EXHIBIT 10.1

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

2002 Stock Option Plan

1. Purpose. The 2002 Stock Option Plan (the "Plan") is intended to advance the best interests of Dover Downs Gaming & Entertainment, Inc. (the "Company") by providing its employees and the employees of its subsidiaries with additional incentive and by increasing their proprietary interest in the success of the Company and its subsidiary corporations.

2. Administration. The Plan shall be administered by the Stock Option Committee of the Board of Directors of the Company (the "Committee"). The Committee shall consist of two or more Directors of the Company. Meetings shall be held at such time and place as shall be determined by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any questions brought before that meeting. In addition, the Committee may take any action otherwise proper under the Plan by the unanimous written consent of its members. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission of such member, including, but not limited to, the exercise of any power or discretion under the Plan, except those resulting from gross negligence or willful misconduct. All questions of interpretation and application of the Plan, or of options granted hereunder (the "Options"), shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee.

3. Option Shares. The stock subject to the Options and other provisions of the Plan shall be shares of the Company's Common Stock, $0.10 par value (the "Stock"). The total amount of the Stock with respect to which Options may be granted shall not exceed in the aggregate 1,500,000 shares; provided, however, that the class and aggregate number of shares which may be subject to Options granted hereunder shall be subject to adjustment in accordance with the provisions of Section 16 hereof. Such shares may be treasury shares or authorized but unissued shares. In the event that any outstanding Option for any reason shall expire, the shares of Stock allocable to the unexercised portion of such Option may again be subject to an Option under the Plan.

4. Termination of Plan. The Plan shall terminate on January 14, 2012; provided, however, that the Board of Directors of the Company within its absolute discretion may terminate the Plan at any time. No such termination, other than as provided for in Section 16 hereof, shall in any way affect any Option then outstanding.

5. Authority to Grant Options. The Committee may grant from time to time to such eligible individuals (the "Participants") as it shall from time to time determine an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan. Subject only to any applicable limitations set forth in the Plan, the number of shares of Stock to be covered by any Option shall be as determined by the Committee. The Committee shall determine whether an Option shall be an "incentive stock option" qualified under
Section 422 of the Internal Revenue Code of 1986 as amended (the "Code"), or a "non-qualified stock option" (that is, any Option which is not considered an incentive stock option). The aggregate Fair Market Value (determined as provided in Section 7 of the Plan) of the Stock with respect to which incentive stock options are granted hereunder which are exercisable for the first time by such employee during any calendar year (under all the stock option plans maintained by the Company and subsidiary corporations) shall not exceed $100,000 in accordance with Section 422 of the Code (or such greater or lesser dollar amount as may be in effect under the Code on the date of grant). No Option shall be granted under the Plan after ten (10) years from the date the Plan is adopted.

6. Eligibility. Participants shall be employees of the Company, or of any subsidiary corporation, as the Committee shall determine from time to time; provided, however, that no employee owning more than ten percent (10%) of the stock of the Company at the time an Option is granted shall be eligible to participate in the Plan. For all purposes of the Plan, the term "subsidiary corporation" shall mean any corporation of which the Company is the "parent corporation" as that term is defined in Section 424(e) of the Code.

7. Option Price. The price at which shares may be purchased pursuant to an Option (the "Option Price") shall be not less than the fair market value of the shares of Stock on the date the Option is granted, and the Committee in its discretion may provide that the Option Price shall be more than such fair market value. The "fair market value" of the Stock shall be the closing price of the Stock on the New York Stock Exchange as reported in The Wall Street Journal for the trading day on which the Option is granted, or if the Option is not granted on a trading day, then such fair market value shall be determined on the trading day before the Option is granted.

8. Duration of Options. No Option shall be exercisable after the expiration of ten years from the date such Option is granted; and the Committee in its discretion may provide that an Option shall be exercisable throughout such ten-year period or during any lesser period of time commencing on or after the date of grant of the Option and ending upon or before the expiration of such ten-year period.

9. Amount Exercisable. Each Option may be exercised, so long as it is valid and outstanding, from time to time in part or as a whole, subject to any limitations with respect to the number of shares for which the Option may be exercised at a particular time and to such other conditions as the Committee in its discretion may specify upon granting the Option.

10. Exercise of Options. Options shall be exercised by the delivery of written notice to the Company setting forth the number of shares with respect to which the Option is to be exercised and specifying the address to which the certificates for such shares are to be mailed, accompanied by provision for full payment for the Shares. The Option Price shall be payable in cash or its equivalent or if permitted by the terms of the Award Agreement (a) by tendering previously acquired shares of Stock having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the shares of Stock which are tendered must have been held by the Participant for at least twelve (12) months prior to their tender to satisfy the Option Price), (b) by broker-assisted cashless exercise (provided that any shares of Stock which are sold in connection with any broker-assisted cashless exercise must have been held by the Participant for at least twelve (12) months if such shares were previously acquired by exercise of an option) or (c) by a combination of any of the foregoing. Notice may be delivered in person to a member of the Committee, or the Secretary of the Company, or may be sent by registered mail, return receipt requested, to a member of the Committee, or the Secretary of the Company, in which case delivery shall be deemed made on the date such notice is deposited in the mail. As promptly as practicable after receipt of such written notification and payment, the Company shall deliver to the Participant certificates for the number of shares with respect to which such Option has been so exercised, issued in the Participant's name; provided, however, that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to the Participant, at the address specified pursuant to this Section 10.

11. Transferability of Options. Options shall not be transferable by a Participant other than by will or under the laws of descent and distribution, and shall be exercisable only by the Participant during such Participant's lifetime. In the event of (a) any attempt by the Participant to alienate, assign, pledge, hypothecate or otherwise dispose of an Option, except as provided for herein, or (b) the levy of any attachment, execution or similar process upon the rights or interest conferred by an Option, the Company may terminate the Option

by notice to the Participant and it shall thereupon become null and void.

12. Certain Option Terminations. Except as may be otherwise expressly provided herein, Options shall terminate on such date as shall be selected by the Committee in its discretion and specified in the Award Agreement, but not in excess of one day less than three months following severance of the employment relationship between the Company or its subsidiary corporation and the Participant for any reason, for or without cause. For purposes of termination of an Option, if a Participant is an employee of a subsidiary of the Company, the aforementioned employment relationship shall be deemed severed at such time as the subsidiary ceases for any reason to be a subsidiary of the Company under
Section 6 hereto whether or not the employee continues in the employ of the subsidiary. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment relationship between the Company or its subsidiary corporation and the Participant shall be determined by the Committee at the time thereof. If, before the date of expiration of the Option, the Participant shall be retired in good standing from the employ of the Company for reasons of age or disability under the then established rules of the Company, the Option shall terminate on the earlier of such date of expiration or one day less than three months after the date of such retirement. In the event of such retirement, the Participant shall have the right prior to the termination of such Option to exercise the Option to the extent to which the Participant was entitled to exercise such Option immediately prior to such retirement. After the death of the Participant, the Participant's executors, administrators, or any person or persons to whom an Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the earlier of the date of expiration or one year following the date of such death, to exercise the Option, in whole or in part (without regard to any limitations set forth in or imposed pursuant to Section 9 hereof).

13. Requirements of Law. The Company shall not be required to sell or issue any shares under an Option if the issuance of such shares constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority. In addition, in connection with the Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of any Option, the Company shall not be required to issue such shares unless the Committee has received evidence satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. In the event the shares issuable on exercise of an Option are not registered under the Securities Act of 1933, the Company may imprint the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933:

"The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Company of an opinion of counsel satisfactory to the Company, in form and substance satisfactory to the Company, that registration is not required for such sale or transfer."

The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended); and in the event any shares are so registered the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. The Company may contractually provide in any Award Agreement for a holding period prior to the sale or disposition of shares of Stock acquired under an Option.

14. No Rights as Shareholder. No Participant shall have rights as a shareholder with respect to shares covered by an Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Section 16 hereof, no adjustment for dividends, or otherwise, shall be made if the record date thereof is prior to the date of issuance of such certificate.

15. Employment Obligation. The granting of any Option shall not impose upon the Company any obligation to employ or continue to employ any Participant; and the right of the Company to terminate the employment of any Participant shall not be dismissed or affected by reason of the fact that an Option has been granted.

16. Changes in the Company's Capital Structure. The existence of outstanding Options shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Stock outstanding, without receiving compensation therefor in money, services or property, then (a) the number, class, and per share price of shares of Stock subject to outstanding Options hereunder shall be appropriately adjusted in such a manner as to entitle a Participant to receive upon exercise of any Option, for the same aggregate cash consideration, the same total number and class of shares as would have been received had the Option been exercised in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares then reserved for issuance under the Plan shall be adjusted by substituting for the total number and class of shares of Stock then reserved that number and class of shares of Stock that would have been received by the owner of an equal number of outstanding shares of each class of Stock as the result of the event requiring the adjustment.

After a merger of one or more corporations into the Company, or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each holder of an outstanding Option shall, at no additional cost, be entitled upon exercise of such Option to receive (subject to any required action by shareholders) in lieu of the number and class of shares as to which such Option would have been so exercisable in the absence of such event, the number and class of shares of Stock or other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such holder had been the holder of record of the number and class of shares of Stock equal to the number and class of shares as to which such Option shall be so exercised.

If the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation, or if the Company is liquidated, or sells or otherwise disposes of substantially all of its assets to another corporation while unexercised Options remain outstanding under the Plan, (i) subject to the provisions of clause (iii) below, after the effective date of such merger, consolidation or sale, as the case may be, each holder of an outstanding Option shall be entitled, upon exercise of such Option, to receive, in lieu of shares of the Stock, shares of such stock or other securities as the holders of shares of such class of Stock received pursuant to the terms of the merger, consolidation or sale; (ii) the Board of Directors may waive any limitations set forth in or imposed pursuant to Section 9 hereof so that all Options, from and after a date prior to the effective date of such merger, consolidation, liquidation or sale, as the case may be, specified by the Board, shall be exercisable in full; and (iii) all outstanding Options may be

canceled by the Board of Directors as of the effective date of any such merger, consolidation, liquidation or sale provided that (x) notice of such cancellation shall be given to each holder of an Option and (y) each holder of an Option shall have the right to exercise such Option in full (without regard to any limitations set forth in or imposed pursuant to Section 9 hereof) during a 30- day period preceding the effective date of such merger, consolidation, liquidation or sale.

Except as hereinbefore expressly provided, the issue by the Company of shares of Stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Stock then subject to outstanding Options.

17. Amendment or Termination of Plan. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the holders of at least a majority of the outstanding shares of Stock, the Board may not increase the aggregate number of shares which may be issued under Options pursuant to the provisions of the Plan and that any amendment, modification, revision or termination shall not effect any outstanding Options.

18. Written Agreement. Each Option granted hereunder shall be embodied in a written option agreement (the "Award Agreement"), which shall be subject to the terms and conditions prescribed above and shall be signed by the Participant and by the President or any Executive Officer of the Company for and in the name and on behalf of the Company. The Award Agreement shall contain such other terms, conditions or limitations as the Committee in its discretion shall deem advisable.

19. Indemnification of Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further action to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by such member in connection with or arising out of any action, suit or proceeding in which such member may be involved by reason of being or having been a member of the Committee, whether or not such member continues to be a member of the Committee at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee (a) in respect of matters as to which such member shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of such member's duty as a member of the Committee, or (b) in respect of any matter in which any settlement is effected, to any amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee unless, within sixty (60) days after institution of any such action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and shall be in addition to all other rights to which such member of the Committee may be entitled as a matter of law, contract, or otherwise.

20. Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount (including any shares of Stock withheld as provided herein) sufficient to satisfy Federal, state and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to an Option or its exercise. The Committee may, in its sole discretion, permit a Participant to satisfy the withholding requirement, in whole or in part, by tendering shares of Stock

held by the Participant at least twelve (12) months prior to their tender or by having the Company withhold shares of Stock having a Fair Market Value on the effective date of exercise equal to the minimum statutory total tax which could be imposed on the transaction. Any such election shall be irrevocable, made in writing and signed by the Participant.

21. Effective Date of Plan. The Plan shall become effective and shall be deemed to have been adopted on January 15, 2002.

22. Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

23. Requirements of Law. The granting of Options and the issuance of shares of Stock under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

24. Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with, and governed by, the laws of the State of Delaware.

EXHIBIT 10.2

EMPLOYEE BENEFITS AGREEMENT

THIS EMPLOYEE BENEFITS AGREEMENT ("Agreement") is made as of the 15th day of Janaury 2002 by and between Dover Downs Entertainment, Inc., a Delaware corporation ("DVD") and Dover Downs Gaming & Entertainment, Inc., a Delaware corporation ("Gaming & Entertainment").

RECITALS

WHEREAS, Dover Downs, Inc., a Delaware corporation ("Slots") is a wholly-owned subsidiary of DVD and a member of a Controlled Group (as hereinafter defined) that includes DVD;

WHEREAS, DVD has formed Gaming & Entertainment as a wholly-owned subsidiary of DVD and the board of directors of DVD has approved the transfer, as a capital contribution, of all of the issued and outstanding capital stock of Slots to Gaming & Entertainment, followed by the distribution of all of the issued and outstanding shares of capital stock of Gaming & Entertainment to the holders of the issued and outstanding shares of capital stock of DVD ("the Spinoff");

WHEREAS, the parties desire to set forth the terms and conditions pursuant to which Gaming & Entertainment and/or Slots shall provide various employee benefits to those Employees (as hereinafter defined) who remain employed by Slots on the Spinoff Date or who become employed by Gaming & Entertainment on the Spinoff Date or who thereafter become employed by Slots, Gaming & Entertainment or any subsidiary of Gaming & Entertainment;

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 GENERAL. As used in this Agreement, capitalized terms defined immediately after their use shall have the respective meanings thereby provided, and the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

Action: any demand, action or cause of action, claim, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any governmental or other regulatory or administrative agency or commission or any arbitration tribunal related to, arising out of or resulting from any employee liability.

Affiliate: with respect to any specified person, a person who, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control

with, such specified person; provided, that DVD and Gaming & Entertainment shall be deemed not to be Affiliates of each other for purposes of this Agreement.

Code: the Internal Revenue Code of 1986, as it may be amended or recodified from time to time.

Controlled Group: two or more business entities affiliated within the meaning of Code Sections 414(b), 414(c), 414(m) and/or 414(o).

Dual Employee: An Employee of DVD immediately prior to the Spinoff Date who, on or after the Spinoff Date, becomes an Employee of Games and Entertainment while remaining an Employee of DVD or Slots.

Employee Benefit Plans: (i) any severance, disability, cafeteria, bonus, stock option, stock appreciation, stock purchase, deferred compensation, or similar types of plans, agreements, policies or arrangements that currently are established, maintained or contributed to by DVD or Slots for the benefit of any former or present employees or their beneficiaries, dependents or spouses, and (ii) any employee welfare and employee pension benefit plans (as such terms are defined in Section 3(l) and 3(2), respectively, of ERISA) which are applicable to former or present Employees or their beneficiaries, dependents or spouses, and that currently are established, maintained or contributed to by DVD or Slots.

Employee/labor Law: any federal, state, local or municipal law (including common law), statute, ordinance, regulation, order, decree, judgment, decision, ruling, permit or authorization (each as may be in effect, applicable and binding, from time to time) relating or applicable to the work place or to the employer/employee relationship including, without limitation, any of the foregoing relating or applicable to wage and hour claims, collective bargaining and labor laws, ERISA-governed employee benefit and welfare plans, federal, state and local tax withholding and payment rules and regulations, workers' compensation and similar laws, accrued vacation statutes, and sexual harassment and anti-discrimination laws.

Employee Liability: any and all debts, charges, liabilities, warranties and obligations (of any nature or type whatsoever regardless of when arising), whether accrued, contingent or reflected on a balance sheet including, without limitation, liability for administrative, civil or criminal penalties or forfeitures, and attorneys' fees or other costs of defending an Action or a claim of Employee Liability under any Employee/Labor Law.

Employees: Employees of Slots, Gaming & Entertainment or any of its subsidiaries on and after the Spinoff Date.

ERISA: the Employee Retirement Income Security Act of 1974, as amended.

Spinoff Date: The date the Spinoff is effective.

1.2 OTHER DEFINITIONS. Capitalized terms not specifically defined herein shall have the meanings ascribed thereto in the Agreement Regarding Distribution and

Plan of Reorganization of even date herewith by and between DVD and Gaming & Entertainment.

ARTICLE 2

EMPLOYEES

2.1 CONDITIONS OF EMPLOYMENT. (a) Nothing in this Agreement shall require either Gaming & Entertainment or Slots to employ any person on or after the Spinoff Date; and (b) nothing in this Agreement shall be interpreted to prohibit or otherwise restrict Gaming & Entertainment or Slots from terminating the employment of any Employee, or from changing the salary or wage range, grade level or location of employment of any Employee, in accordance with their respective personnel policies and procedures following the Spinoff Date. Without limiting the generality of Section 5.9 hereof, no Employee or other person shall have any rights as a third party beneficiary under this Agreement.

2.2 CERTAIN PAYROLL DEDUCTIONS. Effective as of the Spinoff Date, to the extent (if any) required by applicable law, Gaming & Entertainment and/or Slots will assume DVD's obligation to comply with any garnishment order applicable to any Employee. Furthermore, if an Employee has any outstanding liability or obligation to DVD (for example, salary advances) which existed on the Spinoff Date, which has resulted in a special payroll deduction for such Employee, then, to the extent permitted under applicable law, Gaming & Entertainment and/or Slots will withhold such amounts for DVD's benefit from the Employee's compensation earned subsequent to the Spinoff Date. DVD will provide the special payroll deduction information or garnishment information at least fifteen (15) days prior to the date Gaming & Entertainment and/or Slots assumes payroll-processing responsibility for an Employee.

ARTICLE 3

EMPLOYEE BENEFIT PLANS

3.1 WELFARE BENEFIT PLANS. DVD maintains various welfare benefits plans (as defined by Section 3(l) of ERISA). As of the date of the Spinoff, or as soon thereafter as is reasonably practicable, Gaming & Entertainment shall establish its own welfare benefits plans so that following the Spinoff, DVD and Gaming & Entertainment will each continue to sponsor their own separate welfare benefit plans, including medical and life insurance and disability benefits. With respect to Dual Employees, DVD and Gaming & Entertainment will determine which welfare benefit plans these employees will be permitted to participate in.

3.2 VACATION, HOLIDAY, SICK LEAVE AND SHORT-TERM DISABILITY POLICIES. Gaming & Entertainment shall credit all Employees (other than Dual Employees) for any accrued vacation, holiday and sick leave earned but not taken by such Employees with respect to their employment with DVD and/or Slots in the current year through the Spinoff Date; and Gaming & Entertainment shall be solely responsible for payment of such vacation, holiday and sick leave, and shall indemnify DVD and its Affiliates with respect to any

liability therefore. Any vacation, holiday or sick leave with respect to service on and after the Spinoff Date shall be credited in accordance with the vacation, holiday or sick leave policies adopted or maintained by Gaming & Entertainment effective on and after the Spinoff Date. If an Employee who transferred employment to Gaming & Entertainment is, on the Spinoff Date, on short-term disability or other approved leave of absence, Gaming & Entertainment shall assume responsibility for the payment of all benefits associated with such short-term disability or other approved leave of absence (including without limitation rights under the federal Family and Medical Leave Act) with respect to periods of time on and after the Spinoff Date and shall indemnify DVD and its Affiliates with respect to any liability therefore; provided that Gaming & Entertainment shall not provide lesser benefits than had been provided by DVD to such Employee with respect to any short-term disability or approved leave of absence existing at the Spinoff Date.

3.3 DVD PENSION PLAN.

(a) Effective for service on and after the Spinoff Date, Gaming & Entertainment shall establish its own defined benefit Pension Plan (the "Gaming & Entertainment Pension Plan"), the benefit formula under which shall be substantially similar to that under the DVD Pension Plan. The foregoing sentence shall not be construed to limit the ability of Gaming & Entertainment in the future to amend or terminate its Pension Plan. Such Gaming & Entertainment Pension Plan shall afford credit for eligibility and vesting purposes for service prior to the Spinoff Date with DVD and/or Slots as if such service were service with Gaming & Entertainment. Gaming & Entertainment will promptly submit the Gaming & Entertainment Pension Plan to the Internal Revenue Service for a determination of its tax-exempt status.

(b) As soon as practicable following the Spinoff Date and the establishment of the Gaming & Entertainment Pension Plan in such form as will, in the opinion of counsel to DVD, be qualified under section 401(a) of the Code, DVD and Gaming & Entertainment will provide for the transfer of plan assets and the transfer of liabilities, with respect to Former DVD or Slots employees (other than Dual Employees) who will, immediately after the Spinoff Date, become Gaming & Entertainment Employees, from the DVD Pension Plan to the Gaming & Entertainment Pension Plan. The amount of assets to be so transferred shall be determined as of the Spinoff Date by the actuary of the DVD Pension Plan consistent with the requirements of Section 414(l) of the Code and the regulations thereunder relating to spinoffs and mergers (the "Transfer Amount"). The Transfer Amount shall be adjusted by an agreed upon interest for the period from the Spinoff Date to the actual date of transfer.

(c) No transfer of assets and liabilities from the DVD Pension Plan shall take place with respect to Dual Employees. Each such Dual Employee will retain his or her benefit under the DVD Pension Plan (and be able to accrue additional benefits thereunder after the Spinoff Date with respect to his or her continuing service and compensation as a DVD Employee), and be eligible to accrue benefits under the Gaming & Entertainment Pension Plan with respect to service and compensation as a Gaming & Entertainment Employee.

(d) Any administrative, legal and actuarial work necessary for the transfer of assets and liabilities from the DVD Pension Plan shall be provided and paid for by DVD and any

administrative, legal and actuarial work necessary for the establishment of the Gaming & Entertainment Pension Plan, and the submission of the Gaming & Entertainment Pension Plan to the Internal Revenue Service for the determination of its tax-exempt status, shall be provided and paid for by Gaming & Entertainment.

3.4 DVD 401(K) PLAN.

(a) Effective for service on and after the Spinoff Date, Gaming & Entertainment shall establish its own 401(k) Plan (the "Gaming and Entertainment
401(k) Plan), the contribution formula under which shall be substantially similar to that under the DVD 401(k) Plan. The foregoing sentence shall not be construed to limit the ability of Gaming & Entertainment in the future to amend or terminate its 401(k) Plan. Such Gaming & Entertainment 401(k) Plan shall afford credit for eligibility and vesting purposes for service prior to the Spinoff Date with DVD or Slots as if such service were service with Gaming & Entertainment. Gaming & Entertainment will promptly submit the Gaming & Entertainment 401(k) Plan to the Internal Revenue Service for a determination of its tax exempt status.

(b) As soon as practicable following the Spinoff Date and the establishment of the Gaming & Entertainment 401(k) Plan in such form as will, in the opinion of counsel to DVD, be tax-qualified under sections 401(a) and 401(k) of the Code, DVD and Gaming & Entertainment will provide for the transfer of accounts of former DVD and Slots employees (but not Dual Employees) who will, immediately after the Spinoff Date, become employees of Gaming & Entertainment, from the DVD 401(k) Plan to the Gaming & Entertainment 401(k) Plan. The amounts so transferred shall equal the fair market value of each transferred participant's DVD 401(k) Plan account as of the valuation date immediately preceding the date of transfer ("transfer date"), which account shall be treated as fully vested as of the transfer date, and shall be adjusted to reflect any contributions, distributions, in-service withdrawals or participant loans contributed or received by the participant during the period between transfer date and the valuation date immediately preceding the transfer date. Assets shall be transferred entirely in (a) cash or other assets acceptable to the Gaming & Entertainment Plan's trustee and (b) notes which represent the participant loans of individuals whose DVD 401(k) Plan accounts are being transferred.

(c) To the extent the investment options under the Gaming & Entertainment 401(k) Plan are the same as under the DVD 401(k) Plan, the accounts of participants described in subsection (b) will be transferred to and held in those same investment options under the Gaming & Entertainment 401(k) Plan. To the extent that investment options are different, participants' accounts will be either mapped into comparable investment options under the Gaming & Entertainment 401(k) Plan, or participants will be afforded the opportunity to choose the investment options into which their DVD 401(k) Plan account will be transferred, all as determined by the Plan administrator of the Gaming & Entertainment 401(k) Plan.

(d) No transfer of account balances from the DVD 401(k) Plan shall take place with respect to Dual Employees. Each such Dual Employee will retain his or her account under the DVD 401(k) Plan and be able to continue to participate therein on and after the Spinoff Date with respect to his or her compensation as a DVD employee, and be eligible to participate, on

and after the Spinoff Date, in the Gaming & Entertainment 401(k) Plan with respect to compensation as a Gaming & Entertainment Employee.

(e) Any administrative and legal work necessary for the transfer shall be provided by DVD and any administrative and legal work necessary for the establishment of the Gaming & Entertainment 401(K) Plan shall be provided by Gaming & Entertainment.

3.5 SEVERANCE LIABILITIES. Gaming & Entertainment acknowledges that the transactions contemplated by the Spinoff will not result in DVD being or becoming liable for any severance pay to any Employee and Gaming & Entertainment shall indemnify DVD in respect thereof.

3.6 2002 EMPLOYEE STOCK INCENTIVE PLAN.

(a) On or before the Spinoff Date, Gaming & Entertainment shall adopt the Dover Downs Gaming & Entertainment, Inc. 2002 Employee Stock Incentive Plan in a form substantially similar to the DVD Employees Stock Incentive Plan (the "Gaming & Entertainment 2002 Plan").

(b) Following the completion of the Spinoff, Gaming & Entertainment Employees who are not also employees of DVD and have outstanding DVD options immediately prior to the effective date of the Spinoff will receive replacement options of Gaming & Entertainment under the Gaming & Entertainment 2002 Plan equivalent in value to the DVD stock options at such time as follows:

Each Employee of Gaming & Entertainment with outstanding DVD options will be granted replacement Gaming & Entertainment options with the exercise price determined by multiplying the Average Percentage (as defined below) times the original exercise price, and the number of shares subject to such replacement grant determined by dividing the number of shares subject to options currently held by the Average Percentage. "Average Percentage" shall mean Gaming & Entertainment's opening stock price on the New York Stock Exchange ("NYSE") multiplied by .7, or if the Gaming & Entertainment common stock is not traded on the NYSE, such other exchange or quotation system on which it is traded, on the first trading day after the effective date of the Spinoff divided by the sum of
(i) the stock price of DVD and (ii) the stock price of Gaming & Entertainment multiplied by .7, in each case on the first trading day after the effective date of the Spinoff.

(c) Each Dual Employee who holds outstanding DVD options will receive replacement grants for a certain number of such outstanding options under the Gaming & Entertainment 2002 Plan equivalent in value to the options surrendered for cancellation to DVD pursuant to the terms set forth in a Cancellation Agreement entered into by such Dual Employee and DVD. The number of DVD options to be surrendered in exchange for Gaming & Entertainment options shall be calculated by multiplying the number of such employees' DVD options by the Average Percentage defined in Section 3.6 (b) above.

ARTICLE 4

INDEMNIFICATION

4.1 INDEMNIFICATION. In addition to the indemnity obligations set forth in Section 3.2 hereof, Gaming & Entertainment and/or Slots agree to indemnify, defend, reimburse and hold harmless DVD and its Affiliates, and the officers, directors, employees, agents and representatives of DVD and its Affiliates (each, a "DVD Indemnified Party"), from and against any and all Actions, assessments, losses, damages, liabilities, costs and reasonable expenses including, without limitation, interest, penalties, fines, excise taxes and reasonable attorneys' fees and expenses, asserted against or imposed upon or incurred by any DVD Indemnified Party which result from, arise out of or are related to any failure by Gaming & Entertainment and/or Slots to comply with the terms of this Employee Benefits Agreement. DVD agrees to indemnify, defend, reimburse and hold harmless Gaming & Entertainment and its Affiliates, and the officers, directors, employees, agents and representatives of said companies (each, a "Gaming & Entertainment Indemnified Party"), from and against any and all Actions, assessments, losses, damages, liabilities, costs and reasonable expenses including, without limitation, interest, penalties, fines, excise taxes and reasonable attorneys' fees and expenses, asserted against or imposed upon or incurred by any Gaming & Entertainment Indemnified Party which result from, arise out of or are related to any failure on the part of DVD to comply with the terms of this Employee Benefits Agreement.

4.2 PROCEDURE FOR INDEMNIFICATION. In the event any action, suit or proceeding is brought pursuant to this Article 4 or Section 3.2 hereof, the parties shall comply with and be subject to the indemnification procedures set forth in the Distribution Agreement.

ARTICLE 5

MISCELLANEOUS

5.1 BINDING AGREEMENT. This Agreement is binding upon and is for the benefit of the Parties hereto and their respective successors and permitted assigns.

5.2 ASSIGNMENT. No party to this Agreement shall convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of the other party hereto in its sole and absolute discretion. No assignment of this Agreement shall relieve the assigning party of its obligations hereunder.

5.3 NOTICES. All notices or other communications required or permitted to be given hereunder shall be made pursuant to the notice provisions set forth in the Distribution Agreement.

5.4 NO WAIVER. No delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver, nor shall any waiver on the part of any party of any right, power or privilege operate as a waiver of any other right, power or

privilege hereunder, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties hereto may otherwise have at law or in equity.

5.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the agreements and other documents referred to herein, shall constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior agreements, understandings, statements or representations, oral or in writing, of the parties relating thereto. This Agreement may be modified or amended only by written agreement of the parties. In addition to the foregoing, any amendment to this Agreement must, in the case of each of Gaming & Entertainment, DVD, and Slots, be approved by one of their respective elected officers, with their respective execution of such amendment to evidence conclusively such approval.

5.6 SHARING OF INFORMATION. DVD and Gaming & Entertainment recognize that each of them will require certain information regarding employees of the other company or its subsidiaries, including without limitation information regarding past service and compensation information used to determine accrued benefits. Each agrees to provide the information requested by the other in good faith, and on a reasonably prompt basis.

5.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument.

5.8 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws) as to all matters including, without limitation, matters of validity, construction, effect, performance and remedies.

5.9 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of the parties and is not intended to confer upon any other person any rights or remedies hereunder.

5.10 LEGAL ENFORCEABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5.11 INTERPRETATION. The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. The parties have made a good faith effort in this Agreement to provide for those issues involving employee benefits in the transaction which can be reasonably foreseen. The parties acknowledge that other

such issues may arise, and they agree to work in good faith to resolve any differences which may arise.

5.12 DISPUTES. Any disputes between the parties based upon, related to, or arising in connection with this Agreement shall be resolved in accordance with the dispute resolution procedure set forth in Section 13.10 of the Distribution Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the day and year first above written.

Dover Downs Entertainment, Inc.

By: /s/ Denis McGlynn
   -----------------------------------
Name: Denis McGlynn
Its: President

Dover Downs Gaming & Entertainment, Inc.

By: /s/ Denis McGlynn
   -----------------------------------
Name: Denis McGlynn
Its: President

EXHIBIT 10.3

TRANSITION SUPPORT SERVICES AGREEMENT

THIS AGREEMENT for the performance of certain corporate services is executed and made effective as of January 15, 2002, by and between DOVER DOWNS ENTERTAINMENT, INC., a Delaware corporation ("DVD"), and DOVER DOWN GAMING & ENTERTAINMENT, INC., a Delaware corporation ("Gaming & Entertainment").

WHEREAS, DVD, through its ownership of all of the issued and outstanding common stock (the "Stock") of Dover Downs, Inc. ("Slots"), participates in the business of gaming operations; and

WHEREAS, the Board of Directors of DVD has determined that it would be advisable and in the best interests of DVD and its shareholders for DVD to contribute all of the Stock and any other related assets and liabilities relating to gaming operations (the "Business") to Gaming & Entertainment in exchange for Gaming & Entertainment common stock and Class A Common Stock and thereafter to distribute all of the outstanding shares of Gaming & Entertainment common stock and Class A Common Stock on a pro rata basis to the holders of DVD's common stock and Class A Common Stock (the "Distribution") pursuant to an Agreement Regarding Distribution and Plan of Reorganization, dated as of the date hereof, between DVD and Gaming & Entertainment (the "Distribution Agreement"); and

WHEREAS, the parties intend that the transactions described herein will be effective at the Effective Time (as defined in the Distribution Agreement); and

WHEREAS, the parties hereto deem it to be appropriate and in the best interests of the parties that they provide certain services to each other on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Description of Services.

(a) Gaming & Entertainment shall, subject to the terms and provisions of this Agreement, provide DVD with certain services of a financial, administrative and/or advisory nature, on terms to be agreed upon by DVD and Gaming & Entertainment, and render such other specific services as DVD may from time to time reasonably request in writing, subject to Gaming & Entertainment's sole discretion and its being in a position to supply such services at the time of such request.

(b) DVD shall, subject to the terms and provisions of this Agreement, provide DVD with such services as DVD may from time to time reasonably request in writing, subject to DVD's sole discretion and its being in a position to supply such services at the time of the request.

Each of DVD and Gaming & Entertainment, as the case may be, shall use commercially reasonable efforts to transition from using the services provided by the other under this Agreement on or prior to the termination of the original term for the provision of such services (as provided in Section 7 below).

2. Consideration for Services. Gaming & Entertainment shall pay DVD for the services provided hereunder and DVD shall pay Gaming & Entertainment for all the services provided hereunder at rates agreed to by the parties hereunder.

3. Terms of Payment. Within ten (10) business days after the end of each month during the term of this Agreement, DVD will submit a written invoice to Gaming & Entertainment and Gaming & Entertainment will submit a written invoice to DVD for service fees for the immediately preceding month together with an accounting of the charges for the immediately preceding month's services. Within thirty (30) business days after the receipt of such invoices, DVD and Gaming & Entertainment, as the case may be, will remit payment of the full amount of such invoices to the other in the manner provided below. Interest shall accrue at the Prime Rate (as defined in the Distribution Agreement) on any amounts not received by the party providing the service hereunder within thirty (30) days after receipt by the other of the invoice. The amount of any monthly service fee shall be prorated to correspond with the portion of a given month for which services were actually rendered.

4. Method of Payment. All amounts payable by Gaming & Entertainment and DVD for the services rendered by the other pursuant to this Agreement shall be remitted to DVD or Gaming & Entertainment, as the case may be, in United States dollars in the form of a check or wire transfer.

5. WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO WARRANTIES OR GUARANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

6. Liability; Indemnification; Dispute Resolution.

(a) In no event shall either DVD or Gaming & Entertainment have any liability, whether based on contract, tort (including, without limitation, negligence), warranty or any other legal or equitable grounds, for any punitive, consequential, special, indirect or incidental loss or damage suffered by the other arising from or related to this Agreement, including without limitation, loss of data, profits, interest or revenue, or interruption of business, even if the party providing the services hereunder is advised of the possibility of such losses or damages.

(b) The limitations set forth in Section 6(a) above shall not apply to liabilities which may arise as the result of willful misconduct or gross negligence of the party providing the services hereunder.

(c) Effective as of the date of this Agreement, Gaming & Entertainment shall indemnify, defend and hold harmless DVD and its affiliates and their respective directors, officers, employees and agents (the "DVD Indemnitees") from and against any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any and all actions or threatened actions) ("Indemnifiable Losses") incurred or suffered by any of the DVD Indemnitees arising from, related to or associated with (i) DVD's furnishing or failure to furnish the services provided for in this Agreement, other than liabilities arising out of the willful misconduct or gross negligence of the DVD Indemnitees and (ii) the gross negligence or willful misconduct of Gaming & Entertainment

in furnishing or failing to furnish the services to be provided by Gaming & Entertainment in this Agreement, provided however, in no event shall Gaming & Entertainment be obligated to indemnify the DVD Indemnitees (taken together) under this Section 6(c) for Indemnifiable Losses arising out of Gaming & Entertainment's gross negligence in an amount in excess of three times the service fee charged for the category of service related to the Indemnifiable Loss in the month in which the act or failure to act by Gaming & Entertainment that gave rise to such Indemnifiable Loss occurs.

(d) Effective as of the date of this Agreement, DVD shall indemnify, defend and hold harmless Gaming & Entertainment and its affiliates and their respective directors, officers, employees and agents (the "Gaming & Entertainment Indemnitees") from and against any and all Indemnifiable Losses incurred or suffered by any of the Gaming & Entertainment Indemnitees arising from, related to or associated with (i) Gaming & Entertainment's furnishing or failure to furnish the services provided for in this Agreement, other than liabilities arising out of the willful misconduct or gross negligence of the Gaming & Entertainment Indemnitees, and (ii) the gross negligence or willful misconduct of DVD in furnishing or failing to furnish the services to be provided by DVD to Gaming & Entertainment in this Agreement, provided however, in no event shall DVD be obligated to indemnify the Gaming & Entertainment Indemnitees (taken together) under this Section 6(d) for Indemnifiable Losses arising out of DVD's gross negligence in an amount in excess of three times the service fee charged for the category of service related to the Indemnifiable Loss in the month in which the act or failure to act by DVD that gave rise to such Indemnifiable Loss occurs.

(e) To the extent any advisory services provided by one party to the other shall be deemed to constitute legal advice, the parties may enter into a separate agreement to preserve attorney-client privilege, waive conflicts and limit the liability of the party providing such services.

(f) Any disputes arising under this Agreement shall be resolved in accordance with Section 13.10 (Disputes) of the Distribution Agreement.

7. Termination.

(a) After the first anniversary date of this Agreement, each category of service provided under this Agreement shall terminate ninety (90) days after the request of the party receiving the service.

(b) After the first anniversary date of this Agreement, each category of service provided under this Agreement shall terminate one hundred and eighty
(180) days after the request of the party providing the service.

(c) Notwithstanding Sections 7(a) and 7(b) above, this Agreement may be terminated in its entirety (or any particular category of service may be terminated) in accordance with the following:

(i) Upon written agreement of the parties;

(ii) By either party for material breach hereof by the other if the breach is not cured within thirty (30) calendar days after written notice of breach is delivered to the breaching party; or

(iii) By either party, upon written notice to the other if the other shall become insolvent or shall make an assignment of substantially all of its assets for the benefit of creditors, or shall be placed in receivership, reorganization, liquidation or bankruptcy.

(iv) By either party upon a "change-in-control" of the other party. For these purposes "change-in-control" shall be defined as the earliest of the following to occur: (a) the acquisition by any person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then outstanding securities of a party entitled to vote generally in the election of directors ("Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by a party or any corporation controlled by such party or (ii) any acquisition by any corporation pursuant to a transaction described in clauses
(i), (ii) and (iii) of paragraph (b) below; or (b) the effective date of a reorganization, merger or consolidation of a party (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 75% of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns a party through one or more subsidiaries) in substantially the same proportion as their ownership, immediately prior to such Business Combination, of the Outstanding Voting Securities, (ii) no person (excluding any employee benefit plan or related trust of a party or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding voting securities of such party except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the incumbent board of a party at the time of the initial action taken by such party to provide for such Business Combination.

(d) Upon any termination pursuant to Sections 7(b) and 7(c) above, DVD and Gaming & Entertainment shall be compensated for all services performed to the date of termination in accordance with the provisions of this Agreement, and DVD and Gaming & Entertainment, as the case may be, will consider hiring certain employees of the other identified by the other prior to the termination to the extent that DVD or Gaming & Entertainment, as the case may be, does not contract with third parties to provide the services rendered by DVD or Gaming & Entertainment pursuant to this Agreement.

8. General.

(a) Force Majeure. Any delays in or failure of performance by DVD or Gaming & Entertainment shall not constitute a default hereunder if and to the extent such delay or failure of performance is caused by occurrences beyond the reasonable control of DVD or Gaming & Entertainment, as the case may be, including, but not limited to: acts of God or the public enemy; compliance with any order or request of any governmental authority; acts of war; riots or strikes or other concerted acts of personnel; or any other causes beyond the reasonable control of DVD or Gaming & Entertainment, whether or not of the same class or kind as those specifically named above.

(b) Confidentiality. Each party shall hold and cause its directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information concerning the other party (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such disclosing party or (b) lawfully acquired after the Effective Time (as defined in the Distribution Agreement) on a non-confidential basis from other sources by the disclosing party), and neither party shall release or disclose such information to any other person, except its auditors, attorneys, financial advisors, bankers and other consultants and advisors who shall be advised of the provisions of this Section and be bound by them.

(c) Expenses. Except as specifically provided in this Agreement or in the Distribution Agreement, all costs and expenses incurred prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement and with the consummation of the transactions contemplated by this Agreement (including, without limitation, all fees for counsel, accountants and financial and other advisors) shall be paid by DVD and all such costs incurred thereafter shall be paid by the party incurring such costs.

(d) Notices. All notices and communications under this Agreement shall be deemed to have been given (a) when received, if such notice or communication is delivered by facsimile, hand delivery or overnight courier, and, (b) three (3) business days after mailing if such notice or communication is sent by United States registered or certified mail, return receipt requested, first class postage prepaid. All notices and communications, to be effective, must be properly addressed to the party to whom the same is directed at its address as set forth in the Distribution Agreement. Either party may, by written notice delivered to the other party in accordance with this Section 8(d), change the address to which delivery of any notice shall thereafter be made.

(e) Amendment and Waiver. This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by the party or parties to be charged with such amendment or waiver. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.

(f) Entire Agreement. This Agreement together with the Distribution Agreement constitutes the entire understanding of the parties hereto with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter. To the extent that the provisions of this Agreement are inconsistent with the provisions of any Distribution Agreement, the provisions of this Agreement shall prevail with respect to the subject matter hereof.

(g) Parties in Interest. Neither of the parties hereto may assign its rights or delegate any of its duties under this Agreement without the prior written consent of the other party. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer any benefits, rights or remedies upon any person or entity other than

the DVD Indemnitees and Gaming & Entertainment Indemnitees under Section 6 of this Agreement.

(h) Further Assurances and Consents. In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto will use its reasonable efforts to (a) execute and deliver such further instruments and documents and take such other actions as any other party may reasonably request in order to effectuate the purposes of this Agreement and to carry out the terms hereof and (b) take, or cause to be taken, all actions, and do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using its reasonable efforts to obtain any consents and approvals, make any filings and applications and remove any liens, claims, equity or other encumbrances on any asset of the other party necessary or desirable in order to consummate the transactions contemplated by this Agreement; provided that no party hereto shall be obligated to pay any consideration therefor (except for filing fees and other similar charges) to any third party from whom such consents, approvals and amendments are requested or to take any action or omit to take any action if the taking of or the omission to take such action would be unreasonably burdensome to the party or its business.

(i) Severability. The provisions of this Agreement are severable and should any provision hereof be void, voidable or unenforceable under any applicable law, such provision shall not affect or invalidate any other provision of this Agreement, which shall continue to govern the relative rights and duties of the parties as though such void, voidable or unenforceable provision were not a part hereof.

(j) Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

(k) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

Dover Downs Entertainment, Inc.

By:   /s/ Denis McGlynn
      -------------------------------
Name: Denis McGlynn
Its:  President

Dover Downs Gaming & Entertainment, Inc.

By:   /s/ Denis McGlynn
      -------------------------------
Name: Denis McGlynn
Its:  President

EXHIBIT 10.4

TAX SHARING AGREEMENT

THIS TAX SHARING AGREEMENT ("Agreement") is entered into as of the 15th day of January, 2002 by and between DOVER DOWNS ENTERTAINMENT, INC., a Delaware corporation ("Distributing Co."), and DOVER DOWNS GAMING & ENTERTAINMENT, INC., a Delaware corporation ("Controlled Co.") (Distributing Co. and Controlled Co. are sometimes collectively referred to herein as the "Companies"). Capitalized terms used in this Agreement are defined in Section 1 below. Unless otherwise indicated, all "Section" references in this Agreement are to sections of this Agreement.

PRELIMINARY STATEMENTS

A. As of the date hereof, Distributing Co. is the common parent of an affiliated group of corporations, including Controlled Co., which has elected to file consolidated Federal income tax returns.

B. Incident to the distribution of Controlled Co. by Distributing Co., the Companies have entered into an Agreement Regarding Distribution and Plan of Reorganization (the "Distribution Agreement").

C. The Distribution Agreement sets forth corporate transactions pursuant to which Distributing Co., subject to the satisfaction of certain terms and conditions, will distribute all of the capital stock of Controlled Co. held by Distributing Co. to Distributing Co.'s shareholders in a transaction intended to qualify as a tax-free distribution to Distributing Co. and its shareholders under Section 355 of the Code and pursuant to a Private Letter Ruling issued by the Internal Revenue Service dated (the "Letter Ruling").

D. As a result of the Distribution, Controlled Co. and its subsidiaries will cease to be members of the affiliated group of which Distributing Co. is the common parent (the "Distribution Closing Date").

E. The Companies desire to provide for and agree upon the allocation between the parties of liabilities for Taxes arising prior to, as a result of, and subsequent to the transactions contemplated by the Distribution Agreement, and to provide for and agree upon other matters relating to Taxes.

AGREEMENT

NOW, THEREFORE, in consideration of the premises, the mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. DEFINITION OF TERMS. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings:

"Accounting Cutoff Date" means, with respect to Controlled Co., any date as of the end of which there is a closing of the financial accounting records for such entity.

"Accounting Firm" shall have the meaning provided in Section 14.

"Adjustment Request" means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (a) the filing of a Tax Return for a Tax Period showing a Tax overpayment for such Tax Period and requesting a refund or credit of that Tax overpayment, (b) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, or (c) any claim for refund or credit of Taxes previously paid.

"Affiliate" means any entity that directly or indirectly is "controlled" by the person or entity in question. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through ownership of voting securities, by contract or otherwise. Except as otherwise provided herein, the term Affiliate shall refer to Affiliates of a person as determined immediately after the Distribution, provided that Distributing Co. and controlled Co. shall not be deemed Affiliates of each other. The term "Affiliate" includes a Subsidiary, partnership or limited liability company of an entity.

"Agreement" shall mean this Tax Sharing Agreement.

"Carryback" means any net operating loss, net capital loss, excess tax credit, or other similar Tax Item which may or must be carried from one Tax Period to an earlier Tax Period under the Code or other applicable Tax Law.

"Code" means the U.S. Internal Revenue Code of 1986, as amended, or any provisions of succeeding law.

"Companies" means Distributing Co. and Controlled Co., collectively, and "Company" means any one of Distributing Co. and Controlled Co.

"Consolidated or Combined Income Tax" means any Income Tax computed by reference to the assets or activities of members of more than one Group.

"Consolidated or Combined State Income Tax" means any State Income Tax computed by reference to the assets or activities of members of more than one Group.

"Consolidated Tax Liability" means, with respect to any Distributing Co. Federal Consolidated Return, the Tax liability of the group as determined under
Section 1502 of the Code and the Treasury Regulations thereunder.

"Controlled Adjustment" means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest or Adjustment Request to the extent Controlled Co. would be exclusively liable for any resulting Tax under this Agreement or exclusively entitled under Section 4.7(d) to receive any resulting Tax Benefit under this Agreement.

"Controlled Group" means Controlled Co. and its Subsidiaries and partnerships, limited liability companies, or other entities that are Affiliates and in which Controlled Co. or its Subsidiaries own an interest as determined immediately after the Distribution Closing Date or entities that were previously Affiliates engaged in the Company Business.

"Controlled Group Consolidated Tax Liability" or "Controlled Group Consolidated or Combined State Income Tax Liability" with respect to any Tax period means such Tax Liability allocated to the Controlled Group as if the relevant members of the Controlled Group were not and never were part of the Group which includes one or more members of the Distributing Group, but rather were a separate affiliated group of corporations filing a similar group return. This computation shall be made (a) by taking into account transactions with any member of the Distributing Group in the first Tax period such transactions are required to be taken into account for Tax purposes under applicable law; (b) without regard to the income, deductions (including net operating loss and capital loss deductions), credits or other Tax Items in any year of any member of the Distributing Group; (c) by not taking into account net operating loss or net capital loss carryovers and carrybacks, minimum Tax credits from earlier years or any other Tax Item of the Controlled Group from any Tax period other than the particular Tax period for which the Tax Liability is being computed;
(d) by applying the maximum applicable statutory Tax rate in effect under applicable law during the relevant year; (e) reflecting the positions, elections and accounting methods used by the Group in preparing the relevant Return for the Group; and (f) for State Income Tax, without regard to the sales, property or other apportionment factors of any member of the Distributing Group. The Controlled Group Consolidated Tax Liability or Controlled Group Consolidated or Combined State Income Tax Liability may not exceed the actual Consolidated Tax Liability of the Group or actual Consolidated or Combined State Income Tax Liability of the relevant Group.

"Distributing Adjustment" means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest or Adjustment Request to the extent Distributing Co. would be exclusively liable for any resulting Tax under this Agreement and exclusively entitled to receive any resulting Tax Benefit under this Agreement.

"Distributing Co. Federal Consolidated Return" means any United States Federal Tax Return for the affiliated group (as that term is defined in Code
Section 1504) that includes Distributing Co. as the common parent and any member of the Controlled Group.

"Distributing Group" means Distributing Co. and its Subsidiaries and partnerships, limited liability companies, or other entities that currently are or previously have been Affiliates, excluding any entity that is a member of the Controlled Group.

"Distribution" means the distribution to Distributing Co. shareholders on the Distribution Closing Date of all of the outstanding capital stock of Controlled Co. owned by Distributing Co. or any other distribution of the capital stock of a Subsidiary in connection with the Transactions that is intended to be tax-free under Section 355 of the Code.

"Distribution Agreement" means the Agreement Regarding Distribution and Plan of Reorganization dated as of the date of this Agreement between the Distributing Co. and the Controlled Co.

"Distribution Closing Date" means the Distribution Date as that term is defined in the Distribution Agreement.

"Federal Income Tax" means any Tax imposed by Subtitle A or F of the Code.

"Federal Tax Adjustment" shall have the meaning provided in Section 2.2(b).

"Group" means the Distributing Co. Group, the Controlled Co. Group, or both of such Groups as the context requires.

"Income Tax" means any Federal Income Tax, State Income Tax, or Foreign Income Tax.

"Joint Adjustment" means any proposed adjustment resulting from a Tax Contest that is not a (i) Controlled Adjustment, (ii) a Distributing Adjustment, or (iii) any other type of adjustment that gives rise to an indemnification payment by one Company to the other Company pursuant to this Agreement.

"Post-Distribution Period" means any Tax Period beginning after the Distribution Closing Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning the day after the Distribution Closing Date.

"Pre-Distribution Period" means any Tax Period ending on or before the Distribution Closing Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Distribution Closing Date.

"Prime Rate" Shall have the meaning set forth in the Distribution Agreement.

"Prohibited Action" shall have the meaning provided in Section 11(a).

"Responsible Company" means, with respect to any Tax Return, the Company having responsibility for preparing and filing such Tax Return under this Agreement.

"Ruling Request" means the letter dated July 30, 2001 filed by Distributing Co. with the Internal Revenue Service requesting a ruling from the Internal Revenue Service regarding certain tax consequences of the Distribution (including all attachments, exhibits, and other materials

submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

"Separate Company Tax" means any Tax computed by reference to the assets and activities of a member or members of a single Group.

"Straddle Period" means any Tax Period that begins on or before and ends after the Distribution Closing Date.

"State Income Tax" means any Tax imposed by any state of the United States or by any political subdivision of any such state which is imposed on or measured by net income, including state and local franchise or similar Taxes measured by net income.

"Subsidiary" shall have the meaning set forth in Treasury Regulations section 1.1502-1(c).

"Tax" or "Taxes" means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

"Tax Attribute" means any item of deduction or credit, any net operating loss, consolidated net operating loss, capital loss, consolidated net capital loss or other similar Tax Item attributable during a Tax period to the Distributing Group or the Controlled Group.

"Tax Authority" means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

"Tax Benefit" means the Tax effect of any refund, credit, or other reduction in otherwise required Tax payments (including any reduction in estimated tax payments) determined at the maximum applicable statutory Tax rate in effect under applicable law during the relevant year.

"Tax Contest" means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes of any of the Companies or their Affiliates (including any administrative or judicial review of any claim for refund) for any Tax Period ending on or before the Distribution Closing Date or any Straddle Period.

"Tax Detriment" means the Tax effect at the maximum applicable statutory Tax rate in effect under applicable law during the relevant year with respect to any increase in gain or income, reduction in deductions or loss or reduction of credit for Tax Items of the Controlled Group.

"Tax Item" means, with respect to any Income Tax, any item of income, gain, loss, deduction, and credit.

"Tax Law" means the law of any governmental entity or political subdivision thereof relating to any Tax.

"Tax Period" means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

"Tax Records" means Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests, and any other books of account or records maintained or required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

"Tax Return" or "Return" means any report of Taxes due, any claims for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

"Transactions" means only those transactions described in the Letter Ruling.

"Treasury Regulations" means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

2. ALLOCATION OF TAX LIABILITIES. The provisions of this Section 2 are intended to determine each Company's liability for Taxes with respect to Pre- Distribution Periods. Once the liability has been determined under this Section 2, Section 5 determines the time when payment of the liability is to be made, and whether the payment is to be made to the Tax Authority directly or to the other Company.

2.1 General Rule.

(a) Distributing Co. Liability. Distributing Co. shall be liable for Taxes for Pre-Distribution Periods not specifically allocated to the Controlled Co. under this Section 2. Distributing Co. shall indemnify and hold harmless the Controlled Group from and against any liability for Taxes for which Distributing Co. is liable under this Section 2.1(a).

(b) Controlled Co. Liability. Controlled Co. shall be liable for, and shall indemnify and hold harmless the distributing Group from and against, any liability for Taxes which are allocated to Controlled Co. under this Agreement.

(c) Allocation of Tax Attributes. Tax Attributes shall be allocated to the appropriate entity which incurred such Tax Attributes, irrespective of the entity which may have reported them.

2.2 Allocation of United States Federal Income Tax. Except as provided in Section 2.5:

(a) Allocation of Tax Relating to Federal Consolidated Returns. With respect to the Distributing Co. Federal Consolidated Tax returns to be filed for the Tax Period ended on December 31, 2000 and for the Tax Period ended in 2001, the Controlled Co. shall pay the Distributing Co. the amount set forth in Section 5.1(b).

(b) Allocation of Federal Consolidated Return Tax Adjustments. If there is any adjustment with respect to any Distributing Co. Federal Consolidated Return, or to such Return as previously adjusted, Controlled Co. shall be liable to Distributing Co. for the amounts set forth in this Section 2.2(b) attributable to the net amount of the adjustments in such year for Tax Items of the Controlled Group.

(i) The amount, if any, equal to the Controlled Group Consolidated Tax Liability computed with the net amount of the adjustments, minus the Controlled Group Consolidated Tax Liability as computed before such adjustments;

(ii) If any adjustment results in a reduction in the amount of a Tax Benefit realized by the Distributing Group from a Tax Attribute of the Controlled Group, the amount of such reduction whether or not the Controlled Group was previously paid in respect of such Tax Attribute; and

(iii) If not otherwise taken into account under subdivision
(i) of this Section 2.2(b), the amount of the Tax Detriment to the Distributing Group from the use in the year of the adjustment of a Tax Attribute of the Distributing Group against a Tax Item of the Controlled Group even though such Tax Attribute would otherwise be carried to a future Tax period.

Any amount due to Distributing Co. by Controlled Co. shall be computed initially by Distributing Co. and confirmed by a nationally recognized accounting firm selected by Distributing Co.

2.3 Allocation of State Income Taxes. Except as provided in Section 2.5, State Income Taxes shall be allocated as follows:

(a) Separate Company Taxes. In the case of any State Income Tax which is a Separate Company Tax, Controlled Co. shall be liable for such Tax imposed on any members of the Controlled Group.

(b) Consolidated or Combined State Income Taxes. In the case of any Consolidated or Combined State Income Tax, the liability of Controlled Co. with respect to such Tax for any Tax Period shall be computed as follows:

(i) Allocation of Tax Reported on Tax Returns. In the case of any Consolidated or Combined State Income Tax reported on any Tax Return to be filed after the Distribution Closing Date, Controlled Co. shall be liable to Distributing Co. for the State Income Tax liability in accordance with Section 5.3(b).

(ii) Allocation of Combined or Consolidated State Income Tax Adjustments. If there is any adjustment with respect to a Consolidated or Combined State Income Tax Return (or as previously adjusted), Controlled Co. shall be liable to Distributing Co. for the amounts set forth in this Section 2.3(b)(ii) attributable to the net amount of the adjustments in such year for Tax Items of the Controlled Group.

(A) The amount, if any, equal to the Controlled Group Consolidated or Combined State Income Tax Liability computed with the net amount of the adjustments, minus the Controlled Group Consolidated or Combined State Income Tax Liability as computed before such adjustments;

(B) If any adjustment results in a reduction in the amount of a Tax Benefit realized by the Distributing Group from a Tax Attribute of the Controlled Group, the amount of such reduction whether or not the Controlled Group was previously paid in respect of such Tax Attribute; and

(C) If not otherwise taken into account under subdivision
(ii)(A) of this Section 2.3(b), the amount of the Tax Detriment to the Distributing Group from the use in the year of the adjustment of a Tax Attribute of the Distributing Group against a Tax Item of the Controlled Group even though such Tax Attribute would otherwise be carried to a future Tax period.

Any amount due to Distributing Co. by Controlled Co. shall be computed initially by Distributing Co. and confirmed by a nationally recognized accounting firm selected by Distributing Co. and take into account the effective state and local Income Tax rate of the applicable Group. The corporations identified in Schedule "A" hereto shall be treated for purposes of this Section 2.3(b)(ii) as members of the Distributing Group even though they are members of the Controlled Group and the Tax Items of these corporations shall belong to the Distributing Group to the extent set forth in Schedule "A" hereto.

2.4 Allocation of Other Taxes. Except as provided in Section 2.5, all Taxes other than those specifically allocated pursuant to Sections 2.2 and 2.3 shall be allocated based on the legal entity on which the legal incidence of the Tax is imposed. As between the parties to this Agreement, Controlled Co. shall be liable for all Taxes imposed on any member of the Controlled Group including, for purposes of clarification, any Tax imposed by any foreign governmental authority or political subdivision thereof. The Companies believe that there is no

Tax not specifically allocated pursuant to Section 2.3 which is legally imposed on more than one legal entity (e.g., joint and several liability); however, if there is any such Tax, it shall be allocated in accordance with past practices as reasonably determined by the Distributing Co., or in the absence of such practices, in accordance with any reasonable allocation method determined by Distributing Co.

2.5 Transaction and Other Taxes.

(a) Distributing Co. Liability. Except as otherwise provided in this Section 2.5, Distributing Co. shall be liable for, and shall indemnify and hold harmless the Controlled Group from and against, any liability for the following:

(i) any sales and use, documentary, recording or stamp Tax imposed on the transfer of property to a member of the Distributing Group occurring solely pursuant to the Transactions;

(ii) any Federal Income Tax or State Income Tax resulting from any income or gain recognized by Distributing Co. or a Subsidiary (as determined or identified on or before the Distribution Closing Date) as a result of a Distribution failing to qualify for tax-free treatment pursuant to Section 355 of the Code and related provisions;

(iii) any Federal Income Tax or State Income Tax (other than a Tax described in subparagraph (ii) above) resulting from the Transactions; provided, however, that Distributing Co. shall not be liable for, and shall not be obligated to indemnify and hold harmless the Controlled Group from and against liability for any Tax described in clauses (ii) and (iii) above to the extent it arises as a result of Controlled Co.'s, or any member of the Controlled Group engaging in any Prohibited Action as defined in Section 11. Except as otherwise provided in this Section 2.5(a), any Tax resulting from, or arising by reason of, the Transactions shall be paid by the member of the Distributing Group or Controlled Group, as the case may be, on which the legal incidence of the Tax is imposed and which has the primary legal liability for such Tax. Notwithstanding anything in this Section 2.5 to the contrary, any Tax from item (vi) in the "Proposed Transaction" as contained in the Letter Ruling shall be paid by Distributing Co.

(b) Indemnity for Certain Acts. Controlled Co. shall be liable for, and shall indemnify and hold harmless the Distributing Group from and against any liability for any Tax described in paragraph (a)(ii) or (a)(iii) above to the extent arising as a result after the Distribution Closing Date of Controlled Co.'s or any member of the Controlled Group engaging in any Prohibited Action as defined in Section 11, or a breach by Controlled Co. of its representations, warranties and covenants set forth in Section 11. In such case, Distributing Co. shall not be liable for such amounts. If Controlled Co. is liable to the Distributing Group by reason of this Section 2.5(b), the Tax described in paragraph (a)(ii) or (a)(iii) shall be computed in accordance with Section 2.2(b), Section 2.3(b)(ii) and Section 2.4, as applicable.

(c) Shared Liability. Notwithstanding Section 2.5(a) to the contrary, the Distributing Group and the controlled Group shall share equally any Tax described in paragraph

(a)(ii) or (a)(iii) if such Tax did not arise as a result of a Prohibited Action or breach of any representation, warranty or covenant set forth in Section 11 by any member of the Distributing Group or the Controlled Group.

3. PRORATION OF TAXES FOR STRADDLE PERIODS. In the case of any Straddle Period, and in the case of a Tax Period of any member of the Controlled Group which ends on the Distribution Closing Date, Tax Items shall be apportioned between Pre-Distribution Periods and Post-Distribution Periods in accordance with the principles of Treasury Regulations under Section 1502 of the Code.

4. PREPARATION AND FILING OF TAX RETURNS.

4.1 General. Except as otherwise provided in this Section 4, Tax Returns shall be prepared and filed when due (including extensions) by the person obligated to file such Tax Returns under the Code or applicable Tax Law. The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperate with one another in accordance with Section 7 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 7.

4.2 Distributing Co.'s Responsibility. Distributing Co. has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed the following:

(a) Distributing Co. Federal Consolidated Returns for any Periods ending on, before or after the Distribution Closing Date, including the Pre-Distribution Period of any member of the Controlled Group.

(b) Consolidated or Combined State Income Tax Returns for Tax Periods ending on or before the Distribution Closing Date or for any Straddle Period.

(c) Tax Returns for State Income Taxes (including Tax Returns with respect to State Income Taxes that are Separate Company Taxes) for members of the Distributing Group.

4.3 Controlled Co.'s Responsibility. Controlled Co. shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to the Controlled Co. or members of the Controlled Group other than those Tax Returns which Distributing Co. is required to prepare and file under Section 4.2.

4.4 Tax Accounting Practices.

(a) General Rule. Except as otherwise provided in this
Section 4.4, any Tax Return for any Pre-Distribution Period or any Straddle Period, and any Tax Return for any Post-Distribution Period to the extent items reported on such Tax Return might reasonably affect items reported on any Tax Return for any Pre-Distribution Period or any Straddle Period, shall be prepared in accordance with past Tax accounting practices used with respect to the Tax Returns in question (unless such past practices are no longer permissible under the Code or other applicable Tax Law); provided, however, the determination of depreciation, amortization, gain, and loss on vehicles for any Straddle Period shall be made by Distributing Co. and to the extent any items are not covered by past practices (or in the event such past practices are no longer permissible under the Code or other applicable Tax Law), in accordance with reasonable Tax accounting practices selected by the Responsible Company.

(b) Reporting of Transaction Tax Items. The tax treatment reported by Controlled Co. on any Tax Return, whether for a Pre-Distribution or Post-Distribution Period, of Tax Items relating to the Transactions shall be consistent with the

treatment of such item on the Distributing Co. Federal Consolidated Return that includes the Distribution.

4.5 Consolidated or Combined Returns. The Companies will elect and join, and will cause their respective Affiliates to elect and join, in filing consolidated, unitary, combined, or other similar joint Tax Returns for Pre-Distribution and Straddle Periods, to the extent each entity is eligible to join in such Tax Returns, if the Distributing Co. reasonably determines that the filing of such Tax Returns is consistent with past reporting practices, or in the absence of applicable past practices, will result in the minimization of the net present value of the aggregate Tax to the entities eligible to join in such Tax Returns. In addition, the Controlled Co. shall be required to file a consolidated return for Federal Income Tax purposes for its first Tax Period in the Post-Distribution Period ending after the Distribution Closing Date, and the Controlled Co. shall make all necessary elections, and cause each member of the Controlled Group to file all necessary consents, in accordance with Treasury Regulations section 1.1502-75 required to file that consolidated return.

4.6 Right to Review Tax Returns. The Responsible Company with respect to any Tax Return shall make such Tax Return and related workpapers available for review by the other Company, if requested, to the extent (a) such Tax Return relates to Taxes for which the requesting party may be liable, (b) such Tax Return relates to Taxes for which the requesting party may be liable in whole or in part or for any additional Taxes owing as a result of adjustments to the amount of Taxes reported on such Tax Return, (c) such Tax Return relates to Taxes for which the requesting party may have a claim for Tax Benefits under this Agreement, or (d) the requesting party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement.

The Responsible Company shall make such Tax Return available for review as required under this paragraph at least thirty (30) days prior to the due date for filing such Tax Returns to provide the requesting party with a meaningful opportunity to analyze and comment on such Tax Returns and have such Tax Returns modified before filing. The Companies shall attempt in good faith to resolve any issues arising out of the review of such Tax Returns. Issues that cannot be resolved by the Companies shall be resolved in the manner set forth in Section 14; provided, however, that such Tax Return shall be timely filed in the manner prepared by the Responsible Company if the issues cannot be resolved prior to the time required by law (including extensions) for the filing of such Tax Return.

4.7 Claims for Refund, Carrybacks, and Self-Audit Adjustments ("Adjustment Requests").

(a) Consent Required for Adjustment Requests Related to Consolidated or Combined Income Taxes. Except as provided in paragraph (b) below, each of the Companies hereby agrees that (i) any decision to file an Adjustment Request with respect to any Consolidated or Combined Income Tax for a Pre-Distribution Period shall be made by Distributing Co., and (ii) any available elections to waive the right to claim in any Pre-Distribution Period with respect to any Consolidated or Combined Income Tax, any Carryback

arising in a Post-Distribution Period shall be made, and no affirmative election shall be made to claim any such Carryback. Any Adjustment Request shall be prepared and filed by the Responsible Company under Section 4.2 for the Tax Return to be adjusted. The Company requesting the Adjustment Request shall provide to the Responsible Company all information required for the preparation and filing of such Adjustment Request in such form and detail as reasonably requested by the Responsible Company. Notwithstanding anything to the contrary in this paragraph (a), the consent of the Controlled Co. shall not be necessary for any Carryback by Distributing Co. or any member of the Distributing Group provided such Carryback constitutes a Distributing Adjustment in the year (or years) such Carryback is absorbed.

(b) Other Adjustment Requests Permitted. Nothing in this
Section 4.7 shall prevent either Company or its Affiliates from filing any Adjustment Request with respect to Income Taxes which are not Consolidated or Combined Income Taxes or with respect to any Taxes other than Income Taxes. Any refund or credit obtained as a result of any such Adjustment Request (or otherwise) shall be for the account of the person liable for the Tax under this Agreement.

(c) Payment of Refunds. Any refunds or other Tax Benefits received by the Controlled Group (or any of its Affiliates) as a result of any Adjustment Request which are for the account of a member of the Distributing Group shall be paid by the Controlled Co. to the Distributing Co. in accordance with Section 6.

(d) Payment of Refunds and Tax Benefits by Distributing Co. to Controlled Co. The Distributing Co. shall pay the Controlled Co. the following amounts, with respect to Consolidated or Combined Income Tax for any Pre-Distribution Periods:

(i) The amount of any refund of Consolidated or Combined Income Tax (including the amount of any interest received with respect to such Tax refund) attributable to an adjustment of the Tax Items of the Controlled Group received by the Distributing Co. as a result of an Adjustment Request, Tax Contest or other action of a Tax Authority. The amount of such Tax refund shall equal:

(A) the Consolidated Tax Liability, or Consolidated or Combined State Income Tax Liability, after all adjustments for Tax Items of the Distributing Group but before any adjustment for Tax Items of the Controlled Group, minus

(B) the Consolidated Tax Liability, or Consolidated or Combined State Income Tax Liability, after all adjustments for the Tax Items of both the Distributing Group and the Controlled Group;

(ii) The amount payable by the Distributing Co. to the Controlled Co. under Section 4.7(d)(i) shall be paid with interest at the Prime Rate from the date such amount is received by Distributing Co. to the date of payment which shall be made no later than ninety (90) days after the receipt of such Tax refund by Distributing Co., and shall be reduced by

the amounts Controlled Co. owes, at that time, to the Distributing Co. under this Agreement or the Distribution Agreement.

(iii) If, as a result of an adjustment in a particular Tax period, the Controlled Group makes a payment of Tax to the Distributing Group in accordance with Section 5.2(a) or Section 5.4(a), and such adjustment leads directly to a reduction of income or an increase in deductions relating to Tax Items of the Controlled Group in a later Tax period in the Pre-Distribution Period (a "Turnaround Adjustment"), the Distributing Co. shall pay the Controlled Group the Tax attributable to such Turnaround Adjustment. The amount of the Turnaround Adjustment shall be reduced by the net adjustments for other Tax Items of the Controlled Group arising in the Tax Period or in the Pre- Distribution Period in which the Turnaround Adjustment is allowed (the "Turnaround Tax Period"). The Tax attributable to the Turnaround Adjustment shall equal:

(A) the Consolidated Tax Liability, or Consolidated or Combined State Income Tax Liability, after all adjustments for Tax Items of the Distributing Group and the net adjustments for Tax Items of the Controlled Group (other than the Turnaround Adjustment) which create Tax Attributes of the Controlled Group used by the Distributing Group, minus

(B) the Consolidated Tax Liability, or Consolidated or Combined State Income Tax Liability, after all adjustments for Tax Items of the Distributing Group and the Controlled Group.

The amount of the Tax attributable to the Turnaround Adjustment shall be paid by Distributing Co. to Controlled Co. within ninety (90) days of the date following the expiration of the applicable statute of limitations for the Turnaround Tax Period plus interest as determined under Section 6621 of the Code (or the corresponding provisions of state law) as if the amount of Tax attributable to the Turnaround Adjustment was an overpayment of Income Tax for the Turnaround Tax Period. No payment is required under this Section 4.7(d)(iii) if the Tax attributable to a Turnaround Adjustment is refunded and paid to the Controlled Group in accordance with Section 4.7(d)(i) and (ii).

(iv) Notwithstanding Section 5.2(a) or Section 5.4(a) to the contrary, if the Controlled Group would otherwise be required to make a Tax payment for a Tax period ("Earlier Tax Period") with respect to a Tax Item giving rise to a Turnaround Adjustment in a Turnaround Tax Period, that Tax for the Earlier Tax Period will be netted with the Tax attributable to the Turnaround Adjustment (as determined under Section 4.7(d)(iii)) only if that Earlier Tax Period and the Turnaround Tax Period are in the same audit cycle and the statutes of limitation for such Tax Periods expire at the same time.

(v) Except as required in Section 4.7(d)(i) and (iii), the Distributing Group shall not be obligated to pay the Controlled Group for the Tax Benefit arising to the Distributing Group from an adjustment to the Tax Items of the Controlled Group. Notwithstanding the preceding sentence to the contrary, the amount of such Tax Benefit used by

the Distributing Co. as a result of the adjustment to the Tax Items of the Controlled Group in a Tax period shall constitute a set-off upon the expiration of the statute of limitations for the Tax period in which the adjustment is made against the amount the Controlled Group owes to the Distributing Group under this Agreement for another Tax period. This Section 4.7(d)(v) does not apply to the extent the amount of the Tax Benefit is refunded to the Controlled Group in accordance with Section 4.7(d)(i) or paid (or offset) to such Controlled Group in accordance with Section 4.7(d)(iii) or (iv).

5. TAX PAYMENTS AND INTERCOMPANY BILLINGS.

5.1 Payment of Taxes With Respect to Distributing Co. Federal Consolidated Returns Filed After the Distribution Closing Date. In the case of any Distributing Co. Federal Consolidated Return filed after the Distribution Closing Date:

(a) Computation and Payment of Tax Due. On or prior to the filing of such Return, Distributing Co. shall compute the amount of Tax required to be paid to the Internal Revenue Service (taking into account the requirements of Section 4.4 relating to consistent accounting practices) with respect to such Tax Return and shall pay such amount to the Internal Revenue Service on or before the Payment Date.

(b) Amount Due for Prior Periods. Subject to adjustments as set forth in Section 2.2(b), no amounts are currently due and owing by the Controlled Co. with respect to any Consolidated Tax Liability for periods ending on or prior to the year ended on December 31, 2000 or for Tax periods ended in 2001.

5.2 Payment of Federal Income Tax Related to Adjustments.

(a) Adjustments Resulting in Underpayments. Distributing Co. shall pay to the Internal Revenue Service when due any additional Federal Income Tax required to be paid as a result of adjustment to the Tax liability with respect to any Distributing Co. Federal Consolidated Return. The Controlled Co. in accordance with Section 2.2(b) shall pay to Distributing Co. any amount due Distributing Co. under Section 2.2(b) within ninety (90) days from the date of receipt by Controlled Co. of a written notice and demand from Distributing Co. for payment of the amount due, accompanied by a statement describing in reasonable detail the particulars relating thereto. When the adjustments for a Tax period create additional Federal Income Tax with respect to a Distributing Co. Federal Consolidated Return, the Controlled Co. shall pay the Distributing Co. any amount due to the Distributing Co. under Section 2.2(b) no earlier than when such additional Federal Income Tax is due. In any other case where the Controlled Co. owes an amount to Distributing Co. under Section 2.2(b) (where, for example, the adjustments do not create any additional Federal Income Tax because the Controlled Group uses a Tax Attribute of the Distributing Group), the Controlled Co. shall pay the Distributing Co. any amount due to the Distributing Co. under Section 2.2(b) no earlier than after the expiration of the applicable statute of limitations for the Tax period in which the adjustments are made. Any payments required under this Section 5.2(a) shall include interest computed at the Prime Rate based on the number of days from the date any additional Tax was paid by Distributing Co. to

the date of the payment under this Section 5.2(a), or in the case the amount due Distributing Co. under Section 2.2(b) does not involve any additional Federal Income Tax (for example, the use by Controlled Group of a Tax Attribute of the Distributing Group), from the date any additional Tax would have been required to be paid by Distributing Co. to the date of payment under this Section 5.2(a).

(b) Adjustments Resulting in Overpayments. Except as provided in Section 4.7 (d), Distributing Co. shall retain any Tax refund or other Tax Benefit resulting from any adjustment to the Consolidated Tax Liability or to any Distributing Co. Federal Consolidated Return.

5.3 Payment of State Income Tax With Respect to Returns Filed After the Distribution Closing Date. In the case of any Consolidated or Combined State Income Tax Return filed after the Distribution Closing Date:

(a) Computation and Payment of Tax Due. On or prior to any Payment Date for any Tax Return with respect to any State Income Tax, the Responsible Company shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 4.4 relating to consistent accounting practices) with respect to such Tax Return on such Payment Date and the Responsible Company shall, if it is not the Company liable for the Tax reported on such Tax Return, notify the Company liable for such Tax in writing of the amount of Tax required to be paid on such Payment Date. The Company liable for such Tax will pay such amount to such Tax Authority on or before such Payment Date.

(b) Amount Due for Prior Periods. Subject to adjustments as set forth in Section 2.3(b)(ii), no amounts are currently due and owing by the Controlled Co. with respect to any Consolidated or Combined State Income Tax for periods ending on or prior to the year ended on December 31, 2001 or for Tax periods ended in 2002.

5.4 Payment of State Income Taxes Related to Adjustments.

(a) Adjustments Resulting in Underpayments. Distributing Co. shall pay to the applicable Tax Authority when due any additional State Income Tax required to be paid as a result of any adjustment to the Tax liability with respect to any Tax Return for any Consolidated or Combined State Income Tax for any Pre-Distribution Period. Controlled Co. in accordance with Section 2.3(b)(ii) shall pay to Distributing Co. any amount due Distributing Co. under
Section 2.3(b)(ii) within ninety (90) days from the date of receipt by Controlled Co. of a written notice and demand from Distributing Co. for payment of the amount due, accompanied by a statement describing in reasonable detail the particulars relating thereto. When the adjustments for a Tax Period create additional State Income Tax with respect to a Consolidated or Combined State Income Tax Return, the Controlled Co. shall pay the Distributing Co. any amount due to the Distributing Co. under Section 2.3(b)(ii) no earlier than when such additional State Income Tax is due. In any other case where the Controlled Co. owes an amount to Distributing Co. under Section 2.3(b)(ii) (where, for example, the adjustments do not create any

additional State Income Tax because the Controlled Group uses a Tax Attribute of the Distributing Group), the Controlled Co. shall pay the Distributing Co. any amount due to the Distributing Co. no earlier than after the expiration of the applicable statute of limitations for the Tax period in which the adjustments are made. Controlled Co. shall also pay to Distributing Co. interest on its respective share of any additional Tax computed at the Prime Rate based on the number of days from the date the additional Tax was paid by Distributing Co. to the date of its payment to Distributing Co. under this Section 5.4(a), or in the case the amount due Distributing Co. under Section 2.3(b)(ii) does not involve any additional State Income Tax (because, for example, of the use by Controlled Group of a Tax Attribute of the Distributing Group), from the date any additional Tax would have been required to be paid by Distributing Co. to the date of payment under this Section 5.2(a).

(b) Adjustments Resulting in Overpayments. Except as provided in Section 4.7 (d), Distributing Co. shall retain any Tax refund or other Tax Benefit resulting from any adjustment to the Tax liability with respect to any Tax Return for any Consolidated or Combined State Income Tax for any Pre-Distribution Period.

5.5 Payment of Separate Company Taxes. Each Company shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Separate Company Taxes owed by such Company or a member of such Company's Group.

5.6 Indemnification Payments. If any Company (the "payor") is required to pay to a Tax Authority a Tax that is properly allocated to another Company (the "responsible party") under this Agreement, the responsible party shall reimburse the payor within ninety (90) days of delivery by the payor to the responsible party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. The reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 5.6.

6. TAX BENEFITS. If a member of the Controlled Group receives any Tax Benefit with respect to any Taxes for which a member of the Distributing Group is liable hereunder, the Controlled Co. shall make a payment to the Distributing Co. within ninety (90) days following receipt of the Tax Benefit in an amount equal to the Tax Benefit (including any Tax Benefit realized as a result of the payment) plus interest on such amount computed at the Prime Rate based on the number of days from the date of receipt of the Tax Benefit to the date of the payment of such amount under this Section 6.

7. ASSISTANCE AND COOPERATION.

7.1 General. After the Distribution Closing Date, each of the Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other's agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies and their Affiliates including (i) preparation and filing of Tax Returns, (ii) the liability for and amount of any Taxes due (including estimated Taxes) or the right to and

amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Company and their Affiliates available to such other Company as provided in Section 8. Each of the Companies shall also make available to each other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. For purposes of clarification, the Distributing Co. and its employees, agents or accountants shall be given direct access to employees and agents of the Controlled Group engaged in operations in order to prepare and file Tax Returns. Any information or documents provided under this Section 7 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes.

7.2 Income Tax Return Information. Each Company will provide to the other Company information and documents relating to their respective Groups required by the other Company to prepare Tax Returns. The Responsible Company shall determine a reasonable compliance schedule for such purpose in accordance with Distributing Co.'s past practices. Any additional information or documents the Responsible Company requires to prepare such Tax Returns will be provided in accordance with past practices, if any, or as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

8. TAX RECORDS.

8.1 Retention of Tax Records. Except as provided in Section 8.2, each Company shall preserve and keep all Tax Records exclusively relating to the assets and activities of its respective Group for Pre-Distribution Tax Periods, and Distributing Co. shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Distribution Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (a) ninety (90) days after the expiration of any applicable statutes of limitation, and (b) seven (7) years after the Distribution Closing Date. If, prior to the expiration of the applicable statute of limitation and such seven-year period, a Company reasonably determines that any Tax Records which it is required to preserve and keep under this Section 8 are no longer material in the administration of any matter under the Code or other applicable Tax Law, such Company may dispose of such records upon ninety (90) days prior notice to the other Company. Such notice shall include a list of the records to be disposed of describing in reasonable detail each file, book, or other records being disposed. The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such 90-day period, all or any part of such Tax Records.

8.2 State Income Tax Returns. Tax Returns with respect to State Income Taxes

and workpapers prepared in connection with preparing such Tax Returns shall be preserved and kept, in accordance with the terms of Section 8.1, by the Company having liability for the Tax.

8.3 Access to Tax Records. The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records in their possession to the extent reasonably required by the other Company in connection with the preparation of Tax Returns, audits, litigation, or the resolution of items under this Agreement.

9. TAX CONTESTS.

9.1 Notice. Each of the Companies shall provide prompt notice to the other Company of any proposed assessment, actual assessment or proceeding or other Tax Contest on or before ninety (90) days after the date it becomes aware of such pending or threatened event related to Taxes for Tax Periods for which it is indemnified by the other Company hereunder. Such notice shall contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such party fails to give the indemnifying party prompt notice of such asserted Tax liability, then (i) if the indemnifying party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying party shall have no obligation to indemnify the indemnified party for any Taxes arising out of such asserted Tax liability, and (ii) if the indemnifying party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a monetary detriment to the indemnifying party, then any amount which the indemnifying party is otherwise required to pay the indemnified party pursuant to this Agreement shall be reduced by the amount of such detriment.

9.2 Control of Tax Contests.

(a) Separate Company Taxes. In the case of any Tax Contest with respect to any Separate Company Tax, the Company having liability for the Tax shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability.

(b) Consolidated or Combined Income Taxes. In the case of any Tax Contest with respect to any Consolidated or Combined Income Tax, (i) Distributing Co. shall control and decide on the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any Distributing Adjustment, including settlement of any such Distributing Adjustment and (ii) Controlled Co. shall have the right and authority to direct Distributing Co. in the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any Controlled Adjustment, including settlement of any such Controlled Adjustment, and (iii) Distributing Co. shall control the defense or prosecution of Joint Adjustments, including settlement of any such Joint Adjustment, and any and all administrative matters not directly and

exclusively related to any Distributing Adjustment or Controlled Adjustment. A Company shall not agree to any Tax liability for which another Company may be liable under this Agreement, or compromise any claim for any Tax Benefit which another Company may be entitled under this Agreement, without such other Company's written consent (which consent may be given or withheld at the sole discretion of the Company from which the consent would be required), except that this sentence shall not limit Distributing Co.'s authority and rights under clause (iii) of the preceding sentence. The Distributing Co., in the case of any examination or audit of a Distributing Co. Federal Consolidated Return, and the Responsible Company in the case of any examination or audit of a Consolidated or Combined State Income Tax Return, shall be the only parties representing the members of the Group before, or meeting with, any Federal or State Tax Authority in connection with the examination or audit. Notwithstanding the representation by the Distributing Co. or Responsible Company before such Tax Authority, the Distributing Co. or Responsible Company shall (A) provide the Controlled Co. with all information reasonably requested relating to any Controlled Adjustment or Joint Adjustment; (B) submit to such Tax Authority any facts, legal arguments or other matters deemed advisable by Controlled Co. and provided by it to Distributing Co. or the Responsible Company; and (C) not have the authority to settle or otherwise compromise a Controlled Adjustment.

10. EFFECTIVE DATE. This Agreement shall be effective on the Distribution Closing Date.

11. NO INCONSISTENT ACTIONS.

11.1 Prohibited Actions. Controlled Co. covenants and agrees that it will not take any Prohibited Action (as defined below), and it will cause its Affiliates to refrain from taking any Prohibited Action, unless it has obtained the prior written consent of Distributing Co. With respect to any Prohibited Action proposed by Controlled Co., Distributing Co. shall grant its consent to such Prohibited Action if, subject to Section 11.3, the Controlled Co. obtains a ruling with respect to the Prohibited Action from the Internal Revenue Service or other applicable Tax Authority that is reasonably satisfactory to the Distributing Co., or the Controlled Co. obtains a tax opinion addressed to Distributing Co. from one or more qualified firms designated by Distributing Co. and such tax opinion is satisfactory to the Distributing Co. in its absolute discretion. A Prohibited Action is any action which is inconsistent with the Tax treatment of the Transactions and Distribution as contemplated in the Ruling Request and Letter Ruling, and includes, but is not limited to, the following actions:

(a) any acquisition, directly or indirectly, of the shares of capital stock of the Controlled Co. which has the effect of disqualifying a Distribution, or any part thereof, from tax-free treatment under Section 355 of the Code, including stock redemptions and stock issuances (whether in public offerings, private placements or otherwise) and whether or not any such acquisition is the result of direct actions, or within the control, of the Controlled Co.;

(b) a liquidation of the Controlled Co.;

(c) a merger or consolidation with, or acquisition of Controlled Co. by,

another company or person;

(d) the sale, distribution or other disposition of the assets of the Controlled Co. in a manner that would adversely affect the Income Tax consequences of the Transactions;

(e) the discontinuance of any material active businesses conducted by Controlled Co. as of the Distribution Closing Date;

(f) any event or fact relating to the Controlled Co. which is inconsistent with a representation made by the Controlled Co. or Distributing Co. in the Ruling Request, a representation, condition or factual assumption contained in the Letter Ruling or otherwise in connection with any distribution under Code Section 355;

(g) any issuance of stock of Controlled Co. by Controlled Co. (whether in public offerings, private placements or otherwise) or redemption or acquisition of stock of Controlled Co. by Controlled Co., after the Distribution (including stock of Controlled Co. issued to a person or group of persons which becomes a five percent (5%) or greater shareholder of Controlled Co. as defined in Section 355(e) of the Code and actively participates in the management or operations of Controlled Co. by reason of that acquisition or at any point thereafter and before the end of the two-year period beginning on the Distribution Closing Date) which, by itself or together with transactions with respect to Controlled Co. after the Distribution Closing Date and together with other transactions with respect to Distributing Co. or Controlled Co. stock within two years prior to the Distribution Closing Date, would cause the Distribution to be presumed under Section 355(e)(2)(B) of the Code or Treasury Regulations thereunder to be a distribution which is under Section 355(e)(2)(A)(ii) of the Code part of a plan or series of related transactions pursuant to which one or more persons acquire directly or indirectly stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock of Controlled or stock possessing fifty (50%) percent or more of the total value of all classes of stock of Controlled. In applying this section (g) with respect to other transactions with respect to Distributing Co. or Controlled Co. stock within two years prior to the Distribution Closing Date, the Distribution, Distributing Co.'s stock repurchase plan, all outstanding Distributing Co. stock options and warrants, and stock issued on the exercise of options or as consideration in acquisitions shall be taken into account. Unless otherwise provided in proposed, final or temporary Treasury Regulations under
Section 355(e) of the Code or other clear authority within the meaning of Treasury Regulations section 1.6662-4(d)(3)(iii) and (iv), the exercise of options shall be considered an issuance or acquisition of stock. For purposes of this Section 11.1, any reference to Controlled Co. includes a reference to any member of the Controlled Group, and any reference to Distributing Co. includes a reference to any member of the Distributing Group. Except for a longer period as may be required by Treasury Regulations under Section 355(e) of the Code, clauses (a), (b), (c), (d), (e) and (f) of this Section 11.1 cease to have effect three (3) years after the Distribution Closing Date; clause (g) shall cease to have effect one year thereafter; and clause (e) shall cease to have effect after December 31, 2002.

11.2 No Inconsistent Plan or Intent. Controlled Co. and Distributing Co. each represents and warrants that neither it nor any of its Affiliates has any plan or intent to take any

action which is inconsistent with any factual statements or representations in the Letter Ruling or Ruling Request. Regardless of any change in circumstances, Controlled Co. and Distributing Co. each covenant and agree that it will not take, and it will cause its Affiliates to refrain from taking, any such inconsistent action on or before the expiration of the applicable statute of limitation period for the assessment of Tax for the Tax period in which the Distribution Closing Date occurs other than as permitted in this Section 11.

11.3 Amended or Supplemental Rulings. No party other than Distributing Co. shall have the authority to file with the IRS a ruling request relating to the Transactions or Distribution. At the expense of Controlled Co., Controlled Co. may prepare, or cause to be prepared, an amended or supplemental ruling request to be filed by Distributing Co. and relating to the Transactions or Distribution and provide a copy of such request to Distributing Co. provided, however, that any decision whether to file any such request with the IRS, the form and content of such request and the precise rulings requested shall be made exclusively by Distributing Co .

11.4 Waiver. Notwithstanding Section 11.1(a) or (g) to the contrary, the limitations in Section 11.1(g) shall not apply if (i) there is no excess of the fair market value of all of the shares of Controlled Co. distributed in the Distribution on the Distribution Closing Date over the adjusted tax basis of those shares and (ii) the Controlled Co. obtains a tax opinion addressed to Distributing Co. from a qualified firm designated by Controlled Co. and such tax opinion is satisfactory to Distributing Co. in its reasonable discretion. The adjusted basis of the shares in this Section 11.4(a) shall be estimated by Distributing Co. within one hundred twenty (120) days after the Distribution Closing Date and that amount shall be provided in writing to Controlled Co. The initial estimate of the adjusted tax basis of the shares shall be adjusted based upon the Consolidated Tax Return as filed by the Distributing Group for the Tax period ended on December 31, 2001, or as later adjusted by a Tax Authority, but any such adjustment (whether by such Tax Return or a Tax Authority) shall not affect the application of clauses (i) and (ii), or stock issuances or other actions limited by Section 11.1(a) or (g), before the particular adjustment.

11.5 Effect of Waiver. The Distributing Co.'s granting of consent to a Prohibited Action, whether in accordance with Section 11.1, Section 11.4 or otherwise, does not make a Prohibited Action a non-Prohibited Action for purposes of this Agreement. Thus, the Controlled Co. may be liable to the Distributing Group for such Prohibited Action despite such consent in accordance with Section 2.5(b) or Section 11.6.

11.6 Additional Indemnification by Controlled Co. In addition to the Controlled Co. being responsible under Section 2.5(a)(ii), 2.5(a)(iii) and 2.5(b) for Taxes as a result of the Controlled Co. engaging in any Prohibited Action or breaching its representations, warranties or covenants in Section 11.2, the Controlled Co. and each member of the Controlled Group indemnifies, defends and holds harmless the Distributing Co. and each member of the Distributing Group, and each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, from and against any and all liabilities, obligations, damages, costs, expenses or fees relating to, arising out of or

resulting from the Controlled Co. or any member of the Controlled Group engaging in any Prohibited Action or breaching its representations, warranties or covenants in Section 11.2 including, but not limited to, any and all liabilities, obligations, damages, costs, expenses or fees relating to any lawsuit by the shareholders of Distributing Co. against the Distributing Co., which may be filed if the Distribution fails to qualify for tax-free treatment for such shareholders under Section 355 of the Code.

11.7 Additional Indemnification by Distributing Co. For purposes of this Section 11.7, a Prohibited Action of Distributing Co. has the meaning it has in Section 11.1 by substituting "Distributing Co." for "Controlled Co." The Distributing Co. and each member of the Distributing Group indemnifies, defends and holds harmless the Controlled Co. and each member of the Controlled Group, and each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, from and against any and all liabilities, obligations, damages, costs, expenses or fees relating to, arising out of or resulting from the Distributing Co. or any member of the Distributing Group engaging in any Prohibited Action or breaching its representations, warranties or covenants in Section 11.2 including, but not limited to, any and all liabilities, obligations, damages, costs, expenses or fees relating to any lawsuit by the shareholders of Distributing Co. against the Controlled Co. which may be filed if the Distribution fails to qualify for tax- free treatment for such shareholders under Section 355 of the Code.

11.8 Additional Taxes. Controlled Co. shall also be liable for any Income Taxes of the Distributing Group for its Tax Period ending on December 31, 2000 relating to income arising by reason of Treasury Regulations section 1.1502-19, if Controlled Co. does not contribute before the Distribution Closing Date funds to its subsidiaries as directed by Distributing Co. and, as a result of such failure, income arises in the Distributing Group by reason of Treasury Regulations section 1.1502-19.

11.9 Standard. Any opinion issued to Distributing Co. in accordance with Section 11(a) or 11(d)(i) shall be issued under a "should" standard rather than under a "more likely than not" or lesser standard of certainty.

12. SURVIVAL OF OBLIGATIONS. Unless otherwise stated to the contrary in this Agreement, the representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

13. TREATMENT OF PAYMENTS; TAX GROSS UP.

13.1 Treatment of Tax Indemnity and Tax Benefit Payments. n the absence of any change in tax treatment under the Code or other applicable Tax Law,

(a) any Tax indemnity payments made by a Company under
Section 5 shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution Closing Date, but

only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Treasury Regulation Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws); and

(b) any Tax Benefit payments made by a Company under Section 6, shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution Closing Date, but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Treasury Regulation Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws).

13.2 Tax Gross Up. If notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all Income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive pursuant to this Agreement.

13.3 Interest Under This Agreement. Anything herein to the contrary notwithstanding, to the extent one Company ("indemnitor") makes a payment of interest to another Company ("indemnitee") under this Agreement with respect to the period from the date that the indemnitee made a payment of Tax to a Tax Authority to the date that the indemnitor reimbursed the indemnitee for such Tax payment, or with respect to the period from the date that the indemnitor received a Tax Benefit to the date indemnitor paid the Tax Benefit to the indemnitee, the interest payment shall be treated as interest expense to the indemnitor (deductible to the extent provided by law) and as interest income by the indemnitee (includible in income to the extent provided by law). The amount of the interest payment shall not be adjusted under Section 13.2 to take into account any associated Tax Benefit to the indemnitor or increase in Tax to the indemnitee.

14. DISAGREEMENTS. If after good faith negotiations the parties cannot agree on the application of this Agreement to any Tax matter, then the Tax matter will be referred to a nationally recognized accounting firm selected by Distributing Co. (the "Accounting Firm") provided, however, that the firm so selected may not be the firm regularly used by Distributing Co. or Controlled Co. The Accounting Firm shall furnish written notice to the parties of its resolution of any such disagreement as soon as practical, but in any event no later than forty-five (45) days after its acceptance of the matter for resolution. Any such resolution by the Accounting Firm will be conclusive and binding on all parties to this Agreement. In accordance with Section 15, each party shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Accounting Firm. All fees and expenses of the Accounting Firm in connection with such referral shall be shared equally by the parties affected by the matter.

15. LATE PAYMENTS. Any amount owed by one party to another party under this Agreement which is not paid when due shall bear interest at the Prime Rate, compounded semiannually, from the due date of the payment to the date paid. To the extent interest required to be paid under this Section 15 duplicates interest required to be paid under any other provision of this Agreement, interest shall be computed at the higher of the interest rate provided under this Section 15 or the interest rate provided under such other provision.

16. EXPENSES.

16.1 Except as otherwise provided in this Agreement, each party and its Affiliates shall bear their own expenses incurred in connection with the preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

16.2 Fees, costs and expenses incurred by the Distributing Group to unaffiliated third parties ("Third-Party Costs") shall be paid by the Controlled Group to the extent set forth in this Section 16.2.

(a) Fifty percent (50%) of the Third-Party Costs relating to the following Costs:
(i) Costs to the Accounting Firm as provided in
Section 14;

(ii) Costs relating to a Tax Contest which involves a Joint Adjustment or shared liability under Section 2.5(c); and

(iii) relating to confirmation by an accounting firm of the Controlled Group's determinations under Sections 5.1(c)(ii) and 5.3(c)(ii).

(b) One hundred percent (100%) of the Third-Party Costs relating to the following Costs:

(i) Costs relating to the preparation and filing of Consolidated or Combined Income Tax Returns specified in Section 5.1(c) and
Section 5.3(c), which are allocated by the third party providing the services to members of the Controlled Group;

(ii) Costs relating to the preparation and filing of Tax Returns described in Section 4.2(d);

(iii) Costs relating to a Tax Contest which involves a Controlled Adjustment; and

(iv) Costs incurred by the Distributing Group in connection with an action, or proposed action, of a member of the Controlled Group which constitutes, or might constitute, a Prohibited Action under Section 11, including any Costs incurred by the Distributing Group in making a decision to waive the restriction on an action of a member of the

Controlled Group which constitutes, or might constitute, a Prohibited Action.

17. GENERAL PROVISIONS.

17.1 Addresses and Notices. Any notice, demand, request or report required or permitted to be given or made to any party under this Agreement shall be in writing and shall be deemed given or made when delivered in party or when sent by first class mail or by other commercially reasonable means of written communication (including delivery by an internationally recognized courier service or by facsimile transmission) to the party at the party's principal business address. A party may change the address for receiving notices under this Agreement by providing written notice of the change of address to the other parties.

17.2 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

17.3 Waiver. No failure by any party to insist upon the strict performance of any obligation under this Agreement or to exercise any right or remedy under this Agreement shall constitute waiver of any such obligation, right, or remedy or any other obligation, rights, or remedies under this Agreement.

17.4 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not be affected thereby.

17.5 Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other parties in accordance with Section 9.

17.6 Integration. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements and understandings pertaining thereto. In the event of any inconsistency between this Agreement and the Distribution Agreement or any other agreements relating to the transactions contemplated by the Distribution Agreement, the provisions of this Agreement shall control.

17.7 Construction. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning and shall not be strictly construed for or against any party.

17.8 No Double Recovery; Subrogation. No provision of this Agreement shall be construed to provide an indemnity or other recovery for any costs, damages, or other amounts for which the damaged party has been fully compensated under any other provision of this Agreement

or under any other agreement or action at law or equity. Unless expressly required in this Agreement, a party shall not be required to exhaust all remedies available under other agreements or at law or equity before recovering under the remedies provided in this Agreement. Subject to any limitations provided in this Agreement (for example, the limitation on filing claims for refund in Section 4.7), the indemnifying party shall be subrogated to all rights of the indemnified party for recovery from any third party.

17.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.

17.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

17.11 Joint and Several Liability. Whenever the Distributing Co. is liable to the Controlled Co. under this Agreement (a "Distributing Co. Liability") or the Controlled Co. is liable to the Distributing Co. hereunder (a "Controlled Co. Liability"), each member of the Distributing Group shall be jointly and severally liable for a Distributing Co. Liability and each member of the Controlled Group shall be jointly and severally liable for a Controlled Co. Liability. This Section 17.11 shall be binding upon the successors, assigns or transferees of any member of the applicable Group, and upon any entity which becomes affiliated with the applicable Group after the date hereof and which would have been a member of the Distributing Group or Controlled Group if the affiliation existed immediately after the Distribution Closing Date (a "New Member"). Each of the Distributing Co. and the Controlled Co. shall cause each existing member and New Member of the Distributing Group and Controlled Group, as applicable, to execute a counterpart to this Agreement and agree to the provisions hereof including this Section 17.11.

17.12 General Provision. The Distributing Co. shall be responsible for preparing and mailing to the shareholders of Distributing Co. the statement required by Treasury Regulation Section 1.355-5(b).

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers as of the date first written above.

Dover Downs Entertainment, Inc.

By: ___________________________________
Name:___________________________________
Its: ___________________________________

Dover Downs Gaming & Entertainment, Inc.

By: ___________________________________ Name:___________________________________ Its: ___________________________________

EXHIBIT 10.5

REAL PROPERTY AGREEMENT

THIS AGREEMENT is executed and made effective as of January 15, 2002, by and between DOVER DOWNS ENTERTAINMENT, INC., a Delaware corporation ("DVD"), DOVER DOWN GAMING & ENTERTAINMENT, INC., a Delaware corporation ("Gaming & Entertainment"), DOVER DOWNS, INC. ("Slots") and DOVER DOWNS INTERNATIONAL SPEEDWAY, INC. ("Speedway").

WHEREAS, DVD, through its ownership of all of the issued and outstanding common stock (the "Stock") of Slots, participates in the business of gaming operations; and

WHEREAS, the Board of Directors of DVD has determined that it would be advisable and in the best interests of DVD and its shareholders for DVD to contribute all of the Stock and any other related assets and liabilities relating to gaming operations (the "Business") to Gaming & Entertainment in exchange for Gaming & Entertainment common stock and Class A Common Stock and thereafter to distribute all of the outstanding shares of Gaming & Entertainment common stock and Class A Common Stock on a pro rata basis to the holders of DVD's common stock and Class A Common Stock (the "Distribution") pursuant to an Agreement Regarding Distribution and Plan of Reorganization, dated as of the date hereof, between DVD and Gaming & Entertainment (the "Distribution Agreement"); and

WHEREAS, the parties intend that the transactions described herein will be effective at the Effective Time (as defined in the Distribution Agreement); and

WHEREAS, the parties hereto deem it to be appropriate and in the best interests of the parties that they enter into certain agreements relative to the real property at DVD's Dover, Delaware facility on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Real Property Transfers.

At or prior to the Effective Time, or as soon thereafter as is reasonably practical, the following real property transfers shall take place, in each case without the payment of any monetary consideration (the "Real Property Transfers"):

(a) DVD shall cause the transfer to Slots of a 9.3 plus or minus acre parcel of land with all improvements thereon owned by Dover Downs Properties, Inc. ("Properties") and previously acquired by Properties from Lowe's Home Centers (the "Lowe's Parcel");

(b) DVD shall cause the subdivision (the "Subdivision") of the lot upon which the casino, hotel and auto superspeedway facilities are located into two lots: the first lot shall consist of a 77 plus or minus acre parcel of land with all improvements thereon, including the casino, hotel, access roads, parking facilities and the Lowe's Parcel ("Lot 1"); and the second lot shall consist of a 142 plus or minus acre parcel of land with all improvements thereon, including the auto superspeedway ("Lot 2"), with the boundary line between Lot 1 and Lot 2 to be as set forth in that certain plan dated October 25, 2001 by Becker Morgan Group prepared in connection with a variance request relative to the waiver of all building line restrictions between Lot 1 and Lot 2 (the "Becker Morgan Plan"); and

(c) DVD shall, subsequent to the Subdivision, cause the transfer to Speedway, of Lot 2 and all other parcels of land, with any improvements thereon, owned by Slots or Properties within Kent County, in the State of Delaware, other than Lot 1.

2. Liabilities Associated with Real Property Transfers.

With respect to the Real Property Transfers:

(a) All real property shall be conveyed in fee simple by special warranty deed and the conveyances are made AS IS, WHERE IS, with no representation or warranty and as further disclaimed in Section 2.01(f) to the Distribution Agreement, except that the transferor shall discharge any mortgages, mechanics liens or other liens dischargeable by the payment of money prior to the transfer;

(b) All liabilities associated with claims arising after the Effective Time which relate to the condition of any real property at the time of transfer, including the environmental condition thereof, shall be borne by the transferee with indemnification afforded to the transferor by the transferee and the ultimate corporate parent of the transferee which is a party hereto for all Indemnifiable Loss as defined in and pursuant to the indemnification provisions set forth in Articles IV and V to the Distribution Agreement; and

(c) All liabilities associated with the use and occupancy of any real property prior to the Effective Time, other than as set forth in Section 2(b) above, shall constitute DVD Liabilities or Gaming & Entertainment Liabilities, as the case may be, in accordance with the Distribution Agreement.

3. Expenses and Prorations Associated with Real Property Transfers.

With respect to the Real Property Transfers:

(a) The transferee shall pay for recording the deed and for all searches, title insurance and other conveyancing and closing expenses;

(b) The parties anticipate an exemption from transfer taxes but agree that any transfer taxes or title company settlement charges will be divided equally among transferor and transferee; and

(c) Real estate taxes and utility charges previously paid or due and owing shall not be prorated as of the Effective Time.

4. Future Uses of Property.

(a) The deed or deeds required for the Real Property Transfers to Speedway shall contain certain use restrictions prohibiting Speedway from using the property for a casino, hotel, and certain other uses to be agreed upon, but shall not in any way restrict the continued operation of the auto superspeedway.

(b) Notwithstanding the approval of the variance request for a waiver of all building line restrictions referred to in Section 1(b) above, DVD and Gaming & Entertainment shall ensure that

the owner of Lot 1 or the owner of Lot 2, as the case may be, shall not construct any improvements, other than those depicted on the Becker Morgan Plan, within fifty (50) feet of the boundary line between Lot 1 and Lot 2 without obtaining the prior written approval of the other property owner, provided that either party shall be entitled to construct any improvements within fifty (50) feet of the boundary line which would not otherwise require regulatory approval without the prior written approval of the other party.

5. Real Property Easements.

At or prior to the Effective Time, or as soon thereafter as is reasonably practical, the following real property easements shall be entered into, in each case without the payment of any monetary consideration (the "Real Property Easements"):

(a) Speedway shall enter into one or more easement agreements with Slots pursuant to which Speedway shall grant to Slots, at no charge to Slots, certain use and occupancy rights relative to the horse track on Lot 2 for horse racing purposes. The easement shall remain in effect as long as Slots shall maintain a license to conduct horse racing at the horse track, but shall be limited to exclusive use during the period beginning November 1 of each year and ending April 30 of the following year, together with setup and tear down rights for the two weeks before and after such period. During each exclusive use period, Slots shall also be permitted use and occupancy of (1) the western portion of the Winston Cup garage parking area located on the inside of the Superspeedway and (2) certain outdoor viewing areas, including the winner's circle. Slots shall be required to maintain the harness track in at least as good a condition as exists at the Effective Time and shall be responsible for maintaining the inside and outside fences, all exterior lighting, the toteboard, the winner's circle, and the horse racing camera tower and judging stands; and

(b) Slots shall enter into one or more easement or cross-easement agreements relative to access, electric lines, phone lines, water lines, and sewer discharge; and

(c) Slots and Speedway shall enter into a cross-easement relative to stormwater management for Lot 1 and Lot 2 substantially consistent with past practices.

6. Real Property Leases.

At or prior to the Effective Time, or as soon thereafter as is reasonably practical, the following real estate agreements shall be entered into (the "Real Property Leases"):

(a) Slots shall enter into a long-term lease with Speedway under which will be afforded to Speedway, at no charge to Speedway, certain use and occupancy rights relative to: (1) the enclosed grandstand on Lot 1, such use to be for the third floor seating area and dining room of the grandstand, with access substantially consistent with past practices; and (2) certain parking facilities on Lot 1, such use to include an area for Speedway to erect temporary credential facilities and to be substantially consistent with past practices, but subject to the parking and access needs of the casino, hotel and other facilities of Slots on Lot 1 and modification due to future development plans of Slots. The term of the lease shall be for the shorter of 99 years or as long as Speedway continues to operate the auto superspeedway on Lot 2, but shall be limited to exclusive use during two (2) extended motorsports event weekends each calendar year, on dates as are chosen by Speedway during the period from May 1 to October 30, each such extended weekend not to exceed four (4) days of motorsports and other

entertainment events, together with setup and tear down rights for the two weeks before and after such extended weekend;

(b) Slots and Speedway shall enter into a short-term lease with respect to certain office space to be used by Speedway employees.

7. Liabilities Associated Real Property Easements and Real Property Leases.

With respect to the Real Property Easements and Real Property Leases::

(a) Gaming & Entertainment shall indemnify, defend and hold harmless DVD and its affiliates and their respective directors, officers, employees and agents (the "DVD Indemnitees") from and against any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any and all actions or threatened actions) ("Indemnifiable Losses") incurred or suffered by any of the DVD Indemnitees arising from, related to or associated with (i) the condition of, the furnishing of, or the failure to furnish any real property or other rights to Gaming & Entertainment or its subsidiaries as provided for in such agreements, other than liabilities arising out of the willful misconduct or gross negligence of the DVD Indemnitees and (ii) the gross negligence or willful misconduct of the Gaming & Entertainment Indemnitees (as defined below) relative to the furnishing of, or the failure to furnish any real property or other rights to DVD or its subsidiaries as provided for in such agreements; and

(b) DVD shall indemnify, defend and hold harmless Gaming & Entertainment and its affiliates and their respective directors, officers, employees and agents (the "Gaming & Entertainment Indemnitees") from and against any and all Indemnifiable Losses incurred or suffered by any of the Gaming & Entertainment Indemnitees arising from, related to or associated with (i) the condition of, the furnishing of, or the failure to furnish any real property or other rights to DVD or its subsidiaries as provided for in such agreements, other than liabilities arising out of the willful misconduct or gross negligence of the Gaming & Entertainment Indemnitees, and (ii) the gross negligence or willful misconduct of the DVD Indemnities relative to the furnishing of, or the failure to furnish any real property or other rights to Gaming & entertainment or its subsidiaries as provided for in such agreements.

8. Limitation of Liability.

In no event shall either DVD, Gaming & Entertainment or any of their respective subsidiaries have any liability, whether based on contract, tort (including, without limitation, negligence), warranty or any other legal or equitable grounds, for any punitive, consequential, special, indirect or incidental loss or damage suffered by the other arising from or related to this Agreement, the Real Property Transfers, the Real Property Easements, or the Real Property Leases including without limitation, loss of data, profits, interest or revenue, or interruption of business, even if the other party is advised of the possibility of such losses or damages.

9. Insurance.

As long as any Real Property Easement or Real Property Lease is in effect, each party hereunder shall obtain and maintain the following insurance:

(a) Statutory workers compensation including employers liability insurance with a limit of liability of not less than Five Hundred Thousand Dollars ($500,000) and a waiver of subrogation to the other party, its affiliates, and their respective directors, agents, employees and officers.

(b) Commercial general liability and umbrella/excess liability insurance covering claims for injuries to members of the public or damage to property of others arising out of any negligent act or omission of such party or any of its employees or agents. The policy shall be an occurrence form and at least as broad as a standard ISO form with the following minimum limits:

$100,000,000  Each Occurrence
$100,000,000  Products and Completed Operations/Aggregate
$100,000,000  Personal and Advertising Injury
$100,000,000  General Aggregate

The policy shall include the following endorsements:

Severability of Interest Primary, not Contributing Coverage Blanket Contractual Broad form Proprty Damage Liquor Liability

(c) Commercial automobile liability insurance covering claims for injuries to members of the public and/or damages to property of others arising from the use of motor vehicles, with a minimum $1,000,000 combined single limit for bodily injury and property damage liability together with not less than $50,000,000 in umbrella/excess coverage. Coverage must be at least as broad as a standard ISO form. Coverage must apply to any auto, including hired and non- owned autos.

(d) The insurance required by clauses (b) and (c) above shall be endorsed to name the other party, its affiliates, and their respective directors, agents, employees and officers as an additional insured.

(e) All risk property insurance, including business interruption insurance, covering such party's property, including a waiver of subrogation against the other party, its affiliates, and their respective directors, agents, employees and officers.

(f) All insurance shall be in a form and with insurers reasonably acceptable to counsel for the other party. Each party shall be required to give the other party at least thirty (30) days written notice of any modification, cancellation or exhaustion of limits.

(g) Each party may require that the limits set forth in this Section be increased if the amount being maintained is reasonably deemed inadequate by the requesting party or may require that additional coverages be obtained if reasonably deemed necessary by the requesting party, provided that (1) no such request may be made until the five (5) year anniversary of the Effective Time,
(2) no subsequent request shall be made within five (5) years of a prior request, (3) the insurance must be available at commercially reasonable rates, and (4) disputes under this Section shall be handled in accordance with Section 10 hereto.

(h) Notwithstanding the minimum limits set forth above, should a party carry higher limits, it shall afford the benefits of coverage required under this Section in all of its policies to the other party, its affiliates, and their respective directors, agents, employees and officers.

10. Dispute Resolution.

Any disputes arising under this Agreement shall be resolved in accordance with Section 13.10 (Disputes) of the Distribution Agreement.

11. General.

(a) Force Majeure. Any delays in or failure of performance by DVD or Gaming & Entertainment under this Agreement or any Real Property Easements or Real Property Leases (the "Ancillary Agreements") shall not constitute a default hereunder or thereunder if and to the extent such delay or failure of performance is caused by occurrences beyond the reasonable control of DVD or Gaming & Entertainment, as the case may be, including, but not limited to: acts of God or the public enemy; compliance with any order or request of any governmental authority; acts of war; riots or strikes or other concerted acts of personnel; or any other causes beyond the reasonable control of DVD or Gaming & Entertainment, whether or not of the same class or kind as those specifically named above.

(b) Confidentiality. Each party shall hold and cause its directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information concerning the other party (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such disclosing party or (b) lawfully acquired after the Effective Time on a non-confidential basis from other sources by the disclosing party), and neither party shall release or disclose such information to any other person, except its auditors, attorneys, financial advisors, bankers and other consultants and advisors who shall be advised of the provisions of this Section and be bound by them.

(c) Expenses. Except as specifically provided in this Agreement or in the Distribution Agreement, all costs and expenses incurred prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement and with the consummation of the transactions contemplated by this Agreement (including, without limitation, all fees for counsel, accountants and financial and other advisors) shall be paid by DVD and all such costs incurred thereafter shall be paid by the party incurring such costs.

(d) Notices. All notices and communications under this Agreement shall be deemed to have been given (a) when received, if such notice or communication is delivered by facsimile, hand delivery or overnight courier, and, (b) three (3) business days after mailing if such notice or communication is sent by United States registered or certified mail, return receipt requested, first class postage prepaid. All notices and communications, to be effective, must be properly addressed to the party to whom the same is directed at its address as set forth in the Distribution Agreement. Either party may, by written notice delivered to the other party in accordance with this Section, change the address to which delivery of any notice shall thereafter be made.

(e) Amendment and Waiver. This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by the party or parties to be charged with such amendment or waiver. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.

(f) Entire Agreement. This Agreement together with the Ancillary Agreements shall constitute the entire understanding of the parties hereto with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter. To the extent that the provisions of this Agreement are inconsistent with the provisions of the Distribution Agreement or any Ancillary Agreement, the provisions of the more specific agreement shall prevail in the following order: Distribution Agreement, this Agreement, Ancillary Agreement.

(g) Parties in Interest. Neither of the parties hereto may assign its rights or delegate any of its duties under this Agreement without the prior written consent of the other party. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Should a party which owns any real property governed by this Agreement sell or otherwise transfer the real property to a third party, it shall be obligated to require that such party agree to be bound by the provisions of this Agreement. Nothing contained in this Agreement or any Ancillary Agreement, express or implied, is intended to confer any benefits, rights or remedies upon any person or entity other than the DVD Indemnitees and Gaming & Entertainment Indemnitees.

(h) Further Assurances and Consents. In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto will use its reasonable efforts to (a) execute and deliver such further instruments and documents and take such other actions as any other party may reasonably request in order to effectuate the purposes of this Agreement and to carry out the terms hereof and (b) take, or cause to be taken, all actions, and do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using its reasonable efforts to obtain any consents and approvals, make any filings and applications and remove any liens, claims, equity or other encumbrances on any asset of the other party necessary or desirable in order to consummate the transactions contemplated by this Agreement; provided that no party hereto shall be obligated to pay any consideration therefor (except for filing fees and other similar charges) to any third party from whom such consents, approvals and amendments are requested or to take any action or omit to take any action if the taking of or the omission to take such action would be unreasonably burdensome to the party or its business.

(i) Severability. The provisions of this Agreement are severable and should any provision hereof be void, voidable or unenforceable under any applicable law, such provision shall not affect or invalidate any other provision of this Agreement, which shall continue to govern the relative rights and duties of the parties as though such void, voidable or unenforceable provision were not a part hereof.

(j) Survival. The indemnification and insurance provisions of this Agreement shall survive until five (5) years after the expiration of all Ancillary Agreements.

(k) Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

(l) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

Dover Downs Entertainment, Inc.

By:    /s/ Denis McGlynn
       --------------------------------
Name:  Denis McGlynn
Its:   President

Dover Downs Gaming & Entertainment, Inc.

By:    /s/ Denis McGlynn
       --------------------------------
Name:  Denis McGlynn
Its:   President

Dover Downs, Inc.

By:    /s/ Denis McGlynn
       --------------------------------
Name:  Denis McGlynn
Its:   President

Dover Downs International Speedway, Inc.

By:    /s/ Denis McGlynn
       --------------------------------
Name:  Denis McGlynn
Its:   President

CREDIT AGREEMENT

among

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

and

WILMINGTON TRUST COMPANY

DATED AS OF JANUARY__, 2002

$55,000,000

TABLE OF CONTENTS

                                                                                                                   Page
                                                                                                                   ----
SECTION 1. DEFINITIONS...........................................................................................     1
         1.1      Defined Terms..................................................................................     1
         1.2      Other Definitional Provisions..................................................................    13

SECTION 2. THE CREDITS...........................................................................................    14
         2.1      Revolving Credit Loans.........................................................................    14
         2.2      Revolving Credit Loan Procedures...............................................................    14
         2.3      [Intentionally Left Blank].....................................................................    ..
         2.4      General Provisions Regarding Loans.............................................................    15
         2.5      Letters of Credit..............................................................................    15
         2.6      Fees...........................................................................................    18
         2.7      Note; Repayment of Revolving Credit Loans......................................................    18
         2.8      Interest on Revolving Credit Loans.............................................................    18
         2.9      Default Rate; Inability to Determine Interest Rate.............................................    19
         2.10     Termination, Reduction and Extension of Commitment.............................................    20
         2.11     Optional and Mandatory Prepayments of Revolving Credit Loans...................................    20
         2.12     Illegality.....................................................................................    21
         2.13     Requirements of Law............................................................................    21
         2.14     Taxes..........................................................................................    22
         2.15     Indemnity......................................................................................    23
         2.16     [Intentionally Left Blank].....................................................................    ..
         2.17     Payments.......................................................................................    23
         2.18     Conversion and Continuation Options............................................................    24
         2.19     Use of Proceeds................................................................................    24

SECTION 3. REPRESENTATIONS AND WARRANTIES........................................................................    24
         3.1      Financial Condition............................................................................    25
         3.2      No Adverse Change..............................................................................    25
         3.3      Corporate Existence; Compliance with Law.......................................................    25
         3.4      Corporate Power; Authorization; Enforceable Obligations........................................    25
         3.5      No Legal Bar...................................................................................    26
         3.6      No Material Litigation.........................................................................    26
         3.7      No Default.....................................................................................    26
         3.8      Taxes..........................................................................................    26
         3.9      Federal Regulations............................................................................    26
         3.10     ERISA..........................................................................................    27
         3.11     Investment Company Act; Public Utility Holding Company Act.....................................    28
         3.12     Purpose of Loans; Letters of Credit............................................................    28
         3.13     Environmental Matters..........................................................................    28
         3.14     No Burdensome Restrictions.....................................................................    29
         3.15     Ownership of Borrower and Subsidiaries.........................................................    29
         3.16     Patents, Trademarks, etc.......................................................................    29
         3.17     Ownership of Property..........................................................................    29

         3.18     Licenses, etc..................................................................................    29
         3.19     Labor Matters..................................................................................    29
         3.20     Material Contracts.............................................................................    29
         3.21     Insurance......................................................................................    30
         3.22     Senior Debt Status.............................................................................    30
         3.23     No Material Misstatements......................................................................    30

SECTION 4. CONDITIONS PRECEDENT..................................................................................    30
         4.1      Conditions to Effectiveness....................................................................    30
         4.2      Conditions to Each Extension of Credit.........................................................    32

SECTION 5. AFFIRMATIVE COVENANTS.................................................................................    33
         5.1      Financial Statements...........................................................................    33
         5.2      Certificates; Other Information................................................................    33
         5.3      Payment of Obligations.........................................................................    34
         5.4      Conduct of Business and Maintenance of Existence...............................................    34
         5.5      Maintenance of Property; Insurance.............................................................    34
         5.6      Inspection of Property; Books and Records; Discussions.........................................    35
         5.7      Notices........................................................................................    35
         5.8      Environmental Laws.............................................................................    36
         5.9      Management Changes.............................................................................    36

SECTION 6. NEGATIVE COVENANTS....................................................................................    36
         6.1      Financial Condition Covenants..................................................................    36
         6.2      Limitation on Debt.............................................................................    37
         6.3      Limitation on Liens............................................................................    37
         6.4      Limitations on Fundamental Changes.............................................................    37
         6.5      Limitation on Sale of Assets...................................................................    38
         6.6      Limitations on Acquisitions, Investments, Loans and Advances...................................    38
         6.7      Limitation on Distributions....................................................................    39
         6.8      Transactions with Affiliates...................................................................    39
         6.9      Fiscal Year....................................................................................    39
         6.10     Change in Business.............................................................................    39
         6.11     Sale and Leaseback.............................................................................    39
         6.12     Limitation on Negative Pledge Clauses..........................................................    39
         6.13     Interest Hedge Agreements......................................................................    39

SECTION 7. EVENTS OF DEFAULT.....................................................................................    40
         7.1      Events of Default..............................................................................    40

SECTION 8. MISCELLANEOUS.........................................................................................    42
         8.1      Amendments and Waivers.........................................................................    42
         8.2      Notices........................................................................................    43
         8.3      No Waiver; Cumulative Remedies.................................................................    43
         8.4      Survival of Representations and Warranties.....................................................    44
         8.5      Payment of Expenses and Taxes..................................................................    44

8.6      Successors and Assigns.........................................................................    44
8.7      Disclosure of Information......................................................................    45
8.8      Adjustments; Set-off...........................................................................    46
8.9      Counterparts...................................................................................    46
8.10     Severability...................................................................................    46
8.11     Integration....................................................................................    46
8.12     Governing Law..................................................................................    46
8.13     Submission To Jurisdiction; Waivers............................................................    46
8.14     Acknowledgements...............................................................................    47
8.15     WAIVERS OF JURY TRIAL..........................................................................    47

SCHEDULE I    Bank and Commitment Information
SCHEDULE II   Letter of Credit Fees

EXHIBITS

EXHIBIT A     Form of Revolving Credit Borrowing Request
EXHIBIT B     Form of Note
EXHIBIT C     Form of Guaranty Agreement
EXHIBIT D     Form of Opinion of Counsel to Borrower and Guarantor
EXHIBIT E     Form of Compliance Certificate

CREDIT AGREEMENT

In consideration of the mutual covenants and agreements herein set forth and for other consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby covenant and agree as follows:

SECTION 1. DEFINITIONS

GAAP; provided, that there shall be excluded therefrom (a) any addition for non- operating gains (including, without limitation, extraordinary or unusual gains, gains from discontinuance of operations or gains arising from the sale of capital assets) and (b) any subtraction for non-operating losses during such period (including, without limitation, extraordinary or unusual losses, losses from the discontinuance of operations or losses arising from the sale of capital assets).

may be liable are not stated or determinable, in which case the amount of such Contingent Obligation shall be such contingently liable Person's maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.

(a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices);

(b) any other indebtedness which is evidenced by a note, bond, debenture or similar instrument;

(c) all Capital Lease Obligations of such Person;

(d) all liabilities secured by any Lien on any property owned by such Person whether or not such Person has assumed or otherwise become liable for the payment thereof;

(e) all obligations of such Person with respect to Interest Hedge Agreements (calculated on a basis satisfactory to the Bank and in accordance with accepted practice);

(f) all Contingent Obligations of such Person, including all obligations of such Person in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such Person;

(g) all obligations of such Person under "synthetic" or similar leases; and

(h) withdrawal liabilities of such Person or any Commonly Controlled Entity under a Plan.

The Debt of any Person shall include any Debt of any partnership in which such person is a general partner, unless such Debt is nonrecourse to such Person.

display page 3750) two (2) Business Days prior to the first day of such Interest Period for an amount comparable to the principal amount of such Eurodollar Loan and having a borrowing date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:

(a) initially the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three, six or nine months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, given with respect thereto; and

(b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three, six, nine or twelve months thereafter, as selected by the Borrower by irrevocable notice to the Bank not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;

(i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, with respect to Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) with respect to Eurodollar Loans, any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no

numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;

(iii) an Interest Period that otherwise would extend beyond the Termination Date shall end on the Termination Date; and

(iv) the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

(a) direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, provided that such obligations mature within one (1) year from the date of acquisition thereof;

(b) certificates of deposit, time deposits or banker's acceptances, maturing within one (1) year from the date of acquisition, with (i) the Bank or (ii) any other bank or trust company organized under the laws of the United States, the unsecured long-term debt obligations of which are rated "A3" or higher by Moody's or "A-" or higher by S&P, and issued, or in the case of banker's acceptance, accepted, by a bank or trust company having capital, surplus and undivided profits aggregating at least Two Hundred Fifty Million Dollars ($250,000,000);

(c) commercial paper given the highest rating by either S&P or Moody's maturing not more than two hundred seventy (270) days from the date of creation thereof;

(d) mutual funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 that hold themselves out as "money market funds;"

(e) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition, having one of the two highest ratings generally obtainable from either S&P or Moody's;

(f) commercial paper maturing no more than six months from the date of acquisition thereof and issued by the holding company of (i) the Bank or
(ii) any other bank that has (A) combined capital, surplus and undivided profits (less any undivided losses) of not less than $250 million, (B) a Keefe Bank Watch Rating of C or better and (C) commercial paper having a rating of A-2 (or the equivalent) or higher from S&P or P-2 (or the equivalent) or higher from Moody's; and

(g) fully collateralized repurchase agreements with a term of not more than ninety days for underlying securities of the type described in paragraphs (a) and (e) of this definition.

(a) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable;

(b) Pledges or deposits made in the ordinary course of business to secure payment of workmen's compensation, or to participate in any fund in connection with workmen's compensation, unemployment insurance, old-age pensions or other social security programs;

(c) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

(d) Good faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;

(e) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

(g) The following, if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed:

(i) claims or Liens for taxes, assessments or charges due and payable and subject to interest or penalty, provided that the Borrower establishes and maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien; and

(ii) claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; and

(h) Liens relating to judgments which do not constitute an Event of Default under Section 7.1(e).

designation from time to time of the reference rate shall not in any way preclude the Bank from making loans to other borrowers at a rate that is higher or lower than or different from the reference rate.

1.2 Other Definitional Provisions

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Note or any certificate or other document made or delivered pursuant hereto.

(b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(c) As used herein and in the Note, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.

(d) The meanings given to terms defined in this Agreement shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. THE CREDITS

(c) The Loan comprising any Revolving Credit Borrowing shall be (i) with respect to a Base Rate Borrowing, in a minimum aggregate principal amount of $100,000 or a whole multiple thereof or (ii) with respect to a Eurodollar Borrowing, in a minimum aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, in either case, an aggregate principal amount equal to the remaining balance of the available Commitment).

Business Day); (iii) the principal amount of such Borrowing; and (iv) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto. If no election as to the Type of Revolving Credit Borrowing is specified in any such notice, then the requested Revolving Credit Borrowing shall be a Base Rate Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Notwithstanding the foregoing, in the event Borrower and Bank enter into a separate cash management loan sweep arrangements, Base Rate Borrowings may be made in accordance with such separate arrangements.

(a) Subject to Section 2.4(b), the Bank shall make each Revolving Credit Loan hereunder on the proposed date by credit of the amount so lent to the general deposit account of the Borrower with the Bank.

(b) The Borrower may refinance all or any part of any Borrowing with any other Borrowing subject to the conditions and limitations set forth herein and elsewhere in this Agreement. Any Borrowing or part thereof so refinanced shall be deemed to be repaid in accordance with Section 2.7 with the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to the extent they do not exceed the principal amount of the Borrowing being refinanced, shall not be paid by the Bank to the Borrower.

(d) All Borrowings, conversions and continuations of Revolving Credit Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections that, after giving effect thereto, (A) the aggregate principal amount of the Loans comprising each Tranche of Eurodollar Loans shall be equal to $500,000 or a whole multiple of $100,000 in excess thereof and (B) the Borrower shall not have outstanding at any one time more than in the aggregate eight (8) separate Tranches of Loans (including the Base Rate Tranche).

(e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Borrowing if the Interest Period requested with respect thereto would end after the Termination Date.

(i) Each Letter of Credit:

(A) shall be denominated in Dollars and shall be a standby letter of credit; and

(B) shall be for the account of the Borrower and for the benefit of the Borrower and/or the Guarantor;

(C) shall have an expiration date no later than the Termination Date; and

(D) may during the Commitment Period be extended at the sole discretion of the Bank for additional periods of up to one year each (but in no event to expire later than the Termination Date) upon written request from the Borrower to the Bank at least 20 days (or such other time period as agreed by the Borrower and the Bank) before the date upon which notice of extension is otherwise required by the terms thereof.

(ii) Each Letter of Credit shall be subject to ISP98 and, to the extent not inconsistent therewith, the laws of the State of Delaware.

fronting fee in an amount equal to exceed $300. The fees described in the preceding sentences shall be due and payable quarterly in arrears on each L/C Payment Date and on the Termination Date or such earlier date as the Commitment is terminated, and shall be nonrefundable.

(i) Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this subsection from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full at the per annum rate of the Base Rate Option plus 2.0% and shall be payable on demand by the Bank.

(ii) The Bank shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Bank's gross negligence or willful misconduct.

(iii) The Borrower agrees that any action taken or omitted by the Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower

and shall neither result in any liability of the Bank to the Borrower nor constitute a defense to the Borrower's obligation to reimburse the Bank.

(b) The Borrower agrees to pay to the Bank a closing fee in the amount of $137,500, payable on the Effective Date.

(c) All fees shall be paid on the dates due, in immediately available funds, to the Bank. Once paid, none of the fees shall be refundable under any circumstances.

(a) Subject to the provisions of Section 2.9, each Base Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365

(a) Upon the occurrence of and during the continuance of an Event of Default under Section 7.1(a) or (g), the outstanding principal amount of the Loans and, to the extent permitted by law, accrued and unpaid interest thereon and any other amount payable hereunder shall bear interest from the date of such occurrence until paid in full (after as well as before judgment) at a rate per annum which is equal to two percent (2%) in excess of the Base Rate Option. Upon the occurrence of and during the continuance of an Event of Default other than under Section 7.1(a) or (g), the outstanding principal amount of the Loans and, to the extent permitted by law, accrued and unpaid interest thereon and any other amount payable hereunder shall bear interest from the date that the Bank shall send notice to the Borrower of the application of the default rate until paid in full (after as well as before judgment) at a rate per annum which is equal to two percent (2%) in excess of the Base Rate Option. The Borrower acknowledges that such increased interest rate reflects, among other things, the fact that such loans or other amounts have become a substantially greater risk given its default status and that the Bank is entitled to additional compensation for such risk.

(b) In the event, and on each occasion, that prior to the commencement of any Interest Period for a Eurodollar Loan, the Bank shall have determined (which determination shall be conclusive and binding upon the Borrower) that dollar deposits in the principal amount of such Eurodollar Loan are not generally available in the London interbank market, or that the rate at which such dollar deposits are being offered will not adequately and fairly reflect the cost to the Bank of making or maintaining the principal amount of such Eurodollar Loan during such Interest Period, or that reasonable means do not exist for ascertaining the Eurodollar Rate, the Bank shall, as soon as practicable thereafter, give written, telegraphic or telephonic notice of such determination to the Borrower. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for a Eurodollar Loan or for conversion to or maintenance of a Eurodollar Loan pursuant to the terms of this Agreement shall be deemed to be a request for a Base Rate Loan.

(a) The Commitment shall be automatically terminated on the Termination Date.

(b) Subject to the last sentence of this paragraph, upon at least five Business Days' prior irrevocable written or telecopy notice to the Bank, the Borrower may at any time in whole permanently terminate, or from time to time permanently reduce, the Commitment. Each partial reduction of the Commitment shall be in a minimum principal amount of $5,000,000 or in whole multiples thereof, and no such termination or reduction shall be made which would, after giving effect to any prepayments of Revolving Credit Loans on such date reduce the Commitment to an amount less than the amount of the Exposure.

(c) In connection with any reduction of the Commitment, the Borrower shall make any prepayment required under Section 2.11(b).

(d) During the period beginning ninety (90) days prior to the then effective Termination Date and ending sixty (60) days prior to such Termination Date, the Borrower may deliver to the Bank a notice requesting that the Commitment be extended for an additional nine months beyond the Termination Date then in effect. If the Bank agrees to extend the Commitment, the Bank shall so notify the Borrower, whereupon (i) the Commitment shall without further act by any party hereto, be extended to the date nine months after the Termination Date then in effect and (ii) the term "Termination Date" shall thereafter mean such date. Any such extension shall be evidenced by a written agreement between the Bank and the Borrower, such agreement to be in form and substance acceptable to the Bank.

(b) On the date of any reduction of the Commitment pursuant to
Section 2.10, the Borrower shall pay or prepay so much of the Revolving Credit Borrowings as shall be necessary in order that, after giving effect to such reduction and any such payments, the Exposure at such time will not exceed the Commitment.

(c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing of Revolving Credit Loans to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein. All prepayments on Eurodollar Loans under this Section shall be

accompanied by accrued interest on the principal amount being prepaid to the date of prepayment.

(a) In the event that any change in any Requirement of Law or in the interpretation, or application thereof or compliance by the Bank with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject the Bank to any tax of any kind whatsoever with respect to this Agreement, the Note, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to the Bank in respect thereof (except for taxes covered by Section 2.14 and changes in the rate of tax on the overall net income, gross receipts or revenue of the Bank);

(ii) shall impose, modify or hold applicable any reserve, special deposit or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of the Bank which is not otherwise included in the determination of the interest rate on such Eurodollar Loan hereunder; or

(iii) shall impose on the Bank any other condition;

pursuant to this subsection submitted by the Bank to the Borrower shall be reasonably detailed and include supporting documentation, and shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Note and all other amounts payable hereunder.

(d) Notwithstanding the foregoing Section 2.13(a), (b) and (c), the Borrower shall not be required to pay any additional amounts to the Bank that is not incorporated under the laws of the United States or a state thereof as a result of any change in any Requirement of Law or compliance by the Bank with any request or directive from any central bank or Governmental Authority to the extent that such additional amounts exceed the amounts that would have been payable by the Borrower under Section 2.13(a), (b) or (c) to the Bank.

such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Note. Whenever any Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Bank for its own account or for the account of the Bank, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental taxes, interest or penalties that may become payable by the Bank as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Note and all other amounts payable hereunder.

(a) The Borrower agrees to indemnify the Bank and to hold the Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of (i) default by the Borrower in payment when due of the principal amount of or interest on any Eurodollar Loan, (ii) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (iii) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (iv) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto, except any such loss as may result from the partial prepayment of Eurodollar Loans pursuant to Section 4.1(k). This covenant shall survive the termination of this Agreement and the payment of the Note and all other amounts payable hereunder.

(a) The Borrower shall make each payment (including principal of or interest on any Loan or any fees or other amounts) hereunder not later than 12:00 (noon), Wilmington time, on the date when due in Dollars to the Bank at its offices specified in Section 8.2 or at such other place as may be designated by the Bank, in immediately available funds.

(b) Whenever any payment (including principal of or interest on any Loan or any fees or other amounts) hereunder shall become due, or otherwise would occur, on a

day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, if applicable.

(a) a Eurodollar Loan may not be converted at a time other than the last day of the Interest Period applicable thereto;

(b) any portion of a Loan maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Loan;

(c) no Eurodollar Loan may be continued as such and no Base Rate Loan may be converted to a Eurodollar Loan when any Default or Event of Default has occurred and is continuing and the Bank has determined that such a continuation is not appropriate;

(d) any portion of a Eurodollar Loan that cannot be converted into or continued as a Eurodollar Loan by reason of Section 2.18(b) or
(c) automatically shall be converted at the end of the Interest Period in effect for such Loan to a Base Rate Loan; and

(e) on the last day of any Interest Period for Eurodollar Loans if the Borrower shall have failed to give notice of conversion or continuation as described in this subsection or if such conversion or continuation is not permitted pursuant to this Section 2.18, such Loans shall be converted to Base Rate Loans on the last day of such then expiring Interest Period.

Accrued interest on a Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion.

SECTION 3. REPRESENTATIONS AND WARRANTIES

To induce the Bank to enter into this Agreement, and to make the Loans and to issue the Letters of Credit, the Borrower hereby represents and warrants to the Bank that:

other Person (including stockholders and creditors of the Borrower) is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement, the Note or the other Loan Documents. This Agreement has been, and the Note and other Loan Document will be, duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and the Note and other Loan Document when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

foregoing effect in conformity with the requirements of FR Form U-l referred to in said Regulation U. No part of the proceeds of the loans hereunder will be used for any purpose which violates, or which is inconsistent with, the provisions of Regulation X.

(a) Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan, and each Single Employer Plan has compiled in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred and no lien in favor of the PBGC or a Plan has arisen during the five-year period prior to the date as of which this representation is made or deemed made. No other event or condition has occurred or exists with respect to any Plan that could reasonably be expected individually or in the aggregate to have a Material Adverse Effect.

(b) The present value of all accrued benefits under each Single Employer Plan in which the Borrower or any Commonly Controlled Entity is a participant (based on those assumptions used to fund the Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by an amount in excess of ten percent (10%) of Consolidated Net Worth as of the end of the most recent fiscal year of the Borrower for which financial statements have been delivered to the Bank pursuant to this Agreement.

(c) Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan, and neither the Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made, in any such case which could reasonably be expected individually or in the aggregate to have a Material Adverse Effect.

(d) To the Borrower's knowledge, no such Multiemployer Plan is in "reorganization" or "insolvent," within the meaning of such terms as used in ERISA.

(e) The present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Borrower and each Commonly Controlled Entity for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all such Plans allocable to such benefits by an amount in excess of ten percent (10%) of the Borrower's consolidated net worth as of the end of the most recent fiscal year of the Borrower for which financial statements have been delivered to the Bank pursuant to this Agreement.

(a) The Properties do not contain, and have not previously contained, in, on, or under, including, without limitation, the soil and groundwater thereunder, any Materials of Environmental Concern in concentrations which violate Environmental Laws.

(b) The Properties and all operations and facilities at the Properties are in compliance with Environmental Laws, and there is no Materials of Environmental Concern contamination or violation of any Environmental Law which would materially interfere with the continued operation of any of the Properties or materially impair the fair saleable value of any thereof.

(c) Neither the Borrower nor any of its Subsidiaries has received or is aware of any claim, notice of violation, alleged violation, non- compliance, investigation or advisory action or potential liability regarding environmental matters or compliance of Environmental Law with regard to the Properties which has not been satisfactorily resolved by the Borrower or such Subsidiary, nor is the Borrower or any of its Subsidiaries aware or have reason to believe that any such action is being contemplated, considered or threatened.

(d) Materials of Environmental Concern have not been generated, treated, stored, disposed of, at, on or under any of the Properties in violation of Environmental Laws, nor have any Materials of Environmental Concern been transferred from the Properties to any other location except in either case in the ordinary course of business of the Borrower and its Subsidiaries and in material compliance with all Environmental Laws.

(e) There are no governmental, administrative actions or judicial proceedings pending or, to the best knowledge of the Borrower, contemplated under any Environmental Laws to which the Borrower or any of its Subsidiaries is or will be named as a

party with respect to the Properties, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to any of the Properties.

there is no material default thereunder, to the Borrower's knowledge, with respect to parties other than the Borrower.

SECTION 4. CONDITIONS PRECEDENT

the Bank, and the Bank shall have received such other documents in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request.

Each borrowing by the Borrower hereunder or request for the issuance of a Letter of Credit shall constitute a representation and warranty by the Borrower as of the date of such Loan or issuance of such Letter of Credit that the conditions contained in this Section 4.2 have been satisfied.

SECTION 5. AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitment remains in effect, the Note remains outstanding and unpaid, any Letter of Credit remains outstanding or any other amount is owing to the Bank hereunder, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to:

(a) as soon as available, but in any event not later than 120 days after the close of each fiscal year of the Borrower, a copy of the annual audit report for such year for the Borrower and its consolidated Subsidiaries, including therein the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such fiscal year, and related consolidated statement of income, retained earnings and cash flow of the Borrower and its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP applied on a basis consistently maintained throughout the period involved and with the prior year with such changes therein as shall be approved by the Borrower's independent certified public accountants, such consolidated financial statements to be certified by independent certified public accountants selected by the Borrower from among the five largest accounting firms in the United States on the date of this Agreement or their successors, or otherwise acceptable to the Bank, without a "going concern" or like qualification or any exception or qualification arising out of the restricted or limited nature of the examination made by such accountants; and

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, a copy of its Report on Form 10-Q for such quarter filed with the Securities and Exchange Commission.

(b) as soon as available, but in any event not later than 90 days after the end of each fiscal year, (i) detailed capital expenditure budgets of the Borrower and each of its Subsidiaries by quarter and (ii) a forecasted consolidated balance sheet, statement of income and statement of cash flows for the Borrower and its Subsidiaries by quarter in each case for the following two fiscal years;

(c) promptly upon their becoming available, but in any event not later than 120 days after the end of each fiscal year, any reports including management letters submitted to the Borrower or any Subsidiary by independent accountants in connection with any annual, interim or special audit;

(d) financial statements, reports, notices or proxy statements distributed by the Borrower to its stockholders on a date no later than three Business Days after the date supplied to such stockholders; and

(e) promptly, such additional financial and other information as the Bank may from time to time reasonably request.

(a) Maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties material or necessary to its business, and from time to time make or cause to be made all appropriate repairs, renewals or replacements thereof.

(b) Insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, worker's compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to

the extent customary. The Borrower shall deliver at the request of the Bank from time to time a summary schedule indicating all insurance then in force with respect to the Borrower.

(b) Maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Requirements of Law, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of the Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of the Subsidiaries and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

(c) commencement of any litigation or proceeding affecting the Borrower or any of the Subsidiaries in which the amount involved is $1,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought;

(d) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan, any Lien in favor of PBGC or any Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Single Employer Plan in a distress termination under Section 4041(c) of ERISA or Multiemployer Plan;

(e) an event which has had or could reasonably be expected to have a Material Adverse Effect; and

(f) any Permitted Acquisition, prior to the consummation thereof.

Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto.

(a) Comply with, and require compliance by all tenants and to the extent possible, all subtenants, if any, with, all Environmental Laws and obtain and comply with and maintain, and require that all tenants and to the extent possible, all subtenants obtain and comply with and maintain, any and all licenses, approvals, registrations or permits required by Environmental Laws except to the extent that failure to so comply or obtain or maintain such documents could not reasonably be expected to have a Material Adverse Effect.

(b) Comply with all lawful and binding orders and directives of all Governmental Authorities respecting Environmental Laws except to the extent that failure to so comply could not reasonably be expected to have a Material Adverse Effect.

(c) Defend, indemnify and hold harmless the Bank, and its respective employees, agents, officers, directors, successors and assigns from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to any violation of or noncompliance with or liability under any Environmental Laws, or any orders, requirements or demands of Governmental Authorities related thereto which in each case relate to or arise in connection with the Borrower or any Subsidiary, any property or assets thereof or any activities relating to any other property or business of a Borrower or any Subsidiary thereof or the enforcement of any rights provided herein or in the other Loan Documents, including, without limitation, attorneys' and consultants' fees, response costs, investigation and laboratory fees, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of any of the foregoing enumerated parties. This indemnity shall continue in full force and effect regardless of the termination of this Agreement and the payment of the Note.

SECTION 6. NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitment remains in effect, the Note remains outstanding and unpaid, any Letter of Credit remains outstanding or any other amount is owing to the Bank hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, without the prior written consent of the Bank:

(a) amounts outstanding hereunder or under the other Loan Documents; and

(b) Debt under Capital Leases or secured by Purchase Money Security Interests (including those in existence on the date hereof), and other guarantees, loans or advances made in the ordinary course of business, in an aggregate principal amount not exceeding $5,000,000 in any fiscal year.

(b) any wholly-owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any wholly-owned Subsidiary of the Borrower; and

(c) the transactions described in the Registration Statement on Form 10, filed by the Borrower and bearing SEC File No. 001-16791;

(a) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of the Borrower's or any Subsidiary's business;

(b) transactions involving the sale, license or lease of assets in the ordinary course of business;

(c) the sale or discount without recourse of accounts receivable only in connection with the compromise thereof or the assignment of past-due accounts receivable for collection;

(d) as permitted by Section 6.4;

(e) transfers between the Borrower and its Subsidiaries or between one Subsidiary and another Subsidiary; and

(a) extensions of trade credit to customers in the ordinary course of business;

(b) Permitted Investments;

(c) loans and advances to employees of the Borrower or its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business;

(d) Capital Stock of any Subsidiary;

(e) loans and advances by the Borrower to its wholly-owned Subsidiaries; and

(f) Permitted Acquisitions.

(a) Any wholly-owned Subsidiary may declare and pay dividends or other distributions to the Borrower or any other wholly-owned Subsidiary; and

SECTION 7. EVENTS OF DEFAULT

(a) The Borrower shall fail to pay any principal of the Note or any Reimbursement Obligation when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on the Note, or any other amount payable hereunder, within five (5) days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or

(b) Any representation or warranty (i) made or deemed made by the Borrower herein or (ii) which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made (subject as to any representation or warranty referred to in subsection (ii) above to the exclusions and qualifications contained in the last two sentences of Section 3.23); or

(c) The Borrower shall default in the observance or performance of any agreement contained in Section 6; or

(d) The Borrower shall default in the observance or performance of any other agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section 7.1) or any other Loan Document, and such default shall continue unremedied for a period of 30 days; or

(e) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has acknowledged such full coverage in writing) of $500,000 or more and all such judgments or decrees shall not have been vacated, discharged, settled, satisfied or paid, or stayed or bonded pending appeal, within 60 days from the entry thereof; or

(g) (i) The Borrower or any Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or

foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Borrower or any Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any Subsidiary shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(h) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity in favor of the PBGC or a Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or institution of proceedings or appointment of a trustee is, in the reasonable opinion of the Bank, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist in regard to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

(i) Any other event shall have occurred which could reasonably be expected to have a Material Adverse Effect.

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (g) above with respect to the Borrower, automatically the Commitment shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement, the Note and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall automatically and immediately become due and payable, and (B) if such event is any other Event

of Default, either or both of the following actions may be taken: (i) the Bank may by notice to the Borrower declare the Commitment to be terminated forthwith, whereupon the Commitment shall immediately terminate; and (ii) the Bank may by notice of default to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement, the Note and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable.

With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Bank an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby grants to the Bank a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Loan Documents. Amounts held in such cash collateral account shall be applied by the Bank to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the Note and the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the Note and the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. The Borrower shall execute and deliver to the Bank such further documents and instruments as the Bank may request to evidence the creation and perfection of the within security interest in such cash collateral account.

Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

SECTION 8. MISCELLANEOUS

The Borrower:    Dover Downs Gaming & Entertainment, Inc.
                 1131 N. duPont Highway
                 Dover, DE 19903
                 Attention: Mr. Timothy Horne
                 Telecopy:  (302) 734-3142

with a copy to:  Dover Downs Entertainment, Inc.
                 15/th/ Floor
                 2200 Concord Pike
                 Wilmington, DE 19803
                 Attention: Klaus M. Belohoubek, Esquire
                 Telecopy:  (302) 426-3555

The Bank:        Wilmington Trust Company
                 121 South State Street
                 Dover, DE 19901
                 Attention: Michael B. Gast,
                            Commercial Banking Department
                 Telecopy:  (302) 735-2089

with a copy to:  Wilmington Trust Company
                 Rodney Square North
                 1100 North Market Street
                 Wilmington, DE 19890
                 Attention:  Commercial Banking Department

(a) Except as otherwise provided in Section 8.8(b), whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Borrower or the Bank that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. The Borrower may not assign or transfer any of its rights or obligations under this Agreement or the other Loan Documents without the prior written consent of the Bank.

purposes under this Agreement and the other Loan Documents, (iv) the Borrower shall continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations under this Agreement and the other Loan Documents,
(v) in any proceeding under the Bankruptcy Code the Bank shall be, to the extent permitted by law, the sole representative with respect to the obligations held in the name of the Bank, whether for its own account or for the account of any Participant and (vi) the Bank shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of this Agreement or the Note or any other Loan Document, other than any such amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest that forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, or postpones any date fixed for any regularly scheduled payment of principal of, or interest or fees on, any such Loan, or releases any guarantor of such Loan or releases all or substantially all of the collateral, if any, securing any such Loan.

(d) If any Participant of the Bank is organized under the laws of any jurisdiction other than the United States or any state thereof, the Bank, concurrently with the sale of a participating interest to such Participant, shall cause such Participant (i) to represent to the Bank (for the benefit of the Bank and the Borrower) that under applicable law and treaties no taxes will be required to be withheld by the Borrower or the Bank with respect to any payments to be made to such Participant in respect of its participation in the Loans and (ii) to agree (for the benefit of the Bank and the Borrower) that it will deliver (i) two duly completed copies of United States Internal Revenue Service Form W-8ECI or W-8BEN or successor applicable form, as the case may be, and (ii) Internal Revenue Service Form W-8 or W-9 or successor applicable form, and comply from time to time with all applicable U.S. laws and regulations with respect to withholding tax exemptions.

(d) to the Bank, (e) in connection with any litigation to which the Bank is a party involving the Borrower or any Subsidiary or its or their properties or in any way relating to this Agreement or any other Loan Document or any Loans or Letters of Credit or other obligations of the Borrower to the Bank and (f) to any Participant (or prospective Participant) so long as such Participant (or prospective Participant) agrees to comply with the requirements of this Section. In the event of any disclosure pursuant to clauses (a) or (e) above, the Bank shall use its reasonable best efforts to notify the Borrower prior to making such disclosure, and shall cooperate with the Borrower, at the Borrower's expense, in obtaining a protective order if the Borrower so chooses.

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement, the Note or the other Loan Documents, or for recognition and enforcement of any judgment in respect thereof, to the non- exclusive general jurisdiction of the Courts of the State of Delaware, the courts of the United States of America for the District of Delaware, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at the address set forth in Section 8.2 or at such other address of which the Bank shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary or punitive or consequential damages.

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement, the Note and the other Loan Documents;

(b) the Bank has no fiduciary relationship to the Borrower, and the relationship between the Bank and the Borrower is solely that of debtor and creditor; and

(c) no joint venture exists between the Bank and the Borrower.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

DOVER DOWNS GAMING &
ENTERTAINMENT, INC.

By: _____________________________
Name:
Title:

WILMINGTON TRUST COMPANY

By: _____________________________
Name:
Title:

     Bank and Address                   Commitment
     ----------------                   ----------

Wilmington Trust Company     $55,000,000 through
121 South State Street       December 31, 2002 and
Dover, DE 19901              $50,000,000 thereafter
Attn: Commercial Banking
      Department

SCHEDULE II

LETTER OF CREDIT FEES

(see attached)

EXHIBIT A

FORM OF REVOLVING CREDIT BORROWING REQUEST

Wilmington Trust Company
121 South State Street
Dover, DE 19901
Attention: Commercial Banking Department

Ladies and Gentlemen:

The undersigned, Dover Downs Gaming & Entertainment, Inc. refers to the Credit Agreement dated as of January __, 2002 (the "Credit Agreement") (capitalized terms being used herein as therein defined), between the undersigned and Wilmington Trust Company, and hereby gives you notice, irrevocably, pursuant to Section 2.2 of the Credit Agreement that the undersigned hereby requests [a Revolving Credit Loan] [the renewal of a Eurodollar Rate Option] [the conversion of an interest rate option] as follows:

1. The proposed borrowing date is _______________, 200_.

2. The amount of the Revolving Credit Loan comprising the Borrowing is $______________.

3. The [Eurodollar Rate Option] [Base Rate Option] shall apply to the Revolving Credit Loan comprising the Borrowing.

4. The Interest Period for the Revolving Credit Loan comprising the Borrowing is _________ [months].

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the borrowing date:

(a) each of the representations and warranties made by the undersigned in the Credit Agreement or which are contained herein are true and correct in all material respects on and as of the date hereof as if made on and as of the date hereof (except representations and warranties which expressly relate solely to an earlier date or time); and

(b) no Default or Event of Default has occurred and is continuing on the date hereof or will occur after giving effect to the Extensions of Credit requested hereby.

Very truly yours,

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

By:____________________________________
Name: _________________________________
Title: ________________________________

EXHIBIT B

FORM OF NOTE

$_______________ Dated as of ________, 2002 Dover, DE

FOR VALUE RECEIVED, DOVER DOWNS GAMING & ENTERTAINMENT, INC., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of WILMINGTON TRUST COMPANY (the "Bank"), in accordance with the terms of the Credit Agreement, as hereinafter defined, the lesser of the principal sum of $55,000,000.00 or the aggregate unpaid principal amount of all Revolving Credit Loans as defined in the Credit Agreement made by the Bank to the Borrower pursuant to the Credit Agreement, together with all unpaid interest accrued thereon and all other costs, fees and expenses as provided in the Credit Agreement.

The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America at the office of the Bank (as hereinafter defined) at 121 South State Street, Dover, Delaware 19901, in immediately available funds.

This Note is the Note referred to in, and is entitled to the benefits of, the Credit Agreement dated as of January __, 2002 (said Agreement, as it may hereafter be amended or otherwise modified from time to time, being the "Credit Agreement") between the Borrower and the Bank. The Credit Agreement, among other things, (i) provides for the making of Revolving Credit Loans by the Bank to the Borrower in an aggregate amount not to exceed at any time outstanding the dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Loan being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

The Borrower hereby waives presentment, demand, protest and notice of any kind, other than as set forth in the Credit Agreement. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

This Note shall be governed by, and construed in accordance with, the laws of the State of Delaware.

DOVER DOWNS GAMING &
ENTERTAINMENT, INC.

By:__________________________________
Name:
Title:

EXHIBIT C

GUARANTY AND SURETYSHIP AGREEMENT

THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty") is made and entered into as of this ____ day of January, 2002, by DOVER DOWNS, INC., a Delaware corporation, (the "Guarantor"), with an address at 1131 N. duPont Highway, Dover, DE 19903, in consideration of the extension of credit by Wilmington Trust Company (together with its successors and assigns, the "Bank"), with an address of 121 South State Street, Dover, DE 19803, pursuant to the Credit Agreement of even date herewith between the Bank and DOVER DOWNS GAMING & ENTERTAINMENT, INC. (the "Borrower"), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

BACKGROUND

In connection with the Credit Agreement, it is a condition precedent to the effectiveness of the Credit Agreement and to the making of loans and the issuance of letters of credit by the Bank from time to time that the Guarantor executes and delivers this Guaranty.

In consideration of the foregoing and in order to induce the Bank to make loans and issue letters of credit to the Borrower under the Credit Agreement from time to time and for other consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Guarantor hereby agrees as follows:

This is an absolute, unconditional, irrevocable and continuing guaranty and will remain in full force and effect until all of the Obligations have been indefeasibly paid in full, and the Bank has terminated this Guaranty. This Guaranty will not be affected by any surrender, exchange, acceptance, compromise or release by the Bank of any other party, or any other guaranty or any security held by it for any of the Obligations, by any failure of the Bank to take any steps to perfect or maintain its lien or security interest in or to preserve its rights to any security or other collateral for any of the Obligations or any guaranty, or by any irregularity, unenforceability or invalidity of any of the Obligations or any part thereof or any security or other guaranty thereof. The Guarantor's obligations hereunder shall not be affected, modified or impaired by any counterclaim, set-off, deduction or defense based upon any claim the Guarantor may have against the Borrower or the Bank, except payment or performance of the Obligations.

Notice of acceptance of this Guaranty, notice of extensions of credit to the Borrower from time to time, notice of default, diligence, presentment, notice of dishonor, protest, demand for payment, are hereby waived.

The Bank at any time and from time to time, without notice to or the consent of the Guarantor, and without impairing or releasing, discharging or modifying the Guarantor's liabilities hereunder, may (a) change the manner, place, time or terms of payment or performance of or interest rates on, or other terms relating to, any of the Obligations; (b) renew, substitute, modify, amend or alter, or grant consents or waivers relating to any of the Obligations, any other guaranties, or any security for any Obligations or guaranties; (c) apply any and all payments by whomever paid or however realized including any proceeds of any collateral, to any Obligations of the Borrower in such order, manner and amount as the Bank may determine in its sole discretion; (d) deal with any other persons with respect to any Obligations in such manner as the Bank deems appropriate in its sole discretion; (e) substitute, exchange or release any security or guaranty; or (f) take such actions and exercise such remedies hereunder as provided herein.

the same force and effect as if any such proceeding had not been instituted. The Guarantor waives all rights and benefits which might accrue to it by reason of any such proceeding and will be liable to the full extent hereunder, irrespective of any modification, limitation or discharge of the liability of the Borrower that may result from any such proceeding.

or by nationally recognized overnight courier service, to the addresses for the Bank and the Guarantor set forth above or to such other address as one may give to the other in writing for such purpose.

(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE.

(b) The Guarantor hereby irrevocably and unconditionally:

(i) submits for itself and its property in any legal action or proceeding relating to this Agreement or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of Delaware, the courts of the United States of America for the District of Delaware, and appellate courts from any thereof;

(ii) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Guarantor at the address set forth above or at such other address of which the Bank shall have been notified pursuant to Section 10 hereof;

(iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(v) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary or punitive or consequential damages.

LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

The Guarantor acknowledges that it has read and understood all the provisions of this Guaranty, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

WITNESS the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

Attest:_____________________________     By: _________________________________
       Name:                                 Name:
       Title:                                Title:

EXHIBIT D

FORM OF OPINION OF COUNSEL TO BORROWER AND GUARANTOR

January __, 2002

Wilmington Trust Company
121 South State Street
Dover, DE 19901

Ladies and Gentlemen:

We have acted as counsel to Dover Downs Gaming & Entertainment, Inc., a Delaware corporation (the "Borrower"), and Dover Downs, Inc., a Delaware corporation (the "Guarantor"), in connection with the execution and delivery of the Credit Agreement dated as of January __, 2002 (the "Credit Agreement"), between the Borrower and the Bank, and the transactions contemplated thereby. This opinion is delivered to you pursuant to Section 4.1(g) of the Credit Agreement. Terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

In so acting, we have examined executed originals or counterparts of the following documents, each dated the date hereof (the "Loan Documents"):

(a) the Credit Agreement;

(b) the Note; and

(c) the Guaranty Agreement.

We have also examined the articles or certificate of incorporation and bylaws, each as amended to date, of the Borrower and the Guarantor and such other documents and instruments and have made such further inquiries as we have deemed appropriate for purposes of this opinion. As to certain issues of fact, we have, where such facts were not independently known to us, relied with your consent and without independent investigation upon the representations and warranties made by the Borrower in the Credit Agreement and upon certificates of representatives of the Borrower dated January __, 2002.

On the basis of the foregoing, we are of the opinion that:

1. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the business conducted by it requires such qualification.

2. The Borrower has the corporate or other power and authority to own or lease and operate its properties and assets, to conduct the business in which it is now engaged, and to execute and deliver and perform its obligations under the Loan Documents to which it is a party. The execution, delivery and performance of the Loan Documents to which it is a

party by the Borrower have been duly authorized by all necessary action on the part of the Borrower.

3. The Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own or lease and operate its properties and assets, to conduct the business in which it is now engaged, and to execute the Guaranty Agreement.

4. The Loan Documents to which the Borrower is a party delivered on the Closing Date have each been duly executed and delivered by or on behalf of the Borrower and are valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws or equitable principles affecting the enforcement of creditors' rights generally.

5. The Guaranty Agreement has been duly executed and delivered by or on behalf of the Guarantor and is the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws or equitable principles affecting the enforcement of creditors' rights generally.

6. No authorization, approval or consent of, or filing or registration with, any governmental or regulatory body of the United States of America or the State of Delaware is required in connection with the execution, delivery and performance by the Borrower or the Guarantor of the Loan Documents to which it is a party or for any borrowings by the Borrower under the Credit Agreement.

7. Neither the execution and delivery by the Borrower or the Guarantor of the Loan Documents to which it is a party nor the performance and observance by the Borrower or the Guarantor of their respective obligations thereunder, will conflict with, or result in any violation or breach by the Borrower or the Guarantor of or constitute a default under (or an event which, with or without due notice or lapse of time or both, would constitute a default under), or accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of the Borrower or the Guarantor under any of the terms, conditions or provisions of or require any filing or consent under (i) the Borrower's or the Guarantor's articles or certificate of incorporation or bylaws, (ii) any existing law, statute or governmental regulation applicable to the Borrower or the Guarantor, or (iii) to our knowledge, any judgment, order, decree, writ or injunction of any court, arbitrator or governmental department, commission, agency or instrumentality or any indenture, contract, guaranty or other agreement or instrument to which the Borrower or the Guarantor is a party or by which it or its properties may be bound or affected.

8. To our knowledge, there is no action, suit, proceeding or investigation at law or in equity, before any court, public board or body, pending or threatened against or affecting the Borrower wherein an unfavorable decision, ruling or finding would, individually or

collectively, have a material adverse effect on the business or financial condition of the Borrower.

9. The borrowing on the date hereof under the Credit Agreement and the Note and the application of the proceeds thereof as contemplated by the Credit Agreement and the other Loan Documents do not violate any of the provisions of Regulation U or X of the Board of Governors of the Federal Reserve System.

EXHIBIT E

FORM OF COMPLIANCE CERTIFICATE

This Compliance Certificate is executed and delivered by Dover Downs Gaming & Entertainment, Inc. (the "Borrower") in connection with the Credit Agreement dated as of January __, 2002 (together with all exhibits, schedules, extensions, renewals, amendments, substitutions and replacements thereof and thereto, the "Credit Agreement") entered into by and between the Borrower and Wilmington Trust Company (the "Bank"). All capitalized terms used in this Compliance Certificate as defined terms shall have the meanings given them in the Credit Agreement.

The undersigned, [insert name], [insert title] of the Borrower, hereby attests on behalf of the Borrower to the Bank, with respect to the fiscal
[quarter] [year] ended ____________, ____ (the "Fiscal Period"), as follows:

1. As of the date of this Compliance Certificate, and since the date of the most recent Compliance Certificate submitted to the Bank by the Borrower,
(i) to the best of the undersigned's knowledge, the Borrower has kept, observed, performed and fulfilled each and every covenant and condition contained in the Credit Agreement, the Note and the other Loan Documents applicable to it and
(ii) the undersigned has obtained no knowledge of any Default or Event of Default.

2. The Leverage Ratio as of the end of the Fiscal Period, for the four fiscal quarters then ended, is ________, as detailed below:

(a) Consolidated Funded Debt $__________

(b) Consolidated EBITDA $__________

(c) Leverage Ratio (a/b) __________

3. The Interest Coverage Ratio as of the end of the Fiscal Period, for the four fiscal quarters then ended, is __________, as detailed below:

(a) Consolidated EBITDA $__________

(b) Consolidated Interest Expense $__________

(c) Interest Coverage Ratio (a/b) __________

IN WITNESS WHEREOF, I have signed this Certificate as of the ____ day of __________, ____.

DOVER DOWNS GAMING &
ENTERTAINMENT, INC.

By _____________________________
Name:
Title: