Exhibit 10.1


 


FORM OF


INCENTIVE
STOCK OPTION AGREEMENT


USED WITH


DOVER
DOWNS GAMING & ENTERTAINMENT, INC.


2002
STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED


 


OPTION AGREEMENT made as
of the          day of                                   ,
                
between DOVER DOWNS GAMING & ENTERTAINMENT, INC., a Delaware corporation
(hereinafter called “Company”), and                                                   
, 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 2002 Stock Incentive
Plan, as Amended and Restated (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 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 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 covered by the
Option shall be $                  
per share (the “Option Price”).


 





















 


4.             TERM OF OPTION. 
The term of the Option shall be for a period of eight (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

  Date

  of this

  Agreement

  	
   

  	
  Percentage

  of

  Total Grant

  Exercisable

  	
   

  	
  Number

  of

  Shares

  Exercisable

  	
   

  	
  Cumulative

  Number of

  Shares

  Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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 Option price shall be paid in accordance with Paragraph 10 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 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
transferable except by Will or by the laws of descent 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, at the time of the exercise, the Employee 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 the Employee’s Last Will and
Testament, or by the Employee’s 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 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 therefore 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
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 Option by
written notice to the Company, substantially in the form attached as Exhibit A
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 amount of the
Option Price 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 the Employee’s legatee or personal
representative.  The Option Price shall
be payable (a) in cash or its equivalent, (b) by tendering previously acquired
shares of Common Stock having an aggregate Fair Market Value (as defined in the
Plan) on the last trading day prior to the date of exercise equal to the total
Option Price (provided that the shares of Common Stock which


 





















 


are tendered must have been held by the Employee for at least twelve
(12) months prior to their tender to satisfy the Option Price), or (c) by a
combination of any of the foregoing.


 


11.           REQUIREMENTS OF LAW.  If any law, regulation of the Securities and
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 a written
statement that the Employee intends to hold the shares, so acquired 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 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
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 hand and seal, all as of the day and
year first above written.


 


	
   

  	
  Dover Downs Gaming
  & Entertainment, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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  Employee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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