Document:

Exhibit
10.4

 

DATED
                                                            2005

 

 

FINANCIAL
SECURITY ASSURANCE INC

 

and

 

ABACUS
CORPORATE TRUSTEE LIMITED

 

 

DEFINITIVE
TRUST DEED

relating
to the

FSA
OVERSEAS PENSION PLAN 2006

 

 

 

5 Old
Bailey

LONDON

EC4M
7BA

Tel:
+44 (0)20 7054 2500

Fax:
+44 (0)020 7054 2501

E-Mail:
enquiries@mcgrigors.com

Web
Site: http://www.mcgrigors.com

458763 v2

 

 

THIS
DEFINITIVE TRUST DEED is made on                    2005

 

BETWEEN:

 

1.             FINANCIAL
SECURITY ASSURANCE INC whose registered office is
at 31 West 52nd Street, New York NY 10019, United States of America (the “Principal
Employer”); and

 

2.             ABACUS CORPORATE TRUSTEE LIMITED whose registered office is at La Motte Chambers, St Helier, Jersey,
Channel Islands, JE1 1BJ (the “Trustees”).

 

BACKGROUND:

 

(A)          The Principal Employer has decided to establish, with effect from
the date of this deed, a retirement benefits scheme to be known as the FSA
Overseas Pensions Plan 2006 (the “Plan”).

 

(B)           The Plan is to be established under irrevocable trusts and will
provide Relevant Benefits for and in respect of Members.

 

(C)           The Trustees have consented
to act as the first trustees of the Plan.

 

(D)          It is intended that the Plan will be approved by the Jersey tax authorities
under Article 131A of the Income Tax (Jersey) Law 1961.

 

(E)           It is intended that an application will be made for the Plan to be
granted Corresponding Acceptance.

 

(F)           It is a term of the trusts established by this Deed that
contributions made to the Plan are subject to the National Insurance provisions
of Rule 8.3.

 

EFFECT
OF THIS DEED

 

1                 DEFINITIONS AND
INTERPRETATION

 

1.1              Words with
special meanings start with a capital letter. Those which are not defined in
this Trust Deed have the meaning given to them in Rule 1 of the Rules, which
also deals with the interpretation of the Trust Deed and the Rules.

 

2                 TRUSTS OF THE PLAN

 

2.1              The
Principal Employer establishes the Plan under irrevocable trusts on and with
effect from the date of this Trust Deed, to provide Relevant Benefits for and
in respect of Members.

 

2.2              The Plan
will be governed by the terms of the Trust Deed and the Rules.

 

2.3              The
Principal Employer appoints the Trustees to hold the assets of the Plan on the
irrevocable trusts set out in, and the Trustees agree to act as first Trustees
of the Plan and to administer and manage the Plan in accordance with, the Trust
Deed and the Rules.

 

2.4              The assets
of the Plan from time to time shall consist of assets representing:

 

(a)              contributions and other sums paid by the Employers or
the Members;

 

1

 

(b)              any transfer payments accepted by the Trustees in
accordance with the Trust Deed and Rules from a Retirement Benefits Scheme
which provides Relevant Benefits; and

 

(c)              the interest, dividends and other income of the Plan.

 

2.5              The assets
of the Plan attributable to a Member’s Account shall be held by the Trustees:-

 

(a)              for the payment of benefits and all other outgoings in
respect of that Member in accordance with the Trust Deed and Rules; and

 

(b)              subject to the National Insurance requirements of Rule
8.3.

 

3                 EMPLOYERS

 

3.1              Principal Employer

 

The Principal Employer agrees to discharge all the
duties and obligations imposed on it under the Trust Deed and Rules or by law.

 

3.2              Replacement of Principal
Employer

 

A corporation or firm may, with the consent of the
Trustees and the Principal Employer, agree to replace the Principal Employer
for the purposes of the Plan. The replacement will be effected by the
corporation or firm executing a deed in which it undertakes to perform the
Principal Employer’s obligations under this Trust Deed and the Rules with both
the Trustees and the Principal Employer (unless it is in liquidation or has
been dissolved). The replacement will take effect from the date specified in
that deed and shall have effect as if that corporation or firm had been the
Principal Employer referred to in this Trust Deed.

 

3.3              Participating Employers

 

An associated company may, with the consent of the
Trustees and the Principal Employer, be admitted to participation in the Plan
as a Participating Employer. The admission will be effected by the corporation
or firm executing a deed with both the Trustees and the Principal Employer to
abide by and comply with the Trust Deed and the Rules so far as they relate to
it and its employees who become Members. Participation may be on any special
terms set out in that deed and will take effect from date specified in that
deed.

 

3.4              Obligations of Employers

 

In exercising any power or discretion under the Trust
Deed and the Rules (including the giving or withholding of consent) the
Employers are not acting in a fiduciary capacity and are entitled to act in
their own interests.

 

3.5              Temporary participation

 

Where it is known that a Participating Employer will
terminate its liability to the Plan at a future date the exercise of any powers
or discretion by that Employer which affect the benefits of its employees (or
ex-employees) who are Members is subject to the prior approval of the Principal
Employer.

 

3.6              Release

 

The Trustees and Principal Employer may release a
Participating Employer from its obligations under the Trust Deed and the Rules
if no Members are employed by that

 

2

 

Employer or if its obligations are assumed by another
Employer. Any powers and discretions previously exercisable by that released
Employer will, if it is replaced, then vest in the replacement Employer.

 

4                 INVESTMENT

 

4.1              General and Specific Powers

 

In addition to all powers the law gives trustees, but
subject always to the overriding restrictions set out in Clause 4.9 below, the
Trustees may invest or apply the assets of the Plan as if they were absolutely
and beneficially entitled to those assets and may exercise any of the following
powers of investment either directly or indirectly:

 

(a)              to allow cash to remain uninvested and to retain any
other assets, in each case for as long as they think fit;

 

(b)              to sell, exchange, lend or in any way deal with any
assets on any terms; and

 

(c)              either alone or in conjunction with others:

 

(i)               to acquire (whether immediately or in the future)
assets of any nature, situated in any part of the world, whether or not
producing income or involving liabilities or transferable by delivery or by
other means;

 

(ii)              to effect and maintain any contract or policy with any
Insurance Company; and

 

(iii)             to place or retain any money on deposit or current
account in any currency with any bank, deposit-taking institution or public
authority in any part of the world for any period.

 

4.2              Other arrangements

 

The Trustees may, subject always to the overriding
restrictions set out in Clause 4.9 below, enter into any kind of contract,
including, but not limited to:

 

(a)              investing in units in regulated or unregulated
collective investment schemes, such as a mutual fund or unit trust, regardless
of whether such scheme is operated or advised by a company connected or
associated with the Principal Employer;

 

(b)              underwriting the issue or purchase of securities;

 

(c)              lending money or securities subject to Clause 4.9;

 

(d)              granting, purchasing, disposing of or dealing in
options over or by reference to any kind of asset;

 

(e)              giving guarantees, indemnities, warranties and
undertakings binding on the Plan, including giving security;

 

(f)               borrowing money on any terms, including giving
security;

 

(g)              acquiring, disposing of or dealing in currencies,
warrants, futures contracts or contracts for differences; and

 

3

 

(h)              becoming a partner in a partnership for the collective
investment of funds or for other investment purposes.

 

4.3              Diversification

 

Subject to any requirements under Section 36 of the
Pensions Act 1995 (and any regulations made thereunder) the Trustees shall not
be under any obligation to diversify the investments of the Plan and, in
particular, may retain any investments, including shares or other securities or
other property (including uninvested money) for the time being forming part of
the assets of the Plan for so long as the Trustees in their absolute discretion
think fit, notwithstanding that the same may comprise the sole investment of
the Plan.

 

4.4              Repairs and Insurance

 

The Trustees may apply the assets of the Plan in
repairing, improving, altering, demolishing, maintaining or developing the
assets of the Plan and may insure any asset against any risks and for any
amounts.

 

4.5              Pooling

 

The Trustees may enter into arrangements for the
common investment on a pooled basis of assets comprised in the Plan with assets
held on the trusts of other Retirement Benefit Schemes. Those arrangements may
confer on the managers of the assets any powers the Trustees may exercise in
relation to the assets of the Plan and may include provisions allowing the
managers to sub-delegate their powers.

 

4.6              Investment Managers

 

The Trustees may appoint a person, partnership or
company to be an investment manager for the whole or any part of the assets of
the Plan. The Trustees may delegate to the investment manager all or any of
their powers of investment.

 

4.7              Nominees and Custodians

 

The assets of the Plan will be held in the name of the
Trustees or any of them or jointly with some other person or in the name of a
nominee and the Trustees may appoint any person as custodian of any assets of
the Plan (including records, papers and documents) on any terms.

 

4.8              Members’ wishes

 

Although the power of investment is vested solely in
the Trustees, the Trustees may in exercising their powers have regard to any
wishes made known to them by a Member. The Trustees are not obliged to abide by
a Member’s wishes and shall not be liable for any losses which may arise as a
result of either abiding by or ignoring such wishes.

 

4.9              Overriding Restrictions

 

The Trustees’ powers of investment shall be restricted
to preclude the following:

 

(a)              the making of direct or indirect loans to a Member or
any person connected with a Member;

 

(b)              the purchase, sale or lease of any investment or asset
from or to a Member or any person connected with a Member except on full market
terms.

 

4

 

(c)              For the purposes of the restrictions set out above, a
person is connected with a Member if that person is one of the following:

 

(i)               a Spouse of a Member;

 

(ii)              a Relative of a Member (being brother, sister,
ancestor or lineal descendant);

 

(iii)             the spouse of a Relative of the Member; or

 

(iv)             the spouse of a Relative of the Member’s spouse.

 

5                 APPOINTMENT AND REMOVAL
OF TRUSTEES

 

5.1              Appointment and Removal

 

The Principal Employer may by deed:

 

(a)              appoint new or additional Trustees of the Plan
(without any limit on their number); and

 

(b)              remove a Trustee of the Plan by giving thirty days
notice of its intention to do so (providing there remains at least one
continuing Trustee),

 

in which case the assets of the Plan will vest in the
continuing Trustees.

 

5.2              Retirement

 

If any Trustee shall at any time desire to retire from
the trusts hereof, he may do so by notice in writing signed by him (or in the
case of a corporate Trustee, by any of its officers) served on the Principal
Employer and co-trustees and, upon expiration of thirty days from the posting
or personal delivery of such notice, the Trustee so informing shall cease to be
a Trustee hereof to all intents and purposes, except as to acts and deeds
necessary for the proper vesting of the assets of the Plan in the continuing or
new Trustee or otherwise as the case may be. A Trustee can only retire if there
is at least one continuing Trustee or a new Trustee is appointed in place of
the retiring Trustee.

 

5.3              Asset transfer

 

A Trustee who retires or is removed must promptly
execute any deeds and other documents required to transfer the assets of the
Plan to the remaining Trustees, save that the retiring Trustee shall be
entitled to reasonable security against all liabilities it may incur in respect
of that period of office, but only to the extent that the Trustee would be
protected by Clause 7.

 

6                 TRUSTEES’ POWERS

 

6.1              General

 

In addition to all powers the law gives trustees, the
Trustees may take any action or make any arrangements generally in connection
with the administration or management of the Plan which they think fit. In
particular, the Trustees may:

 

(a)              employ any person on any terms;

 

(b)              obtain advice from, and engage the services of, any
person on any terms, so long as the Principal Employer is provided with a copy
of any such advice within 5

 

5

 

working days of receipt (unless providing
such a copy would result in the Trustees being in breach of any law, statutory
obligation, regulatory provision or code of conduct applicable to the Trustees,
or would, in the reasonable opinion of the Trustees, prejudice the commercial
or other interests of the Trustees or the Members;

 

(c)              engage the services of or delegate any powers to an
Employer (who will not be liable to account for any profit or other benefit so
gained);

 

(d)              delegate, either generally or for any particular
purpose, to any person any or all of the powers, discretions and duties of the
Trustees on any terms (including sub-delegation); and

 

(e)              authorise any person to open and operate bank accounts
(including the drawing and endorsing of cheques).

 

6.2              Insurance

 

Subject, in the case of a professional trustee, to the
consent of the Principal Employer, the Trustees may insure themselves and any
officer of a company which is a Trustee against any liabilities incurred in
connection with the Plan including liabilities for the acts or omissions of any
employee of the Trustees to the same extent they can insure themselves if they
were absolute and beneficial owners of the assets of the Plan and insure the
Plan against any losses arising from the administration and management of the
Plan apart from matters not covered by the exemption in Clause 7.1. The cost of
any such insurance may be met out of the assets of the Plan.

 

7                 PROTECTION OF TRUSTEES

 

7.1              Exemption and Indemnity

 

Each Trustee (or an officer or employee of a company
which is a Trustee) shall not be responsible, chargeable or liable in any
manner whatsoever except for a breach of trust or acts or omissions arising
from his negligence, fraud or deliberate or culpable disregard of the interests
of the Members.

 

For the avoidance of doubt, the Trustees’ liability
under this Clause 7.1 shall be limited to the value of the assets of the Plan
from time to time.

 

Each Trustee (and any officer or employee of a company
which is a Trustee) is entitled to be indemnified out of the assets of the Plan
(and has a lien over the assets for such indemnity) against any actions,
proceedings, claims, costs and liabilities of any nature arising out of the
management or administration of the Plan, except any resulting from a breach of
trust or acts or omissions arising from his negligence, fraud or deliberate or
culpable disregard of the interests of the Members.

 

7.2              Statutory Protection

 

The provisions of this Clause 7 are in addition to any
reliefs and indemnities which the Trustees are entitled to by law.

 

6

 

8                 PROCEEDINGS OF TRUSTEES

 

8.1              Corporate trustee

 

Where a company is the sole Trustee it may exercise
all the powers and discretions exercisable by the Trustee without holding any
meeting if so permitted under the terms of its constitution.

 

8.2              Trustees’ meetings

 

Where Clause 8.1 does not apply:-

 

(a)              The Trustees will decide the manner in which their
meetings are held and may elect a chairman of their meetings.

 

(b)              Unless the Trustees decide otherwise the quorum for
meetings will be a majority of the Trustees and decisions may be taken by
agreement of a majority of the Trustees present at the meeting.

 

(c)              A written resolution, notice of which has been given
to all Trustees and which is signed by a majority of the Trustees, shall be
treated as if it was passed at a duly convened Trustee meeting. The resolution
may consist of several copies each signed by one or more of the Trustees.

 

(d)              The Trustees may delegate any matter for decision by a
committee which includes at least two Trustees.

 

(e)              Minutes will be kept of all decisions made at Trustees’
meetings and at meetings of any committee.

 

8.3              Minorities

 

A Trustee who is in the minority on a vote or who does
not attend a meeting must promptly execute any deeds and other documents
required to implement the decision of the Trustees.

 

9                 TRUSTEES - FURTHER
PROVISIONS

 

9.1              Interests

 

The exercise of a power or discretion or discharge of
a duty by a Trustee (or an officer of a company which is a Trustee) shall not
be invalid on the grounds that he has a direct or indirect interest in it.

 

9.2              Benefits

 

A Trustee (or an officer of a company which is a
Trustee) or any holding company, subsidiary, associate or affiliate company of
the Trustee may:-

 

(a)              retain for itself any benefit, fees and commissions
which it derives from its connection with the Plan; and

 

(b)              participate in any discussion, count towards the
quorum and vote on any resolution which may affect any benefit payable to it
from the Plan.

 

7

 

9.3              Absolute discretion

 

The exercise of every power or discretion and the
making of every determination or decision by the Trustees in relation to the
Plan is at their absolute discretion, unless it is expressly restricted by the
terms of the Trust Deed or the Rules.

 

9.4              No duty to act unless
adequately protected

 

The Trustees will not be required to take any
proceedings or steps in connection with the Plan which may involve any costs,
charges or expenses unless and until suitable provision is made to their
satisfaction for the payment of all such costs and expenses.

 

10               TRUSTEES’ REMUNERATION

 

The fees of the Trustees (and officers of a company
which is a Trustee) shall be met from the assets of the Plan unless and to the
extent that the Principal Employer notifies the Trustees that any such fees
shall be met by the Employers (in such proportions as the Principal Employer so
determines and they are so met). In addition, any firm of which a Trustee is a
partner and any corporation in which he is in any way interested is (subject to
the consent of the Principal Employer) entitled to be paid all proper charges
for business transacted, time spent and acts done in connection with the Plan.

 

Where the fees of the Trustees are met out of the assets
of the Plan, the Trustees shall deduct such amounts as they consider
appropriate from each and any Member’s Account in respect of such fees.

 

11               AMENDMENTS

 

The Principal Employer may from time to time with the
consent of the Trustees alter or replace the Trust Deed or the Rules provided
that (a) approval is not prejudiced, and (b) the Plan would not cease to
satisfy the Relevant Benefit requirements of Clause 2.1. An alteration or
replacement must be made by a deed executed by the Principal Employer and the
Trustees and may have retrospective effect. An alteration or replacement may be
made even after a termination of the Plan has begun.

 

12               SPECIAL BENEFITS

 

12.1            At the
request of the Principal Employer, but subject to the payment of any additional
contributions the Trustees may require, the Trustees may increase any of the
benefits payable under the Plan or pay any benefit otherwise than in accordance
with the Trust Deed and Rules.

 

Special benefits shall not be provided pursuant to
this Clause if to do so:-

 

(a)              would exceed Revenue Limits; or

 

(b)              would mean that Relevant Benefits are provided for or
in respect of a Member before age 50 (except on death or Incapacity).

 

13               ACTUARIAL
INVESTIGATIONS

 

13.1            Plan Actuary

 

The Trustees may with the consent of the Principal
Employer appoint an individual, company or firm to provide advice on financial
questions relating to the funding of the Plan and on the actuarial affairs of
the Plan.

 

8

 

For the avoidance of doubt, any expenses incurred in
relation to the appointment of an Actuary or any advice provided by the same
shall be met from the assets of the Plan.

 

13.2            Meaning of Actuary

 

Any reference in the Trust Deed and Rules to “the
Actuary” means any individual, company or firm appointed under Clause 13.1.

 

13.3            Replacement

 

Any appointment under this Clause may be revoked by
the Trustees at any time.

 

13.4            Valuations

 

The Trustees may instruct the Actuary to report on the
financial position of the Plan at such dates as the Trustees decide.

 

In particular, the Trustees may at regular intervals
ask the Actuary to review the value of the Member’s Accounts with a view to
ensuring that the emerging benefits are not likely to exceed Revenue Limits at
Normal Retirement Date. Where necessary, the Actuary will also be asked to
advise on the maximum contributions that can be made to the Plan in respect of
each Member without exceeding Revenue Limits at Normal Retirement Date.

 

14               RECORDS AND ACCOUNTS

 

The Trustees must keep or cause to be kept proper
records relating to all Members and other beneficiaries and also proper
accounting records in relation to the assets of the Plan which are sufficient
to explain the transactions relating to the Plan and to disclose its financial
position. In particular the Trustees shall ensure that the records of the Plan
are maintained so as to have regard to the National Insurance requirements of
Rule 8.3.

 

15               PLAN EXPENSES AND
PROCEEDINGS

 

15.1            The
Trustees may incur any expenses in relation to the administration and
management of the Plan (these may include the costs and expenses of others)
which shall be met from the assets of the Plan unless and to the extent that
the Principal Employer notifies the Trustees that such fees are to be met by
the Employers and such fees are so met.

 

15.2            Where
expenses incurred by the Trustees (including those of winding-up and
investment) are met out of the assets of the Plan the Trustees may deduct such
amounts as they consider appropriate from each and any Member’s Account in
respect of such expenses.

 

15.3            The
Trustees have power to reimburse an Employer out of the Plan in respect of any
expense of the Plan which has been met by that Employer.

 

15.4            The
Trustees may:-

 

(a)              start, carry on and defend proceedings relating in any
way to the Plan, and

 

(b)              settle, compromise or submit to arbitration any claim
or matter relating in any way to the Plan.

 

For the avoidance of doubt the leave of court is not
required to take any action under this Clause and the costs, charges and
expenses incurred by the Trustees in connection with any action taken under
this Clause are payable in accordance with the other provisions of this Clause
15.

 

9

 

16               EMPLOYERS CEASING TO
PARTICIPATE

 

16.1            Events

 

An Employer will cease to participate in the Plan if:-

 

(a)              the Employer has given one month’s notice terminating
its liability in respect of all of its employees;

 

(b)              the Employer enters into a liquidation (unless it is a
solvent liquidation for the purpose of reconstruction) or is dissolved;

 

(c)              the Trustees give an Employer which is not a
subsidiary of the Principal Employer prior written notice terminating its
liability;

 

(d)              the Principal Employer so determines on the failure of
the Employer to remedy any breach of its obligations under the Plan after
having received reasonable written notice from the Trustees requiring that
breach to be remedied.

 

(e)              For the purpose of this Clause, the date on which the
Employer ceases to participate in the Plan is the “Relevant Date”.

 

16.2            Leaving Service

 

Where an Employer ceases to participate in the Plan,
every Active Member who is in Service with that Employer will be treated as
leaving Service on the Relevant Date for the purposes of the Plan (unless that
Member has by then become employed by another Employer).

 

16.3            Separate fund

 

With the consent of the Principal Employer the
Trustees may, at any time after the Relevant Date, set aside a separate fund
within the Plan. The separate fund will apply to:-

 

(a)              all or any of the Members who were in Service with the
Employer immediately before the Relevant Date; and

 

(b)              if the Trustees decide, all or any Members who left
Service before the Relevant Date but who were previously employed by that Employer
(or persons entitled to benefits through such Members).

 

The separate fund will be the value of the aggregate
of the Member’s Accounts of all the Members in respect of whom the separate
fund is established as determined by the Trustees on the advice of the Actuary.
The provisions of Rule 8.3 must apply to any separate fund.

 

The separate fund may not be administered in a way
that is inconsistent with Corresponding Acceptance.

 

16.4            Applying the separate fund

 

Having established such a separate fund the Trustees
may:-

 

(a)              administer it as a separate fund;

 

10

 

(b)              use it to make bulk transfer payments in respect of
the people referred to in Clause 16.3; or

 

(c)              apply the separate fund in accordance with Clauses 18,
19 and 20 on the basis that the Identified Persons are the people referred to
in Clause 16.3.

 

16.5            Transfer of powers

 

If a Participating Employer ceases to participate in
the Plan any powers and discretions vested in that Employer will from the
Relevant Date (or the date determined in accordance with Clause 3.5 if earlier)
be transferred to the Principal Employer.

 

17               TRANSFERS

 

17.1            Bulk transfers out

 

The Trustees may at the request of the Principal
Employer transfer the whole or any part of the assets of the Plan (after
deducting any costs, expenses or taxes recoverable from those assets) to other Retirement
Benefits Schemes. The transfer will be in accordance with Rule 11 (transfers
out). The transfer may be subject to such terms or conditions as the Trustees
may decide and must include a requirement on the receiving Trustees to operate
provisions which are similar to those in Rule 8.3.

 

17.2            Transfers in

 

With the agreement of the Principal Employer, the
Trustees may accept a transfer payment from any other Retirement Benefits Scheme
or arrangement on such terms as the Trustees decide. If such a transfer is
received the Trustees will, in the case of an existing Member, credit the
Member’s Account with such amount as they consider appropriate in respect of
the transfer received or otherwise admit any person to whom the transfer
relates as a Member on such terms and grant such benefits for and in respect of
that person as the Trustees determine.

 

18               TERMINATION

 

18.1            Termination Events

 

The liability of all Employers to contribute to the
Plan shall be terminated and the Plan shall be wound-up:-

 

(a)              if the Principal Employer gives one month’s notice to
the Trustees terminating its liability in respect of all of its employees;

 

(b)              on the date the Principal Employer enters into
liquidation (apart from a solvent liquidation for the purpose of
reconstruction) or is dissolved, unless the Principal Employer is replaced in
accordance with Clause 3.2;

 

(c)              where the Principal Employer fails to remedy any
breach of its obligations under the Plan after having received reasonable
written notice from the Trustees of that breach;

 

(d)              if it appears to the Trustees that the Plan is
insolvent or if they receive Actuarial advice to that effect and the Trustees
thereupon decide to wind up the Plan; or

 

(e)              on the expiration of the Perpetuity Period.

 

11

 

The Termination Date is the date on which the Plan
starts to be wound-up.

 

18.2            Accrued payments

 

The termination of liability under this Clause does
not release the Employers from any liability to pay any amounts due to the
Trustees (by way of contributions or otherwise) for the period up to the
Termination Date.

 

18.3            Identified Persons

 

The Trustees shall take all reasonable steps, within a
reasonable timescale, to identify all Members alive at the Termination Date and
all persons who are entitled to benefits in respect of Members who died before
the Termination Date (“the Identified Persons”).

 

18.4            Notification

 

The Trustees shall notify the Identified Persons of
the winding-up as soon as reasonably practicable after the Termination Date.

 

18.5            Postponement

 

If Sub-Clauses (a) to (c) of Clause 18.1 apply, the
Trustees may with the consent of the Principal Employer (unless it is in
liquidation or has ceased to exist, when consent will not be required) defer
winding-up the Plan and operate it as a closed scheme until the end of the
Perpetuity Period or if earlier, the date on which the Trustees resolve to wind
up the Plan and for which purposes they will have the benefit of such trusts,
powers and provisions of the Plan as they consider requisite or desirable in
order to facilitate the continued operation of the Plan as a closed scheme. Benefits
shall be calculated on the basis that all Members who were in Service
immediately before the Termination Date ceased to be in Service on that date. Where
the Principal Employer is in liquidation or has ceased to exist all powers and
discretions of the Employers including the power of amendment in Clause 11
shall be exercisable by the Trustees so long as those powers are not exercised
so as to increase any liability owed by the Employers.

 

19               APPLYING THE ASSETS OF
THE PLAN

 

19.1            Expenses and unpaid benefits

 

On the termination of the Plan, the Trustees must
first pay from the assets of the Plan:-

 

(a)              all expenses and liabilities incurred in the
administration and management of the Plan or to be incurred in connection with
its termination including for the avoidance of doubt, any sums owing to the
Trustees by way of remuneration or reimbursement of expenses;

 

(b)              any taxes for which the Trustees are liable;

 

(c)              any benefit which became due before the Termination
Date that was unpaid at that date,

 

The Trustees must also reserve an amount to
meet their obligations under Rule 8.3, assuming all benefits will be subject to
National Insurance.

 

12

 

For the purposes of this clause the Trustees may
reduce the value of any Member’s Account in such manner as they consider
equitable in order to meet such expenses and liabilities

 

19.2            Member’s Accounts

 

The remainder of the assets of the Plan shall, subject
to Rule 8.3, be used to provide benefits for and in respect of each Member by
applying that part of the assets of the Plan which is equal in value to his
Member’s Account. If the assets of the Plan exceed the value of all Members’
Accounts, the Trustees shall apply the whole of the excess assets to increase
the value of the Members’ Accounts in such proportions as the Trustees think
fit.

 

19.3            Bulk transfers

 

The Trustees may make a bulk transfer payment of some
or all of the assets of the Plan in accordance with Clause 17.1.

 

20               SECURING BENEFITS

 

The Trustees will decide how the benefits referred to
in Clause 19 are to be provided and may:-

 

(a)              make individual transfer payments in accordance with
the Rules;

 

(b)              make payment of benefits from the Plan to the
beneficiary entitled;

 

(c)              purchase immediate, deferred or contingent annuities
from an Insurance Company and deal with any such policies already held by the
Trustees; and

 

(d)              until the winding-up is complete, pay benefits from
the Plan.

 

Benefits may not be secured in a way which would
prejudice the Corresponding Acceptance of the Plan.

 

Provided that the Trustees shall ensure that any such
arrangement includes provisions which are similar to those of Rule 8.3.

 

21               GOVERNING LAW

 

This Deed is governed by, and shall be construed in
accordance with, the laws of England.

 

22               COUNTERPARTS

 

This Deed may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
but which together shall constitute one and the same instrument.

 

IN WITNESS of which this deed has been executed and delivered on the date
which appears first on page one.

 

13

 

	
  EXECUTED and DELIVERED
  as a DEED

  	
  )

  
	
  by FINANCIAL SECURITY ASSURANCE INC

  	
  )

  
	
  acting
  through

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Director/Secretary

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED and DELIVERED
  as a DEED

  	
  )

  
	
  under
  the common seal of ABACUS CORPORATE

  	
  )

  
	
  TRUSTEE LIMITED acting through

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorised
  Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorised
  Signatory

  	
   

  	
   

  

 

14

 

SCHEDULE

THE RULES

 

1                 DEFINITIONS AND
INTERPRETATION

 

1.1              Definitions

 

In the Trust Deed and the Rules the following
expressions have the following meanings:

 

	
  “Active Member”

  	
   

  	
  An
  employee of an Employer who has been admitted to membership of the Plan in
  accordance with Rule 2 until the earlier of his opting out of membership,
  leaving Service, retirement or death.

  
	
   

  	
   

  	
   

  
	
  “Actuary”

  	
   

  	
  Has
  the meaning set out in Clause 13 of the Trust Deed.

  
	
   

  	
   

  	
   

  
	
  “Child”

  	
   

  	
  A
  Member’s legitimate, legitimated or adopted child who is under age 18 or in
  full time education and below age 25.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Trustees may, if the Principal Employer agrees, include as a Child any person
  treated by the Member as a child but not otherwise included in this
  definition.

  
	
   

  	
   

  	
   

  
	
  “Corresponding Acceptance”

  	
   

  	
  Acceptance
  of the Plan by HMRC for the purposes of authorising corresponding relief
  under section 390 of ITEPA.

  
	
   

  	
   

  	
   

  
	
  “Death Beneficiaries”

  	
   

  	
  Any of:

   

  (a)           The descendants of the Member’s grandparents;

   

  (b)           The spouses of such descendants;

   

  (c)           Any Dependant of the Member;

   

  any
  other person nominated by the Member in writing to the Trustees as one of the
  Death Beneficiaries,

  

  and for this purpose a “descendant” of a person includes an adopted person,
  an illegitimate child, a stepchild and any person who in the opinion of the
  Trustees has been treated as a child of the first person.

  

 

1

 

	
  “Dependant”

  	
   

  	
  Any person who, immediately before a
  Member’s death, was in the Trustees’ opinion completely or partly maintained
  by him including a case of financial interdependence between the Member and
  any person. A Child of a Member of whatever age shall be a Dependant.

  
	
   

  	
   

  	
   

  
	
  “Employers”

  	
   

  	
  The Principal Employer and the
  Participating Employers. In relation to any employee or former employee or
  person claiming through him, “Employer” means the Employer by which, at the
  relevant time, he is or was last employed.

  
	
   

  	
   

  	
   

  
	
  “Final Remuneration”

  	
   

  	
  The higher of
  either (a) or (b) below:-

   

  (a)   The yearly average of the
  Member’s Pensionable Salary for any 3 or more consecutive years (or such
  shorter period of Service) ending not earlier than 10 years before the
  Relevant Date (being the date of death, retirement or leaving service
  (whichever is earlier)).

   

  (b)   The aggregate of basic pay for
  any one of the 5 years preceding the Relevant Date plus the yearly average,
  over 3 or more consecutive years ending with the Relevant Date, of any
  fluctuating emoluments.

   

  In any case where any 12 month period used for the purposes of the
  above is not the 12 months ending on the Relevant Date, Pensionable Salary,
  basic pay and fluctuating emoluments for that period can be increased in
  proportion to any increase in a published government index of consumer prices
  appropriate to the currency in which Pensionable Salary is denominated – such
  increase to be calculated from the last day of the 12 month period in
  question up to the Relevant Date. The Principal Employer shall notify the
  Trustees of the Final Remuneration of the Member.

  
	
   

  	
   

  	
   

  
	
  “HMRC”

  	
   

  	
  Her Majesty’s
  Revenue and Customs in the United Kingdom

  
	
   

  	
   

  	
   

  
	
  “ITEPA”

  	
   

  	
  The Income Tax (Earnings and Pensions)
  Act 2003.

  
	
   

  	
   

  	
   

  
	
  “ICTA”

  	
   

  	
  The Income and Corporation Taxes Act
  1988.

  
	
   

  	
   

  	
   

  
	
  “Incapacity”

  	
   

  	
  Physical or mental deterioration of a
  Member such that in the opinion of the Trustees he cannot carry on the
  employment which has given rise to his membership of the Plan or such that the

  

 

2

 

	
   

  	
   

  	
  Member’s earning capacity is seriously
  impaired.

  
	
   

  	
   

  	
   

  
	
  “Insurance Company”

  	
   

  	
  An insurance company which is authorised
  to carry on long-term insurance business in the jurisdiction in which it
  operates.

  
	
   

  	
   

  	
   

  
	
  “Member”

  	
   

  	
  An Active Member and any person who was
  formerly an Active Member for as long as benefits are or may become payable
  to or in respect of him from the Plan.

  
	
   

  	
   

  	
   

  
	
  “Member’s Account”

  	
   

  	
  The account established under the Plan by
  the Trustees for a Member in accordance with Rule 4.

  
	
   

  	
   

  	
   

  
	
  “Normal Retirement Date”

  	
   

  	
  The date on which the Member reaches age
  60 or such other date as the Employer and Member agree which shall not be
  lower than age 60 unless specifically agreed with HMRC.

  
	
   

  	
   

  	
   

  
	
  “Participating Employer”

  	
   

  	
  Any corporation or firm (except the
  Principal Employer) participating in the Plan.

  
	
   

  	
   

  	
   

  
	
  “Pensionable Salary”

  	
   

  	
  All earnings of a Member received from an
  Employer. Pensionable Salary shall not include any amounts which arise from
  the acquisition or disposal of shares or any interest in shares or from a
  right to acquire shares or anything in respect of which tax is chargeable
  under section 722 and Schedule 6 of ITEPA (payments in connection with
  termination of employment).

  
	
   

  	
   

  	
   

  
	
  “Perpetuity Period”

  	
   

  	
  The period of 80 years commencing with
  the date of the Trust Deed (which shall be the perpetuity period for the
  purposes of the Trust Deed and Rules).

  
	
   

  	
   

  	
   

  
	
  “Relevant Benefits”

  	
   

  	
  Any pension, lump sum, gratuity or other
  like benefit given or to be given on retirement or on death, or by virtue of
  a pension sharing order or provision, or in anticipation of retirement, or,
  in connection with past service, after retirement or death, or to be given on
  or in anticipation of or in connection with any change in the nature of the
  service of the employee in question, except that it does not include any
  benefit which is to be afforded solely by reason of the disablement by
  accident of a person occurring during his service or of his death by accident
  so occurring and for no other reason.

  
	
   

  	
   

  	
   

  
	
  “Retirement Benefits Scheme”

  	
   

  	
  Means a scheme, plan or arrangement for
  the provision of benefits consisting of or including Relevant Benefits.

  

 

3

 

	
  “Revenue Limits”

  	
   

  	
  The limits referred to in Rule 15 which
  shall apply if Corresponding Acceptance has been granted or such higher
  amounts as will not prejudice Corresponding Acceptance or migrant member
  relief under the Finance Act 2004.

  
	
   

  	
   

  	
   

  
	
  “Rules”

  	
   

  	
  These Rules as altered from time to time.

  
	
   

  	
   

  	
   

  
	
  “Service”

  	
   

  	
  Employment with an Employer or any other
  employer within the same group as the Principal Employer. If a Member
  transfers from one Employer (or other employer within the same Group) to
  another his Service is regarded as continuous. If a transfer payment is
  received from another retirement benefits scheme in respect of a Member, the
  Trustees may treat service under the transferring scheme as part of the
  Member’s Service.

  
	
   

  	
   

  	
   

  
	
  “Spouse”

  	
   

  	
  A Member’s lawful widow or widower who,
  at the date of his death, in the Trustees’ opinion is either living with him
  or financially dependent upon him to a substantial extent.

   

  In any case where a Member has more than
  one spouse, the Trustees shall decide who is the “Spouse” for the purposes of
  the Plan.

  
	
   

  	
   

  	
   

  
	
  “Tax Liability”

  	
   

  	
  The amount of all taxes and/or social
  security contributions including primary national insurance contributions or
  any other contribution which are the liability of a beneficiary and which any
  Employer (or any member of the same group of companies as the Principal
  Employer) is required to, or may, account or pay for and on behalf of that
  beneficiary (wherever the tax or liability arises). For the avoidance of
  doubt, any charges payable under Schedule 34 of the Finance Act 2004 shall be
  Tax Liabilities.

  
	
   

  	
   

  	
   

  
	
  “Termination Date”

  	
   

  	
  Has the meaning set out in Clause 18.1 of
  the Trust Deed.

  
	
   

  	
   

  	
   

  
	
  “Trustees”

  	
   

  	
  The trustees for the time being of the
  Plan.

  

 

 

Interpretation

 

1.2              References to an Act
include Regulations made under that Act; a reference to legislation includes
any modification or re-enactment for the time being in force.

 

1.3              The headings do not
affect the meaning of the Trust Deed or the Rules.

 

4

 

1.4              Where the context
requires words which refer to one gender refer also to the other gender (except
in the case of widow or widower) and words which refer to the singular refer
also to the plural and vice versa.

 

1.5              Any reference to benefits
which are payable for a Member shall include any benefits payable to survivors
in respect of that Member.

 

2                 MEMBERSHIP

 

2.1              Eligibility

 

An employee of an Employer is eligible to become an
Active Member if he is invited by his Employer to join the Plan. Such an
employee will become an Active Member by completing any application forms
(agreeing to be bound by the Trust Deed and Rules) and providing such
information as the Trustees may require.

 

Every person becoming an Active Member shall at that
time and at all times thereafter during membership provide such information,
documents and evidence as the Trustees may require.

 

2.2              Opting-out and
Rejoining

 

An Active Member can opt out of Active Membership by
giving the Trustees one month’s written notice at any time. A Member who has
opted out shall be treated for the purposes of the Plan as having left Service
and may only rejoin the Plan as an Active Member if both the Principal Employer
and the Trustees agree.

 

2.3              Membership of
other Arrangements

 

A Member shall not, whilst an Active Member of the
Plan, participate as an active member of any exempt approved retirement
benefits scheme (approved under Chapter 1 of Part XIV of ICTA) or contribute to
any UK personal pension plan (approved under Chapter IV of Part XIV of ICTA).

 

The restrictions in this Rule 2.3 do not prevent an
Active Member from participating:-

 

(a)              as a member of an
approved scheme that only provides death benefits in respect of the Member; or

 

(b)              in an appropriate
personal pension plan but only for the purpose of contracting out of the State
Second Pension.

 

3                 CONTRIBUTIONS

 

3.1              Member’s
Contributions

 

Members will pay contributions to the Plan at the rate
(if any) specified from time to time by their Employer. A Member may also, with
the consent of the Trustees, pay additional voluntary contributions to the
Plan.

 

Voluntary contributions shall not exceed 15% of
Pensionable Salary (which shall be limited to the permitted maximum as defined
in Section 590C ICTA) in any UK tax year or such higher amount as will not
prejudice Corresponding Acceptance or migrant member relief under the Finance
Act 2004 (as the case may be) or (if lower) the amount determined by the
Trustees after having consulted with the Actuary.

 

5

 

3.2              Employer’s
Contributions

 

Each Employer may contribute to the Plan in respect of
each of its employees who is an Active Member at the rates notified to the
Member on such basis as may be agreed with the Member.

 

The rate of Employer contributions may differ for each
Member and will be notified to the Trustees by the Employer. An Employer’s
contributions for a Member will be reduced if necessary so as not to exceed
Revenue Limits.

 

All contributions paid by an Employer (including additional
contributions under Rule 3.4) shall be on the basis that the Trustees are
required to operate National Insurance provisions of Rule 8.3 and the Trustees
shall accept such contributions on this basis.

 

3.3              Method of
payment

 

The Employers’ contributions must be paid by the
Employers to the Trustees as agreed with the Trustees and at intervals arranged
between the Trustees and the Employers.

 

3.4              Additional
contributions

 

An Employer may, if the Principal Employer agrees, at
any time pay to the Plan contributions additional to those notified to the
Member. An additional contribution cannot be paid if it would result in a
Member’s benefits exceeding Revenue Limits. The Employer may designate a
particular purpose for which such additional contributions are to be applied
and may apply restrictions to the use thereof.

 

3.5              Termination

 

An Employer may at any time on giving the Trustees
notice in writing, terminate its liability to pay contributions to the Plan for
all or any of its employees who are Active Members. Any notice of termination
is without prejudice to any obligation of the Employer to pay contributions to
(or the expenses of) the Plan in respect of any period before the effective
date of the notice. The provisions of Clause 16 of the Trust Deed (Employers
ceasing to participate) shall apply if the notice relates to all employees of
that Employer who are Active Members.

 

Where such a notice relates to only some of the
Members employed by that Employer, those people will cease to be Active Members
on the date the notice takes effect, and will be treated as though Rule 6
(Leaving Service Benefits) then applied to them.

 

4                 MEMBERS’
ACCOUNTS

 

4.1              Establishment
of a Member’s Account

 

The Trustees will establish an account for each Member
on joining the Plan and will keep appropriate records of the Member’s Account
from time to time. The Trustees shall at least annually provide details to each
Member of the value of the Member’s Account and of the investments which have
been credited to that Member’s Account.

 

6

 

4.2              Credit of Funds

 

The Trustees will credit each Member’s Account with
the amount of the contributions made by the Employer in respect of the Member
or made by the Member from time to time and with any investment acquired by the
Trustees with these contributions and shall also credit to such account any
transfer payment received in respect of the Member.

 

If a Member has died, the Trustees will credit the
Member’s Account with any sums received by the Trustees under any policies of
insurance effected by the Trustees on the Member’s life.

 

The Trustees will credit each Member’s Account with
such further amounts as they consider appropriate to reflect the income and
capital gains accruing to those assets of the Plan which have been credited to
the Member’s Account. A credit to a Member’s Account may be negative.

 

In calculating the amounts to be credited to a Member’s
Account, the Trustees may make such deductions as they consider appropriate in
respect of the actual or potential tax liabilities or investment or
administration expenses of the Trustees or of the Plan to the extent so
authorised by the Trust Deed and the Rules.

 

If a Member dies, the Trustees will credit the Member’s
Account with any sums received by the Trustees under any policies of insurance
effected by the Trustees on the Member’s life.

 

4.3              The Trustees shall debit
from each Member’s Account any amount required to be debited under Rule 8.3. The
amount so debited shall be applied in accordance with Rule 8.3.

 

4.4              Application of
Member’s Account

 

A Member’s Account will be used to provide Relevant
Benefits in the manner and at the times described in these Rules, provided that
a Member’s benefits cannot come into payment in the same UK tax year as the
Member leaves Service unless the Principal Employer consents. The Principal
Employer shall give its consent if the Member (or the beneficiary) makes
arrangements which are acceptable to the Principal Employer for the payment of
any tax due on benefits.

 

5                 RETIREMENT
BENEFITS

 

5.1              Retirement at
or after Normal Retirement Date

 

If a Member retires from Service with the Employer at
Normal Retirement Date (or such later date as the Member and the Trustees may
agree, not exceeding age 75) the Trustees shall apply the Member’s Account to
provide Relevant Benefits (for which purpose the Trustees shall take into
account any wishes of the Member, but shall not be bound thereby) in one or
more of the following forms:-

 

(a)              a pension payable to the
Member from the date of retirement (or such later date as the Member may
specify, not exceeding 75); and/or

 

(b)              a contingent pension (or
pensions) payable on the Member’s death to any one or more of his Spouse and
Dependants.

 

7

 

The Trustees may at their discretion, and if alive
subject to the consent of the Member, determine that all or any pensions
payable from the Plan shall instead be commuted for a lump sum (or lump sums)
which are payable at such times and on such terms as the Trustees may
determine.

 

If the Member has not before or within six months of
his Normal Retirement Date made known to the Trustees any wishes as
contemplated by this Rule, the Trustees may arrange for the Relevant Benefits
of the Member to be paid or secured in such manner, consistent with the
provisions of the Trust Deed and Rules as they consider to be in his best
interests.

 

The Trustees will inform a Member in writing of the
Relevant Benefits to be provided for and in respect of him.

 

5.2              Early
Retirement Benefits

 

If a Member retires from Service before Normal
Retirement Date and is either:-

 

(a)              over age 50; or

 

(b)              in the opinion of the
Trustees, retiring because of Incapacity

 

the Trustees may, if the Member so requests, treat the
Member as having retired on his Normal Retirement Date and apply his Member’s
Account to provide Relevant Benefits for or in respect of the Member in
accordance with Rule 5.1.

 

6                 LEAVING SERVICE
BENEFITS

 

If a Member leaves Service and does not receive early retirement
benefits under Rule 5.2, the Trustees shall apply the Member’s Account at the
Member’s Normal Retirement Date to provide Relevant Benefits for or in respect
of the Member (as though Rule 5.1 then applied). The Trustees may, with the
consent of the Member apply the Member’s Account to provide such Relevant
Benefits at an earlier date provided that the Member is either:-

 

(a)              over age 50; or

 

(b)              in the opinion of  the Trustees suffering from Incapacity.

 

The Member may direct the Trustees to postpone paying
Relevant Benefits from the Plan until after Normal Retirement Date but benefits
must come into payment before the Member’s 75th birthday.

 

A Member who has left Service and does not receive
immediate benefits may, at any time before benefits become payable, request the
Trustees to apply his Member’s Account in accordance with Rule 11.

 

For the avoidance of doubt, benefits shall not be paid
to a Member who leaves Service unless he is, at that date, either over age 50,
or in the opinion of the Trustees suffering from Incapacity.

 

7                 PROVISIONS WITH
REGARD TO PENSION

 

7.1              Any pension under the Plan may be paid by the Trustees or secured
(at any time) by the purchase of an annuity policy from an Insurance Company
which will be purchased:-

 

(a)              in the name of the
Member (or other beneficiary); or

 

8

 

(b)              in the name of the
Trustees; or

 

(c)              in the name of the
Trustees and then assigned to the Member (or other beneficiary).

 

7.2              Any pension under the Plan
may be payable on such terms, including as to duration, as the Trustees think
fit and may be of a fixed yearly amount or subject to increases linked to the
retail prices index or any other index which the Trustees consider appropriate.

 

7.3              Any pension payable to
the Member or Spouse shall be payable for such period and on such terms as the
Trustees think fit (taking into account in their discretion any wishes made
known to them by him).

 

7.4              Any pension payable to a
Child of the Member will be payable until the age of 18 but the Trustees may at
their discretion pay the pension (a) to a Child after age 18 while he remains
in full-time education or training approved by the Trustees or (b) for the
lifetime of a Child who was wholly incapacitated at birth or became wholly
incapacitated before age 18.

 

8                 GENERAL
PROVISIONS CONCERNING BENEFITS

 

8.1              The Trustees may deduct
from any payment under the Plan any tax for which they may be liable in respect
of it.

 

8.2              Where a beneficiary will
or may suffer a Tax Liability in respect of the provision of benefits under, or
contributions made to, the Plan the Trustees shall ensure that either:-

 

(a)              the beneficiary has made
acceptable arrangements with the Employer to make provision for payment in
respect of his Tax Liability; or

 

(b)              the beneficiary
authorises the Trustees to take such action on behalf of the beneficiary as is
necessary to discharge the Tax Liability. If the Trustees make any appropriate
withholdings they shall be authorised to remit the beneficiary’s Tax Liability
to the Employer within 5 working days following the date on which the Tax
Liability arises. Alternatively, and by arrangement with the Employer, the
Trustees may account for the said Tax Liability directly to the appropriate
authority.

 

8.3              The Trustees shall,
unless and to the extent that the Employer otherwise instructs the Trustees in
writing,  debit from a Member’s Account in
accordance with Rule 3 an amount equal to any Excess Secondary National
Insurance Contributions payable (whether 
by the Trustees or otherwise) on the provision of benefits so that as a
result of making such debit the benefit then actually provided, together with
all Excess Secondary National Insurance Contributions thereon is equal to the
value of the Member’s Account (taking account of any assets then remaining in
the Member’s Account). The amount debited from the Member’s Account shall be
paid by the Trustees to the appropriate authority on behalf of the person who
is liable for such contributions. The Trustees shall inform the Employer of any
payment it makes to the appropriate authority.

 

For the
purpose of this Rule “Excess Secondary National Insurance Contributions” shall
mean the amount by which any secondary National Insurance Contributions payable
on the provision of benefits exceeds the amount which is equal to the aggregate
of each Employer contribution made to the applicable Member’s Account
multiplied by the effective rate of secondary National Insurance applicable at
the time the contribution is made.

 

9

 

8.4              If a person attempts to
assign or charge any benefit to which he would otherwise be entitled under the
Trust Deed and Rules other than with the consent in writing of the Trustees or
if any event occurs (including, if this would be the case, on bankruptcy) by
which his benefit would become payable in whole or in part to some other
person, his entitlement to the benefit shall cease and the Trustees shall
instead pay an equivalent benefit either to the person concerned or to his
Spouse or Dependants or will divide it between any of them or apply it for
their benefit in such manner and in such shares as the Trustees see fit. The
Trustees may however transfer or assign part of a Member’s Account to, or for
the benefit of, the Member’s Spouse or ex Spouse in connection with any divorce
or separation proceedings relating to that Member.

 

8.5              If the Trustees consider
that a beneficiary is suffering from any incapacity (by reason of illness,
mental disorder, minority or otherwise) rendering him unable to manage his
affairs or give a proper receipt then the Trustees may in their absolute
discretion apply any amounts due to him for his benefit or may pay them to some
other person or persons to do so and the receipt of the person to whom they pay
the benefit will be a complete discharge and the Trustees shall not be liable
to see to the application of the sum or sums paid.

 

8.6              For the purposes of
Rules 8.4 and 8.5 above the Trustees shall have power to declare such trusts for
the benefit of any such persons as they may think fit with power to appoint
separate trustees of such trusts and to include provisions considered
appropriate by them for the maintenance and advancement of any minor
beneficiaries but without infringing the Perpetuity Period.

 

8.7              Each Member will provide
such evidence of health (including submission to examination by such medical
practitioner as the Employer may nominate) age and family circumstances as the
Trustees may require.

 

8.8              Nothing in the Trust
Deed or Rules shall in any way restrict the right of an Employer to determine
the employment of the Member.

 

8.9              A pension or allowance
will be paid by instalments, as the Trustees decide, in advance or in arrears,
at monthly or other regular intervals and with or without addition or deduction
for periods of less than a month (or other interval).

 

8.10            The Trustees may make a
payment to the person entitled to it by sending him or her a cheque, by direct
credit to his or her bank account or by any other method which the Trustees
consider appropriate. The use of any such method is at the risk of the person
entitled to the payment.

 

8.11            If a person dies when
payment of a benefit was due to him or her and no grant of representation to
that person’s estate has been shown to the Trustees, payment may be made to the
widow, widower or any other Dependant of that person.

 

8.12            Any instalments of a
pension and any lump sum benefit will be forfeited if not claimed within 6
years of the date on which payment first became due. The Trustees may, in their
discretion, decide that all or part of any instalment or lump sum will be paid
to the Member or any of the Member’s Dependants. A pension so payable shall be
at a rate not exceeding the rate of the forfeited pension.

 

9                 DEATH BENEFITS

 

If and so far as a Member’s Account is not exhausted
in providing Relevant Benefits before the death of the Member, the Trustees
shall, on the Member’s death, use the remainder of

 

10

 

the Member’s Account in providing Relevant Benefits
(having regard to any wishes made known by the Member in writing to the
Trustees) in one or both of the following forms:-

 

(a)              a lump sum death benefit
to be applied in accordance with Rule 10; or

 

(b)              a pension or pensions
payable to any one or more of the Member’s Spouse and Dependants, on whatever
terms the Trustees decide;

 

and the Trustees will inform any person or persons to
whom such benefits become payable of such benefits and the terms of payment.

 

If the benefit (or part of a benefit) is to be
provided in respect of the Member using the proceeds of any contract or policy
of insurance effected by the Trustees, the Trustees may delay payment of that
benefit (or part) until the Trustees receive the proceeds of the contract or
policy.

 

10               LUMP SUM
BENEFITS

 

A lump sum benefit under the Plan may be paid out by
the Trustees or may be secured by the purchase of an insurance policy from an
Insurance Company.

 

The Trustees may pay or apply any lump sum death
benefit payable under the Plan to or for the benefit of all or any one or more
of the Death Beneficiaries and if more than one in such proportions and in such
manner generally as they think fit (subject to the Perpetuity Period) and
without prejudice to the generality of the foregoing the Trustees may:-

 

(a)              direct that all or part
of the lump sum will be held by themselves or other trustees on such trusts
(including discretionary trusts) and with such powers and provisions (including
powers of selection and variation) as the Trustees think fit; or

 

(b)              pay all or part of the
lump sum to the trustees of any other existing trust the trustees of which are
resident in any part of the world to be held by such trustees as an accretion
to the trust property subject to that trust and as one fund therewith for all
purposes.

 

10.2            If and so far as any lump
sum death benefit is not paid or applied under Rule 10.1 above within 2 years
after the death of the Member, the Trustees shall pay any lump sum death
benefit to the Member’s estate.

 

11               TRANSFERS OUT
OF THE PLAN

 

11.1            A Member may request the
Trustees to transfer the value of his Member’s Account to acquire rights under
another retirement benefits scheme that provides Relevant Benefits of which the
Member is a member and the trustees or managers of which are able and willing
to accept such a transfer payment. If and so far as the Member’s Account is
used as described in this Rule the Trustees will be discharged from any
obligation to provide benefits for or in respect of the Member under the Plan.

 

11.2            Unless the Principal
Employer consents a transfer payment cannot be paid whilst a Member is in
Service or in the same UK tax year as the Member leaves Service.

 

11.3            A transfer payment must
relate to all or an identified portion of the benefits otherwise payable to the
Member and will be determined by reference to the Member’s Account. The
Trustees are not obliged to enquire into the application of the cash or other
assets transferred.

 

11

 

12               TEMPORARY
ABSENCE

 

If a Member is
temporarily absent from work:

 

(a)              for any period if the
period of absence is due to illness, maternity, paternity or incapacity; or

 

(b)              to enable the Member to
be seconded to another Employer;

 

the Member
will be regarded as a continuing Member for such period of absence unless the
Employer has given notice in writing to the Trustees of its decision to suspend
its contributions or make no further contributions to the Plan in respect of
the Employee under Clause 16 of the Definitive Trust Deed.

 

13               CALCULATION OF
BENEFITS

 

13.1            Determination
of Value

 

Unless expressly left to be decided by the Trustees or
the Actuary, it is for the Employer, after consulting the Trustees and the
Actuary, to decide:

 

(a)              the value of any pension
or other benefit;

 

(b)              the amount by which a
pension or other benefit is to be increased or reduced as required by the
Rules; and

 

(c)              whether a pension or
other benefit is equal in value to any other pension or other benefit.

 

In making such decisions, the Trustees, the Employer
and the Actuary may make such assumptions and take account of such matters as
they think appropriate.

 

13.2            Tax

 

If the Trustees are liable for any tax in respect of
any benefit, they may apply part of the benefit in paying the tax (including
any interest) or may postpone payment of the benefit until the tax has been
paid or provided to their satisfaction.

 

14               PROVISION OF
INFORMATION

 

14.1            Proof of
Entitlement

 

Before making any payment to a person the Trustees may
require proof of entitlement to the payment, and any other information which
may be relevant for the purposes of the Plan (including particulars of
marriages, deaths and births), and the Trustees may withhold payment pending
proof or information satisfactory to the Trustees.

 

14.2            Insurance
Company Requirements

 

14.2.1         Any benefits secured under a
policy shall be subject to any restrictions that the Insurance Company imposes.

 

14.2.2         Any person entitled to or
claiming any benefit under the Rules must produce any evidence or information
that the Trustees or the Insurance Company through whom the benefits are
secured may require before any benefit is paid. Where evidence is required, it
may be required in a written or oral form and may, in particular, involve proof
of age and a

 

12

 

requirement
that the Member will submit to a medical examination. If any such information
is mis-stated or if the information is not provided or is unsatisfactory,
benefits may be adjusted as the Trustees or such Insurance Company consider
appropriate having regard to such mis-statement.

 

14.2.3         Where a policy has been
effected to provide benefits in respect of the Member, the Trustees will comply
with any requirements of the Insurance Company in giving notice and exercising
any options referred to in the Rules.

 

14.3            Address for
Communication

 

Each Member must furnish the Employer with his or her
private postal address and notify them at once of any change. The Trustees will
be deemed to have communicated with the Member if they have sent a letter to
his or her Employer. Members shall address all communications in connection
with the Plan in writing to the Trustees care of the Employer or as otherwise
agreed with the Trustees.

 

14.4            Overpayment of
benefits

 

If any amount paid to a person exceeds his
entitlement, the Trustees may deduct the amount overpaid from any future
payments due to that person or to any other person who derives entitlement to
benefit through that person. Alternatively, the Trustees may at any time
recover the amount overpaid from the person to whom it was paid.

 

15               REVENUE LIMITS

 

15.1            Restriction of
Benefits

 

The provisions of this Rule 15 shall apply
notwithstanding anything to the contrary in the provisions of the Trust Deed
and Rules.

 

The Trustees shall reduce the benefits payable from
the Plan to or in respect of a Member to ensure that such benefits do not
exceed the appropriate limits as set out in this Rule 15 or such other limits
as apply to UK exempt approved retirement benefits schemes from time to time.

 

For the purpose of this Rule “Retained Benefits” means
pension and the pension equivalent of any lump sum benefits (or any lump sum
and the cash equivalent of any pension benefits in the case of death whilst in
Service) payable to or in respect of the Member from any retirement benefits
scheme (except for any statutory scheme) to which any Employer contributes or
has contributed.

 

15.2            Maximum Benefit
on Retirement

 

Where a Member retires from Service at or after:-

 

(a)              Normal Retirement Date
(see Rule 5.1); or

 

(b)              Age 50; (see Rule 5.2),

 

the emerging pension (or the pension equivalent of any
lump sum) will not exceed the higher of:-

 

(i)               3.5% of Final Remuneration for each year of Service
(up to a maximum of 70% of Final Remuneration) including the value of Retained
Benefits; and

 

13

 

(ii)              1/60th of Final Remuneration for each year of Service
(subject to a maximum of 40 years’ Service).

 

15.3            Maximum Benefit
on Leaving Service

 

Where a Member leaves Service entitled to a deferred
benefit in accordance with Rule 6, the deferred pension payable from Normal
Retirement Date (or the pension equivalent of any lump sum) will not exceed an
amount calculated as in Rule 15.2 based on Service to, and Final Remuneration
at, the date of leaving Service and the resulting benefit can be increased in
line with the rate specified in Rule 15.5 between the date of leaving Service
and the date the benefit comes into payment.

 

15.4            The Pension
Equivalent of a Lump Sum

 

For the purpose of this Rule 15 it is for the Actuary
to calculate the value of the pension equivalent of a lump sum payment and in
making his calculation the Actuary shall:-

 

(a)              use a recognised
international actuarial method;

 

(b)              adopt whatever
assumptions he considers reasonable;

 

(c)              assume that the pension
would otherwise carry a 2/3rds survivor’s pension;

 

(d)              assume that the pension
would be guaranteed for 5 years; and

 

(e)              assume that pensions
increase in payment at the rate set out in Rule 15.5 (a).

 

15.5            Increases to
Benefits

 

Where a pension is in the course of payment or is a
deferred pension it can be increased up to either:

 

(a)              The percentage increase
in a published government index of consumer prices or national average earnings
appropriate to the currency in which the said pension is denominated from the
date the pension commenced or the date of leaving Service (as applicable); or

 

(b)              A fixed rate not
exceeding 3% per annum compound.

 

15.6            Reduction in
Benefits

 

Where any reduction is required to be made to the
value of a Member’s Account in order to comply with the limits of this Rule 15,
the value of such reduction shall, with the consent of the Principal Employer,
either be:

 

(a)              held by the Trustees for
the general purposes of the Plan; or

 

(b)              used to augment the
Member’s Accounts of one or more of the remaining Members of the Plan if any;
or

 

(c)              used to meet some or all
of the expenses of the Plan.

 

14EXHIBIT 10.1

 

AMENDED & RESTATED

 

EMPLOYMENT AND NON-COMPETE AGREEMENT

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

 

AND

 

DENIS MCGLYNN

 

THIS AGREEMENT, is by and
between Dover Downs Gaming & Entertainment, Inc. (the “Company”)
and Denis McGlynn (the “Executive”), is effective as of this 13th day of February 2006
(the “Effective Date”), and amends and restates the Employment and Non-Compete
Agreement between the parties dated June 16, 2004 (the “Prior Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is
currently employed by the Company or an affiliate thereof in an executive
position; and

 

WHEREAS, the Executive
has, in the course of his employment, developed relationships with employees
and customers of the Company, and learned valuable and sensitive information
concerning the Company’s operations, policies and procedures; and

 

WHEREAS, the Executive
has, in the course of his employment, been exposed to valuable and sensitive
Company reports, files, memoranda, records, software, and other property; and

 

WHEREAS, the Company
recognizes that the solicitation of its employees and customers, and the use or
disclosure of the policies, procedures, information, documents, and property of
the Company would be damaging to the Company’s interests; and

 

WHEREAS, the Company has
determined that it is in the best interests of the Company to protect its
interests through the use of Employment and Non-Compete Agreements; and

 

WHEREAS, the Company has
determined that it is in the best interests of the Company and its shareholders
for the Company to agree to provide benefits under the circumstances described
below to the Executive and other executives who agree to such an agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:

 

 

Section 1

Definitions

 

“Announcement” shall mean
a press release issued by the Company announcing the signing of an agreement
whereby the Company will be acquired by or merge with any other entity or a
tender offer for the shares of the Company stock will be initiated.

 

“Board” shall mean the
Board of Directors of the Company or the ultimate corporate parent entity which
owns the Company if the Company is not public.

 

“Cause” shall mean a
unanimous determination by the Board that the Executive has been convicted of a
felony, has embezzled from, or committed fraud against, the Company which
embezzlement or fraud has a material adverse financial impact on the Company or
gross insubordination which has continued after written notice of such from the
Board which determination is upheld by a final, non-appealable arbitration
award pursuant to Section 6.

 

“Change in Control” shall
mean the earlier to occur of (a) ten (10) days following the closing
of a tender offer for the Company’s stock following the Announcement or (b) the
closing of a merger or similar transaction (“Transaction”) of the Company and
any other entity; provided, however, a Transaction the result of which is the
shareholders of the Company’s voting securities immediately prior to the
Transaction own, directly or indirectly in substantially the same proportion,
at least 60% of the voting securities of the survivor of such Transaction
immediately following such Transaction shall not be a Change in Control.

 

“Change in Control Fee”
shall mean $500,000.

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended.

 

“Company Information”
shall mean (i) confidential information including, without limitation,
information received from third parties under confidential conditions, (ii) information
subject to the Company’s and its affiliates’ attorney-client or work-product
privilege; and (iii) other technical, business, legal or financial
information (including, without limitation, customer lists), the use or disclosure
of which might reasonably be construed to be contrary to the Company’s and its
affiliates’ interests.

 

“Date of Termination”
shall mean the date on which the Executive’s employment is terminated.

 

“Employment Period” shall
mean the period of time during the Extension Period the Executive is an
employee of the Company.

 

“Extension Period” shall
mean the 60 month period following the Change in Control.

 

“Good Reason” shall mean
a (i) reduction in title, responsibilities, administrative support or support
services, (ii) relocation of Executive’s office, (iii) travel at a
level that exceeds the travel requirements before the Change in Control, (iv) any
breach by the Company of its obligations hereunder, (v) any breach by the
purchaser under a merger or acquisition agreement pursuant to which the Change
in Control takes place relating to employee benefits or directors’ and officers’

 

2

 

insurance or
indemnification provisions, or (vi) any reason whatsoever two months after
the Change in Control.

 

“Monthly
Amount” shall be an amount equal to one-twelfth of the sum of (a) the
Executive’s then current annual base salary (excluding any incentive or bonus),
and (b) the amount of any cash bonus awarded to the Executive for the then
most recently concluded fiscal year of the Company,
provided that for purposes of this calculation only, the cash bonus shall be
deemed to be (1) not less than 75% of the average cash bonus awarded to
the Executive for the then most recently concluded fiscal year of the Company
and the preceding two fiscal years, and (2) not greater than 125% of the
average cash bonus awarded to the Executive for the then most recently
concluded fiscal year of the Company and the preceding two fiscal years.

 

“Non-Compete Monthly
Amount” shall mean the portion of the Monthly Amount which is paid in
consideration of the Executive’s agreement to the restrictions and other
provisions of Section 7, with the remainder of the Monthly Amount and
other benefits under this Agreement paid after the Employment Period to be
treated as severance.  Executive’s
Non-Compete Monthly Amount shall be calculated by multiplying the Monthly
Amount by fifty percent.

 

“Retirement Plan” shall
mean the Company’s qualified defined benefit retirement plan(s) in which the
Executive participates.

 

“SERP” shall mean any and
all supplemental retirement plans in which the Executive participates
(including, but not limited to, any benefit restoration plan(s) maintained by
the Company from time to time).

 

Section 2

Term
of Agreement

 

This
Agreement shall be effective as of the Effective Date and shall automatically
terminate if the Executive’s employment is terminated.  Renewal of this Agreement shall
automatically occur for successive two (2) year terms, provided that at
any time prior to any such renewal, the Company’s Compensation and Stock
Incentive Committee shall have the discretion to terminate this automatic
renewal provision.

 

Section 3

Benefits

 

(a)          On the date of a Change
in Control, the Company shall pay to the Executive in cash the Change in
Control Fee.

 

(b)         During the Extension
Period, the Company shall pay to the Executive the Monthly Amount, payable on
the first day of each month, prorated for partial months.

 

(c)          If the Executive’s
employment is terminated during the Extension Period, then,

 

(i)                                     within
five business days after the Date of Termination, the Company shall pay to the
Executive (or if the Executive dies, to the estate of the Executive) in cash
all accrued but unpaid salary, earned but unpaid bonuses, and accrued but
unused vacation in accordance with Company policies;

 

3

 

(ii)                                  the
Company shall pay to the Executive (or if the Executive dies, to the estate of
the Executive) the Monthly Amount on the first day of each month during the
remainder of the Extension Period;

 

(iii)                               the
Company shall pay to the Executive (or if the Executive dies, to his
beneficiary, if any, under the Retirement Plan) a lump sum amount equal to the
value of the  monthly benefit under (x)
the Retirement Plan and (y) the SERP, that the Executive or his beneficiary, if
any, under the Retirement Plan would have received (1) for payments of the
Monthly Amount had Executive been an employee while receiving such payments and
(2) for payment of the Change of Control Fee had such amount been treated
as a normal bonus for pension accrual purposes 
(giving credit for all purposes, including, but not limited to, accrual
of benefits, vesting, age and years of service and making the determination
without regard to compensation or benefit limitations prescribed by federal law
or regulation), which payment shall be paid within 10 days of the Date of
Termination and calculated by Buck Consultants (or such other consultant as may
be agreed upon) using the actuarial assumptions under the Retirement Plan and
the discount rate which would be utilized for purposes of funding a Plan
termination;

 

(d)         During the Extension
Period (whether or not during the Employment Period) the Executive shall be
entitled to the following additional benefits:

 

(i)                                     The
Executive and, as applicable, the Executive’s covered dependents shall be
entitled to all health, welfare, and fringe benefits provided by the Company to
its key employees generally or to the Executive on an individual or group basis
(including, but not limited to, any life, accident, health, hospitalization or
long-term disability insurance, maintained from time to time by the Company),
whether maintained pursuant to a plan, policy or other arrangement (written or
unwritten), as if the Executive were still employed during such period, at the
same level of benefits and at the same dollar cost to the Executive as is
available generally to comparable employees of the Company (but in no instances
shall such benefits be at a level less than as in effect on the date of the
Change in Control).  If the Company
reasonably determines that the coverage required under this Section would
cause a welfare plan sponsored by the Company to violate any provision of the
Code prohibiting discrimination in favor of highly compensated employees or key
employees, or if any benefits described in this Section cannot be provided
(or the Company determines that it does not wish to provide such benefits) pursuant
to the appropriate plan or program maintained for employees of the Company, the
Company shall provide such benefits outside such plan or program at no
additional cost (on an after tax basis) to the Executive or, if the parties
shall so agree, the Company will pay to the Executive the cash equivalent
thereof.  The health benefits provided in
accordance with this Section shall be secondary to any comparable benefits
provided by another employer if and only if the Executive chooses to be
covered  by such other employee plan.

 

(ii)                                  Executive
shall receive continued payment of professional and organizational dues and
fees as in effect prior the Change in Control.

 

(e)                                  (i)                                     If
all, or any portion, of the payments and benefits provided under this
Agreement, if any, either alone or together with other payments and benefits
which the Executive receives or is entitled to receive from the Company, would
constitute an excess “parachute payment” within the meaning of Section 280G
of the Code (whether or not under an existing plan, arrangement, or other
agreement) (each such parachute payment, a “Parachute Payment”), and would
result in the imposition on the Executive of an excise tax under Section 4999
of the Code,

 

4

 

then, in addition to any other benefits to which the
Executive is entitled under this Agreement or otherwise, the Executive shall be
paid an amount in cash equal to the sum of the excise taxes payable by the
Executive by reason of receiving Parachute Payments plus the amount necessary
to place the Executive in the same after-tax position (taking into account any
and all applicable federal, state and local excise, income or other taxes at
the highest possible applicable rates on such Parachute Payments (including,
without limitation, any payments under this Section) as if no excise taxes had
been imposed with respect to Parachute Payments (the “Parachute Gross-Up”).  Any Parachute Gross-Up otherwise required by
this Section shall not be made later than the time of the corresponding
payment or benefit hereunder giving rise to the underlying Section 4999
excise tax, even if the payment of the excise tax is not required under the
Code until a later time.

 

(ii)                                  Subject
to the provisions of Section 3(d) and except as may otherwise be
agreed to by the Company and the Executive, the amount or amounts (if any)
payable under this Section 3 shall be as conclusively determined by the
KPMG LLP, or such other firm as mutually agreed to by the Company and the
Executive (“Independent Tax Counsel”), whose determination or determinations
shall be final and binding on all parties. 
The Executive shall agree to utilize such determination or
determinations, as applicable, in filing all of the Executive’s tax returns
with respect to the excise tax imposed by Section 4999 of the Code, if
any.  If such Independent Tax Counsel
fails or refuses to make the required determinations for any reason, then such
determinations shall be made by a comparable firm or group of national reputation
to which the parties reasonably mutually agreed.  All fees and expenses of the Independent Tax
Counsel or its replacement shall be paid by the Company.

 

(iii)                               As
a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Independent Tax Counsel
hereunder, it is possible that Parachute Gross-Up payments, if any, which will
not have been made by the Company, should have been made, together with any
interest, penalties or taxes of any kind thereon, consistent with the
calculations required to be made hereunder (an “Underpayment”).  The Company shall pay all such Underpayments
to or for the benefit of the Executive. 
The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment within ten (10) business days after the
Executive is informed in writing of such claim. 
The Company shall notify the Executive within ten (10) business
days of receipt of the Executive notice that the Company (x) will pay the
Underpayment and do so on or before the date due, or (y) that it desires to
contest such claim.  The Executive will
cooperate with the Company in any such contest; provided, however, that the
Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled, at Executive’s expense, to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

 

(iv)                              References
herein to Code sections shall apply to comparable Code sections in the event of
any amendment to the Code.

 

5

 

(v)                                 The
foregoing provisions of this subsection (f) shall similarly apply to
any benefit provided elsewhere in this Agreement where it is expressly provided
that the benefit is to be provided on an after tax basis.

 

(f)            In the event of the
Executive’s termination of employment under this Agreement, the Executive shall
be under no obligation to seek other employment, and there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment.

 

In the
event that Executive’s employment is terminated by the Company for Cause (and
Executive was not capable of voluntarily terminating for Good Reason at or
prior to such time) or if Executive voluntarily terminates without Good Reason,
the Company shall remain obligated to pay the Non-Compete Monthly Amount but
shall not be obligated to pay the balance of the Monthly Amount.  Executive is free to terminate his employment
for Good Reason.

 

Section 4

Employment

 

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

 

(i)                                     The
Executive shall perform services consistent with his past practices,

 

(ii)                                  The
Executive shall not be required to relocate or travel in excess of past
practices,

 

(iii)                               The
Executive shall enjoy the same office, administrative support and support
services as he enjoyed prior to the Change in Control.

 

(iv)                              The
Executive shall not be required to devote more time to Company business than he
did prior to the Change in Control and may continue director or officer
positions with other private or public entities that do not violate Section 7.

 

(v)                                 The
Executive’s expenses shall be reimbursed consistent with past practices, and

 

(vi)                              The
Executive shall receive at least the same vacation as he currently enjoys, but
not less than four weeks paid vacation.

 

Notwithstanding Executive’s ability to voluntarily terminate his
employment under clauses (i) and (vi) under the definition of Good
Reason, Executive agrees, for a 24 month period following the Change of
Control, to assist the Company from time to time, at mutually agreeable times,
with respect to legislative matters within the State of Delaware in terms of
sharing his knowledge of the industry, key legislators and regulators and the
legislative process in general and in terms of making appropriate introductions
within the Delaware community, provided that

 

6

 

Executive shall not be required to engage in lobbying
activities or assist in day-to-day matters, and further provided that Executive
retains the right to completely terminate his employment under any other clause
defining Good Reason.

 

No breach or alleged
breach of this Section 4 shall constitute grounds for, or otherwise
entitle, the Company to offset payments otherwise owing to the Executive under
this Agreement.

 

Section 5

Source
of Payments

 

All payments provided for
in this Agreement shall be paid in cash from the general funds of the Company;
provided, however, that such payments shall be reduced by the amount of any
payments made to the Executive or his dependents, beneficiaries or estate from
any trust or special or separate fund established by the Company to assure such
payments.  The Company shall not be
required to establish a special or separate fund or other segregation of assets
to assure such payments.

 

Section 6

Litigation
Expenses and Arbitration

 

In addition to the
Company’s other obligations under this Agreement, the Company shall pay all
legal fees and expenses incurred in a legal proceeding (including arbitration)
by the Executive in seeking to obtain or enforce any right or benefit provided
by this Agreement (including, without limitation, any rights to a tax
gross-up).  Such payments are to be made
within five days after the Executive’s request for payment accompanied with
such evidence of fees and expenses incurred as the Company reasonably may
require; provided, however, that if the Executive institutes a proceeding and
the judge or other decision-maker presiding over the proceeding affirmatively
finds that the Executive has failed to prevail substantially, he shall pay his
own costs and expenses (and, if applicable, return any amounts theretofore paid
on his behalf under this Section 6.

 

All disputes with respect
to the subject matter of this Agreement and the enforcement of rights hereunder
shall be submitted to binding arbitration in accordance with the rules of
the American Arbitration Association (the “AAA”).  Each party hereto shall designate one
arbitrator (who need not be impartial) within fifteen (15) days after notice of
the dispute. The two arbitrators so designated shall endeavor to designate
promptly a third, neutral arbitrator. If the two arbitrators have not
designated the third arbitrator by the fifteenth (15th) day
following the designation of the second arbitrator, or if a second arbitrator
has not been designated by the (15th) day following the designation
of the first, either Party may request the AAA to designate the remaining
arbitrator(s). The third arbitrator shall take an oath of neutrality. The arbitrators
shall not be bound by judicial formalities and may abstain from following the
strict rules of evidence and shall interpret this Agreement as an
honorable engagement and not merely as a legal obligation. The arbitrators
shall have the power to render equitable relief as may be available in
accordance with applicable law.  Unless
otherwise agreed by the parties, any such arbitration shall take place in such
City within the United States as Executive may designate, and shall be
conducted in accordance with the Rules of the AAA.  The determination reached in such arbitration
shall be final and binding on both parties without any right of appeal or
further dispute. The arbitrators’ award may be confirmed in, and judgment upon
the award entered by, any federal or state court having jurisdiction over the
parties.

 

7

 

Section 7

Restrictive
Covenants

 

(a)          Within a reasonable
period of time following his termination of employment, the Executive shall
return to the Company all Company Information, reports, files, memoranda,
records, credit cards, cardkey passes, door and file keys, computer access
codes, and other property which the Executive has received, prepared, or helped
to prepare in connection with his employment with the Company, except as
provided in Section 3.  The
Executive acknowledges that in the course of employment with the Company, he
has acquired Company Information and that such Company Information has been
disclosed to him in confidence and for the Company’s use only.  The Executive agrees that, during the
Extension Period, he (i) will keep such Company Information confidential
at all times, (ii) will not disclose or communicate Company Information to
any third party, and (iii) will not make use of Company Information on his
own behalf or on behalf of any third party. 
The Executive further acknowledges and agrees that the Company’s remedy
in the form of monetary damages for any breach by him of any of the provisions
of this Section may be inadequate and that, in addition to any monetary
damages for such breach, the Company shall be entitled to institute and
maintain any appropriate proceeding or proceedings, including an action for
specific performance and/or injunction.

 

(b)         Executive agrees not to,
during the Extension Period, within the Territory, directly or indirectly,
individually or on behalf of persons not now parties to this Agreement, or as a
director, officer, principal, agent, executive, or in any other capacity or
relationship, engage in the casino business (except as a passive investor
holding not more than 3% of the equity of such business), or aid or endeavor to
assist any business or legal entity, that is in the casino business and that
competes with the Company anywhere in the Territory.  The Territory shall consist of both the
entire State of Delaware and a 50-mile radius around the Company’s facility in
Dover, Delaware.  The Company and
Executive acknowledge the reasonableness of this covenant not to compete and
the reasonableness of the geographic area and duration of time which are a part
of said covenant.

 

(c)          Unless waived in writing
by the Company, Executive further agrees that he will not, directly or
indirectly, during the Extension Period, solicit the trade or patronage of any
of the customers of the Company, regardless of the location of such customers
of the Company with respect to any services, products, or other matters in
which the Company is active.

 

(d)         Unless waived in writing
by the Company, Executive further agrees that he will not, directly or
indirectly, during the Extension Period, solicit or attempt to entice away from
the Company any director, agent or employee of the Company.

 

(e)          Executive acknowledges
that the Company has no adequate remedy at law and would be irreparably harmed
if Executive breaches or threatens to breach any of the provisions of this Section and,
therefore, agrees that the Company shall be entitled to injunctive relief to
prevent any such breach or threatened breach thereof and to specific performance
of the terms of this Section  (in addition to any other legal or equitable
remedy the Company may have, including if so determined by arbitration, that
the Company is not obligated to pay to the Executive (or the Executive is
required to repay to the Company) a portion or all of the Non-Compete Monthly
Amount; provided, however, in all instances the Company shall continue to pay
to Executive the Non-Compete Monthly Amount unless and until all appeals have
been exhausted or the time for such has expired).  Executive further agrees that Executive shall
not, in any equity proceeding relating to the

 

8

 

enforcement of this
Section, raise the defense that the Company has an adequate remedy at law.  Nothing in this Agreement shall be construed
as prohibiting the Company from pursuing any other remedies at law or in equity
that it may have under and in respect of this Agreement or any other agreement.

 

(f)            The Executive agrees
to pay to the Company any outstanding amounts owed to the Company; provided,
however, that no breach or alleged breach of this subsection (f) or
any other provision of this Section shall constitute grounds for, or
otherwise entitle, the Company to offset payments otherwise owed to the Executive
under this Agreement.

 

Section 8

Severability

 

If, for any reason, any
one or more of the provisions or part of a provision contained in this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement not held so invalid, illegal
or unenforceable, and each other provision or part of a provision shall to the
fullest extent consistent with law continue in full force and effect.

 

Section 9

Amendment,
Termination, or Modification

 

Except as provided below,
this Agreement may not be terminated, modified or amended other than by an
instrument in writing signed by the parties hereto.  No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument
signed by the party charged with such waiver or estoppel.  No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

 

Section 10

Consolidation,
Merger, or Sale of Assets; Assignability

 

The Company shall require
(a) any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business or
assets of the Company and (b) the parent entity owning or controlling such
successor expressly to assume and agree to perform under the terms of this
Agreement in the same manner and to the same extent that the Company and its
affiliates would be required to perform it if no such succession had taken
place (provided that such a requirement to perform which arises by operation of
law shall be deemed to satisfy the requirements for such an express assumption
and agreement).  Except as provided
herein, the Executive’s rights hereunder shall not be assignable.

 

Section 11

Tax
Withholding

 

The Company may withhold
from any payments made under this Agreement all federal, state or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.

 

9

 

Section 12

Entire
Understanding

 

This Agreement contains
the entire understanding between the Company and the Executive with respect to
the subject matter hereof and supersedes any prior agreement between the
Company and the Executive regarding non-compete provisions, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not expressly dealt
with in this Agreement.  This Agreement
supersedes the Prior Agreement.

 

Section 13

Binding
Agreement

 

This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors and assigns.

Section 14

Employment
Status

 

Nothing
herein contained shall be deemed to create an employment agreement between the
Company and the Executive providing for the employment of the Executive by the
Company for any fixed period of time prior to a Change in Control.  The Executive’s employment with the Company
is terminable at will by the Company or Executive and each shall have the right
to terminate Executive’s employment with the Company at any time, with or
without Cause, subject to the Company’s obligation to provide any benefits
required hereunder.   There are no other
agreements or understandings between the Company and the Executive which
guarantee continued employment to the Executive or guarantee any level of compensation,
including incentive or bonus payments, to the Executive.

Section 15

No
Attachment

 

Except as required by
law, no right to receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge or hypothecation or to execution, attachment, levy or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.

 

Section 16

Notices

 

All notices, requests,
demands and other communications required or permitted hereunder shall be given
in writing and shall be deemed to have been duly given if delivered or mailed,
postage prepaid, first class as follows:

 

(a)          to the Company, at its
Dover, Delaware address

 

(b)         to the Executive, at the
address maintained by the Company for the Executive for payroll purposes;

 

10

 

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

 

Section 17

Revocation
and Executive Acknowledgments

 

The Executive
acknowledges that he has read and understands the provisions of this
Agreement.  The Executive further
acknowledges that he has been given an opportunity for his legal counsel to
review this Agreement and that the provisions of this Agreement are reasonable
and that he has received a copy of this Agreement.

 

Section 18

Headings
of No Effect

 

The section headings
contained in this Agreement are included solely for convenience of reference
and shall not in any way affect the meaning or interpretation of any of the
provisions of this Agreement.

 

Section 19

Applicable
Law

 

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

 

Section 20

Counterparts

 

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

 

IN WITNESS WHEREOF, the
Company through its officer duly authorized, and the

 

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

 

 

	
   

  	
  Dover Downs
  Gaming & Entertainment, Inc.

  
	
   

  	
   

  
	
   

  	
   /s/ Klaus M. Belohoubek

  	
   

  
	
   

  	
  Its: Senior Vice President-General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
    /s/ Denis McGlynn

  	
   

  

 

11

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