**Exhibit 10.5**

 

AGREEMENT

 

This Agreement is made and entered into this 1st day of May, 2007,superseding the agreement entered into on the 22nd day of October, 2003 by andbetween Dover Downs, Inc., a Corporation of the State of Delaware(hereinafter called Dover Downs), and Delaware Standardbred Owners Association, Inc.,a Delaware Corporation (hereinafter called D.S.O.A.) and is executed induplicate original copies.

 

WITNESSETH:

 

WHEREAS, Dover Downs is licensed to conduct and is engaged in thebusiness of conducting harness racing meetings at a harness racing track knownas Dover Downs, located in Dover, Delaware; and

 

WHEREAS, D.S.O.A.’s membership consists of owners, trainers, anddrivers of harness horses participating in harness race meetings at Dover Downsand elsewhere in the United States and Canada, and D.S.O.A. has been organizedand exists for the purpose of promoting the sport of harness racing; improvingthe lot of owners, drivers, and trainers of harness racing horses participatingin race meetings; establishing health, welfare and insurance programs forowners, drivers, and trainers of harness racing horses; negotiating withharness racing tracks on behalf of owners, trainers, drivers, and grooms ofharness racing horses; and generally rendering assistance to them whenever andwherever possible; and

 

WHEREAS, the parties hereto desire to cooperate in promoting thepopularity of the sport of harness racing, and in insuring the continuity ofharness racing at Dover Downs for the best interests of the parties hereto andthe public; and

 

 

 

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IN CONSIDERATION OF the promises, the covenants set forth herein, andother considerations, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:

 

1.  Term of Agreement

 

The provisions of this Agreement shall apply to and govern everyharness racing meeting conducted by or at Dover Downs effective May 1,2007, and continuing through July 31, 2010. The parties agree that thisAgreement shall automatically renew for two successive one year periods unlesseither party notifies the other party by May 1st of itsintention to not renew this Agreement in which event the agreement shallterminate at the end of the then current term (i.e., on July 31, 2010 inthe event there is no renewal or July 31, 2011 in the event that theAgreement is renewed only once or July 31, 2012 in the event that theAgreement is renewed for both option years.

 

**During the term of this agreement Dover Downs will schedulenot less than 133 days of live racing each year, where a live day of racingshall consist of a minimum of 13 programmed races per day, and the minimumnumber of races each year shall be 1995 unless otherwise mutually agreed by theparties provided however, that any days or races lost to weather, acts of God,technical problems, or human error, shall not be required to be rescheduled.These days and races are subject to the availability of horses and may bereduced if the races are not adequately filled by available horses. If such areduction is necessary, Dover Downs will consult with the D.S.O.A. to determinethe best manner in which to conduct the reduced number of races.**

** **

 

 

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2.  Basic Purse Distribution

 

A.  Dover Downs will distributeas racing purses at all meetings conducted at Dover Downs during the term ofthis agreement 10% of the live handle wagered at Dover Downs.  Except, however, when Dover Downs races morethan 13 races per day, Dover Downs will retain all monies received from thelive handle wagered on the last race each day.

 

In the event of any legislation which changes Dover Downs’ share of thepari-mutuel commission, the amount calculated above shall be adjusted so that50% of any increase shall be added to purses and 50% of any decrease shall besubtracted from the purses.

 

B. Dover Downs agrees to distribute to D.S.O.A. via the purse pool andsubject to the provisions of paragraph 5, twenty five percent (25%) of anymonies received from Dover Downs’ export signal of the live race meetsconducted during the term of this agreement. Except, however, when Dover Downsraces more than 13 races per day, Dover Downs will retain all monies receivedfrom Dover Downs’ export signal on the last live race each day.

 

C*.* Over and above the purses payable under paragraphs 2 *A) and 2*(B), Dover Downs shall pay additional purses in anamount calculated pursuant to 29 Del.C.4815 (b)(3)b et seq.

 

D.  In consideration of Dover Downs racing morethan 1560 races per race meet and agreeing to many provisions relating to raceconditions, qualifying standards, qualifying races, physical improvements, andother accommodations for the horsemen, the 

 

 

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share of pari-mutuelcommissions for purses has been negotiated to the amounts specified inParagraphs 2 (A) and 2 (B) above.

 

E.  An average of 6 races perprogram shall be written and if possible filled for Delaware owned or bredhorses.  The race secretary shall makeevery effort to write Delaware owned horses in all classes permitted to race atDover Downs.  The purses for these racesshall be twenty (20%) percent greater than purses for the same class notrestricted to Delaware owned or bred horses rounded to the nearest $100. Shouldthese races not fill with all Delaware owned or bred horses the racingsecretary may open the class to non-Delaware owned or bred horse, with theDelaware owned or bred horses having first preference in accordance withD.H.R.C. rules.

 

F.  During the term of thisAgreement, Dover Downs, on a weekly basis during any race meeting conducted byDover Downs, shall pay directly to the drivers and trainers of the horses whoseowners are entitled to receive a portion of the purse money, an amount equal tofive (5%) percent of the owners’ purse money, which amount shall be creditedagainst the purses required to be paid to the owners of such horses.  In no event shall the aggregate payment madeby Dover Downs on account of purses and other items specified in Paragraph 5 beincreased beyond the applicable amount for purses.

 

                3.  Projection of Purses and Carry-Over ofPurse Money

 

A.   Thespecifications of the applicable purses for the race meet, in accordance withParagraph 2, shall be projected on the basis of the total estimated purse fundsto be accrued during the live race meeting, with consideration given toseasonal fluctuation of purse accruals, so as to maintain a reasonably uniformpurse distribution schedule throughout the Dover Downs meetings each year.

 

 

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B. (i) If any purse money due under Paragraph 2 has not been fullydistributed at any meeting covered by this Agreement, the amount due shall becarried over and distributed in purses at the next meeting covered by this Agreement.Any underpayment of purse money under the preceding Agreements between DoverDowns and D.S.O.A. shall likewise be added to the purse money payable underParagraph 2.

 

   (ii) If the pursesactually paid at any meeting covered by this Agreement exceed the amount dueunder Paragraph 2, the amount of the excess payment shall be deducted from thepurses otherwise payable at the next meeting covered by this Agreement.  Any overpayment of purses during the last meetingconducted under the previous agreement between Dover Downs and D.S.O.A. shalllikewise be deducted from the purse money payable under Paragraph 2 of thisAgreement.

 

                                                4.  Minimum and Maximum Purses

 

At all meetings conducted at Dover Downs, the minimum and maximum pursepayable by Dover Downs for any pari-mutuel betting race shall be agreed upon byD.S.O.A. representatives and Dover Downs prior to the beginning of each racemeet. In the event the parties are unable to reach an agreement, the minimumand maximum purse payable will be the same as the start of the previous racemeet conducted at Dover Downs.

 

5.  Arrangements with D.S.O.A.

 

A.  Dover Downs will pay toD.S.O.A., in diminution of and as a credit against the percentages specified inParagraph 2, requested funds to compensate D.S.O.A. for its expenses providedthat D.S.O.A.’s representation of the horsemen racing at meetings conducted byDover Downs has been demonstrated by the horsemen’s adherence

 

 

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to and recognition of this Agreement. Such sums, other than health insurance premiums payable under paragraph5(E), shall not exceed 110% of the amount requested the prior year and shall bepaid in monthly installments no later than seven (7) days after theconclusion of each month of each racing meeting covered by this Agreementunless mutually agreed by the parties.

 

B.  When this Agreement and anysucceeding Agreement between D.S.O.A. and Dover Downs has expired and there isno agreement in effect between them providing otherwise, any underpayment ofpurses due under this Agreement shall be payable to horsemen who participatedin the last Dover Downs’ meet covered by this Agreement and both parties shalltake whatever action is required to accomplish such payment.

 

In order to minimize any underpayment****or****overpayment of purses at the conclusion of the live racemeet****under this Agreement, D.S.O.A. andDover Downs will meet regularly to make adjustments to the purse account ifnecessary.  These adjustments to thepurses will be in****a fair and reasonable manner and****will include lowering the minimum purse if such action iswarranted.  The base purse for anyclaiming race will not exceed 80% of the claiming price.

 

C.  Dover Downs shall provide anoffice for the use of a D.S.O.A. representative on its racing grounds.

 

D.  Representatives of DoverDowns will be available at reasonable times to consult with D.S.O.A.representatives upon request of either party concerning any matters pertainingto the provisions of this Agreement and/or the conduct of races, maintenance ofthe receiving stable area, the race track, paddock and training areas.

 

 

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E.  Dover Downs shall pay toD.S.O.A. as part of its expenses in paragraph 5(A.), the incurred premiums ofinsurance administered by D.S.O.A. for grooms, second trainers, trainers, anddrivers.  Insurance premiums shall bepaid monthly******upon presentation of a billfrom D.S.O.A..  The premiums shall be indiminution of and as a credit against purse money payable under this Agreementas specified in Paragraph 2.

 

F.  Dover Downs agrees tocooperate with D.S.O.A. in its effort to provide education, promotionalmaterial and public relations regarding harness racing, pari-mutuel betting,and horse ownership.

 

G.  D.S.O.A. acknowledges thatfrom time to time****certain legislative effort willbe required in Delaware pertaining to pari-mutuel wagering, horse racing, thevideo lottery as well as other matters that will effect Dover Downs.****D.S.O.A. will fully support and help lobby for allreasonable legislation****and oppose allharmful legislation insofar as it****does notadversely impact horsemen’s issues.

 

H.  During the term of thiscontract the minimum claiming price for Delaware Owned and Bred races shall be($7,500) seventy five hundred dollars. The minimum open claiming price shall be($12,500) twelve thousand five hundred dollars unless changed by mutualagreement.

 

I.*** ***Unlesschanged by mutual agreement, the qualifying times during the term of thisagreement shall be 2:00 for pacers and 2:02 for trotters, plus applicableallowances for weather, and track conditions. Two year olds will receive a twosecond allowance. Three year olds will receive a two second allowance from January 1through April 30 and a one second allowance after April 30.

 

 

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J.*** ***During this Agreement,horses permitted at Dover Downs will have the opportunity to qualify two timesper calendar month. Horses that are two year olds and three year olds, and arenominated to the Delaware Breeders program, will have unlimited opportunity toqualify during each of the three (3) months leading up to the first eventof the program to which it is nominated.

 

K.  There shall not be anygeneral age restrictions in condition races that are written as NW of $6,000 orhigher in last (x) starts. This does not apply to NW of (x) raceslifetime, NW of ($x) lifetime, or any other type of condition race writtenaccording to the available horse population in an effort to enhance the qualityand competitiveness of the racing at Dover Downs.  All races written for NW of (x) raceslifetime shall exclude as a win only, any win in which the first place moneywas less than or equal to $500.

 

L.  During the term of thisagreement, if Dover Downs has races with nine horse fields, a bonus will beadded to the base purse as follows:

 

| Base purse is:    |   | Bonus is: |
|-------------------|--------|-----------|
|              |   |      |
| Less than $20,000 |   | $500      |
| $20,000 or more   |   | $1000     |

 

M.  Dover Downs, upon request,shall furnish to D.S.O.A. a summary of the handle.

 

N.   During the term of thisagreement, Dover Downs will provide an outrider, if one can be obtained at acomparable cost to that paid by area racetracks, that is acceptable to theD.S.O.A..

 

O.   Dover Downs will providedrainage in each stall of the paddock in order to permit bathing of horses inthe race stalls in the paddock.

 

 

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6.  Simulcast Wagering

 

A.  As consideration for thedistribution to the purse pool in accordance with paragraph 2(B.)****D.S.O.A. agrees, as is standard in the industry, to share**the daily cost incurred by Dover Downs for the daily exportof the live signal throughout each season. These incremental costs incurred by Dover Downs for the exporting oflive races will be calculated and shared 25% by D.S.O.A. and 75% by****Dover Downs.  Thesedaily costs will be detailed on the purse reconciliation report submitted toD.S.O.A. at the end of each month.

 

B. As consideration for the covenants set forth herein, and otherconsiderations, D.S.O.A. agrees that it will not share in any of the revenuesor expenses from intrastate and interstate simulcasting of standardbred andthoroughbred races from such tracks as approved per paragraph 6(c).

 

C.  All simulcasting agreementsneed the approval of D.S.O.A. prior to Dover Downs accepting wagering on thoseraces. D.S.O.A. agrees not to unreasonably withhold their approval.

 

    Should either D.S.O.A. or Dover Downs deny anapproval or elect to terminate an agreement, they must provide the other partywritten notice at least 15 days prior to termination or disapproval withreasonable explanation for their action.

 

7.  Stake and Early ClosingEvents

 

Not more than 8% of the total purse money payable to the horsemenduring each race meet shall be paid for Stake and Early Closing events. Pursemoney payable to the Delaware Breeders Program, or any other Delawareowned/bred Stakes or early closing events, shall not be part of the 8%limitation.

 

 

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8.  On-Track Driver Insurance

 

Dover Downs shall provide On-track driver accident and disabilityinsurance with minimums of $50,000 death benefit, $100,000 medical expenses and$500 a week disability income extending for 26 weeks then $350 a weekdisability income for an additional 78 weeks subject to no more than aseven-day waiting period.  This coverageshall have no deductible to the horsemen and will be provided on race days,non-race days during the race meet when the track is available for training andfor three (3) days prior to each race meeting covered under thisAgreement.

 

9.  Stall Assignments andRacing Privileges

 

Nothing in this Agreement shall be deemed to limit or restrict in anymanner the absolute discretion of Dover Downs to assign stalls and/or grantracing privileges to owners and trainers whether or not members of D.S.O.A.,except that stall space and/or racing privileges shall not be denied by reasonof membership in, or activity on behalf of, D.S.O.A. or a duly constitutedhorsemen’s committee.  Notwithstandingthis paragraph, it is understood that Dover Downs does not contemplate openingits barn area and providing stabling facilities during the term of thisAgreement.  Dover Downs does, however,agree to make reasonable attempts to restrict the horse population to amanageable level with preference being given to Delaware owned horses.

 

10.  Indemnity and Cooperation

 

D.S.O.A. shall indemnify and hold Dover Downs harmless against anyclaims, losses, expenses, judgments, penalties or extra distributions imposedupon or suffered by Dover Downs arising out of, or in connection with, thepayment provided in Paragraph 5 above. In the event any other organization shall claim to represent the

 

 

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horsemen participating in any Dover Downs meeting during the term ofthis Agreement, Dover Downs shall promptly notify D.S.O.A.

 

Dover Downs agrees and acknowledges that the D.S.O.A. during the termof this agreement is and shall be the sole and exclusive representatives andbargaining agent for harness horse people in respect to all matters related toharness racing and ancillary and appurtenant activities carried on by DoverDowns, as long as D.S.O.A. represents a majority of the horsemen racing atDover Downs.

 

11.  Controlling Law andRegulation

 

The interpretation of the provisions of this Agreement shall begoverned by the law of Delaware.  If andto the extent that any provision(s) of this Agreement is and/or becomesinconsistent with any Delaware Statute, law or any regulation of the DelawareState Harness Racing Commission not in effect or hereinafter enacted, suchprovision or provisions shall be deemed to be superseded by such law orregulation as the case may be.  Thevalidity of the remaining provisions of the contract shall be construed andenforced as if the contract did not contain the particular provision held to beinvalid.

 

12.  Miscellaneous

 

This agreement acknowledges and incorporates by reference the letterfrom Charles Lockhart, Vice President of Horse Racing, under date of April 20,2007 attached hereto, addressing some issues that the parties have agreed to.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to besigned on their behalf by their respective Officers as of the date first abovewritten.

 
| Witness:              |   | DOVER DOWNS, INC.                                |
|-----------------------|--------|--------------------------------------------------|
|                  |   |                                             |   |   |
|                  |   |                                             |   |   |
| /s/ Denis McGlynn     |   | By                                               |   | /s/ Charles B. Lockhart |
|                  |   |                                             |   |      Charles B. Lockhart |
|                  |   |                                             |   |      Vice President—Horse  Racing |
|                  |   |                                             |   |   |
|                  |   |                                             |   |   |
| Witness:              |   | DELAWARE STANDARDBRED  OWNERS  ASSOCIATION, INC. |
|                  |   |                                             |   |   |
|                  |   |                                             |   |   |
|                  |   |                                             |   |   |
| /s/ Salvatore DiMario |   | By                                               |   | /s/ James T. Case |
|                  |   |                                             |   |      James T. Case |
|                  |   |                                             |   |      President |
|                  |   |                                             |   |   |
|                       |        |                                                  |  |  |  |

 

 

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