNUSED VACATION IN ACCORDANCE WITH COMPANY POLICIES;

 

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(II)           THE COMPANY SHALL PAY TO THE EXECUTIVE (OR IF THE EXECUTIVE DIES,
TO THE ESTATE OF THE EXECUTIVE) THE MONTHLY AMOUNT ON THE FIRST DAY OF EACH
MONTH DURING THE REMAINDER OF THE EXTENSION PERIOD;

 

(III)          THE COMPANY SHALL PAY TO THE EXECUTIVE (OR IF THE EXECUTIVE DIES,
TO HIS BENEFICIARY, IF ANY, UNDER THE RETIREMENT PLAN) A LUMP SUM AMOUNT EQUAL
TO THE VALUE OF THE MONTHLY BENEFIT UNDER (X) THE RETIREMENT PLAN AND (Y) THE
SERP, THAT THE EXECUTIVE OR HIS BENEFICIARY, IF ANY, UNDER THE RETIREMENT PLAN
WOULD HAVE RECEIVED (1) FOR PAYMENTS OF THE MONTHLY AMOUNT HAD EXECUTIVE BEEN AN
EMPLOYEE WHILE RECEIVING SUCH PAYMENTS, AND (2) FOR PAYMENT OF THE CHANGE OF
CONTROL FEE HAD SUCH AMOUNT BEEN TREATED AS A NORMAL BONUS FOR PENSION ACCRUAL
PURPOSES (GIVING CREDIT FOR ALL PURPOSES, INCLUDING, BUT NOT LIMITED TO, ACCRUAL
OF BENEFITS, VESTING, AGE AND YEARS OF SERVICE AND MAKING THE DETERMINATION
WITHOUT REGARD TO COMPENSATION OR BENEFIT LIMITATIONS PRESCRIBED BY FEDERAL LAW
OR REGULATION), WHICH PAYMENT SHALL BE PAID WITHIN 10 DAYS OF THE DATE OF
TERMINATION AND CALCULATED BY BUCK CONSULTANTS (OR SUCH OTHER CONSULTANT AS MAY
BE AGREED UPON) USING THE ACTUARIAL ASSUMPTIONS UNDER THE RETIREMENT PLAN AND
THE DISCOUNT RATE WHICH WOULD BE UTILIZED FOR PURPOSES OF FUNDING A PLAN
TERMINATION;

 

(IV)          ON THE DATE OF TERMINATION THE COMPANY SHALL TRANSFER TITLE AND
OWNERSHIP TO THE EXECUTIVE OF HIS LAPTOP COMPUTER, IF ANY, WITHOUT ANY PAYMENT
BY THE EXECUTIVE TO THE COMPANY.

 

(D) DURING THE EXTENSION PERIOD (WHETHER OR NOT DURING THE EMPLOYMENT PERIOD)
THE EXECUTIVE SHALL BE ENTITLED TO THE FOLLOWING ADDITIONAL BENEFITS:

 

(I)            THE EXECUTIVE AND, AS APPLICABLE, THE EXECUTIVE’S COVERED
DEPENDENTS SHALL BE ENTITLED TO ALL HEALTH, WELFARE, AND FRINGE BENEFITS
PROVIDED BY THE COMPANY TO ITS KEY EMPLOYEES GENERALLY OR TO THE EXECUTIVE ON AN
INDIVIDUAL OR GROUP BASIS (INCLUDING, BUT NOT LIMITED TO, ANY LIFE, ACCIDENT,
HEALTH, HOSPITALIZATION OR LONG-TERM DISABILITY INSURANCE, MAINTAINED FROM TIME
TO TIME BY THE COMPANY), WHETHER MAINTAINED PURSUANT TO A PLAN, POLICY OR OTHER
ARRANGEMENT (WRITTEN OR UNWRITTEN), AS IF THE EXECUTIVE WERE STILL EMPLOYED
DURING SUCH PERIOD, AT THE SAME LEVEL OF BENEFITS AND AT THE SAME DOLLAR COST TO
THE EXECUTIVE AS IS AVAILABLE GENERALLY TO COMPARABLE EMPLOYEES OF THE COMPANY
(BUT IN NO INSTANCES SHALL SUCH BENEFITS BE AT A LEVEL LESS THAN AS IN EFFECT ON
THE DATE OF THE CHANGE IN CONTROL).  IF THE COMPANY REASONABLY DETERMINES THAT
THE COVERAGE REQUIRED UNDER THIS SECTION WOULD CAUSE A WELFARE PLAN SPONSORED BY
THE COMPANY TO VIOLATE ANY PROVISION OF THE CODE PROHIBITING DISCRIMINATION IN
FAVOR OF HIGHLY COMPENSATED EMPLOYEES OR KEY EMPLOYEES, OR IF ANY BENEFITS
DESCRIBED IN THIS SECTION CANNOT BE PROVIDED (OR THE COMPANY DETERMINES THAT IT
DOES NOT WISH TO PROVIDE SUCH BENEFITS) PURSUANT TO THE APPROPRIATE PLAN OR
PROGRAM MAINTAINED FOR EMPLOYEES OF THE COMPANY, THE COMPANY SHALL PROVIDE SUCH
BENEFITS OUTSIDE SUCH PLAN OR PROGRAM AT NO ADDITIONAL COST (ON AN AFTER TAX
BASIS) TO THE EXECUTIVE OR, IF THE PARTIES SHALL SO AGREE, THE COMPANY WILL PAY
TO THE EXECUTIVE THE CASH EQUIVALENT THEREOF.  THE HEALTH BENEFITS PROVIDED IN
ACCORDANCE WITH THIS SECTION SHALL BE SECONDARY TO ANY COMPARABLE BENEFITS
PROVIDED BY ANOTHER EMPLOYER IF AND ONLY IF THE EXECUTIVE CHOOSES TO BE COVERED
BY SUCH OTHER EMPLOYEE PLAN.

 

(II)           EXECUTIVE SHALL RECEIVE CONTINUED PAYMENT OF PROFESSIONAL AND
ORGANIZATIONAL DUES AND FEES AS IN EFFECT PRIOR THE CHANGE IN CONTROL.

 

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(E) EXECUTIVE SHALL HAVE EXCLUSIVE USE OF THE OFFICE SPACE IDENTIFIED ON THE
ATTACHED EXHIBIT A FOR THE TERM SET FORTH THEREON, TOGETHER WITH ALL FURNITURE,
FIXTURES, EQUIPMENT AND SYSTEMS CURRENTLY THEREIN (OR COMPARABLE EQUIPMENT AND
SYSTEMS, SUCH AS PHONE, VOICEMAIL, EMAIL, COPIERS OR COMPUTERS, IF COMPANY
WISHES TO CHANGE SERVICE PROVIDERS), ALL OF WHICH SHALL BE PROVIDED AND
MAINTAINED (INCLUDING UTILITIES AND JANITORIAL SERVICE) AT NO COST TO EXECUTIVE
(ON AN AFTER TAX BASIS) CONSISTENT WITH PAST PRACTICES, EXCEPT THAT FOR ANY
PERIOD OF SUCH USE WHICH EXTENDS PAST THE EMPLOYMENT PERIOD, EXECUTIVE SHALL BE
RESPONSIBLE TO REIMBURSE COMPANY FOR LONG DISTANCE PHONE CHARGES.  EXECUTIVE
SHALL ALSO BE GIVEN TITLE TO THE LAW LIBRARY IN SUCH OFFICES (INCLUDING THE
UNEXPIRED TERM OF ANY SUBSCRIPTION SERIES) AT NO COST TO EXECUTIVE (ON AN AFTER
TAX BASIS).

 

(F)            (I)      IF ALL, OR ANY PORTION, OF THE PAYMENTS AND BENEFITS
PROVIDED UNDER THIS AGREEMENT, IF ANY, EITHER ALONE OR TOGETHER WITH OTHER
PAYMENTS AND BENEFITS WHICH THE EXECUTIVE RECEIVES OR IS ENTITLED TO RECEIVE
FROM THE COMPANY, WOULD CONSTITUTE AN EXCESS “PARACHUTE PAYMENT” WITHIN THE
MEANING OF SECTION 280G OF THE CODE (WHETHER OR NOT UNDER AN EXISTING PLAN,
ARRANGEMENT, OR OTHER AGREEMENT) (EACH SUCH PARACHUTE PAYMENT, A “PARACHUTE
PAYMENT”), AND WOULD RESULT IN THE IMPOSITION ON THE EXECUTIVE OF AN EXCISE TAX
UNDER SECTION 4999 OF THE CODE, THEN, IN ADDITION TO ANY OTHER BENEFITS TO WHICH
THE EXECUTIVE IS ENTITLED UNDER THIS AGREEMENT OR OTHERWISE, THE EXECUTIVE SHALL
BE PAID AN AMOUNT IN CASH EQUAL TO THE SUM OF THE EXCISE TAXES PAYABLE BY THE
EXECUTIVE BY REASON OF RECEIVING PARACHUTE PAYMENTS PLUS THE AMOUNT NECESSARY TO
PLACE THE EXECUTIVE IN THE SAME AFTER-TAX POSITION (TAKING INTO ACCOUNT ANY AND
ALL APPLICABLE FEDERAL, STATE AND LOCAL EXCISE, INCOME OR OTHER TAXES AT THE
HIGHEST POSSIBLE APPLICABLE RATES ON SUCH PARACHUTE PAYMENTS (INCLUDING, WITHOUT
LIMITATION, ANY PAYMENTS UNDER THIS SECTION) AS IF NO EXCISE TAXES HAD BEEN
IMPOSED WITH RESPECT TO PARACHUTE PAYMENTS (THE “PARACHUTE GROSS-UP”).  ANY
PARACHUTE GROSS-UP OTHERWISE REQUIRED BY THIS SECTION SHALL NOT BE MADE LATER
THAN THE TIME OF THE CORRESPONDING PAYMENT OR BENEFIT HEREUNDER GIVING RISE TO
THE UNDERLYING SECTION 4999 EXCISE TAX, EVEN IF THE PAYMENT OF THE EXCISE TAX IS
NOT REQUIRED UNDER THE CODE UNTIL A LATER TIME.

 

(II)           SUBJECT TO THE PROVISIONS OF SECTION 3(D) AND EXCEPT AS MAY
OTHERWISE BE AGREED TO BY THE COMPANY AND THE EXECUTIVE, THE AMOUNT OR AMOUNTS
(IF ANY) PAYABLE UNDER THIS SECTION 3 SHALL BE AS CONCLUSIVELY DETERMINED BY THE
KPMG LLP, OR SUCH OTHER FIRM AS MUTUALLY AGREED TO BY THE COMPANY AND THE
EXECUTIVE (“INDEPENDENT TAX COUNSEL”), WHOSE DETERMINATION OR DETERMINATIONS
SHALL BE FINAL AND BINDING ON ALL PARTIES.  THE EXECUTIVE SHALL AGREE TO UTILIZE
SUCH DETERMINATION OR DETERMINATIONS, AS APPLICABLE, IN FILING ALL OF THE
EXECUTIVE’S TAX RETURNS WITH RESPECT TO THE EXCISE TAX IMPOSED BY SECTION 4999
OF THE CODE, IF ANY.  IF SUCH INDEPENDENT TAX COUNSEL FAILS OR REFUSES TO MAKE
THE REQUIRED DETERMINATIONS FOR ANY REASON, THEN SUCH DETERMINATIONS SHALL BE
MADE BY A COMPARABLE FIRM OR GROUP OF NATIONAL REPUTATION TO WHICH THE PARTIES
REASONABLY MUTUALLY AGREED.  ALL FEES AND EXPENSES OF THE INDEPENDENT TAX
COUNSEL OR ITS REPLACEMENT SHALL BE PAID BY THE COMPANY.

 

(III)          AS A RESULT OF THE UNCERTAINTY IN THE APPLICATION OF SECTION 4999
OF THE CODE AT THE TIME OF THE INITIAL DETERMINATION BY THE INDEPENDENT TAX
COUNSEL HEREUNDER, IT IS POSSIBLE THAT PARACHUTE GROSS-UP PAYMENTS, IF ANY,
WHICH WILL NOT HAVE BEEN MADE BY THE COMPANY, SHOULD HAVE BEEN MADE, TOGETHER
WITH ANY INTEREST, PENALTIES OR TAXES OF ANY KIND THEREON, CONSISTENT WITH THE
CALCULATIONS REQUIRED TO BE MADE HEREUNDER (AN “UNDERPAYMENT”).  THE COMPANY
SHALL PAY ALL SUCH UNDERPAYMENTS TO OR FOR THE BENEFIT OF THE EXECUTIVE.  THE

 

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EXECUTIVE SHALL NOTIFY THE COMPANY IN WRITING OF ANY CLAIM BY THE INTERNAL
REVENUE SERVICE THAT, IF SUCCESSFUL, WOULD REQUIRE THE PAYMENT BY THE COMPANY OF
THE GROSS-UP PAYMENT WITHIN TEN (10) BUSINESS DAYS AFTER THE EXECUTIVE IS
INFORMED IN WRITING OF SUCH CLAIM.  THE COMPANY SHALL NOTIFY THE EXECUTIVE
WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THE EXECUTIVE NOTICE THAT THE
COMPANY (X) WILL PAY THE UNDERPAYMENT AND DO SO ON OR BEFORE THE DATE DUE, OR
(Y) THAT IT DESIRES TO CONTEST SUCH CLAIM.  THE EXECUTIVE WILL COOPERATE WITH
THE COMPANY IN ANY SUCH CONTEST; PROVIDED, HOWEVER, THAT THE COMPANY SHALL BEAR
AND PAY DIRECTLY ALL COSTS AND EXPENSES (INCLUDING ADDITIONAL INTEREST AND
PENALTIES) INCURRED IN CONNECTION WITH SUCH CONTEST AND SHALL INDEMNIFY AND HOLD
THE EXECUTIVE HARMLESS, ON AN AFTER-TAX BASIS, FOR ANY EXCISE TAX OR INCOME TAX
(INCLUDING INTEREST AND PENALTIES WITH RESPECT THERETO) IMPOSED AS A RESULT OF
SUCH REPRESENTATION AND PAYMENT OF COSTS AND EXPENSES.  FURTHERMORE, THE
COMPANY’S CONTROL OF THE CONTEST SHALL BE LIMITED TO ISSUES WITH RESPECT TO
WHICH A GROSS-UP PAYMENT WOULD BE PAYABLE HEREUNDER AND THE EXECUTIVE SHALL BE
ENTITLED, AT EXECUTIVE’S EXPENSE, TO SETTLE OR CONTEST, AS THE CASE MAY BE, ANY
OTHER ISSUE RAISED BY THE INTERNAL REVENUE SERVICE OR ANY OTHER TAXING
AUTHORITY.

 

(IV)          REFERENCES HEREIN TO CODE SECTIONS SHALL APPLY TO COMPARABLE CODE
SECTIONS IN THE EVENT OF ANY AMENDMENT TO THE CODE.

 

(V)           THE FOREGOING PROVISIONS OF THIS SUBSECTION (F) SHALL SIMILARLY
APPLY TO ANY BENEFIT PROVIDED ELSEWHERE IN THIS AGREEMENT WHERE IT IS EXPRESSLY
PROVIDED THAT THE BENEFIT IS TO BE PROVIDED ON AN AFTER TAX BASIS.

 

(G) IN THE EVENT OF THE EXECUTIVE’S TERMINATION OF EMPLOYMENT UNDER THIS
AGREEMENT, THE EXECUTIVE SHALL BE UNDER NO OBLIGATION TO SEEK OTHER EMPLOYMENT,
AND THERE SHALL BE NO OFFSET AGAINST AMOUNTS DUE THE EXECUTIVE UNDER THIS
AGREEMENT ON ACCOUNT OF ANY REMUNERATION ATTRIBUTABLE TO ANY SUBSEQUENT
EMPLOYMENT.

 

In the event that Executive’s 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.

 

SECTION 4
EMPLOYMENT

 

Following a Change in Control, the Executive will, except as provided below,
continue as an employee during the Extension Period.  During the Employment
Period:

 

(I)            THE EXECUTIVE SHALL PERFORM SERVICES CONSISTENT WITH HIS PAST
PRACTICES,

 

(II)           THE EXECUTIVE SHALL NOT BE REQUIRED TO RELOCATE OR TRAVEL IN
EXCESS OF PAST PRACTICES,

 

(III)          THE EXECUTIVE SHALL ENJOY THE SAME OFFICE, ADMINISTRATIVE SUPPORT
AND SUPPORT SERVICES AS HE ENJOYED PRIOR TO THE CHANGE IN CONTROL.

 

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(IV)          THE EXECUTIVE SHALL NOT BE REQUIRED TO DEVOTE MORE TIME TO COMPANY
BUSINESS THAN HE DID PRIOR TO THE CHANGE IN CONTROL AND MAY CONTINUE DIRECTOR OR
OFFICER POSITIONS WITH OTHER PRIVATE OR PUBLIC ENTITIES THAT DO NOT VIOLATE
SECTION 7.

 

(V)           THE EXECUTIVE’S EXPENSES SHALL BE REIMBURSED CONSISTENT WITH PAST
PRACTICES, AND

 

(VI)          THE EXECUTIVE SHALL RECEIVE AT LEAST THE SAME VACATION AS HE
CURRENTLY ENJOYS, BUT NOT LESS THAN FOUR WEEKS PAID VACATION.

 

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.

 

SECTION 5
SOURCE OF PAYMENTS

 

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.

 

SECTION 6
LITIGATION EXPENSES AND ARBITRATION

 

In addition to the Company’s 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
Executive’s 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
(15th) day following the designation of the second arbitrator, or if a second
arbitrator has not been designated by the (15th) 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

 

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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.

 

SECTION 7
RESTRICTIVE COVENANTS

 

(A) WITHIN A REASONABLE PERIOD OF TIME FOLLOWING HIS TERMINATION OF EMPLOYMENT,
THE EXECUTIVE SHALL RETURN TO THE COMPANY ALL COMPANY INFORMATION, REPORTS,
FILES, MEMORANDA, RECORDS, CREDIT CARDS, CARDKEY PASSES, DOOR AND FILE KEYS,
COMPUTER ACCESS CODES, AND OTHER PROPERTY WHICH THE EXECUTIVE HAS RECEIVED,
PREPARED, OR HELPED TO PREPARE IN CONNECTION WITH HIS EMPLOYMENT WITH THE
COMPANY, EXCEPT AS PROVIDED IN SECTION 3.  THE EXECUTIVE ACKNOWLEDGES THAT IN
THE COURSE OF EMPLOYMENT WITH THE COMPANY, HE HAS ACQUIRED COMPANY INFORMATION
AND THAT SUCH COMPANY INFORMATION HAS BEEN DISCLOSED TO HIM IN CONFIDENCE AND
FOR THE COMPANY’S USE ONLY.  THE EXECUTIVE AGREES THAT, DURING THE EXTENSION
PERIOD, HE (I) WILL KEEP SUCH COMPANY INFORMATION CONFIDENTIAL AT ALL TIMES,
(II) WILL NOT DISCLOSE OR COMMUNICATE COMPANY INFORMATION TO ANY THIRD PARTY,
AND (III) WILL NOT MAKE USE OF COMPANY INFORMATION ON HIS OWN BEHALF OR ON
BEHALF OF ANY THIRD PARTY.  THE EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES THAT
THE COMPANY’S REMEDY IN THE FORM OF MONETARY DAMAGES FOR ANY BREACH BY HIM OF
ANY OF THE PROVISIONS OF THIS SECTION MAY BE INADEQUATE AND THAT, IN ADDITION TO
ANY MONETARY DAMAGES FOR SUCH BREACH, THE COMPANY SHALL BE ENTITLED TO INSTITUTE
AND MAINTAIN ANY APPROPRIATE PROCEEDING OR PROCEEDINGS, INCLUDING AN ACTION FOR
SPECIFIC PERFORMANCE AND/OR INJUNCTION.

 

(B) EXECUTIVE AGREES NOT TO, DURING THE EXTENSION PERIOD, WITHIN THE TERRITORY,
DIRECTLY OR INDIRECTLY, INDIVIDUALLY OR ON BEHALF OF PERSONS NOT NOW PARTIES TO
THIS AGREEMENT, OR AS A DIRECTOR, OFFICER, PRINCIPAL, AGENT, EXECUTIVE, OR IN
ANY OTHER CAPACITY OR RELATIONSHIP, ENGAGE IN THE CASINO BUSINESS (EXCEPT AS A
PASSIVE INVESTOR HOLDING NOT MORE THAN 3% OF THE EQUITY OF SUCH BUSINESS), OR
AID OR ENDEAVOR TO ASSIST ANY BUSINESS OR LEGAL ENTITY, THAT IS IN THE CASINO
BUSINESS AND THAT COMPETES WITH THE COMPANY ANYWHERE IN THE TERRITORY.  THE
TERRITORY SHALL CONSIST OF BOTH THE ENTIRE STATE OF DELAWARE AND A 50-MILE
RADIUS AROUND THE COMPANY’S FACILITY IN DOVER, DELAWARE.  THE COMPANY AND
EXECUTIVE ACKNOWLEDGE THE REASONABLENESS OF THIS COVENANT NOT TO COMPETE AND THE
REASONABLENESS OF THE GEOGRAPHIC AREA AND DURATION OF TIME WHICH ARE A PART OF
SAID COVENANT.

 

(C) UNLESS WAIVED IN WRITING BY THE COMPANY, EXECUTIVE FURTHER AGREES THAT HE
WILL NOT, DIRECTLY OR INDIRECTLY, DURING THE EXTENSION PERIOD, SOLICIT THE TRADE
OR PATRONAGE OF ANY OF THE CUSTOMERS OF THE COMPANY, REGARDLESS OF THE LOCATION
OF SUCH CUSTOMERS OF THE COMPANY WITH RESPECT TO ANY SERVICES, PRODUCTS, OR
OTHER MATTERS IN WHICH THE COMPANY IS ACTIVE.

 

(D) UNLESS WAIVED IN WRITING BY THE COMPANY, EXECUTIVE FURTHER AGREES THAT HE
WILL NOT, DIRECTLY OR INDIRECTLY, DURING THE EXTENSION PERIOD, SOLICIT OR
ATTEMPT TO ENTICE AWAY FROM THE COMPANY ANY DIRECTOR, AGENT OR EMPLOYEE OF THE
COMPANY.

 

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(E) EXECUTIVE ACKNOWLEDGES THAT THE COMPANY HAS NO ADEQUATE REMEDY AT LAW AND
WOULD BE IRREPARABLY HARMED IF EXECUTIVE BREACHES OR THREATENS TO BREACH ANY OF
THE PROVISIONS OF THIS SECTION AND, THEREFORE, AGREES THAT THE COMPANY SHALL BE
ENTITLED TO INJUNCTIVE RELIEF TO PREVENT ANY SUCH BREACH OR THREATENED BREACH
THEREOF AND TO SPECIFIC PERFORMANCE OF THE TERMS OF THIS SECTION (IN ADDITION TO
ANY OTHER LEGAL OR EQUITABLE REMEDY THE COMPANY MAY HAVE, INCLUDING IF SO
DETERMINED BY ARBITRATION, THAT THE COMPANY IS NOT OBLIGATED TO PAY TO THE
EXECUTIVE (OR THE EXECUTIVE IS REQUIRED TO REPAY TO THE COMPANY) A PORTION OR
ALL OF THE NON-COMPETE MONTHLY AMOUNT; PROVIDED, HOWEVER, IN ALL INSTANCES THE
COMPANY SHALL CONTINUE TO PAY TO EXECUTIVE THE NON-COMPETE MONTHLY AMOUNT UNLESS
AND UNTIL ALL APPEALS HAVE BEEN EXHAUSTED OR THE TIME FOR SUCH HAS EXPIRED). 
EXECUTIVE FURTHER AGREES THAT EXECUTIVE SHALL NOT, IN ANY EQUITY PROCEEDING
RELATING TO THE ENFORCEMENT OF THIS SECTION, RAISE THE DEFENSE THAT THE COMPANY
HAS AN ADEQUATE REMEDY AT LAW.  NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS
PROHIBITING THE COMPANY FROM PURSUING ANY OTHER REMEDIES AT LAW OR IN EQUITY
THAT IT MAY HAVE UNDER AND IN RESPECT OF THIS AGREEMENT OR ANY OTHER AGREEMENT.

 

(F) THE EXECUTIVE AGREES TO PAY TO THE COMPANY ANY OUTSTANDING AMOUNTS OWED TO
THE COMPANY; PROVIDED, HOWEVER, THAT NO BREACH OR ALLEGED BREACH OF THIS
SUBSECTION (F) OR ANY OTHER PROVISION OF THIS SECTION SHALL CONSTITUTE GROUNDS
FOR, OR OTHERWISE ENTITLE, THE COMPANY TO OFFSET PAYMENTS OTHERWISE OWED TO THE
EXECUTIVE UNDER THIS AGREEMENT.

 

SECTION 8
SEVERABILITY

 

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.

 

SECTION 9
AMENDMENT, TERMINATION, OR MODIFICATION

 

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.

 

SECTION 10
CONSOLIDATION, MERGER, OR SALE OF ASSETS; ASSIGNABILITY

 

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

 

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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 Executive’s rights hereunder shall not be assignable.

 

SECTION 11
TAX WITHHOLDING

 

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.

 

SECTION 12
ENTIRE UNDERSTANDING

 

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.

 

SECTION 13
BINDING 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.

 

SECTION 14
EMPLOYMENT STATUS

 

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 Executive’s employment with the Company is terminable at will by
the Company or Executive and each shall have the right to terminate Executive’s
employment with the Company at any time, with or without Cause, subject to the
Company’s 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.

 

SECTION 15
NO ATTACHMENT

 

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.

 

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SECTION 16
NOTICES

 

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:

 

(A) TO THE COMPANY, AT ITS DOVER, DELAWARE ADDRESS

 

(B) TO THE EXECUTIVE, AT THE ADDRESS MAINTAINED BY THE COMPANY FOR THE EXECUTIVE
FOR PAYROLL PURPOSES;

 

or to such address as either party shall have previously specified in writing to
the other.

 

SECTION 17
REVOCATION AND EXECUTIVE ACKNOWLEDGMENTS

 

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.

 

SECTION 18
HEADINGS OF NO EFFECT

 

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.

 

SECTION 19
APPLICABLE LAW

 

This Agreement and its validity, interpretation, performance, and enforcement
shall be governed by the laws of the State of Delaware.

 

SECTION 20
COUNTERPARTS

 

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

 

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Executive both intending to be legally bound have duly executed and delivered
this Agreement, to be effective as of the Effective Date.

 

 

Dover Downs Gaming & Entertainment,
Inc.

 

 

 

  /S/  Denis McGlynn

 

Its

 

 

 

 

 

EXECUTIVE

 

 

 

  /S/  Klaus M. Belohoubke

 

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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

 

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