_____________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________
FORM 10-K
(Mark One)
/ X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1997 or
/__/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to _______________
Commission file number 1-11929
DOVER DOWNS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0357525
(State of Incorporation) (I.R.S. Employer Identification Number)
1131 North DuPont Highway, Dover, Delaware 19901
(Address of principal executive offices)
Registrant's telephone number including area code (302) 674-4600
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of exchange on which
registered
Common Stock, $.10 Par Value NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /___/
The aggregate market value of the voting stock held by non-
affiliates of the registrant was $51,588,250 as of July 31, 1997.
As of July 31, 1997, the number of shares of each class of the
Registrant's common stock outstanding is as follows:
Commom Stock - 2,939,000 shares
Class A Common Stock - 12,286,830 shares
The following documents are incorporated by reference:
Part of this form into which
Document incorporated
Proxy Statement in connection with
Annual Meeting of Shareholders to be
held October 31, 1997 III
<PAGE>
ITEM 1. BUSINESS
Dover Downs Entertainment, Inc. (Dover Downs or the Company) owns and
operates the Dover Downs International Speedway, the Dover Downs
Raceway and a video lottery casino at a multi-purpose gaming and
entertainment complex. The facility is located in close proximity to
the major metropolitan areas of Philadelphia, Baltimore and Washington,
D.C. on approximately 825 acres of land owned by the Company in Dover,
Delaware.
Dover Downs International Speedway offers a modern, state-of-the-art,
concrete superspeedway for top-rated NASCAR-sanctioned auto racing
events. Dover Downs Raceway offers traditional harness horse racing and
year-round satellite-linked pari-mutuel wagering on simulcast harness
and thoroughbred horse racing from regional and national tracks. The
Company also simulcasts live races at Dover Downs to tracks and other
off-track betting locations across North America. The Company expanded
into video lottery (slot) machine gaming in December of 1995. The
video lottery operations are managed by Caesars World Gaming
Development Corporation (Caesars), a wholly-owned subsidiary of Caesars
World, Inc., the casino gaming arm of ITT Corporation.
Dover Downs offers a unique gaming and entertainment experience.
Management believes it to be the only facility in the country that
combines in one location NASCAR Winston Cup/Busch Series stock car
racing, harness horse racing, pari-mutuel wagering on both live and
simulcast horse races, and video lottery (slot) machine gaming.
(a) General Development of Business
On October 3, 1996, the Company completed its initial public offering.
The Company issued 1,075,000 shares of the Company's Common Stock and
received proceeds of approximately $16,360,000, net of issuance costs
of approximately $1,913,000.
In October of 1996 the Company completed the expansion of the video
lottery casino increasing the number of video lottery (slot) machines
from 572 to 1,000, which is the maximum number permitted by law.
In November of 1996 the Company began satellite transmission of its
live harness races from Dover Downs Raceway to tracks and other off-
track betting locations across North America.
(b) Financial Information About Industry Segments.
The Company's principal operations are grouped into two segments:
motorsports and gaming. Financial information concerning these
businesses is included on pages 9 through 13 of this 1997 Annual Report
on Form 10-K.
(c) Narrative Description of Business
Motorsports
Dover Downs has presented NASCAR-sanctioned racing events for 29
consecutive years. The Company currently conducts four major NASCAR-
sanctioned events annually. Two races are associated with the Winston
Cup professional stock car racing circuit and two races are associated
with the Busch Series, Grand National Division racing circuit.
Each of the Busch Series events at the Company's tracks is conducted on
the day before a Winston Cup event. Dover Downs is one of only six
speedways in the country that presents two Winston Cup events and also
conducts two Busch Series events each year. The June and September
dates have historically allowed Dover Downs to hold the first and last
Winston Cup events in the Maryland to Maine region each year.
The auto racing track is a high-banked, one mile long, concrete
superspeedway. Current seating capacity at Dover Downs is
approximately 100,000 seats. Unlike some speedways, substantially all
grandstand seats at Dover Downs, including indoor, air-conditioned
grandstand and skybox seats, offer an unobstructed view of the entire
track. The recently completed installation of a concrete racing
surface created the only concrete superspeedway (one mile or greater in
length) that conducts NASCAR-sanctioned events.
In recent years, television coverage and corporate sponsorship have
increased for NASCAR-sanctioned events. The Company's NASCAR-
sanctioned events are currently televised live by TNN to a nationwide
audience and broadcast nationally to a network of over 450 radio
stations affiliated with the Motor Racing Network (over 250 stations
for Busch Series events).
Gaming
Dover Downs has presented harness racing events for 29 consecutive
years. On December 29, 1995, the Company introduced video lottery
(slot) machines to its entertainment mix.
Under an agreement with Caesars, a leader in the gaming industry,
Caesars supervises, manages, markets and operates the Company's video
lottery operations. The newly expanded, air-conditioned "video lottery
casino" housing the gaming operations was designed and built using
expertise from Caesars.
Dover Downs is a "Licensed Agent" authorized to conduct video lottery
operations under the Delaware State Lottery Code. Pursuant to
Delaware's Horse Racing Redevelopment Act enacted in 1994, the Delaware
State Lottery Office administers and controls the operation of the
video lottery operations. Unless the Act is extended or reenacted, it
will terminate on March 15, 2000, in which event the Company will be
required to discontinue its video lottery operations. The video
lottery machines are leased by and operated under the auspices of the
Delaware State Lottery Office. In October 1996, 428 machines were
added to bring the total number of slot machines to 1,000, which is the
maximum presently permitted by law.
Dover Downs is permitted by law to set its payout to customers between
87% and 95%. Prior approval from the Director of the Delaware State
Lottery Office would be required for any payout in excess of 95%.
Since inception of its operations on December 29, 1995, Dover Downs has
maintained an average payout of 90.5%.
By law, video lottery operations in Delaware are limited to the three
locations in the State where thoroughbred horse racing or harness horse
racing was held in 1993. In addition to the Dover Downs complex in
Dover, Delaware, there are only two other locations permitted by law:
Delaware Park, a northern Delaware thoroughbred track; and Harrington
Raceway, a south central Delaware fairgrounds track. Dover Downs and
Delaware Park began video lottery operations in December 1995;
Harrington Raceway began video lottery operations in August 1996.
The harness horse racing track is a five-eighths mile track and is
lighted for nighttime harness horse racing. The track is located
inside the one-mile auto racing superspeedway. The configuration
offers turns with a wider than normal turning radius and 4 degree
banking. This allows trotting and pacing horses to remain in full
stride through the turns. The result has been higher than normal
speeds attained by horses in competition. With the start of the race
season beginning November 1996, live harness races conducted at Dover
Downs were simulcast to tracks and other off-track betting locations
across North America.
The Company has facilities for pari-mutuel wagering on both live
harness horse racing and on simulcast thoroughbred and harness horse
racing received from numerous tracks across North America. Within the
main grandstand is the simulcast parlor where patrons can wager on
harness and thoroughbred races received by satellite into Dover Downs.
Television monitors throughout the parlor area provide views of all
races simultaneously and the parlor's betting windows are tied into a
central computer allowing bets to be received on all races from all
tracks.
With the recent expansion of its simulcasting operations, pari-mutuel
wagering is now on a year-round basis. For the fiscal years ended June
30, 1995, 1996, and 1997, the Company had 90, 201 and 363 simulcast
racing dates, respectively.
Harness racing in the State of Delaware is governed by the Delaware
Harness Racing Commission. The Company holds a license from the
Commission by which it is authorized to hold harness race meetings on
its premises and to make, conduct and sell pools by the use of pari-
mutuel machines or totalizators. Pari-mutuel wagering refers to pooled
betting or wagering on harness horse racing by means of a totalizator.
Through pooled betting, the wagering public, not the track, determines
the odds and the payoff. The track retains a percentage of the amount
wagered. Simulcasting refers to the transmission of live horse racing
by television, cable or satellite signal from one race track to another
with pari-mutuel wagering being conducted at the sending and receiving
track and a portion of the handle being shared by the sending and
receiving tracks.
Competition
Motorsports
The Company's racing events compete with other racing events sanctioned
by various racing bodies, such as CART (Championship Auto Racing
Teams), IRL (Indy Racing League), and NHRA (National Hot Rod
Association), and with other sports and other recreational events
scheduled on the same dates. Racing events sanctioned by different
organizations are often held on the same dates at separate tracks, in
competition with the NASCAR-sanctioned event dates. In addition,
motorsports facilities compete with one another for the patronage of
motor racing spectators, and with other sports and entertainment
businesses. The quality of the competition, type of racing event,
caliber of the events, sight lines, ticket pricing, location, and
customer conveniences, among other things, distinguish the motorsports
facilities.
The two closest speedways that currently sponsor Winston Cup races are
in Richmond, Virginia (approximately four hours to the South) and
Pocono International Raceway in Long Pond, Pennsylvania (approximately
three and a half hours to the North). Nazareth Speedway in Nazareth,
Pennsylvania (approximately two hours to the North) currently conducts
Busch Series, NASCAR Craftsman Truck and Indy races. Based on
historical data, management does not believe that any of these
facilities significantly impact operations at Dover Downs International
Speedway. In recent years, the Company's NASCAR-sanctioned Winston Cup
events have all sold out well in advance of the race.
Gaming
The legalization of additional casino and other gaming venues in states
close to Delaware, particularly Maryland, Pennsylvania and New Jersey,
may have a material adverse effect on the Company's business. From
time to time, legislation has been introduced in these states that
would further expand gambling opportunities, including video lottery
(slot) machines at horse-tracks.
At present, video lottery (slot) machines are only permitted at two
other locations in Delaware: Delaware Park and Harrington Raceway.
Delaware Park and Harrington Raceway presently have in operation 1,000
and 580 machines, respectively. The neighboring states of Pennsylvania
and Maryland do not presently permit video lottery operations.
Pennsylvania, Maryland and New Jersey all have state-run lotteries.
Atlantic City, New Jersey is located approximately 100 miles from Dover
Downs and a certain amount of market overlap should be expected.
Casinos in Atlantic City offer a full range of gaming products. Dover
Downs does not expect to compete directly with Atlantic City because of
the Company's inability to offer a full range of casino gaming
products, but it does expect to capture a portion of the existing
Atlantic City slot market in the Dover area, due to the facility's
proximity, convenience and multiple attractions.
The Company also competes for attendance with a wide range of other
entertainment and recreational activities available in the region,
including professional and collegiate sporting events.
Competition in horse racing is varied since race tracks in the
surrounding area differ in many respects. Some tracks only offer
thoroughbred or harness horse racing; others have both. Tracks have
live racing seasons that may or may not overlap with neighboring
tracks. Depending on the purse structure, tracks that are farther
apart may compete with each other more for quality horses than for
patrons.
Live harness racing also competes with simulcasts of thoroughbred and
harness racing. All race tracks in the region are involved with
simulcasting. In addition, a number of off-track betting parlors
compete with track simulcasting activities. With respect to the
Company simulcasting its live harness races to tracks and other
locations, its simulcast signals are in direct competition with live
races at the receiving track and other races being simulcast to the
receiving location.
Within the State of Delaware, Dover Downs faces little direct live
competition from the State's other two tracks. Harrington Raceway, a
south central Delaware fairgrounds track, conducts harness horse racing
periodically between May and November. There is no overlap presently
with Dover Downs' live race season. Delaware Park, a northern Delaware
track, conducts thoroughbred horse racing from April through mid-
November. Its race season only overlaps with Dover Downs for
approximately five to six weeks each year.
The neighboring states of Pennsylvania, Maryland and New Jersey all
have harness and thoroughbred racing and simulcasting. Dover Downs
competes with Rosecroft Raceway in Maryland, Philadelphia Park in
Pennsylvania, Garden State Park and The Meadowlands in New Jersey and
a number of other race tracks in the surrounding area. The Company
also receives simulcast harness and thoroughbred races from
approximately 30 race tracks, including the tracks noted above.
Seasonality
The Company derives a substantial portion of its total revenues from
admissions and event-related revenue attributable to four NASCAR-
sanctioned events which are currently held in June and September. As
a result, the Company's business has been, and is expected to remain,
highly seasonal. The seasonality was offset to some degree by the
year-round video lottery (slot) machine gaming operations and year-
round simulcasting.
At June 30, 1997, the Company had a total of 367 full-time employees
and 43 part-time employees. The Company hires temporary employees to
assist during its auto racing events and its live harness racing
season.
ITEM 2. PROPERTIES
The Company maintains its headquarters, motorsports speedway, harness
racetrack, and video lottery casino all on approximately 825 acres of
land owned by the Company in Dover, Delaware.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is a party to any
material legal proceedings. The Company and its subsidiaries are
engaged in ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
None.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The Common Stock of Dover Downs Entertainment, Inc. has traded on the
New York Stock Exchange under the symbol "DVD" since the Company's
initial public offering on October 3, 1996. There is no established
public trading market for the Company's Class A Common Stock. As of
July 31, 1997, there were 2,939,000 shares of Common Stock and
12,286,830 shares of Class A Common Stock outstanding. There were 480
record holders of Common Stock and 13 record holders of Class A Common
Stock at July 31, 1997.
For the fiscal year ended June 30, 1997, the range of share prices for
the Common Stock on the New York Stock Exchange is as follows:
1997
Fiscal Quarter High Low
First - -
Second 26 7/8 17 1/4
Third 20 1/2 16 5/8
Fourth 19 7/8 16 1/8
The Company declared a quarterly dividend of $.08 per share on all
classes of Common Stock in the third and fourth quarters of fiscal
1997.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Five Year Selected Financial Data
(Dollars in thousands, except per share data)
<CAPTION>
Year Ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Revenues:
Motorsports 20,516 18,110 16,282 13,561 11,984
Gaming (1) 81,162 31,980 1,250 796 2,058
101,678 50,090 17,532 14,357 14,042
Earnings before income taxes 28,239 15,593 7,239 5,791 4,791
Net earnings 16,472 9,196 4,284 3,562 2,908
Earnings per common share 1.08 .63 .30 .26 .21
Dividends per common share .16 - - - -
At June 30, 1997 1996 1995 1994 1993
Total assets 71,261 42,311 25,422 19,776 17,208
Long-term debt,
less current portion 760 766 698 776 878
Shareholders' equity 54,300 23,715 14,225 9,923 6,361
(1) Gaming revenues from the Company's video lottery (slot) machine gaming operations include the
total win from such operations. The Delaware State Lottery Office collects the win and remits a
portion thereof to the Company as its commission for acting as a Licensed Agent. The difference
between total win and the amount remitted to the Company is reflected in operating expenses.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Fiscal Year 1997 Compared With Fiscal Year 1996
Revenues increased by $51,588,000 to $101,678,000 from $50,090,000 in
the prior year. The significant increase in revenues was principally
due to the introduction of video lottery (slot) machines which were in
operation for the entire fiscal year 1997 compared with six months in
fiscal 1996. Video lottery revenues also increased as a result of
expanding the casino facility and increasing the number of video
lottery (slot) machines from 572 to 1,000 in October of 1996.
Motorsports revenues increased by $2,406,000 or 13.3%. Approximately
$999,000 of the total motorsports revenue increase resulted from
increased attendance and $663,000 resulted from increased ticket
prices. The remainder of the revenue increase of $744,000 was
principally due to increased marketing and sponsorship revenues.
Operating expenses increased by $37,860,000 of which $34,695,000 was
due to the video lottery (slot) machines in operation for the entire
fiscal year 1997 compared with six months in fiscal 1996. Payments to
the State of Delaware, fees to the manager who operates the video
lottery (slot) machine operation, and payments to the vendors who
provide the video lottery (slot) machines were $32,674,000 in fiscal
1997 and $12,188,000 in fiscal 1996. Amounts allocated from the video
lottery operation for harness horse racing purses were $9,157,000 in
fiscal 1997 and $3,550,000 in fiscal 1996. Wages and benefits for
employees of the video lottery (slot) machine operation were $4,035,000
in fiscal 1997 and $2,277,000 in fiscal 1996. Advertising, promotional
and customer complimentary costs of $4,251,000 and costs associated
with casino food and beverage sales of $1,923,000 were the other
significant operating costs of the video lottery (slot) machine
operations.
For the horse racing and simulcasting operations, wage and benefit cost
increases of $467,000, simulcasting cost increases of $537,000 and
purse increases of $155,000 (exclusive of the $9,157,000 of harness
horse racing purses allocated from video lottery operations in fiscal
1997) accounted for the most significant operating cost increases. The
cost increases were primarily the result of increasing the number of
live harness racing days to 97 from 67 in 1996 and from increasing the
number of simulcasting days to 363 from 201 in 1996.
Motorsports' operating expenses increased principally due to a $394,000
increase in purse obligation expenses. Sanction fees increased by
$80,000 and advertising increased by $145,000 during the 1997 fiscal
year.
Depreciation increased by $615,000 or 41.9% to $2,084,000 from
$1,469,000 as a result of a full year of depreciation expense related
to the Company's video lottery casino being recognized in 1997 compared
with six months of depreciation in 1996. Capital expenditures for the
expansion of the Company's motorsports facilities also contributed to
the increase in depreciation.
General and administrative expenses increased by $992,000 to $3,065,000
from $2,073,000. Wage and benefit costs increased by $363,000 and
contracted services increased by $205,000, principally due to the
Company's expansion of video lottery (slot) machine and simulcasting
operations.
The Company's effective income tax rates for fiscal 1997 and fiscal
1996 were 41.7% and 41.0%, respectively.
Net earnings increased by $7,276,000 due to the inclusion of video
lottery (slot) machine operations for the entire fiscal year 1997
compared with six months in fiscal 1996 and also due to higher
attendance and related revenues at the Company's NASCAR-sanctioned
events in September 1996 and June 1997.
Fiscal Year 1996 Compared With Fiscal Year 1995
Revenues increased by $32,558,000 to $50,090,000 from $17,532,000 in
the prior year. The significant increase in revenues was principally
due to the introduction of video lottery (slot) machine operations in
late December 1995. Fiscal year 1996 revenues include six months of
video lottery revenues of $28,818,000 compared with none in fiscal
1995. Motorsports revenues increased by $1,828,000 or 11.2%.
Approximately $1,028,000 of the total motorsports revenue increase
resulted from increased attendance and $345,000 resulted from increased
ticket prices. The remainder of the revenue increase of $455,000 was
principally due to increased marketing and sponsorship revenues.
Operating expenses increased by $23,302,000 of which $20,952,000 was
due to the introduction of video lottery (slot) machine operations.
Payments to the State of Delaware, fees to the manager who operates the
video lottery (slot) machine operation, and payments to the vendors who
provide the video lottery machines were $12,188,000 in fiscal 1996 and
none in fiscal 1995. Amounts allocated from the video lottery operation
for harness horse racing purses were $3,550,000 in fiscal 1996 and none
in fiscal 1995. Wages and benefits of newly hired employees for the
video lottery (slot) machine operation were $2,277,000. Advertising,
promotional and customer complimentary costs of $636,000, costs
associated with casino food and beverage sales of $611,000 and building
service costs of $229,000 were some of the other significant operating
costs of the video lottery (slot) machine operations.
For the horse racing and simulcasting operations, increased purses of
$451,000 (exclusive of the $3,550,000 of harness horse racing purses
allocated from video lottery operations), higher wage and benefit costs
of $444,000 and increased simulcasting costs of $285,000 accounted for
the most significant operating cost increases.
Motorsports' operating expenses increased principally due to a $505,000
increase in purse obligation expenses. Sanction fees increased by
$91,000 and wages and related benefits increased by $66,000 during the
1996 fiscal year.
Depreciation increased by $426,000 or 40.8% to $1,469,000 from
$1,043,000 due to the capital expenditures related to the Company's
newly constructed video lottery casino and to the further expansion of
its motorsports facilities.
General and administrative expenses increased by $368,000 to $2,073,000
from $1,705,000. Wage and benefit costs increased by $616,000
principally due to the Company's introduction of video lottery (slot)
machine operations and expansion of simulcasting operations.
The Company's effective income tax rates for fiscal 1996 and fiscal
1995 were 41.0% and 40.8%, respectively.
Net earnings increased by $4,912,000 due to the inclusion of video
lottery (slot) machine operations for six months in fiscal 1996 and
also due to higher attendance and related revenues at the Company's
NASCAR-sanctioned events in September 1995 and June 1996.
Liquidity and Capital Resources
Cash flow from operations for the three years ended June 30, 1997, 1996
and 1995 was $18,600,000, $15,317,000 and $4,802,000, respectively. The
significant increase from fiscal 1995 to fiscal 1996 reflected the
Company's higher net earnings and increased non-cash charges, as well
as deferred revenue, which is cash received in advance for
NASCAR-sanctioned event tickets. Deferred revenue amounted to
$7,542,000 and $6,003,000 at June 30, 1997 and 1996, respectively.
The Company has an annually renewable, $20,000,000 committed revolving
line of credit from a bank to provide seasonal funding needs and to
finance capital improvements. The Company was in compliance with all
terms of the facility and there were no amounts outstanding at June 30,
1997.
Capital expenditures for the year ended June 30, 1997 were $16,841,000.
Purchases of land for $1,060,000 were completed to provide for
additional parking and other future expansion. Construction of the
17,000 square foot casino facility expansion for $5,124,000 and
construction of additional permanent grandstand seating and luxury
suites for motorsports events of approximately $8,061,000 represented
the more significant capital projects in fiscal 1997. The capital
expenditures were financed with the proceeds from the initial public
offering and cash from operations.
Capital expenditures were $18,936,000 in fiscal 1996 compared with
$6,166,000 in fiscal 1995. Construction of the Company's video lottery
gaming facility was begun in fiscal 1995 with $1,790,000 expended
during the year. The higher level of capital spending in fiscal 1996
compared with fiscal 1995 also reflected the construction of additional
grandstand seating, new skyboxes, the acquisition and improvement of
land, the resurfacing of the auto race track, and improvements to the
horse racing facilities.
In fiscal 1998, the Company expects to make capital expenditures of
approximately $12,500,000 which will include additional permanent
grandstand and skybox seating and renovations to the existing harness
racing grandstand. The Company anticipates that cash from operations
and funds expected to be available under its bank credit facility will
satisfy the Company's cash requirements in fiscal 1998.
Impact of Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. This statement, which is effective in fiscal 1998,
simplifies the standards for computing earnings per share ("EPS") by
replacing the presentation of primary EPS with a presentation of basic
EPS. The Company has determined that SFAS 128 will not have a material
effect on its financial statements.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income. This statement requires that comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other financial statements. The Company plans to adopt this standard on
July 1, 1998, as required. The adoption of this standard will not
impact results of operations or financial condition.
In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. This statement established
standards for reporting information about operating segments and
related disclosures about products and services, geographic areas and
major customers. The Company plans to adopt this standard on July 1,
1998, as required. The adoption of this standard will not impact
results of operations or financial condition.
Forward Looking Statements
Matters discussed in this annual report on Form 10-K contain estimates
and forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities and Exchange
Act of 1934, including statements regarding the Company's expectations,
hopes, intentions, beliefs or strategies regarding the future. All
forward looking statements included in this document are based on
information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward looking
statements. It is important to note that the Company's actual results
could differ materially from those in such forward looking statements.
Among the factors that could cause results to differ materially are
weather, the Company's relationship with NASCAR, the motorsports
sanctioning body, changes in state and local laws and regulations, the
ability to keep purses at a competitive level and the ability to
increase on-track and simulcast handle.
ITEM 8.. . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company and the
Independent Auditors' Reports included in this report are shown on the
Index to the Consolidated Financial Statements on page 19.
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
In June 1996, the Board of Directors of the Company engaged KPMG Peat
Marwick LLP as its outside auditors and notified Siegfried Schieffer &
Seitz that the Company elected not to engage that firm to perform the
1996 audit. The reports of Siegfried Schieffer & Seitz on the
Company's financial statements for 1994 and 1995 contained no
disclaimers, adverse opinions, or qualifications or modifications as to
uncertainty, audit scope or accounting principles. During the period
of those audits and through the Company's decision in June 1996 to
change auditors, there were no disagreements between the Company and
Siegfried Schieffer & Seitz.
ITEM 10. . DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Except as presented below, the information called for by this Item 10
is incorporated by reference from the Company's Proxy Statement to be
filed pursuant to Regulation 14A for the Annual Meeting of Shareholders
to be held on October 31, 1997.
Executive Officers of the Registrant. As of June 30, 1997, the
Executive Officers of the registrant were:
Name Position Age Term of Office
Robert M. Comollo Treasurer and Secretary 49 11/81 to date
Timothy R. Horne Vice President-Finance 31 11/96 to date
Michael B. Kinnard Vice President-General Counsel 39 6/94 to date
Denis McGlynn President and 51 11/79 to date
Chief Executive Officer
John W. Rollins, Sr. Chairman of the Board 81 10/96 to date
Eugene W. Weaver Senior Vice President- 64 10/96 to date
Administration
Vice President-Finance 1970 to 10/96
Robert M. Comollo has been employed by the Company for 17 years, of
which 16 years have been in the capacity of Treasurer and Secretary.
Timothy R. Horne became Vice President-Finance in November of 1996.
From 1988 until 1996, Mr. Horne was employed by KPMG Peat Marwick LLP,
where he most recently served as an assurance senior manager.
Michael B. Kinnard has been Vice President-General Counsel to the
Company since 1995. Mr. Kinnard also serves as Vice President-General
Counsel and Secretary to Matlack Systems, Inc. and Vice President-
General Counsel and Secretary to Rollins Truck Leasing Corp. Prior to
1995, Mr. Kinnard was a partner in the law firm of Baker, Worthington,
Crossley, Stansberry & Woolf (now known as Baker, Donelson, Bearman &
Caldwell).
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 is incorporated by reference
from the Company's Proxy Statement to be filed pursuant to Regulation
14A for the Annual Meeting of Shareholders to be held on October 31,
1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item 12 is incorporated by reference
from the Company's Proxy Statement filed pursuant to Regulation 14A for
the Annual Meeting of Shareholders to be held on October 31, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended June 30, 1997, the following officers and/or
directors of the Company were also officers and/or directors of Rollins
Truck Leasing Corp.; Patrick J. Bagley, Michael B. Kinnard, John W.
Rollins, John W. Rollins, Jr. and Henry B. Tippie. The following
officers and/or directors of the Company were also officers and/or
directors of Matlack Systems, Inc.; Patrick J. Bagley, Michael B.
Kinnard, John W. Rollins, John W. Rollins, Jr. and Henry B. Tippie.
John W. Rollins owns directly and of record 11.6% and 11.5% of the
outstanding shares of common stock of Rollins Truck Leasing Corp. and
Matlack Systems, Inc., respectively, at June 30, 1997. The description
of transactions between the Company and Rollins Truck Leasing Corp.
appears under the caption "Transactions with Related Parties" on page
___ of this 1997 Annual Report on Form 10-K.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements - See accompanying Index to
Consolidated Financial Statements on page 19.
(2) Financial Statement Schedules - None.
(3) Exhibits:
Exhibit
No.
2.1 Share Exchange Agreement and Plan of Reorganization dated
June 14, 1996 between Dover Downs Entertainment, Inc., Dover
Downs, Inc., Dover Downs International Speedway, Inc. and the
shareholders of Dover Downs, Inc. as filed with the Company's
Registration Statement Number 333-8147 on Form S-1 dated July
15, 1996, which was declared effective on October 3, 1996, is
incorporated herein by reference.
3.1 Certificate of Incorporation of Dover Downs Entertainment,
Inc., amended June 14, 1996, and further amended on June 28,
1996 as filed with the Company's Registration Statement
Number 333-8147 on Form S-1 dated July 15, 1996, which was
declared effective on October 3, 1996, is incorporated herein
by reference.
3.2 Amended and Restated Bylaws of Dover Downs Entertainment,
Inc.
4.2 Rights Agreement dated as of June 14, 1996 between Dover
Downs Entertainment, Inc. and ChaseMellon Shareholder
Services, L.L.C. as filed with the Company's Registration
Statement Number 333-8147 on Form S-1 dated July 15, 1996,
which was declared effective on October 3, 1996, is
incorporated herein by reference.
10.1 Credit Agreement between PNC Bank and Dover Downs
Entertainment, Inc. dated January 31, 1997
10.2 Dover Downs Entertainment, Inc. $20 Million Dollar Committed
Line of Credit Note in favor of PNC Bank dated January 31,
1997
10.5 Guaranty and Suretyship Agreement dated July 31, 1996 in
favor of PNC Bank as filed with the Company's Registration
Statement Number 333-8147 on Form S-1 dated July 15, 1996,
which was declared effective on October 3, 1996, is
incorporated herein by reference.
10.7 Project Consulting and Management Agreement between Dover
Downs, Inc. and Caesars World Gaming Development Corporation
dated May 10, 1995 as filed with the Company's Registration
Statement Number 333-8147 on Form S-1 dated July 15, 1996,
which was declared effective on October 3, 1996, is
incorporated herein by reference.(1)
10.9 Dover Downs Entertainment, Inc. 1996 Stock Option Plan as
filed with the Company's Registration Statement Number 333-
8147 on Form S-1 dated July 15, 1996, which was declared
effective on October 3, 1996, is incorporated herein by
reference.
10.10 Dover Downs Entertainment, Inc. 1991 Stock Option Plan as
filed with the Company's Registration Statement Number 333-
8147 on Form S-1 dated July 15, 1996, which was declared
effective on October 3, 1996, is incorporated herein by
reference.
10.11 NASCAR Sanction Application and Agreement Form, NASCAR Busch
Series, Grand National Division, with Dover Downs
International Speedway, Inc. dated December 17, 1996.
10.12 NASCAR Sanction Application and Agreement Form, NASCAR
Winston Cup Series, with Dover Downs International Speedway,
Inc. dated December 17, 1996.
21.1 Subsidiaries
27 Financial Data Schedule
__________________________
(1) Portions of this exhibit have been deleted pursuant to the
Company's request for confidential treatment pursuant to Rule
406 promulgated under the Securities Act of 1993.
(b) Reports on Form 8-K
A Form 8-K was filed by Dover Downs Entertainment, Inc. on July 17,
1997 to disclose that the Company had changed its fiscal year from July
31 to June 30.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATED: September 5, 1997 DOVER DOWNS ENTERTAINMENT, INC.
Registrant
BY:_____________________________________
Denis McGlynn
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
________________________ Vice President-Finance _______________
Timothy R. Horne
________________________ Chairman of the Board _______________
John W. Rollins
_______________________ Vice Chairman of the Board ______________
Henry B. Tippie
_______________________ Senior Vice President- ______________
Eugene W. Weaver Administration and Director
_______________________ Director ______________
John W. Rollins, Jr.
_______________________ Director ______________
Patrick J. Bagley
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATED: September 5, 1997 DOVER DOWNS ENTERTAINMENT, INC.
Registrant
BY:/s/ Denis McGlynn
Denis McGlynn
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
/s/ Timothy R. Horne Vice President-Finance September 5, 1997
Timothy R. Horne
/s/ John W. Rollins Chairman of the Board September 5, 1997
John W. Rollins
/s/ Henry B. Tippie Vice Chairman of the Board September 5, 1997
Henry B. Tippie
/s/ Eugene W. Weaver Senior Vice President- September 5, 1997
Eugene W. Weaver Administration and Director
/s/ John W. Rollins, Jr. Director September 5, 1997
John W. Rollins, Jr.
/s/ Patrick J. Bagley Director September 5, 1997
Patrick J. Bagley
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page(s)
Independent Auditors' Reports on Financial Statements 20 & 21
Consolidated Statement of Earnings for the years
ended June 30, 1997, 1996 and 1995 22
Consolidated Balance Sheet at June 30, 1997, 1996
and 1995 23
Consolidated Statement of Cash Flows for the years
ended June 30, 1997, 1996 and 1995 25-26
Notes to Consolidated Financial Statements 27-35
<PAGE>
The Board of Directors and Shareholders of
Dover Downs Entertainment, Inc.
We have audited the accompanying consolidated statements of earnings
and cash flows of Dover Downs Entertainment, Inc. and its subsidiaries
for the year ended June 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations and cash
flows of Dover Downs Entertainment, Inc. and its subsidiaries for the
year ended June 30, 1995 in conformity with generally accepted
accounting principles.
Siegfried Schieffer & Seitz
Wilmington, DE
August 18, 1997
<PAGE>
The Board of Directors and Shareholders
of Dover Downs Entertainment, Inc.:
We have audited the accompanying consolidated balance sheet of Dover
Downs Entertainment, Inc. and subsidiaries as of June 30, 1997 and
1996, and the related consolidated statements of earnings and of cash
flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Dover Downs Entertainment, Inc. and subsidiaries as of June 30, 1997
and 1996 and the results of their operations and their cash flows for
the two years then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
July 18, 1997
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Year ended June 30,
1997 1996 1995
Revenues:
Motorsports $ 20,516,000 $18,110,000 $16,282,000
Gaming 81,162,000 31,980,000 1,250,000
Total revenues 101,678,000 50,090,000 17,532,000
Expenses:
Operating 68,559,000 30,699,000 7,397,000
Depreciation 2,084,000 1,469,000 1,043,000
General and administrative 3,065,000 2,073,000 1,705,000
73,708,000 34,241,000 10,145,000
Operating earnings 27,970,000 15,849,000 7,387,000
Interest (income) expense (269,000) 256,000 148,000
Earnings before income
taxes 28,239,000 15,593,000 7,239,000
Income taxes 11,767,000 6,397,000 2,955,000
Net earnings $ 16,472,000 $ 9,196,000 $ 4,284,000
Earnings per common share $ 1.08 $ .63 $ .30
Weighted average common
shares and common share
equivalents outstanding 15,275,000 14,511,000 14,511,000
The Notes to the Consolidated Financial Statements are an integral part
of these statements.
<PAGE>
CONSOLIDATED BALANCE SHEET
June 30,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $15,503,000 $ 3,140,000
Accounts receivable 1,613,000 1,221,000
Due from State of Delaware 1,983,000 901,000
Inventories 402,000 356,000
Prepaid expenses 775,000 533,000
Deferred income taxes 124,000 56,000
Total current assets 20,400,000 6,207,000
Property, plant and equipment, at cost
Land 10,563,000 9,481,000
Casino facility 11,566,000 6,442,000
Racing facility 38,546,000 28,872,000
Machinery and equipment 5,357,000 4,101,000
Furniture and fixtures 573,000 413,000
Construction in progress 83,000 538,000
66,688,000 49,847,000
Less accumulated depreciation (15,827,000) (13,743,000)
50,861,000 36,104,000
Total assets $71,261,000 $42,311,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to bank $ - $ 3,500,000
Accounts payable 1,860,000 1,189,000
Purses due horsemen 1,387,000 1,436,000
Accrued liabilities 2,280,000 2,368,000
Income taxes payable 2,507,000 2,836,000
Current portion of long-term debt 19,000 22,000
Deferred revenue 7,542,000 6,003,000
Total current liabilities 15,595,000 17,354,000
Long-term debt 760,000 766,000
Deferred income taxes 606,000 476,000
Commitments (see Notes to the
Consolidated Financial Statements)
Shareholders' equity:
Preferred stock, $.10 par value;
1,000,000 shares authorized;
issued and outstanding: none
Common stock, $.10 par value;
35,000,000 shares authorized; issued and
outstanding: 1997-2,939,000; 1996-none 294,000 -
Class A common stock, $.10 par value;
30,000,000 shares authorized; issued and
outstanding: 1997-12,286,830 shares;
1996-13,925,830 shares 1,229,000 1,393,000
Additional paid-in capital 21,081,000 4,669,000
Retained earnings 31,696,000 17,653,000
Total shareholders' equity 54,300,000 23,715,000
Total liabilities and shareholders'
equity $71,261,000 $42,311,000
The Notes to the Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
Years ended June 30,
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating
activities:
Net earnings $16,472,000 $ 9,196,000 $4,284,000
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation 2,084,000 1,469,000 1,043,000
Loss on disposition of
property - - 135,000
(Increase) decrease in assets:
Accounts receivable (392,000) 48,000 (418,000)
Due from affiliate - 333,000 44,000
Due from State of Delaware (1,082,000) (901,000) -
Inventories (46,000) (250,000) 17,000
Prepaid expenses (242,000) (39,000) (205,000)
Increase (decrease) in
liabilities:
Accounts payable 671,000 152,000 (542,000)
Purses due horsemen (49,000) 1,436,000 -
Accrued liabilities (88,000) 1,497,000 (668,000)
Current and deferred
income taxes (267,000) 1,927,000 (146,000)
Deferred revenue 1,539,000 449,000 1,258,000
Net cash provided by
operating activities 18,600,000 15,317,000 4,802,000
Cash flows from investing
activities:
Sale of short-term
investments - 3,200,000 3,038,000
Capital expenditures (16,841,000) (18,936,000) (6,166,000)
Net cash used in investing
activities (16,841,000) (15,736,000) (3,128,000)
Cash flows from financing
activities:
Short-term borrowings
(repayments) (3,500,000) 3,500,000 -
Repayment of long-term debt (9,000) (786,000) (77,000)
Repayment to shareholder _ (200,000) (1,016,000)
Net proceeds from initial
public offering 16,360,000 - -
Dividends paid (2,429,000) - -
Proceeds from stock options
exercised, including
related tax benefit 182,000 294,000 18,000
Net cash provided by
(used in) financing
activities 10,604,000 2,808,000 (1,075,000)
Net increase in cash and
cash equivalents 12,363,000 2,389,000 599,000
Cash and cash equivalents,
beginning of year 3,140,000 751,000 152,000
Cash and cash equivalents,
end of year $15,503,000 $ 3,140,000 $ 751,000
Supplemental disclosures of
cash flow information:
Interest paid $ 168,000 $ 373,000 $1,173,000
Income taxes paid $12,034,000 $ 4,413,000 $3,113,000
Non-cash investing and
financing activities:
Land acquired $ 1,300,000
Cash paid (500,000)
Mortgage incurred $ 800,000
The Notes to the Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1-Business Operations
Dover Downs Entertainment, Inc. (the Company or Dover Downs) owns and
operates the Dover Downs International Speedway and the Dover Downs
Raceway at a multi-purpose gaming and entertainment complex located on
approximately 825 acres owned by the Company in Dover, Delaware. The
Company hosts a variety of NASCAR-sanctioned events and harness horse
racing events throughout the year. With expanded facilities completed
at the end of 1995, the Company is now open 363 days per year both for
video lottery (slot) machine gaming and for pari-mutuel wagering on
simulcast harness and thoroughbred horse races across the country.
Video lottery (slot) machine gaming began on December 29, 1995 pursuant
to video lottery legislation enacted in the State of Delaware.
Dover Downs, Inc. is authorized to conduct video lottery operations as
a "Licensed Agent" under the Delaware State Lottery Code. Pursuant to
Delaware's Horse Racing Redevelopment Act, enacted in 1994, the
Delaware State Lottery Office administers and controls the operation of
the video lottery operations. Unless the Act is extended or reenacted,
it will terminate on March 15, 2000, in which event the Company will be
required to discontinue its video lottery operations. In addition,
under the Act, no payments can be made to Dover Downs beyond December
29, 1998 unless new legislation is enacted, in which event the Company
would be required to discontinue its video lottery operations. The
video lottery operations account for a significant portion of the
Company's revenues and operating earnings.
For the video lottery operations, the difference between the amount
wagered by bettors and the amount paid out to bettors is referred to as
the win. The win is included in the amount recorded in the Company's
financial statements as gaming revenue. The Delaware State Lottery
Office sweeps the winnings from the video lottery operations, collects
the State's share of the winnings and the amount due to the vendors
under contract with the State who provide the video lottery machines
and associated computer systems, collects the amount allocable to
purses for harness horse racing, and remits the remainder to the
Company as its commission for acting as a Licensed Agent. Operating
expenses include the amounts collected by the State (i) for the State's
share of the winnings, (ii) for remittance to the providers of the
video lottery machines and associated computer systems, and (iii) for
harness horse racing purses.
The Company's license from the Delaware Harness Racing Commission must
be renewed on an annual basis. In order to maintain its license to
conduct video lottery operations, the Company is required to maintain
its harness horse racing license.
Due to the nature of the Company's business activities, it is subject
to various federal, state and local regulations.
NOTE 2-Reorganization
On June 14, 1996, Dover Downs Entertainment, Inc. effected a tax-free
restructuring pursuant to which all former shareholders of Dover Downs,
Inc. exchanged each share of common stock held in Dover Downs, Inc. for
4,500 shares of Class A Common Stock of the Company. As a result of
this share exchange, Dover Downs, Inc. became a wholly-owned subsidiary
of the Company and the former shareholders of Dover Downs, Inc.
acquired an equal percentage of the equity of the Company. As part of
the restructuring, the Company acquired by dividend from Dover Downs,
Inc. all of the outstanding capital stock of Dover Downs International
Speedway, Inc. (which was not operational), and the motorsports
operation of Dover Downs, Inc. was transferred to Dover Downs
International Speedway, Inc. Additionally, in June 1996, the Company
formed Dover Downs Properties, Inc. for the initial purpose of holding
some or all of the real estate of the Company. This reorganization has
been accounted for on an as if pooled basis.
All common share and per share amounts have been restated to give
effect to the reorganization assuming the transaction had occurred on
June 30, 1994. Results of operations for all prior years were not
affected by the reorganization.
On July 14, 1997, the Company changed its fiscal year-end from July 31
to June 30 and has restated the results for the three years ended June
30, 1997. Certain amounts in the 1996 and 1995 consolidated financial
statements have been reclassified to conform to the 1997 presentation.
The change in year-end did not have a significant effect upon
previously reported earnings.
NOTE 3-Summary of Significant Accounting Policies
Consolidation-The consolidated financial statements include the
accounts of all subsidiaries. Intercompany transactions and balances
among these subsidiaries have been eliminated.
Revenue and expense recognition-Tickets to motorsports races are sold
and certain expenses are incurred in advance of the race date. Such
advance sales and corresponding expenses are recorded as deferred
revenue and prepaid expenses, respectively, until the race is held.
Gaming revenues represent the net win from video lottery (slot) machine
wins and losses and commissions from pari-mutuel wagering. Payments to
the State of Delaware pursuant to the lottery legislation are reported
in operating expenses.
Advertising costs-Subsequent to the opening of the Company's casino
facility in December of 1995, all advertising costs are expensed as
incurred.
Earnings per share-Earnings per common share are computed assuming the
conversion of all potentially dilutive outstanding stock options, using
the treasury stock method.
Cash and cash equivalents-The Company considers as cash equivalents all
highly liquid investments with an original maturity of three months or
less.
Pre-opening costs-The Company deferred costs in the amount of $760,000
associated with the opening of its new casino facility in fiscal 1996.
Such costs were principally related to the wages and fringe benefits of
newly hired personnel during a training period prior to opening, casino
management and consulting fees, advertising and promotional expenses
and supply items. All such costs were amortized during the period from
the casino's opening on December 29, 1995 through July 31, 1996 in
order to match such costs with associated gaming revenues. Pre-opening
costs deferred at June 30, 1996 were $108,000.
Inventories-Inventories, primarily items held for sale at concession
and novelty stands, are stated at the lower of cost or market with cost
being determined on the first-in, first-out (FIFO) basis.
Property, plant and equipment-Property, plant and equipment is stated
at cost. Depreciation is computed on a straight-line basis over the
following estimated useful lives:
Racing and casino facilities 10 - 40 years
Machinery and equipment 5 - 10 years
Furniture and fixtures 5 years
Income taxes-Deferred income taxes are provided in accordance with the
provisions of Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes" on all differences between the tax
bases of assets and liabilities and their reported amounts in the
financial statements based upon enacted statutory tax rates in effect
at the balance sheet date.
Use of estimates-The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair Values of Financial Instruments-The carrying amount reported in
the balance sheet for current assets and current liabilities
approximates their fair value at June 30, 1997.
Recently Adopted Accounting Standards-The Company adopted the
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, on
July 1, 1996. SFAS No. 123 defines a fair-value based method of
accounting for stock-based compensation plans, however, it allows the
continued use of the intrinsic value method under Accounting Principles
Board Opinion, No. 25, Accounting for Stock Issued to Employees. The
Company has elected to continue to use the intrinsic value method.
NOTE 4-Indebtedness
The Company has an annually renewable, $20,000,000 committed revolving
line of credit from a bank to satisfy seasonal funding needs and to
finance capital improvements. The Company must pay an annual commitment
fee of 7.5 basis points on the average unused portion of the commitment
and interest monthly on amounts outstanding at the bank's prime minus
three-quarters of one percent. There were no amounts outstanding at
June 30, 1997.
Long-term debt consists of an 8% mortgage note payable in quarterly
principal and interest installments through January 2006, and
collateralized by land with a carrying value of $1,300,000. The
mortgage note matures as follows: 1998-$19,000; 1999-$20,000;
2000-$22,000; 2001-$24,000; 2002-$26,000; and thereafter $668,000.
NOTE 5-Income Taxes
The current and deferred income tax provisions are as follows:
Years ended June 30,
1997 1996 1995
Current:
Federal $ 9,207,000 $4,971,000 $2,306,000
State 2,498,000 1,329,000 631,000
11,705,000 6,300,000 2,937,000
Deferred:
Federal 49,000 81,000 14,000
State 13,000 16,000 4,000
62,000 97,000 18,000
Total income taxes $11,767,000 $6,397,000 $2,955,000
Deferred income taxes relate to the temporary differences between
financial accounting income and taxable income and are primarily
attributable to depreciation using different methods for tax purposes.
A reconciliation of the effective income tax rate with the applicable
statutory federal income tax rate is as follows:
Years ended June 30,
1997 1996 1995
Federal tax at statutory rate 35.0% 35.0% 34.0%
State taxes, net of
federal benefit 5.7% 5.7% 5.7%
Other 1.0% .3% 1.1%
Effective income tax rate 41.7% 41.0% 40.8%
NOTE 6-Pension Plan
Prior to August 1, 1996, the Company participated in a multiple
employer defined-benefit pension plan covering substantially all
full-time employees. On August 1, 1996, the Dover Downs Entertainment,
Inc. Pension Plan was established and the related assets were
transferred from the multiple employer pension plan to the new Dover
Downs Entertainment, Inc. Trust.
The provisions of the Dover Downs Entertainment, Inc. Pension Plan are
identical to those of the aforementioned multiple employer
defined-benefit pension plan. Plan benefits are based on years of
service and employees' remuneration over their employment with the
Company. Pension costs are funded in accordance with the provisions of
the Internal Revenue Code.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet at June 30,
1997:
Actuarial present value of accumulated benefit obligation:
Vested $ 289,254
Non-vested 41,570
$ 330,824
Projected benefit obligation $ 530,761
Plan assets at market value 463,844
Funded status (66,917)
Unrecognized net gain (35,760)
Unrecognized prior service cost 205,442
Prepaid pension cost $ 102,765
At June 30, 1997, the assets of the plan were invested 81% in equity
securities, 18% in fixed income securities and the balance in other
short-term interest-bearing accounts. The discount rate and the assumed
rate of compensation increase were 8% and 5%, respectively. The
expected long-term rate of return on assets was 9% for 1997.
The components of net periodic pension cost for 1997 are as follows:
Service cost $ 61,129
Interest cost 32,087
Return on plan assets (68,385)
Net amortization 16,416
Deferral of net gain 35,760
$ 77,007
Net periodic pension costs for 1996 and 1995 were $24,000 and $32,000,
respectively.
The Company also maintains a nonqualified, noncontributory defined
benefit pension plan for certain employees to restore pension benefits
reduced by federal income tax regulations. The cost associated with the
plan is determined using the same actuarial methods and assumptions as
those used for the Company's qualified pension plan.
The Company also maintains a defined contribution 401(k) plan which
permits participation by substantially all employees.
NOTE 7-Shareholders' Equity
Changes in the components of shareholders' equity are as follows:
<TABLE>
<CAPTION> $.10 Par
$.10 Par Value
Value Class A Additional
Common Common Paid-in Retained
Stock Stock Capital Earnings
<S> <C> <C> <C> <C>
Balance at
June 30, 1994 $ - $1,371,000 $ 4,379,000 $ 4,173,000
Net earnings 4,284,000
Issuance of
common stock 1,000 17,000
Balance at
June 30, 1995 - 1,372,000 4,396,000 8,457,000
Net earnings 9,196,000
Exercise of
stock options 21,000 171,000
Tax benefit
related to stock
option plans 102,000
Balance at
June 30, 1996 - 1,393,000 4,669,000 17,653,000
Net earnings 16,472,000
Issuance of
common
stock, net 288,000 (180,000) 16,252,000
Dividends on
common stock,
$.16 per share (2,429,000)
Exercise of
stock options 22,000 160,000
Conversion of
Class A shares 6,000 (6,000)
Balance at
June 30, 1997 $ 294,000 $1,229,000 $21,081,000 $31,696,000
</TABLE>
Holders of Common Stock have one vote per share and holders of Class A
Common Stock have ten votes per share. Shares of Class A Common Stock
are convertible at any time into shares of Common Stock on a share for
share basis at the option of the holder thereof. Dividends on Class A
Common Stock cannot exceed dividends on Common Stock on a per share
basis. Dividends on Common Stock may be paid at a higher rate than
dividends on Class A Common Stock. The terms and conditions of each
issue of Preferred Stock are determined by the Board of Directors. No
Preferred shares have been issued.
The Company has adopted Rights Plans with respect to its Common Stock
and Class A Common Stock which include the distribution of Rights to
holders of such stock. The Rights entitle the holder, upon the
occurrence of certain events, to purchase additional stock of the
Company. The Rights are exercisable if a person, company or group
acquires 10% or more of the outstanding combined equity of Common Stock
and Class A Common Stock or engages in a tender offer. The Company is
entitled to redeem each Right for one cent.
On October 3, 1996, the Company completed its initial public offering.
The Company issued 1,075,000 shares of the Company's Common Stock and
received proceeds of approximately $16,360,000, net of issuance costs
of approximately $1,913,000.
The Company has two stock option plans pursuant to which the Company's
Board of Directors may grant stock options to officers and key
employees at not less than 100% of the fair market value at the date of
the grant. Options granted under the 1991 Stock Option Plan are
exercisable for Class A Common Stock while options granted under the
1996 Stock Option Plan are exercisable for Common Stock. The 1991 Stock
Option Plan has been amended so that no additional options may be
granted thereunder. The 1991 and 1996 stock options have 7 and 8 year
terms, respectively, and generally vest equally over a period of 5 and
6 years from the date of grant, respectively. In all other material
respects, the 1991 Stock Option Plan is structured the same as the 1996
Stock Option Plan. The Company applies APB Opinion No. 25 and related
interpretations in accounting for its stock option plans. Accordingly,
no compensation cost has been recognized for its stock option plans.
For disclosure purposes, the Company determined compensation cost for
its stock options based upon the fair value at the grant date using the
Black Scholes option-pricing model with the following assumptions:
expected dividend yield - .46%, risk-free interest rate - 5.3%, an
expected life of six years and volatility of 26%. Had compensation cost
been recognized in accordance with SFAS No. 123, the Company's earnings
per share disclosed in the basic financial statements would be reduced
by less than $.01 per share in 1997 and 1996.
Option activity is as follows:
June 30
1997 1996 1995
Number of options:
Outstanding at beginning
of year 585,000 787,500 225,000
Granted 112,764 - 562,500
Exercised (225,000) (202,500) -
Outstanding at June 30 472,764 585,000 787,500
At June 30:
Options available for grant 637,236 750,000 -
Options exercisable 22,500 90,000 135,000
Weighted Average
Exercise Price
Options granted $17.13 - $1.33
Options exercised $ .81 $ .95 -
Options outstanding $ 5.10 $1.13 $1.08
Options exercisable $ 1.33 $ .46 $ .46
NOTE 8-Related Party Transactions
In prior years, management services were provided to a company
principally-owned by the majority shareholder. Management fees for the
years ended June 30, 1995 and 1996 were $176,000 and
$122,000,respectively. At June 30, 1995 accounts receivable due from
related party were $333,000 related to such services. There was no
balance due the Company at June 30, 1996 or 1997 as the management
service agreement was cancelled. In June 1996, the Company acquired for
cash several tracts of undeveloped land comprising a total of 206 acres
for $6,200,000 from a company wholly-owned by the majority shareholder.
The purchase price was determined on the basis of an independent
appraisal performed in 1996. During the year ended June 30, 1997 and
1996, the Company purchased certain paving, site work and construction
services involving total payments of $584,000 and $586,000 from a
company wholly-owned by an employee/director. The Company purchased
administrative services from Rollins Truck Leasing Corp. and affiliated
companies in 1997 and 1996. The total cost of these services, which
have been included in general and administrative expenses in the
Consolidated Statement of Earnings, was $178,000 and $36,000 in 1997
and 1996, respectively.
In the opinion of management of the Company, the foregoing transactions
were effected at rates which approximate those which the Company would
have realized or incurred had such transactions been effected with
independent third parties.
NOTE 9-Business Segment Information
The Company's operations are in motorsports and gaming. Revenues,
operating earnings, identifiable assets, capital expenditures and
depreciation pertaining to these business segments are presented below:
Motorsports Gaming Consolidated
Year ended June 30, 1997
Revenue $20,516,000 $81,162,000 $101,678,000
Operating earnings 11,079,000 16,891,000 27,970,000
Identifiable assets
at year-end 34,801,000 36,460,000 71,261,000
Capital expenditure 9,496,000 7,345,000 16,841,000
Depreciation $ 981,000 $ 1,103,000 $ 2,084,000
Year ended June 30, 1996
Revenue $18,110,000 $31,980,000 $ 50,090,000
Operating earnings 10,040,000 5,809,000 15,849,000
Identifiable assets
at year-end 26,489,000 15,822,000 42,311,000
Capital expenditures 10,119,000 8,817,000 18,936,000
Depreciation $ 952,000 $ 517,000 $ 1,469,000
Year ended June 30, 1995
Revenue $16,282,000 $ 1,250,000 $ 17,532,000
Operating earnings (loss) 8,372,000 (985,000) 7,387,000
Identifiable assets
at year-end 17,109,000 6,363,000 23,472,000
Capital expenditures 5,749,000 417,000 6,166,000
Depreciation $ 712,000 $ 331,000 $ 1,043,000
NOTE 10-Commitments
In May 1995, Dover Downs, Inc., a subsidiary of the Company, entered
into a long-term management agreement with Caesars World Gaming
Development Corporation (Caesars). The initial term of the agreement
expires in December 1998 and Caesars has two additional three-year
renewal options which Dover Downs may void if certain financial results
are not achieved. Caesars acts as the exclusive agent to supervise,
market, manage and operate the Company's video lottery operations.
Caesars has been properly licensed by the Delaware State Lottery Office
to perform these functions. Caesars' performance-based fee for such
services was $5,184,908 in fiscal 1997 and $2,260,909 in fiscal 1996.
Amounts due to Caesars at June 30, 1997 and 1996 totaled $431,464 and
$401,117, respectively and are included in accrued liabilities.
The Company currently holds licenses to conduct four NASCAR-sanctioned
events in 1997 (two of which were held in June 1997 and two of which
will be held in September 1997). NASCAR sanctions are issued on an
annual basis and require the payment of sanction fees, prize money and
point funds to NASCAR. The Company has held NASCAR-sanctioned events
for 29 consecutive years. Nonrenewal of a NASCAR event license would
have a material adverse effect on the Company's financial condition and
results of operations.
<PAGE>
NOTE 11-Quarterly Results (unaudited)
<TABLE>
<CAPTION> September 30 December 31 March 31 June 30
<S> <C> <C> <C> <C>
1997
Revenues $27,226 $17,246 $21,684 $35,522
Gross profit 10,624 2,836 4,548 13,027
Net earnings 5,659 1,291 2,322 7,200
Earnings per
common share $ .39 $ .08 $ .15 $ .46
1996
Revenues $ 8,632 $ 980 $14,482 $25,996
Gross profit (loss) 5,165 (488) 3,339 9,906
Net earnings (loss) 2,913 (644) 1,682 5,245
Earnings (loss) per
common share $ .20 $ (.04) $ .11 $ .36
</TABLE>
BY-LAWS
OF
DOVER DOWNS ENTERTAINMENT, INC.
------------------------------------------------------------------
ARTICLE I
The Corporation
Section 1.1 Name. The title of this Corporation is Dover Downs
Entertainment, Inc.
Section 1.2 Office. The registered office of this Corporation
shall be located at P. O. Box 843, Dover, Delaware, or at such other
place as the Board of Directors may designate in accordance with
Section 133 of the Delaware Corporation Law.
Section 1.3 Seal. The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation and the year of its
creation (1994) and the words "Incorporated Delaware".
ARTICLE II
Stockholders
Section 2.1 Annual Meeting. The annual meeting of stockholders
shall be held at such place within or without the State of Delaware as
the Board of Directors from time to time determine.
A majority of the amount of the stock issued and outstanding and
entitled to vote shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, the charter of the
corporation or these by-laws. Each stockholder of Common Stock shall
be entitled to one vote and each stockholder of Class A Common Stock
shall be entitled to ten votes, either in person or by proxy, for each
share of stock standing registered in his or her name on the books of
the Corporation on the record date selected by the Board of Directors
in accordance with these by-laws, unless different voting is, by law or
by the terms of the instrument creating special or preferred shares,
conferred upon the holders thereof.
Notice of the annual meeting shall be mailed by the Secretary to
each stockholder at his or her last known post office address no less
than ten days and no more than sixty days prior thereto.
Section 2.2 Special Meetings. Special meetings of stockholders for
any purpose or purposes may be called at any time by the Chairman of
the Board of Directors, the Vice Chairman of the Board of Directors,
the Chairman of the Executive Committee or the President and not by any
other person.
Section 2.3 Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by
law, the written notice of any meeting shall be given not less than ten
nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the mail, postage
prepaid, directed to the stockholder at his address as it appears on
the records of the Corporation.
Section 2.4 Adjournments. Any meeting of the stockholders, annual
or special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of any such adjourned
meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted
at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these
by-laws, the holders of a majority of the outstanding shares of stock
entitled to vote at the meeting, present in person or by proxy, shall
constitute a quorum. In the absence of a quorum, the stockholders so
present may, by majority vote, adjourn the meeting from time to time in
the manner provided in Section 2.4 of these by-laws until a quorum
shall attend.
Section 2.6 Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in his absence
by the Vice Chairman of the Board, if any, or in his absence by the
President, or in his absence by the Chairman of the Executive
Committee, if any, or in his absence by a Vice President, or in the
absence of the foregoing persons by a chairman designated by the Board
of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of
stock of Common Stock and ten votes for each share of Class A Common
Stock held by such shareholder which has voting power upon the matter
in question. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient
in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or
another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings of stockholders need not be by
written ballot and need not be conducted by inspectors unless the
holders of a majority of the outstanding shares of all classes of stock
entitled to vote thereon present in person or by proxy at such meeting
shall so determine. At all meetings of stockholders for the election
of directors a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise
provided by law or by the certificate of incorporation or these
by-laws, be decided by the vote of the holders of a majority of the
outstanding shares of stock entitled to vote thereon present in person
or by proxy at the meeting, provided that (except as otherwise required
by law or by the certificate of incorporation or these by-laws) the
Board of Directors may require a larger vote upon any election or
question.
Section 2.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion of exchange or stock or
for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty
days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the day next preceding the day
on which the meeting is held; and (2) the record date for determining
stockholders for any other purpose shall be at the close of business on
the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 2.9 List of Stockholders Entitled To Vote. The Secretary
shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who
are the stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the Corporation, or to vote in person or
by proxy at any meeting of stockholders.
Section 2.10 Action by Consent Of Stockholders. Unless
prohibited by law or the rules and regulations of any national
securities exchange on which securities of the Corporation are listed,
action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without
a meeting, and stockholders shall have the power to consent in writing,
without a meeting, to the taking of any action.
ARTICLE III
Board of Directors
Section 3.1 Number; Qualifications. The Board of Directors shall
consist up to nine members. Directors need not be stockholders.
Section 3.2 Election; Resignation; Removal; Vacancies. At each
annual meeting of stockholders, the stockholders shall elect Directors
to replace those Directors whose terms then expire. Any Director may
resign at any time upon written notice to the Corporation.
Stockholders may remove Directors only for cause. Any vacancy
occurring in the Board of Directors for any cause may be filled only by
the Board of Directors, acting by vote of a majority of the Directors
then in office, although less than quorum. Each Director so elected
shall hold office until the expiration of the term of office of the
Director whom he has replaced.
Section 3.3 Notice Of Nomination Of Directors. Nominations for the
election of directors may be made by the Chairman acting on behalf of
the Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Corporation not less than fourteen
days nor more than sixty days prior to any meeting of the stockholders
called for the election of directors; provided, however, that if less
than twenty-one days' notice of the meeting is given to stockholders,
such written notice shall be delivered or mailed, as prescribed, to the
Secretary of the Corporation not later than the close of the seventh
day following the day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by the Board of
Directors shall be given by the Chairman on behalf of the Board. Each
such notice shall set forth (i) the name, age, business address and, if
known, residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominee and (iii)
the number of shares of stock of the Corporation which are beneficially
owned by each such nominee. The Chairman of the meeting may, if the
facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 3.4 Non-Discrimination Statement. Consistent with the
Corporation's equal employment opportunity policy, nominations for the
election of directors shall be made by the Board of Directors and
accepted from stockholders in a manner consistent with these By-Laws
and without regard to the nominee's race, color, ethnicity, religion,
sex, age, national origin, veteran status, handicap or disability.
Section 3.5 Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of
Delaware and at such times as the Board of Directors may from time to
time determine, and if so determined notices thereof need not be given.
Section 3.6 Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State
of Delaware whenever called by the Chairman of the Board of Directors,
the Vice Chairman of the Board of Directors, the Chairman of the
Executive Committee, or by the President. Reasonable notice thereof
shall be given by the person calling the meeting, not later than the
second day before the date of the special meeting.
Section 3.7 Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board, may participate in
any meeting of such Board or committee by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in
a meeting pursuant to this by-law shall constitute presence in person
at such meeting.
Section 3.8 Quorum; Vote Required For Action; Informal Action. At
all meetings of the Board of Directors a majority of the whole Board
shall constitute a quorum for the transaction of business. Except in
cases in which the certificate of incorporation or these by-laws
otherwise provide, the vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of
the Board or committee.
Section 3.9 Organization. Meetings of the Board of Directors shall
be presided over by the Chairman of the Board, if any, or in his
absence by the Vice Chairman of the Board, if any, or in his absence by
the President, or in his absence by the Chairman of the Executive
Committee, if any, or in his absence by a Vice President, or in the
absence of the foregoing persons by a chairman designated by the Board
of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as a secretary of the
meeting, but in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 3.10 Compensation Of Directors. The Directors and
members of standing committees shall receive such fees or salaries as
fixed by resolution of the Executive Committee and in addition will
receive expenses in connection with attendance or participation in each
regular or special meeting.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors
of the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of the committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have
and may exercise all the powers and authority of the Board of Directors
in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers
which may require it; but no such committee shall have power or
authority in reference to amending the certificate of incorporation of
the Corporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange or all or
substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, or amending these by-laws. The Board of
Directors shall, at the annual organization meeting thereof, elect an
Executive Committee which shall consist of not more than four members,
all of whom shall be members of the Board of Directors. The Executive
Committee shall have and may exercise all of the powers and authority
of the Board of Directors in the management of the business and affairs
of the Corporation to the fullest extent permitted by law (as presently
allowed under Section 141 (c) to the Delaware General Corporation Law
as revised effective July 1, 1996, and as may be allowed in the future
pursuant to amendments or revisions to applicable law).
Section 4.2 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business. In the absence
of such rules each committee shall conduct its business in the same
manner as the Board of Directors conducts its business pursuant to
Article III of these by-laws.
ARTICLE V
Officers
Section 5.1 Executive Officers; Election; Qualifications; Term of
Office; Resignation; Removal; Vacancies. The officers of the
Corporation shall consist of a Chairman, Vice Chairmen, President, Vice
Presidents, Secretary, Assistant Secretaries, Treasurer, Assistant
Treasurers, General Counsel, and such other officers as may from time
to time be elected or appointed by the Board of Directors. The
President shall be elected from the Board of Directors. Any officer
may resign at any time upon written notice to the Corporation. The
Board of Directors may remove any officer with or without cause at any
time, but such removal shall be without prejudice to the contractual
rights of such officer, if any, with the Corporation. Any number of
offices may be held by the same person, except that the offices of
President and Chairman of the Board shall be separate. Any vacancy
occurring in any office of the Corporation by death, resignation,
removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting. In
the absence of any officer, the Board of Directors may delegate his
power and duties to any other officer or to any director for the time
being.
Section 5.2 President. The President shall be the Chief Executive
Officer of the Corporation, shall execute in the name of the
Corporation all contracts and agreements authorized by the Board or the
Executive Committee, and shall affix the seal to any instrument
requiring the same, which shall always be attested by the signature of
the President, the Vice President or the Secretary or any Assistant
Secretary or the Treasurer. He may sign certificates of stock; he
shall have general supervision and direction of all the other officers
of the Corporation; he shall submit a complete report of the operations
and condition of the Corporation for the year to the Chairman and to
the directors at their regular meetings, and from time to time shall
report to the directors all matters which the interest of the
Corporation may require to be brought to their notice. He shall have
the general powers and duties usually vested in the office of a
President of a corporation.
Section 5.3 Vice President - Finance. The Vice President - Finance
shall be the Chief Accounting and Chief Financial Officer of the
Corporation and shall be responsible to the Board of Directors, the
Executive Committee and the President for all financial control and
internal audit of the Corporation and its subsidiaries. He shall
perform such other duties as may be assigned to him by the Board of
Directors, the Executive Committee or the President.
Section 5.4 Vice Presidents. The Vice Presidents elected or
appointed by the Board of Directors shall perform such duties and
exercise such powers as may be assigned to them from time to time by
the Board of Directors, the Executive Committee or the President. In
the absence or disability of the President, the Vice President
designated by the Board of Directors, the Executive Committee, or the
President shall perform the duties and exercise the powers of the
President. A Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
Section 5.5 Secretary. The Secretary shall be ex-officio Secretary
of the Board of Directors and of the standing committees. He shall
attend all sessions of the Board, act as clerk thereof, record all
votes and keep the minutes of all proceedings in a book to be kept for
that purpose. He shall perform like duties for the standing committees
when required. He shall see that the proper notices are given of all
meetings of stockholders and directors, and perform such other duties
as may be prescribed from time to time by the Board of Directors, the
Executive Committee, the Chairman or the President, and shall be sworn
to the faithful discharge of his duties. He shall keep the accounts of
stock registered and transferred in such form and manner and under such
regulations as the Board of Directors or Executive Committee may
prescribe.
Section 5.6 Treasurer. The Treasurer shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as
may be designated by the Board of Directors or Executive Committee. He
shall disburse the funds of the Corporation as may be ordered by the
Board, the Executive Committee or the President, taking proper vouchers
therefor, and shall render to the President and the Executive Committee
and Directors, whenever they may require it, an account of all his
transactions as Treasurer, and of the financial condition of the
Corporation, and at the annual organization meeting of the Board a like
report for the preceding year.
Section 5.7 General Counsel. The General Counsel shall be the
legal adviser of the Corporation and shall perform such services as the
Chairman, President, Board of Directors or Executive Committee may
require.
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of stock shall be entitled
to have a certificate signed by or in the name of the Corporation by
the Chairman or Vice Chairman of the Board of Directors, if any, or the
President of the Corporation, certifying the number of shares owned by
him in the Corporation. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent,
or registrar who has signed or whose facsimile signature has been
placed upon a certificate, shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Section 6.2 Lost, Stolen Or Destroyed Stock Certificates; Issuance
Of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged
to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify
it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1. General. The Company shall indemnify, and advance
Expenses (as hereinafter defined) to, Indemnitee (as hereinafter
defined) to the fullest extent permitted by applicable law in effect
on the adoption of these By-Laws, and to such greater extent as
applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include, but
shall not be limited to, the rights set forth in the other Sections of
this Article.
Section 7.2. Proceedings Other Than Proceedings By Or In The
Right Of The Company. Indemnitee shall be entitled to the
indemnification rights provided in this Section 7.2 if, by reason of
his Corporate Status (as hereinafter defined), he is, or is threatened
to be made, a party to any threatened, pending, or completed Proceeding
(as hereinafter defined), other than a Proceeding by or in the right of
the Company. Pursuant to this Section 7.2, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal Proceeding, had no reasonable cause
to believe his conduct was unlawful.
Section 7.3. Proceedings By Or In The Right Of The Company.
Indemnitee shall be entitled to the indemnification rights provided in
this Section 7.3 to the fullest extent permitted by law if, by reason
of his Corporate Status, he is, or is threatened to be made, a party to
any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to
this Section 7.3, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Company.
Section 7.4. Indemnification For Expenses Of A Party Who Is
Wholly Or Partly Successful. Notwithstanding any other provision of
this Article, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice,
shall be deemed to be a successful result as to such claim, issue or
matter.
Section 7.5. Indemnification For Expenses Of A Witness.
Notwithstanding any other provision of this Article, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
Section 7.6. Advancement Of Expenses. The Company shall advance
all reasonable Expenses incurred by or on behalf of Indemnitee in
connection with any Proceeding within twenty days after the receipt by
the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after
final disposition of such proceeding. Such statement or statements
shall reasonably evidence the Expenses incurred by Indemnitee and shall
include or be preceded or accompanied by an undertaking by or on behalf
of Indemnitee to repay any Expenses advanced if it shall ultimately be
determined that Indemnitee is not entitled to be indemnified against
such Expenses.
Section 7.7. Procedure For Determination Of Entitlement To
Indemnification.
(a) To obtain indemnification under this Article, Indemnitee
shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available
to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The
determination of Indemnitee's entitlement to indemnification shall be
made not later than 60 days after receipt by the Company of the written
request for indemnification. The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification, advise the
Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Indemnitee's entitlement to indemnification under any of
Sections 7.2, 7.3 or 7.4 of this Article shall be determined in the
specific case: (i) by the Board of Directors by a majority vote of a
quorum of the Board consisting of Disinterested Directors (as
hereinafter defined); or (ii) by Independent Counsel (as hereinafter
defined), in a written opinion, if (A) a Change of Control (as
hereinafter defined) shall have occurred and Indemnitee so requests, or
(B) if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of
Disinterested Directors so directs; or (iii) by the stockholders of the
Company; or (iv) as provided in Section 7.8 of this Article.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 7.7(b) of this Article, the Independent Counsel shall be
selected as provided in this Section 7.7(c). If a Change of Control
shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, and if so
requested by Indemnitee in his written request for indemnification, the
Independent Counsel shall be selected by Indemnitee, and Indemnitee
shall give written notice to the Company advising it of the identity of
the Independent Counsel so selected. In either event, Indemnitee or
the Company, as the case may be, may, within 7 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 7.13 of this Article, and the objection
shall set forth with particularity the factual basis of such assertion.
If such written objection is made, the Independent Counsel so selected
shall be disqualified from acting as such. If, within 20 days after
submission by Indemnitee of a written request for indemnification
pursuant to Section 7.7(a) hereof, no Independent Counsel shall have
been selected, or if selected shall have been objected to, in
accordance with this Section 7.7(c), either the Company or Indemnitee
may petition the Court of Chancery of the State of Delaware for the
appointment as Independent Counsel of a person selected by the Court or
by such other person as the Court shall designate, and the person so
appointed shall act as Independent Counsel under Section 7.7(b) hereof.
The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in acting
pursuant to Section 7.7(b) hereof, and the Company shall pay all
reasonable fees and expenses incident to the procedures of this Section
7.7(c), regardless of the manner in which such Independent Counsel was
selected or appointed.
Section 7.8. Presumptions And Effect Of Certain Proceedings. If
a Change of Control shall have occurred, Indemnitee shall be presumed
(except as otherwise expressly provided in this Article) to be entitled
to indemnification under this Article upon submission of a request for
indemnification in accordance with Section 7.7(a) of this Article, and
thereafter the Company shall have the burden of proof to overcome that
presumption in reaching a determination contrary to that presumption.
Whether or not a Change of Control shall have occurred, if the person
or persons empowered under Section 7.7 of this Article to determine
entitlement to indemnification shall not have made a determination
within 60 days after receipt by the Company of the request therefor,
the requisite determination of entitlement to indemnification shall be
deemed to have been made and Indemnitee shall be entitled to such
indemnification unless (i) Indemnitee misrepresented or failed to
disclose a material fact in making the request for indemnification, or
(ii) such indemnification is prohibited by law. The termination of any
Proceeding described in any of Sections 7.2, 7.3, or 7.4 of this
Article, or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this
Article) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe
that his conduct was unlawful.
Section 7.9. Remedies Of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 7.7 of this Article that Indemnitee is not entitled to
indemnification under this Article, (ii) advancement of Expenses is not
timely made pursuant to Section 7.6 of this Article, or (iii) payment
of indemnification is not made within five (5) days after a
determination of entitlement to indemnification has been made or deemed
to have been made pursuant to Sections 7.7 or 7.8 of this Article,
Indemnitee shall be entitled to an adjudication in an appropriate court
of the State of Delaware, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement
of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to
the rules of the American Arbitration Association. The Company shall
not oppose Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 7.7 of this Article that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 7.9 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination. If a Change of
Control shall have occurred, in any judicial proceeding or arbitration
commenced pursuant to this Section 7.9 the Company shall have the
burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Sections 7.7 or 7.8 of this Article that
Indemnitee is entitled to indemnification, the Company shall be bound
by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 7.9, unless (i) Indemnitee
misrepresented or failed to disclose a material fact in making the
request for indemnification, or (ii) such indemnification is prohibited
by law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section
7.9 that the procedures and presumptions of this Article are not valid,
binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of
this Article.
(e) In the event that Indemnitee, pursuant to this Section 7.9,
seeks a judicial adjudication of, or an award in arbitration to enforce
his rights under, or to recover damages for breach of, this Article,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types
described in the definition of Expenses in Section 7.13 of this
Article) actually and reasonably incurred by him in such judicial
adjudication or arbitration, but only if he prevails therein. If it
shall be determined in said judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of Expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
Section 7.10. Non-Exclusivity And Survival Of Rights. The rights
of indemnification and to receive advancement of Expenses as provided
by this Article shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the
Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise.
Notwithstanding any amendment, alteration or repeal of any provision of
this Article, Indemnitee shall, unless otherwise prohibited by law,
have the rights of indemnification and to receive advancement of
Expenses as provided by this Article in respect of any action taken or
omitted by Indemnitee in his Corporate Status and in respect of any
claim asserted in respect thereof at any time when such provision of
this Article was in effect. The provisions of this Article shall
continue as to an Indemnitee whose Corporate Status has ceased and
shall inure to the benefit of his heirs, executors and administrators.
Section 7.11. Severability. If any provision or provisions of
this Article shall be held to be invalid, illegal or unenforceable for
any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Article (including without limitation, each portion
of any Section of this Article containing any such provision held to be
invalid, illegal or unenforceable, that is not itself invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this
Article (including, without limitation, each portion of any Section of
this Article containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
Section 7.12. Certain Persons Not Entitled To Indemnification Or
Advancement Of Expenses. Notwithstanding any other provision of this
Article, no person shall be entitled to indemnification or advancement
of Expenses under this Article with respect to any Proceeding, or any
claim therein, brought or made by him against the Company.
Section 7.13. Definitions. For purposes of this Article:
(a) "Change in Control" means a change in control of the
Company of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the
Securities Exchange Act of 1934 (the "Act"), whether or not the Company
is then subject to such reporting requirement; provided, however, that,
without limitation, such a Change in Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Act) is or becomes the "beneficial owner") (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of
the Company's then outstanding securities without the prior approval of
at least two-thirds of the members of the Board of Directors in office
immediately prior to such person attaining such percentage interest;
(ii) the Company is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of
Directors thereafter; or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the
Board of Directors (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is
or was a director, officer, employee, agent or fiduciary of the Company
or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, or being or preparing to be a witness in a
Proceeding.
(e) "Indemnitee" includes any person who is, or is threatened
to be made, a witness in or a party to any Proceeding as described in
Sections 7.2, 7.3 or 7.4 of this Article by reason of his Corporate
Status.
(f) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five (5) years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to
either such party, or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either
the Company or Indemnitee in an action to determine Indemnitee's rights
under this Article.
(g) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other proceeding whether civil, criminal, administrative
or investigative, except one initiated by an Indemnitee pursuant to
Section 7.9 of this Article to enforce his rights under this Article.
Section 7.14. Miscellaneous. Use of the masculine pronoun shall
be deemed to include usage of the feminine pronoun where appropriate.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
Section 8.2 Waiver Of Notice Of Meetings Of Stockholders,
Directors, And Committees. Any written waiver of notice, signed by the
person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the stockholders, directors, or members
of a committee of directors need be specified in any written waiver of
notice.
Section 8.3 Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of
its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or participates
in the meeting of the Board or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and
the Board or the committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
Section 8.4 Form Of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock
ledger, books of account, and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs,
or any other information storage device, provided that the records so
kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the
request of any person entitled to inspect the same.
Section 8.5 Amendment Of By-Laws. The Board of Directors of the
Corporation is expressly authorized to adopt, amend or repeal the
by-laws of the Corporation by a vote of a majority of the entire Board.
The stockholders may make, alter or repeal any by-law whether or not
adopted by them, provided however, that any such additional by-laws,
alterations or repeal may be adopted only by the affirmative vote of
the holders of 75% or more of the outstanding shares of capital stock
of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class), unless such
additional by-laws, alterations or repeal shall have been recommended
to the stockholders for adoption by a majority of the Board of
Directors, in which event such additional by-laws, alterations or
repeal may be adopted by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
Section 8.6 Restrictive Gaming Legend. All certificates issued for
Shares of the $.10 par value Common Stock of the Corporation shall bear
the following legend:
"Any and all shares of Common Stock of the Corporation are held
subject to the condition that if (a) any regulatory authority
should request, determine or otherwise advise that the holder
or owner is disqualified, or unsuitable, must qualify for or
obtain a license, or must submit an application and satisfy a
review process, including background checks, in order for the
Corporation or any subsidiary to obtain or retain a license or
a relicense, or otherwise avoid significant penalties or
business disadvantage, and (b) such holder or owner shall fail
to submit to qualification within fifteen (15) days following
such request, determination or advice, or fail to be found
qualified or suitable, then (c) such holder or owner, at the
request of the Corporation or the appropriate regulatory
authority, shall promptly dispose of such holder's or owner's
interest in the Corporation's Common Stock and shall be subject
to any order of such regulatory body limiting such holder's or
owner's rights pending such disposition. Without limiting the
foregoing, any holder or owner that intends to acquire,
directly or indirectly, ten percent (10%) or more of the
outstanding common stock of the Corporation (regardless of
class or series) shall first notify the Corporation and obtain
prior written approval from the Delaware State Lottery Office.
Since money damages are inadequate to protect the Corporation,
it shall be entitled to injunctive relief to enforce the
foregoing provision."
Section 8.7 Restrictions on Transfer of Class A Common Stock.
(a) Restriction. Shares of the Company's Class A Common Stock (the
"Shares") may be sold, transferred or disposed of only in accordance
with the following:
(i) Shares may be sold or transferred to any other
holder of Shares, provided that such holder has not
acquired Shares in contravention of these Bylaws; or
(ii) Shares may be sold, transferred or pass by
intestacy, will or inheritance to:
(A) one or more members of the immediate
family of a holder of Shares, provided that
such holder has not acquired Shares in
contravention of these Bylaws;
(B) a corporation all of the shares of
which are owned by holders of Shares (or one
or more members of the immediate family of a
holder of Shares), provided that no such
holder has acquired Shares in contravention of
these Bylaws;
(C) a trust all of the beneficial
interests of which are owned by holders of
Shares (or one or more members of the
immediate family of a holder of Shares),
provided that no such holder has acquired
Shares in contravention of these Bylaws; or
(D) a general or limited partnership all
of the partnership interests in which are
owned by holders of Shares (or one or more
members of the immediate family of a holder of
Shares), provided that no such holder has
acquired Shares in contravention of these
Bylaws.
(b) Family Member Defined. For purposes of clause (a)(ii) above,
"members of the immediate family" shall be limited to any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and shall include adoptive
relationships.
(c) Evidence of Compliance. Prior to any sale, transfer or
disposition of Shares, the holder may be required, at the option of the
Company, to furnish appropriate evidence of compliance with these
Bylaws, including but not limited to an opinion of counsel.
(d) Conversion. Shares may be converted to shares of the Company's
Common Stock and sold, transferred or disposed of without regard to the
limitations set forth in clause (a) above.
(e) Pledge. The bona fide pledge of Shares as collateral security
for indebtedness to the pledgee shall not be deemed to violate clause
(a) above, provided that the pledgee provides to the Company a written
undertaking not to sell, transfer or dispose of the Shares in violation
of these Bylaws.
(f) Legend. All certificates evidencing the Shares (and
replacement certificates issued in their stead) shall be inscribed with
the following legend (in addition to any other legends required
hereunder or under federal or state securities laws):
"The Shares of Class A Common Stock represented by
this certificate may be sold, transferred or otherwise
disposed of only in accordance with the terms and
conditions set forth in the Company's Bylaws, which
terms and conditions restrict, and in some instances
prohibit, the transfer or other disposition of such
Shares and which terms and conditions may only be
amended by shareholders owning 75% or more of the
outstanding shares of Class A Common Stock. The terms
and conditions set forth in the Company's Bylaws are
incorporated herein by reference and copies thereof are
available for inspection or will be mailed by the
Company to any holder without charge within five days
after the Company's receipt of a written request
therefor."
(g) Vote Required to Amend. This Section 8.7 may only be amended
by shareholders owning 75% or more of the outstanding Shares.
(h) Injunctive Relief. Since money damages would be inadequate,
the Company or any holder of Shares shall be entitled to injunctive
relief to enforce this Section 8.7.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") is dated effective as of the
31st day of January , 1997 by and between DOVER DOWNS
ENTERTAINMENT, INC. (the "Borrower") and PNC BANK, DELAWARE (the
"Bank").
Recitals:
R1. Dover Downs Entertainment, Inc. is a Delaware corporation
created and existing as a holding company for one hundred percent of
the stock of a group of companies which own and/or operate the
facilities and various businesses known as "Dover Downs" located on
North duPont Highway in Dover, Delaware;
R2. The Dover Downs group of operating companies (each of which
is a Delaware corporation) consists of Dover Downs, Inc., Dover Downs
International Speedway, Inc. and Dover Downs Properties, Inc.
(collectively, the "Affiliated Companies");
R3. The Affiliated Companies are organized and structured as
follows: (i) Dover Downs, Inc. is the operating company for the
Dover Downs slot machine and harness racing businesses; (ii) Dover
Downs International Speedway, Inc. is the operating company for the
Dover Downs automobile racing business and, (iii) Dover Downs
Properties, Inc. is a real estate holding company which is the record
owner of certain real property, fixtures and improvements at which
these business operations are conducted.
Agreement:
Now therefore, the Borrower with the intent to be legally bound
agrees with the Bank as follows:
A. Agreement to Lend. The Bank will provide the credit facility
described hereinbelow, subject to and governed by this Agreement.
1. Type of Facility and Use of Proceeds. This facility is a
committed, revolving line of credit under which the Borrower may
request and the Bank will, subject to the terms and conditions of
this Agreement, make advances from time to time until the Expiration
Date, in an amount in the aggregate at any time outstanding not to
exceed TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00) (the "Line
of Credit"). The "Expiration Date" means January 29, 1998 or such
later date as may be designated by the Bank by written notice to the
Borrower. The purpose of the Line of Credit is to provide for
financing needs to support the Borrower's acquisition of additional
facilities or companies related to the gaming and entertainment
industry and working capital for the Borrower and the Affiliated
Companies.
2. Interest Rate. Advances under the Line of Credit will bear
interest at a rate per annum which is at all times equal to the sum
of the Prime Rate minus three-quarters of one percent (0.75%).
3. Repayment. Subject to the terms and conditions of this
letter, the Borrower may borrow, repay and reborrow under the Line of
Credit until the Expiration Date, on which date the outstanding
principal balance of the Line of Credit and any accrued but unpaid
interest thereon shall be due and payable in full. Interest will be
due and payable on a monthly basis, and will be computed on the basis
of a year of 360 days and paid on the actual number of days elapsed.
4. Note. The obligation of the Borrower to repay loans under
the Line of Credit shall be evidenced by a promissory note (the
"Note"), in form and content satisfactory to the Bank.
5. Depository. The Borrower and the Affiliated Companies will
establish and maintain at the Bank their primary depository accounts.
6. Guarantys. The Line of Credit will be jointly and
severally guaranteed by the Affiliated Companies. Each guaranty will
be evidenced by a guaranty and suretyship agreement in form and
content satisfactory to the Bank.
7. Commitment Fee. The Borrower will pay a commitment fee of
7.50 basis points per annum on the average unused portion of the Line
of Credit. This fee will be payable quarterly in arrears.
The Line of Credit supersedes and replaces three lines of credit
referred to, respectively, as Facilities A, B and C in a credit
agreement dated July 31, 1996.
B. Covenants. Unless compliance is waived in writing by the Bank,
or until payment in full and termination of all the Line of Credit:
1. Financial Reporting. The Borrower will promptly submit to
the Bank the following financial information:
a. Financial Statements for its fiscal year, within 120
days after fiscal year end, audited and certified without
disclaimer or adverse opinion by a certified public accountant
who is (i) a member in good standing of the Private Company's
Practice Sessions (PCPS) of the AICPA, or (ii) otherwise
acceptable to the Bank.
b. Financial Statements for each fiscal quarter within 45
days after quarter end, certified as true and correct by the
Borrower's chief financial officer.
With each delivery of Financial Statements, the Borrower's
chief financial officer shall also deliver a certificate as to
the Borrower's compliance with the financial covenants for the
period then ended and whether any known Event of Default (as
defined in the Note) exists to the best of the Borrower's
knowledge, and, if so, the nature thereof and the corrective
measures the Borrower proposes to take.
"Financial Statements" means the consolidated balance sheet
and statements of income and cash flows of the Borrower and the
Affiliated Companies prepared in accordance with generally
accepted accounting principles in effect from time to time
("GAAP") applied on a consistent basis (subject in the case of
interim statements to normal year-end adjustments).
The Borrower will also cause each of the Affiliated Companies to
concurrently submit their separate annual (audited) and quarterly
financial statements prepared in accordance with the standards
applicable to the Borrower's submissions.
2. Financial Performance. The Borrower will have and maintain
on a consolidated basis with the Affiliated Companies:
a. As of the end of each fiscal quarter, a ratio of total
liabilities to Tangible Net Worth of not greater than 1.25 to
1.00, and;
b. At all times, a minimum Tangible Net Worth of
$25,000,000.00.
c. At all times, a total net worth of not less than
$40,000,000.00.
"Tangible Net Worth" means stockholders' equity less loans
or advances to officers, shareholders or other related parties
and all items properly classified as intangibles, in accordance
with GAAP.
Any accounting term not defined in this Agreement and each
accounting term partly defined herein, to the extent not
defined, shall have the meaning given such term under generally
accepted accounting principles.
3. Negative Covenants.
a. The Borrower will not make or permit any change in its
equity ownership which results in John W. Rollins, Rollins
family members or principal officers listed in the Addendum
having an equity ownership, in the aggregate, of less than 55%.
b. The Borrower will not create, assume, incur or suffer
to exist any mortgage, pledge, encumbrance, security interest,
lien or charge of any kind upon any of its property, now owned
or hereafter acquired, or acquire or agree to acquire any kind
of property under conditional sales or other title retention
agreements; provided, however, that the foregoing restrictions
shall not prevent the Borrower from:
(i) incurring liens for taxes, assessments or governmental
charges or levies which shall not at the time be due and
payable or can thereafter be paid without penalty or are
being contested in good faith by appropriate proceedings
diligently conducted and with respect to which it has
created adequate reserves;
(ii) making pledges or deposits to secure obligations
under workers' compensation laws or similar legislation;
(iii) granting liens or security interests in favor of the
Bank;
(iv) maintaining existing acquisition-related mortgages on
its real estate, as disclosed on the Financial Statements
of the Borrower and/or the Affiliated Companies dated as of
7/31/96;
(v) granting any security interest, mortgage, encumbrance
or other lien (collectively, a "Lien") in or upon any item
of real or personal property, or interest therein,
hereafter acquired, which Lien is created or assumed
contemporaneously with such acquisition to secure or
provide for the payment or financing of any part of the
purchase price thereof, or the assumption of any Lien in or
upon any such property hereafter acquired, existing at the
time of such acquisition, or the acquisition of any such
property subject to any Lien without the assumption
thereof; provided, however, that:
a) the indebtedness secured by any such Lien so
created, assumed or existing shall not exceed
100% of the lower of the actual cost or fair
market value of the property covered thereby;
b) each such Lien shall attach only to the
property so acquired; and;
c) the acquisition to which any such Lien relates
shall not result in a default under any provision
of any other agreements with the Bank.
c. The Borrower will not create, incur, guarantee, endorse
(except endorsements in the course of collection), assume or
suffer to exist any indebtedness, except (i) indebtedness
incurred to finance the actual cost of acquiring real property
used, or to be used, to expand the Borrower's existing
operations , (ii) indebtedness to the Bank, (iii) open account
trade debt incurred in the ordinary course of business and not
past due, (iv) other indebtedness disclosed on the Borrower's
Financial Statements dated as of 7/31/96, or (v) additional
indebtedness that is made expressly subordinate to the Bank
indebtedness.
d. The Borrower will not liquidate, merge or consolidate
with any person, firm, corporation or other entity.
e. The Borrower will not in any fiscal year make
acquisitions of all or substantially all of the property or
assets of any person, firm, corporation or other entity, unless
the contract price or actual value given for such property or
assets is in the aggregate, on a consolidated basis with the
Affiliated Companies $20,000,000.00 or less.
f. The Borrower will not make or have outstanding any
loans or advances to or otherwise extend credit to any person,
firm or corporation, except in the ordinary course of business.
The Borrower further agrees that (i) the Borrower will cause
each of the Affiliated Companies to comply with the foregoing
negative covenants and, (ii) a violation of any such covenant by any
of the Affiliated Companies will be an event of default under this
Agreement.
C. Representations and Warranties. To induce the Bank to provide
the Line of Credit, the Borrower represents and warrants on behalf of
itself and each of the Affiliated Companies as follows:
1. All advances received from the Bank under the Line of Credit
will be used solely by, or for the direct benefit of, the Affiliated
Companies.
2. There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of the Affiliated Companies,
none of which could result in a material adverse change in its or
their business, assets, operations, financial condition or results of
operations and there is no basis known to the Borrower for any
action, suit, proceedings or investigation which could result in such
a material adverse change. All pending or threatened litigation
against the Borrower or any of the Affiliated Companies is listed on
the Addendum attached hereto and incorporated by reference (the
"Addendum").
3. The Borrower and each of the Affiliated Companies have filed
all returns and reports that are required to be filed in connection
with any federal, state or local tax, duty or charge levied, assessed
or imposed upon it or its property or withheld by it, including
unemployment, social security and similar taxes and all of such
taxes, have been either paid or adequate reserve or other provision
has been made.
4. The Borrower and each of the Affiliated Companies are in
compliance, in all material respects, with all Environmental Laws,
including, without limitation, all applicable Environmental Laws in
jurisdictions in which each entity owns or operates, or has owned or
operated, a facility or site, or holds or has held any interest in
real property. Except as otherwise disclosed on the Addendum, no
litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or, to the best of the
Borrower's knowledge, threatened against the Borrower or any of the
Affiliated Companies, any real property which such entity holds or
has held an interest or any past or present operation of the Borrower
or any of the Affiliated Companies. No release, threatened release
or disposal of hazardous waste, solid waste or other wastes is
occurring, or to the best of the Borrower's knowledge has occurred,
on, under or to any real property in which the Borrower or any of the
Affiliated Companies holds any interest or performs any of its
operations, in violation of any Environmental Law. As used in this
Section, "litigation or proceeding" means any demand, claim notice,
suit, suit in equity, action, administrative action, or investigation
brought by a governmental authority, and "Environmental Laws" means
all provisions of laws, statutes, ordinances, rules, regulations,
permits, licenses, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by any governmental authority
concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
5. The Borrower and each of the Affiliated Companies maintains
and will continue to maintain books and records in accordance with
GAAP. The Borrower and each of the Affiliated Companies will give
representatives of the Bank access thereto at all reasonable times,
including permission to examine, copy and make abstracts from any of
such books and records and such other information as the Bank may
from time to time reasonably request, and the Borrower and each of
the Affiliated Companies will make available to the Bank for
examination copies of any reports, statements or returns which they
may make to or file with any governmental department, bureau or
agency, federal or state.
6. As of the date of this Agreement, the individuals named in
the attached Addendum, having the titles indicated, are the principal
managing officers of the Borrower and the Affiliated Companies.
D. Additional Provisions.
1. Before the first advance under the Line of Credit, the
Borrower agrees to sign and deliver to the Bank the Note, and other
required documents and to provide such other instruments and
documents as the Bank may reasonably request, such as
certificates of good standing for the Borrower and the Affiliated
Companies, certified resolutions, incumbency certificates or other
evidence of authority.
2. The Bank will not be obligated to make any advance under the
Line of Credit if any Event of Default (as defined in the Note or as
provided in this Agreement), or event which with the passage of time,
provision of notice or both would constitute an Event of Default,
shall have occurred and be continuing.
3. The Borrower represents and warrants that the Borrower (i)
is the legal owner of one hundred percent of the outstanding shares
of stock of each of the Affiliated Companies and, (ii) will remain
the sole stockholder of each of the Affiliated Companies until
payment in full and termination of the Line of Credit.
4. The Borrower will promptly inform the Bank in writing from
time to time of (i) any material change in the nature of its business
as carried on as of the date of this Agreement or its senior
management, and (ii) any such changes occurring with respect to any
of the Affiliated Companies.
5. If, at any point during any fiscal year, the Borrower and/or
any of the Affiliated Companies shall have sold, leased, transferred
or otherwise disposed of property or assets having an aggregate book
value on a consolidated basis in excess of $1,000,000.00, the
Borrower shall promptly notify the Bank in writing of such fact and
provide such information concerning the transaction as the Bank may
reasonably require.
6. The Borrower and the Bank acknowledge a duty of good faith
and fair dealing in connection with the terms, covenants and
conditions of the Line of Credit as set forth in this Agreement.
7. Each of the Borrower and the Bank irrevocably waive any and
all rights they may have to a trial by jury in any action, proceeding
or claim of any nature relating to this agreement, any documents
executed in connection with this agreement or any transaction
contemplated in any of such documents. Each party acknowledges that
the foregoing waiver is knowing and voluntary.
WITNESS the due execution hereof as a document under seal, as of the
date first written above.
ATTEST/WITNESS: DOVER DOWNS ENTERTAINMENT, INC.
__________________________ By:______________________(SEAL)
Denis McGlynn
President
__________________________ By:______________________(SEAL)
Robert M. Comollo
Treasurer
PNC BANK, DELAWARE
_________________________ By:______________________(SEAL)
Paul L. Frick
Assistant Vice President
<PAGE>
Each of the undersigned guarantors hereby reaffirms its guaranty
agreement dated 7/31/96 and acknowledges and agrees that the above-
referenced line of credit is secured by such guaranty agreement.
ATTEST/WITNESS: DOVER DOWNS, INC.
_________________________ By:______________________(SEAL)
Denis McGlynn
President
_________________________ By:______________________(SEAL)
Robert M. Comollo
Treasurer
DOVER DOWNS INTERNATIONAL
SPEEDWAY, INC.
_________________________ By:______________________(SEAL)
Denis McGlynn
President
_________________________ By:______________________(SEAL)
Robert M. Comollo
Treasurer
DOVER DOWNS PROPERTIES, INC.
_________________________ By:______________________(SEAL)
Denis McGlynn
President
_________________________ By:______________________(SEAL)
Robert M. Comollo
Treasurer
<PAGE>
ADDENDUM TO CREDIT AGREEMENT
Litigation: Describe pending or threatened litigation, proceedings,
etc. below:
Legal Proceedings
There are various claims and legal actions pending against the
Company. In the opinion of management, based on the advice of
counsel, it is only remotely likely that the ultimate resolution of
these claims and actions will be material.
Directors, Executive Officers, and other Senior Officers:
Dover Downs Entertainment, Inc.
Dover Downs, Inc.
Dover Downs International Speedway, Inc.
Dover Downs Properties, Inc.
Name Position
John W. Rollins Chairman of the Board of Directors
Henry B. Tippie Vice Chairman of the Board of Directors
Denis McGlynn Director, President and
Chief Executive Officer
Eugene W. Weaver Director and Senior Vice President -
Administration
Melvin L. Joseph Director, Vice President and
Director of Auto Racing for Dover Downs
International Speedway, Inc.
Robert M. Comollo Treasurer and Secretary
Tim Horne Vice President - Finance
John W. Rollins, Jr. Director
R. Randall Rollins Director
Patrick J. Bagley Director
Jeffrey W. Rollins Director
Michael B. Kinnard Vice President and General Counsel
COMMITTED LINE OF CREDIT NOTE
$20,000,000.00 January 31, 1997
FOR VALUE RECEIVED, DOVER DOWNS ENTERTAINMENT, INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of PNC BANK,
DELAWARE (the "Bank"), in lawful money of the United States of America
in immediately available funds at its offices located at 222 Delaware
Avenue, Wilmington, Delaware 19801, or at such other location as the
Bank may designate from time to time, the principal sum of TWENTY
MILLION AND 00/100 DOLLARS ($20,000,000.00) (the "Facility") or such
lesser amount as may be advanced to or for the benefit of the Borrower
hereunder, together with interest accruing on the outstanding principal
balance from the date hereof, as provided below:
1. Rate of Interest. Amounts outstanding under this Note will bear
interest at a rate per annum which is at all times equal to the sum of
the Prime Rate minus three quarters of one percent (.75%).
Interest will be calculated on the basis of a year of 360 days for the
actual number of days in each interest period. As used herein, "Prime
Rate" shall mean the rate publicly announced by the Bank from time to
time as its prime rate. The Prime Rate is not tied to any external
rate or index and does not necessarily reflect the lowest rate of
interest actually charged by the Bank to any particular class or
category of customers. If and when the Prime Rate changes, the rate of
interest on this Note will change automatically without notice to the
Borrower, effective on the date of any such change. In no event will
the rate of interest hereunder exceed the maximum rate allowed by law.
2. Advances. The Borrower may borrow, repay and reborrow hereunder
until the Expiration Date, subject to the terms and conditions of this
Note and the Loan Documents (as defined herein). The "Expiration Date"
shall mean January 29, 1998, or such later date as may be designated by
the Bank by written notice from the Bank to the Borrower. The Borrower
acknowledges and agrees that in no event will the Bank be under any
obligation to extend or renew the Facility or this Note beyond the
initial Expiration Date.
3. Advance Procedures. A request for advance made by telephone must be
promptly confirmed in writing by such method as the Bank may require.
The Borrower authorizes the Bank to accept telephonic requests for
advances, and the Bank shall be entitled to rely upon the authority of
any person providing such instructions. The Borrower hereby
indemnifies and holds the Bank harmless from and against any and all
damages, losses, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses) which may arise or be created by the
acceptance of such telephone requests or making such advances. The
Bank will enter on its books and records, which entry when made will be
presumed correct, the date and amount of each advance, as well as the
date and amount of each payment made by the Borrower.
4. Payment Terms. Accrued interest will be due and payable on the
first day of each month, as billed by the Bank. The outstanding
principal balance and any accrued but unpaid interest shall be due and
payable in full on the Expiration Date.
If any payment under this Note shall become due on a Saturday, Sunday
or public holiday under the laws of the state of Delaware, such payment
shall be made on the next succeeding business day and such extension of
time shall be included in computing interest in connection with such
payment. Payments received will be applied to charges, fees and
expenses (including attorneys' fees), accrued interest and principal in
any order the Bank may choose, in its sole discretion.
5. Late Payments; Default Rate. If the Borrower fails to make any
payment of principal, interest or other amount becoming due pursuant to
the provisions of this Note within 15 calendar days of the date due and
payable, the Borrower also shall pay to the Bank a late charge equal to
five percent (5.0%) of the amount of such payment. Such 15-day period
shall not be construed in any way to extend the due date of any such
payment. The late charge is imposed for the purpose of defraying the
Bank's expenses incident to the handling of delinquent payments and is
in addition to, and not in lieu of, the exercise by the Bank of any
rights and remedies hereunder, under the other Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys
which the Bank may employ. Upon maturity, whether by acceleration,
demand or otherwise, and at the option of the Bank upon the occurrence
of any Event of Default (as hereinafter defined) and during the
continuance thereof, this Note shall bear interest at a rate per annum
(based on a year of 360 days and actual days elapsed) which shall be
three percentage points (3.0%) in excess of the interest rate in effect
from time to time under this Note but not more than the maximum rate
allowed by law (the "Default Rate"). The contract interest rate(s)
herein shall continue to apply whether or not judgment shall be entered
on this Note.
6. Prepayment. The indebtedness evidenced by this Note may be prepaid
in whole or in part at any time without penalty.
7. Other Loan Documents; Assumption of Obligations. This Note is
issued in connection with a Credit Agreement bearing even date
herewith, guaranties and related documents, the terms of which are
incorporated herein by reference (the "Loan Documents").
8. Events of Default. The occurrence of any of the following events
will be deemed to be an "Event of Default" under this Note: (i) the
nonpayment of any principal, interest or other indebtedness under this
Note when due; (ii) the occurrence of any event of default or default
and the lapse of any notice or cure period under any other debt,
liability or obligation to the Bank of any Borrower or any Guarantor of
this Note, including but not limited to any of the foregoing arising
under the Loan Documents or any other documents now or in the future
securing the obligations of any Borrower or any Guarantor to the Bank;
(iii) the filing by or against any Borrower or any Guarantor of any
proceeding in bankruptcy, receivership, insolvency, reorganization,
liquidation, conservatorship or similar proceeding, or any assignment
by any Borrower or any Guarantor for the benefit of creditors, or any
levy, garnishment, attachment or similar proceeding is instituted
against any property of any Borrower or any Guarantor held by or
deposited with the Bank; (iv) a default with respect to any other
indebtedness of any Borrower or any Guarantor for borrowed money in
excess of $500,000 in the aggregate, if the effect of such default is
to cause or permit the acceleration of such debt; (v) [omitted
intentionally]; (vi) the entry of a final judgment against any Borrower
or any Guarantor in excess of $500,000 in the aggregate and the
failure of such Borrower or Guarantor to discharge the judgment within
ten days of the entry thereof; (vii) [omitted intentionally]; (viii)
any material adverse change in the business, assets, operations,
financial condition or results of operations of any Borrower or any
Guarantor (ix) the revocation or attempted revocation, in whole or in
part, of any guarantee by any Guarantor; (x) the death of any
individual Borrower or Guarantor or, if any Borrower is a partnership,
the death of any individual general partner; (xi) any representation or
warranty made by any Borrower or any Guarantor to the Bank in any
document, including but not limited to the Loan Documents or any other
documents now or in the future securing the obligations of any Borrower
or any Guarantor to the Bank, is false, erroneous or misleading in any
material respect; or (xii) the failure of any Borrower or any Guarantor
to observe or perform any covenant or other agreement with the Bank
contained in any document, including but not limited to the Loan
Documents or any documents now or in the future securing the
obligations of any Borrower or any Guarantor to the Bank. As used
herein, the term "Guarantor" will mean any guarantor of the obligations
of the Borrower to the Bank existing on the date of this Note or
arising in the future.
Upon the occurrence of an Event of Default: (a) the Bank shall be under
no further obligation to make advances hereunder unless and until the
default is cured to the Bank's satisfaction; (b) if an Event of Default
specified in clause (iii) above shall occur, the outstanding principal
balance and accrued interest hereunder together with any additional
amounts payable hereunder, shall be immediately due and payable without
demand or notice of any kind; (c) if an Event of Default specified in
clause (i) shall occur and Borrower shall fail to effect a cure of such
Event of Default within ten (10) days of notice thereof from the Bank,
the outstanding principal balance and accrued interest hereunder,
together with any additional amounts payable hereunder, at the option
of the Bank and without demand or notice of any kind may be accelerated
and become immediately due and payable; (d) if any other Event of
Default shall occur and Borrower shall fail to effect a cure of such
Event of Default within thirty (30) days of notice thereof from the
Bank, the outstanding principal balance and accrued interest hereunder
together with any additional amounts payable hereunder, at the option
of the Bank and without further demand or notice of any kind may be
accelerated and become immediately due and payable; (e) at the option
of the Bank, this Note will bear interest at the Default Rate from the
date after the lapse of any applicable cure period with respect to the
Event of Default; and (f) the Bank may exercise from time to time any
of the rights and remedies available to the Bank under the Loan
Documents or under applicable law.
9. Power to Confess Judgment. The Borrower hereby empowers any
attorney of any court of record within the State of Delaware, after the
occurrence of any Event of Default hereunder, to appear for the
Borrower and confess judgment, or a series of judgments, against the
Borrower in favor of the Bank or any holder hereof for the entire
principal balance of this Note and all accrued interest, together with
costs of suit and an attorney's commission of $2,500.00 added as a
reasonable attorney's fee, and for doing so this Note or a copy
verified by affidavit shall be a sufficient warrant. Interest on any
such judgment shall accrue at the Default Rate.
No single exercise of the foregoing power to confess judgment, or a
series of judgments, shall be deemed to exhaust the power, whether or
not any such exercise shall be held by any court to be invalid,
voidable, or void, but the power shall continue undiminished and it may
be exercised from time to time as often as the Bank shall elect until
such time as the Bank shall have received payment in full of the debt,
interest and costs.
10. Miscellaneous. No delay or omission of the Bank to exercise any
right or power arising hereunder shall impair any such right or power
or be considered to be a waiver of any such right or power or any
acquiescence therein nor shall the action or inaction of the Bank
impair any right or power resulting therefrom. The Borrower agrees to
pay on demand, to the extent permitted by law, all costs and expenses
incurred by the Bank in the enforcement of its rights in this Note and
any security therefor, including without limitation reasonable fees and
expenses of the Bank's counsel. If any provision of this Note is found
to be invalid by a court, all the other provisions of this Note will
remain in full force and effect.
Except for notices of default as provided in Section 8 above, the
Borrower hereby forever waives presentment, demand, protest, notice of
dishonor, notice of nonpayment or default and any other notices of any
kind. The Borrower also waives all defenses based on suretyship or
impairment of collateral.
If this Note is executed by more than one Borrower, the obligations of
such persons or entities hereunder will be joint and several. This
Note shall bind the Borrower and the heirs, executors, administrators,
successors and assigns of the Borrower, and the benefits hereof shall
inure to the benefit of Bank and its successors and assigns. All
references herein to the "Borrower" and "Bank" shall be deemed to apply
to the Borrower and Bank and their respective heirs, executors,
administrators, successors and assigns.
This Note has been delivered to and accepted by the Bank and will be
deemed to be made in the state of Delaware. This Note will be
interpreted and the rights and liabilities of the parties hereto
determined in accordance with the laws of the state of Delaware,
excluding its conflict of laws rules. The Borrower hereby agrees to
the jurisdiction of any state or federal court located within the state
of Delaware, and consents that all service of process be sent by
nationally recognized overnight courier service directed to Borrower at
the Borrower's address set forth herein and service so made will be
deemed to be completed on the date of actual delivery to the Borrower;
provided that nothing contained herein will prevent the Bank from
bringing any action or exercising any rights against any security or
against the Borrower individually, or against any property of the
Borrower within any other state or nation to enforce any award or
judgment obtained in the venue specified above, or such other venue as
the Bank chooses. The Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted
hereunder.
12. Waiver of Jury Trial. Each of the Borrower and the Bank
irrevocably waive any and all rights they may have to a trial by jury
in any action, proceeding or claim of any nature relating to this Note,
any documents executed in connection with this note or any transaction
contemplated in any of such documents. Each party acknowledges that
the foregoing waiver is knowing and voluntary.
The Borrower acknowledges that it has read and understood all the
provisions of this Note, including the confession of judgment and
waiver of jury trial, and has been advised by counsel as necessary or
appropriate.
WITNESS the due execution and sealing hereof with the intent to be
legally bound hereby.
WITNESS/ATTEST: DOVER DOWNS ENTERTAINMENT, INC.
__________________________ By:__________________________(SEAL)
Denis McGlynn
President
___________________________ By:__________________________(SEAL)
Robert M. Comollo
Treasurer
Borrower's Address: 1131 N. duPont Highway, Dover, DE 19901.
Date Received 12-17-96
Sanction No. NBSGND #15 & NBSGND #21
NASCAR Official /s/ Ray Hill
GM GOODWRENCH/DELCO BATTERY "200" - May 31, 1997
MBNA "200" - September 20, 1997
SANCTION APPLICATION AND AGREEMENT FORM
NASCAR BUSCH SERIES, GRAND NATIONAL DIVISION
INSTRUCTIONS:
(1) All NASCAR Busch Series, Grand National Division Championship
Events for which PROMOTER seeks a NASCAR sanction must be listed in a
single application form. Please sign the original and forward to
NASCAR; upon acceptance and approval by NASCAR, a copy will be returned
to the PROMOTER.
(2) "PROMOTER" means the individual, partnership, corporation,
joint venture or other entity that, in connection with the Event (as
defined below), is ultimately responsible (financially and otherwise)
for the organization and promotion of the Event and the facility at
which the Event is to be run. If two or more entities are acting
together in such capacity, all such entities should be listed as
"PROMOTER" and the authorized officer of each should sign this form.
(3) This form when signed by the PROMOTER is only an application
for a NASCAR sanction. NASCAR is under no obligation to accept or
approve the application. Upon being accepted and approved in writing by
NASCAR, this form becomes an agreement binding on both parties.
(4) Application for a NASCAR Busch Series, Grand National Division
Championship Event must be received at NASCAR no later than ten
business days after the PROMOTER receives this form from NASCAR.
* * * * * * * * * * *
The undersigned PROMOTER, designated below, applies to the National
Association for Stock Car Auto Racing, Inc. ("NASCAR") for a NASCAR
sanction to organize and promote a NASCAR-sanctioned NASCAR Busch
Series, Grand National Division Championship Event(s) in accordance
with the terms and conditions set forth hereafter, as follows:
POST OFFICE BOX 2875 . DAYTONA BEACH, FLORIDA 32120-2875 -
904/253-0611
<PAGE>
EXHIBIT 1
To Sanction Application and Agreement Form
NASCAR and PROMOTER agree as follows:
DEFINITIONS
(1) "Event" means the Event(s) designated in the Sanction
Application and Agreement Form, as well as all periods for
registration, inspections, time trials, practice runs, post-race
inspections and postponed dates related thereto. Whenever the word
"Event" appears in the singular, it shall apply to all Events
designated on the Sanction Application and Agreement Form, unless the
context requires otherwise. All provisions in the Sanction Application
and Agreement Form and in Exhibits 1, 2 and 2a apply to the Event(s)
designated in the Sanction Application and Agreement Form, unless the
context requires otherwise.
(2) "Additional Award" as used herein includes any monetary or
non-monetary award by, or contracted through, the PROMOTER, for
distribution based upon the Event(s), other than (a) purse, (b) point
fund, (c) Winner's Circle and Plan awards, (d) television income and
(e) the entry award for the current NASCAR Busch Series, Grand National
Division Champion. PROMOTER understands and acknowledges that the
above-listed awards may or may not be applicable to or available in
connection with the Event, and that NASCAR makes no representation as
to the availability or amounts of such awards.
(3) "Television Income", as used herein, means all monies and
things of value received by PROMOTER as a result of and in connection
with any television contract(s), including but not limited to payments
received from networks, stations, packages, brokers, advertisers,
advertising agencies, and the like. In computing all monies and things
of value received, it is intended that the gross amount set forth in
all television contract(s) as payable by the other contracting entity
or entities shall be included and that any applicable commissions, fees
or expenses paid to or deducted by sales agents, consultants and other
parties shall not be deducted therefrom.
(4) "Television Contract", as used herein, means any contract,
agreement or understanding, whether oral or written, entered into
between PROMOTER and any other entity or entities, whether or not they
are broadcasters, for the sale, assignment or other transferral of the
rights of PROMOTER in the live or delayed televised broadcast of,
rebroadcast of, tape or film production of, and/or any other use of,
the Event, whether by cable TV, pay TV, theater TV, video tape
cassettes, and/or satellite transmissions, and whether local, regional
national or worldwide.
PROMOTER'S GENERAL OBLIGATIONS
(5) PROMOTER warrants to NASCAR that in connection with the Event
it has sole control of the racetrack, the premises upon which the
racetrack is located and surrounding same, and all facilities thereon,
that it has obtained all necessary licenses, permits or other approvals
required, and that it has full authority to conduct the Event at the
racetrack pursuant to the terms of this agreement. PROMOTER further
warrants that it will comply with all local, state and federal laws and
regulations in connection with the organization and promotion of the
Event. PROMOTER, at its expense, will make all appropriate filings of
forms or other documents as required by federal, state or local laws.
(6) PROMOTER at its expense assumes sole responsibility for
furnishing the racetrack, the premises upon which the racetrack is
located and surrounding same, and all facilities thereon in good
repair, ready for use by competitors and officials. PROMOTER is solely
responsible and liable for the safety of such competitors and officials
while on, entering or leaving such racetrack, premises and facilities.
PROMOTER warrants that the racetrack, premises and facilities are and
will remain in a condition suitable for the conduct of the Event, and
that the racing surface of the track will not be altered, resurfaced or
otherwise substantially changed during the term of this Agreement
without the express written consent of NASCAR. PROMOTER will provide
NASCAR or its designated representative full access to the racetrack,
premises and facilities as requested by NASCAR during the term of this
Agreement.
(7) If NASCAR in its sole discretion determines that the
racetrack, the premises or any facilities are in an unsatisfactory
condition, PROMOTER agrees to repair or resurface the racetrack and to
repair the premises or facilities, at PROMOTER's expense and to the
satisfaction of NASCAR prior to any NASCAR-sanctioned Event. If NASCAR
in its sole discretion determines that it is necessary to resurface the
racetrack, such resurfacing shall be completed by PROMOTER with
adequate time prior to the Event to allow for tire and private car
testing. If NASCAR in its sole discretion determines that there is
insufficient time to place the racetrack in a condition suitable for
the conduct of the Event, NASCAR in its sole discretion may postpone or
cancel the Event.
(8) PROMOTER at its expense will furnish adequate facilities,
personnel, equipment and services for accommodating and controlling the
public during the Event. PROMOTER is solely responsible and liable for
the safety of the public during the Event. PROMOTER is solely
responsible for the condition, actions and operations of such
facilities, personnel, equipment and services before, during and after
the Event.
(9) PROMOTER at its expense will furnish adequate facilities,
support personnel, equipment, and related security, for use by NASCAR
in the performance of NASCAR's duties, as they may be requested by
NASCAR from time to time, including but not limited to facilities for
office administration, registration, timing, scoring, car inspection,
race direction, officiating and prize money distribution. Without in
any way limiting the foregoing, PROMOTER at its expense will:
a. provide one or more television monitors, in locations to be
specified by NASCAR, with all related equipment necessary for such
monitors to be connected to video and audio equipment used by the
television producer under contract for the Event, in order to
provide to NASCAR Officials live video on such monitors and the
ability to switch instantaneously its view on the monitors among
the different camera locations used by the television producer, at
all times during the Event when all or a portion of the Event is
being videotaped, broadcast, monitored and/or recorded;
b. provide NASCAR with two (2) pace vehicles, each with the NASCAR
logo (as set forth under paragraph 21 below) displayed on the side
in a manner and size which is visible to all persons on the
racetrack, in the viewing area and in all locations where NASCAR
Officials are visually monitoring the Event;
c. provide NASCAR prior to the Event with a list of the track
radio frequencies to be used for the Event, including but not
limited to frequencies to be used for maintenance, police and
security personnel;
d. cooperate with NASCAR in pre-race and victory lane ceremonies,
awards presentations and photographs;
e. have readily available quantities of oil dry acceptable to
NASCAR when the track opens for practice and at all other times
during the Event, and adequate personnel to spread the oil dry at
NASCAR's direction;
f. certify and recertify the scales as requested by NASCAR upon
arrival for the first day of inspection and at all other times
during the Event, and provide written certifications to the NASCAR
Busch Series, Grand National Division Director as to the results
of the certifications;
g. provide personnel to secure the entry into the pits and garage
areas during competition periods;
h. provide personnel to secure the garage area on a continuous,
24-hour/day basis beginning the first day the track is open for
inspection and ending when released by the NASCAR Busch Series,
Grand National Division Director;
i. deliver to the garage area before the morning of race day twice
the number of chairs as cars starting in the race for use by
drivers and crew chiefs at the pre-race meeting;
j. line and number each pit with appropriate paint, line and paint
traffic lanes in the garage and garage area when and where needed,
and repaint all start/finish, scoring, third turn and re-entry
cutoff lines;
k. place portable toilets along pit road and in the garage area as
directed by NASCAR;
l. coordinate with NASCAR all tours of the garage areas, including
the times, number of participants and other arrangements;
m. provide adequate electricity (including without limitation 220
volts 50 amps service with female range outlet for the NASCAR
trailer), air conditioning, heat, telephone (including a track
phone extension) and water facilities as requested by NASCAR;
n. coordinate with NASCAR to ensure that it has a minimum of ten
(10) minutes immediately before, during or after driver
introductions for NASCAR awards presentations;
o. coordinate with NASCAR to ensure that it has a reasonable
period of time immediately following the Event for victory lane
ceremonies, awards presentations and sponsor recognitions;
p. provide a control tower of adequate size with electricity, air
conditioning, heat, telephone (including a track phone extension),
chairs with cushions, a television monitor (as set forth above),
water facilities and other utilities, supplies and equipment as
requested by NASCAR;
q. provide a registration facility of adequate size outside the
track and in the garage area, with electricity, air conditioning,
heat, telephone (including a track phone extension), chairs with
cushions, water facilities and other utilities, supplies and
equipment as requested by NASCAR;
r. provide adequate trash receptacles in the garage and pit area
and coordinate with the NASCAR Busch Series, Grand National
Division Director the times for trash pick up by track personnel;
s. provide adequate personnel to sweep and clean-up the garage and
pit areas on a daily basis;
t. provide adequate parking areas for all competitors (including
car owners, drivers and crew members) and NASCAR Officials
adjacent to or near the garage area;
Exhibit 1 to Sanction Application and Agreement Form
Page 2 of 7
u. provide NASCAR with a track suite, including the customary
number of admission tickets for admission to said suite, and 100
grandstand general admission tickets, such tickets to be delivered
to NASCAR no later than thirty (30) days prior to the Event.
(10) PROMOTER at its expense will provide adequate facilities,
personnel, equipment and services for, and assumes sole responsibility
to provide, fire protection equipment and on-site medical services for
competitors, officials, the public and others, including without
limitation cleanup crews, towing and flatbed wreckers. PROMOTER at its
expense will make advance arrangements with local hospitals and
physicians for the prompt and efficient treatment of any and all
injuries occurring during the Event.
(11) PROMOTER at its expense will furnish adequate security
personnel (in addition to the requirements of paragraph 9) in the pit
and garage area, and will limit access to such areas before, during and
after the Event to authorized individuals and equipment. PROMOTER is
solely responsible and liable for the actions of security personnel.
(12) PROMOTER at its expense assumes and will perform all business
responsibilities in connection with the Event (except as otherwise
provided by this Agreement), including but not limited to business
organization, promotional activities, management, general business
affairs, ticket sales, track operation and press accommodations. NASCAR
does not warrant, either expressly or by implication, nor is it
responsible for, the financial or other success of the Event or the
number or identity of vehicles or competitors participating in the
Event.
(13) PROMOTER will not schedule or permit any private race car
practice or test runs for the seven days immediately preceding the
first day of official practice for the Event without prior written
approval by NASCAR. PROMOTER will not schedule any ancillary events or
activities on the same day as registration or inspection, or on any
days during the Event, without prior written approval by NASCAR. The
ancillary events or activities covered by this paragraph include
without limitation other motorsports events, thrill shows, live
performances and/or helicopter rides. PROMOTER further agrees to notify
NASCAR of any private race car testing and/or practice done at the
racetrack pursuant to and in accordance with the 1997 NASCAR Busch
Series, Grand National Division Private Race Car Testing Policy.
OFFICIAL ENTRY BLANK
(14) An Official Entry Blank for the Event will be composed,
printed, published and distributed by NASCAR, and will constitute the
sole official statement as to the date, place, schedule and length of
the Event, eligibility requirements for competitors, and monetary and
non-monetary awards.
(15) PROMOTER will notify NASCAR prior to contracting for any
Additional Award. NASCAR may reject a proposed Additional Award in its
entirety, require different terms for the proposed Additional Award, or
require a reallocation of the distribution of such an award among
competitors, if in NASCAR's sole judgment the proposed award will not
advance the nature of the competition, will have an adverse impact on
the Event, or will be detrimental to the sport of automobile racing,
NASCAR, any sponsors of the Event, or any sponsors of the NASCAR Busch
Series, Grand National Division. NASCAR's determination in that regard
will be binding on PROMOTER. PROMOTER assumes full responsibility for,
and will indemnify NASCAR against, any liability or costs incurred as
a result of NASCAR's determination with respect to any proposed award
arranged by or through PROMOTER. All Additional Awards are subject to
independent verification by NASCAR.
(16) PROMOTER will submit to NASCAR, no later than sixty (60)
calendar days before the date of the Event, a list of any and all
proposed Additional Awards (as defined above) for the Event not
previously included in Exhibit 2 and Exhibit 2a of this Agreement. If
either PROMOTER or NASCAR contracts for Additional Awards after
publication of the Official Entry Blank, then, subject to the
provisions of paragraph 15, NASCAR in its sole discretion may publish
and distribute a supplement to the Official Entry Blank posting the
Additional Awards.
(17) PROMOTER will not publish an official or unofficial entry
blank or supplement, or any other form setting forth monetary or
non-monetary awards, without prior written approval from NASCAR.
PROMOTER will not advertise or otherwise disseminate any information as
to monetary or non-monetary awards for the Event other than those
specified in the Official Entry Blank or NASCAR-approved supplement.
(18) NASCAR will use its best efforts to consult with the PROMOTER
regarding postponement of an Event, but the decision to postpone an
Event and the selection of the postponed date will be made by NASCAR in
its sole
Exhibit 1 to Sanction Application and Agreement Form
Page 3 of 7
discretion and will be binding on PROMOTER. Publication by PROMOTER of
a postponement and/or postponed date that has not been approved by
NASCAR is not binding upon NASCAR.
PROMOTER'S FINANCIAL AND INSURANCE OBLIGATIONS
(19) PROMOTER will pay to NASCAR at Daytona Beach, Florida, not
later than the Payment Date set forth in the Sanction Application and
Agreement Form, by wire transfer of funds, an amount equal to the sum
of the PROMOTER's Purse and Point Fund and the Sanction Fee, plus any
other monies due NASCAR for the Event pursuant to this agreement,
unless otherwise directed by NASCAR in writing. Time is of the essence.
If said monies and fees are not paid to NASCAR in the manner and by the
Payment Date, NASCAR at its option may (a) cancel and rescind this
Agreement, or (b) enforce collection of said monies and fees by suit or
action, in which case PROMOTER will pay all costs incurred by NASCAR in
connection therewith, including reasonable attorney's fees.
(20) PROMOTER at its expense will obtain and maintain public
liability insurance for the Event that is acceptable to NASCAR, with a
minimum combined single limit of $10,000,000.00 per occurrence, for (i)
spectator injury and property damage and (ii) PROMOTER's legal, pit,
track and product liability. In the event that PROMOTER cannot obtain
such insurance with $10,000,000.00 per occurrence limits, PROMOTER
shall obtain and maintain such insurance at the highest available per
occurrence limit, but in no event shall PROMOTER obtain such insurance
with a per occurrence limit (for all categories of liability specified
above) less than $5,000,000.00. PROMOTER will deliver to NASCAR at
Daytona Beach, Florida no later than the Notification Date set forth in
the Sanction Application and Agreement Form, a certified true copy of
all public liability insurance policies in force for the Event,
regardless of the total amount of coverage. In all such policies and in
all other public liability policies obtained and maintained by the
PROMOTER or PROMOTER'S parent, the following will be named as insured
or additional insured: National Association for Stock Car Auto Racing,
Inc., its shareholders, directors, officers, employees, agents,
officials, and members; all drivers, car owners, car sponsors,
mechanics, and all sponsors for the Event or the series of which the
Event is a part. All policies shall also contain a cross liability
endorsement acceptable to NASCAR. If PROMOTER fails to deliver such
policies to NASCAR by the date provided, or if PROMOTER fails to
maintain such policies with the required minimum coverage throughout
the Event, NASCAR may cancel and rescind this Agreement immediately and
without notice to the PROMOTER. If the policy or policies are not
acceptable to NASCAR, then NASCAR may obtain the required insurance
from an acceptable insurance company, with acceptable terms, at the
PROMOTER's expense.
ADVERTISING AND USE OF REGISTERED MARK
(21) Each party authorizes the use of its name and registered mark
by the other for publicizing, promoting or advertising the Event. The
NASCAR name and registered mark will only be used as follows:
NASCAR (R)
The symbol (R) will appear as indicated with the NASCAR logo. In all
publicity, advertising and promotion relating to the Event, including,
but not limited to news releases, advertisements and brochures,
PROMOTER will display the registered trademark and the phrase
"NASCAR-sanctioned NASCAR Busch Series, Grand National Division
Championship Event".
(22) All competitors, including car owners and drivers, when they
execute the NASCAR Official Entry Blank in connection with the Event,
grant to NASCAR certain rights to their name(s), picture(s),
likeness(es) or performance(s). Subject to the next sentence, NASCAR
hereby assigns to PROMOTER the non-exclusive right to use such
competitors' name(s), picture(s), likeness(es) or performance(s) for
the purpose of publicizing, promoting or advertising the Event, but
only to the extent such rights have been released to NASCAR pursuant to
the NASCAR Official Entry Blank. Notwithstanding the foregoing, NASCAR
retains the right to disapprove and prohibit the PROMOTER's actual or
intended use of a competitor's name, picture, likeness or performance
if NASCAR determines in its sole discretion that such use is or will be
detrimental to NASCAR, to the Event, to the series of which the Event
is a part, or to the sport.
(23) PROMOTER will make no misrepresentations of fact in
connection with publicizing, promoting or advertising the Event. If
such a misrepresentation is made (a) the PROMOTER promptly will correct
the misrepresentation through a subsequent PROMOTER publication, (b)
NASCAR may correct the misrepresentation itself through NASCAR
publication at PROMOTER's expense and/or (c) NASCAR may cancel and
rescind this Agreement.
Exhibit 1 to Sanction Application and Agreement Form
Page 4 of 7
(24) PROMOTER acknowledges that the Event is part of the NASCAR
Busch Series, Grand National Division. PROMOTER will cooperate fully
with NASCAR, with the series sponsor(s), and with any other company
that has contracted with NASCAR to sponsor awards or programs
(including without limitation the Busch Beer Pole Award or the
Rookie-of-the-Year Award) that are based in whole or in part on a
competitor's performance in the Event or over a number of NASCAR Busch
Series, Grand National Division events, in connection with those
sponsors' activities, if any, during the Event. PROMOTER, on its own
and at the request of NASCAR, will use its best efforts to feature such
sponsors prominently in all of PROMOTER's advertising, publicity and
promotion in connection with the Event, and no competitor of such a
sponsor shall be featured therein as prominently as such sponsor.
PROMOTER will take no action that, in NASCAR's sole judgment, will
jeopardize the maintenance or continuation of such sponsorships.
(25) PROMOTER acknowledges that the sale or use, for advertising
purposes, of space at the racetrack, the premises upon which the
racetrack is located and surrounding same, the facilities thereon, or
in any publications distributed in connection with the Event, is an
action that could have an impact upon the existing sponsorships
described in paragraph 24 above. Such sale to or use by competitors of
such sponsors shall be subject to prior written approval by NASCAR,
which NASCAR may provide or withhold in its sole discretion.
(26) NASCAR reserves the right to approve or disapprove any
advertising, sponsorship or similar agreement in connection with any
Event.
(27) PROMOTER will use the NASCAR NATIONAL PROGRAM PACKAGE, if
provided by NASCAR.
TELEVISION AND SIMILAR RIGHTS
(28) PROMOTER will pay to NASCAR at Daytona Beach, Florida not
later than the Payment Date set forth in the Sanction Application and
Agreement Form, or within twenty-four (24) hours of the consummation or
execution of the television contract (whichever occurs later), by wire
transfer, ten percent (10%) of all television income received or
contracted to be received (whichever is greater) by the PROMOTER in
connection with the Event.
(29) In addition to the sum to be paid in accordance with
paragraph 28, PROMOTER will pay into the NASCAR event purse trust
account, not later than the Payment Date set forth in the Sanction
Application and Agreement Form, or within twenty-four (24) hours of the
consummation or execution of the television contract (whichever occurs
later), by wire transfer, twenty-five percent (25%) of all television
income received or contracted to be received (whichever is greater) by
the PROMOTER in connection with the Event.
(30) PROMOTER will maintain for a period of six years from the
date of the Event (1) true and complete copies of any written
television contract, any document evidencing such contract, and any
document relating to such contract, and (2) accurate and complete
records of all receipts and disbursements of television income received
in connection with the Event. PROMOTER will permit NASCAR or its
authorized agent at all reasonable times to request, receive, inspect
and audit any or all such records and documents, wherever they may be
located or at any other mutually agreeable location. PROMOTER will
forward to NASCAR upon its execution true and complete copies of any
written television contract.
(31) PROMOTER will require, in any new or renewed television
contract, the following language (or language having the same legal and
practical effect):
"The parties hereto agree to defer to the requests of NASCAR or
its authorized agent in the placement and use of television
cameras, crews, supporting equipment and personnel, and in the
establishment of the starting time, for the Event."
"Parties hereto agree to permit NASCAR or its authorized agent at
all reasonable times, to request, and receive, true and complete
copies of any written television contract, any document evidencing
such contract, and any document relating to such contract."
"Parties hereto agree that NASCAR shall have the non-exclusive
right to use any and all sounds, images, pictures, audiotape,
videotape, information and other digital data relating to the
Event, including without limitation Event standings and results,
for the purpose of distribution via the Internet, NASCAR Online or
any other NASCAR-authorized public online service."
Exhibit 1 to Sanction Application and Agreement Form
Page 5 of 7
(32) PROMOTER, at no expense to NASCAR, will provide NASCAR in any
new or renewed television contract, for NASCAR's exclusive use, two (2)
thirty-second (30) commercial advertising segments, not to be resold by
NASCAR.
(33) If the television contract, after its publication in any
form, becomes or is found to be unenforceable or is not performed by
one or all parties thereto for any reason other than those mentioned in
paragraph 34 below, the PROMOTER will perform its obligations as set
forth herein as if the television contract were fully enforceable and
in fact fully performed.
(34) If the Event or the performance of the television contract is
prevented or postponed due to an act of God, force majeure, inevitable
accident, strike or other labor dispute, fire, riot or civil commotion,
government action or decree, inclement weather, failure of technical
facilities beyond the control of the broadcaster, the recapture of any
time period scheduled for the live broadcast of the Event for an event
of national importance or emergency, or for any similar reason beyond
the control of the parties to this Agreement or to the television
contract the PROMOTER will perform its obligations as set forth herein,
except that the monies due under paragraphs 28 and 29 shall be the
respective percentages of television income actually received. If any
monies in excess of those due under this paragraph have been paid
before the prevention or postponement of the Event as set forth in this
paragraph, NASCAR will refund the excess to the PROMOTER within thirty
(30) days of the prevention or the delayed staging of the Event.
(35) PROMOTER warrants that it is authorized to grant, and hereby
grants, to NASCAR the non-exclusive right to use any and all sounds,
images, pictures, audiotape, videotape, information and other digital
data relating to the Event, including without limitation Event
standings and results, for the purpose of distribution via the
Internet, NASCAR Online or any other NASCAR-authorized public online
service.
GENERAL PROVISIONS
(36) The Event will be conducted in accordance with the NASCAR
Busch Series, Grand National Division Rule Book, as it may be amended
from time to time, any special rules that may be published by NASCAR
specifically for the Event, and this Agreement. NASCAR may cancel or
rescind this Agreement if NASCAR determines in its sole discretion that
PROMOTER has failed to abide by the provisions of this Agreement, the
NASCAR Busch Series, Grand National Division Rule Book, amendments
thereto, or any special rules as set forth herein. Notice to PROMOTER
is effective as set forth in paragraph 44.
(37) PROMOTER's rights and obligations under this Agreement, and
the sanction given pursuant to it, are not transferable or assignable.
NASCAR may cancel or rescind this Agreement if (a) there is a change,
material or otherwise, in the ownership, control or management of
PROMOTER, (b) if the PROMOTER admits that it is not or will not be able
to pay its debts as they become due, applies for or agrees to the
appointment of a receiver or trustee in liquidation, makes a general
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or a petition seeking reorganization or an arrangement of
creditors under any bankruptcy law, becomes a party against whom a
petition under any bankruptcy law is filed, or is adjudicated a
bankrupt under any bankruptcy law, or (c) if the PROMOTER engages in
activity of any kind that NASCAR determines in its sole discretion to
be detrimental to the sport or to NASCAR.
(38) This Agreement and the sanction granted herein relate solely
to the Event(s) and the date or dates set forth on the Sanction
Application and Agreement Form. Nothing in this Agreement, or in the
course of dealing between the parties, will be construed to require the
PROMOTER or NASCAR to enter into a sanction agreement or to issue a
sanction for this or any other Event in the future.
(39) Nothing in this Agreement will be construed to place NASCAR
in the relationship of a partner or joint venturer with the PROMOTER.
The PROMOTER will not, and has no power to, obligate or bind NASCAR in
any manner other than as provided expressly in this Agreement.
(40) If an Event is postponed or cancelled for any reason (other
than a strike, war, declaration of a state of national emergency, act
of God or the public enemy, or any other cause beyond the control of
the PROMOTER) without either (1) the prior written approval of NASCAR,
or (2) during the Event, the prior oral approval of the NASCAR Official
in charge of the Event, or if NASCAR cancels and rescinds this
Agreement pursuant to paragraphs 19, 20, 23, 36 or 37, NASCAR may elect
to retain all or any part of the PROMOTER's Purse and Point Fund, and
other fees and monies received by NASCAR pursuant to this Agreement,
and to utilize the same to reimburse, in whole or in part, NASCAR as
well as the drivers and car owners, and each of them, for expenses
incurred in connection with the Event, which
Exhibit 1 to Sanction Application and Agreement Form
Page 6 of 7
include but are not limited to salaries, transportation, lodging, and
payments to the pit crew. NASCAR's determination as to what is or is
not a proper expense or as to the manner or the amount of disbursement
or as to whom disbursement is made in this regard is binding on the
PROMOTER, as well as on all drivers and car owners entered in the
Event. Nothing in this paragraph or in paragraphs 19, 20, 23, 36 or 37
shall be construed to limit or otherwise affect any right of action by
NASCAR for damages, or any other available remedy, for breach of this
Agreement.
(41) NASCAR may modify, alter, change or replace the name of the
series of which the Event is a part, at any time. In that event,
PROMOTER shall use the new name in all communications, advertising,
publicity and promotion relating to the Event.
(42) In the event of litigation arising out of the enforcement of
this Agreement, its terms and conditions, attorney's fees and costs
shall be awarded to the prevailing party.
(43) PROMOTER shall indemnify and hold NASCAR harmless from any
and all claims, allegations, demands, obligations, suits, actions,
causes of action, proceedings, rights, damages, and costs of any nature
arising out of the Event or this Agreement, unless such claim,
allegation, demand, obligation, suit, action, cause of action,
proceeding, right, damage or cost arises solely out of the act or
omission of NASCAR. With respect to any matter falling within the scope
of the PROMOTER's obligation to defend and hold NASCAR harmless, NASCAR
shall be entitled to select counsel to represent it in such matter at
PROMOTER's expense, and that counsel's duties and obligations in all
respects shall be to NASCAR.
(44) Unless otherwise permitted herein, notice required by the
Agreement shall be given by facsimile/telecopy, and by overnight mail
or other express service, postage prepaid, addressed as follows:
TO NASCAR: National Association for Stock Car Auto Racing, Inc.
P.O. Box 2875
Daytona Beach, Florida 32120-2875
TO PROMOTER: The Address set forth immediately below the name of
the PROMOTER first listed in the Sanction
Application and Agreement Form.
(45) This agreement shall be construed according to the laws of
Florida and may not be amended except in writing and signed by both
parties. Venue shall lie solely in Volusia County, Florida, and all
parties hereto consent to service of process by, and the personal and
subject matter jurisdiction of, the courts in and for Volusia County,
Florida.
(46) The Sanction Application and Agreement Form, including
Exhibits 1, 2 and 2a thereto, constitutes the entire agreement between
NASCAR and the PROMOTER. All previous communications and negotiations
between NASCAR and the PROMOTER, whether oral or written, not contained
herein are hereby withdrawn and annulled.
End of Exhibit 1
* * * * * * * * * * * * * *
Exhibit 1 to Sanction Application and Agreement Form
Page 7 of 7
<PAGE>
EXHIBIT 2a
TO SANCTION APPLICATION AND AGREEMENT FORM FOR THE
MBNA ~200"
NASCAR and PROMOTER agree as follows:
RACING PURSE $
BONUS AWARDS
NASCAR POINT FUND
NASCAR BUSCH SERIES, GRAND NATIONAL DIVISION CHAMPION
NASCAR BUSCH SERIES, GRAND NATIONAL DIVISION PLAN
WINNERS' CIRCLE AWARDS
TELEVISION AWARDS
MINIMUM PROMOTER'S PURSE AND POINT FUND $
NASCAR TELEVISION FEE
TOTAL ................................................. $
<PAGE>
EXHIBIT 2
TO SANCTION APPLICATION AND AGREEMENT FORM FOR THE
GM GOODWRENCH/DELCO BATTERY "200"
NASCAR and PROMOTER agree as follows:
RACING PURSE $
BONUS AWARDS
NASCAR POINT FUND
NASCAR BUSCH SERIES, GRAND NATIONAL DIVISION CHAMPION
NASCAR BUSCH SERIES, GRAND NATIONAL DIVISION PLAN
WINNERS' CIRCLE AWARDS
TELEVISION AWARDS
MINIMUM PROMOTER'S PURSE AND POINT FUND $
NASCAR TELEVISION FEE
TOTAL ................................................ $
<PAGE>
EVENT NUMBER 1
PROMOTER: Dover Downs International Speedway, Inc.
ADDRESS: P. O. Box 843, Dover, DE 19903
NAME OF EVENT: GM GOODWRENCH/DELCO BATTERY "200"
TRACK: Dover Downs International Speedway
LOCATION: Dover, DE TELEPHONE #: (302) 674-4500
TRACK LENGTH: 1 Mile, Paved EVENT DISTANCE: 200 Miles (200 laps)
DATE OF EVENT: May 31, 1997 STARTING TIME: TBD
POSTPONED DATE: Next Raceable Day
TIME TRIAL DATE(S) AND HOURS: PRACTICE DATE(S) AND HOURS:
Friday, May 30-Per Entry Blank Friday, May 30-Per Entry Blank
REGISTRATION & INSPECTION - Friday, May 30-Per Entry Blank
MINIMUM PROMOTER'S PURSE
AND POINT FUND TOTAL
(See Exhibit 2): $ SANCTION FEE: $
PAYMENT DATE 12 Noon on INSURANCE NOTIFICATION DATE
(See Exhibit 1, May 21, 1997 (See Exhibit 1, May 21, 1997
Para. 19) Para. 20)
Sanction Application and Agreement Form
Page 2 of 4
<PAGE>
EVENT NUMBER 2
PROMOTER: Dover Downs International Speedway, Inc.
ADDRESS: P. O. Box 843, Dover, DE 19903
NAME OF EVENT: MBNA "200"
TRACK: Dover Downs International Speedway
LOCATION: Dover, DE TELEPHONE #: (302) 674-4500
TRACK LENGTH: 1 Mile, Paved EVENT DISTANCE: 200 Miles (200 laps)
DATE OF EVENT: September 20, 1997 STARTING TIME: TBD
POSTPONED DATE: Next Raceable Day
TIME TRIAL DATE(S) AND HOURS: PRACTICE DATE(S) AND HOURS:
Friday, Sept. 19-Per Entry Blank Friday, Sept. 19-Per Entry Blank
REGISTRATION & INSPECTION - Friday, September 19-Per Entry Blank
MINIMUM PROMOTER'S PURSE
AND POINT FUND TOTAL
(See Exhibit 2): $ SANCTION FEE: $
PAYMENT DATE 12 Noon on INSURANCE NOTIFICATION DATE
(See Exhibit 1, Sept. 10, 1997 (See Exhibit 1, Sept. 10, 1997
Para. 19) Para. 20)
Sanction Application and Agreement Form
Page 3 of 4
<PAGE>
Upon written acceptance and approval of the above application, in
consideration for the mutual promises set forth herein, NASCAR and
PROMOTER agree as follows:
(1) NASCAR hereby grants its sanction to PROMOTER for the Event(s)
listed, and NASCAR agrees to conduct the Event(s), through its officers
and designated officials, in accordance with the NASCAR Busch Series,
Grand National Division Rule Book, as it may be amended from time to
time, and special rules that may be published by NASCAR specifically
for the Event(s), and this agreement. Interpretation and application
of the NASCAR Busch Series, Grand National Division Rule Book, as it
may be amended from time to time, and any special rules that may be
published by NASCAR specifically for the Event(s), are committed to
NASCAR's sole discretion, and are final and unreviewable except to the
extent provided in the NASCAR Busch Series, Grand National Division
Rule Book.
(2) Exhibits 1, 2 and 2a, attached hereto, are incorporated herein
and made a part of this agreement.
(3) NASCAR will retain for its own account all inspection fees.
(4) Additional Provisions:
Submitted this _____________ day of __________________, 19____.
Dover Downs Int'l Speedway, Inc.
Promoter
By: /s/ Denis McGlynn President
(an authorized officer) (title)
Witnessed By: /s/ Jerry Dunning Gen Mang
(title)
Accepted and Approved this 17th day of December, 1996.
National Association for Stock Car Auto Racing, Inc.
By: /s/ Michael G. Helton Vice President for Competition
(an authorized officer) (title)
Witnessed By: /s/ Dawn K. Brown Asst. Event Coord.
(title)
Sanction Application and Agreement Form
Page 4 of 4
NASCAR
Date Received 12-17-96
Sanction No. NWCS#12 & NWCS #26
NASCAR Official /s/ Gary Nelson
MILLER "500" - June 1, 1997
MBNA "400~ - September 21, 1997
SANCTION APPLICATION AND AGREEMENT FORM
NASCAR WINSTON CUP SERIES
INSTRUCTIONS:
(1) All NASCAR Winston Cup Series Championship Events for which
PROMOTER seeks a NASCAR sanction must be listed in a single application
form. Please sign the original and forward to NASCAR; upon acceptance
and approval by NASCAR, a copy will be returned to the PROMOTER.
(2) "PROMOTER" means the individual, partnership, corporation,
joint venture or other entity that, in connection with the Event (as
defined below), is ultimately responsible (financially and otherwise)
for the organization and promotion of the Event and the facility at
which the Event is to be run. If two or more entities are acting
together in such capacity, all such entities should be listed as
"PROMOTER" and the authorized officer of each should sign this form.
(3) This form when signed by the PROMOTER is only an application
for a NASCAR sanction. NASCAR is under no obligation to accept or
approve the application. Upon being accepted and approved in writing
by NASCAR, this form becomes an agreement binding on both parties.
(4) Application for a NASCAR Winston Cup Series Championship Event
must be received at NASCAR no later than ten business days after the
PROMOTER receives this form from NASCAR.
* * * * * * * * * * * * * *
The undersigned PROMOTER, designated below, applies to the
National Association for Stock Car Auto Racing, Inc. ("NASCAR") for a
NASCAR sanction to organize and promote a NASCAR-sanctioned NASCAR
Winston Cup Series Championship Event(s) in accordance with the terms
and conditions set forth hereafter. as follows:
POST OFFICE BOX 2875 - DAYTONA BEACH, FLORIDA 32120-2875 .904/253-0611
EXHIBIT 1
To Sanction Application and Agreement Form
NASCAR and PROMOTER agree as follows:
DEFINITIONS
(1) "Event" means the Event(s) designated in the Sanction
Application and Agreement Form, as well as all periods for
registration, inspections, time trials, practice runs, post-race
inspections and postponed dates related thereto. Whenever the word
"Event" appears in the singular, it shall apply to all Events
designated on the Sanction Application and Agreement Form, unless the
context requires otherwise. All provisions in the Sanction Application
and Agreement Form and in Exhibits 1, 2 and 2a apply to the Event(s)
designated in the Sanction Application and Agreement Form, unless the
context requires otherwise.
(2) "Additional Award" as used herein includes any monetary or
non-monetary award by, or contracted through, the PROMOTER, for
distribution based upon the Event(s), other than (a) purse, (b) point
fund, (c) Winner's Circle and Plan awards, (d) television income and
(e) the entry award for the current NASCAR Winston Cup Series Champion.
PROMOTER understands and acknowledges that the above-listed awards may
or may not be applicable to or available in connection with the Event,
and that NASCAR makes no representation as to the availability or
amounts of such awards.
(3) "Television Income", as used herein, means all monies and
things of value received by PROMOTER as a result of and in connection
with any television contract(s), including but not limited to payments
received from networks, stations, packages, brokers, advertisers,
advertising agencies, and the like. In computing all monies and things
of value received, it is intended that the gross amount set forth in
all television contract(s) as payable by the other contracting entity
or entities shall be included and that any applicable commissions, fees
or expenses paid to or deducted by sales agents, consultants and other
parties shall not be deducted therefrom.
(4) "Television Contract", as used herein, means any contract,
agreement or understanding, whether oral or written, entered into
between PROMOTER and any other entity or entities, whether or not they
are broadcasters, for the sale, assignment or other transferral of the
rights of PROMOTER in the live or delayed televised broadcast of,
rebroadcast of, tape or film production of, and/or any other use of,
the Event, whether by cable TV, pay TV, theater TV, video tape
cassettes, and/or satellite transmissions, and whether local, regional,
national or worldwide.
PROMOTER'S GENERAL OBLIGATIONS
(5) PROMOTER warrants to NASCAR that in connection with the Event
it has sole control of the racetrack, the premises upon which the
racetrack is located and surrounding same, and all facilities thereon,
that it has obtained all necessary licenses, permits or other approvals
required, and that it has full authority to conduct the Event at the
racetrack pursuant to the terms of this agreement. PROMOTER further
warrants that it will comply with all local, state and federal laws and
regulations in connection with the organization and promotion of the
Event. PROMOTER, at its expense, will make all appropriate filings of
forms or other documents as required by federal, state or local laws.
(6) PROMOTER at its expense assumes sole responsibility for
furnishing the racetrack, the premises upon which the racetrack is
located and surrounding same, and all facilities thereon in good
repair, ready for use by competitors and officials. PROMOTER is solely
responsible and liable for the safety of such competitors and officials
while on, entering or leaving such racetrack, premises and facilities.
PROMOTER warrants that the racetrack, premises and facilities are and
will remain in a condition suitable for the conduct of the Event, and
that the racing surface of the track will not be altered, resurfaced or
otherwise substantially changed during the term of this Agreement
without the express written consent of NASCAR. PROMOTER will provide
NASCAR or its designated representative full access to the racetrack,
premises and facilities as requested by NASCAR during the term of this
Agreement.
(7) If NASCAR in its sole discretion determines that the
racetrack, the premises or any facilities are in an unsatisfactory
condition, PROMOTER agrees to repair or resurface the racetrack and to
repair the premises or facilities, at PROMOTER's expense and to the
satisfaction of NASCAR prior to any NASCAR-sanctioned Event. If NASCAR
in its sole discretion determines that it is necessary to resurface the
racetrack, such resurfacing shall be completed by PROMOTER with
adequate time prior to the Event to allow for tire and private car
testing. If NASCAR in its sole discretion determines that there is
insufficient time to place the racetrack in a condition suitable for
the conduct of the Event, NASCAR in its sole discretion may postpone or
cancel the Event.
(8) PROMOTER at its expense will furnish adequate facilities,
personnel, equipment, and services for accommodating and controlling
the public during the Event. PROMOTER is solely responsible and liable
for the safety of the public during the Event. PROMOTER is solely
responsible for the condition, actions and operations of such
facilities, personnel, equipment and services before, during and after
the Event.
(9) PROMOTER at its expense will furnish adequate facilities,
support personnel, equipment, and related security, for use by NASCAR
in the performance of NASCAR's duties, as they may be requested by
NASCAR from time to time, including but not limited to facilities for
office administration, registration, timing, scoring, car inspection,
race direction, officiating and prize money distribution. Without in
any way limiting the foregoing, PROMOTER at its expense will:
a. provide one or more television monitors, in locations to be
specified by NASCAR, with all related equipment necessary for such
monitors to be connected to video and audio equipment used by the
television producer under contract for the Event, in order to
provide to NASCAR Officials live video on such monitors and the
ability to switch instantaneously its view on the monitors among
the different camera locations used by the television producer, at
all times during the Event when all or a portion of the Event is
being videotaped, broadcast, monitored and/or recorded;
b. provide NASCAR with two (2) pace vehicles, each with the NASCAR
logo (as set forth under paragraph 21 below) displayed on the side
in a manner and size which is visible to all persons on the
racetrack, in the viewing area and in all locations where NASCAR
Officials are visually monitoring the Event;
c. provide NASCAR prior to the Event with a list of the track
radio frequencies to be used for the Event, including but not
limited to frequencies to be used for maintenance, police and
security personnel;
d. cooperate with NASCAR in pre-race and victory lane ceremonies,
awards presentations and photographs;
e. have readily available quantities of oil dry acceptable to
NASCAR when the track opens for practice and at all other times
during the Event, and adequate personnel to spread the oil dry at
NASCAR's direction;
f. certify and recertify the scales as requested by NASCAR upon
arrival for the first day of inspection and at all other times
during the Event, and provide written certifications to the NASCAR
Winston Cup Series Director as to the results of the
certifications;
g. provide personnel to secure the entry into the pits and garage
areas during competition periods;
h. provide personnel to secure the garage area on a continuous,
24-hour/day basis beginning the first day the track is open for
inspection and ending when released by the NASCAR Winston Cup
Series Director;
i. deliver to the garage area before the morning of raceday twice
the number of chairs as cars starting in the race for use by
drivers and crew chiefs at the pre-race meeting;
j. line and number each pit with appropriate paint, line and paint
traffic lanes in the garage and garage area when and where needed,
and repaint all start/finish, scoring, third turn and re-entry
cutoff lines;
k. place portable toilets along pit road and in the garage area as
directed by NASCAR;
l. coordinate with NASCAR all tours of the garage areas, including
the times, number of participants and other arrangements;
m. provide adequate electricity (including without limitation 220
volts 50 amps services with female range outlets for the NASCAR
trailers), air conditioning, heat, telephone (including a track
phone extension) and water facilities as requested by NASCAR;
n. coordinate with NASCAR to ensure that it has a minimum of ten
(10) minutes immediately before, during or after driver
introductions for NASCAR awards presentations;
o. coordinate with NASCAR to ensure that it has a reasonable
period of time immediately following the Event for victory lane
ceremonies, awards presentations and sponsor recognitions;
p. provide a control tower of adequate size with electricity, air
conditioning, heat, telephone (including a track phone extension),
chairs with cushions, a television monitor (as set forth above),
water facilities and other utilities, supplies and equipment as
requested by NASCAR;
q. provide a registration facility of adequate size outside the
track and in the garage area, with electricity, air conditioning,
heat, telephone (including a track phone extension), chairs with
cushions, water facilities and other utilities, supplies and
equipment as requested by NASCAR;
r. provide adequate trash receptacles in the garage and pit area
and coordinate with the NASCAR Winston Cup Series Director the
times for trash pick up by track personnel;
s. provide adequate personnel to sweep and clean-up the garage and
pit areas on a daily basis;
t. provide adequate parking areas for all competitors (including
car owners, drivers and crew members) and NASCAR Officials
adjacent to or near the garage area;
Exhibit 1 to Sanction Application and Agreement Form
Page 2 of 7
u. provide NASCAR with a track suite, including the customary
number of admission tickets for admission to said suite, and 100
grandstand general admission tickets, such tickets to be delivered
to NASCAR no later than thirty (30) days prior to the Event.
(10) PROMOTER at its expense will provide adequate facilities,
personnel, equipment and services for, and assumes sole responsibility
to provide, fire protection equipment and on-site medical services for
competitors, officials, the public and others, including without
limitation cleanup crews, towing and flatbed wreckers. PROMOTER at its
expense will make advance arrangements with local hospitals and
physicians for the prompt and efficient treatment of any and all
injuries occurring during the Event.
(11) PROMOTER at its expense will furnish adequate security
personnel (in addition to the requirements of paragraph 9) in the pit
and garage area, and will limit access to such areas before, during and
after the Event to authorized individuals and equipment. PROMOTER is
solely responsible and liable for the actions of security personnel.
(12) PROMOTER at its expense assumes and will perform all business
responsibilities in connection with the Event (except as otherwise
provided by this Agreement), including but not limited to business
organization, promotional activities, management, general business
affairs, ticket sales, track operation and press accommodations. NASCAR
does not warrant, either expressly or by implication, nor is it
responsible for, the financial or other success of the Event or the
number or identity of vehicles or competitors participating in the
Event.
(13) PROMOTER will not schedule or permit any private race car
practice or test runs for the seven days immediately preceding the
first day of official practice for the Event without prior written
approval by NASCAR. PROMOTER will not schedule any ancillary events or
activities on the same day as registration or inspection, or on any
days during the Event, without prior written approval by NASCAR. The
ancillary events or activities covered by this paragraph include
without limitation other motorsports events, thrill shows, live
performances and/or helicopter rides. PROMOTER further agrees to notify
NASCAR of any private race car testing and/or practice done at the
racetrack pursuant to and in accordance with the 1997 NASCAR Winston
Cup Series Private Race Car Testing Policy.
OFFICIAL ENTRY BLANK
(14) An Official Entry Blank for the Event will be composed,
printed, published and distributed by NASCAR, and will constitute the
sole official statement as to the date, place, schedule and length of
the Event, eligibility requirements for competitors, and monetary and
non-monetary awards.
(15) PROMOTER will notify NASCAR prior to contracting for any
Additional Award. NASCAR may reject a proposed Additional Award in its
entirety, require different terms for the proposed Additional Award, or
require a reallocation of the distribution of such an award among
competitors, if in NASCAR's sole judgment the proposed award will not
advance the nature of the competition, will have an adverse impact on
the Event, or will be detrimental to the sport of automobile racing,
NASCAR, any sponsors of the Event, or any sponsors of the NASCAR
Winston Cup Series. NASCAR's determination in that regard will be
binding on PROMOTER. PROMOTER assumes full responsibility for, and will
indemnify NASCAR against, any liability or costs incurred as a result
of NASCAR's determination with respect to any proposed award arranged
by or through PROMOTER. All Additional Awards are subject to
independent verification by NASCAR.
(16) PROMOTER will submit to NASCAR, no later than sixty (60)
calendar days before the date of the Event, a list of any and all
proposed Additional Awards (as defined above) for the Event not
previously included in Exhibit 2 and Exhibit 2a of this Agreement. If
either PROMOTER or NASCAR contracts for Additional Awards after
publication of the Official Entry Blank, then, subject to the
provisions of paragraph 15, NASCAR in its sole discretion may publish
and distribute a supplement to the Official Entry Blank posting the
Additional Awards.
(17) PROMOTER will not publish an official or unofficial entry
blank or supplement, or any other form setting forth monetary or
non-monetary awards, without prior written approval from NASCAR.
PROMOTER will not advertise or otherwise disseminate any information as
to monetary or non-monetary awards for the Event other than those
specified in the Official Entry Blank or NASCAR-approved supplement.
(18) NASCAR will use its best efforts to consult with the PROMOTER
regarding postponement of an Event, but the decision to postpone an
Event and the selection of the postponed date will be made by NASCAR in
its sole discretion and will be binding on PROMOTER. Publication by
Exhibit 1 to Sanction Application and Agreement Form
Page 3 of 7
PROMOTER of a postponement and/or postponed date that has not been
approved by NASCAR is not binding upon NASCAR.
PROMOTER'S FINANCIAL AND INSURANCE OBLIGATIONS
(19) PROMOTER will pay to NASCAR at Daytona Beach, Florida, not
later than the Payment Date set forth in the Sanction Application and
Agreement Form, by wire transfer of funds, an amount equal to the sum
of the PROMOTER's Purse and Point Fund and the Sanction Fee, plus any
other monies due NASCAR for the Event pursuant to this agreement,
unless otherwise directed by NASCAR in writing. Time is of the essence.
If said monies and fees are not paid to NASCAR in the manner and by the
Payment Date, NASCAR at its option may (a) cancel and rescind this
Agreement, or (b) enforce collection of said monies and fees by suit or
action, in which case PROMOTER will pay all costs incurred by NASCAR in
connection therewith, including reasonable attorney's fees.
(20) PROMOTER at its expense will obtain and maintain public
liability insurance for the Event that is acceptable to NASCAR, with a
minimum combined single limit of $10,000,000.00 per occurrence, for (i)
spectator injury and property damage and (ii) PROMOTER's legal, pit,
track and product liability. In the event that PROMOTER cannot obtain
such insurance with $10,000,000.00 per occurrence limits, PROMOTER
shall obtain and maintain such insurance at the highest available per
occurrence limit, but in no event shall PROMOTER obtain such insurance
with a per occurrence limit (for all categories of liability specified
above) less than $5,000,000.00. PROMOTER will deliver to NASCAR at
Daytona Beach, Florida no later than the Notification Date set forth in
the Sanction Application and Agreement Form, a certified true copy of
all public liability insurance policies in force for the Event,
regardless of the total amount of coverage. In all such policies and in
all other public liability policies obtained and maintained by the
PROMOTER or PROMOTER'S parent, the following will be named as insured
or additional insured: National Association for Stock Car Auto Racing,
Inc., its shareholders, directors, officers, employees, agents,
officials, and members; all drivers, car owners, car sponsors,
mechanics, and all sponsors for the Event or the series of which the
Event is a part. All policies shall also contain a cross liability
endorsement acceptable to NASCAR. If PROMOTER fails to deliver such
policies to NASCAR by the date provided, or if PROMOTER fails to
maintain such policies with the required minimum coverage throughout
the Event, NASCAR may cancel and rescind this Agreement immediately and
without notice to the PROMOTER. If the policy or policies are not
acceptable to NASCAR, then NASCAR may obtain the required insurance
from an acceptable insurance company, with acceptable terms, at the
PROMOTER's expense.
ADVERTISING AND USE OF REGISTERED MARK
(21) Each party authorizes the use of its name and registered mark
by the other for publicizing, promoting or advertising the Event. The
NASCAR name and registered mark will only be used as follows:
NASCAR (R)
The symbol (R) will appear as indicated with the NASCAR logo. In all
publicity, advertising and promotion relating to the Event, including,
but not limited to news releases, advertisements and brochures,
PROMOTER will display the registered trademark and the phrase
"NASCAR-sanctioned NASCAR Winston Cup Series Championship Event".
(22) All competitors, including car owners and drivers, when they
execute the NASCAR Official Entry Blank in connection with the Event,
grant to NASCAR certain rights to their name(s), picture(s),
likeness(es) or performance(s). Subject to the next sentence, NASCAR
hereby assigns to PROMOTER the non-exclusive right to use such
competitors' name(s), picture(s), likeness(es) or performance(s) for
the purpose of publicizing, promoting or advertising the Event, but
only to the extent such rights have been released to NASCAR pursuant to
the NASCAR Official Entry Blank. Notwithstanding the foregoing, NASCAR
retains the right to disapprove and prohibit the PROMOTER's actual or
intended use of a competitor's name, picture, likeness or performance
if NASCAR determines in its sole discretion that such use is or will be
detrimental to NASCAR, to the Event, to the series of which the Event
is a part, or to the sport.
(23) PROMOTER will make no misrepresentations of fact in
connection with publicizing, promoting or advertising the Event. If
such a misrepresentation is made (a) the PROMOTER promptly will correct
the misrepresentation through a subsequent PROMOTER publication, (b)
NASCAR may correct the misrepresentation itself through NASCAR
publication at PROMOTER's expense and/or (c) NASCAR may cancel and
rescind this Agreement.
Exhibit 1 to Sanction Application and Agreement Form
Page 4 of 7
(24) PROMOTER acknowledges that the Event is part of the NASCAR
Winston Cup Series. PROMOTER will cooperate fully with NASCAR, with the
series sponsor(s), and with any other company that has contracted with
NASCAR to sponsor awards or programs (including without limitation the
Busch Beer Pole Award or the Rookie-of-the-Year Award) that are based
in whole or in part on a competitor's performance in the Event or over
a number of NASCAR Winston Cup Series events, in connection with those
sponsors' activities, if any, during the Event. PROMOTER, on its own
and at the request of NASCAR, will use its best efforts to feature such
sponsors prominently in all of PROMOTER's advertising, publicity and
promotion in connection with the Event, and no competitor of such a
sponsor shall be featured therein as prominently as such sponsor.
PROMOTER will take no action that, in NASCAR's sole judgement, will
jeopardize the maintenance or continuation of such sponsorships.
(25) PROMOTER acknowledges that the sale or use, for advertising
purposes, of space at the racetrack, the premises upon which the
racetrack is located and surrounding same, the facilities thereon, or
in any publications distributed in connection with the Event, is an
action that could have an impact upon the existing sponsorships
described in paragraph 24 above. Such sale to or use by competitors of
such sponsors shall be subject to prior written approved by NASCAR,
which NASCAR may provide or withhold in its sole discretion.
(26) NASCAR reserves the right to approve or disapprove any
advertising, sponsorship or similar agreement in connection with any
Event.
(27) PROMOTER will use the NASCAR NATIONAL PROGRAM PACKAGE, if
provided by NASCAR.
TELEVISION AND SIMILAR RIGHTS
(28) PROMOTER will pay to NASCAR at Daytona Beach, Florida not
later than the Payment Date set forth in the Sanction Application and
Agreement Form, or within twenty-four (24) hours of the consummation or
execution of the television contract (whichever occurs later), by wire
transfer, ten percent (10%) of all television income received or
contracted to be received (whichever is greater) by the PROMOTER in
connection with the Event.
(29) In addition to the sum to be paid in accordance with
paragraph 28, PROMOTER will pay into the NASCAR event purse trust
account, not later than the Payment Date set forth in the Sanction
Application and Agreement Form, or within twenty-four (24) hours of the
consummation or execution of the television contract (whichever occurs
later), by wire transfer, twenty-five percent (25%) of all television
income received or contracted to be received (whichever is greater) by
the PROMOTER in connection with the Event.
(30) PROMOTER will maintain for a period of six years from the
date of the Event (1) true and complete copies of any written
television contract, any document evidencing such contract, and any
document relating to such contract, and (2) accurate and complete
records of all receipts and disbursements of television income received
in connection with the Event. PROMOTER will permit NASCAR or its
authorized agent at all reasonable times to request, receive, inspect
and audit any or all such records and documents, wherever they may be
located or at any other mutually agreeable location. PROMOTER will
forward to NASCAR upon its execution true and complete copies of any
written television contract.
(31) PROMOTER will require, in any new or renewed television
contract, the following language (or language having the same legal and
practical effect):
"The parties hereto agree to defer to the requests of NASCAR or
its authorized agent in the placement and use of television
cameras, crews, supporting equipment and personnel, and in the
establishment of the starting time, for the Event."
"Parties hereto agree to permit NASCAR or its authorized agent at
all reasonable times, to request, and receive, true and complete
copies of any written television contract, any document evidencing
such contract, and any document relating to such contract."
"Parties hereto agree that NASCAR shall have the non-exclusive
right to use any and all sounds, images, pictures, audiotape,
videotape, information and other digital data relating to the
Event, including without limitation Event standings and results,
for the purpose of distribution via the Internet, NASCAR Online or
any other NASCAR-authorized public online service."
Exhibit 1 to Sanction Application and Agreement Form
Page 5 of 7
(32) PROMOTER, at no expense to NASCAR, will provide NASCAR in any
new or renewed television contract, for NASCAR's exclusive use, two (2)
thirty-second (30) commercial advertising segments, not to be resold by
NASCAR.
(33) If the television contract, after its publication in any
form, becomes or is found to be unenforceable or is not performed by
one or all parties thereto for any reason other than those mentioned in
paragraph 34 below, the PROMOTER will perform its obligations as set
forth herein as if the television contract were fully enforceable and
in fact fully performed.
(34) If the Event or the performance of the television contract is
prevented or postponed due to an act of God, force majeure, inevitable
accident, strike or other labor dispute, fire, riot or civil commotion,
government action or decree, inclement weather, failure of technical
facilities beyond the control of the broadcaster, the recapture of any
time period scheduled for the live broadcast of the Event for an event
of national importance or emergency, or for any similar reason beyond
the control of the parties to this Agreement or to the television
contract the PROMOTER will perform its obligations as set forth herein,
except that the monies due under paragraphs 28 and 29 shall be the
respective percentages of television income actually received. If any
monies in excess of those due under this paragraph have been paid
before the prevention or postponement of the Event as set forth in this
paragraph, NASCAR will refund the excess to the PROMOTER within thirty
(30) days of the prevention or the delayed staging of the Event.
(35) PROMOTER warrants that it is authorized to grant, and hereby
grants, to NASCAR the non-exclusive right to use any and all sounds,
images, pictures, audiotape, videotape, information and other digital
data relating to the Event, including without limitation Event
standings and results, for the purpose of distribution via the
Internet, NASCAR Online or any other NASCAR-authorized public online
service.
GENERAL PROVISIONS
(36) The Event will be conducted in accordance with the NASCAR
Winston Cup Series Rule Book, as it may be amended from time to time,
any special rules that may be published by NASCAR specifically for the
Event, and this Agreement. NASCAR may cancel or rescind this Agreement
if NASCAR determines in its sole discretion that PROMOTER has failed to
abide by the provisions of this Agreement, the NASCAR Winston Cup
Series Rule Book, amendments thereto, or any special rules as set forth
herein. Notice to PROMOTER is effective as set forth in paragraph 44.
(37) PROMOTER's rights and obligations under this Agreement, and
the sanction given pursuant to it, are not transferable or assignable.
NASCAR may cancel or rescind this Agreement if (a) there is a change,
material or otherwise, in the ownership, control or management of
PROMOTER, (b) if the PROMOTER admits that it is not or will not be able
to pay its debts as they become due, applies for or agrees to the
appointment of a receiver or trustee in liquidation, makes a general
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or a petition seeking reorganization or an arrangement of
creditors under any bankruptcy law, becomes a party against whom a
petition under any bankruptcy law is filed, or is adjudicated a
bankrupt under any bankruptcy law, or (c) if the PROMOTER engages in
activity of any kind that NASCAR determines in its sole discretion to
be detrimental to the sport or to NASCAR.
(38) This Agreement and the sanction granted herein relate solely
to the Event(s) and the date or dates set forth on the Sanction
Application and Agreement Form. Nothing in this Agreement, or in the
course of dealing between the parties, will be construed to require the
PROMOTER or NASCAR to enter into a sanction agreement or to issue a
sanction for this or any other Event in the future.
(39) Nothing in this Agreement will be construed to place NASCAR
in the relationship of a partner or joint venturer with the PROMOTER.
The PROMOTER will not, and has no power to, obligate or bind NASCAR in
any manner other than as provided expressly in this Agreement.
(40) If an Event is postponed or cancelled for any reason (other
than a strike, war, declaration of a state of national emergency, act
of God or the public enemy, or any other cause beyond the control of
the PROMOTER) without either (1) the prior written approval of NASCAR,
or (2) during the Event, the prior oral approval of the NASCAR Official
in charge of the Event, or if NASCAR cancels and rescinds this
Agreement pursuant to paragraphs 19, 20, 23, 36 or 37, NASCAR may elect
to retain all or any part of the PROMOTER's Purse and Point Fund, and
other fees and monies received by NASCAR pursuant to this Agreement,
and to utilize the same to reimburse, in whole or in part, NASCAR as
well as the drivers and car owners, and each of them, for expenses
incurred in connection with the Event, which
Exhibit 1 to Sanction Application and Agreement Form
Page 6 of 7
include but are not limited to salaries, transportation, lodging, and
payments to the pit crew. NASCAR's determination as to what is or is
not a proper expense or as to the manner or the amount of disbursement
or as to whom disbursement is made in this regard is binding on the
PROMOTER, as well as on all drivers and car owners entered in the
Event. Nothing in this paragraph or in paragraphs 19, 20, 23, 36 or 37
shall be construed to limit or otherwise affect any right of action by
NASCAR for damages, or any other available remedy, for breach of this
Agreement.
(41) NASCAR may modify, alter, change or replace the name of the
series of which the Event is a part, at any time. In that event,
PROMOTER shall use the new name in all communications, advertising,
publicity and promotion relating to the Event.
(42) In the event of litigation arising out of the enforcement of
this Agreement, its terms and conditions, attorney's fees and costs
shall be awarded to the prevailing party.
(43) PROMOTER shall indemnify and hold NASCAR harmless from any
and all claims, allegations, demands, obligations, suits, actions,
causes of action, proceedings, rights, damages, and costs of any nature
arising out of the Event or this Agreement, unless such claim,
allegation, demand, obligation, suit, action, cause of action,
proceeding, right, damage or cost arises solely out of the act or
omission of NASCAR. With respect to any matter falling within the scope
of the PROMOTER's obligation to defend and hold NASCAR harmless, NASCAR
shall be entitled to select counsel to represent it in such matter at
PROMOTER's expense, and that counsel's duties and obligations in all
respects shall be to NASCAR.
(44) Unless otherwise permitted herein, notice required by the
Agreement shall be given by facsimile/telecopy, and by overnight mail
or other express service, postage prepaid, addressed as follows:
TO NASCAR: National Association for Stock Car Auto Racing, Inc.
P.O. Box 2875
Daytona Beach, Florida 32120-2875
TO PROMOTER: The Address set forth immediately below the name of
the PROMOTER first listed in the Sanction
Application and Agreement Form.
(45) This agreement shall be construed according to the laws of
Florida and may not be amended except in writing and signed by both
parties. Venue shall lie solely in Volusia County, Florida, and all
parties hereto consent to service of process by, and the personal and
subject matter jurisdiction of, the courts in and for Volusia County,
Florida.
(46) The Sanction Application and Agreement Form, including
Exhibits 1, 2 and 2a thereto, constitutes the entire agreement between
NASCAR and the PROMOTER. All previous communications and negotiations
between NASCAR and the PROMOTER, whether oral or written, not contained
herein are hereby withdrawn and annulled.
End of Exhibit 1
* * * * * * * * * * * * * *
Exhibit 1 to Sanction Application and Agreement Form
Page 7 of 7
<PAGE>
EXHIBIT 2a
TO SANCTION APPLICATION AND AGREEMENT FORM FOR THE
MBNA "400"
NASCAR and PROMOTER agree as follows:
RACING PURSE $
TIME TRIALS
NASCAR POINT FUND
NASCAR WINSTON CUP SERIES CHAMPION
NASCAR ROOKIE OF THE RACE AWARD
NASCAR WINSTON CUP SERIES PLAN 1
NASCAR WINSTON CUP SERIES PLAN 1c
WINNERS' CIRCLE AWARDS
TELEVISION AWARDS
MINIMUM PROMOTER'S PURSE AND POINT FUND $
NASCAR TELEVISION FEE
TOTAL $
<PAGE>
EXHIBIT 2
TO SANCTION APPLICATION AND AGREEMENT FORM FOR THE
MILLER "500"
NASCAR and PROMOTER agree as follows:
RACING PURSE $
TIME TRIALS
NASCAR POINT FUND
NASCAR WINSTON CUP SERIES CHAMPION
NASCAR ROOKIE OF THE RACE AWARD
NASCAR WINSTON CUP SERIES PLAN 1
NASCAR WINSTON CUP SERIES PLAN 1c
WINNERS' CIRCLE AWARDS
TELEVISION AWARDS
MINIMUM PROMOTER'S PURSE AND POINT FUND $
NASCAR TELEVISION FEE
TOTAL ............................................... $
<PAGE>
EVENT NUMBER 1
PROMOTER: Dover Downs International Speedway, Inc.
ADDRESS: P. O. Box 843, Dover, DE 19903
NAME OF EVENT: MILLER "500"
TRACK: Dover Downs International Speedway
LOCATION: Dover, DE TELEPHONE #: (302) 674-4500
TRACK LENGTH: 1 Mile, Paved EVENT DISTANCE: 500 Miles (500 laps)
DATE OF EVENT: June 1, 1997 STARTING TIME: TBD
POSTPONED DATE: Next Raceable Day
TIME TRIAL DATE(S) AND HOURS: PRACTICE DATE(S) AND HOURS:
Friday, May 30-Per Entry Blank Friday, May 30-Per Entry Blank
Saturday, May 31-Per Entry Blank Saturday, May 31-Per Entry Blank
REGISTRATION & INSPECTION - Friday, May 30-Per Entry Blank
MINIMUM PROMOTER'S PURSE
AND POINT FUND TOTAL
(See Exhibit 2): $ SANCTION FEE: $
PAYMENT DATE 12 Noon on INSURANCE NOTIFICATION DATE
(See Exhibit 1, May 21, 1997 (See Exhibit 1, May 21, 1997
Para. 19) Para. 20)
Sanction Application and Agreement Form
Page 2 of 4
<PAGE>
EVENT NUMBER 2
PROMOTER: Dover Downs International Speedway, Inc.
ADDRESS: P. O. Box 843, Dover, DE 19903
NAME OF EVENT: MBNA "400"
TRACK: Dover Downs International Speedway
LOCATION: Dover, DE TELEPHONE #: (302) 674-4500
TRACK LENGTH: 1 Mile, Paved EVENT DISTANCE: 400 Miles (400 laps)
DATE OF EVENT: September 21, 1997 STARTING TIME: TBD
POSTPONED DATE: Next Raceable Day
TIME TRIAL DATE(S) AND HOURS: PRACTICE DATE(S) AND HOURS:
Friday, Sept. 19-Per Entry Blank Friday, Sept. 19-Per Entry Blank
Saturday, Sept. 20-Per Entry Blank Saturday, Sept. 20-Per Entry Blank
REGISTRATION & INSPECTION - Friday, September 19-Per Entry Blank
MINIMUM PROMOTER'S PURSE
AND POINT FUND TOTAL
(See Exhibit 2): $ SANCTION FEE: $
PAYMENT DATE 12 Noon on INSURANCE NOTIFICATION DATE
(See Exhibit 1, Sept. 10, 1997 (See Exhibit 1, Sept. 10, 1997
Para. 19) Para. 20)
Sanction Application and Agreement Form
Page 3 of 4
<PAGE>
Upon written acceptance and approval of the above application, in
consideration for the mutual promises set forth herein, NASCAR and
PROMOTER agree as follows:
(1) NASCAR hereby grants its sanction to PROMOTER for the Event(s)
listed, and NASCAR agrees to conduct the Event(s), through its officers
and designated officials, in accordance with the NASCAR Winston Cup
Series Rule Book, as it may be amended from time to time, and special
rules that may be published by NASCAR specifically for the Event(s),
and this agreement. Interpretation and application of the NASCAR
Winston Cup Series Rule Book, as it may be amended from time to time,
and any special rules that may be published by NASCAR specifically for
the Event(s), are committed to NASCAR's sole discretion, and are final
and unreviewable except to the extent provided in the NASCAR Winston
Cup Series Rule Book.
(2) Exhibits 1, 2 and 2a, attached hereto, are incorporated herein
and made a part of this agreement.
(3) NASCAR will retain for its own account all inspection fees.
(4) Additional Provisions:
Submitted this _____________ day of __________________, 19____.
Dover Downs Int'l Speedway, Inc.
Promoter
By: /s/ Denis McGlynn President
(an authorized officer) (title)
Witnessed By: /s/ Jerry Dunning Gen Mang
(title)
Accepted and Approved this 17th day of December, 1996.
National Association for Stock Car Auto Racing, Inc.
By: /s/ Michael G. Helton Vice President for Competition
(an authorized officer) (title)
Witnessed By: /s/ Dawn K. Brown Asst. Event Coord.
(title)
Sanction Application and Agreement Form
Page 4 of 4
Exhibit 21.1
Dover Downs Entertainment, Inc.
Subsidiaries
Dover Downs, Inc.
Dover Downs International Speedway, Inc.
Dover Downs Properties, Inc.
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,503
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0
0
<COMMON> 1,523
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<SALES> 101,678
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