Exhibit 10.1

EXECUTION COPY

LOGO [g60412g30g08.jpg]

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

DATED AS OF DECEMBER 22, 2009

AMONG

CHURCHILL DOWNS INCORPORATED,

THE LENDERS,

THE GUARANTORS,

AND

JPMORGAN CHASE BANK, N.A.

AS AGENT AND COLLATERAL AGENT

WITH

PNC BANK, NATIONAL ASSOCIATION

AS SYNDICATION AGENT

AND

FIFTH THIRD BANK, U.S. BANK, NATIONAL ASSOCIATION AND

WELLS FARGO BANK, NATIONAL ASSOCIATION

AS DOCUMENTATION AGENTS

 

 

J.P. MORGAN SECURITIES INC. AND PNC CAPITAL MARKETS, INC.

AS JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS

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TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS

   1

ARTICLE II. THE CREDITS

   21

2.1

   Revolving Loan Commitment    21

2.2

   Swing Line Loans    21    2.2.1    Amount of Swing Line Loans    21    2.3.2
   Borrowing Notice    22    2.2.3    Making of Swing Line Loans    22    2.2.4
   Repayment of Swing Line Loans    22    2.2.5    Working Cash Sweep Rider   
22

2.3

   Letter of Credit Subfacility    23    2.3.1    Issuance    23    2.3.2   
Participations    23    2.3.3    Notice    23    2.3.4    LC Fees    24    2.3.5
   Administration; Reimbursement by Lenders    24    2.3.6    Reimbursement by
Borrower    24    2.3.7    Obligations Absolute    25    2.3.8    Actions of LC
Issuer    25    2.3.9    Indemnification    26    2.3.10    Lenders’
Indemnification    26    2.3.11    Facility LC Collateral Account    26   
2.3.12    Rights as a Lender    26

2.4

   Required Payments; Termination    26

2.5

   Ratable Loans    27

2.6

   Types and Number of Eurodollar Advances    27

2.7

   Commitment Fee; Reductions in Aggregate Commitment    27

2.8

   Minimum Amount of Each Advance    27

2.9

   Optional Principal Payments    27

2.10

   Method of Selecting Types and Interest Periods for New Advances    27

2.11

   Conversion and Continuation of Outstanding Advances    28

2.12

   Changes in Interest Rate, etc.    28

2.13

   Rates Applicable After Default    28

2.14

   Method of Payment    29

2.15

   Noteless Agreement; Evidence of Indebtedness    29

2.16

   Telephonic Notices    30

2.17

   Interest Payment Dates; Interest and Fee Basis    30

2.18

   Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions    30

2.19

   Lending Installations    30

2.20

   Non-Receipt of Funds by the Agent    31

2.21

   Replacement of Lender    31

2.22

   Increase in Commitments    31    2.22.1    Amount of Increase in Commitments
   31    2.22.2    Eligibility    31    2.22.3    Notice    31    2.22.4   
Minimum Amount    32    2.22.5    Implementation of Increase    32

ARTICLE III. YIELD PROTECTION; TAXES

   34

3.1

   Yield Protection    34

 

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3.2

   Changes in Capital Adequacy Regulations    35

3.3

   Availability of Types of Advances    35

3.4

   Funding Indemnification    35

3.5

   Taxes    36

3.6

   Lender Statements; Survival of Indemnity    37

ARTICLE IV. CONDITIONS PRECEDENT

   38

4.1

   Initial Credit Extension    38

4.2

   Each Credit Extension    40

ARTICLE V. REPRESENTATIONS AND WARRANTIES

   41

5.1

   Existence and Standing    41

5.2

   Authorization and Validity    41

5.3

   No Conflict; Government Consent    41

5.4

   Financial Statements    42

5.5

   Material Adverse Change    42

5.6

   Taxes    42

5.7

   Litigation and Contingent Obligations    42

5.8

   Subsidiaries    42

5.9

   ERISA    42

5.10

   Accuracy of Information    42

5.11

   Regulation U    43

5.12

   Material Agreements    43

5.13

   Compliance With Laws    43

5.14

   Ownership of Properties    43

5.15

   Plan Assets; Prohibited Transactions    43

5.16

   Environmental Matters    43

5.17

   Investment Company Act    44

5.18

   Public Utility Holding Company Act    44

5.19

   Post-Retirement Benefits    44

5.20

   Insurance    44

5.21

   Solvency    44

5.22

   Intellectual Property    44

5.23

   Properties    44

5.24

   Operating Locations    44

5.25

   Certain Licenses    45

5.26

   Predecessor Entities of the Loan Parties    45

ARTICLE VI. COVENANTS

   45

6.1

   Financial Reporting    45

6.2

   Use of Proceeds    46

6.3

   Notice of Default    47

6.4

   Conduct of Business    47

6.5

   Taxes    47

6.6

   Insurance    47

6.7

   Compliance with Laws    47

6.8

   Maintenance of Properties    48

6.9

   Inspection    48

6.10

   Indebtedness    48

6.11

   Merger    49

6.12

   Sale of Assets    49

6.13

   Investments and Acquisitions    50

6.14

   Subsidiaries    53

6.15

   Certain Transactions    54

 

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6.16

  Liens    54

6.18

  Rentals    55

6.19

  Affiliates    55

6.20

  No Prepayment of Material Indebtedness    56

6.21

  Recordation of Calder Mortgage    56

6.22

  Financial Contracts    56

6.23

  Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities    56

6.24

  Financial Covenants    56   6.24.3    Minimum Net Worth    57

6.25

  Loan Parties shall enter into Collateral Documents    57

6.26

  Maintenance of Patents, Trademarks, Etc.    57

6.27

  Plans and Benefit Arrangements    57

6.28

  Compliance with Laws    57

6.29

  Further Assurances    58

6.30

  Subordination of Intercompany Loans    58

6.31

  Plans and Benefit Arrangements    58

6.32

  Issuance of Stock    58

6.33

  Changes in Organizational Documents    59

6.35

  Other Agreements    59

6.36

  Preservation of Existence    59

ARTICLE VII. DEFAULTS

   60

ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

   62

8.1

  Acceleration; Facility LC Collateral Accounts    62

8.2

  Amendments    63

8.3

  Preservation of Rights    64

ARTICLE IX. GENERAL PROVISIONS

   64

9.1

  Survival of Representations    64

9.2

  Governmental Regulation    64

9.3

  Headings    64

9.4

  Entire Agreement    65

9.5

  Several Obligations; Benefits of this Agreement    65

9.6

  Expenses; Indemnification    65

9.7

  Numbers of Documents    66

9.8

  Accounting    66

9.9

  Severability of Provisions    66

9.10

  Nonliability of Lenders    66

9.11

  Confidentiality    67

9.12

  Nonreliance    67

9.13

  Disclosure    67

9.14

  Joinder of Guarantors    67

9.15

  Business Days    68

9.16

  No Course of Dealing    68

9.17

  Waivers by the Borrower    68

9.18

  Incorporation by Reference    68

9.19

  USA Patriot Act Notification    68

ARTICLE X. THE AGENT

   68

10.1

  Appointment; Nature of Relationship    68

10.2

  Powers    69

10.3

  General Immunity    69

10.4

  No Responsibility for Loans, Recitals, etc.    69

 

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10.5

   Action on Instructions of Lenders    69

10.6

   Employment of Agents and Counsel    70

10.7

   Reliance on Documents; Counsel    70

10.8

   Agent’s Reimbursement and Indemnification    70

10.9

   Notice of Default    70

10.10

   Rights as a Lender    70

10.11

   Lender Credit Decision    71

10.12

   Successor Agent    71

10.13

   Agent and Arranger Fees    71

10.14

   Delegation to Affiliates    71

10.15

   Execution of Collateral Documents    71

10.16

   Collateral Releases    71

10.17

   Co-Agents, Documentation Agent, Syndication Agent, etc.    72

ARTICLE XI. SETOFF; RATABLE PAYMENTS

   72

11.1

   Setoff    72

11.2

   Ratable Payments    72

ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

   72

12.1

   Successors and Assigns    72

12.2

   Participations    73    12.2.1    Permitted Participants; Effect    73   
12.2.2    Voting Rights    73    12.2.3    Benefit of Certain Provisions    73

12.3

   Assignments    74    12.3.1    Permitted Assignments    74    12.3.2   
Consents    74    12.3.3    Effect; Effective Date    74    12.3.4    Register
   74

12.4

   Dissemination of Information    75

12.5

   Tax Treatment    75

ARTICLE XIII. NOTICES

   76

13.1

   Notices    76

13.2

   Change of Address    76

ARTICLE XIV. COUNTERPARTS; INTEGRATION; EFFECTIVENESS

   76

ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

   77

15.1

   Choice of Law    77

15.2

   Consent to Jurisdiction    77

15.3

   Waiver of Jury Trial    77

 

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Commitment Schedule

Pricing Schedule

Exhibit A

   Borrower’s Counsel Opinion Requirements

Exhibit B

   Compliance Certificate

Exhibit C

   Form of Assignment and Assumption Agreement

Exhibit D

   Loan/Credit Related Money Transfer Instructions

Exhibit E

   Form of Note

Exhibit F

   Form of Notice of Acquisition

Exhibit G

   Intentionally Omitted

Exhibit H

   Form of Intercompany Subordination Agreement

Exhibit I

   Forms of Mortgages and Deeds of Trust

Exhibit J

   Form of Negative Pledge Agreement

Exhibit K

   Form of Second Amended and Restated Pledge and Security Agreement

Exhibit L

   Form of Lender Joinder

Exhibit M

   Form of Acquisition Compliance Certificate

Exhibit N

   Form of Guarantor Joinder

Exhibit O

   Form of Investment Compliance Certificate

Exhibit P

   Form of Certificate of Chief Financial Officer

Exhibit Q

   Form of Reimbursement Agreement

Exhibit R

   Form of Borrowing Notice

Exhibit S

   Form of Notice of Continuation / Conversion

Schedule 1

  

Subsidiaries and other Investments

Schedule 2

  

Indebtedness and Liens

Schedule 3

  

Less Than 100% Subsidiaries

 

Schedule 4.1(i)(p)

   Jurisdiction for Personal Property Searches

Schedule 4.1(i)(q)

   Certain Required Third Party Consents

 

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Schedule 5.22

   Intellectual Property

Schedule 5.23

   Real Property

Schedule 5.24

   Operating Locations

Schedule 5.25

   Licenses

Schedule 5.26

   Predecessor Entities

Schedule 6(a)

   Louisiana Mortgages

Schedule 6.22

   Existing Rate Management Transactions

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This Second Amended and Restated Credit Agreement, dated as of December 22,
2009, is among CHURCHILL DOWNS INCORPORATED, the GUARANTORS party hereto, the
LENDERS party hereto, the DEPARTING LENDERS, if any, party hereto and JPMORGAN
CHASE BANK, N.A., a national banking association, as AGENT and as COLLATERAL
AGENT to amend and restate the Previous Credit Agreement, which is hereby
amended and restated in its entirety.

WHEREAS, the Borrower has requested, and the Agent, the Collateral Agent, the
Departing Lenders and the Lenders have agreed, to amend the Previous Credit
Agreement;

WHEREAS, the Borrower, the Lenders, the Departing Lenders, the Collateral Agent
and the Agent have agreed (a) to enter into this Agreement in order to (i) amend
and restate the Previous Credit Agreement in its entirety; (ii) re-evidence the
Obligations, which shall be repayable in accordance with the terms of this
Agreement; and (iii) set forth the terms and conditions under which the Lenders
will, from time to time, make loans and extend other financial accommodations to
or for the benefit of the Borrower and (b) that each Departing Lender shall
cease to be a party to the Previous Credit Agreement, as evidenced by its
execution and delivery of its Departing Lender Signature Page; and

WHEREAS, it is the intention of the parties to this Agreement that this
Agreement not constitute a novation and that, from and after the Closing Date,
the Previous Credit Agreement shall be amended and restated hereby and all
references herein to “hereunder,” “hereof,” or words of like import and all
references in any other Loan Document to the “Credit Agreement” or words of like
import shall mean and be a reference to the Previous Credit Agreement as amended
and restated hereby (and any section references to the Previous Credit Agreement
shall refer to the applicable equivalent provision set forth herein although the
section number thereof may have changed);

NOW, THEREFORE, in consideration of the terms and conditions contained herein,
and of any loans or extensions of credit heretofore, now or hereafter made to or
for the benefit of the Borrower by the Lenders and the Agent, the parties hereto
agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Defined Terms. As used in this Agreement:

“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
other Loan Party (i) acquires any going business or all or substantially all of
the assets of any Person, or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding ownership interests
of a partnership or limited liability company.

“Acquisition Compliance Certificate” has the meaning given it in Section 6.13.

 

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“Adjusted EBITDA” of any Person for any period means the EBITDA for that Person
for that period adjusted as set forth in the following sentence. For the
purposes of calculating Adjusted EBITDA for any period of four consecutive
fiscal quarters (each, a “Reference Period”) solely in respect of determining
the Leverage Ratio, (i) if at any time during such Reference Period the Borrower
or any Subsidiary shall have made any Material Disposition, the EBITDA of such
Person for such Reference Period shall be reduced by an amount equal to the
EBITDA (if positive) attributable to the property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the EBITDA (if negative) attributable thereto for such Reference Period, and
(ii) if during such Reference Period the Borrower or any Subsidiary shall have
made a Material Acquisition, EBITDA for such Person for such Reference Period
shall be calculated (a) after giving pro forma effect thereto as if such
Material Acquisition occurred on the first day of such Reference Period and
(b) without giving effect to any material impairment charges made by the Person
that is the target in any such Material Acquisition during such Reference
Period. As used in this definition, “Material Acquisition” means any Acquisition
that (a) constitutes (i) assets comprising all or substantially all or any
significant portion of a business or operating unit of a business, or (ii) all
or substantially all of the common stock or other Equity Interests of a Person,
and (b) involves the payment of consideration by the Borrower and its
Subsidiaries in excess of $10,000,000; and “Material Disposition” means any
sale, transfer or disposition of property or series of related sales, transfers,
or dispositions of property that yields gross proceeds to the Borrower or any of
its Subsidiaries in excess of $10,000,000.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Agent.

“Advance” means a borrowing hereunder, (i) made by the Lenders on the same
Borrowing Date, or (ii) converted or continued by the Lenders on the same date
of conversion or continuation, consisting, in either case, of the aggregate
amount of the several Loans of the same Type and, in the case of Eurodollar
Loans, for the same Interest Period. The term “Advance” shall include Swing Line
Loans unless otherwise expressly provided.

“Advance Wagering Deposits” means refundable deposits and amounts held by a Loan
Party for the benefit of persons who made such deposits for the purpose of
future wagering, ownership of which deposits and amounts is vested in such
persons.

“Affected Lender” has the meaning given it in Section 2.21.

“Affiliate” of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

“Agent” means JPMorgan in its capacity as contractual representative of the
Lenders pursuant to Article X, and not in its individual capacity as a Lender,
and any successor Agent appointed pursuant to Article X.

“Aggregate Commitment” means the aggregate of the Commitments of all the
Lenders, as reduced or increased from time to time pursuant to the terms hereof.
The initial Aggregate Commitment on the Closing Date is Two Hundred and
Seventy-Five Million and 00/100 Dollars ($275,000,000).

“Aggregate Outstanding Credit Exposure” means, at any time, the aggregate of the
Outstanding Credit Exposure of all the Lenders.

“Agreement” means this Second Amended and Restated Credit Agreement, as it may
be amended or modified and in effect from time to time.

 

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“Agreement Accounting Principles” means generally accepted accounting principles
as in effect from time to time, applied in a manner consistent with that used in
preparing the financial statements referred to in Section 5.4.

“Alternate Base Rate” means, for any day, a rate of interest per annum equal to
the highest of (a) the Prime Rate in effect for such date, (b) the sum of the
Federal Funds Effective Rate in effect for such day plus 1/2% per annum and
(c) the sum of (i) the quotient of (x) the Eurodollar Base Rate for a one month
Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day), divided by (y) one minus the Reserve
Requirement (expressed as a decimal) applicable to such one month Interest
Period, plus (ii) 1% per annum; provided that, for the avoidance of doubt, the
Eurodollar Base Rate for any day shall be based on the applicable British
Bankers’ Association LIBOR rate for deposits in Dollars as reported on Reuters
Screen LIBOR01 Page or, if such service is not available, by any other generally
recognized financial information service as of 11:00 a.m. (London time) on such
day. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Eurodollar Base Rate shall be effective
from and including the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Eurodollar Base Rate, respectively.

“Applicable Fee Rate” means, at any time, the percentage rate per annum at which
the Commitment Fee is accruing on the unused portion of the Aggregate Commitment
at such time as set forth in the Pricing Schedule.

“Applicable Margin” means, with respect to Advances of any Type at any time, the
percentage rate per annum which is applicable at such time with respect to
Advances of such Type as set forth in the Pricing Schedule.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Arlington Land Acquisition” means the acquisition of 66.8 acres of land by
Arlington Park Racecourse, LLC (“Arlington Park”) from The Duchossois Group,
Inc. (“Duchossois Group”) pursuant to the terms of that certain Agreement of
Sale and Purchase dated November 30, 2009.

“Arranger” means collectively, J.P. Morgan Securities Inc., and its successors,
and PNC Capital Markets, Inc., a Pennsylvania corporation, and its successors,
in their capacity as Joint Lead Arrangers and Joint Book Runners.

“Assignment of Patents, Trademarks and Copyrights” shall mean the Assignment of
Patents, Trademarks and Copyrights from time to time executed by the Loan
Parties in favor of the Collateral Agent, as amended, restated, supplemented or
otherwise modified from time to time.

“Article” means an article of this Agreement unless another document is
specifically referenced.

“Authorized Officer” means any of the chief executive officer, chief financial
officer, any executive vice president, any senior vice president, the treasurer,
and any other officer designated as such by the board of directors of the
Borrower, acting singly.

“Available Aggregate Commitment” means, at any time, the Aggregate Commitment
then in effect minus the Aggregate Outstanding Credit Exposure at such time.

“Banking Services” means the Working Cash Sweep Rider and each and any of the
following bank services provided to the Borrower or any of its Subsidiaries by
any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored
value cards and (c) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items,
overdrafts and interstate depository network services).

 

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“Banking Services Obligations” means any and all obligations of the Borrower or
any of its Subsidiaries to the Lenders and their Affiliates, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor) in connection with Banking Services.

“Benefit Arrangement” shall mean at any time an “employee benefit plan,” within
the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the Controlled Group.

“Borrower” means Churchill Downs Incorporated, a Kentucky corporation, and its
successors and assigns.

“Borrowing Date” means a date on which an Advance is made hereunder.

“Borrowing Notice” is defined in Section 2.10, and shall be in a form
satisfactory to the Agent, generally in the form of Exhibit R.

“Business Day” means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Louisville and New York City for the conduct
of substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Louisville for the conduct of substantially all of their commercial
lending activities and interbank wire transfers can be made on the Fedwire
system.

“CDMC” shall mean Churchill Downs Management Company, LLC, a Kentucky limited
liability company, and wholly owned subsidiary of the Borrower.

“Calder” means Calder Race Course, Inc., a Florida corporation.

“Calder Financing Statements” is defined in Section 6.21.

“Calder Mortgage” means the Mortgage executed by Calder in favor of the
Collateral Agent with respect to the Real Property owned by Calder. Calder
executed the Calder Mortgage and delivered such Calder Mortgage to the Agent on
the 2003 Closing Date in a form sufficient for recordation and the Agent may
hereafter record such Mortgage at any time pursuant to Section 6.21.

“Capitalized Lease” of a Person means any lease of Property by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.

“Capitalized Lease Obligations” of a Person means the amount of the obligations
of such Person under Capitalized Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with Agreement Accounting
Principles.

“Cash Equivalent Investments” means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000 and a certificate of
deposit issued by Louisville Community Development Bank in an amount not to
exceed $100,000; provided in each case that the same provides for payment of
both principal and interest (and not principal alone or interest alone) and is
not subject to any contingency regarding the payment of principal or interest.

 

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“Change in Control” means the occurrence of any of the following: Any person (as
such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as
in effect on the date of the Closing Date) or related Persons constituting a
group (as such term is used in Rule 13d-5 under the Exchange Act), other than a
group including, and under the general supervision of, the Excluded Group:
(i) become the “beneficial owners” (as such term is used in Rule 13d-3 under the
Exchange Act as in effect on the date of the Closing Date), directly or
indirectly, of more than 50% of the total voting power of all classes then
outstanding of the voting stock or membership or other equity interests of the
Borrower, or (ii) acquire after the date of the Closing Date (x) the power to
elect, appoint or cause the election or appointment of at least a majority of
the members of the board of directors of the Borrower, through beneficial
ownership of the capital stock of the Borrower or otherwise, or (y) all or
substantially all of the properties and assets of the Borrower.

“Change” has the meaning given it in Section 3.2.

“Closing Date” means December 22, 2009.

“Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

“Collateral” means and includes, collectively but without limitation, all
property and assets in which the Loan Parties grant (or are required to grant
pursuant to the terms hereof) the Collateral Agent for the benefit of the
Lenders an interest as collateral or other security for all or any of the
Secured Obligations, whether real or personal property, whether granted directly
or indirectly, whether granted now or in the future, and whether granted in the
form of a security interest, mortgage, deed of trust, assignment, pledge,
chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional
sale, trust receipt, lien, charge, lien or title retention, contract, lease or
consignment agreement intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract or otherwise and is
intended to and shall include all real and personal property, tangible and
intangible, of the Loan Parties; provided, however, the term Collateral shall
not include (i) the Horseman’s Account, (ii) Advance Wagering Deposits,
(iii) the bond issued under the Master Plan Bond Transaction and payments owed
by one Loan Party to another Loan Party in connection with the Master Plan Bond
Transaction, (iv) ownership interests of any Loan Party in any (a) Excluded
Subsidiary, (b) any Excluded Entity, and (c) those Persons listed on Schedule 3
hereto in which, as of the Closing Date, a Loan Party directly or indirectly
owns less than 100% of the outstanding interest of such Person and in which the
organizational agreements governing such Person prohibit the applicable Loan
Party from granting a security interest in such ownership interest, and (v) any
chattel paper, contract rights or other general intangibles which are now held
or hereafter acquired by any Loan Party to the extent that such chattel paper,
contract rights or other general intangibles (including, but not limited to,
licenses) are not assignable or capable of being encumbered (a) as a matter of
law or (b) under the terms of any agreement applicable thereto (but solely to
the extent that any such restriction is enforceable and not ineffective under
applicable law) without the consent of the other party to such agreement where
such consent has not been obtained after the applicable Loan Party has made a
reasonably diligent effort satisfactory to the Agent to obtain such consent.

“Collateral Agent” means JPMorgan in its capacity as contractual representative
of the Lenders as Collateral Agent hereunder, and not in its individual capacity
as a Lender.

“Collateral Documents” means, collectively, all of the instruments, documents
and agreements executed in connection with this Agreement, the Previous Credit
Agreement or the 2003 Credit Agreement by which any Person grants a security
interest in Collateral, including without limitation, those documents referenced
in Section 6.25 of this Agreement, which in turn includes without limitation,
the Pledge and Security Agreement, the Mortgages, the Mortgage Instruments, the
Negative Pledge Agreement, the Assignment of Patents, Trademarks and Copyrights,
the Intercompany Subordination Agreement, the 2004B Collateral Documents, and
all other documents or instruments executed as security for the Secured
Obligations from time to time, including, without limitation, those entered into
pursuant to Section 6.29 of this Agreement.

 

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“Collateral Shortfall Amount” is defined in Section 8.1.

“Commitment” means, for each Lender, the obligation of such Lender to make
Revolving Loans to, and participate in Facility LCs issued upon the application
of, the Borrower in an aggregate amount not exceeding the amount set forth for
such Lender on the Commitment Schedule, as it may be modified as a result of any
assignment that has become effective pursuant to Section 12.3.3 or as otherwise
modified from time to time pursuant to the terms hereof.

“Commitment Fee” is defined in Section 2.7.

“Commitment Schedule” means the Schedule identifying each Lender’s Commitment as
of the Closing Date attached hereto and identified as such.

“ContentCo” means CD ContentCo HC, LLC, a Delaware limited liability company
existing to hold Borrower’s interest in TrackNet Media Group, LLC, a Delaware
limited liability company and joint venture formed by Borrower and Magna
Entertainment Corp., a Delaware corporation (“Magna”), which joint venture will
consolidate racing signals, wagering rights, account wagering and related
businesses of the Borrower and its Subsidiaries and third parties, including
without limitation, Magna.

“Consolidated Adjusted EBITDA” for any Period means the consolidated Adjusted
EBITDA of all of the Loan Parties for that period, consolidated in accordance
with Agreement Accounting Principles. The EBITDA of the Excluded Subsidiaries
shall not be included in Consolidated Adjusted EBITDA.

“Consolidated Funded Indebtedness” means at any time the aggregate dollar amount
of Consolidated Indebtedness which has actually been funded and is outstanding
at such time, whether or not such amount is due or payable at such time.

“Consolidated Indebtedness” means at any time the Indebtedness of the Loan
Parties calculated on a consolidated basis as of such time in accordance with
Agreement Accounting Principles. The Indebtedness of any Excluded Subsidiary
shall not be included in Consolidated Indebtedness.

“Consolidated Interest Expense” means, with reference to any period, the
interest expense of the Loan Parties calculated on a consolidated basis for such
period in accordance with Agreement Accounting Principles. The interest expense
paid by an Excluded Subsidiary shall not be included in Consolidated Interest
Expense.

“Consolidated Net Income” means, with reference to any period, the net income
(or loss) of all of the Loan Parties calculated on a consolidated basis for such
period in accordance with Agreement Accounting Principles. The net income (or
loss) of any Excluded Subsidiary shall not be included in Consolidated Net
Income.

“Consolidated Net Worth” means as of any date of determination total
shareholders’ equity of all of the Loan Parties as of such date determined and
consolidated in accordance with Agreement Accounting Principles. The total
shareholders’ equity of any Excluded Subsidiary shall not be included in
Consolidated Net Worth.

“Consolidated Rentals” means, with reference to any period, the Rentals of the
Loan Parties calculated on a consolidated basis for such period in accordance
with Agreement Accounting Principles. The Rentals of any Excluded Subsidiary
shall not be included in Consolidated Rentals.

 

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“Contingent Obligation” of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any guaranty, comfort letter,
operating agreement, take-or-pay contract or the obligations of any such Person
as general partner of a partnership with respect to the liabilities of the
partnership.

“Controlled Group” means all members of a controlled group of corporations or
other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.

“Conversion/Continuation Notice” is defined in Section 2.11, and shall be in a
form satisfactory to this Agent, generally in the form of Exhibit S.

“Credit Extension” means the making of an Advance or the issuance of a Facility
LC hereunder.

“Credit Extension Date” means the Borrowing Date for an Advance or the issuance
date for a Facility LC.

“Current Fields of Enterprise” means those fields of enterprise that each Loan
Party is engaged in as of the date of this Agreement, and activities related
thereto, including, but not limited to the acquisition of Persons that provide
wagering platforms and the acquisition of entertainment event Persons and the
improvement of existing facilities to allow expanded entertainment venues, and,
in each case, shall not include any mode of gambling other than pari-mutuel
wagering on horse racing and Permitted Alternative Gaming which, in each case,
is conducted in full compliance with applicable law.

“Default” means one or more of the events described in Article VII.

“Defaulting Lender” means any Lender, as determined by the Agent, that has
(a) failed to fund any portion of its Loans or participations in Facility LCs or
Swing Line Loans within three (3) Business Days of the date required to be
funded by it hereunder, (b) notified the Borrower, the Agent, the LC Issuer, the
Swing Line Lender or any Lender in writing that it does not intend to comply
with any of its funding obligations under this Agreement or has made a public
statement to the effect that it does not intend to comply with its funding
obligations under this Agreement or under other agreements in which it commits
to extend credit, (c) failed, within three (3) Business Days after request by
the Agent, to confirm that it will comply with the terms of this Agreement
relating to its obligations to fund prospective Loans and participations in then
outstanding Facility LCs and Swing Line Loans, (d) otherwise failed to pay over
to the Agent or any other Lender any other amount required to be paid by it
hereunder within three (3) Business Days of the date when due, unless the
subject of a good faith dispute, or (e) (i) become or is insolvent or has a
parent company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian,
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator, assignee
for the benefit of creditors or similar Person charged with reorganization or
liquidation of its business or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.

“Departing Lender” means each lender under the Previous Credit Agreement that
executes and delivers to the Agent a Departing Lender Signature Page. There are
no Departing Lenders.

 

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“Departing Lender Signature Page” means each signature page to this Agreement on
which it is indicated that the Departing Lender executing the same shall cease
to be a party to the Previous Credit Agreement on the Closing Date.

“EBITDA” for any Person for any period of determination means that Person’s net
income plus, to the extent deducted from revenues in determining net income,
(i) interest expense, (ii) expense for taxes paid or accrued,
(iii) depreciation, (iv) amortization, (v) extraordinary losses incurred other
than in the ordinary course of business and (vi) the one-time contribution by
the Borrower of up to $10,000,000 to the Churchill Downs Foundation; minus, to
the extent included in net income, that Person’s extraordinary gains realized
other than in the ordinary course of business for such period determined, in
accordance with Agreement Accounting Principles.

“Environmental Laws” means all applicable federal, provincial, state and local
laws, rules, regulations, reported and publicly available orders, reported
judicial determinations, and reported and publicly available decisions of an
executive body or any governmental or quasi-governmental entity, whether in the
past, the present or the future, pertaining to health and/or the environment in
effect in any and all jurisdictions in which the Borrowers are at any time
leasing equipment pursuant to a Lease or otherwise doing business. The
Environmental Laws shall include, but shall not be limited to, the following:
(1) the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Sections 9601, et seq.; the Superfund Amendments and Reauthorization
Act, Public Law 99-499, 100 Stat. 1613; the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901, et seq.; the National Environmental Policy Act, 42
U.S.C. Section 4321; the Safe Drinking Water Act, 42 U.S.C. Sections 300F, et
seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801; the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1251; et seq.; the Clean Air Act, 42
U.S.C. Section 7401, et seq.; and the regulations promulgated in connection
therewith; and (2) Environmental Protection Agency regulations pertaining to
asbestos (including 40 C.F.R. Part 61, Subpart M); Occupational Safety and
Health Administration regulations pertaining to asbestos (including 29 C.F.R.
Sections 1910.1001 and 1926.58); and any state, province and local laws and
regulations pertaining to Hazardous Materials and/or asbestos.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any of the
foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any rule or regulation issued thereunder.

“Eurodollar Advance” means an Advance which, except as otherwise provided in
Section 2.13, bears interest at the applicable Eurodollar Rate.

“Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable British Bankers’ Association LIBOR rate
for deposits in U.S. dollars as reported on Reuters Screen LIBOR01 Page or, if
such service is not available, by any other generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers’ Association LIBOR
rate is available to the Agent, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the rate determined by the Agent to be
the rate at which JPMorgan or one of its Affiliate banks offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, in the approximate amount of JPMorgan’s relevant
Eurodollar Loan and having a maturity equal to such Interest Period.

 

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“Eurodollar Loan” means a Loan which, except as otherwise provided in
Section 2.13, bears interest at the applicable Eurodollar Rate.

“Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.

“Exchange Act” means the Securities Exchange Act of 1934.

“Excluded Entities” means any corporation, partnership, limited liability
company or other Person in which the Loan Parties hold an ownership interest,
either directly or indirectly, and which is not a Loan Party.

“Excluded Group” means and includes Duchossois Industries, Inc. and its
Affiliates.

“Excluded Subsidiaries” means any Excluded Entity which is a Subsidiary of any
of the Loan Parties. The Excluded Subsidiaries on the date of this Agreement
are: Tracknet, LLC, BRIS Data Corporation, TSN Data Corporation, CD ContentCo
HC, LLC, a Delaware limited liability company, CD HRTV HC, LLC, a Delaware
limited liability company, and, until the consummation of the acquisition by the
Borrower of UBET, Tomahawk Merger Corp., a Delaware corporation and Tomahawk
Merger LLC, a Delaware limited liability company.

“Excluded Taxes” means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (ii) the jurisdiction
in which the Agent’s or such Lender’s principal executive office or such
Lender’s applicable Lending Installation is located.

“Exhibit” refers to an exhibit to this Agreement, unless another document is
specifically referenced.

“Facility LC” is defined in Section 2.3.1.

“Facility LC Application” is defined in Section 2.3.3.

“Facility LC Collateral Account” is defined in Section 2.3.11.

“Facility Termination Date” means December 22, 2013, or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.

“Fair Grounds Assignment and Subordination of Lease and Management Agreement”
shall mean the Assignment and Subordination of Lease and Management Agreement,
dated as of October 14, 2004, between Churchill Downs Louisiana Horseracing
Company, L.L.C., as Landlord, and Fair Grounds Corporation, as Tenant.

“Federal Funds Effective Rate” means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published on the next succeeding day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations at approximately
10:00 a.m. (Louisville time) on such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent in its sole discretion.

 

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“Financial Contract” of a Person means (i) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, and/or (ii) any Rate Management
Transaction.

“First Amendment” means the 2004A Amendment to Loan Documents, dated as of
June 1, 2004 among the Agent, the Guarantors party thereto and the Borrower.

“Floating Rate” means, for any day, a rate per annum equal to (i) the Alternate
Base Rate for such day plus (ii) the Applicable Margin, in each case changing
when and as the Alternate Base Rate changes.

“Floating Rate Advance” means an Advance which, except as otherwise provided in
Section 2.13, bears interest at the Floating Rate.

“Floating Rate Loan” means a Loan which, except as otherwise provided in
Section 2.13, bears interest at the Floating Rate.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“Guarantor Joinder” is defined in Section 9.14.

“Guarantors” means, subject to Section 6.12(iii) collectively, Churchill Downs
Management Company, LLC, Churchill Downs Investment Company, Churchill Downs
Simulcast Productions, LLC, Charlson Industries, Inc., Calder Race Course, Inc.,
Tropical Park, Inc., Arlington Park Racecourse, LLC, Arlington OTB Corp., Quad
City Downs, Inc., Churchill Downs Louisiana Horseracing Company, L.L.C.,
Churchill Downs Louisiana Video Poker Company, L.L.C., Video Services, Inc.,
Churchill Downs Technology Initiatives Company, any Person who becomes a
Guarantor under Section 9.14, and the successors and assigns of any of them, and
“Guarantor” means any one or more of these.

“Guaranty” means that certain Second Amended and Restated Guaranty dated as of
the Closing Date, executed by the Guarantors in favor of the Collateral Agent,
entered into pursuant to this Agreement, as amended, restated, supplemented or
otherwise modified and in effect from time to time.

“Hazardous Materials” means any substance, chemical, wastes (medical or
otherwise), or contaminants, including, without limitation, asbestos,
polychlorinated biphenyls (“PCBs”), paint containing lead, gasoline or other
petroleum products, radioactive material, urea formaldehyde foam insulation, and
discharges of sewage or effluent that is designated or defined (either by
inclusion in a list of materials or by reference to exhibited characteristics)
as hazardous, toxic or dangerous, or as a designated or prohibited substance, in
any federal, state, provincial, municipal or local law, by-law, code having the
force of law, or ordinance, including, without limitation, the applicable
Environmental Laws, now existing or hereafter in effect, and all rules having
the force of law and regulations promulgated thereunder.

“Horseman’s Account” means refundable deposits and amounts held by a Loan Party
for the benefit of horsemen, ownership of which deposits and amounts is vested
in such horsemen.

“HRTV” means CD HRTV HC, LLC, a Delaware limited liability company existing to
hold Borrower’s fifty percent (50%) interest in Magna’s horse racing channel
HRTV™, which channel engages or will engage in the production of television
broadcast of racing signals and related businesses of the Borrower and its
Subsidiaries and third parties, including without limitation, Magna.

 

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“Indebtedness” of a Person means such Person’s (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person’s business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person,
(iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) obligations of such Person to purchase securities or other
Property arising out of or in connection with the sale of the same or
substantially similar securities or Property, (vi) Capitalized Lease
Obligations, (vii) LC Obligations, (viii) aggregate undrawn stated amount under
Letters of Credit that are not Facility LCs, plus the aggregate amount of all
reimbursement obligations in connection therewith, and (ix) any other obligation
for borrowed money or other financial accommodation which in accordance with
Agreement Accounting Principles would be shown as a liability on the
consolidated balance sheet of such Person, but the term “Indebtedness” does not
include trade payables and accrued expenses, deferred revenue related to the
annual running of the Kentucky Derby, deferred revenue from the leasing or
licensing of PSLs, and obligations not exceeding $3,000,000 under outstanding
pari-mutuel tickets that are payable with respect to races run not more than one
year prior to the date of determination which were incurred in the ordinary
course of business, which are not represented by a promissory note or other
evidence of indebtedness and (other than pari-mutuel tickets) which are not more
than thirty (30) days past due, all determined in accordance with Agreement
Accounting Principles.

“Indemnity Agreement” shall mean the Environmental Indemnity Agreement, dated as
of the 2003 Closing Date, among the Agent, the Borrower and the Guarantors party
thereto.

“Intercompany Subordination Agreement” shall mean a subordination agreement
among the Loan Parties in the form attached hereto as Exhibit H.

“Interest Coverage Ratio” means, as of any date of calculation, the ratio of
(a) Consolidated Adjusted EBITDA to (b) Consolidated Interest Expense, in each
instance computed as provided in Section 6.24.1 and in accordance with Agreement
Accounting Principles.

“Interest Period” means, with respect to a Eurodollar Advance, a period of one,
two, three or six (or, with the consent of each Lender, nine or twelve) months
commencing on a Business Day selected by the Borrower pursuant to this
Agreement. Such Interest Period shall end on the day which corresponds
numerically to such date one, two, three or six (or, with the consent of each
Lender, nine or twelve) months thereafter, provided, however, that if there is
no such numerically corresponding day in such next, second, third or sixth
succeeding month, such Interest Period shall end on the last Business Day of
such next, second, third or sixth (or, with the consent of each Lender, ninth or
twelfth) succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.

“Investment” of a Person means any loan, advance (other than commission, travel
and similar advances to officers and employees made in the ordinary course of
business), extension of credit (other than accounts receivable arising in the
ordinary course of business on terms customary in the trade) or contribution of
capital by such Person; stocks, bonds, mutual funds, partnership interests,
notes, debentures or other securities owned by such Person; any deposit accounts
and certificate of deposit owned by such Person; and structured notes,
derivative financial instruments and other similar instruments or contracts
owned by such Person.

“Jazz Fest Subordination Agreement and Estoppel” shall mean the Subordination,
Non-Disturbance and Attornment Agreement dated October 13, 2004, between The New
Orleans Jazz and Heritage Foundation, Inc., as Tenant, and the Collateral Agent
as mortgagee under the Mortgage defined therein, together with the Estoppel
Certificate by The New Orleans Jazz and Heritage Foundation, Inc. in favor of
the Agent and the Collateral Agent.

 

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“JPMorgan” means JPMorgan Chase Bank, N.A., a national banking association, in
its individual capacity, and its successors.

“LC Exposure” means, at any time, the aggregate principal amount of all LC
Obligations at such time. The LC Exposure of any Lender at any time shall be its
Pro Rata Share of the total LC Exposure at such time.

“LC Fee” is defined in Section 2.3.4.

“LC Issuer” means PNC Bank (or any subsidiary or affiliate of PNC Bank
designated by PNC Bank) in its capacity as issuer of Facility LCs hereunder.

“Investment Compliance Certificate” is defined in Section 6.13(ii)(c).

“LC Obligations” means, at any time, the sum, without duplication, of (i) the
aggregate undrawn stated amount under all Facility LCs outstanding at such time
(including without limitation increases, if any, in the stated amount provided
in any Facility LC, whether or not the time for such increase has occurred) plus
(ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.

“LC Payment Date” is defined in Section 2.3.5.

“LC Reimbursement Agreement” is defined in Section 2.3.3.

“Lenders” means the lending institutions (other than the Departing Lenders)
listed on the signature pages of this Agreement and their respective successors
and assigns, together with any lending institution that becomes a Lender under
Section 12.3. Unless otherwise specified, the term “Lenders” includes PNC Bank
in its capacity as Swing Line Lender.

“Lending Installation” means, with respect to a Lender or the Agent, the office,
branch, subsidiary or Affiliate of such Lender or the Agent listed on the
signature pages hereof or on a Schedule or otherwise selected by such Lender or
the Agent pursuant to Section 2.19.

“Letter of Credit” of a Person means a letter of credit or similar instrument
which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.

“Leverage Ratio” means, as of any date of calculation, the ratio of
(i) Consolidated Funded Indebtedness outstanding on such date to
(ii) Consolidated Adjusted EBITDA, in each instance computed in accordance with
Section 6.24.2 and Agreement Accounting Principles.

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention agreement).

“Loan” means a Revolving Loan or a Swing Line Loan.

“Loan Documents” means this Agreement, the Facility LC Applications, the LC
Reimbursement Agreement, any Notes issued pursuant to Section 2.15, the
Collateral Documents, the Guaranty, and all other documents (excluding the
Working Cash Sweep Rider) and/or instruments executed and delivered pursuant to
and/or in connection with the 2003 Credit Agreement, the Previous Credit
Agreement or this Agreement.

 

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“Loan Parties” means the Borrower and the Guarantors from time to time.

“Louisiana Mortgages” means the Mortgages, Assignments of Rents and Security
Agreements and the Leasehold Mortgages, Assignments of Rents and Security
Agreements and Deeds of Trust encumbering the Loan Parties’ fee or leasehold
interest in those properties listed on 6(a) of the 2004B Amendment and delivered
by each of the applicable Loan Parties with respect to each of the parcels of
real property listed on Schedule 6(a) to the Collateral Agent for the benefit of
the Lenders, as they may be amended and/or supplemented from time to time.

“Master Plan Bond Rentals” means rentals payable under the Master Plan Bond
Transaction.

“Master Plan Bond Transaction” means the transaction through which the City of
Louisville, Kentucky (n/k/a Louisville/Jefferson County Metro Government)
Taxable Industrial Building Revenue Bond, Series 2002 (Churchill Downs
Incorporated Project) was issued.

“Material Adverse Effect” means a material adverse effect on (i) the business,
Property, condition (financial or otherwise), results of operations, or
prospects, of the Loan Parties taken as a whole, (ii) the ability of the
Borrower to perform its obligations under the Loan Documents to which it is a
party, or (iii) the validity or enforceability of any of the Loan Documents or
the rights or remedies of the Agent, the LC Issuer, the Collateral Agent or the
Lenders thereunder.

“Material Greenfield Project” means a project(s) or transaction(s) pursuant to
which a Loan Party would license, construct and operate a facility providing
Permitted Alternative Gaming.

“Material Indebtedness” means Indebtedness in an outstanding principal amount of
$3,000,000 or more in the aggregate (or the equivalent thereof in any currency
other than U.S. dollars), but does not include the Indebtedness under the
Convertible Promissory Note in the principal amount of $16,669,379.87 dated
October 19, 2004 payable to Brad M. Kelley.

“Material Indebtedness Agreement” means any agreement under which any Material
Indebtedness was created or is governed or which provides for the incurrence of
Indebtedness in an amount which would constitute Material Indebtedness (whether
or not an amount of Indebtedness constituting Material Indebtedness is
outstanding thereunder).

“Modify” and “Modification” are defined in Section 2.3.1.

“Money Service Business Laws” means all applicable federal, provincial, state
and local laws, rules, regulations, reported and publicly available orders,
reported judicial determinations, and reported and publicly available decisions
of an executive body or any governmental or quasi-governmental entity, whether
in the past, the present or the future, pertaining to any Money Service Business
Provider in effect in any and all jurisdictions in which the Borrower or any of
its Subsidiaries are at any time doing business.

“Money Service Business Provider” means a Person that provides any of the
following services: 1) currency dealer or exchanger, 2) check casher, 3) issuer
of traveler’s checks, money orders or open stored value cards, 4) seller or
redeemer of traveler’s checks, money orders, or open stored value cards or 5)
money transmitter.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgages” shall mean the Mortgages and Deeds of Trust in substantially the
form of collective Exhibit I previously executed and delivered by each of the
applicable Loan Parties with respect to each of the parcels of Real Property
Collateral to the Collateral Agent for the benefit of the Lenders. The Calder
Mortgage with respect to the Real Property in Florida was not recorded on the
2003 Closing Date, but the Agent may cause the Collateral Agent to record the
Calder Mortgage at any time pursuant to Section 6.21.

 

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“Mortgage Instruments” means such title reports, ALTA title insurance policy
(with endorsements), evidence of zoning compliance, property insurance, opinions
of counsel, ALTA surveys, appraisals, flood certifications (and, if applicable,
FEMA form acknowledgements of insurance), environmental assessments and reports
and mortgage tax affidavits and declarations as are requested by, and in form
and substance reasonably acceptable to, the Administrative Agent from time to
time.

“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Borrower or any member of the
Controlled Group is a party to which more than one employer is obligated to make
contributions.

“Negative Pledge Agreement” means that certain Negative Pledge Agreement in
substantially the form of Exhibit J executed and delivered by Calder and all the
Loan Parties in favor of the Agent with respect to all interest of the Loan
Parties in any Property of Calder, including without limitation any Property
subject to the Calder Mortgage and/or any Calder Financing Statements.

“Non-U.S. Lender” is defined in Section 3.5(iv).

“Note” is defined in Section 2.15(iv).

“Notice of Acquisition” is defined in Section 6.13(iii)(b).

“Obligations” means, collectively, all unpaid principal of and accrued and
unpaid interest on the Loans, all obligations, contingent or otherwise, under
and/or in connection with any Notes and/or to or for the benefit of any Lender
and/or the LC Issuer under and/or in connection with the other Loan Documents,
all Reimbursement Obligations, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent, the Collateral Agent for the benefit of any Lender
or the LC Issuer, the LC Issuer or any indemnified party arising under the Loan
Documents, whether they exist on the date of this Agreement, the Previous Credit
Agreement or the 2003 Credit Agreement, or arise or are created or acquired
after the date of this Agreement, the Previous Credit Agreement or the 2003
Credit Agreement.

“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (ii) any liability under any Sale and Leaseback Transaction which
is not a Capitalized Lease, (iii) any liability under any so-called “synthetic
lease” transaction entered into by such Person, or (iv) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause (iv) Operating
Leases.

“Operating Lease” of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.

“Other Taxes” is defined in Section 3.5(ii).

“Outstanding Credit Exposure” means, as to any Lender at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Pro Rata Share of the LC Obligations at such time,
plus (iii) an amount equal to its Pro Rata Share of the aggregate principal
amount of Swing Line Loans outstanding at such time.

“Participants” is defined in Section 12.2.1.

 

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“Payment Date” means the last day of each calendar quarter.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Permitted Acquisitions” has the meaning given it in Section 6.13(iii).

“Permitted Alternative Gaming” means on-line gaming (including social gaming)
and/or slot machines and/or video lottery terminals and/or electronic gaming
machines, in each case operated by one or more of the Loan Parties at a facility
owned or leased by, and operated by one or more of the Loan Parties, and at
which either (1) live horse racing is underway at that facility and pari-mutuel
wagering is being conducted with respect to those races; and/or (2) live horse
racing is being simulcast at, and as a primary purpose of, that facility and
pari-mutuel wagering is being conducted with respect to those races.

“Permitted Investment” means (i) investments in UBET; (ii) a possible investment
of up to $10,000,000 in ContentCo; and (iii) a possible investment of up to
$20,000,000 in HRTV.

“Permitted Liens” is defined in Section 6.16.

“Permitted Pro Rata Secured Financings” means those certain issuances of
Indebtedness of the Borrower or any Domestic Subsidiary pursuant to a note
offering to institutional investors or other term loan financing from banks
and/or institutional investors, in each case with a maturity date that is no
earlier than the Facility Termination Date and otherwise pursuant to such terms
and conditions as are approved by the Administrative Agent from time to time and
in an aggregate cumulative principal amount acceptable to the Required Lenders.

“Permitted Pro Rata Secured Obligations” means the Indebtedness and other
obligations, if any, of the Borrower and its Subsidiaries under the Permitted
Pro Rata Secured Financings.

“Permitted Secured Rate Management Transaction” has the meaning given it in
Section 6.16(vii).

“Person” means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

“Plan” means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which the Borrower or any member of the Controlled Group may have any
liability.

“Pledge and Security Agreement” means the Second Amended and Restated Pledge and
Security Agreement in substantially the form of Exhibit K dated as of the
Closing Date and executed and delivered by each of the applicable Loan Parties
to the Collateral Agent for the ratable benefit of the Lenders, as amended,
restated, supplemented or otherwise modified and in effect from time to time.

“PNC Bank” means PNC Bank, National Association, a national banking association
having its principal office in Pittsburgh, Pennsylvania, and having an office in
Louisville, Kentucky, in its individual capacity, and its successors.

“Previous Credit Agreement” means that certain Amended and Restated Credit
Agreement dated as of September 23, 2005 by and among the Borrower, the
Guarantors party thereto, the Lenders party thereto and the Agent, as the same
has been amended prior to the Closing Date.

“Pricing Schedule” means the Pricing Schedule attached to this Agreement.

 

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“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.

“Prohibited Transaction” shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United States
Department of Labor.

“Pro Rata Share” means, with respect to any Lender, the percentage obtained by
dividing (i) such Lender’s Commitment at such time by (ii) the Aggregate
Commitment at such time; provided, however, (1) in the case of Section 2.23 when
a Defaulting Lender shall exist, “Pro Rata Share” shall mean the percentage
obtained by dividing (a) such Lender’s Commitment at such time by (b) the
Aggregate Commitment (disregarding any Defaulting Lender’s Commitment) at such
time and (2) if all of the Commitments are terminated pursuant to the terms of
this Agreement, then “Pro Rata Share” means the percentage obtained by dividing
(a) such Lender’s Outstanding Credit Exposure at such time by (b) the Aggregate
Outstanding Credit Exposure (giving effect to any assignments and to any
Lender’s status as a Defaulting Lender at the time of determination) at such
time.

“Property” of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

“PSL” means any agreement between any Loan Party and a Person providing for a
right to purchase or otherwise use seating accommodations in certain seating
locations at the Borrower’s Property located on Central Avenue in Louisville,
Kentucky, known as the Churchill Downs racetrack facility, and which agreement
does not conflict with any of the Loan Documents, and/or result in a Default or
Unmatured Default, and expressly does not result in, or require, the creation or
imposition of any Lien in, leasehold interest in, rights in, claim to, easement
or easement by estoppel over, or similar rights or interests in any Property of
any such Loan Party, or result in, or require, the creation or imposition of any
right to possess specific property (other than the contractual right to purchase
or otherwise use the subject seating accommodations subject to the terms of such
agreement).

“PSL Buyback/Guarantee” means any promise to repurchase or buy back, guarantee
or otherwise provide credit support, directly or indirectly, given by any Loan
Party in favor of any financial institution or other Person in connection with
an obligation arising under a PSL Financing.

“PSL Financing” means any instance in which, pursuant to a PSL Financing
Program, a PSL Purchaser finances its obligations under a PSL, in whole or in
part, and which does not conflict with any of the Loan Documents, and/or result
in a Default or Unmatured Default.

“PSL Financing Program” means a financing arrangement program established by any
Loan Party with a financial institution or other Person pursuant to which such
financial institution or other Person agrees to finance, in whole or in part,
PSL Purchasers’ obligations under the PSLs, and which arrangement does not
conflict with any of the Loan Documents, and/or result in a Default or Unmatured
Default.

“PSL Purchaser” means the Person who enters into a PSL with any Loan Party.

“Purchasers” is defined in Section 12.3.1.

“Rate Management Obligations” means any and all obligations of the Borrower or
any of its Subsidiaries to the Lenders or their Affiliates, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all Rate Management Transactions, and (ii) any and
all cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.

 

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“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing including, without limitation, those transactions
described on Schedule 6.22 or hereafter entered by the Borrower which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions) or
any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.

“Real Property” means, collectively, each of the parcels of owned and/or leased
real property of any of the Loan Parties, all of which is listed on Schedule
5.23.

“Real Property Collateral” means each of the parcels of owned Real Property
listed on Schedule 5.23 except as set forth on such Schedule.

“Recorded Mortgages” means each of the Mortgages, except for the Calder
Mortgage, but if the Calder Mortgage is subsequently recorded in accordance with
Section 6.21, Recorded Mortgage shall include such Calder Mortgage on and after
the date of such recordation.

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

“Regulation U” means Regulation U, T, G or X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

“Reimbursement Obligations” means, at any time, the aggregate of all obligations
of the Borrower then outstanding under Section 2.3 to reimburse the LC Issuer
for amounts paid by the LC Issuer in respect of any one or more drawings under
Facility LCs.

“Rentals” of a Person means the aggregate fixed amounts payable by such Person
under any Operating Lease but shall not include Master Plan Bond Rentals or Tote
Rentals.

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA
and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.

“Reports” is defined in Section 9.6(i).

“Required Lenders” means Lenders in the aggregate having greater than fifty
percent (50%) of the Aggregate Outstanding Credit Exposure, or if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding greater than
fifty percent (50%) of the aggregate principal amount of all of the Loans plus
all of the LC Obligations.

 

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“Reserve Requirement” means, with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

“Restricted Assets” has the meaning given it in Section 6.13(iii)(d)(3).

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Borrower or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in the Borrower or
any Subsidiary.

“Revolving Loan” means, with respect to a Lender, such Lender’s Loan made
pursuant to its Commitment to lend set forth in Section 2.1 (or any conversion
or continuation thereof) and includes any “Revolving Loan” made pursuant to the
Previous Credit Agreement and outstanding on the Closing Date.

“Risk-Based Capital Guidelines” has the meaning given it in Section 3.2

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.

“Sale and Leaseback Transaction” means any sale or other transfer of Property by
any Person with the intent to lease such Property as lessee.

“Schedule” refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

“SEC” means the Securities and Exchange Commission, or any governmental
authority succeeding to any of its principal functions.

“Section” means a numbered section of this Agreement, unless another document is
specifically referenced.

“Secured Obligations” means, collectively, (i) all Obligations, (ii) all Rate
Management Obligations owing to one or more Lenders or any affiliate of any
Lender, (iii) all Banking Services Obligations, (iv) any and all other
indebtedness and/or obligations to or for the benefit of the Agent and/or one or
more Lenders and/or the LC Issuer secured by and/or in all or any of the
Collateral Documents, in each case whether they exist on the date of this
Agreement, or arise or are created or acquired after the date of this Agreement
and (v) Permitted Pro Rata Secured Obligations.

“Single Employer Plan” means a Plan maintained by the Borrower or any member of
the Controlled Group for employees of the Borrower or any member of the
Controlled Group.

“Subsidiary” of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its direct or indirect Subsidiaries or by such Person and one or more of its
direct or indirect Subsidiaries, or (ii) any partnership, limited liability
company, association, joint venture or similar business organization more than
50% of the ownership interests having ordinary voting power of which shall at
the time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

“Swing Line Borrowing Notice” is defined in Section 2.2.2.

 

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“Swing Line Commitment” means the obligation of the Swing Line Lender in
Section 2.2 to make Swing Line Loans up to a maximum principal amount of
$20,000,000.

“Swing Line Exposure” means, at any time, the aggregate principal amount of all
Swing Line Loans outstanding at such time. The Swing Line Exposure of any Lender
at any time shall be its Pro Rata Share of the total Swing Line Exposure at such
time.

“Swing Line Lender” means PNC Bank, or such other Lender which may succeed to
its rights and obligations as Swing Line Lender pursuant to the terms of this
Agreement.

“Swing Line Loan” means a Loan made available to the Borrower by the Swing Line
Lender pursuant to Section 2.2.3 and includes any “Swing Line Loan” made
pursuant to the Previous Credit Agreement and outstanding on the Closing Date.

“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.

“Term Substantial Portion” means, with respect to the Property of the Borrower
and the other Loan Parties, collectively, Property which represents 20% or more
of Consolidated Net Worth or Property which is responsible for 20% of the
Consolidated Net Income, in each case, as would be shown in the consolidated
financial statements of the Loan Parties as at the end of the fiscal month next
preceding the Closing Date (or if financial statements have not been delivered
hereunder for that month, then the financial statements delivered hereunder for
the quarter ending immediately prior to that month).

“Tote Rentals” means all amounts paid by a Person for rental of equipment and/or
the provision of services under any agreement between such Person and a
totalisator company.

“Transferee” is defined in Section 12.4.

“Twelve Month Substantial Portion” means, with respect to the Property of the
Borrower and the other Loan Parties, collectively, Property which represents 10%
or more of Consolidated Net Worth or Property which is responsible for 10% of
the Consolidated Net Income, in each case, as would be shown in the consolidated
financial statements of the Loan Parties as at the beginning of the twelve-month
period ending with the month in which such determination is made (or if
financial statements have not been delivered hereunder for that month which
begins the twelve-month period, then the financial statements delivered
hereunder for the quarter ending immediately prior to that month).

“2003 Closing Date” means April 3, 2003.

“2003 Credit Agreement” means that certain Credit Agreement dated as of April 3,
2003 by and among the Borrower, the Guarantors party thereto, the Lenders party
thereto and the Agent, as the same has been amended prior to September 23, 2005.

“2004B Amendment” means the 2004B Amendment to Loan Documents, dated as of
October 14, 2004, among the Agent, the Guarantors party thereto and the
Borrower.

“2004B Amendment to Pledge and Security Agreement” means the 2004B Amendment to
Pledge and Security Agreement, dated as of October 14, 2004, among the
applicable Loan Parties and the Collateral Agent, as they may be amended and/or
supplemented from time to time.

 

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“2004B Assignments of Patent, Trademarks and Copyrights” shall mean the
Assignment of Patent, Trademarks and Copyrights, dated as of October 14, 2004,
executed by CDIP, L.L.C. in favor of the Collateral Agent and the Assignment of
Patent, Trademarks and Copyrights, dated as of October 14, 2004, executed by
Churchill Downs Louisiana Horseracing Company, L.L.C. in favor of the Collateral
Agent.

“2004B Collateral Documents” means, collectively, all of the instruments,
documents and agreements by which any Person grants a security interest in any
Collateral pursuant to the 2004B Amendment, including without limitation, those
documents referenced in Sections 6.25 and 6.29 of this Agreement, which in turn
includes without limitation, the 2004B Amendment to the Pledge and Security
Agreement, the 2004B Louisiana Addendum to Pledge and Security Agreement (as
defined in the 2004B Amendment to Pledge and Security Agreement), the 2004B
Consent Joinder and Reaffirmation, the Louisiana Mortgages, the 2004B
Assignments of Patents, Trademarks and Copyrights, the Fair Grounds Assignment
and Subordination of Lease and Management Agreement, the Jazz Fest Subordination
Agreement and Estoppel, and all other documents or instruments executed as
security for the Secured Obligations in connection with the 2004B Amendment from
time to time, as they may be amended and/or supplemented from time to time.

“2004B Consent Joinder and Reaffirmation” shall mean the Consent Joinder and
Reaffirmation, dated October 14, 2004, among the Collateral Agent, the Borrower
and the Guarantors party thereto.

“2004B Guarantor Joinder” shall mean the Guarantor Joinder, dated October 14,
2004, among the Collateral Agent, the Borrower and the Guarantors party thereto.

“Type” means, with respect to any Advance, its nature as a Floating Rate Advance
or a Eurodollar Advance and with respect to any Loan, its nature as a Floating
Rate Loan or a Eurodollar Loan.

“UBET” means Youbet.com, Inc., a Delaware corporation.

“Unfunded Liabilities” means the amount (if any) by which the present value of
all vested and unvested accrued benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.

“Unmatured Default” means an event which but for the lapse of time or the giving
of notice, or both, would constitute a Default.

“Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.

“Working Cash Sweep Rider” is defined in Section 2.2.5.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

1.2 Amendment and Restatement of Previous Credit Agreement. The parties to this
Agreement agree that, upon (i) the execution and delivery by each of the parties
hereto of this Agreement and (ii) satisfaction of the conditions set forth in
Sections 4.1 and 4.2, the terms and provisions of the Previous Credit Agreement
shall be and hereby are amended, superseded and restated in their entirety by
the terms and provisions of this Agreement. This Agreement is not intended to
and shall not constitute a novation. All Loans made and Secured Obligations
incurred under the Previous Credit Agreement which are outstanding on the
Closing Date shall continue as Loans and Secured Obligations under (and shall be
governed by the terms of) this Agreement. Without limiting the foregoing,

 

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upon the effectiveness hereof: (a) all Letters of Credit issued (or deemed
issued) under the Previous Credit Agreement which remain outstanding on the
Closing Date shall continue as Facility LCs under (and shall be governed by the
terms of) this Agreement, (b) all Secured Obligations constituting Rate
Management Obligations with any Lender or any Affiliate of any Lender which are
outstanding on the Closing Date shall continue as Secured Obligations under this
Agreement and the other Loan Documents, (c) the Agent shall make such
reallocations of each Lender’s “Outstanding Credit Exposure” under the Previous
Credit Agreement as are necessary in order that each such Lender’s Outstanding
Credit Exposure hereunder reflects such Lender’s Pro Rata Share of the
outstanding Aggregate Outstanding Credit Exposure and (d) the Previous Revolving
Loans (as defined in Section 2.1) of each Departing Lender shall be repaid in
full (accompanied by any accrued and unpaid interest and fees thereon), each
Departing Lender’s “Commitment” under the Previous Credit Agreement shall be
terminated and each Departing Lender shall not be a Lender hereunder.

ARTICLE II

THE CREDITS

2.1 Revolving Loan Commitment. Prior to the Closing Date, revolving loans were
previously made to the Borrower under the Previous Credit Agreement which remain
outstanding as of the date of this Agreement (such outstanding revolving loans
being hereinafter referred to as the “Previous Revolving Loans”). Subject to the
terms and conditions set forth in this Agreement, the Borrower and each of the
Lenders agree that on the Closing Date but subject to the satisfaction of the
conditions precedent set forth in Section 4.1 and 4.2 (as applicable), the
Previous Revolving Loans shall be reevidenced as Revolving Loans under this
Agreement, the terms of the Previous Revolving Loans shall be restated in their
entirety and shall be evidenced by this Agreement. From and including the date
of this Agreement and prior to the Facility Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this Agreement, to
make Loans to the Borrower from time to time in amounts not to exceed in the
aggregate at any one time outstanding the amount of its Commitment. Subject to
the terms of this Agreement, the Borrower may borrow, repay and reborrow at any
time prior to the Facility Termination Date. The Commitments to lend hereunder
shall expire on the Facility Termination Date. The Aggregate Commitment may be
increased up to a total of $375,000,000 upon compliance with Section 2.22 below.
No Lender shall have any obligation to increase its Commitment; any such
increase shall be at the sole discretion of such Lender.

2.2 Swing Line Loans.

2.2.1 Amount of Swing Line Loans. Upon the satisfaction of the conditions
precedent set forth in Section 4.2 and, if such Swing Line Loan is to be made on
the date of the initial Advance hereunder, the satisfaction of the conditions
precedent set forth in Section 4.1 as well, from and including the date of this
Agreement and prior to the Facility Termination Date, the Swing Line Lender
agrees, on the terms and conditions set forth in this Agreement, to make Swing
Line Loans to the Borrower from time to time in an aggregate principal amount
not to exceed the Swing Line Commitment, provided that the Aggregate Outstanding
Credit Exposure (including without limitation Swing Line Loans) shall not at any
time exceed the Aggregate Commitment, and provided further that at no time shall
the sum of (i) the Swing Line Lender’s Pro Rata Share of the Swing Line Loans,
plus (ii) the outstanding Revolving Loans made by the Swing Line Lender pursuant
to Section 2.1, exceed the Swing Line Lender’s Commitment at such time. Subject
to the terms of this Agreement, the Borrower may borrow, repay and reborrow
Swing Line Loans at any time prior to the Facility Termination Date.

 

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2.2.2 Borrowing Notice. The Borrower shall deliver to the Agent and the Swing
Line Lender irrevocable notice (a “Swing Line Borrowing Notice”) not later than
noon (Louisville time) on the Borrowing Date of each Swing Line Loan, specifying
(i) the applicable Borrowing Date (which date shall be a Business Day), and
(ii) the aggregate amount of the requested Swing Line Loan which shall be an
amount not less than $100,000. The Swing Line Loans shall bear interest at a
rate per annum equal to the Alternate Base Rate, plus the Applicable Margin set
forth in the Pricing Schedule for the Floating Rate at that time.

2.2.3 Making of Swing Line Loans. Promptly after receipt of a Swing Line
Borrowing Notice, the Agent shall notify each Lender by fax, or other similar
form of transmission, of the requested Swing Line Loan. Not later than 2:00 p.m.
(Louisville time) on the applicable Borrowing Date, the Swing Line Lender shall
make available the Swing Line Loan, in funds immediately available in
Louisville, to the Agent at its address specified pursuant to Article XIII. The
Agent will promptly make the funds so received from the Swing Line Lender
available to the Borrower on the Borrowing Date at the Agent’s aforesaid
address.

2.2.4 Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in full
by the Borrower on or before the fifth (5th) Business Day after the Borrowing
Date for such Swing Line Loan. In addition, the Swing Line Lender (i) may at any
time in its sole discretion with respect to any outstanding Swing Line Loan, or
(ii) shall, except when a Working Cash Sweep Rider is in effect, on the fifth
(5th) Business Day after the Borrowing Date of any Swing Line Loan, require each
Lender (including the Swing Line Lender) to make a Revolving Loan in the amount
of such Lender’s Pro Rata Share of such Swing Line Loan (including, without
limitation, any interest accrued and unpaid thereon), for the purpose of
repaying such Swing Line Loan. Not later than noon (Louisville time) on the date
of any notice received pursuant to this Section 2.2.4, each Lender shall make
available its required Revolving Loan, in funds immediately available in
Louisville to the Agent at its address specified pursuant to Article XIII.
Revolving Loans made pursuant to this Section 2.2.4 shall initially be Floating
Rate Loans and thereafter may be continued as Floating Rate Loans or converted
into Eurodollar Loans in the manner provided in Section 2.11 and subject to the
other conditions and limitations set forth in this Article II. Unless a Lender
shall have notified the Swing Line Lender, prior to its making any Swing Line
Loan, that any applicable condition precedent set forth in Sections 4.1 or 4.2
had not then been satisfied, such Lender’s obligation to make Revolving Loans
pursuant to this Section 2.2.4 to repay Swing Line Loans shall be unconditional,
continuing, irrevocable and absolute and shall not be affected by any
circumstance, including, without limitation, (a) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Agent,
the Swing Line Lender or any other Person, (b) the occurrence or continuance of
a Default or Unmatured Default, (c) any adverse change in the condition
(financial or otherwise) of the Borrower, or (d) any other circumstance,
happening or event whatsoever. In the event that any Lender fails to make
payment to the Agent of any amount due under this Section 2.2.4, the Agent shall
be entitled to receive, retain and apply against such obligation the principal
and interest otherwise payable to such Lender hereunder until the Agent receives
such payment from such Lender or such obligation is otherwise fully satisfied.
In addition to the foregoing, if for any reason any Lender fails to make payment
to the Agent of any amount due under this Section 2.2.4, such Lender shall be
deemed, at the option of the Agent, to have unconditionally and irrevocably
purchased from the Swing Line Lender, without recourse or warranty, an undivided
interest and participation in the applicable Swing Line Loan in the amount of
such Revolving Loan, and such interest and participation may be recovered from
such Lender together with interest thereon at the Federal Funds Effective Rate
for each day during the period commencing on the date of demand and ending on
the date such amount is received. On the Facility Termination Date, the Borrower
shall repay in full the outstanding principal balance of the Swing Line Loans.

 

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2.2.5 Working Cash Sweep Rider. Any provision of this Section 2.2 to the
contrary notwithstanding, the Agent and each Lender acknowledges that, at the
request of the Borrower, the Swing Line Lender has linked the Swing Line Loans
to the Borrower’s demand deposit account with the Swing Line Lender. The Agent
and the Lenders further acknowledge that the Borrower has entered into a Working
Cash, Line of Credit, Investment Sweep Rider (“Working Cash Sweep Rider”) with
the Swing Line Lender, pursuant to which certain cash management activities,
including the making of Swing Line Loans, will occur automatically in amounts
that may be less than the stated minimum Swing Line Loan set forth in
Section 2.2.2 above, and without the need for a Swing Line Borrowing Notice.
Each Lender agrees that it shall be obligated, pursuant to and in accordance
with Section 2.2.4, to fund such Lender’s Pro Rata Share of any such
automatically-made Swing Line Loans on the fifth (5th) Business Day following
the day such advances are made, unless the Agent shall have given the Swing Line
Lender written notice prior to the date the Swing Line Loan was made that any
applicable condition precedent set forth in Sections 4.1 or 4.2 had not then
been satisfied, and the Swing Line Lender has had a reasonable amount of time,
not to exceed two (2) Business Days from such notice, within which to act. In
the event of termination of the Working Cash Sweep Rider by either the Borrower
or the Swing Line Lender, the Swing Line Lender will promptly notify the Agent
of such termination.

2.3 Letter of Credit Subfacility.

2.3.1 Issuance. The LC Issuer hereby agrees, on the terms and conditions set
forth in this Agreement, to issue standby and commercial letters of credit (each
such Letter of Credit, together with each Letter of Credit issued or deemed to
be issued pursuant to the Previous Credit Agreement and outstanding on the
Closing Date, a “Facility LC”) and to renew, extend, increase, decrease or
otherwise modify each Facility LC (“Modify,” and each such action a
“Modification”), from time to time from and including the date of this Agreement
and prior to the Facility Termination Date upon the request of the Borrower;
provided that immediately after each such Facility LC is issued or Modified,
(i) the aggregate amount of the outstanding LC Obligations shall not exceed
$20,000,000 and (ii) the Aggregate Outstanding Credit Exposure shall not exceed
the Aggregate Commitment. No Facility LC shall have an expiry date later than
the earlier of (x) the fifth Business Day prior to the Facility Termination Date
and (y) one year after its issuance; provided that any Facility LC with an
expiry date one year after issuance may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (x) above).

2.3.2 Participations. Upon (a) the Closing Date with respect to each Facility LC
issued and outstanding under the Previous Credit Agreement and (b) the issuance
or Modification by the LC Issuer of each other Facility LC in accordance with
this Section 2.3, the LC Issuer shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably sold to each Lender, and
each Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the LC Issuer, a participation in
such Facility LC (and each Modification thereof) and the related LC Obligations
in proportion to its Pro Rata Share.

2.3.3 Notice. Subject to Section 2.3.1, the Borrower shall give the LC Issuer
and the Agent notice prior to 10:00 a.m. (Louisville time) at least three
Business Days, or such shorter period of time as may be acceptable to the LC
Issuer in its discretion, prior to the proposed date of issuance or Modification
of each Facility LC, specifying the beneficiary, the proposed date of issuance
(or Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby. Upon Agent’s receipt of such notice, the Agent shall
promptly notify the LC Issuer if the proposed amount of such Facility LC will
cause the Aggregate Outstanding Credit Exposure to equal or exceed the Aggregate
Commitment. The issuance or Modification by the LC Issuer of any Facility LC
shall, in addition to the conditions precedent set forth in Article IV (the
satisfaction of which the LC Issuer shall have no duty to

 

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ascertain), be subject to the conditions precedent that such Facility LC shall
be satisfactory to the LC Issuer and that the Borrower shall have executed and
delivered a Reimbursement Agreement (“LC Reimbursement Agreement”) in the form
of Exhibit Q, and such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall have reasonably
requested (each, a “Facility LC Application”). The terms of the LC Reimbursement
Agreement and Facility LC Application shall supplement the terms of this
Agreement, but in the event of any conflict between the terms of this Agreement
and the terms of any LC Reimbursement Agreement and/or any Facility LC
Application, the terms of this Agreement shall control. On the date of issuance
or Modification by the LC Issuer of any Facility LC, the LC Issuer shall notify
the Agent, and the Agent shall promptly notify each Lender of the issuance or
Modification of each Facility LC, specifying the beneficiary, the date of
issuance (or Modification) and the expiry date of such Facility LC, the terms of
the Facility LC and the nature of the transactions supported by the Facility LC.

2.3.4 LC Fees. The Borrower shall pay to the Agent, for the account of the
Lenders ratably in accordance with their respective Pro Rata Shares, with
respect to each Facility LC, a letter of credit fee at a per annum rate equal to
the Applicable Margin for Eurodollar Loans in effect from time to time on the
average daily undrawn stated amount under such Facility LC, such fee to be
payable in arrears on each Payment Date, and such fee to be payable on the date
of such issuance or increase (each such fee described in this sentence an “LC
Fee”). In addition, the Borrower shall pay to the LC Issuer for its own account
a fronting fee equal to 12.5 basis points (0.125%) multiplied by the daily
average Letters of Credit Outstanding, payable quarterly in arrears commencing
on the first Business Day of each October, January, April and July following
issuance of each Facility LC and on the Facility Termination Date. As used
herein, “Letters of Credit Outstanding” means the aggregate amount available to
be drawn on all Facility LCs issued and outstanding (including any amounts drawn
thereunder and not reimbursed, regardless of the existence or satisfaction of
any conditions or limitations on drawing).

2.3.5 Administration; Reimbursement by Lenders. Upon receipt from the
beneficiary of any Facility LC of any demand for payment in connection with a
presentation of documents under such Facility LC, the LC Issuer shall notify the
Agent and the Agent shall promptly notify the Borrower and each other Lender as
to the amount to be paid by the LC Issuer as a result of such demand and the
proposed payment date (the “LC Payment Date”). The responsibility of the LC
Issuer to the Borrower and each Lender shall be only to determine that the
documents (including each demand for payment) delivered under each Facility LC
in connection with such presentment shall be in conformity in all material
respects with such Facility LC. The LC Issuer shall endeavor to exercise the
same care in the issuance and administration of the Facility LCs as it does with
respect to letters of credit in which no participations are granted, it being
understood that in the absence of any gross negligence or willful misconduct by
the LC Issuer, each Lender shall be unconditionally and irrevocably liable
without regard to the occurrence of any Default or any condition precedent
whatsoever, to reimburse the LC Issuer on demand for (i) such Lender’s Pro Rata
Share of the amount of each payment made by the LC Issuer under each Facility LC
to the extent such amount is not reimbursed by the Borrower pursuant to
Section 2.3.6 below, plus (ii) interest on the foregoing amount to be reimbursed
by such Lender, for each day from the date of the LC Issuer’s demand for such
reimbursement (or, if such demand is made after 11:00 a.m. (Louisville time) on
such date, from the next succeeding Business Day) to the date on which such
Lender pays the amount to be reimbursed by it, at a rate of interest per annum
equal to the Federal Funds Effective Rate for the first three days and,
thereafter, at a rate of interest equal to the rate applicable to Floating Rate
Advances.

2.3.6 Reimbursement by Borrower. The Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the applicable
LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing
under any Facility LC, without presentment, demand, protest or other formalities
of any kind; provided that neither the Borrower nor any

 

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Lender shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrower or such Lender to the extent,
but only to the extent, caused by the willful misconduct or gross negligence of
the LC Issuer in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC. All such amounts paid
by the LC Issuer and remaining unpaid by the Borrower shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to (x) the
rate applicable to Floating Rate Advances for such day if such day falls on or
before the applicable LC Payment Date and (y) the sum of 2% plus the rate
applicable to Floating Rate Advances for such day if such day falls after such
LC Payment Date. The LC Issuer will pay to each Lender ratably in accordance
with its Pro Rata Share all amounts received by it from the Borrower for
application in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Facility LC issued by the LC Issuer, but only to the extent such
Lender has made payment to the LC Issuer in respect of such Facility LC pursuant
to Section 2.3.5. Subject to the terms and conditions of this Agreement
(including without limitation the submission of a Borrowing Notice in compliance
with Section 2.10 and the satisfaction of the applicable conditions precedent
set forth in Article IV), the Borrower may request an Advance hereunder for the
purpose of satisfying any Reimbursement Obligation.

2.3.7 Obligations Absolute. The Borrower’s obligations under this Section 2.3
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the LC Issuer, any Lender or any
beneficiary of a Facility LC. The Borrower further agrees with the LC Issuer and
the Lenders that the LC Issuer and the Lenders shall not be responsible for, and
the Borrower’s Reimbursement Obligation in respect of any Facility LC shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even if such documents should in fact prove to be
in any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or
any financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Facility LC. The Borrower
agrees that any action taken or omitted by the LC Issuer or any Lender under or
in connection with each Facility LC and the related drafts and documents, if
done without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not put the LC Issuer or any Lender under any liability to
the Borrower. Nothing in this Section 2.3.7 is intended to limit the right of
the Borrower to make a claim against the LC Issuer for damages as contemplated
by the proviso to the first sentence of Section 2.3.6.

2.3.8 Actions of LC Issuer. The LC Issuer shall be entitled to rely, and shall
be fully protected in relying, upon any Facility LC, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the LC Issuer. The LC Issuer shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first have received such advice or concurrence of the Required
Lenders as it reasonably deems appropriate or it shall first be indemnified to
its reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Notwithstanding any other provision of this Section 2.3, the LC
Issuer shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and any future holders of a
participation in any Facility LC.

 

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2.3.9 Indemnification. The Borrower hereby agrees to indemnify and hold harmless
each Lender, the LC Issuer and the Agent, and their respective directors,
officers, agents and employees from and against any and all claims and damages,
losses, liabilities, costs or expenses which such Lender, the LC Issuer or the
Agent may incur (or which may be claimed against such Lender, the LC Issuer or
the Agent by any Person whatsoever) by reason of or in connection with the
issuance, execution and delivery or transfer of or payment or failure to pay
under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities, costs
or expenses which the LC Issuer may incur by reason of or in connection with
(i) the failure of any other Lender to fulfill or comply with its obligations to
the LC Issuer hereunder (but nothing herein contained shall affect any rights
the Borrower may have against any defaulting Lender) or (ii) by reason of or on
account of the LC Issuer issuing any Facility LC which specifies that the term
“Beneficiary” included therein includes any successor by operation of law of the
named Beneficiary, but which Facility LC does not require that any drawing by
any such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify any
Lender, the LC Issuer or the Agent for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the willful
misconduct or gross negligence of the LC Issuer in determining whether a request
presented under any Facility LC complied with the terms of such Facility LC.
Nothing in this Section 2.3.9 is intended to limit the obligations of the
Borrower under any other provision of this Agreement.

2.3.10 Lenders’ Indemnification. Each Lender shall, ratably in accordance with
its Pro Rata Share, indemnify the LC Issuer, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees’ gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Section 2.3 or any
action taken or omitted by such indemnitees hereunder.

2.3.11 Facility LC Collateral Account. The Borrower agrees that it will, upon
the request of the Agent or the Required Lenders and until the final expiration
date of any Facility LC and thereafter as long as any amount is payable to the
LC Issuer or the Lenders in respect of any Facility LC, maintain a special
collateral account pursuant to arrangements satisfactory to the Agent (the
“Facility LC Collateral Account”) at the Agent’s office at the address specified
pursuant to Article XIII, in the name of the Borrower but under the sole
dominion and control of the Agent, for the benefit of the Lenders and the LC
Issuer and in which the Borrower shall have no interest other than as set forth
in Section 8.1. The Borrower hereby pledges, assigns and grants to the Agent, on
behalf of and for the ratable benefit of the Lenders, and the LC Issuer, a
security interest in all of the Borrower’s right, title and interest in and to
all funds which may from time to time be on deposit in the Facility LC
Collateral Account to secure the prompt and complete payment and performance of
the Obligations. The Agent will invest any funds on deposit from time to time in
the Facility LC Collateral Account in certificates of deposit of JPMorgan having
a maturity not exceeding 30 days. Nothing in this Section 2.3.11 shall either
obligate the Agent to require the Borrower to deposit any funds in the Facility
LC Collateral Account or limit the right of the Agent to release any funds held
in the Facility LC Collateral Account in each case other than as required by
Section 8.1.

2.3.12 Rights as a Lender. In its capacity as a Lender, the LC Issuer shall have
the same rights and obligations as any other Lender.

2.4 Required Payments; Termination. Any outstanding Advances and all other
unpaid Obligations shall be paid in full by the Borrower on the Facility
Termination Date.

 

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2.5 Ratable Loans. Each Advance hereunder shall consist of Loans made from the
several Lenders ratably according to their Pro Rata Shares.

2.6 Types and Number of Eurodollar Advances. The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.10 and 2.11, or Swing Line Loans selected
by Borrower in accordance with Section 2.2. The Borrower may have no more than
eight (8) Eurodollar Advances outstanding at any one time.

2.7 Commitment Fee; Reductions in Aggregate Commitment. The Borrower agrees to
pay to the Agent for the account of each Lender according to its Pro Rata Share
a commitment fee (the “Commitment Fee”) in arrears at a per annum rate equal to
the Applicable Fee Rate in effect from time to time on the average daily
Available Aggregate Commitment of such Lender from the date hereof to and
including the Facility Termination Date, payable on each Payment Date hereafter
and on the Facility Termination Date. Swing Line Loans shall not count as usage
of any Lender’s Commitment for the purpose of calculating the commitment fee due
hereunder. In addition, on the Closing Date, the Borrower shall pay to the Agent
for the ratable account of the lenders then party to the Previous Credit
Agreement, the accrued and unpaid commitment fees under the Previous Credit
Agreement through Closing Date. The Borrower may permanently reduce the
Aggregate Commitment in whole, or in part ratably among the Lenders in integral
multiples of $5,000,000, upon at least one Business Days’ written notice to the
Agent, which notice shall specify the amount of any such reduction, provided,
however, that the amount of the Aggregate Commitment may not be reduced below
the Aggregate Outstanding Credit Exposure. All accrued Commitment Fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Credit Extensions hereunder.

2.8 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the
minimum amount of $500,000 (and in multiples of $100,000 if in excess thereof),
and each Floating Rate Advance (other than an advance to repay Swing Line Loans)
shall be in the minimum amount of $500,000 (and in multiples of $100,000 if in
excess thereof), provided, however, that any Floating Rate Advance may be in the
amount of the Available Aggregate Commitment.

2.9 Optional Principal Payments. The Borrower may from time to time pay, without
penalty or premium, all outstanding Floating Rate Advances (other than Swing
Line Loans), or, in a minimum aggregate amount of $1,000,000 or any integral
multiple of $1,000,000 in excess thereof, any portion of the outstanding
Floating Rate Advances (other than Swing Line Loans) upon one Business Day’s
prior notice to the Agent. The Borrower may at any time pay, without penalty or
premium, all outstanding Swing Line Loans, or, in a minimum amount of $100,000
and increments of $50,000 in excess thereof, any portion of the outstanding
Swing Line Loans, with notice to the Agent and the Swing Line Lender by 11:00
a.m. (Louisville Time) on the date of repayment. The Borrower may from time to
time pay, subject to the payment of any funding indemnification amounts required
by Section 3.4 but without penalty or premium, all outstanding Eurodollar
Advances or any portion of the outstanding Eurodollar Advances upon three
(3) Business Days’ prior notice to the Agent.

2.10 Method of Selecting Types and Interest Periods for New Advances. Each Type
of Advance shall bear interest according to its Type, from the date the Advance
is made until it is repaid. The Borrower shall select the Type of Advance and,
in the case of each Eurodollar Advance, the Interest Period applicable thereto
from time to time. The Borrower shall give the Agent irrevocable notice (a
“Borrowing Notice”) not later than 11:00 a.m. (Louisville time) at least one
Business Day before the Borrowing Date of each Floating Rate Advance and three
Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

 

  (i) the Borrowing Date, which shall be a Business Day, of such Advance,

 

  (ii) the aggregate amount of such Advance,

 

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  (iii) the Type of Advance selected, and

 

  (iv) in the case of each Eurodollar Advance, the Interest Period applicable
thereto.

Not later than 1:00 p.m. (Louisville time) on each Borrowing Date, each Lender
shall make available its Loan or Loans in funds immediately available in
Louisville to the Agent at its address specified pursuant to Article XIII. The
Agent will make the funds so received from the Lenders available to the Borrower
at the Agent’s aforesaid address.

2.11 Conversion and Continuation of Outstanding Advances. Floating Rate Advances
(other than Swing Line Loans) shall continue as Floating Rate Advances unless
and until such Floating Rate Advances are converted into Eurodollar Advances
pursuant to this Section 2.11 or are repaid in accordance with Section 2.9. Each
Eurodollar Advance shall continue as a Eurodollar Advance until the end of the
then applicable Interest Period therefor, at which time such Eurodollar Advance
shall be automatically converted into a Floating Rate Advance unless (x) such
Eurodollar Advance is or was repaid in accordance with Section 2.9 or (y) the
Borrower shall have given the Agent a Conversion/Continuation Notice (as defined
below) requesting that, at the end of such Interest Period, such Eurodollar
Advance continue as a Eurodollar Advance for the same or another Interest
Period. Subject to the terms of Section 2.10, the Borrower may elect from time
to time to convert all or any part of a Floating Rate Advance (other than a
Swing Line Loan) into a Eurodollar Advance. The Borrower shall give the Agent
irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a
Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar
Advance not later than 11:00 a.m. (Louisville time) at least three Business Days
prior to the date of the requested conversion or continuation, specifying:

 

  (i) the requested date, which shall be a Business Day, of such conversion or
continuation,

 

  (ii) the aggregate amount and Type of the Advance which is to be converted or
continued, and

 

  (iii) the amount of such Advance which is to be converted into or continued as
a Eurodollar Advance and the duration of the Interest Period applicable thereto.

2.12 Changes in Interest Rate, etc. Each Floating Rate Advance (other than a
Swing Line Loan) shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate Advance
pursuant to Section 2.11, to but excluding the date it is paid or is converted
into a Eurodollar Advance pursuant to Section 2.11 hereof, at a rate per annum
equal to the Floating Rate for such day. Each Swing Line Loan shall bear
interest on the outstanding principal amount thereof, for each day from and
including the day such Swing Line Loan is made to but excluding the date it is
paid, at a rate per annum equal to the Floating Rate for such day. Changes in
the rate of interest on that portion of any Advance maintained as a Floating
Rate Advance will take effect simultaneously with each change in the Alternate
Base Rate. Each Eurodollar Advance shall bear interest on the outstanding
principal amount thereof from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Interest Period
at the interest rate determined by the Agent as applicable to such Eurodollar
Advance based upon the Borrower’s selections under Sections 2.10 and 2.11 and
otherwise in accordance with the terms hereof. No Interest Period may end after
the Facility Termination Date.

2.13 Rates Applicable After Default. Notwithstanding anything to the contrary
contained in Section 2.10, 2.11 or 2.12, during the continuance of a Default or
Unmatured Default the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent of the
Lenders to changes in interest rates), declare that no Advance may be made as,
converted into or continued as a Eurodollar Advance. During the continuance of a
Default the Required Lenders may, at their option, by notice to the Borrower

 

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(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent of the
Lenders to changes in interest rates), declare that (i) each Eurodollar Advance
shall bear interest for the remainder of the applicable Interest Period at the
rate otherwise applicable to such Interest Period plus 2% per annum, and
(ii) each Floating Rate Advance shall bear interest at a rate per annum equal to
the Floating Rate in effect from time to time plus 2% per annum and (iii) the LC
Fee shall be increased by 2% per annum, provided that, during the continuance of
a Default under Section 7.6 or 7.7, the interest rates set forth in clauses
(i) and (ii) above and the increase in the LC Fee set forth in clause
(iii) above shall be applicable to all Credit Extensions without any election or
action on the part of the Agent or any Lender.

2.14 Method of Payment. All payments of the Obligations hereunder shall be made,
without setoff, deduction, or counterclaim, in immediately available funds to
the Agent at the Agent’s address specified pursuant to Article XIII, or at any
other Lending Installation of the Agent specified in writing by the Agent to the
Borrower, by noon (local time) on the date when due and shall (except with
respect to repayments of Swing Line Loans, and in the case of Reimbursement
Obligations for which the LC Issuer has not been fully indemnified by the
Lenders, or as otherwise specifically required hereunder) be applied ratably by
the Agent among the Lenders. Each payment delivered to the Agent for the account
of any Lender shall be delivered promptly by the Agent to such Lender, in the
same type of funds that the Agent received, at such Lender’s address specified
pursuant to Article XIII or at any Lending Installation specified in a notice
received by the Agent from such Lender. The Agent is hereby authorized to charge
the account of the Borrower maintained with JPMorgan for each payment of
principal, interest Reimbursement Obligations and fees as it becomes due
hereunder. Each reference to the Agent in this Section 2.14 shall also be deemed
to refer, and shall apply equally, to the LC Issuer, in the case of payments
required to be made by the Borrower to the LC Issuer pursuant to Section 2.3.6.

2.15 Noteless Agreement; Evidence of Indebtedness.

 

  (i) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time hereunder.

 

  (ii) The Agent shall also maintain accounts in which it will record (a) the
amount of each Loan made hereunder, the Type thereof and the Interest Period (if
applicable) with respect thereto, (b) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder, (c) the original stated amount of each Facility LC and the amount of
LC Obligations outstanding at any time, and (d) the amount of any sum received
by the Agent hereunder from the Borrower and each Lender’s share thereof.

 

  (iii) The entries maintained in the accounts maintained pursuant to paragraphs
(i) and (ii) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided, however, that the failure of the
Agent or any Lender to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Obligations in
accordance with their terms.

 

  (iv)

Any Lender may request that its Loans be evidenced by a promissory note or, in
the case of the Swing Line Lender, promissory notes representing its Revolving
Loans and Swing Line Loans, respectively, substantially in the form of Exhibit
E, with appropriate changes for notes evidencing Swing Line Loans (each, a
“Note”). In such event, the Agent shall prepare and forward to the Borrower for
execution and delivery to such Lender a Note or Notes payable to the order

 

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of such Lender. Thereafter, the Loans evidenced by each such Note and interest
thereon shall at all times (prior to any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee named
therein, except to the extent that any such Lender subsequently returns any such
Note for cancellation and requests that such Loans once again be evidenced as
described in paragraphs (i) and (ii) above.

2.16 Telephonic Notices. The Borrower hereby authorizes the Lenders and the
Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower, it being understood that the foregoing authorization is
specifically intended to allow Borrowing Notices and Conversion/Continuation
Notices to be given telephonically. The Borrower agrees to deliver promptly to
the Agent a written confirmation signed by an Authorized Officer, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice.
If the written confirmation differs in any material respect from the action
taken by the Agent and the Lenders, the records of the Agent and the Lenders
shall govern absent manifest error.

2.17 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each
Floating Rate Advance shall be payable on each Payment Date, commencing with the
first such date to occur after the date hereof, on each date set forth in the
Working Cash Sweep Rider, on any date on which the Floating Rate Advance is
prepaid, whether due to acceleration or otherwise, and on the Facility
Termination Date. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a day
other than a Payment Date shall be payable on the date of conversion. Interest
accrued on each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and on the Facility Termination
Date. Interest accrued on each Eurodollar Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest, Commitment Fees and
LC Fees shall be calculated for actual days elapsed on the basis of a 360-day
year, except for interest payable on Advances at the Alternate Base Rate which
shall accrue on the basis of the actual number of days elapsed over a year of
365 or 366 days, as appropriate. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if payment
is received prior to noon (local time) at the place of payment. If any payment
of principal of or interest on an Advance shall become due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.

2.18 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Agent will notify each Lender of
the contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
Promptly after notice from the LC Issuer, the Agent will notify each Lender of
the contents of each request for issuance of a Facility LC hereunder. The Agent
will notify each Lender of the interest rate applicable to each Eurodollar
Advance promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Alternate Base Rate.

2.19 Lending Installations. Each Lender may book its Loans and its participation
in any LC Obligations and the LC Issuer may book the Facility LCs at any Lending
Installation selected by such Lender or the LC Issuer, as the case may be, and
may change its Lending Installation from time to time. All terms of this
Agreement shall apply to any such Lending Installation and the Loans, Facility
LCs, participations in LC Obligations and any Notes issued hereunder shall be
deemed held by each Lender or the LC Issuer, as the case may be, for the benefit
of any such Lending Installation. Each Lender and the LC Issuer may, by written
notice to the Agent and the Borrower in accordance with Article XIII, designate
replacement or additional Lending Installations through which Loans will be made
by it or Facility LCs will be issued by it and for whose account Loan payments
or payments with respect to Facility LCs are to be made.

 

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2.20 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the
case may be, notifies the Agent prior to the date on which it is scheduled to
make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan
or (ii) in the case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or the
Borrower, as the case may be, has not in fact made such payment to the Agent,
the recipient of such payment shall, on demand by the Agent, repay to the Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (x) in the case of payment by a Lender, the Federal Funds Effective
Rate for such day for the first three days and, thereafter, the interest rate
applicable to the relevant Loan or (y) in the case of payment by the Borrower,
the interest rate applicable to the relevant Loan.

2.21 Replacement of Lender. If the Borrower is required pursuant to Section 3.1,
3.2 or 3.5 to make any additional payment to any Lender, if any Lender becomes a
Defaulting Lender or if any Lender’s obligation to make or continue, or to
convert Floating Rate Advances into, Eurodollar Advances shall be suspended
pursuant to Section 3.3 (any Lender so affected an “Affected Lender”), the
Borrower may elect, if such amounts continue to be charged, if such Lender
continues to be a Defaulting Lender or such suspension is still effective, to
replace such Affected Lender as a Lender party to this Agreement, provided that
no Default or Unmatured Default shall have occurred and be continuing at the
time of such replacement, and provided further that, concurrently with such
replacement, (i) another bank or other entity which is reasonably satisfactory
to the Borrower and the Agent shall agree, as of such date, to purchase for cash
the Advances and other Obligations due to the Affected Lender pursuant to an
assignment substantially in the form of Exhibit C and to become a Lender for all
purposes under this Agreement and to assume all obligations of the Affected
Lender to be terminated as of such date and to comply with the requirements of
Section 12.3 applicable to assignments, and (ii) the Borrower shall pay to such
Affected Lender in same day funds on the day of such replacement (A) all
interest, fees and other amounts then accrued but unpaid to such Affected Lender
by the Borrower hereunder to and including the date of termination, including
without limitation payments due to such Affected Lender under Sections 3.1, 3.2
and 3.5, and (B) an amount, if any, equal to the payment which would have been
due to such Lender on the day of such replacement under Section 3.4 had the
Loans of such Affected Lender been prepaid on such date rather than sold to the
replacement Lender.

2.22 Increase in Commitments.

2.22.1 Amount of Increase in Commitments. The Borrower may at any time, with the
consent of the Agent but without the consent of the Lenders except as provided
in Sections 2.22.2 and 2.22.5(i), increase the Aggregate Commitment up to an
amount not to exceed $375,000,000, subject to satisfaction of each and all of
the requirements contained in this Section 2.22.

2.22.2 Eligibility. Each Lender who provides an increase in the Aggregate
Commitment (each a “New Commitment Provider”) shall be either an existing Lender
at the time of the increase (each an “Existing Lender”) or a financial
institution reasonably acceptable to the Agent and the Borrower (and the
Borrower’s acceptance shall not be unreasonably withheld) that is not then
currently a Lender (each a “New Lender”).

2.22.3 Notice. The Borrower and the Agent jointly shall notify the Lenders at
least fifteen (15) Business Days before the date (“Commitment Increase Effective
Date”) any increase in the Aggregate Commitment shall become effective. Such
notice shall state the amount of the increase in the Aggregate Commitment, the
names of the Lenders providing the additional Commitments and the Commitment
Increase Effective Date.

 

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2.22.4 Minimum Amount. Any increase in the Aggregate Commitment provided by any
individual Lender shall be in an amount not less than $5,000,000 and integral
multiples of $1,000,000 in excess thereof.

2.22.5 Implementation of Increase. On the Commitment Increase Effective Date:

 

  (i) Joinder. Each New Commitment Provider shall execute and deliver to the
Agent two Business Days prior to the Commitment Increase Effective Date a
Joinder in the form attached as Exhibit L (“Lender Joinder”), which shall become
effective on the Commitment Increase Effective Date. The Lender Joinder shall
set forth the Commitment provided by the New Commitment Provider if it is a New
Lender and the new amount of the Commitment and the increase in the Commitment
to be provided if it is an Existing Lender. If the New Commitment Provider is a
New Lender it shall on the Effective Date join and become a party to this
Agreement and the other Loan Documents as a Lender for all purposes hereunder
and thereunder, subject to the provisions of this Section 2.22, having a
Commitment as set forth in the Lender Joinder tendered by the same. Any Lender
whose Commitment shall remain unaffected shall be deemed to have consented and
agreed to such Lender Joinder.

 

  (ii) Floating Rate Loans. Each New Commitment Provider shall (i) purchase from
the other Lenders such New Commitment Provider’s Pro Rata Share in any Floating
Rate Loans outstanding on the Commitment Increase Effective Date, and (ii) share
ratably in all Floating Rate Loans borrowed by the Borrower after the Commitment
Increase Effective Date.

 

  (iii) Eurodollar Rate Loans. Each New Commitment Provider shall (a) purchase
from the other Lenders such New Commitment Provider’s Pro Rata Share in each
outstanding Eurodollar Loan on the date on which the Borrower either renews its
Eurodollar Loan election with respect to the Eurodollar Loan in question or
converts such Eurodollar Loan to a Floating Rate Loan, provided that the New
Commitment Providers shall not purchase an interest in such Loans from the other
Lenders on the Commitment Increase Effective Date (unless the Commitment
Increase Effective Date is a renewal or conversion date, as applicable, in which
case the preceding sentence shall apply), and (b) shall participate in all new
Eurodollar Loans borrowed by the Borrower on and after the Commitment Increase
Effective Date.

 

  (iv) Facility LCs. Each New Commitment Provider shall participate in all
Facility LCs outstanding on the Commitment Increase Effective Date according to
its Pro Rata Share and in accordance with the terms of this Agreement.

 

  (v) Limit on Amount. Any increase in the Commitments pursuant to this
Section 2.22 may not cause the total amount of the Commitments to exceed the
amount specified in Section 2.22.1.

 

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  (vi) No Default or Unmatured Default; Representations and Warranties. There
shall exist no Default or Unmatured Default on the Commitment Increase Effective
Date. Without limiting that sentence, the representations and warranties
contained in Article V must be true and correct in all material respects as of
such Commitment Increase Effective Date except to the extent any such
representation is stated to relate solely to an earlier date, in which case such
representation shall have been true and correct on and as of such earlier date.
If a Default or Unmatured Default exists on such Commitment Increase Effective
Date, or such representations and warranties are not true and correct to the
extent and as required in the second sentence of this Section 2.22.5(vi), the
Borrower shall not request an increase of, and may not increase, the Aggregate
Commitment.

 

  (vii) No Obligation. No Existing Lender shall be required to increase its
Commitment in the event that the Borrower asks such Existing Lender to provide
all or a portion of any increase in the Aggregate Commitment desired by the
Borrower.

2.23 Defaulting Lenders. Notwithstanding any provision of this Agreement to the
contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Lender pursuant to Section 2.7;

(b) the Commitment and Outstanding Credit Exposure of such Defaulting Lender
shall not be included in determining whether all Lenders or the Required Lenders
have taken or may take any action hereunder (including any consent to any
amendment or waiver pursuant to Section 8.2); provided that any waiver,
amendment or modification requiring the consent of all Lenders or each affected
Lender which affects such Defaulting Lender differently than other affected
Lenders shall require the consent of such Defaulting Lender;

(c) if any Swing Line Exposure or LC Exposure exists at the time a Lender
becomes a Defaulting Lender then:

(i) all or any part of such Swing Line Exposure and LC Exposure shall be
reallocated among the non-Defaulting Lenders in accordance with their respective
Pro Rata Shares but only to the extent (x) the sum of all non-Defaulting
Lenders’ Outstanding Credit Exposures plus such Defaulting Lender’s Swing Line
Exposure and LC Exposure does not exceed the total of all non-Defaulting
Lenders’ Commitments and (y) the conditions set forth in Section 4.2 are
satisfied at such time;

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrower shall within one (1) Business Day following
notice by the Agent (x) first, prepay such Swing Line Exposure and (y) second,
cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to
any partial reallocation pursuant to clause (i) above) in accordance with the
procedures set forth in Section 2.3.11 for so long as such LC Exposure is
outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to Section 2.23(c), the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.7 with
respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

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(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
Section 2.23(c), then the fees payable to the Lenders pursuant to Sections 2.7
and 2.3.4 shall be adjusted in accordance with such non-Defaulting Lenders’ Pro
Rata Shares; or

(v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to Section 2.23(c), then, without prejudice to any rights
or remedies of the LC Issuer or any Lender hereunder, all letter of credit fees
payable under Section 2.3.4 with respect to such Defaulting Lender’s LC Exposure
shall be payable to the LC Issuer until such LC Exposure is cash collateralized
and/or reallocated; and

(d) so long as any Lender is a Defaulting Lender, the Swing Line Lender shall
not be required to fund any Swing Line Loan and the LC Issuer shall not be
required to issue, amend or increase any Facility LC, unless it is satisfied
that the related exposure will be 100% covered by the Commitments of the
non-Defaulting Lenders and/or cash collateral will be provided by the Borrower
in accordance with Section 2.23(c), and participating interests in any such
newly issued or increased Facility LC or newly made Swing Line Loan shall be
allocated among non-Defaulting Lenders in a manner consistent with
Section 2.23(c)(i) (and Defaulting Lenders shall not participate therein).

In the event that the Agent, the Borrower, the LC Issuer and the Swing Line
Lender each agrees that a Defaulting Lender has adequately remedied all matters
that caused such Lender to be a Defaulting Lender, then the Swing Line Exposure
and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of
such Lender’s Commitment and on such date such Lender shall purchase at par such
of the Loans of the other Lenders (other than Swing Line Loans) as the Agent
shall determine may be necessary in order for such Lender to hold such Loans in
accordance with its Pro Rata Share.

ARTICLE III

YIELD PROTECTION; TAXES

3.1 Yield Protection. If, on or after the date of this Agreement, the adoption
of any law or any governmental or quasi-governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any change
in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:

 

  (i) subjects any Lender or any applicable Lending Installation or the LC
Issuer to any Taxes, or changes the basis of taxation of payments (other than
with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its
Eurodollar Loans, Facility LCs or participations therein, or

 

  (ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation or the LC Issuer (other than reserves and
assessments taken into account in determining the interest rate applicable to
Eurodollar Advances), or

 

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  (iii) imposes any other condition the result of which is to increase the cost
to any Lender or any applicable Lending Installation or the LC Issuer of making,
funding or maintaining its Eurodollar Loans, or of issuing or participating in
Facility LCs, or reduces any amount receivable by any Lender or any applicable
Lending Installation or the LC Issuer in connection with its Eurodollar Loans,
Facility LCs or participations therein, or requires any Lender or any applicable
Lending Installation or the LC Issuer to make any payment calculated by
reference to the amount of Eurodollar Loans, Facility LCs or participations
therein held or interest received by it, by an amount deemed material by such
Lender or the LC Issuer, as the case may be,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation Lender or the LC Issuer, as the case may be, of
making or maintaining its Eurodollar Loans or Commitment or of issuing or
participating in Facility LCs or to reduce the return received by such Lender or
applicable Lending Installation or the LC Issuer, as the case may be, in
connection with such Eurodollar Loans, Commitment, Facility LCs or
participations therein, then, within 15 days of demand by such Lender or the LC
Issuer, as the case may be, the Borrower shall pay such Lender or the LC Issuer,
as the case may be, such additional amount or amounts as will compensate such
Lender, or the LC Issuer, as the case may be, for such increased cost or
reduction in amount received.

3.2 Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer
determines the amount of capital required or expected to be maintained by such
Lender or the LC Issuer, any Lending Installation of such Lender or the LC
Issuer or any corporation controlling such Lender or the LC Issuer is increased
as a result of a Change, then, within 15 days of demand by such Lender or the LC
Issuer, the Borrower shall pay such Lender or the LC Issuer the amount necessary
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender or the LC Issuer determines is attributable
to this Agreement, its Outstanding Credit Exposure or its Commitment to make
Loans and issue or participate in Facility LCs, as the case may be, hereunder
(after taking into account such Lender or the LC Issuer’s policies as to capital
adequacy). “Change” means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or the LC Issuer or any Lending Installation or
any corporation controlling any Lender or the LC Issuer. “Risk-Based Capital
Guidelines” means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled “International Convergence
of Capital Measurements and Capital Standards,” including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.

3.3 Availability of Types of Advances. If any Lender determines that maintenance
of its Eurodollar Loans at a suitable Lending Installation would violate any
applicable law, rule, regulation, or directive, whether or not having the force
of law, or if the Required Lenders determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Advances are not available or
(ii) the interest rate applicable to Eurodollar Advances does not accurately
reflect the cost of making or maintaining Eurodollar Advances, then the Agent
shall suspend the availability of Eurodollar Advances and require any affected
Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject
to the payment of any funding indemnification amounts required by Section 3.4.

3.4 Funding Indemnification. If any payment of a Eurodollar Advance occurs on a
date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or maintain such
Eurodollar Advance.

 

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3.5 Taxes.

 

  (i) All payments by the Borrower to or for the account of any Lender, the LC
Issuer or the Agent hereunder or under any Note or Facility LC Application shall
be made free and clear of and without deduction for any and all Taxes. If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, the LC Issuer or the Agent, (a) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5) such Lender, the LC Issuer or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (b) the Borrower shall make such deductions, (c) the
Borrower shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) the Borrower shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.

 

  (ii) In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or any Facility LC Application (“Other
Taxes”).

 

  (iii) The Borrower hereby agrees to indemnify the Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.5) paid by the Agent, the LC Issuer or such Lender as a result of its
Commitment, any Loans made by it hereunder, or otherwise in connection with its
participation in this Agreement and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within 30 days of the date the Agent, the LC
Issuer or such Lender makes demand therefor pursuant to Section 3.6.

 

  (iv)

Each Lender that is not incorporated under the laws of the United States of
America or a state thereof (each a “Non-U.S. Lender”) agrees that it will, not
more than ten Business Days after the date of this Agreement, (i) deliver to the
Agent two duly completed copies of United States Internal Revenue Service Form
W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, and (ii) deliver to the Agent a United
States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it
is entitled to an exemption from United States backup withholding tax. Each
Non-U.S. Lender further undertakes to deliver to each of the Borrower and the
Agent (x) renewals or additional copies of such form (or any successor form) on
or before the date that such form expires or becomes obsolete, and (y) after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, such additional forms or amendments thereto as may be reasonably
requested by the Borrower or the Agent. All forms or amendments described in the
preceding sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation)

 

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has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.

 

  (v) For any period during which a Non-U.S. Lender has failed to provide the
Borrower with an appropriate form pursuant to clause (iv), above (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such
Non-U.S. Lender to recover such Taxes.

 

  (vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.

 

  (vii) If the U.S. Internal Revenue Service or any other governmental authority
of the United States or any other country or any political subdivision thereof
asserts a claim that the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not
delivered or properly completed, because such Lender failed to notify the Agent
of a change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax,
withholding therefor, or otherwise, including penalties and interest, and
including taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses related thereto
(including attorneys fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent). The obligations of the Lenders under
this Section 3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement.

3.6 Lender Statements; Survival of Indemnity. To the extent reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Loans to reduce any liability of the Borrower to such Lender
under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar
Advances under Section 3.3, so long as such designation is not, in the judgment
of such Lender, disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to the Agent) as
to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Loan shall be calculated as
though each Lender funded its Eurodollar Loan through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that is
the case or not. Unless otherwise provided herein, the amount specified in the
written statement of any Lender shall be payable on demand after receipt by the
Borrower of such written statement. The obligations of the Borrower under
Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.

 

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ARTICLE IV

CONDITIONS PRECEDENT

4.1. Effectiveness of Agreement. The effectiveness of this Agreement shall be
subject to the satisfaction of the following conditions precedent and, if
applicable, the delivery by the Borrower to the Agent with sufficient copies for
the Lenders of the following:

 

  (i) the Borrower has furnished to the Agent, with sufficient copies for the
Lenders, the following, in each case satisfactory to the Agent, in its
discretion, and its counsel:

 

  (a) Copies of the articles or certificate of incorporation of the Borrower and
each other Loan Party, together with all amendments, and a certificate of good
standing (or comparable certificate in the case of those governmental offices
which do not issue good standing certificates), each certified by the
appropriate governmental officer in its jurisdiction of incorporation or
formation.

 

  (b) Copies, certified by the Secretary or Assistant Secretary (or Person
serving an equivalent function) of the Borrower and each other Loan Party, of
its by-laws or operating agreement, as applicable, and of its board of
directors’ resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which the Borrower and each
other Loan Party is a party.

 

  (c) An incumbency certificate, executed by the Secretary or Assistant
Secretary (or Person serving an equivalent function) of, as applicable, the
Borrower and each other Loan Party, which shall identify by name and title and
bear the signatures of the Authorized Officers and any other officers or Persons
of the Borrower and each other Loan Party authorized to sign the Loan Documents
to which, as applicable, the Borrower and each other Loan Party is a party, upon
which certificate the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower and each other Loan Party.

 

  (d) A certificate, signed by the chief financial officer of the Borrower, in
the form of Exhibit P stating that on the Closing Date no Default or Unmatured
Default has occurred and is continuing.

 

  (e) A written opinion of the Borrower’s and the Guarantors’ counsel, addressed
to the Lenders in substantially the form of Exhibit A.

 

  (f) Any Notes requested by a Lender pursuant to Section 2.15 payable to the
order of each such requesting Lender.

 

  (g) Written money transfer instructions from the Borrower, in substantially
the form of Exhibit D, addressed to the Agent and signed by an Authorized
Officer.

 

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  (h) Satisfactory financial statement projections through and including the
Borrower’s 2013 fiscal year, together with such information as the Agent and the
Lenders shall reasonably request (including, without limitation, a detailed
description of the assumptions used in preparing such projections).

 

  (i) All Collateral Documents and other Loan Documents executed by the Borrower
or the Guarantors, as the case may be, including without limitation any
amendments, reaffirmations or supplements to the Pledge and Security Agreement,
the Guaranty, the Mortgages, the Negative Pledge Agreement, the Indemnity
Agreement, the Assignment of Patents, Trademarks and Copyrights and the
Intercompany Subordination Agreement requested by the Collateral Agent to be
executed and delivered on the Closing Date.

 

  (j) To the extent requested by any of the Lenders, all documentation and other
information required by bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations, including
the USA PATRIOT Act.

 

  (k) Intentionally Omitted.

 

  (l) Intentionally Omitted.

 

  (m) Intentionally Omitted.

 

  (n) The insurance certificate described in Section 5.20 and 6.6(ii).

 

  (o) Intentionally Omitted.

 

  (p) Reports of searches of personal property of records from the appropriate
reporting agencies listed on Schedule 4.1(i)(p). The Agent may obtain such
reports but the Borrower shall pay all costs associated with obtaining them. The
reports of searches of the personal property of records shall not disclose any
security interest in the Loan Parties’ personal property prior to the Collateral
Agent’s security interest therein other than Permitted Liens.

 

  (q) All material third-party consents required to effectuate the transactions
under the Loan Documents, including without limitation those described on
Schedule 4.1(i)(q).

 

  (r) Evidence satisfactory to the Agent that no action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, this Agreement, the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or which, in the Agent’s sole discretion, would make it inadvisable
to consummate the transactions contemplated by this Agreement or any of the
other Loan Documents.

 

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  (s) Evidence satisfactory to the Agent with respect to the proper perfection
and priority of all of the Liens created in favor of the Collateral Agent
securing all of the Secured Obligations.

 

  (t) Intentionally Omitted.

 

  (u) Intentionally Omitted.

 

  (v) Unqualified audited financial statements for the Borrower dated as of
December 31, 2008 and unaudited financial statements for the Borrower’s fiscal
quarter ended September 30, 2009.

 

  (w) A certificate in the form of Exhibit P signed by the chief financial
officer of the Borrower stating that on the Closing Date no Material Adverse
Effect has occurred since December 31, 2008 or is occurring, and all of the
representations and warranties made by or on behalf of any of the Loan Parties
relating to this Agreement and/or any of the other Loan Documents remain true,
correct and complete.

 

  (x) Payment or reimbursement of expenses as and to the extent required under
Section 9.6 and payment of fees under Section 10.13.

 

  (y) Such other documents as the Agent, any Lender or their counsel may have
reasonably requested.

 

  (ii) The Agent and the Lenders shall have determined to their satisfaction:

 

  (a) There exists no Default or Unmatured Default.

 

  (b) No Material Adverse Effect shall have occurred since December 31, 2008.

 

  (c) The Loan Parties have complied with all applicable requirements of
Regulation U.

 

  (d) All legal and regulatory matters (including those relating to taxes) are
satisfactory.

 

  (e) No injunctions or temporary restraining orders against any Loan Party
exist which would prohibit a Credit Extension.

 

  (f) No existing or potential environmental liability with respect to any Loan
Party and/or any Collateral exists that would have a Material Adverse Effect.

4.2 Each Credit Extension. The Lenders shall not be required to make any Credit
Extension unless on the applicable Credit Extension Date:

 

  (i) There exists no Default or Unmatured Default.

 

  (ii) The representations and warranties contained in Article V are true and
correct in all material respects as of such Credit Extension Date except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date.

 

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  (iii) All legal matters incident to the making of such Credit Extension shall
be satisfactory to the Lenders and their counsel.

Each Borrowing Notice or request for issuance of a Facility LC with respect to
each such Credit Extension shall constitute a representation and warranty by the
Borrower that the conditions contained in Sections 4.2(i) and (ii) have been
satisfied.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Loan Parties jointly and severally represent and warrant to the Agent and
the Lenders that:

5.1 Existence and Standing. Each of the Loan Parties and its Subsidiaries is a
corporation, partnership (in the case of Subsidiaries only) or limited liability
company duly and properly incorporated or organized, as the case may be, validly
existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation or organization and
has all requisite authority to conduct its respective business in each
jurisdiction in which its respective business is conducted and where the failure
to do so would cause a Material Adverse Effect.

5.2 Authorization and Validity. Each Loan Party has the power and authority and
legal right to execute and deliver the Loan Documents to which it is a party and
to perform its obligations thereunder. The execution and delivery by the Loan
Party of the Loan Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by proper corporate or limited
liability company proceedings, and the Loan Documents to which the Loan Party is
a party constitute legal, valid and binding obligations of the applicable Loan
Party enforceable against the applicable Loan Party in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

5.3 No Conflict; Government Consent. Neither the execution and delivery by a
Loan Party of the Loan Documents to which it is a party, nor the consummation by
it of the transactions therein contemplated, nor compliance with the provisions
thereof by it will violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on any such Loan Party or (ii) any such Loan
Party’s articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which any such Loan
Party is a party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder, or except for the Liens
required by the terms of Loan Documents, result in, or require, the creation or
imposition of any Lien in, of or on the Property of any such Loan Party pursuant
to the terms of any such indenture, instrument or agreement. Except for the
recordation of any applicable Collateral Documents with any applicable
governmental authority, no order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by any Loan
Party, is required to be obtained by any Loan Party in connection with the
execution and delivery of the Loan Documents, the borrowings under this
Agreement, the payment and performance by the Borrower of the Obligations or the
legality, validity, binding effect or enforceability of any of the Loan
Documents. Notwithstanding anything in this Agreement or the other Loan
Documents to the contrary, the parties to this Agreement and the other Loan
Documents acknowledge that (i) the transfer, assignment, change of ownership or
interest, foreclosure or realization on any of the Collateral or the membership
interests of CDMC or (ii) any transfer, assignment, or change of ownership or
interest in any pari-mutuel permits or licenses must comply with applicable law,
which may require prior approval by the Florida Division of Pari-Mutuel Wagering
or comparable governmental authority in the applicable State.

 

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5.4 Financial Statements. The December 31, 2008 consolidated financial
statements of the Loan Parties heretofore delivered to the Lenders were prepared
in accordance with generally accepted accounting principles in effect on the
date such statements were prepared and fairly present the consolidated financial
condition and operations of the Loan Parties at such date and the consolidated
results of their operations for the period then ended.

5.5 Material Adverse Change. Since December 31, 2008 there has been no change in
the business, Property, prospects, condition (financial or otherwise) or results
of operations of the Loan Parties taken as a whole, which could reasonably be
expected to have a Material Adverse Effect.

5.6 Taxes. Each Loan Party has filed all United States federal tax returns and
all other tax returns which are required to be filed and has paid all taxes due
pursuant to said returns or pursuant to any assessment received by such Loan
Party, except such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided in accordance with Agreement
Accounting Principles and as to which no Lien exists. The United States income
tax returns of each Loan Party and the other Loan Parties have been audited by
the Internal Revenue Service through the fiscal year ended December 31, 2000 and
an audit for fiscal years 2004, 2005, 2006 and 2007 is ongoing. No tax liens
have been filed and, except as more particularly described in the Borrower’s
Form 10-Q for the quarterly period ended September 30, 2009, no claims are being
asserted with respect to any such taxes. The Illinois State tax returns of the
Borrower are currently being audited for fiscal years 2002, 2003 and 2004. The
charges, accruals and reserves on the books of each Loan Party in respect of any
taxes or other governmental charges are adequate.

5.7 Litigation and Contingent Obligations. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of their officers, threatened against or affecting any Loan Party which
could reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Credit Extensions. Other than any
liability incident to any litigation, arbitration or proceeding which could not
reasonably be expected to have a Material Adverse Effect, the Loan Parties have
no material contingent obligations not provided for or disclosed in the
financial statements referred to in Section 5.4.

5.8 Subsidiaries. Schedule 1 contains an accurate list of all Subsidiaries of
the Loan Parties as of the date of this Agreement, setting forth their
respective jurisdictions of organization and the percentage of their respective
capital stock or other ownership interests owned by each Loan Party. All of the
issued and outstanding shares of capital stock or other ownership interests of
such Subsidiaries have been (to the extent such concepts are relevant with
respect to such ownership interests) duly authorized and issued and are fully
paid and non-assessable.

5.9 ERISA. Except for any Multiemployer Plan, none of the Loan Parties sponsors
or contributes to a Plan that is covered by Title IV of ERISA or that is subject
to the minimum funding standards under Section 412 of the Code. Neither any Loan
Party nor any other member of the Controlled Group has incurred, or is
reasonably expected to incur, any withdrawal liability to Multiemployer Plans in
excess of $10,000,000 in the aggregate. No Loan Party has any knowledge that any
Plan fails to comply in all material respects with all applicable requirements
of law and regulation. Neither the Borrower nor any other member of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to reorganize or terminate any Plan.

5.10 Accuracy of Information. No information, exhibit or report furnished by the
Borrower or any of the other Loan Parties to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any misstatement of material fact or omitted to state a material fact
necessary to make the statements contained therein not misleading.

 

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5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes less
than 25% of the value of those assets of the Loan Parties which are subject to
any limitation on sale, pledge, or other restriction hereunder.

5.12 Material Agreements. Neither the Borrower nor any Subsidiary is a party to
any agreement or instrument or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.

5.13 Compliance With Laws. The Loan Parties have complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having jurisdiction over the
conduct of their respective businesses or the ownership of their respective
Property except for any failure to comply with any of the foregoing which could
not reasonably be expected to have a Material Adverse Effect.

5.14 Ownership of Properties. Except as set forth on Schedule 2, on the date of
this Agreement, the Loan Parties will have good title, free of all Liens other
than Permitted Liens, to all of the Property and assets reflected in the
Borrower’s most recent consolidated financial statements provided to the Agent
as owned by the Loan Parties. Except for the Permitted Liens, liens granted to
the Collateral Agent for the benefit of the Lenders pursuant to the Mortgages do
constitute and will constitute valid first priority Liens under applicable law.
Borrower will take all such action as will be necessary or advisable to
establish such Lien of the Collateral Agent and its priority as described in the
preceding sentence at or prior to the time required for such purpose, and there
will be as of the date of execution and delivery of the Mortgages no necessity
for any further action in order to protect, preserve and continue such Lien and
such priority except for (i) the filing of continuation statements to continue
financing statements (filed as fixture filings) upon the expiration thereof and
(ii) for the recordation of the Calder Mortgage and for the recording of the
Mortgages (other than the Calder Mortgage) all of which recordation of such
Mortgages (other than the Calder Mortgage and Mortgages entered into after the
2003 Closing Date) shall have occurred on the 2003 Closing Date (or within one
Business Day following the 2003 Closing Date provided that the title insurance
policy relating to such Mortgages (other than the Calder Mortgage and Mortgages
entered into after the 2003 Closing Date) provides coverage as of the 2003
Closing Date based on pro forma policies delivered and accepted on or before the
2003 Closing Date).

5.15 Plan Assets; Prohibited Transactions. The Borrower (a) is not an entity
deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an
employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA or any plan (within the meaning of Section 4975 of the Code),
and assuming the source of the Loans does not in any case include the assets of
any employee benefit plan, neither the execution of this Agreement nor the
making of Credit Extensions hereunder gives rise to a prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code, and
(b) the Borrower is an “operating company” as defined in 29 C.F.R 2510-101
(c) or “benefit plan investors” (as defined in 29 C.F.R. § 2510.3-101(f)) do not
own 25% or more of the value of any class of equity interests in the Borrower.

5.16 Environmental Matters. In the ordinary course of its business, the officers
of the Borrower consider the effect of Environmental Laws on the business of the
Loan Parties, in the course of which they identify and evaluate potential risks
and liabilities accruing to the Borrower due to Environmental Laws. On the basis
of this consideration, the Borrower has concluded that Environmental Laws cannot
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary has received any notice to the effect that its operations are
not in material compliance with any of the requirements of applicable

 

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Environmental Laws or are the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which non-compliance
or remedial action could reasonably be expected to have a Material Adverse
Effect.

5.17 Investment Company Act. Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

5.18 [Intentionally Omitted].

5.19 Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by the Loan Parties to
their employees and former employees, as estimated by the Borrower in accordance
with procedures and assumptions deemed reasonable by the Required Lenders, does
not exceed $10,000,000.

5.20 Insurance. The certificate signed by the President or chief financial
officer of the Borrower, that attests to the existence and adequacy of, and
summarizes, the property and casualty insurance program carried by the Borrower
with respect to itself and the other Loan Parties and that has been furnished by
the Borrower to the Agent and the Lenders, is complete and accurate. This
summary includes the insurer’s or insurers’ name(s), policy number(s),
expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s),
and deductibles. This summary also includes similar information, and describes
any reserves, relating to any self-insurance program that is in effect.

5.21 Solvency. (i) Immediately after the consummation of the transactions to
occur on the date hereof and immediately following the making of each Loan, if
any, made on the date hereof and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of the Loan Parties on
a consolidated basis, at a fair valuation, will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Loan Parties on a
consolidated basis; (b) the present fair saleable value of the Property of the
Loan Parties on a consolidated basis will be greater than the amount that will
be required to pay the probable liability of the Loan Parties on a consolidated
basis on their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(c) the Loan Parties on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Loan Parties on a
consolidated basis will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted after the date hereof.

(ii) The Borrower does not intend to, or to permit any of the other Loan Parties
to, and does not believe that it or any of the other Loan Parties will, incur
debts beyond such Person’s ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such Loan
Party and the timing of the amounts of cash to be payable on or in respect of
its Indebtedness or the Indebtedness of any such Loan Party.

5.22 Intellectual Property. Schedule 5.22 sets forth a true and complete list,
differentiated by each Loan Party, of all of the patents, trademarks, licenses
not included in Schedule 5.25, copyrights and other intellectual property owned
by any of the Loan Parties or which any of them has an interest.

5.23 Properties. Schedule 5.23 sets forth a true and complete list,
differentiated by each Loan Party, of the addresses of all Real Property.

5.24 Operating Locations. Schedule 5.24 sets forth a true and complete list,
differentiated by each Loan Party, of the street addresses of each of the Loan
Parties’ operating locations.

 

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5.25 Certain Licenses. Schedule 5.25 sets forth a true and complete list,
differentiated by each Loan Party of all licenses or other authorities under
which any Loan Party is a licensee from any racing commission or authority or
holder of other racing rights.

5.26 Predecessor Entities of the Loan Parties. Schedule 5.26 sets forth a list
of any and all predecessors and/or prior names of any Loan Party within the past
five (5) years, including any entity or entities which may no longer exist,
whether by reason of merger, acquisition, consolidation, sale of its material
assets, dissolution, bankruptcy, reorganization, which may have or had an
interest in the Collateral or any part thereof, together with such predecessor’s
(1) state of incorporation, (2) the jurisdictional location of all of such
entities offices and locations and (3) all jurisdictional locations where any
Collateral may have been kept.

ARTICLE VI

COVENANTS

From and after the date of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

6.1 Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with Agreement Accounting Principles, and furnish to the Lenders:

 

  (i) Within ninety (90) days after the close of each of Borrower’s fiscal
years, an unqualified (except for qualifications relating to changes in
Agreement Accounting Principles or practices reflecting changes in generally
accepted accounting principles and required or approved by the Borrower’s
independent certified public accountants) audit report certified by
PricewaterhouseCoopers LLP or such other independent certified public
accountants acceptable to the required Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated basis for itself and the other
Loan Parties, including consolidated balance sheets as of the end of such
period, related consolidated profit and loss and reconciliation of surplus
statements, and a consolidated statement of cash flows, accompanied by any
management letter prepared by said accountants, provided that satisfaction of
the requirements of this Section 6.1(i) shall be deemed to have been met by
delivery within the time frame specified above of (a) copies of the Borrower’s
Annual Report on Form 10-K for such fiscal year prepared in accordance with the
requirements therefor and filed with the SEC, and (b) the financial statements
and reports otherwise required in this Section 6.1(i), consolidated as to the
Borrower and the other Loan Parties, except that such financial statements and
reports need not be audited and may be internally prepared.

 

  (ii) Within forty-five (45) days after the close of the first three quarterly
periods of each of its fiscal years, for itself and the other Loan Parties,
consolidated unaudited balance sheets as at the close of each such period and
consolidated profit and loss statements and a consolidated statement of cash
flows for the period from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer, provided that
satisfaction of the requirements of this Section 6.1(ii) shall be deemed to have
been met by delivery within the time frame specified above of copies of (a) the
Borrower’s Quarterly Report on Form 10-Q prepared in accordance with the
requirements therefor and filed with the SEC, and (b) the financial statements
and reports otherwise required in this Section 6.1(ii), consolidated as to the
Borrower and the other Loan Parties.

 

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  (iii) As soon as available, but in any event within ninety (90) days after the
beginning of each fiscal year of the Borrower, a copy of the plan and budget
(including, at a minimum, a projected consolidated balance sheet for the
following fiscal year end and projected quarterly income statements) of the
Borrower and the other Loan Parties for such fiscal year.

 

  (iv) Together with the financial statements required under Sections 6.1(i) and
(ii), a compliance certificate, in substantially the form of Exhibit B attached
hereto, signed by its chief financial officer or treasurer showing the
calculations necessary to determine compliance with this Agreement and stating
that no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.

 

  (v) Within two hundred seventy (270) days after the close of each fiscal year,
a statement of the Unfunded Liabilities of each Single Employer Plan, if any,
certified as correct by an actuary enrolled under ERISA.

 

  (vi) If the Borrower has established a Plan, as soon as possible and in any
event within 10 days after the Borrower knows that any Reportable Event has
occurred with respect to any Plan, a statement, signed by the chief financial
officer of the Borrower, describing said Reportable Event and the action which
the Borrower proposes to take with respect thereto.

 

  (vii) As soon as possible and in any event within 10 days after receipt by the
Borrower, a copy of (a) any notice or claim to the effect that the Borrower or
any of the other Loan Parties is or may be liable to any Person as a result of
the release by the Borrower, any of the other Loan Parties, or any other Person
of any Hazardous Materials into the environment, and (b) any notice alleging any
violation of any Environmental Laws by the Borrower or any of the other Loan
Parties, which, in either case, could reasonably be expected to have a Material
Adverse Effect.

 

  (viii) Promptly upon request, copies of all annual reports to shareholders
(including without limitation annual reports to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act), financial statements, reports
and proxy statements so furnished and which are not otherwise available on the
SEC’s Edgar (or its successor) system.

 

  (ix) Promptly upon request, copies of all registration statements and annual,
quarterly, monthly or other regular reports which any of the Loan Parties files
with the SEC and which are not otherwise available on the SEC’s Edgar (or its
successor) system.

 

  (x) Such other information (including non-financial information) as the Agent
or any Lender may from time to time reasonably request.

6.2 Use of Proceeds. The Borrower and each other Loan Party will, and will cause
each Subsidiary to, use the proceeds of the Credit Extensions for general
corporate purposes, including for working capital and Acquisition needs. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any “margin stock” (as defined in
Regulation U).

 

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6.3 Notice of Default. The Borrower and each other Loan Party will give prompt
notice in writing to the Agent of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect.

6.4 Conduct of Business. The Borrower and each other Loan Party will, and will
cause each Subsidiary (other than the Excluded Subsidiaries) to, carry on and
conduct its respective business in substantially the same manner and in
substantially the Current Fields of Enterprise, and in any other mode of
gambling, including pari-mutuel wagering on horse racing and Permitted
Alternative Gaming which, in each case, is conducted in full compliance with
applicable law, and do all things necessary to remain duly incorporated or
organized, validly existing and (to the extent such concept applies to such
entity) in good standing as a domestic corporation, partnership or limited
liability company in its jurisdiction of incorporation or organization, as the
case may be, and maintain all requisite authority to conduct its business in
each jurisdiction in which its respective business is conducted in each case in
which the failure to so maintain such authority would have a Material Adverse
Effect.

6.5 Taxes. The Borrower and each other Loan Party will, and will cause each
Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by law and pay when due
all taxes, assessments and governmental charges and levies upon such Loan Party
or such Loan Party’s income, profits or Property, except those which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside in accordance with Agreement Accounting
Principles.

6.6 Insurance.

 

  (i) The Borrower and each other Loan Party will, and will cause each
Subsidiary to, maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will furnish to any
Lender upon request full information as to the insurance carried.

 

  (ii) All insurance which the Loan Parties are required to maintain shall be
satisfactory to the Agent in form, amount and insurer. Such insurance shall
provide that any loss thereunder shall be payable notwithstanding any action,
inaction, breach of warranty or condition, breach of declarations,
misrepresentation or negligence of any of the Loan Parties. Each policy shall
contain an agreement by the insurer that, notwithstanding lapse of a policy for
any reason, or right of cancellation by the insurer or any cancellation by any
Loan Party such policy shall continue in full force for the benefit of the
Collateral Agent for at least thirty (30) days after written notice thereof to
the Agent and the applicable Loan Party, and no alteration in any such policy
shall be made except upon thirty (30) days written notice of such proposed
alteration to the Agent and the applicable Loan Party and written approval by
the Agent. At or before the making of the first Credit Extension, each Loan
Party shall provide the Agent with certificates evidencing its due compliance
with the requirements of this Section.

6.7 Compliance with Laws. The Borrower and each other Loan Party will, and will
cause each Subsidiary to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which such party may be
subject including, without limitation, all Environmental Laws and Money Service
Business Laws, provided that it shall not be deemed to be a violation of this
Section 6.7 if any failure to comply with any law would not result in fines,
penalties, remediation costs, other similar liabilities or injunctive relief
which in the aggregate would constitute a Material Adverse Effect.

 

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6.8 Maintenance of Properties. The Borrower and each other Loan Party will, and
will cause each Subsidiary (other than the Excluded Subsidiaries) to, do all
things necessary to maintain, preserve, protect and keep its Property in good
repair, working order and condition, normal wear and tear excepted and taking
into account the age and condition of such Property and make all necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.

6.9 Inspection. The Borrower and each other Loan Party will, and will cause each
Subsidiary to, permit the Agent, the Collateral Agent and the Lenders, by their
respective representatives and agents, to inspect any of the Property, books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Agent, the
Collateral Agent or any Lender may designate; provided, however, so long as no
Default or Unmatured Default has occurred or is continuing, no such inspections,
examinations, or discussions shall occur during the two week period preceding,
or on the day of, the running of the (i) Kentucky Derby or (ii) Breeder’s Cup,
if the Breeder’s Cup is to be held at Churchill Downs.

6.10 Indebtedness. The Borrower and the other Loan Parties will not, nor will
they permit any Subsidiary (other than Excluded Subsidiaries) to, create, incur
or suffer to exist any Indebtedness, except:

 

  (i) The Loans and the Reimbursement Obligations.

 

  (ii) Indebtedness existing on the date hereof and described in Schedule 2.

 

  (iii) Indebtedness arising under Rate Management Transactions related to the
Loans to the extent permitted under Section 6.22.

 

  (iv) Indebtedness secured by any purchase money security interests not
exceeding $5,000,000;

 

  (v) Capitalized Lease Obligations in an amount not exceeding $10,000,000;

 

  (vi) Indebtedness to sellers in connection with Permitted Acquisitions in an
aggregate amount not to exceed $10,000,000; provided that such Indebtedness is
subordinated to the Indebtedness hereunder pursuant to subordination provisions
acceptable to the Required Lenders in the Required Lenders’ reasonable
discretion;

 

  (vii) Indebtedness secured by any Lien permitted pursuant to Section 6.16;

 

  (viii) Indebtedness to the Duchossois Group in connection with the Arlington
Land Acquisition in an aggregate amount not to exceed $24,043,000;

 

  (ix) Indebtedness under Permitted Pro Rata Secured Financings;

 

  (x) Indebtedness of not greater than $153,000,000 under the Master Plan Bond
Transaction; and

 

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  (xi) Additional unsecured Indebtedness (including unsecured subordinated
indebtedness) of the Borrower, to the extent not otherwise permitted under this
Section 6.10, and any Indebtedness constituting refinancings, renewals or
replacements of any such Indebtedness; provided that (i) both immediately prior
to and after giving effect (including pro forma effect) thereto, no Unmatured
Default or Default shall exist or would result therefrom, (ii) such Indebtedness
matures after, and does not require any scheduled amortization or other
scheduled payments of principal prior to, the date that is 181 days after the
Facility Termination Date (it being understood that any provision requiring an
offer to purchase such Indebtedness as a result of change of control or asset
sale shall not violate the foregoing restriction), (iii) such Indebtedness is
not guaranteed by any Subsidiary of the Borrower other than the Guarantors and
(iv) the covenants applicable to such Indebtedness are not more onerous or more
restrictive than the applicable covenants set forth in this Agreement.

6.11 Merger. Without the consent of the Required Lenders, the Borrower will not,
nor will it permit any Subsidiary (other than the Excluded Subsidiaries) to,
merge or consolidate with or into any other Person, except that a Loan Party may
merge into the Borrower or a Wholly-Owned Subsidiary that is or becomes a Loan
Party; provided that at least ten (10) Business Days before the date of such
consolidation or merger, the applicable parties shall have delivered to the
Agent all of the new Mortgages, amendments to Mortgages, the Mortgage
Instruments, financing statements, amendments thereto and other amendments to
the Loan Documents and the schedules thereto required to reflect such
consolidation or merger and to perfect or confirm the Liens of the Collateral
Agent for the benefit of the Lenders in the assets of the Loan Parties which are
parties thereto.

6.12 Sale of Assets.

 

  (i) The Borrower will not, nor will it permit any Subsidiary (other than the
Excluded Subsidiaries) to, lease, sell or otherwise dispose of its Property to
any other Person, except:

 

  (a) Sales of inventory in the ordinary course of business.

 

  (b) Leases, sales or other dispositions of its Property (including ownership
interests in Guarantors described in Subsection 6.12(iii)(b)) that, together
with all other Property of the Loan Parties previously leased, sold or disposed
of (other than inventory in the ordinary course of business) as permitted by
this Section, in the aggregate, (1) during the twelve-month period ending with
the month in which any such lease, sale or other disposition occurs, do not
constitute a Twelve Month Substantial Portion of the Property of the Loan
Parties, or (2) from and after the Closing Date does not constitute a Term
Substantial Portion of the Property of the Loan Parties, in each case (subject
to subsection (ii) below); provided that prior to and upon completion of such
lease, sale or other disposition no Default or Unmatured Default would exist,
including after giving effect to such sale, transfer or other disposition.

 

  (c) Intentionally Omitted.

 

  (ii) Any Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to a Loan Party.

 

  (iii) (a) Intentionally Omitted.

 

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  (b) Upon consummation of the sale or other disposition of Property that
(1) consists of (A) all of the interests of all Loan Parties in a Guarantor,
including, without limitation, all of the capital stock, LLC or partnership (as
applicable) and other equity interests in that Guarantor, or (B) all of the
Property of a Guarantor, and (2) is permitted under and consummated in
accordance with Subsections 6.12(i)(b) and (ii) above, the Agent is hereby
authorized by the Lenders to instruct the Collateral Agent to cause that
particular Guarantor to be released from its obligations under the Guaranty
without the need for any further authorization from the Lenders, provided that
no Default or Unmatured Default shall exist and be continuing or result from
that sale or other disposition of that Property and/or the release of that
Guarantor from its obligations under the Guaranty.

Notwithstanding the foregoing provisions of this Section 6.12, nothing contained
in this Section 6.12 or this Agreement shall prevent the Borrower nor any other
Loan Party or any Subsidiary from conducting its revenue producing activities in
the ordinary course of its respective business, including, but not limited to,
the (a) leasing or licensing of parking facilities, banquet facilities, boxes,
suites or other facilities to the patrons of the Borrower, each Loan Party and
each Subsidiary (collectively, the “Patrons”), (b) staging entertainment events
(i.e., concerts, etc.) for Patrons, (c) granting of PSLs to Patrons,
(d) granting of licenses to Patrons to use space in the “marquee village” and
other similar facilities, (e) the license or use for a fee of simulcast signals,
trademarks, copyrights, and other similar assets and (f) prepaying and/or
forgiving any amounts owed under or canceling the bond or the Lease issued or
entered into in connection with the Master Plan Bond Transaction.

6.13 Investments and Acquisitions. The Borrower will not, nor will it permit any
other Loan Party to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, or to make any Acquisition of any
Person, except:

 

  (i) (a) Cash Equivalent Investments and (b) Permitted Investments.

 

  (ii) Any Investment (a) in existence on the date hereof (including without
limitation existing Investments in Subsidiaries) and described in Schedule 1,
(b) in any Subsidiary that is a Loan Party if such Investment is not an
Acquisition, and (c) so long as no Default or Unmatured Default has occurred and
is continuing, in an Excluded Entity that is not an Acquisition if, but only if,
the aggregate amount of all Investments in all Excluded Entities under this
clause (ii)(c) after the date of this Agreement, when aggregated with all of the
Acquisitions and/or Investments under clauses (iii)(d)(4), (iii)(e) and (iii)(f)
of this Section 6.13 made after the date of this Agreement (including such
proposed Investment), shall not exceed 25% of Consolidated Net Worth at the time
of the proposed Investment in such Excluded Entity. The Loan Parties shall
demonstrate, including in appropriate circumstances determined by and acceptable
to the Agent, through representations by the Loan Parties, that they shall be in
compliance with all provisions of this Agreement after giving effect to any
Investment permitted by this clause 6.13 (ii)(c) by delivering, at least five
(5) Business Days prior to making or closing such Investment a certificate in
the form of Exhibit O (each an “Investment Compliance Certificate”) evidencing
such compliance.

 

  (iii) The Borrower or any Loan Party may effect an Acquisition through a
merger, consolidation or by purchase, lease or otherwise of the capital stock or
ownership interest of another Person, or of Property of another Person (each a
“Permitted Acquisition”), to the extent, but only to the extent, such Loan Party
shall have complied with all of the applicable following provisions:

 

  (a) In the case of a Permitted Acquisition by the Borrower, the Borrower shall
be the surviving entity in any merger or consolidation.

 

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  (b) At least thirty (30) Business Days before the date of the proposed
Acquisition, the Borrower shall have delivered to the Agent a notice of
acquisition substantially in the form of Exhibit F attached hereto (a “Notice of
Acquisition”) describing in detail the proposed Acquisition.

 

  (c) (1) Such Person is either (A) an existing Guarantor or (B) has executed a
Guarantor Joinder to join this Agreement as a Guarantor pursuant to
Section 9.14, or shall have done so on or before the date of such Permitted
Acquisition, or, (2) in the alternative, upon request provided in the Notice of
Acquisition of the Loan Party acquiring such Person, on or before the date of
closing of such Permitted Acquisition, the Required Lenders shall have
consented, in their discretion, in writing, to permit such acquired Person to be
an Excluded Entity.

 

  (d) If the Person to be acquired is not to be an Excluded Entity, then clauses
(1), (2), (3) and (4) of this subsection apply:

 

  (1) The Loan Party which acquires such ownership interest in such Person shall
pledge such ownership interests to the Collateral Agent pursuant to the Pledge
and Security Agreement and Section 9.14 on or before the date of the closing of
such Permitted Acquisition, except as provided in clauses (iii)(d)(3) or
(iii)(e) below; and such Person shall, on or before the date of the closing of
such Permitted Acquisition execute and deliver a Guarantor Joinder and otherwise
comply with the requirements of Section 9.14;

 

  (2) No Default or Unmatured Default shall exist prior to and/or after giving
effect to such Permitted Acquisition;

 

  (3) If such Person is engaged in a Current Field of Enterprise and applicable
laws relating to horse racing or gaming prohibit the pledge of the ownership
interests of such Person or the grant of Liens in one or more assets of such
Person (such stock and assets, collectively, the “Restricted Assets”), such
Person and its owners shall not be obliged to grant Liens in the Restricted
Assets, provided that the Loan Parties shall use their best efforts with respect
to the matters within their respective control to obtain, within ninety
(90) days after the date of such Permitted Acquisition (A) the consent of the
applicable regulatory authority to the pledge or grant of first and prior Liens
in the Restricted Assets of such Person to the Collateral Agent, or (B) the
acknowledgement by such regulatory authority that such a pledge or grant of
security interests does not require such consent; and the applicable Loan
Parties shall within ten (10) days after receiving any such acknowledgement or
consent take all steps necessary or appropriate to pledge and grant first and
prior Liens, other than Permitted Liens, in favor of the Collateral Agent in, as
applicable, the Restricted Assets pursuant to the Pledge and Security Agreement
and any other applicable Collateral Documents, other Loan Documents, and/or
other documents in the form of the Collateral Documents except for the name of
the applicable Loan Party and the description of the Property; and

 

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  (4) If such Person is not engaged in a Current Field of Enterprise, the
aggregate consideration paid for the Acquisition of and Investment in that
Person, together with all other Acquisitions under this clause (iii)(d)(4)
previous to the Acquisition in question, when aggregated with all of the
Investments under clause(ii)(c) and Acquisitions under clauses (iii)(e) and
(iii)(f) of this Section 6.13, shall not exceed 25% of Consolidated Net Worth at
the time of the proposed Acquisition of such Person.

 

  (e) If the acquired Person is to be an Excluded Entity, then clauses (1), (2),
(3) and (4) of this subsection apply:

 

  (1) The board of directors or other equivalent governing body of such Person
shall have approved such Permitted Acquisition and, if the Loan Parties shall
use any portion of the Loans to fund such Permitted Acquisition, the Loan
Parties shall also have delivered to the Lenders written evidence of the
approval of the board of directors (or equivalent body) of such Person for such
Permitted Acquisition;

 

  (2) No Default or Unmatured Default shall exist prior to and/or after giving
effect to such Permitted Acquisition;

 

  (3) The Loan Parties shall have delivered to the Agent at least five
(5) Business Days before such Permitted Acquisition copies of any agreements
entered into or proposed to be entered into by such Loan Parties in connection
with such Permitted Acquisition and shall deliver to the Agent for its review
such other information about such Person or its Property as the Agent may
reasonably require; and

 

  (4) The aggregate consideration paid for the Acquisition of and Investment in
all Persons pursuant to this clause (iii)(e) of this Section 6.13, when
aggregated with all other consideration paid for the Acquisition of and
Investments in any Person under this clause (iii)(e) and when aggregated with
all Investments under clause (ii)(c) and all Acquisitions under clauses
(iii)(d)(4) and (iii)(f) of this Section, shall not exceed 25% of Consolidated
Net Worth at the time of the Proposed Acquisition of such Person.

 

  (f) If the Permitted Acquisition is through purchase, lease or other
acquisition of Property of a Person by a Loan Party, then clauses (1), (2) and
(3) of this subsection apply:

 

  (1) No Default or Unmatured Default shall exist prior to and/or after giving
effect to such Permitted Acquisition.

 

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  (2) That Loan Party shall pledge such Property pursuant to the Pledge and
Security Agreement and/or Mortgage(s), as appropriate, and Section 6.29, unless
such Loan Party is engaged in a Current Field of Enterprise and applicable laws
relating to horse racing or gaming cause the Property, or some part of it, being
acquired to be Restricted Assets, in which case such Loan Party shall not be
obliged to grant Liens in the Restricted Assets, provided that the Loan Parties
shall use their best efforts with respect to the matters within their respective
control to obtain, within ninety (90) after the date of such Permitted
Acquisition (A) the consent of the applicable regulatory authority to the pledge
or grant of first and prior Liens, other than Permitted Liens, in the Restricted
Assets of such Loan Party to the Collateral Agent, or (B) the acknowledgement by
such regulatory authority that such a pledge or grant of security interests does
not require such consent, and that Loan Party shall within ten (10) days after
receiving any such acknowledgement or consent take all steps necessary or
appropriate to pledge and grant first and prior Liens, other than Permitted
Liens, in favor of the Collateral Agent in, as applicable, the Restricted Assets
pursuant to the Pledge and Security Agreement and any other applicable
Collateral Documents, other Loan Documents, and/or documents consistent with the
Collateral Documents.

 

  (3) If that Loan Party is not engaged in a Current Field of Enterprise both
before and after the Permitted Acquisition, the aggregate consideration paid for
the Acquisition of Property of such Person by such Loan Party pursuant to this
clause (iii)(f) of this Section 6.13, when aggregated with all other
consideration paid for the Investment in any Person under clause (ii)(c) and
when further aggregated with all other Acquisitions and Investments under
clauses (iii)(d)(4) and (iii)(e) of this Section, shall not exceed 25% of
Consolidated Net Worth at the time of the proposed Acquisition of such Property.

 

  (g) The Loan Parties shall demonstrate, including, in appropriate
circumstances determined by and acceptable to the Agent, through representations
by the Loan Parties, that they shall be in compliance with (i) the covenants
contained in Sections 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18, 6.19,
6.23, 6.24, 6.25, 6.26, 6.30, 6.32, 6.33, 6.34 and 6.37 (including in such
computation Indebtedness, Contingent Obligations, Sale and Leaseback
Transactions and all other liabilities and/or obligations assumed or incurred by
a Loan Party or such Person in connection with such Permitted Acquisition), and
(ii) all other provisions of this Agreement after giving effect to any Permitted
Acquisition, by delivering at least five (5) Business Days prior to such
Permitted Acquisition a certificate in the form of Exhibit M hereto (each an
“Acquisition Compliance Certificate”) evidencing such compliance.

6.14 Subsidiaries. Each Loan Party shall not, and shall not permit any of its
Subsidiaries to, own or create, directly or indirectly, any Subsidiaries other
than (a) any Subsidiary on the Closing Date, and (b) any Subsidiary formed or
acquired after the Closing under this Agreement pursuant to a Permitted
Acquisition. Unless the Subsidiary so acquired is an Excluded Entity with
respect to which the Loan Parties have complied with Section 6.13, such newly
formed or acquired Subsidiary and the applicable Loan Party, as applicable,
shall grant and cause to be perfected first and prior Liens (other than
Permitted Liens) in favor of the Collateral Agent in the assets held by, and
stock of or other ownership interest in, such Subsidiary, subject to
Section 6.13(iii)(d)(3). Except as otherwise permitted under Section 6.13 of
this Agreement, each of the Loan Parties shall not become or agree to become
(1) a general or

 

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limited partner in any general or limited partnership, except that Loan Parties
may be general or limited partners in other Loan Parties, (2) become a member or
manager of, or hold a limited liability company interest in, a limited liability
company, except that the Loan Parties may be members or managers of, or hold
limited liability company interest in, other Loan Parties, or (3) become a joint
venturer or hold a joint venture interest in any joint venture.

6.15 Certain Transactions. Except for the Sale and Leaseback Transaction that is
a part of the Master Plan Bond Transaction, the Borrower and the other Loan
Parties collectively, in the aggregate, may not incur Off Balance Sheet
Liabilities under Section 6.23(ii), which, at any one time, aggregate for the
Borrower and all of the other Loan Parties, collectively, in an amount more than
$50,000,000.

6.16 Liens. The Borrower will not, nor will it permit any Subsidiary to, create,
incur, or suffer to exist any Lien in, of or on the Property of the Borrower or
any of its Subsidiaries, except (collectively, “Permitted Liens”):

 

  (i) Liens for taxes, assessments or governmental charges or levies on such
Loan Party’s Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
Agreement Accounting Principles shall have been set aside on such Loan Party’s
books.

 

  (ii) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’
liens and other similar Liens arising in the ordinary course of business which
secure payment of obligations not more than sixty (60) days past due or which
are being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with Agreement Accounting Principles shall have
been set aside on such Loan Party’s books.

 

  (iii) Liens arising out of pledges or deposits under worker’s compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.

 

  (iv) Utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower or its Subsidiaries.

 

  (v) Liens existing on the date hereof and described in Schedule 2 and any Lien
filed or which arises, at any time solely against Property of any Excluded
Subsidiary.

 

  (vi) Liens in favor of the Collateral Agent granted pursuant to any Collateral
Document.

 

  (vii) Liens, security interests and mortgages for the benefit of any
individual Lender which provides a Rate Management Transaction permitted under
Section 6.22 (each a “Permitted Secured Lender Rate Management Transaction”)
between one or more of the Loan Parties and such Lender, provided that any such
Liens shall be pari passu with the Liens securing the other Secured Obligations
hereunder. The parties to a “Permitted Secured Rate Management Transaction”
shall state in the documentation governing such agreement that such agreement is
intended to be a “Permitted Secured Rate Management Transaction” hereunder, and
upon doing so such agreement shall be treated as a “Permitted Secured Rate
Management Transaction” for all purposes hereunder and under each of the other
Loan Documents and such agreement shall be entitled to share in the Collateral
as more fully provided for herein and therein.

 

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  (viii) Liens created in connection with assets leased under Capitalized Leases
described in and permitted under Section 6.10(v).

 

  (ix) Purchase money security interests described in and permitted under
Section 6.10(iv).

 

  (x) So long as, (A) the validity or amount thereof is being contested in good
faith by appropriate and lawful proceedings diligently conducted and so long as
levy and execution thereon have been stayed and continue to be stayed or (B) if
a final judgment is entered, such judgment is discharged within thirty (30) days
of entry, and in either case they do not in the aggregate, materially impair the
ability of the Borrower to perform its Obligations hereunder and under the other
Loan Documents, then the following:

 

  (a) Claims or Liens for taxes, assessments or charges due and payable and
subject to interest or penalty, provided that the applicable Loan Party
maintains such reserves or other appropriate provisions as shall be required by
Agreement Accounting Principles and pays all such taxes, assessments or charges
forthwith upon the commencement of proceedings to foreclose any such Lien
provided that, notwithstanding any such reserves, the Loan Parties shall pay any
Liens related to recording or related taxes (including documentary stamp taxes
or intangible taxes), immediately upon the existence of any Default or
immediately upon the request of the Agent if the Collateral Agent has recorded
or is recording a Mortgage with respect to such realty;

 

  (b) Claims, Liens or encumbrances upon, and defects of title to, real or
personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits;

 

  (c) Claims or Liens of mechanics, materialmen, warehousemen, carriers, or
other statutory nonconsensual Liens; or

 

  (d) Claims or Liens resulting from judgments or orders which, in the
aggregate, do not exceed $5,000,000.

 

  (xi) Liens permitted under the title policies delivered to the Collateral
Agent.

6.17 Intentionally Omitted.

6.18 Rentals. The Borrower will not, nor will it permit any Loan Party to,
create, incur or suffer to exist obligations for Consolidated Rentals in excess
of $15,000,000 in any one fiscal year for the Borrower and its Subsidiaries in
the aggregate.

6.19 Affiliates. The Borrower will not, and will not permit any Subsidiary to,
enter into any transaction (including, without limitation, the purchase or sale
of any Property or service) with, or make any payment or transfer to, any
Affiliate except (i) in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower’s or such Subsidiary’s business and
(ii) upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would obtain in a comparable
arms-length transaction.

 

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6.20 No Prepayment of Material Indebtedness. The Loan Parties shall not, nor
will any of them permit any Subsidiary to, prepay, anticipate, defease,
purchase, redeem or acquire any Material Indebtedness (other than Obligations
hereunder), either in whole or in part, directly or indirectly, prior to the
scheduled maturity thereof, except for payment of regularly scheduled
installments of principal and/or interest thereon as and when those installments
come due in the regular course, and not by acceleration thereof, provided that
nothing in this Section 6.20 shall prohibit an Excluded Subsidiary to prepay any
Indebtedness with respect to which it, but not any Loan Party, is obligated.

6.21 Recordation of Calder Mortgage. The Agent may, and at the direction of the
Required Lenders shall, direct the Collateral Agent to record the Calder
Mortgage; and appropriate UCC fixture filings. The other financing statements
for filing in Florida (the “Calder Financing Statements”) have been filed
concurrently with the 2003 Closing Date. The Loan Parties shall take all such
steps as the Agent, the Collateral Agent or the Required Lenders request and
shall otherwise cooperate in connection with the recordation of the Calder
Mortgage, and related documents pursuant to the preceding sentence, including
(i) obtaining title insurance for the benefit of the Collateral Agent and the
Lenders in an amount not less than the appraised value of the property covered
by such Calder Mortgage (which the Loan Parties shall be required to pay for)
and providing all other Mortgage Instruments and (ii) if a Default exists at the
time of such recordation or if a Default should occur following such
recordation, the Loan Parties shall pay (or reimburse the Agent for) all
documentary stamp taxes, intangible asset taxes or other fees and expenses
associated with such recordation. The Calder Mortgage shall be treated as a
“Recorded Mortgage” for purposes of this Agreement including the warranty in
Section 5.14 relating to the Recorded Mortgages.

6.22 Financial Contracts. The Borrower has entered into the transactions of the
type described in the definition of “Rate Management Transactions” described on
Schedule 6.22, and may enter into one or more transactions of the type described
in the definition of “Rate Management Transactions” with one or more of the
Lenders after the date of this Agreement, but the Borrower shall not, nor will
it permit any Subsidiary to enter into or remain liable under any Financial
Contract that is speculative in nature.

6.23 Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities.
The Borrower will not, nor will it permit any Subsidiary to, enter into or
suffer to exist any (i) Sale and Leaseback Transaction except the Sale and
Leaseback Transaction that is a part of the Master Plan Bond Transaction or
(ii) any other transaction pursuant to which it incurs or has incurred
Off-Balance Sheet Liabilities, except for (a) Rate Management Obligations
permitted to be incurred under the terms of Section 6.22 and (b) as provided in
Section 6.15.

6.24 Financial Covenants.

6.24.1 Interest Coverage Ratio. The Borrower will maintain the Interest Coverage
Ratio, determined as of the end of each of its fiscal quarters for the then
most-recently ended four fiscal quarters, of (i) Consolidated Adjusted EBITDA,
to (ii) Consolidated Interest Expense, all calculated for the Loan Parties on a
consolidated basis and in accordance with Agreement Accounting Principles, to be
greater than 3.50 to 1.00.

6.24.2 Leverage Ratio. The Borrower will not permit the Leverage Ratio,
determined as of the end of each of its fiscal quarters, of (i) Consolidated
Funded Indebtedness to (ii) Consolidated Adjusted EBITDA for the then
most-recently ended four fiscal quarters to be greater than 3.25 to 1.0;
provided that, during the term of this Agreement, for a single period of six
(6) consecutive fiscal quarters, such period beginning with the fiscal quarter
during which the Borrower commences the Material Greenfield Project, the
Leverage Ratio may be greater than 3.25 to 1.00 but less than or equal to 4.00
to 1.00; provided that from and after the end of such period of six
(6) consecutive fiscal quarters, the Leverage Ratio shall not be greater than
3.25 to 1.00.

 

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6.24.3 Minimum Net Worth. The Borrower will at all times maintain Consolidated
Net Worth of not less than the sum of (i) $350,000,000 plus (ii) 50% of
Consolidated Net Income earned in each fiscal year beginning with the Borrower’s
fiscal year ending December 31, 2009 (without deduction for losses), plus
(iii) 100% of the proceeds from any public and/or private offering and/or sale
of any common and/or preferred stock and/or other equity security, and/or any
note, debenture, or other security convertible, in whole or in part, to common
and/or preferred stock and/or other equity security, net of reasonable expenses,
commissions and fees associates with such sale, from and after the date of this
Agreement; provided, that, to the extent that the Borrower makes cash
repurchases of its Equity Interests in any fiscal year of the Borrower, up to
$25,000,000 of such amount expended by the Borrower shall be deducted from the
Consolidated Net Worth that would otherwise be required to be maintained
pursuant to the terms of this Section 6.24.3.

6.25 Loan Parties shall enter into Collateral Documents. The Borrower and each
of the other Loan Parties shall grant to the Collateral Agent, for the benefit
of the Lenders, a first priority perfected security interest in all of the
Property of the Borrower and each of the Loan Parties, provided that
(i) recordation of the Calder Mortgage and UCC fixture filings for filing in
Florida may be delayed pursuant to and in accordance with Section 6.21, and
(ii) Churchill Downs Simulcast Productions, LLC and Charlson Industries, Inc.
shall not, so long as the assets of such Subsidiaries are not pledged or
otherwise subject to any lien for the benefit of any other creditors, be
required to execute or deliver any Collateral Document other than the Guaranty.
To that end, each of the Loan Parties shall duly authorize, execute and promptly
deliver the Guaranty to the Agent and deliver to the Collateral Agent the
Mortgages, the Mortgage Instruments, the Pledge and Security Agreement, the
Assignments of Patents, Trademarks and Copyrights, the Intercompany
Subordination Agreement and any and all other Collateral Documents, including
without limitation all documents or instruments necessary or appropriate to
create and/or perfect or otherwise protect the Liens in the Collateral in favor
of the Collateral Agent for the benefit of the Lenders.

6.26 Maintenance of Patents, Trademarks, Etc. Each Loan Party shall, and shall
cause each of its Subsidiaries (except for the Excluded Subsidiaries) to,
maintain in full force and effect all patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material Adverse Effect.

6.27 Plans and Benefit Arrangements. The Borrower shall, and shall cause each
other member of the Controlled Group to, comply with ERISA, the Code and other
applicable Laws applicable to Plans, or Benefit Arrangements except where such
failure, alone or in conjunction with any other failure, would not result in a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Borrower shall make, and cause each member of the Controlled Group to make, in a
timely manner, all contributions due to Plans, Benefit Arrangements and
Multiemployer Plans.

6.28 Compliance with Laws. Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply with all applicable all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof having jurisdiction over the conduct of
their respective businesses or the ownership of their respective Property,
including all Environmental Laws and Money Service Business Laws, in all
respects, provided that it shall not be deemed to be a violation of this
Section 6.28 if any failure to comply with any of the foregoing would not result
in fines, penalties, remediation costs, other similar liabilities or injunctive
relief which in the aggregate would constitute a Material Adverse Effect.

 

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6.29 Further Assurances. Each Loan Party shall, from time to time, at its
expense, (i) take such steps as may be necessary and/or appropriate to
faithfully preserve and protect the Lien in favor of the Collateral Agent, for
the benefit of the Lenders, on and security interest in the Collateral more
fully described in the Collateral Documents as a continuing first priority
perfected Lien, subject only to Permitted Liens, (ii) shall do such other acts
and things as the Agent in its sole discretion may deem necessary or advisable
from time to time in order to preserve, perfect and protect the Liens granted
under the Loan Documents and to exercise and enforce its rights and remedies
thereunder with respect to the Collateral (including without limitation the
execution and/or delivery of such amendments and supplements to the Collateral
Documents and related instruments and documents to the extent, and within such
time periods, as are reasonably requested by the Collateral Agent), and (iii) as
Property is acquired and as required by the other provisions of this Agreement,
enter into additional documents from time to time in the form of the Collateral
Documents (except as to the applicable Loan Party and the Property subject
thereto) and take such other steps to grant and perfect first priority Liens on
those assets to the Collateral Agent, for the benefit of the Lenders.

6.30 Subordination of Intercompany Loans. Each Loan Party shall cause any
intercompany Indebtedness, and loans or advances owed by any Loan Party to any
other Loan Party to be subordinated pursuant to the terms of the Intercompany
Subordination Agreement.

6.31 Plans and Benefit Arrangements. Each of the Loan Parties shall not, and
shall not permit any of its Subsidiaries to:

 

  (i) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would constitute a
Material Adverse Effect;

 

  (ii) fail to make when due any contribution to any Multiemployer Plan that the
Borrower or any member of the Controlled Group may be required to make under any
agreement relating to such Multiemployer Plan, or any Law pertaining thereto;

 

  (iii) withdraw (completely or partially) from any Multiemployer Plan where any
such withdrawal is likely to result in a material liability under Section 4063
of ERISA of the Borrower or any member of the Controlled Group that would
constitute a Material Adverse Effect;

 

  (iv) terminate, or institute proceedings to terminate, any Plan, where such
termination is likely to result in a material liability to the Borrower or any
member of the Controlled Group that would constitute a Material Adverse Effect;

 

  (v) make any amendment to any Plan with respect to which security is required
under Section 307 of ERISA;

 

  (vi) fail to give any and all notices and make all disclosures and
governmental filings required under ERISA or the Code, where such failure is
likely to result in a Material Adverse Effect; or

 

  (vii) create or enter into any Plan subject to the minimum funding
requirements of ERISA, without the prior written consent of the Required
Lenders.

6.32 Issuance of Stock. Except as may be permitted in Section 6.13, each of the
Loan Parties other than the Borrower shall not issue any additional shares of
such Loan Party’s capital stock or any options, warrants or other rights in
respect thereof to any Person not a Loan Party, provided that the Borrower shall
deliver stock powers and the original certificates evidencing such new shares in
such Loan Party and shall take any other steps necessary to grant security
interests in such shares in favor of the Collateral Agent prior to issuing such
shares.

 

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6.33 Changes in Organizational Documents. Except as provided in the next
sentence, each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, amend in any respect its certificate of incorporation
(including any provisions or resolutions relating to capital stock), by-laws,
certificate of limited partnership, partnership agreement, articles or
certificate of formation, limited liability company agreement or other
organizational documents without providing at least ten (10) calendar days’
prior written notice to the Agent and, in the event such change would be
materially adverse to the Lenders as determined by the Agent in its sole
discretion, obtaining the prior written consent of the Required Lenders. The
Borrower may amend its articles of incorporation to do any or all of the
following: (1) in connection with a public offering of shares of its capital
stock to provide for an increase in the number of authorized shares of such
stock or (2) in connection with such a public offering to increase the total
number of shares issuable as Series 1998 Preferred Stock to reflect the increase
in the number of shares of the Borrower’s common stock outstanding, and
(3) delete any provisions related to cumulative voting by shareholders in the
election or removal of directors.

6.34 Contingent Obligations. The Borrower will not, nor will it permit any
Subsidiary (except for the Excluded Subsidiaries) to, make or suffer to exist
any Contingent Obligation (including, without limitation, any Contingent
Obligation with respect to the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in the ordinary course of
business, (ii) the Reimbursement Obligations, (iii) for the Guaranty; (iv) for
PSL Buyback/Guarantee(s) not to exceed $20,000,000 at any one time in the
aggregate for all such PSL Buyback/Guarantees; (v) guaranties of the obligations
of Loan Parties not to exceed $10,000,000 at any one time in the aggregate for
all such guaranties; and (vi) potential withdrawal liability under Multiemployer
Plans related to the Hollywood Park operation in an aggregate amount not to
exceed $10,000,000.

6.35 Other Agreements. The Loan Parties will not enter into any agreement
containing any provision which would be violated or breached by the performance
of their obligations hereunder or under any instrument or document delivered or
to be delivered by them hereunder or in connection herewith.

6.36 Preservation of Existence. Each Loan Party shall, and shall cause each of
its Subsidiaries (other than the Excluded Subsidiaries) to maintain its legal
existence as a corporation, limited partnership or limited liability company and
its license or qualification and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary, except (i) as otherwise may be expressly be
permitted in Sections 6.11, 6.12. 6.13 and/or 6.14 and (ii) where such failure
to do so shall not have a Material Adverse Effect.

6.37 Restricted Payments. The Borrower will not, and will not permit any of its
Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except (a) the Borrower may declare and pay
dividends with respect to its Equity Interests payable solely in additional
shares of its common stock, (b) Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests, (c) the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries and (d) so long as no Default or Event of Default has occurred and
is continuing prior to making such Restricted Payment or would arise after
giving effect (including pro forma effect) thereto, (i) the Borrower may
repurchase shares of its capital stock so long as the aggregate amount of all
such repurchases during the term of this Agreement does not exceed $75,000,000
and (ii) the Borrower and its Subsidiaries may make any other Restricted
Payments so long as the aggregate amount of all such other Restricted Payments
does not exceed $20,000,000 during any fiscal year of the Borrower.

 

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ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute a
Default:

7.1 Any representation or warranty made or deemed made by or on behalf of the
Loan Parties to the Lenders or the Agent under or in connection with this
Agreement, any Credit Extension, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made.

7.2 Nonpayment of principal of any Loan when due, or nonpayment of any
Reimbursement Obligation in or of any interest upon any Loan or Reimbursement
Obligation within one Business Day after the same becomes due, or of any
commitment fee, LC Fee or other obligations under any of the Loan Documents
within five days after the same becomes due.

7.3 The breach by the Borrower and/or any Loan Party of any of the terms or
provisions of Sections 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18,
6.19, 6.20, 6.22, 6.23, 6.24, 6.25, 6.26, 6.27, 6.28, 6.29, 6.30, 6.31, 6.32,
6.33, 6.34, 6.35, 6.36 and/or 6.37.

7.4 The breach by the Borrower and/or any Loan Party (other than a breach which
constitutes a Default under another Section of this Article VII) of any of the
terms or provisions of this Agreement and/or any other Loan Document which is
not remedied within five days after written notice from the Agent or any Lender.

7.5 Failure of the Borrower or any of the other Loan Parties to pay when due any
Material Indebtedness; or the default by the Borrower or any of the other Loan
Parties in the performance (beyond the applicable grace period with respect
thereto, if any) of any term, provision or condition contained in any Material
Indebtedness Agreement, or any other event shall occur or condition exist, the
effect of which default, event or condition is to cause, or to permit the
holder(s) of such Material Indebtedness or the lender(s) under any Material
Indebtedness Agreement to cause, such Material Indebtedness to become due prior
to its stated maturity or any commitment to lend under any Material Indebtedness
Agreement to be terminated prior to its stated expiration date; or any Material
Indebtedness of the Borrower or any of the other Loan Parties shall be declared
to be due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries or any Guarantor shall not pay, or admit in
writing its inability to pay, its debts generally as they become due.

7.6 The Borrower or any of the other Loan Parties shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it or
any Term Substantial Portion or Twelve Month Substantial Portion of its
Property, (iv) institute any proceeding seeking an order for relief under the
Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate or
partnership action to authorize or effect any of the foregoing actions set forth
in this Section 7.6 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 7.7.

7.7 Without the application, approval or consent of the Borrower or any of the
other Loan Parties, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of the other Loan Parties or
any Term Substantial Portion or Twelve Month Substantial Portion of its
Property, or a proceeding described in Section 7.6(iv) shall be instituted
against the Borrower or any of the other Loan Parties and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for
a period of 60 consecutive days.

 

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7.8 Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of any of the Loan Parties which, when taken together with all other
Property of the Loan Parties so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month in
which any such action occurs, constitutes a Term Substantial Portion or Twelve
Month Substantial Portion.

7.9 The Borrower or any of the other Loan Parties shall fail within thirty
(30) days to pay, bond or otherwise discharge one or more (i) judgments or
orders for the payment of money in excess of $5,000,000 (or the equivalent
thereof in currencies other than U.S. Dollars) in the aggregate, or
(ii) nonmonetary judgments or orders which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, which
judgment(s), in any such case, is/are not stayed on appeal or otherwise being
appropriately contested in good faith.

7.10 Nonpayment by the Borrower or any Loan Party of any Rate Management
Obligation when due or the breach by the Borrower or any Subsidiary of any term,
provision or condition contained in any Rate Management Transaction or any
transaction of the type described in the definition of “Rate Management
Transactions,” whether or not any Lender or Affiliate of a Lender is a party
thereto.

7.11 Any Change in Control shall occur.

7.12 The Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans by the Borrower or
any other member of the Controlled Group as withdrawal liability (determined as
of the date of such notification), exceeds $10,000,000 or requires payments
exceeding $10,000,000 per annum.

7.13 The Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and the other members of the Controlled Group
(taken as a whole) to all Multiemployer Plans which are then in reorganization
or being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $10,000,000.

7.14 The Borrower or any of the other Loan Parties shall (i) be the subject of
any proceeding or investigation pertaining to the release by the Borrower, any
of the other Loan Parties or any other Person of any toxic or hazardous waste or
substance into the environment, or (ii) violate any Environmental Law, which, in
the case of an event described in clause (i) or clause (ii), could reasonably be
expected to have a Material Adverse Effect.

7.15 The occurrence of any “default,” as defined in any Loan Document (other
than this Agreement) or the breach of any of the terms or provisions of any Loan
Document (other than this Agreement), which default or breach continues beyond
any period of grace therein provided.

7.16 Any Guaranty shall fail to remain in full force or effect or any action
shall be taken to discontinue or to assert the invalidity or unenforceability of
any Guaranty, or any Guarantor shall fail to comply with any of the terms or
provisions of any Guaranty to which it is a party, or any Guarantor shall deny
that it has any further liability under any Guaranty to which it is a party, or
shall give notice to such effect.

 

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7.17 Any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest in any Collateral purported to be
covered thereby, except as permitted by the terms of any Collateral Document, or
any Collateral Document shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or the Borrower shall fail to
comply with any of the terms or provisions of any Collateral Document.

7.18 The representations and warranties set forth in Section 5.15 (Plan Assets;
Prohibited Transactions) shall at any time not be true and correct.

7.19 The Borrower or any Loan Party shall fail to pay when due any Operating
Lease Obligation, obligation with respect to a Letter of Credit, obligation
under a Sale and Leaseback Transaction or Contingent Obligation which in any of
those cases involves a Material Indebtedness.

7.20 Intentionally Omitted.

7.21 The occurrence of any default under or breach of any of the terms or
provisions of the applicable documents in the Master Plan Bond Transaction,
which default or breach continues beyond any period of grace therein provided.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1 Acceleration; Facility LC Collateral Account.

 

  (i) If any Default described in Section 7.6 or 7.7 occurs with respect to the
Borrower, the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuer to issue Facility LCs shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Agent, the Collateral Agent, the LC
Issuer or any Lender and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay to the Collateral
Agent an amount in immediately available funds, which funds shall be held in the
Facility LC Collateral Account, equal to the difference of (x) the amount of LC
Obligations at such time, less (y) the amount on deposit in the Facility LC
Collateral Account at such time which is free and clear of all rights and claims
of third parties and has not been applied against the Obligations (such
difference, the “Collateral Shortfall Amount”). If any other Default occurs, the
Required Lenders (or the Agent with the consent of the Required Lenders) may
(a) terminate or suspend the obligations of the Lenders to make Loans hereunder
and the obligation and power of the LC Issuer to issue Facility LCs, or declare
the Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives, and
(b) upon notice to the Borrower and in addition to the continuing right to
demand payment of all amounts payable under this Agreement, make demand on the
Borrower to pay, and the Borrower will, forthwith upon such demand and without
any further notice or act, pay to the Collateral Agent the Collateral Shortfall
Amount, which funds shall be deposited in the Facility LC Collateral Account.

 

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  (ii) If at any time while any Default is continuing, the Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the Agent may
make demand on the Borrower to pay, and the Borrower will, forthwith upon such
demand and without any further notice or act, pay to the Collateral Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility LC
Collateral Account.

 

  (iii) The Collateral Agent may at any time or from time to time after funds
are deposited in the Facility LC Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time have
become due and payable by the Borrower to the Lenders or the LC Issuer.

 

  (iv) At any time while any Default is continuing, neither the Borrower nor any
Person claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all
of the Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be distributed to Borrower or paid to whomever may be
legally entitled thereto at such time.

 

  (v) If, within 30 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans and the
obligation and power of the LC Issuer to issue Facility LCs hereunder as a
result of any Default (other than any Default as described in Section 7.6 or 7.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.

 

  (vi) The Collateral Agent shall have the right to exercise the remedies and
other rights with respect to the Collateral provided in and subject to the
Collateral Documents.

8.2 Amendments. Subject to the provisions of this Section 8.2, the Required
Lenders (or the Agent with the consent in writing of the Required Lenders) and
the Borrower may enter into agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender directly and adversely affected thereby:

 

  (i) Extend the final maturity of any Loan, or extend the expiry date of any
Facility LC, in each case applicable to such Lender to a date after the Facility
Termination Date or postpone any regularly scheduled payment of principal of any
Loan of such Lender or forgive all or any portion of the principal amount
thereof or any Reimbursement Obligation related thereto, or reduce the rate or
extend the time of payment of interest or fees thereon or Reimbursement
Obligation related thereto.

 

  (ii) Reduce the percentage specified in the definition of Required Lenders.

 

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  (iii) Extend the Facility Termination Date applicable to such Lender, or
reduce the amount or extend the payment date for, the mandatory payments
required under Section 2.4, or increase the amount of the Aggregate Commitment,
except as provided in Section 2.22, or of the Commitment of such Lender
hereunder or the commitment to issue Facility LCs, or permit the Borrower to
assign its rights under this Agreement.

 

  (iv) Amend this Section 8.2.

 

  (v) Release all or substantially all of the Guarantors except as provided in
Section 6.12(iii) or, except as provided in the Collateral Documents, agree to
subordinate the Lenders’ Liens with respect to all or substantially all of the
Collateral.

 

  (vi) Release all or substantially all of the Collateral, provided that the
Lenders acknowledge that the Agent may alone instruct the Collateral Agent to
release any Collateral as and to the extent provided in Section 10.16.

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, and no amendment of any
provision relating to the LC Issuer shall be effective without the written
consent of the LC Issuer. The Agent may (i) waive payment of the fee required
under Section 12.3.3 and (ii) implement any flex pricing provisions contained in
the fee letter described in Section 10.13 or any commitment letter delivered in
connection with the transaction which is the subject of this Agreement without
obtaining the consent of any other party to this Agreement so long as, in the
case of any implementation of any flex-pricing provisions, the Agent’s actions
would not require consent of all of the Lenders pursuant to the foregoing
provisions of this Section.

8.3 Preservation of Rights. No delay or omission of the Lenders, the LC Issuer,
the Agent or the Collateral Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Credit Extension notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent, the LC Issuer, the Lenders and the Collateral Agent until the
Secured Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

9.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.

9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.

9.3 Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of the Loan Documents.

 

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9.4 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, the Collateral Agent, the LC Issuer
and the Lenders and supersede all prior agreements and understandings among the
Borrower, the Agent, the LC Issuer and the Lenders relating to the subject
matter thereof other than those contained in the fee letter described in
Section 10.13 and any flex pricing provisions contained in any commitment letter
entered into in connection with the transactions that are the subject of this
Agreement, all of which survives and remains in full force and effect during the
term of this Agreement.

9.5 Several Obligations; Benefits of this Agreement. The respective obligations
of the Lenders hereunder are several and not joint and no Lender shall be the
partner or agent of any other (except to the extent to which the Agent is
authorized to act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.

9.6 Expenses; Indemnification.

 

  (i) The Borrower shall reimburse the Agent (the term “Agent” in this
Section 9.6 also being used to refer to the Agent in its capacity as Collateral
Agent) and J.P. Morgan Securities Inc. for any costs, internal charges and
out-of-pocket expenses (including reasonable attorneys’ fees and time charges of
attorneys for the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, syndication, distribution (including, without
limitation, via the internet), review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Agent, J.P. Morgan Securities Inc., the LC Issuer and the Lenders for any costs,
internal charges and out-of-pocket expenses (including reasonable attorneys’
fees and time charges of attorneys for the Agent, J.P. Morgan Securities Inc.,
the LC Issuer and the Lenders, which attorneys may be employees of the Agent,
J.P. Morgan Securities Inc., or the Lenders) paid or incurred by the Agent, J.P.
Morgan Securities Inc., the LC Issuer or any Lender in connection with the
collection and enforcement of the Loan Documents. Expenses being reimbursed by
the Borrower under this Section include, without limitation, the cost and
expense of obtaining an appraisal, if any, of any parcel of real property or
interest in real property described in any relevant Collateral Documents which
appraisal, if any, shall be in conformity with the applicable requirements of
any law or any governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation thereof,
including, without limitation, the provisions of Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended, reformed
or otherwise modified from time to time, and any rules promulgated to implement
such provisions and costs and expenses incurred in connection with the Reports
described in the following sentence. The Borrower acknowledges that from time to
time the Agent may prepare and may distribute to the Lenders (but shall have no
obligation or duty to prepare or to distribute to the Lenders) certain audit
reports (the “Reports”) and/or the Collateral Agent may prepare and distribute
Reports to the Agent (but the Collateral Agent shall have no obligation or duty
to prepare or distribute such Reports, nor shall the Agent have any obligation
or duty to distribute such Reports to the Lenders as it may receive from the
Collateral Agent) pertaining to the Borrower’s Property for internal use by the
Agent from information furnished to it by or on behalf of the Borrower, after
the Agent or the Collateral Agent has exercised its rights of inspection
pursuant to this Agreement.

 

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  (ii) The Borrower hereby further agrees to indemnify the Agent, the Arranger,
the LC Issuer and each Lender, their respective affiliates, and each of their
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent, the
Arranger, the LC Issuer any Lender or any affiliate is a party thereto) which
any of them may pay or incur arising out of or relating to this Agreement, the
other Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Credit
Extension hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification.

 

  (iii) The Agent and the Lenders shall not be liable for, and the Loan Parties
agree that they shall immediately pay to the Agent and the Lenders when incurred
and shall indemnify, defend and hold the Lenders harmless from and against, all
loss, cost, liability, damage and expense (including, without limitation,
reasonable attorneys’ fees and costs incurred in the investigation, defense and
settlement of claims) that the Agent or the Lenders may suffer or incur as
mortgagees as a result of, or in connection in any way with any applicable
Environmental Laws (including the assertion that any lien existing pursuant to
the Environmental Laws takes priority over the lien or security interests of the
Collateral Agent or Lenders), or any environmental assessment or study from time
to time reasonably undertaken or requested by the Agent or any Lenders or breach
of any covenant or undertaking by the Loan Parties. The obligations of the Loan
Parties under this Section 9.6 shall survive the termination of this Agreement.

9.7 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.

9.8 Accounting. Except as provided to the contrary herein, all accounting terms
used herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with Agreement Accounting Principles, except that
any calculation or determination which is to be made on a consolidated basis
shall be made for the Borrower and the other Loan Parties. Notwithstanding any
other provision contained herein, all terms of an accounting or financial nature
used herein shall be construed, and all computations of amounts and ratios
referred to herein shall be made, without giving effect to any election under
Accounting Standards Codification 825-10-25 (previously referred to as Statement
of Financial Accounting Standards 159) (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect)
to value any Indebtedness or other liabilities of the Borrower or any Subsidiary
at “fair value”, as defined therein.

9.9 Severability of Provisions. Any provision in any Loan Document that is held
to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to
that jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.

9.10 Nonliability of Lenders. The relationship between the Borrower on the one
hand and the Lenders, the LC Issuer and the Agent on the other hand shall be
solely that of borrower and lender. Neither the Agent, the Arranger, the LC
Issuer nor any Lender

 

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shall have any fiduciary responsibilities to the Borrower. Neither the Agent,
the Arranger, the LC Issuer nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower’s business or operations. The Borrower agrees that neither
the Agent, the Collateral Agent, the Arranger, the LC Issuer nor any Lender
shall have liability to the Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower in connection with, arising out
of, or in any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final nonappealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is sought.
Neither the Agent, the Collateral Agent, the Arranger, the LC Issuer nor any
Lender shall have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect, consequential or
punitive damages suffered by the Borrower in connection with, arising out of, or
in any way related to the Loan Documents or the transactions contemplated
thereby.

9.11 Confidentiality. Each Lender agrees to, and to cause its Affiliates to,
hold any confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure (i) to its
Affiliates and to other Lenders and their respective Affiliates, (ii) to legal
counsel, accountants, and other professional advisors to such Lender or to a
Transferee, (iii) to regulatory officials, (iv) to any Person as requested
pursuant to or as required by law or regulation, (v) to any Person in connection
with any legal proceeding to which such Lender is a party, to the extent
required by law or legal process, provided that such Lender shall have used its
best reasonable efforts to provide notice to the Borrower of the legal process
requesting disclosure of such confidential information prior to disclosure,
(vi) to such Lender’s direct or indirect contractual counterparties in swap
agreements or to legal counsel, accountants and other professional advisors to
such counterparties, provided that such Lender is a party to a Rate Management
Transaction with the Borrower, (vii) permitted by Section 12.4, and (viii) to
rating agencies if requested or required by such agencies in connection with a
rating relating to the Advances hereunder.

9.12 Nonreliance. Each Lender hereby represents that it is not relying on or
looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Credit
Extensions provided for herein.

9.13 Disclosure. The Borrower and each Lender hereby acknowledge and agree that
the Agent and/or its Affiliates from time to time may hold investments in, make
other loans to or have other relationships with the Borrower and its Affiliates.

9.14 Joinder of Guarantors. If a Subsidiary is required to join this Agreement
as a Guarantor pursuant to Section 6.14 (regarding Subsidiaries) and/or 6.13
(regarding Permitted Acquisitions) then (a) such Subsidiary shall execute and
deliver to the Agent (1) a Guarantor Joinder in substantially the form attached
hereto as Exhibit N (a “Guarantor Joinder”) pursuant to which it shall join as a
Guarantor each of the documents to which the Guarantors are parties;
(2) documents in the forms described in Section 4.1 modified as appropriate to
relate to such Subsidiary, including opinions of counsel with respect to each
Subsidiary; (3) documents necessary to grant and perfect first and prior Liens
(other than Permitted Liens) in favor of the Collateral Agent in all property
and assets held by such Subsidiary and in the ownership interests in such
Subsidiary, and (b) to the extent required under this Agreement, the Loan Party
which holds the ownership interest in such Subsidiary shall take such steps as
are necessary to pledge such interests pursuant to the Pledge and Security
Agreement and grant to the Collateral Agent first and prior Liens (other than
Permitted Liens) therein, except to the extent such grant of security interests
is excused or delayed under Section 6.13(iii)(d)(3) of this Agreement. In the
case of any Subsidiary formed after the date of this Agreement, the Loan Parties
shall deliver such Guarantor Joinder and related documents to the Agent within
five (5) business days after the date of the filing of such Subsidiary’s
Articles of Incorporation if the Subsidiary is a corporation, the date of the
filing of its certificate of limited partnership if it is a limited partnership,
or the date of its organization if it is an entity other than a limited
partnership or corporation, or the closing date of the acquisition agreement in
the case of a Permitted Acquisition.

 

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9.15 Business Days. Except as provided in the definition of “Interest Period” in
Article I above, if any provision of this Agreement or any of the other Loan
Documents requires that the Borrower perform any act (other than to make a
payment) on a day that is not a Business Day, then the action shall be deemed to
be due on the first day thereafter that is a Business Day; and in the case of a
payment, shall be due on the last Business Day prior to the date that is not a
Business Day but upon which the payment is due.

9.16 No Course of Dealing. No course of dealing between the Borrower and the
Lenders, the Agent or the Collateral Agent shall operate as a waiver of any of
the rights of the Lenders, the Agent and the Collateral Agent under any of the
Loan Documents.

9.17 Waivers by the Borrower. The Borrower hereby waives, to the extent
permitted by applicable law, (a) all presentments, demands for performances,
notices of nonperformance (except to the extent specifically required by this
Agreement or any other of the Loan Documents), protests, notices of protest and
notices of dishonor in connection with this Agreement or any Notes, (b) any
requirement of diligence or promptness on the part of any Lender in enforcement
of rights under the provisions of any of the Loan Documents, and (c) any
requirement of marshaling assets or proceeding against Persons or assets in any
particular order.

9.18 Incorporation by Reference. All schedules, annexes or other attachments to
this Agreement are incorporated into this Agreement as if set out in full at the
first place in this Agreement that reference is made thereto.

9.19 USA Patriot Act Notification. The following notification is provided to the
Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C.
Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government of the United States of America fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each Person that opens an
account, including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. Accordingly, when the
Borrower opens an account, the Agent and the Lenders will ask for the Borrower’s
name, tax identification number, business address, and other information that
will allow the Agent and the Lenders to identify the Borrower. The Agent and the
Lenders may also ask to see the Borrower’s legal organizational documents or
other identifying documents.

ARTICLE X

THE AGENT

10.1 Appointment; Nature of Relationship. JPMorgan is hereby re-appointed by
each of the Lenders as its contractual representative and as Collateral Agent
(herein referred to collectively in this Article X as the “Agent”) hereunder and
under each other Loan Document, and each of the Lenders irrevocably authorizes
the Agent to act as the contractual representative of such Lender with the
rights and duties expressly set forth herein and in the other Loan Documents,
and each of the Lenders and the LC Issuer authorizes the Agent and Collateral
Agent to enter into an intercreditor agreement, on behalf of such Lender and the
LC Issuer (each Lender and the LC Issuer hereby agreeing to be bound by the
terms of such intercreditor agreement, as if it were a party thereto) and to
take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Agent

 

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and the Collateral Agent by the terms hereof and the terms of the other Loan
Documents, together with such actions and powers as are reasonably incidental
thereto. The Agent agrees to act as such contractual representative upon the
express conditions contained in this Article X. Notwithstanding the use of the
defined term “Agent,” it is expressly understood and agreed that the Agent shall
not have any fiduciary responsibilities to any Lender by reason of this
Agreement or any other Loan Document and that the Agent is merely acting as the
contractual representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders’ contractual representative, the Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders, and (ii) is acting as
an independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any agency theory
or any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives. Except as expressly set forth herein, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any other Loan
Party that is communicated to or obtained by the bank servicing as Agent or any
of its Affiliates in any capacity.

10.2 Powers. The Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.

10.3 General Immunity. Neither the Agent nor any of its directors, officers,
agents or employees shall be liable to the Borrower, the Lenders or any Lender
for any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except to the extent
such action or inaction is determined in a final non-appealable judgment by a
court of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of such Person.

10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent; (d) the existence
or possible existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
Guarantor of any of the Obligations or of any of the Borrower’s or any such
Guarantor’s respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent, or as Collateral Agent, or in its
individual capacity).

10.5 Action on Instructions of Lenders. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Required
Lenders, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge
that the Agent shall be under no duty to take any discretionary action permitted
to be taken by it pursuant to the provisions of this Agreement or any other Loan
Document unless it shall be requested in writing to do so by the Required
Lenders. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.

 

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10.6 Employment of Agents and Counsel. The Agent may execute any of its duties
as Agent hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders, except
as to money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Agent shall be entitled to advice of counsel
concerning the contractual arrangement between the Agent and the Lenders and all
matters pertaining to the Agent’s duties hereunder and under any other Loan
Document.

10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon
any Note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.

10.8 Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse
and indemnify the Agent ratably in proportion to their respective Commitments
(or, if the Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed by the
Borrower for which the Agent is entitled to reimbursement by the Borrower under
the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders)
and (iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted
against the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders), or the enforcement of any of the
terms of the Loan Documents or of any such other documents, provided that (i) no
Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Agent and (ii) any indemnification required pursuant to Section 3.5(vii)
shall, notwithstanding the provisions of this Section 10.8, be paid by the
relevant Lender in accordance with the provisions thereof. The obligations of
the Lenders under this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.

10.9 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a “notice of default”. In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.

10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent shall
have the same rights and powers hereunder and under any other Loan Document with
respect to its Commitment and its Loans as any Lender and may exercise the same
as though it were not the Agent, and the term “Lender” or “Lenders” shall, at
any time when the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Agent, in its individual capacity, is
not obligated to be remain a Lender.

 

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10.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.

10.12 Successor Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower, such resignation to be effective upon
the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent’s giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. Notwithstanding the previous
sentence, the Agent may at any time without the consent of the Borrower or any
Lender, appoint any of its Affiliates which is a commercial bank as a successor
Agent hereunder. If the Agent has resigned and no successor Agent has been
appointed, the Lenders may perform all the duties of the Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such successor
Agent has accepted the appointment. Any such successor Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents. In the event
that there is a successor to the Agent by merger, or the Agent assigns its
duties and obligations to an Affiliate pursuant to this Section 10.12, then the
term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate
or other analogous rate of the new Agent.

10.13 Agent and Arranger Fees. The Borrower agrees to pay to the Agent and J.P.
Morgan Securities Inc., for their respective accounts, the fees agreed to by the
Borrower, the Agent and the Arranger pursuant to that certain letter agreement
dated November 18, 2009, or as otherwise agreed from time to time.

10.14 Delegation to Affiliates. The Borrower and the Lenders agree that the
Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate’s directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.

10.15 Execution of Collateral Documents. The Lenders hereby empower and
authorize the Agent to cause the Collateral Agent, to execute and deliver to the
Borrower on their behalf the Security Agreement(s) and all related financing
statements and any financing statements, agreements, documents or instruments as
shall be necessary or appropriate to effect the purposes of the Security
Agreement(s).

10.16 Collateral Releases. The Lenders acknowledge that the Collateral Agent is
authorized to execute and deliver to the Borrower on their behalf any
agreements, documents or instruments as shall be necessary or appropriate to
effect any releases of Collateral which shall be permitted by the terms of this
Agreement (including, for example, lease, sale or other disposition of Property
permitted in Section 6.12) or of any other Loan Document or which shall
otherwise have been approved by the Required Lenders

 

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(or, if required by the terms of Section 8.2, all of the Lenders) in writing,
without further authorization or consent from the Lenders; and without limiting
any other consents or authorizations provided by the Lenders, the Lenders hereby
consent to the Collateral Agent having and exercising that authority.

10.17 Co-Agents, Documentation Agents, Syndication Agent, etc. Neither any of
the Lenders identified in this Agreement as a “co-agent” nor any Documentation
Agent or the Syndication Agent shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, none of such
Lenders shall have or be deemed to have a fiduciary relationship with any
Lender. Each Lender hereby makes the same acknowledgments with respect to such
Lenders as it makes with respect to the Agent in Section 10.11.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available, but not including funds held by a Loan Party which are held by that
Loan Party only as custodian or trustee (and in which that Loan Party does not
have a beneficial interest) such as, (by way of example and not limitation),
Horseman’s Accounts, and which are clearly labeled to indicate that such funds
are so held by the Loan Party) and any other Indebtedness at any time held or
owing by any Lender or any Affiliate of any Lender to or for the credit or
account of the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or any part
thereof, shall then be due.

11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Outstanding Credit Exposure (other than payments
received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their respective Pro Rata Shares of the
Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding upon and inure to the benefit of the Borrower, each other Loan
Party and the Lenders and their respective successors and assigns permitted
hereby, except that (i) the Borrower shall not have the right to assign its
rights or obligations under the Loan Documents without the prior written consent
of each Lender, (ii) any assignment by any Lender must be made in compliance
with Section 12.3, and (iii) any transfer by Participation must be made in
compliance with Section 12.2. Any attempted assignment or transfer by any party
not made in compliance with this Section 12.1 shall be null and void, unless
such attempted assignment or transfer is treated as a participation in
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Section 12.3.3. The parties to this Agreement acknowledge that clause (ii) of
this Section 12.1 relates only to absolute assignments and this Section 12.1
does not prohibit assignments creating security interests, including, without
limitation, (x) any pledge or assignment by any Lender of all or any portion of
its rights under this Agreement and any Note to a Federal Reserve Bank or (y) in
the case of a Lender which is a Fund, any pledge or assignment of all or any
portion of its rights under this Agreement and any Note to its trustee in
support of its obligations to its trustee; provided, however, that no such
pledge or assignment creating a security interest shall release the transferor
Lender from its obligations hereunder unless and until the parties thereto have
complied with the provisions of Section 12.3. The Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof for all
purposes hereof unless and until such Person complies with Section 12.3;
provided, however, that the Agent may in its discretion (but shall not be
required to) follow instructions from the Person which made any Loan or which
holds any Note to direct payments relating to such Loan or Note to another
Person. Any assignee of the rights to any Loan or any Note agrees by acceptance
of such assignment to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of the
rights to any Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder or assignee of the
rights to such Loan.

12.2 Participations.

12.2.1 Permitted Participants; Effect. Any Lender may at any time sell to one or
more banks or other entities (“Participants”) participating interests in any
Outstanding Credit Exposure of such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender’s obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Outstanding Credit Exposure and the holder of any Note issued
to it in evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower, the Agent
and the Collateral Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under the Loan
Documents.

12.2.2 Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Credit Extension or Commitment in which such
Participant has an interest which would require consent of all of the Lenders
pursuant to the terms of Section 8.2 or of any other Loan Document.

12.2.3 Benefit of Certain Provisions. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each Lender shall
retain the right of setoff provided in Section 11.1 with respect to the amount
of participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 11.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a Lender. The Borrower
further agrees that each Participant shall be entitled to the benefits of and
bound by the provisions of Section 2.21 and Sections 3.1, 3.2, 3.4 and 3.5 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 12.3, provided that (i) a Participant shall not
be entitled to receive any greater payment under Section 3.1, 3.2 or 3.5 than
the Lender who sold the participating interest to such Participant would have
received had it retained such interest for its own account, unless the sale of
such interest to such Participant is made with the prior written consent of the
Borrower, and (ii) any Participant not incorporated under the laws of the United
States of America or any State thereof agrees to comply with the provisions of
Section 3.5 to the same extent as if it were a Lender.

 

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12.3 Assignments.

12.3.1 Permitted Assignments. Any Lender may at any time assign to one or more
banks or other entities (“Purchasers”) all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit C or in such other form as may be agreed to by the parties
thereto. Each such assignment with respect to a Purchaser which is not a Lender
or an Affiliate of a Lender or an Approved Fund shall either be in an amount
equal to the entire applicable Commitment and Loans of the assigning Lender or
(unless each of the Borrower and the Agent otherwise consents) be in an
aggregate amount not less than $5,000,000. The amount of the assignment shall be
based on the Commitment or outstanding Loans (if the Commitment has been
terminated) subject to the assignment, determined as of the date of such
assignment or as of the “Trade Date,” if the “Trade Date” is specified in the
assignment.

12.3.2 Consents. The consent of the Borrower shall be required prior to an
assignment becoming effective unless the Purchaser is a Lender, an Affiliate of
a Lender or an Approved Fund, provided that the consent of the Borrower shall
not be required if a Default has occurred and is continuing. The consent of the
Agent shall be required for each assignment. Any consent required under this
Section 12.3.2 shall not be unreasonably withheld or delayed.

12.3.3 Effect; Effective Date. Upon (i) delivery to the Agent of an assignment,
together with any consents required by Sections 12.3.1 and 12.3.2, and
(ii) payment of a $3,500 fee to the Agent (payable by a party other than a Loan
Party) for processing such assignment (unless such fee is waived by the Agent),
such assignment shall become effective on the effective date specified in such
assignment. The assignment shall contain a representation by the Purchaser to
the effect that none of the consideration used to make the purchase of the
Commitment and Outstanding Credit Exposure under the applicable assignment
agreement constitutes “plan assets” as defined under ERISA and that the rights
and interests of the Purchaser in and under the Loan Documents will not be “plan
assets” under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by or on behalf of the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party thereto, and the transferor Lender shall
be released with respect to the Commitment and Outstanding Credit Exposure
assigned to such Purchaser without any further consent or action by the
Borrower, the Lenders or the Agent. In the case of an assignment covering all of
the assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a Lender hereunder but shall continue to be entitled to the
benefits of, and subject to, those provisions of this Agreement and the other
Loan Documents which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 12.3
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 12.2.
Upon the consummation of any assignment to a Purchaser pursuant to this
Section 12.3.3, the transferor Lender, the Agent and the Borrower shall, if the
transferor Lender or the Purchaser desires that its Loans be evidenced by Notes,
make appropriate arrangements so that new Notes or, as appropriate, replacement
Notes are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their respective Commitments, as adjusted pursuant to such
assignment.

12.3.4 Register. The Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Louisville, Kentucky a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the

 

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Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

12.4 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a “Transferee”) and any
prospective Transferee any and all information in such Lender’s possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this
Agreement.

12.5 Tax Treatment. If any interest in any Loan Document is transferred to any
Transferee which is not incorporated under the laws of the United States or any
State thereof, the transferor Lender shall cause such Transferee, concurrently
with the effectiveness of such transfer, to comply with the provisions of
Section 3.5(iv).

 

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ARTICLE XIII

NOTICES

13.1 Notices. (a) Except as otherwise permitted by Section 2.10 with respect to
borrowing notices, all notices, requests and other communications to any party
hereunder shall be in writing (including electronic transmission, facsimile
transmission or similar writing) and shall be given to such party: in the case
of the Borrower, any other Loan Party, the Lenders, the LC Issuer, the Swing
Line Lender or the Agent, at its address or facsimile number set forth below:

(i) if to the Borrower, to it at 700 Central Avenue, Louisville, Kentucky 40208,
Attention of General Counsel (Telecopy No. (502) 636-4439; Telephone No.
(502) 636-4429);

(ii) if to any Loan Party (other than the Borrower), to it, c/o the Borrower, at
700 Central Avenue, Louisville, Kentucky 40208, Attention of General Counsel
(Telecopy No. (502) 636-4439; Telephone No. (502) 636-4429);

(iii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and
Agency Services Group, 10 South Dearborn, 7th Floor, Chicago, Illinois 60603,
Attention of Awri McKee (Telecopy No. (312) 385-7103),with a copy to JPMorgan
Chase Bank, N.A., 416, West Jefferson Street, Louisville, Kentucky 40202
Attention of H. Joseph Brenner (Telecopy No. (502) 566-2789);

(iii) if to the LC Issuer, to it at PNC Bank, National Association, 500 West
Jefferson Street, Louisville, Kentucky 40202, Attention of Shelly Stephenson
(Telecopy No. (502) 581-3355);

(iv) if to the Swing Line Lender, to it at PNC Bank, National Association, 500
West Jefferson Street, Louisville, Kentucky 40202, Attention of Shelly
Stephenson (Telecopy No. (502) 581-3355); and

(v) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.

(b) Each such notice, request or other communication shall be effective (i) if
given by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, (ii) if given
by mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered (or, in the case of electronic transmission, received) at
the address specified in this Section; provided that notices to the Agent under
Article II shall not be effective until received.

13.2 Change of Address. The Borrower, any other Loan Party, the Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS; INTEGRATION; EFFECTIVENESS

This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. Except as
provided in Article IV, this Agreement shall become effective when it shall have
been executed by the Borrower, the Agent, the Collateral Agent, the LC Issuer,

 

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the Lenders and the Departing Lenders and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
such parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
COMMONWEALTH OF KENTUCKY, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.

15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR COMMONWEALTH OF
KENTUCKY COURT SITTING IN LOUISVILLE, KENTUCKY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE COLLATERAL AGENT, THE LC
ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE LC ISSUER
OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN
A COURT IN LOUISVILLE, KENTUCKY.

15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE LC ISSUER AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

[THE BALANCE OF THIS PAGE IS BLANK

AND SIGNATURES BEGIN ON THE FOLLOWING PAGE.]

 

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IN WITNESS WHEREOF, the Borrower, the Guarantors, the Lenders, the Departing
Lenders, the LC Issuer, the Collateral Agent and the Agent have executed this
Agreement as of the date first above written.

 

CHURCHILL DOWNS INCORPORATED By:   /s/ Michael W. Anderson Name:   Michael W.
Anderson Title:   Treasurer GUARANTORS: CHURCHILL DOWNS MANAGEMENT COMPANY, LLC,
as a Guarantor By   /s/ William E. Mudd   Name: William E. Mudd   Title:
Treasurer CHURCHILL DOWNS INVESTMENT COMPANY, as a Guarantor By   /s/ Michael W.
Anderson   Name: Michael W. Anderson   Title: Treasurer CHURCHILL DOWNS
SIMULCAST PRODUCTIONS, LLC, as a Guarantor By   /s/ Michael W. Anderson   Name:
Michael W. Anderson   Title: Treasurer CHARLSON INDUSTRIES, INC., as a Guarantor
By   /s/ Michael W. Anderson   Name: Michael W. Anderson   Title: Treasurer
CALDER RACE COURSE, INC., as a Guarantor By   /s/ William E. Mudd   Name:
William E. Mudd   Title: Treasurer

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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TROPICAL PARK, INC., as a Guarantor By   /s/ Michael W. Anderson   Name: Michael
W. Anderson   Title: Treasurer ARLINGTON PARK RACECOURSE, LLC, as a Guarantor By
  /s/ Michael W. Anderson   Name: Michael W. Anderson   Title: Treasurer
ARLINGTON OTB CORP., as a Guarantor By   /s/ Rebecca C. Reed   Name: Rebecca C.
Reed   Title: Secretary QUAD CITY DOWNS, INC., as a Guarantor By   /s/ Rebecca
C. Reed   Name: Rebecca C. Reed   Title: Treasurer CHURCHILL DOWNS LOUISIANA
HORSERACING COMPANY, L.L.C., as a Guarantor By   /s/ Michael W. Anderson   Name:
Michael W. Anderson   Title: Treasurer CHURCHILL DOWNS LOUISIANA VIDEO POKER
COMPANY, L.L.C., as a Guarantor By   /s/ Michael W. Anderson   Name: Michael W.
Anderson   Title: Treasurer

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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VIDEO SERVICES, INC., as a Guarantor By   /s/ Michael W. Anderson   Name:
Michael W. Anderson   Title: Treasurer CHURCHILL DOWNS TECHNOLOGY INITIATIVES
COMPANY, as a Guarantor By   /s/ Bradley K. Blackwell   Name: Bradley K.
Blackwell   Title: Vice President and Secretary CHURCHILL DOWNS ENTERTAINMENT
GROUP, LLC, as a Guarantor By   /s/ William E. Mudd   Name: William E. Mudd  
Title: Treasurer

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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JPMORGAN CHASE BANK, N.A.,

individually as a Lender, as Administrative Agent and as Collateral Agent

By:   /s/ [ILLEGIBLE] Name:   Title:  

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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PNC BANK, NATIONAL ASSOCIATION,

individually as a Lender, as Swing Line Lender, as LC Issuer and as Syndication
Agent

By:   /s/ Shelly B. Stephenson Name:   Shelly B. Stephenson Title:   Vice
President

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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FIFTH THIRD BANK, individually as a Lender and as a Documentation Agent By:  
/s/ David O’ Neal Name:   David O’ Neal Title:   Vice President

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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U.S. BANK, NATIONAL ASSOCIATION, individually as a Lender and as a Documentation
Agent By:   /s/ Joseph C. Hensley Name:   Joseph C. Hensley Title:   Vice
President

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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WELLS FARGO BANK, NATIONAL ASSOCIATION, individually as a Lender and as a
Documentation Agent By:   /s/ Bryan Hulter Name:   Bryan Hulter Title:   SVP

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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BRANCH BANKING AND TRUST COMPANY, as a Lender By:   /s/ Johnny L. Perry Name:  
Johnny L. Perry Title:   Senior Vice President

 

Signature Page to

Second Amended and Restated Credit Agreement

Churchill Downs Incorporated et al

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COMMITMENT SCHEDULE

 

LENDER

   COMMITMENT

JPMORGAN CHASE BANK, N.A.

   $ 55,000,000

PNC BANK, NATIONAL ASSOCIATION

   $ 55,000,000

FIFTH THIRD BANK

   $ 40,000,000

U.S. BANK, NATIONAL ASSOCIATION

   $ 40,000,000

WELLS FARGO BANK, NATIONAL ASSOCIATION

   $ 40,000,000

BRANCH BANKING AND TRUST COMPANY

   $ 45,000,000

AGGREGATE COMMITMENT

   $ 275,000,000

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PRICING SCHEDULE

 

APPLICABLE MARGIN

   LEVEL I
STATUS     LEVEL II
STATUS     LEVEL III
STATUS     LEVEL IV
STATUS     LEVEL V
STATUS     LEVEL VI
STATUS     LEVEL VII
STATUS  

Eurodollar Rate

   2.00 %    2.25 %    2.50 %    2.75 %    3.00 %    3.25 %    3.50 % 

Floating Rate

   1.00 %    1.25 %    1.50 %    1.75 %    2.00 %    2.25 %    2.50 % 

APPLICABLE FEE RATE

   LEVEL I
STATUS     LEVEL II
STATUS     LEVEL III
STATUS     LEVEL IV
STATUS     LEVEL V
STATUS     LEVEL VI
STATUS     LEVEL VII
STATUS  

Commitment Fee

   0.30 %    0.35 %    0.40 %    0.45 %    0.50 %    0.50 %    0.50 % 

For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

“Financials” means the annual or quarterly financial statements of the Borrower
delivered pursuant to Section 6.1(i) or (ii).

“Level I Status” exists at any date if, as of the last day of the fiscal quarter
of the Borrower referred to in the most recent Financials, the Leverage Ratio is
less than 1.00 to 1.00.

“Level II Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is
greater than or equal to 1.00 to 1.00 and less than 1.50 to 1.00.

“Level III Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status or Level II Status and (ii) the
Leverage Ratio is greater than or equal to 1.50 to 1.00 and less than 2.00 to
1.00.

“Level IV Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status, Level II Status or Level III
Status and (ii) the Leverage Ratio is greater than or equal to 2.00 to 1.00 and
less than 2.50 to 1.00.

“Level V Status” exists at any date if, as of the last day of the fiscal quarter
of the Borrower referred to in the most recent Financials, (i) the Borrower has
not qualified for Level I Status, Level II Status, Level III Status or Level IV
Status and (ii) the Leverage Ratio is greater than or equal to 2.50 to 1.00 and
less than 3.00 to 1.00.

--------------------------------------------------------------------------------

“Level VI Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status, Level II Status, Level III
Status, Level IV Status or Level V Status and (ii) the Leverage Ratio is greater
than or equal to 3.00 to 1.00 and less than 3.25 to 1.00.

“Level VII Status” exists at any date if the Borrower has not qualified for
Level I Status, Level II Status, Level III Status, Level IV Status, Level V
Status or Level VI Status.

“Status” means either Level I Status, Level II Status, Level III Status, Level
IV Status, Level V Status, Level VI Status and Level VII Status.

If at any time the Borrower fails to deliver the Financials to the Agent on or
before the date such statements or certificates are due, Level VII Status shall
be deemed applicable for the period commencing five (5) business days after such
required date of delivery and ending on the date which is five (5) business days
after such statements or certificates are actually delivered, after which the
Status shall be determined in accordance with the table above as applicable.

Except as otherwise provided in the paragraph below, adjustments, if any, to the
Status then in effect shall be effective five (5) business days after the Agent
has received the applicable financial statements and certificates (it being
understood and agreed that each change in Status shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change).

Notwithstanding the foregoing, Level III Status shall be deemed to be applicable
until the Agent’s receipt of the applicable financial statements for the
Borrower’s fiscal quarter ending on or about March 31, 2010 (unless such
financial statements demonstrate that Level IV, V, VI or VII Status should have
been applicable during such period, in which case such other Status shall be
deemed to be applicable during such period) and adjustments to the Status then
in effect shall thereafter be effected in accordance with the preceding
paragraphs.

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EXHIBIT A

BORROWER’S COUNSEL OPINION REQUIREMENTS

December 22, 2009

To the Lenders, the Agent

and the Collateral Agent Referred to Below

c/o JPMorgan Chase Bank, N.A.,

as Agent and Collateral Agent

10 South Dearborn Street

Chicago, Illinois 60670

 

  Re: Second Amended and Restated Credit Agreement dated as of December 22,
2009, among Churchill Downs Incorporated, Arlington OTB Corp., Arlington Park
Racecourse, LLC, Calder Race Course, Inc., Charlson Industries, Inc., Churchill
Downs Entertainment Group, LLC, Churchill Downs Investment Company, Churchill
Downs Louisiana Horseracing Company, L.L.C., Churchill Downs Louisiana Video
Poker Company, L.L.C., Churchill Downs Management Company, LLC, Churchill Downs
Simulcast Productions, LLC, Churchill Downs Technology Initiatives Company, Quad
City Downs, Inc., Tropical Park, Inc., Video Services, Inc., the banks and other
financial institutions identified in the Credit Agreement as Lenders and
JPMorgan Chase Bank, N.A., as Agent and Collateral Agent

Ladies and Gentlemen:

We have acted as counsel to Churchill Downs Incorporated, a Kentucky corporation
(“Borrower”), Arlington OTB Corp., a Delaware corporation (“AOTBC”), Arlington
Park Racecourse, LLC, an Illinois limited liability company (“APR”), Calder Race
Course, Inc., a Florida corporation (“Calder”), Charlson Industries, Inc., an
Ohio corporation (“CII”), Churchill Downs Entertainment Group, LLC, a Delaware
limited liability company (“CDEG”), Churchill Downs Investment Company, a
Kentucky corporation (“CDIC”), Churchill Downs Louisiana Horseracing Company,
L.L.C., a Louisiana limited liability company (“CDLHC”), Churchill Downs
Louisiana Video Poker Company, L.L.C., a Louisiana limited liability company
(“CDLVPC”), Churchill Downs Management Company, LLC, a Kentucky limited
liability company (“CDMC”), Churchill Downs Simulcast Productions, LLC, a
Kentucky limited liability company (“CDSP”), Churchill Downs Technology
Initiatives Company, a Delaware corporation (“CDTIC”), Quad City Downs, Inc., an
Iowa corporation (“Quad City”), Tropical Park, Inc., a Florida corporation
(“Tropical”) and Video Services, Inc., a Louisiana corporation (“VSI”; and with
AOTBC, APR, Calder, CII, CDEG, CDIC, CDLHC, CDLVPC, CDMC, CDSP, CDTIC,

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Quad City, Tropical and VSI, each a “Guarantor” and collectively the
“Guarantors”), in connection with the execution and delivery of that certain
Second Amended and Restated Credit Agreement of even date herewith (the “Credit
Agreement”) among Borrower, the Guarantors, the banks and other financial
institutions identified in the Credit Agreement as Lenders, the LC Issuer (as
defined in the Credit Agreement), the Collateral Agent (as defined in the Credit
Agreement) and the Agent (as defined in the Credit Agreement) together with the
schedules and exhibits to the Credit Agreement. This opinion (the “Opinion”) is
being delivered to you at the direction of the Borrower in satisfaction of the
condition set forth in Section 4.1(i)(e) of the Credit Agreement. Terms defined
in the Credit Agreement are used in this Opinion with the same meanings unless
otherwise provided.

 

I. Documents Reviewed and Defined Terms.

In our capacity as counsel to the Loan Parties, we have reviewed copies of the
following documents, all of which are dated as of the date of this Opinion
unless otherwise noted:

1. Credit Agreement;

2. Guaranty;

3. Pledge and Security Agreement;

4. Confirmatory Grant of Security Interest in United States Copyrights (the
“Churchill Copyright Grant”) by and from the Borrower in favor of the Collateral
Agent;

5. Confirmatory Grant of Security Interest in United States Patents (the
“Churchill Patent Grant”) by and from the Borrower in favor of the Collateral
Agent;

6. Confirmatory Grant of Security Interest in United States Trademarks (the
“Churchill Trademark Grant”) by and from the Borrower in favor of the Collateral
Agent;

7. Confirmatory Grant of Security Interest in United States Patents (the “CDTIC
Patent Grant”) by and from CDTIC in favor of the Collateral Agent;

8. Confirmatory Grant of Security Interest in United States Trademarks (the
“CDTIC Trademark Grant”) by and from CDTIC in favor of the Collateral Agent;

9. Confirmatory Grant of Security Interest in United States Trademarks (the “APR
Trademark Grant”) by and from APR in favor of the Collateral Agent;

10. Confirmatory Grant of Security Interest in United States Trademarks (the
“CDLHC Trademark Grant”) by and from CDLHC in favor of the Collateral Agent;

11. UCC Financing Statement (the “Borrower Financing Statement”) naming the
Borrower as Debtor and the Collateral Agent as the Secured Party for filing in
the Office of the Kentucky Secretary of State (the “Kentucky Secretary of
State’s Office”);

--------------------------------------------------------------------------------

12. UCC Financing Statement (the “AOTBC Financing Statement”) naming AOTBC as
Debtor and the Collateral Agent as the Secured Party for filing in the Office of
the Delaware Secretary of State (the “Delaware Secretary of State’s Office”);

13. UCC Financing Statement (the “APR Financing Statement”) naming APR as Debtor
and the Collateral Agent as the Secured Party for filing in the Office of the
Illinois Secretary of State;

14. UCC Financing Statement (the “Calder Financing Statement”) naming Calder as
Debtor and the Collateral Agent as the Secured Party for filing in the Office of
the Florida Secretary of State (the “Florida Secretary of State’s Office”);

15. UCC Financing Statement (the “CDEG Financing Statement”) naming CDEG as
Debtor and the Collateral Agent as the Secured Party for filing in the Delaware
Secretary of State’s Office;

16. UCC Financing Statement (the “CDIC Financing Statement”) naming CDIC as
Debtor and the Collateral Agent as the Secured Party for filing in the Kentucky
Secretary of State’s Office;

17. UCC Financing Statement (the “CDLHC Financing Statement”) naming CDLHC as
Debtor and the Collateral Agent as the Secured Party for filing in the Office of
the Louisiana Secretary of State (the “Louisiana Secretary of State’s Office”);

18. UCC Financing Statement (the “CDLVPC Financing Statement”) naming CDLVPC as
Debtor and the Collateral Agent as the Secured Party for filing in the Louisiana
Secretary of State’s Office;

19. UCC Financing Statement (the “CDMC Financing Statement”) naming CDMC as
Debtor and the Collateral Agent as the Secured Party for filing in the Kentucky
Secretary of State’s Office;

20. UCC Financing Statement (the “CDTIC Financing Statement”) naming CDTIC as
Debtor and the Collateral Agent as the Secured Party for filing in the Delaware
Secretary of State’s Office;

21. UCC Financing Statement (the “Quad City Financing Statement”) naming Quad
City as Debtor and the Collateral Agent as the Secured Party for filing in the
Office of the Iowa Secretary of State;

22. UCC Financing Statement (the “Tropical Financing Statement”) naming Tropical
as Debtor and the Collateral Agent as the Secured Party for filing in the
Florida Secretary of State’s Office;

--------------------------------------------------------------------------------

23. UCC Financing Statement (the “VSI Financing Statement” and with the Borrower
Financing Statement, the AOTBC Financing Statement, the APR Financing Statement,
the Calder Financing Statement, the CDEG Financing Statement, the CDIC Financing
Statement, the CDLHC Financing Statement, the CDLVPC Financing Statement, the
CDMC Financing Statement, the CDTIC Financing Statement, the Quad City Financing
Statement and the Tropical Financing Statement each a “Financing Statement” and
collectively, the “Financing Statements”) naming VSI as Debtor and the
Collateral Agent as the Secured Party for filing in the Louisiana Secretary of
State’s Office;

24. General Reaffirmation and Modification Agreement by and among the Loan
Parties and the Collateral Agent (the “Reaffirmation”); and

25. Notes made by the Borrower to the Lenders receiving Notes (the “Notes”);

The foregoing items 1 through 25, inclusive, are referred to in this Opinion
collectively as the “Loan Documents”. The term “Collateral” refers to the
Borrower’s and the Guarantors’ personal property described as collateral in the
Pledge and Security Agreement and the term “UCC Collateral” refers to the items
and types of Collateral in which a security interest can be created under
Article 9 of the Uniform Commercial Code as presently in effect in the
(i) Commonwealth of Kentucky, KRS 355.9-101 et seq. (the “Kentucky UCC”) and
(ii) State of Delaware, 6 Del. C. 9-101 et seq. (the “Delaware UCC”). Terms that
are defined in the Kentucky UCC are used with the same meanings in this Opinion
unless otherwise specified or unless the context otherwise requires. References
in this Opinion to “KRS” shall mean the Kentucky Revised Statutes as in effect
on the date of this Opinion.

We have also examined and are familiar with executed originals or certified
copies of (i) the Borrower’s, AOTBC’s, CDIC’s and CDTIC’s articles or
certificate of incorporation and bylaws (each as certified by an officer of the
Borrower, AOTBC, CDIC or CDTIC, as applicable, to be currently in full force and
effect), (ii) CDEG’s, CDMC’s and CDSP’s certificates of formation and operating
agreements (each as certified by an officer of CDEG, CDMC or CDSP, as
applicable), (iii) a Certificate of Existence for the Borrower, CDIC, CDMC and
CDSP issued by Office of the Secretary of State of Kentucky (the “Secretary of
State’s Office”), (iv) Certificates of Good Standing for AOTBC, CDEG and CDTIC
issued by the Delaware Secretary of State’s Office and (v) resolutions of the
governing body of the Borrower, AOTBC, CDEG, CDIC, CDMC, CDSP and CDTIC (each an
“Opinion Party” and collectively, the “Opinion Parties”) relating to the
authorization, execution and delivery of the Loan Documents and the consummation
of the transactions described in the Credit Agreement (each as certified by an
officer of each Opinion Party, as applicable, to be currently in full force and
effect).

 

II. Assumptions.

We have made no independent investigation as to factual matters, except as
expressly stated in this Opinion. We use the terms “to our knowledge,” “to the
best of our knowledge,” “as known to us,” “as far as we know,” and similar terms
to indicate that we have not made any inquiry or investigation into factual
matters, and that our opinions are therefore limited in scope and based

--------------------------------------------------------------------------------

solely on the actual knowledge of David E. Saffer, Barry A. Hines and Robert B.
Vice, Jr., the only attorneys in our firm who have been actively involved in the
review of the Loan Documents and the preparation of this Opinion. With respect
to factual matters, and without independent investigation, we have relied upon
and assumed the accuracy and completeness of (i) certificates and other
documents obtained from public officials, (ii) certificates of officers of the
Opinion Parties, (iii) the representations and warranties of the Loan Parties
contained in the Loan Documents and (iv) such other documents, corporate
records, certificates and other instruments as in our judgment are necessary or
appropriate to enable us to render this Opinion.

We have assumed the legal capacity of all individuals, the genuineness of all
signatures other than those of representatives of the Loan Parties, the
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as certified, photostatic, or
conformed copies and the authenticity of the originals of such documents. We
also have assumed the due authorization of all documents to be delivered by all
Persons other than the Opinion Parties, the execution and delivery of all
documents to be delivered by all Persons other than the Loan Parties and the
validity and binding effect of those documents with respect to any such Person
other than the Loan Parties.

In rendering our opinions, we have, with your permission, made and relied on the
following additional assumptions:

(a) The parties will enforce the Loan Documents in accordance with their terms;
all parties thereto have acted, and will at all times act, equitably, in good
faith, without chicanery, in a commercially reasonable manner, and in compliance
with all applicable laws and regulations.

(b) There are no other agreements, understandings or negotiations among the
parties that would modify the terms of the Loan Documents.

(c) All exhibits and schedules have been properly attached to the Loan
Documents.

(d) Each Financing Statement will be properly filed and indexed in the
applicable filing office, and all applicable fees payable in connection with
such filing will be paid.

(e) Each Financing Statement states the correct name and address of the
Collateral Agent.

(f) The Collateral Agent is in possession of the (i) certificates evidencing the
shares of stock of (a) CDIC (the “CDIC Certificated Pledge Shares”), (b) AOTB
(the “AOTBC Certificated Pledged Shares”), (c) CDTIC (the “CDTIC Certificated
Pledged Shares”) and (d) Keeneland Association (the “Keeneland Certificated
Pledged Shares”) described on the Pledged Securities Schedule and
(ii) accompanying properly executed stock power(s) for the (a) CDIC Certificated
Pledged Shares, (b) the AOTBC Certificated Pledged Shares, (c) the CDTIC
Certificated Pledged Shares, (d) the Keeneland Certificated Pledged Shares and
(e) certificates evidencing the shares of stock of VSI.

--------------------------------------------------------------------------------

III. Opinions.

Based on the foregoing, and subject to the limitations and qualifications set
forth herein, it is our opinion that:

1. Borrower and CDIC are each corporations validly existing under the laws of
the Commonwealth of Kentucky (“Kentucky”), and based upon certificates dated
December 14, 2009, obtained from the Secretary of State’s Office, each has paid
all fees due and owing to the Secretary of State’s Office, has delivered to the
Secretary of State’s Office such Person’s most recent annual report as required
by KRS 271B.16-220, and has not filed articles of dissolution.

2. CDMC and CDSP are each limited liability companies validly existing under the
laws of Kentucky, and based upon certificates dated December 14, 2009, obtained
from the Secretary of State’s Office, each has paid all fees due and owing to
the Secretary of State’s Office, has delivered to the Secretary of State’s
Office such Person’s most recent annual report as required by KRS 271B.16-220,
and has not filed articles of dissolution.

3. AOTBC and CDTIC are each corporations validly existing, and based on
certificates dated December 14, 2009, obtained from the Delaware Secretary of
State’s Office, in good standing under the laws of the State of Delaware
(“Delaware”).

4. CDEG is a limited liability company validly existing, and based on a
certificate dated December 14, 2009, obtained from the Delaware Secretary of
State’s Office, in good standing under the laws of the Delaware.

5. Each of the Opinion Parties has the requisite corporate or limited liability
company power and authority to execute and deliver the Loan Documents to which
such Person is a party and perform its respective obligations thereunder.

6. Each of the Opinion Parties has taken all necessary corporate or limited
liability company action to authorize the execution and delivery of the Loan
Documents to which such Person is a party and the performance of such Person’s
obligations thereunder. The Loan Documents to which each Loan Party is a party
have been duly executed and delivered by each such Loan Party.

7. The Loan Documents to which each Loan Party is a party constitute valid and
binding obligations of each such Loan Party, enforceable against each such Loan
Party in accordance with their respective terms.

8. No consent, approval, authorization or other action by, or filing with, any
non-judicial governmental agency or instrumentality of Kentucky or the United
States of America (“Governmental Authority”) is required for each Opinion
Party’s execution and delivery of the Loan Documents and the performance of such
Person’s obligations under such Loan Documents, except for (i) those already
obtained and (ii) any recordations and filings that may be necessary to perfect
the security interests granted by an Opinion Party.

--------------------------------------------------------------------------------

9. The execution and delivery of the Loan Documents by the Opinion Parties, the
performance by the Opinion Parties of their respective obligations under the
Loan Documents and the exercise by the Opinion Parties of the rights created by
the Loan Documents (i) will not violate (a) any applicable law or regulation of
Kentucky or the United States of America, (b) the articles of incorporation or
formation, operating agreements or bylaws, as applicable, of the Opinion Parties
or (c) any order of any Governmental Authority that we know to be binding on any
Opinion Party, (ii) will not conflict with, violate or result in a default under
any indenture, mortgage, agreement for borrowed money or other material
agreement of any Loan Party of which we have knowledge and (iii) to our
knowledge, will not result in the creation or imposition of any Lien on any
asset of any Opinion Party other than the Liens created pursuant to the Loan
Documents.

10. The Borrower is the record owner of the issued membership interests of CDEG.
The issued membership interest of CDEG have been duly and validly issued.

11. The AOTBC Financing Statement, the CDEG Financing Statement, and the CDTIC
Financing Statement to be filed against AOTBC, CDEG and CDTIC are each in
appropriate form for filing in the Delaware Secretary of State’s Office.

12. The Churchill Financing Statement, the CDIC Financing Statement, and the
CDMC Financing Statement, are each in appropriate form for filing in the
Kentucky Secretary of State’s Office.

13. The Pledge and Security Agreement is effective to create in favor of the
Collateral Agent, for the benefit of the Lenders and the other holders of
Secured Obligations, a security interest in all of each Opinion Party’s right,
title and interest in the Collateral. Upon the such filing of the Financing
Statements, the Collateral Agent’s security interest, for the benefit of the
Lenders and the other holders of Secured Obligations, in the UCC Collateral of
each Opinion Party will be perfected, to the extent that a security interest in
such collateral can be perfected by the filing of financing statements under the
Kentucky UCC and the Delaware UCC.

14. Assuming the Collateral Agent remains in possession of certificates
representing the Pledged Securities (as defined in the Pledge and Security
Agreement) listed in the Pledged Securities Schedule, which is attached to and
made a part of this Opinion (the “Certificated Pledged Shares”), and the proper
endorsement to the Collateral Agent (or an endorsement in blank), and assuming
the continued sole possession by the Collateral Agent of such Certificated
Pledged Shares in Kentucky, the security interest created in favor of the
Collateral Agent under the Pledge and Security Agreement constitutes a valid and
enforceable perfected security interest in such Certificated Pledged Shares (and
the proceeds thereof) in favor of the Collateral Agent under the Pledge and
Security Agreement. Upon delivery to the Collateral Agent of the Certificated
Pledged Shares endorsed to the Collateral Agent or endorsed in blank by an
effective endorsement and assuming neither the Agent, the Collateral Agent nor
any Lender has notice of any adverse claim to such Certificated Pledged Shares,
the Collateral Agent will be a “protected purchaser” of such Certificated
Pledged Shares (within the meaning of Section 8-303 of the UCC) and will acquire
its interest in such Certificated Pledged Shares free of any adverse claim.

--------------------------------------------------------------------------------

To the extent that the Collateral Agent has sole possession of the Certificated
Pledged Shares as described above, no filings, registrations or recordings are
required to perfect (or maintain the perfection of) the security interest
created under the Pledge and Security Agreement in respect of such Certificated
Pledged Shares. No filing or other action, other than the filing of the
Financing Statements described in paragraphs 11 and 12 above, is required to
perfect the Liens in the Collateral of the Opinion Parties created under the
Pledge and Security Agreement except (i) proper steps to obtain “control” as
defined in Article 9 of the UCC) may be required to perfect any security
interests in Deposit Accounts (as defined in the Pledge and Security Agreement),
(ii) providing a more particularized description of “Commercial Tort Claims” (as
defined in the Pledge and Security Agreement) (if any exist or come to exist),
and (iii) taking appropriate steps to note Liens on any certificates of title
issued in connection with any Goods (as defined in the Pledge and Security
Agreement).

15. No recording, filing, stamp, transfer, privilege, intangibles or other tax
must be paid in connection with the execution, delivery and recordation of the
Churchill Financing Statement, the AOTBC Financing Statement, the CDEG Financing
Statement, the CDIC Financing Statement, the CDMC Financing Statement or the
CDTIC Financing Statement except nominal recording and filing fees payable to,
as applicable, the Delaware Secretary of State’s Office and the Kentucky
Secretary of State’s Office.

16. The payment by the Borrower and receipt by the Agent, for the benefit of the
Lenders and the other holders of Secured Obligations, of all principal and
interest required to be paid pursuant to the terms of the Credit Agreement and
any Notes, will not violate the usury laws of Kentucky.

17. The lending of money by Lenders under the Loan Documents and the Collateral
Agent’s enforcement, for the benefit of the Lenders, of the Collateral Agent’s
rights under the Loan Documents in Kentucky shall not, solely on that account,
cause the Collateral Agent or Lenders to be deemed to be doing business in
Kentucky.

18. None of the transactions contemplated by the Loan Documents, including,
without limitation, the use of the proceeds of the Loans provided for in the
Loan Documents, will violate or result in a violation of regulations T, U or X
of the Board of Governors of the Federal Reserve System.

19. No Opinion Party is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.

 

IV. Confirmations.

Based solely on (i) certificates of officers of each Opinion Party and
(ii) examination of records maintained in the offices of the Clerks of the
Jefferson County, Kentucky Circuit Court and of the United States District Court
for the Western District of Kentucky (in Louisville) and without further
investigation or inquiry, we confirm that we have no knowledge of any actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending or, to our knowledge, threatened in writing, against any Opinion Party
(i) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected to have a
Material Adverse Effect or (ii) that involve any Loan Document.

--------------------------------------------------------------------------------

V. Qualifications.

Our opinions are limited by and subject to the following:

(a) Our opinions are based solely upon the laws of Kentucky and the General
Corporation Law of the State of Delaware. To the extent that our opinions set
forth in paragraphs 11, 12, 13 and 14 of this Opinion are governed by the laws
of any state other than Kentucky, such opinions are based solely on our review
of the text of the UCC in effect in such states as set forth in the generally
available compilation of the UCC published by Commerce Clearing House, Inc.
(without reference to matters of judicial interpretation). We express no opinion
concerning the laws of any other jurisdiction or whether such laws may apply,
under a conflict of laws analysis or otherwise.

(b) Our opinions are subject to the effects of applicable bankruptcy,
insolvency, reorganization, receivership, liquidation, conservatorship,
reorganization, moratorium and other federal or state laws or constitutions in
effect from time to time affecting the rights and remedies of creditors
generally, including, without limitation, fraudulent conveyance laws,
preferential conveyance laws and judicially developed doctrines relevant to any
of the foregoing laws.

(c) Our opinions are also subject to general principles of equity (whether
considered in a proceeding in equity or at law), including, without limitation,
equitable defenses, limitations on the availability of equitable remedies, and
concepts of materiality, reasonableness, unconscionability, good faith and fair
dealing, and similar doctrines affecting the enforceability of agreements
generally.

(d) Certain agreements, rights, remedies, indemnities, waivers and other
provisions of the Loan Documents may not be enforceable strictly in accordance
with their terms, and may be limited by applicable laws, rules, regulations,
court decisions, public policies and constitutional requirements, but the
inclusion of such agreements, rights, remedies, indemnities, waivers and other
provisions, and the application of such limitations will not, in our judgment
(i) render the Loan Documents invalid as a whole, (ii) impair the Agent’s or the
Collateral Agent’s rights, on behalf of the Lenders and the other holders of
Secured Obligations, to accelerate and demand payment of the unpaid principal of
the Loans upon the occurrence of a legally enforceable default or (iii) preclude
enforcement of such obligations through normal legal proceedings, including
proceedings to enforce the liens. Without limiting the generality of the
foregoing, we express no opinion as to the enforceability of any provision of
the Loan Documents that purports to (i) require disputes to be resolved by
arbitration or by litigation in any particular court, jurisdiction or venue,
(ii) establish evidentiary standards or restrict access to legal or equitable
remedies, (iii) waive the right to trial by jury, (iv) appoint the Agent, the
Collateral Agent, any Lender or other holders of Secured Obligations as an agent
or attorney-in-fact of any Loan Party or (v) impose on any Loan Party any fees
or costs of obtaining, filing or recording releases or termination statements
following satisfaction of the secured debt.

--------------------------------------------------------------------------------

(e) Pursuant to KRS Section 411.195, any provision in the Loan Documents
purporting to require payment of attorneys’ fees will be enforceable only to the
extent authorized by such statute.

(f) We express no opinion concerning any Opinion Party’s rights in or title to
any of the Collateral, or, except as set forth in paragraph 14 above, as to the
priority of any security interest in or Liens on the Collateral.

(g) We express no opinion as to the creation or validity of any assignment of or
security interest in any Collateral consisting of (i) tort claims except as set
forth in paragraph 14 above, (ii) property that is subject to a statute,
regulation or treaty of the United States that pre-empts in any way the
provisions of the Kentucky UCC or the Delaware UCC, (iii) commodities, commodity
accounts, timber or as-extracted collateral or (iv) property acquired or held
primarily for personal, family or household purposes.

(h) The continued perfection of the security interests perfected by the filing
of the Churchill Financing Statement, the AOTBC Financing Statement, the CDEG
Financing Statement, the CDIC Financing Statement, the CDMC Financing Statement
or the CDTIC Financing Statement will depend upon the filing of periodic
continuation statements in accordance with, as applicable, the Kentucky UCC and
the Delaware UCC.

(i) Except as set forth in opinion number 17 above, we express no opinion as to
matters of usury, interest, late charges, loan charges or loan fees, or as to
any provisions of the Loan Documents relating to any of the foregoing.

(j) We express no opinion as to prepayment penalties, prepayment fees,
yield-maintenance payments, exit fees, early termination fees, prepayment
premiums, defeasance or the like, or as to the enforceability of provisions of
the Loan Documents relating to any of the foregoing.

(k) We call to your attention that the Lenders under the Loan Documents may be
subject to the franchise tax imposed by KRS §136.500, et seq., if any such
Lender were to solicit business with twenty (20) or more Persons in Kentucky or
receive $100,000.00 or more in income attributable to sources in Kentucky in any
tax year as set forth in KRS §136.520.

(l) With respect to our opinion in paragraph 9(ii) above, we express no opinion
as to whether the incurrence of indebtedness by the Borrower under the Loan
Documents might result in the violation of any of the financial covenants set
forth in any of the indentures, instruments or agreements described in paragraph
9(ii).

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(m) We express no opinion as to any matter not specifically stated to be and
numbered as an opinion, and we undertake no obligation to advise you of legal or
factual changes affecting this Opinion that occur after the date of this
Opinion.

This Opinion is being furnished solely for the benefit of the Agent, the
Collateral Agent and the Lenders and their successors and assigns in connection
with the transactions described in the Credit Agreement, and may not be relied
on by any other Person without our express prior written consent. Further,
without our express prior written consent, the opinions expressed in this
Opinion may not be quoted, circulated, assigned or delivered to any other Person
(except that copies hereof may be delivered to the Agent’s, the Collateral
Agent’s and Lenders’ counsel and independent accountants and to regulatory
agencies with authority over the Agent’s, the Collateral Agent’s and the
Lenders’ activities).

Very truly yours,

STITES & HARBISON, PLLC

DES/BAH/RBV

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Pledged Securities Schedule

to

Opinion of Stites & Harbison, PLLC

 

Issuer:

   Certificate
Number:    Number of
Shares:

Churchill Downs Investment Company

      20

Calder Race Course, Inc.

   CD-1    667,440

Tropical Park, Inc.

   CD-11    195

Arlington OTB Corp.

      10

Quad City Downs, Inc.

   42    315,800

Video Services, Inc.

      510A       490B

Churchill Downs Technology Initiatives Company

      100

Charlson Industries, Inc.

   3    111

Keeneland Association

      25

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

 

To: The Lenders Parties to the

  Credit Agreement Described Below

This Compliance Certificate is furnished pursuant to that certain Second Amended
and Restated Credit Agreement dated as December 22, 2009 (as amended, modified,
renewed, restated or extended from time to time, the “Agreement”) among
Churchill Downs Incorporated (the “Borrower”), the Guarantors party thereto, the
Lenders party thereto, and JPMorgan Chase Bank, N.A., as Agent for the Lenders.
Unless otherwise defined herein, capitalized terms used in this Compliance
Certificate and the attached Schedules have the meanings given them in the
Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected                                  of the Borrower;

2. I have reviewed the terms of the Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and the other Loan Parties during the accounting
period covered by the attached financial statements;

3. The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Compliance Certificate, except as set forth below;

4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct;

5. Schedule I Part 3(B) hereto sets forth the Borrower’s determination of the
interest rates to be paid for Advances, the LC Fee rates and the Commitment Fee
rates commencing on the fifth day following the delivery hereof; and

6. Schedule II attached hereto sets forth the various reports and deliveries
which are required at this time under the Agreement, the Collateral Documents
and the other Loan Documents and the status of compliance.

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

     

The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Compliance Certificate in support hereof, are made and delivered
                    , 20    .

--------------------------------------------------------------------------------

CHURCHILL DOWNS INCORPORATED,

a Kentucky corporation

By    

Print Name:    

Title:    

--------------------------------------------------------------------------------

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of                 , 20     (the “Report Date”) with

Provisions of Sections 6.10, 6.12, 6.13, 6.15, 6.18, 6.23, 6.24.1, 6.24.2,
6.24.3, 6.34 and 6.37

of the Agreement

1. Interest Coverage Ratio (Section 6.24.1)

The ratio of (A) Consolidated Adjusted EBITDA to (B) Consolidated Interest
Expense, for the four fiscal quarters ending as of the Report Date is
                     to 1.00 which is not less than 3.50 to 1.00. Such ratio is
computed as follows:

 

(A)   Consolidated Adjusted EBITDA for the four fiscal quarters ending as of the
Report Date.

   $_______________

(B)   Consolidated Interest Expense for four fiscal quarters ending as of the
Report Date.

   $_______________

(C)   Ratio of Item (A) to Item (B) equals Interest Coverage Ratio on the Report
Date.

   _______ to 1.0

2. Leverage Ratio (Section 6.24.2)

The ratio of (A) Consolidated Funded Indebtedness on the Report Date to
(B) Consolidated Adjusted EBITDA for the four fiscal quarters ending on the
Report Date is                  to 1.00, calculated as set forth below in this
Part 2, which is not greater than [3.25 to 1.00]1. Such ratio is computed as
follows:

 

(A)   Consolidated Funded Indebtedness as of the Report Date.

   $_______________

(B)   Consolidated Adjusted EBITDA for the four fiscal quarters ending as of the
Report Date.

   $_______________

(C)   Ratio of amount on Line (A) to amount on Line (B) equals Leverage Ratio.

   _______ to 1.00

3. Pricing Adjustments to Eurodollar Rate, Floating Rate and Commitment Fee
(Pricing Schedule)

 

(A)   The Leverage Ratio on the Report Date equals [take from Part 2(C). above]

   _______ to 1.00

(B)   Adjusted interest rates and Commitment Fee based on the Leverage Ratio in
line (A) [Refer to Credit Agreement attachment for Pricing Schedule of
Applicable Margins and the Applicable Rate]

  

 

      Applicable Margin    Rate (per annum)  

Eurodollar Rate

   ___________    _______  % 

Floating Rate

   ___________    ________  % 

Commitment Fee Rate

   ___________    ________  % 

 

1

Adjust per Section 6.24.2 of the Agreement if Material Greenfield Project has
commenced.

--------------------------------------------------------------------------------

4. Minimum Net Worth (Section 6.24.3).

As of the Report Date, (A) the Consolidated Net Worth is $                ,
which is not less than (B) the base net worth (“Base Net Worth”) which is
$            . Such amounts are computed as follows:

Base Net Worth as of Report Date:

 

(i)     Minimum net worth.

   $ 350,000,000

(ii)    50% of Consolidated Net Income of the Borrower earned in each fiscal
year beginning with the Borrower’s fiscal year ending December 31, 2009.

   $ _______________

(iii)  100% of the proceeds from any public and/or private offering and/or sale
of any common and/or preferred stock and/or other equity security, and/or any
note, debenture or other security convertible, in whole or in part, to common
and/or preferred stock and/or other equity security, net of reasonable expenses,
commissions and fees associated with such sale, from and after the date of the
Agreement2.

   $ _______________

(iv)   Sum of item (i) plus item (ii) plus item (iii) equals the Base Net Worth
as of the Report Date.

   $ _______________

5. Indebtedness (Section 6.10).

  

(A)   Total amount of Indebtedness secured by purchase money security interests
(may not exceed $5,000,000).

   $ _______________

(B)   Capitalized Lease Obligations (may not exceed $10,000,000).

   $ _______________

(C)   Indebtedness to sellers in connection with Permitted Acquisitions
subordinated as required in Section 6.10(vi) (in an aggregate amount may not
exceed $10,000,000).

   $ _______________

(D)   Indebtedness under the Master Plan Bond Transaction (may not exceed
$153,000,000).

   $ _______________

6. Sale of Assets (Section 6.12)

  

(A)   Leases, sales or other dispositions of Property, including Property
previously leased, sold or disposed of during the twelve-month period ending
with the month in which any such lease, sale or other disposition occurs (may
not exceed a Twelve Month Substantial Portion).

   $ _______________

 

2

Provided, that, to the extent that the Borrower makes cash repurchases of its
Equity Interests in any fiscal year of the Borrower, up to $25,000,000 of such
amount expended by the Borrower shall be deducted from the Consolidated Net
Worth that would otherwise be required to be maintained pursuant to the terms of
Section 6.24.3 of the Agreement.

--------------------------------------------------------------------------------

(B)   Leases, sales or other dispositions of Property, including Property
previously leased, sold or disposed of from and after the Closing Date (may not
exceed a Term Substantial Portion).

   $ _______________

7. Investments and Acquisitions (Section 6.13)

  

(A)   Investments in Excluded Entities subject to Section 6.13(ii)(c).

   $ _______________

(B)   Acquisitions of Loan Parties not engaged in a Current Field of Enterprise
subject to Section 6.13(iii)(d)(4).

   $ _______________

(C)   Acquisition of Excluded Entities subject to Section 6.13(iii)(e).

   $ _______________

(D)   Acquisitions subject to Section 6.13(iii)(f)(3).

   $ _______________

(E)   Total of amounts in Part 7(A), (B), (C), and (D) (as aggregated may not
exceed 25% of Consolidated Net Worth).

   $ _______________

8. Rentals (Section 6.18)

  

Obligations for Consolidated Rentals in the aggregate for current fiscal year
(may not exceed $15,000,000 in any one fiscal year).

   $ _______________

9. Off-Balance Sheet Liabilities (Section 6.23)

  

Off-Balance Sheet Liabilities (may not, when aggregated as provided in Section
6.15, exceed $50,000,000).

   $ _______________

10. Contingent Obligations (Section 6.34)

  

Contingent Obligations (prohibited except as provided in Section 6.34, including
guaranties of the obligations of Loan Parties not to exceed $10,000,000 in the
aggregate).

   $ _______________

11. Restricted Payments (Section 6.37)

  

Restricted Payments (prohibited except as provided in Section 6.37, including
the repurchase by the Borrower of its capital stock (not to exceed $75,000,000
during the term of the Agreement) and additional Restricted Payments (not to
exceed $20,000,000 in the aggregate during any fiscal year of the Borrower).

   $ _______________

--------------------------------------------------------------------------------

SCHEDULE II TO COMPLIANCE CERTIFICATE

Reports and Deliveries Currently Due

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Second Amended and Restated Credit Agreement
identified below (as amended, modified, renewed, restated or extended from time
to time, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Terms and Conditions and the
Credit Agreement, as of the Effective Date inserted by the Agent as contemplated
below, the interest in and to all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto that represents the amount and percentage
interest identified below of all of the Assignor’s outstanding rights and
obligations under the respective facilities identified below (including without
limitation any letters of credit, guaranties and swingline loans included in
such facilities and, to the extent permitted to be assigned under applicable
law, all claims (including without limitation contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity),
suits, causes of action and any other right of the Assignor against any Person
whether known or unknown arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby) (the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

 

1.      Assignor:                                              
                                                    

2.      Assignee:                                              
                                                     [and is an
Affiliate/Approved Fund of [identify Lender]3

3.      Borrower(s):                                              
                                                

4.      Agent: JPMorgan Chase Bank, N.A., as the agent under the Credit
Agreement.

5.      Credit Agreement: The $275,000,000 Second Amended and Restated Credit
Agreement dated as of December 22, 2009 among Churchill Downs Incorporated, as
Borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Agent, and
the other agents party thereto.

6.      Assigned Interest:

 

Facility Assigned

   Aggregate Amount of
Commitment/Loans for
all Lenders*    Amount of
Commitment/Loans
Assigned*    Percentage Assigned of
Commitment/Loans4  

____________5

   $      $      _______ % 

____________

   $      $      _______ % 

____________

   $      $      _______ % 

 

3

Select as applicable.

* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

4

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

5

Fill in the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment (e.g. “Revolving Loan
Commitment”, etc.)

--------------------------------------------------------------------------------

7.

Trade Date: ___________________________________________6

Effective Date:                                     , 20__ [TO BE INSERTED BY
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE
AGENT.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:      

Title:

 

ASSIGNEE

[NAME OF ASSIGNEE]

By:      

Title:

 

 

Consented to and Accepted:

 

[NAME OF AGENT], as Agent

By:     Title:  

 

 

[Consented to:]7

 

[NAME OF RELEVANT PARTY]

By:     Title:  

 

6

Insert if satisfaction of minimum amounts is to be determined as of the Trade
Date.

7

To be added only if the consent of the Borrower and/or other parties (e.g.
Swingline Lender, L/C Issuer) is required by the terms of the Credit Agreement.

--------------------------------------------------------------------------------

ANNEX 1

TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby. Neither the Assignor nor any of its officers, directors, employees,
agents or attorneys shall be responsible for (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency, perfection, priority, collectibility, or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document, (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Loan Documents, (v) inspecting any of
the property, books or records of the Borrower, or any Guarantor, or (vi) any
mistake, error of judgment, or action taken or omitted to be taken in connection
with the Loans or the Loan Documents.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are “plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be “plan assets” under ERISA,
(v) agrees to indemnify and hold the Assignor harmless against all losses, costs
and expenses (including, without limitation, reasonable attorneys’ fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee’s non-performance of the obligations assumed under this
Assignment and Assumption, (vi) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Agent or any other Lender, and
(vii) attached as Schedule 1 to this Assignment and Assumption is any
documentation required to be delivered by the Assignee with respect to its tax
status pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee and (b) agrees that (i) it will, independently and
without reliance on the Agent, the Assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. From and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and
to the Assignee for amounts which have accrued from and after the Effective
Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the Commonwealth of Kentucky.

--------------------------------------------------------------------------------

EXHIBIT D

LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

To JPMorgan Chase Bank, N.A.,

as Agent (the “Agent”) under the Credit Agreement

Described Below.

 

Re: Second Amended and Restated Credit Agreement, dated December 22, 2009 (as
amended, modified, renewed, restated or extended from time to time, the “Credit
Agreement”), among Churchill Downs Incorporated (the “Borrower”), the Guarantors
named therein, the Lenders named therein and the Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned thereto
in the Credit Agreement.

The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.16 of the
Credit Agreement.

Facility Identification
Number(s)___________________________________________________________________________

Customer/Account
Name___________________________________________________________________________

Transfer Funds
To___________________________________________________________________________

                                        
___________________________________________________________________________

For Account
No.___________________________________________________________________________

Reference/Attention
To___________________________________________________________________________

 

Authorized Officer (Customer Representative)     Date
______________________________         (Please Print)     Signature Bank Officer
Name     Date ______________________________         (Please Print)    
Signature

(Deliver Completed Form to Credit Support Staff For Immediate Processing)

--------------------------------------------------------------------------------

EXHIBIT E

FORM OF NOTE

NOTE

_____________, 20__

Louisville, Kentucky

Churchill Downs Incorporated, a Kentucky corporation (the “Borrower”), promises
to pay                  (the “Lender”) the aggregate unpaid principal amount of
all Loans made by the Lender to the Borrower pursuant to Article II of the
Agreement (as hereinafter defined), in immediately available funds at the main
office of JPMorgan Chase Bank, N.A., as Agent, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Revolving Loans in full on the Facility Termination Date.

This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Second Amended and Restated Credit Agreement, dated as of
December 22, 2009 among (a) the Borrower, (b) the Guarantors party thereto,
(c) the Lenders party thereto, including the Lender, and (d) JPMorgan Chase
Bank, N.A., as Agent (the “Agent”) (as amended, modified, renewed, restated or
extended from time to time, the “Agreement”) to which Agreement reference is
hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. This Note is secured pursuant to the Collateral
Documents, all as more specifically described in the Agreement, and reference is
made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
given them in the Agreement. A Default under the Agreement is a Default under
this Note.

Failure of the holder of this Note to exercise any of its rights and remedies
shall not constitute a waiver of any provision of this Note or of the Agreement,
the Collateral Documents or any of the other Loan Documents or of any of such
holder’s and/or the Agent’s rights and remedies, nor shall it prevent the holder
from exercising any rights or remedies with respect to the subsequent happening
of the same or similar occurrences. All remedies of the holder hereof shall be
cumulative to the greatest extent permitted by law. Time shall be of the essence
for payment of all payments of interest and principal on this Note.

If there is any Default, or this Note is placed in the hands of an attorney for
collection, or is collected through any court, including any bankruptcy court,
the Borrower promises to pay to the order of the holder hereof such holder’s
reasonable attorneys’ fees and court costs incurred in collecting or attempting
to collect or securing or attempting to secure this Note or enforcing the
holder’s rights with respect to any collateral securing this Note, to the extent
allowed by the laws of the Commonwealth of Kentucky or any state in which any
collateral for this Note is situated.

If the Borrower makes a payment required under this Note ten (10) days or more
late, the Borrower shall be charged five percent (5%) of the regularly scheduled
payment up to a maximum amount of $1,500.00 as a late charge.

This Note has been delivered in, and shall be governed by and construed in
accordance with the laws (including, without limitation, the conflicts of laws
rules) of the Commonwealth of Kentucky.

Revolving Loans may be made from time to time by the Lender to the Borrower in
the manner and subject to the terms and conditions set forth in the Agreement.
As contemplated in Section 2.15(i) of the Agreement, upon the disbursement of
each Revolving Loan, the Lender shall record the making and amount of such Loan
on the Lender’s electronic automated accounting system; and the Lender shall
also record on the Lender’s electronic automated accounting system the payment
by the Borrower of amounts of principal made on this Note. The aggregate amount
of all Revolving Loans made by the Lender, less the amounts of payments of

--------------------------------------------------------------------------------

principal made by the Borrower, shall be the principal amount outstanding under
this Note. The information contained on the Lender’s electronic automated
accounting system and the information maintained by the Agent pursuant to
Section 2.15(ii) of the Agreement shall be prima facie evidence of the unpaid
amount of principal outstanding under this Note.

The Borrower waives presentment, demand, notice of dishonor, protest, notice of
protest, notice of nonpayment or nonacceptance and any other notice and all due
diligence or promptness that may otherwise be required by law (but not any
notice required by the Loan Documents as defined in the Agreement), and all
exemptions to which they may now or hereafter be entitled under the laws of the
Commonwealth of Kentucky, the United States of America or any state thereof. The
holder of this instrument may, whether one or more times, with or without notice
to any party, and without affecting the obligations of any maker, surety,
guarantor, endorser, accommodation party or any other party to this Note
(1) extend the time for payment of either principal or interest from time to
time, (2) release or discharge any one or more parties liable on this Note,
(3) suspend the right to enforce this Note with respect to any persons,
(4) change, exchange or release any Property in which the holder has any lien or
interest securing this Note and (5) justifiably or otherwise, impair any
Collateral securing this Note or suspend the right to enforce against any such
Collateral.

[Signature Page Follows]

--------------------------------------------------------------------------------

CHURCHILL DOWNS, INCORPORATED,

a Kentucky corporation

By      

Name:

Title:

--------------------------------------------------------------------------------

EXHIBIT F

Form of

NOTICE OF ACQUISITION

___________________, 20__

JPMorgan Chase Bank, N.A., Agent

416 W. Jefferson Street

Louisville, Kentucky 40202

Ladies and Gentlemen:

I refer to the Second Amended and Restated Credit Agreement dated as of
December 22, 2009 as it may have been amended, modified, restated and/or
supplemented through the date hereof (the “Credit Agreement”) among Churchill
Downs Incorporated (the “Borrower”), the Guarantors party thereto, the Lenders
party thereto and JPMorgan Chase Bank, N.A., as contractual representative as
Agent for itself and the Lenders as provided therein (the “Agent”). Capitalized
terms used in this Notice and not otherwise defined shall have the meanings
given them in the Credit Agreement.

I, __________________, [President/Chief Executive Officer/Chief Financial
Officer/Treasurer] of the Borrower, do hereby give notice to the Agent, as
required by Section 6.13(iii)(b) of the Credit Agreement, of [Insert Name of
Applicable Loan Party] proposed Acquisition of
                                         or the Property of
                                . Set forth below are the details of the
proposed Acquisition.

[Set forth details of Acquisition acceptable to the Agent and the Required
Lenders, including without limitation the following information:

 

  1. Name of Person to be acquired or from which Property is to be acquired (the
“Target”):                     .

 

  2. Name of Loan Party effecting the Acquisition:                     .

 

  3. Nature of business of Target (describe in detail):                     

                                           
                                                      .

 

  4. The nature of the business of the Target is a Current Field of Enterprise.

    Check One:    ¨  Yes,    ¨   No

 

  [5. Include if appropriate: The Target will be or become a Loan Party.

    A properly executed Guarantor Joinder and appropriate Collateral Documents
signed by the appropriate Loan Parties will be attached to the Acquisition
Compliance Certificate.]

 

  [5. Include if appropriate: The Loan Parties propose that the Target be an
Excluded Entity.]

 

  6. Proposed date of Acquisition:                     , 20__.

 

  7. Other information required by the Agent and the Required Lenders:
                                         
                                                        .]

--------------------------------------------------------------------------------

An Acquisition Compliance Certificate will be provided in accordance with
Section 6.13(iii)(g) on a timely basis.

 

CHURCHILL DOWNS INCORPORATED By     Name:     Title:   [President/Chief
Executive Officer/Chief Financial Officer/Treasurer]

--------------------------------------------------------------------------------

EXHIBIT G

INTENTIONALLY OMITTED

--------------------------------------------------------------------------------

EXHIBIT H

FORM OF INTERCOMPANY SUBORDINATION AGREEMENT

Attached

--------------------------------------------------------------------------------

INTERCOMPANY SUBORDINATION AGREEMENT

This INTERCOMPANY SUBORDINATION AGREEMENT (THIS “AGREEMENT”) is dated as of
April 3, 2003, and is made by the undersigned Loan Parties in favor of Bank One,
Kentucky, NA, as Collateral Agent for itself and all the other Lenders under the
Credit Agreement referred below (the “Collateral Agent”).

RECITALS

A. Pursuant to the Credit Agreement dated as of April 2, 2003 (as it may
hereafter be amended, modified, restated or supplemented from time to time, the
“Credit Agreement”) among Churchill Downs Incorporated (the “Borrower”), the
guarantors party thereto, the Lenders party thereto and the Agent, the Lenders
intend to make certain Loans to Borrower.

B. Each Loan Party (defined in the Credit Agreement) either currently is or may
in the future be indebted to one or more of the other Loan Parties (all such now
existing or hereafter incurred indebtedness, and other amounts payable in
respect thereof, are hereinafter collectively referred to as the “Subordinated
Indebtedness”).

C. The Lenders have entered into that certain Collateral Sharing Agreement,
dated as of April 3, 2003 (the “Collateral Sharing Agreement”) with the
Collateral Agent, the Agent, and the holders of notes issued pursuant to those
certain Note Purchase Agreements, each dated April 3, 2003 (the “Note Holders”).

D. The obligation of the Lenders and the LC Issuer to extend certain Credit
Extensions is subject to the terms of the credit agreement and specifically is
subject to the condition, among others, that each Loan Party subordinate the
Subordinated Indebtedness to any and all Secured Obligations (defined in the
Credit Agreement) pursuant to the Credit Agreement and the other Loan Documents
(such Secured Obligations are herein called the “Senior Debt” in the manner set
forth herein.

NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
covenant and agree as follows:

1. Recitals; Defined Terms; Subordinated Indebtedness Subordinated to Senior
Debt. The Recitals set forth above are hereby incorporated herein by reference.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings given them in the Credit Agreement. All subordinated Indebtedness shall
be subordinate and subject in right of payment to the prior indefeasible payment
in full of all Senior Debt pursuant to the provisions contained herein.

2. Payment Over of Proceeds Upon Dissolution, Etc. Upon any distribution of
assets of any Loan Party in the event of (a) any insolvency or bankruptcy case
or proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to any Loan Party, as such
or to such Loan Party’s assets, or (b) any liquidation, dissolution or other
winding up of any Loan party, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any marshalling of assets and liabilities of any Loan Party, [POST
IT COVERING] Collateral Agent for the benefit of the Lenders shall be [POST IT
COVERING] Lenders indefeasible payment in full of all amounts due [POST IT
COVERING] not a Default has occurred under the terms of the Loan [POST IT
COVERING] been declared due and payable prior to the date on which [POST IT
COVERING] due an payable) on or in respect of any and all Senior [POST IT
COVERING] is entitled to receive any payment on account of the principal [POST
IT COVERING] such Subordinated Indebtedness, and to that end collateral Agent
shall be entitled to receive on behalf of Lenders, for application to the
payment of the Senior Debt in accordance with the terms of the Collateral
Sharing Agreement, any payment or distribution of any kind or character, whether
in cash, property or securities, which may be payable or deliverable in respect
of the Subordinated Indebtedness owed by such Loan Party in any such case,
proceeding, dissolution, liquidation or other winding up or event.

--------------------------------------------------------------------------------

3. No Commencement of any Proceeding. Each Loan Party agrees that, so long as
the Senior Debt shall remain unpaid, it will not commence, or join with any
creditor other than the Agent, the Lenders and the Term Note Purchasers in
commencing, any proceeding including, but not limited to, those described in
Section 2 hereof or any other enforcement action of any kind against another
Loan Party.

4. Prior Payment of Senior Debt Upon Acceleration of Subordinated Indebtedness.
If any portion of the Subordinated indebtedness owed by any Loan Party becomes
or is declared due and payable before its stated maturity, then and in such
event Collateral Agent shall be entitled to receive on behalf of Lenders
indefeasible payment in full of all amount s due and to become due on or in
respect of the Senior Debt (whether or not a Default has occurred under the
terms of the Credit Agreement or the Senior Debt has been declared due and
payable prior to the date on which it would otherwise have become due and
payable) before any other Loan Party is entitled to receive any payment on such
Subordinated Indebtedness; provided, however, the obligor with respect to the
bond (the “Bond”) issued in connection with the Master Plan Bond Transaction may
make prepayments to the holder thereof or cause such Bond to be cancelled
provide that the holder thereof is another Loan Party no Default or Unmatured
Default has occurred and is continuing, and any such prepayment does not result
in an Unmatured Default or Default under the Credit Agreement.

5. No Payment When Senior Debt in Default. If any Unmatured Default or Default
under the Credit Agreement shall have occurred and be continuing or such an
Unmatured Default or Default would result from or exist after giving effect to a
payment with respect to any portion of the Subordinated Indebtedness, unless
Agent shall have consented to or waived the same, so long as any of the Senior
Debt shall remain outstanding, no payment shall be made by any Loan Party on
account of principal or interest on any portion of the Subordinated
Indebtedness.

6. Payment Permitted if No Default. Nothing contained in this Agreement shall
prevent a Loan Party, at any time except during the pendency of any of the
conditions described in Sections 2, 4, and 5 of this Agreement, from making the
regularly scheduled payments of the Subordinated Indebtedness as set forth in
the documentation evidencing the Subordinated Indebtedness, or the retention
thereof by the Loan Party to whom it is due and payable, of any money deposited
with such Loan Party for the regularly scheduled payments of or on account of
the Subordinated Indebtedness; provide, however, without the prior written
consent of Agent, the Loan Parties shall not make, and any Loan Party to whom
such payment is due and payable shall not accept, any payments with respect to
the Subordinated Indebtedness other than the regularly scheduled payments,
except that the obligor with respect to the Bond may make prepayments to the
holder thereof provided that the holder thereof is another Loan Party, no
Default or Unmatured Default has occurred and is continuing, and any such
prepayment does not result in an Unmatured Default or Default under the Credit
Agreement. the Loan Parties agree not to pledge or otherwise grant a Lien on or
with respect to the Bond to any Person. So long as no Default or Unmatured
Default has occurred and is continuing, nothing contained in this Agreement
shall prevent advances of moneys between the Loan Parties to the extent that
such advances are made to effect draws under the Bond.

7. Receipt of Prohibited Payments. If, notwithstanding the foregoing provisions
of Sections 2, 4, 5 and 6 of this Agreement, any Loan Party shall have received
any payment or distribution of assets from another Loan party of any kind or
character (other than payments specifically permitted in Section 2), whether in
cash, property or securities as payment on the Subordinated Indebtedness, then
and in such event such payment or distribution shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other funds and
property held by such Loan Party, and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
endorsement) to be applied (in the case of cash) to or held as Collateral (in
the case of noncash property or securities) for the payment or prepayment of the
Senior Debt in accordance with the terms of the Collateral Sharing Agreement.

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8. Right of Subrogation. Each Loan Party agrees that no payment or distribution
to the Collateral Agent pursuant to the provisions of this Agreement shall
entitle it to exercise any rights of subrogation in respect thereof until the
Senior Debt shall have been indefeasibly paid in full and the Commitments under
the Credit Agreement shall have terminated.

9. Instruments Evidencing Subordinated Indebtedness. Each Loan Party shall cause
each instrument specified by Agent which now or hereafter evidences all or a
portion of the Subordinated Indebtedness to be conspicuously marked as follows:

“This instrument is subject to the terms of an Intercompany Subordination
Agreement dated as of April 3, 2003 in favor of the Collateral Agent named
therein, which Subordination Agreement is incorporated herein by reference.
Notwithstanding any contrary statement contained in the within instrument, no
payment on account of the principal thereof or interest thereon shall become due
or payable except in accordance with the express terms of said Subordination
Agreement.”

Each Loan Party will further mark its books of account in such a manner as shall
be effective to give proper notice to the effect of this Agreement.

10. Agreement Solely to Define Relative Rights. The purpose of this Agreement is
solely to define the relative rights of each Loan Party, on the one hand, and
the Collateral Agent for the benefit of the Lenders, on the other hand. Nothing
contained in this Agreement is intended to or shall impair, as among the Loan
Parties and their creditors other than Agent, any obligation of the Loan Parties
to each other to pay the principal of and interest on the Subordinated
Indebtedness as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights among the
Loan Parties and their creditors other than Agent, nor shall anything herein
prevent the Loan Parties from exercising all remedies otherwise permitted by
applicable law upon default under any agreement pursuant to which the
Subordinated Indebtedness is created, subject to the rights, if any, under this
Agreement of Collateral Agent to receive on behalf of Lenders cash, property or
securities otherwise payable or deliverable with respect to the Subordinated
Indebtedness.

11. No Implied Waivers of Subordination. No right of Collateral Agent on behalf
of the lenders to enforce the right of subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of a Loan Party, by any act or failure to act by the Collateral Agent
or any Lender, or by any non-compliance by a Loan Party with the terms,
provisions and covenants of any knowledge thereof the Collateral Agent may have
or be otherwise charged with. Except with respect to any prepayment and/or
cancellation of the Bond issued in connection with the Master Plan Bond
Transaction as and when permitted under Sections 4 and 6 of this Agreement, the
Loan Parties, by their acceptance hereof, agree that, so long as there is Senior
Debt outstanding or Commitments in effect under the Credit Agreement, the Loan
parties shall not agree to sell, assign, pledge, encumber or otherwise dispose
of, or to compromise, release, forgive or otherwise discharge the obligations of
such other Loan party with respect to its Subordinated Indebtedness, other than
by means of payment of such Subordinated Indebtedness according to its terms,
without the prior written consent of Agent.

Without in any way limiting the generality of the foregoing paragraph, Agent may
at any time and from time to time in compliance with the Loan Documents, without
the consent of or notice to the Loan Parties (other than the Borrower as
provided for the Credit Agreement), without incurring responsibility to the Loan
Parties and without impairing or releasing the subordination provided in this
Agreement or the obligations hereunder of the Loan Parties to the Collateral
Agent, do any one or more of the

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following: (i) change the manner, place or terms of payment, or extend the time
of payment, renew or alter the Senior Debt or otherwise amend or supplement the
Senior Debt or the Loan Documents; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing the Senior Debt;
(iii) release any Person liable in any manner for the payment or collection of
the Senior Debt, (iii) release any Person liable in any manner for the payment
or collection of the Senior Debt; and (iv) exercise or refrain from exercising
any rights against Borrower and nay other Person.

12. Subordination Agreement under Note Purchase Agreements. The Lenders
acknowledge that the Loan Parties are entering into an Intercompany
Subordination Agreement, dated as of April 3, 2003 (the “Subordination Agreement
for the Note Holders”) also with the Collateral Agent. The rights of the Lenders
and the Collateral Agent under this Agreement, and the Lenders’ Senior Debt, are
pari-passu and of the equal priority with the rights of the Note Holders and the
Collateral Agent under the Subordination Agreement for the Note Holders and the
“Senior Debt” of the Note Holders as defined in the Subordination Agreement for
the Note Holders.

13. Continuing Force and Effect. This Agreement shall continue in force until
all of the Senior Debt is indefeasibly paid in full and the Commitments under
the Credit Agreement have terminated, it being contemplated that this Agreement
be of a continuing nature.

14. Modification, Amendments or Waivers. Any and all agreements amending or
changing any provision of this Agreement or the rights of Agent hereunder, and
any and all waivers or consents to any departures from the due performance of
the Loan Parties hereunder shall be made only by written agreement, waiver or
consent signed by Agent.

15. Expenses. The Loan Parties unconditionally agree upon demand to pay to Agent
for the Benefit of Lenders the amount of any and all reasonable and necessary
out-of-pocket costs, expenses and disbursements for which reimbursement is
customarily obtained, including but not limited to reasonable fees and expenses
of counsel, which Agent or any lender any incur in connection with (a) the
exercise or enforcement of any of the rights of Agent or any Lender hereunder,
or (b) the failure by any Loan Party to perform or observe any of the provisions
hereof.

16. Severability. The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

17. Governing Law. This Agreement shall be a contract under the internal laws of
the Commonwealth of Kentucky and for all purposes shall be construed in
accordance with the laws of the Commonwealth of Kentucky without giving effect
to the principles of conflicts of law.

18. Successors and Assigns. This Agreement shall inure to the benefit of Agent,
Lenders and their respective successors and assigns and the obligations of the
Loan Parties shall be binding upon their successors and assigns. The duties and
obligations of the Loan Parties may not be delegated or transferred by the Loan
Parties. Except to the extent otherwise required by the context of this
Agreement, the work “Lender” when used herein shall mean and include any holder
of any Note or an assignment of rights therein originally issued to any Lender
under the Credit Agreement and each such holder of a Note or assignment shall
have the benefits of this Agreement to the same extent as if such holder had
originally been a Lender under the Credit Agreement.

19. Counterparts. This agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed will be deemed to be an original and all of which taken together will
constitute one and the same agreement. Any party so executing this Agreement by
facsimile transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of the
counterpart executed by facsimile transmission.

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20. Attorneys-in-Fact. The Loan Parties hereby authorize and empower Collateral
Agent, at its election and in the name of either itself, or in the name of the
Loan Parties, to execute and file proofs and documents and take any other action
Agent may deem advisable to completely protect Agent’s and Lenders’ interests in
the Subordinated Indebtedness and Agent’s right of enforcement thereof, and to
that end the Loan Parties hereby irrevocably make, constitute and appoint
Collateral Agent, its officers, employees and agents, or any of them, with full
power of substitution, as the true and lawful attorney-in-fact and agent of the
Loan Parties and with full power for the Loan Parties and in the name, place and
stead of the Loan Parties for the purpose of carrying out the provisions of this
Agreement and taking any action and executing, delivering, filing and recording
any instruments which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof, which power of attorney, being given for
security, is coupled with an interest and irrevocable. The Loan parties hereby,
ratify, confirm, and agree to ratify and confirm all action taken by the
Collateral Agent, its officers, employees or agents pursuant to the foregoing
power of attorney.

21. Application of Payments. All payments and/or other amounts hereunder shall
be made to and/or received by the Collateral Agent for application pursuant to
Section 9 of the Collateral Sharing Agreement. In the event any payments are
received by Agent or any Lender under the terms of this Agreement for
application to the Senior Debt at any time when the Senior Debt has not been
declared due and payable, such payment shall constitute a voluntary prepayment
of the Senior Debt for all purposes under the Credit Agreement.

22. Remedies. In the event of a breach by the Loan Parties in the performance of
any of the terms of this Agreement, Agent may demand specific performance of
this Agreement and seek injunctive relief (and if Agent makes such demand,
Collateral Agent shall be made a party to any such action) and may exercise any
other remedy available at law or in equity (with Collateral Agent to be made a
party to such action), it being recognized that the remedies of Agent at law may
not fully compensate Agent for the damages it may suffer in the event of a
breach hereof. In the event of any award, decree, judgment or writ in favor of
Lenders or Collateral Agent, any funds obtained pursuant to such award, decree,
judgment or writ shall be delivered to Collateral Agent and distributed in
accordance with Section 9 of the Collateral Sharing Agreement.

23. CONSENT TO JURISDICTION. EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR COMMONWEALTH
OF KENTUCKY COURT SITTING IN LOUISVILLE, KENTUCKY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH LOAN PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST
ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY A LOAN PARTY AGAINST THE AGENT OR ANY AFFILIATE OF THE AGENT INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN LOUISVILLE,
KENTUCKY.

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24. WAIVER OF JURY TRIAL. EACH LOAN PARTY AND THE AGENT HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.

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WITNESS the due execution hereof as of the day and year first above written.

Acknowledged and agreed to:

 

BANK ONE, KENTUCKY, NA, As Collateral Agent By:      

H. Joseph Brenner

First Vice President

416 W. Jefferson Street

Louisville, Kentucky 40202

  Attention:   H. Joseph Brenner   Telephone:   (502) 566-2789   Fax:   (502)
566-8339 LOAN PARTIES: CHURCHILL DOWNS INCORPORATED By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
CHURCHILL DOWNS MANAGEMENT COMPANY By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
CHURCHILL DOWNS INVESTMENT COMPANY By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439

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RACING CORPORATION OF AMERICA By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
CALDER RACE COURSE, INC. By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
TROPICAL PARK, INC. By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
CHURCHILL DOWNS CALIFORNIA COMPANY By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
CHURCHILL DOWNS CALIFORNIA FALL OPERATING COMPANY By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439

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ARLINGTON PARK RACECOURSE, LLC By:     Title:    

700 Central Avenue

Louisville, Kentucky 40208

Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439
ARLINGTON MANAGEMENT SERVICES, LLC By:     Title:     700 Central Avenue
Attention: General Counsel   Telephone:   (502) 636-4429   Fax:   (502) 636-4439

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EXHIBIT I

FORMS OF MORTGAGES AND DEEDS OF TRUST

In accordance with Rule 202 of Regulation S-T Exhibit I is being filed in paper
pursuant to a continuing hardship exemption.

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EXHIBIT J

FORM OF NEGATIVE PLEDGE AGREEMENT

Attached

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NEGATIVE PLEDGE AGREEMENT

This NEGATIVE PLEDGE AGREEMENT (this “Agreement”) is dated April 3, 2003, and is
made by the undersigned Loan Parties in favor of Bank One, Kentucky, NA, in its
capacity as contractual representation as Agent for itself and all the other
Lenders under the Credit Agreement referenced below (“Agent”).

RECITALS

A. Pursuant to the Credit Agreement dated as of April 2, 2003 (as it may
hereafter be amended, modified, restated or supplemented from time to time, the
“Credit Agreement”) among Churchill Downs Incorporated (the “Borrower”), the
Guarantors party thereto, the Lenders, the LC Issuer party thereto, and Agent,
Lenders expect to extend certain Credit Extensions to Borrower subject to the
terms of the Credit Agreement.

B. The obligation of the Lenders and the LC Issuer to make Credit Extensions is
subject to the condition, among others, that the Loan Parties enter into this
Agreement.

NOW THEREFORE, the Loan Parties, for valuable consideration, receipt of which
hereby is acknowledged, jointly and severally hereby agree with the Agent (the
“Pledgee”), as follows:

1. Capitalized Terms. Capitalized terms not otherwise defined herein shall have
the meanings given them in the Credit Agreement.

2. Negative Pledge. In order to induce the Lenders and the LC Issuer to extend
the Credit Extensions, to the Borrower (the “Borrower”), the Loan Parties hereby
agree that so long as any of the Secured Obligations remain outstanding, the
Loan Parties will not, nor will they permit, as the case may be, Calder (except
as expressly permitted below) to grant a Lien in, or otherwise mortgage,
encumber, pledge, and/or enter into a negative pledge agreement with respect to
(collectively, the “Calder Property”) (a) any equity or other interest in
Calder, and/or (b) any of the Property of Calder.

3. Nature of Negative Pledge, Waivers. This is an absolute, unconditional and
continuing Agreement and will remain in full force and effect until the Secured
Obligations have been fully satisfied. This Agreement will extend to and cover
renewals, extensions, modifications and/or marketing of the Secured Obligations
and any number of extensions of time for payment thereof and will not be
affected by any surrender, exchange, acceptance, or release by Pledgee of any
pledge or any security held by it for any of the Secured Obligations. Notice of
acceptance of this Agreement, notice of extensions of credit to the Borrower
from time to time, notice of default, diligence, presentment, protest, demand
for payment, notice of demand or protest, and any defense based upon a failure
of Pledge to comply with the notice of demand or protest, and any defense based
upon a failure of Pledgee to comply with the notice

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requirements of the applicable version of Uniform Commercial Code Section 9-611,
or any predecessor or successor section thereto, are hereby waived. Pledgee at
any time and from time to time, without the consent of the Loan Parties (other
than the Borrower as provided for the Credit Agreement), may change the manner,
place or terms of payment of or interest rates on, or change or extend the time
of payment of, or renew or alter, any of the Secured Obligations, without
impairing or releasing the liabilities of the Loan Parties hereunder.

4. Representations and Covenants. The Loan Parties warrant and represent that:
(a) Calder has not made any prior sale, pledge, encumbrance, assignment or other
disposition of any of the Calder Property and the same is free from all
encumbrances and rights of setoff of any kind except for the Collateral
Documents to which it is a party and Permitted Liens; and (b) the Loan Parties
will defend, at the Loan Parties’ expense, the Calder Property against all
claims and demands of all persons at any time claiming the same or any interest
therein.

5. Default. All or any of the following will constitute a Default under this
Agreement: (a) the breach of any representation of the Loan Parties herein,
(b) the failure of the Loan Parties to perform any covenants or agreements
contained herein, and/or (c) the occurrence of a Default under the Credit
Agreement.

6. Representations and Warranties to Survive. All representations, warranties,
covenants and agreements made by the Loan Parties herein will survive the
execution and delivery of this Agreement without limitation as to time and
amount.

7. Notices. All notices, demands, requests, consents approvals and other
communications required or permitted hereunder will be in writing and will be
conclusively deemed to have been received by a party hereto and to be effective
if delivered pursuant to the requirements of Article XIII of the Credit
Agreement.

8. Miscellaneous.

 

  8.1 The obligations of the Loan Parties hereunder will be joint and several.
Unless otherwise specified herein, any reference to the “Loan Parties” will mean
each such Person executing this Agreement individually and all of such Persons
collectively.

 

  8.2 This Agreement will be binding upon and inure to the benefit of the Loan
Parties and Pledgee and their respective successors and assigns, provided,
however, that no Loan Party may assign this Agreement in whole or in part
without the prior written consent of Pledgee and Pledgee at any time may assign
this Agreement in whole or in part pursuant to the Credit Agreement. All
references herein to the “Loan Parties” and “Pledgee” will be deemed to apply to
the Loan Parties and Pledgee and their respective successors and assigns.

 

2

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  8.3 This Agreement (including the documents and instruments referred to herein
or therein) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. All the terms of this Agreement will be
binding upon the respective successors and assigns of the parties hereto and
will inure to the benefit of and be enforceable by the parties hereto, their
respective successors and assigns. This Agreement may be amended or modified in
whole or in part at any time only by an agreement in writing executed in the
same manner as this Agreement after authorization to do so by the parties
hereto.

 

  8.4 In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

 

  8.5 This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed will be deemed to be an original and all of which taken together will
constitute one and the same agreement. Any party so executing this Agreement by
facsimile transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of the
counterpart executed by facsimile transmission.

 

  8.6 Acknowledgement by Loan Parties. THE LOAN PARTIES ACKNOWLEDGE THAT THEY
HAVE READ AND UNDERSTAND THE FOREGOING AGREEMENT, IN PARTICULAR, THE LOAN
PARTIES UNDERSTAND THAT THIS AGREEMENT, UCC FINANCING STATEMENTS AND/OR SUCH
OTHER DOCUMENTS AS PLEDGEE DEEMS NECESSARY TO EFFECTUATE THE PURPOSES OF THIS
AGREEMENT WILL BE RECORDED, PURSUANT TO AND IN ACCORDANCE WITH SECTION 6.21 OF
THE CREDIT AGREEMENT, IN THE OFFICE OF THE SECRETARY OF STATE OF FLORIDA AND
THAT THIS AGREEMENT WILL MAKE CALDER’S TITLE TO THE PROPERTY UNMARKETABLE, SO
THAT NO ONE WILL LIKELY PURCHASE OR LEASE ANY PART OF THE PROPERTY OR LOAN MONEY
AND ACCEPT A MORTGAGE OR SECURITY INTEREST ON ANY PART OF THE PROPERTY (EXCEPT
AS ALLOWED IN THE CREDIT AGREEMENT).

 

  8.7 Governing Law. This Agreement has been delivered and accepted at and will
be deemed to have been made at Louisville, Kentucky and will be interpreted and
the rights and liabilities of the parties hereto determined in accordance with
the laws of the Commonwealth of Kentucky, without regard to conflicts of law
principles.

 

3

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  8.8 Consent to Jurisdiction. EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
COMMONWEALTH OF KENTUCKY COURT SITTING IN LOUISVILLE, KENTUCKY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH LOAN PARTY
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREINAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT TO BRING
PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY A LOAN PARTY AGAINST THE AGENT OR ANY AFFILIATE OF THE
AGENT INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT
IN LOUISVILLE, KENTUCKY.

 

  8.9 WAIVER OF JURY TRIAL. EACH LOAN PARTY AND THE AGENT HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.

[signature pages to follow]

 

4

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Signed at Louisville, Kentucky as of April 2, 2003.

 

LOAN PARTIES: CHURCHILL DOWNS INCORPORATED By:     Title:     700 Central Avenue
Louisville, Kentucky 40208 Attention:       Telephone:   (    )       Fax:  
(    )     LOAN PARTIES: CHURCHILL DOWNS MANAGEMENT COMPANY By:     Title:    
700 Central Avenue Louisville, Kentucky 40208 Attention:       Telephone:  
(    )       Fax:   (    )     LOAN PARTIES: CHURCHILL DOWNS INVESTMENT COMPANY
By:     Title:     700 Central Avenue Louisville, Kentucky 40208 Attention:    
  Telephone:   (    )       Fax:   (    )     LOAN PARTIES: RACING CORPORATION
OF AMERICA By:     Title:     700 Central Avenue Louisville, Kentucky 40208
Attention:       Telephone:   (    )       Fax:   (    )    

 

5

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LOAN PARTIES: CALDER RACE COURSE, INC. By:     Title:     700 Central Avenue
Louisville, Kentucky 40208 Attention:       Telephone:   (    )       Fax:  
(    )     LOAN PARTIES: TROPICAL PARK, INC. By:     Title:     700 Central
Avenue Louisville, Kentucky 40208 Attention:       Telephone:   (    )      
Fax:   (    )     LOAN PARTIES: CHURCHILL DOWNS CALIFORNIA COMPANY By:    
Title:     700 Central Avenue Louisville, Kentucky 40208 Attention:      
Telephone:   (    )       Fax:   (    )     LOAN PARTIES: CHURCHILL DOWNS
CALIFORNIA FALL OPERATING COMPANY By:     Title:     700 Central Avenue
Louisville, Kentucky 40208 Attention:       Telephone:   (    )       Fax:  
(    )    

 

6

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LOAN PARTIES: ARLINGTON PARK RACECOURSE, LLC By:     Title:     700 Central
Avenue Louisville, Kentucky 40208 Attention:       Telephone:   (    )      
Fax:   (    )     LOAN PARTIES: ARLINGTON MANAGEMENT SERVICES, LLC By:    
Title:     700 Central Avenue Louisville, Kentucky 40208 Attention:      
Telephone:   (    )       Fax:   (    )     LOAN PARTIES: ARLINGTON OTB CORP.
By:     Title:     700 Central Avenue Louisville, Kentucky 40208 Attention:    
  Telephone:   (    )       Fax:   (    )     LOAN PARTIES: QUAD CITY DOWNS,
INC. By:     Title:     700 Central Avenue Louisville, Kentucky 40208 Attention:
      Telephone:   (    )       Fax:   (    )    

 

7

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LOAN PARTIES: CDIC, LLC By:     Title:     700 Central Avenue Louisville,
Kentucky 40208 Attention:       Telephone:   (    )       Fax:   (    )     LOAN
PARTIES: CDIP HOLDINGS, LLC By:     Title:     700 Central Avenue Louisville,
Kentucky 40208 Attention:       Telephone:   (    )       Fax:   (    )     LOAN
PARTIES: ELLIS PARK RACE COURSE, INC. By:     Title:     700 Central Avenue
Louisville, Kentucky 40208 Attention:       Telephone:   (    )       Fax:  
(    )     LOAN PARTIES: BANK ONE, KENTUCKY, NA, Individually, as a Lender and
as Agent By:     Title:     700 Central Avenue Louisville, Kentucky 40208
Attention:       Telephone:   (    )       Fax:   (    )    

 

8

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With a copy to:

Frost Brown Todd LLC

Suite 3200

400 W. Market Street

Louisville, Kentucky 40202

Attention: Charles R. Keeton, Esq.

  Telephone:   (505) 568-0257

 

9

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EXHIBIT K

FORM OF SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

Attached

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SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (as may be
further amended, restated, modified or supplemented, the “Security Agreement”)
is dated as of December 22, 2009, and is made by and among CHURCHILL DOWNS
INCORPORATED, a Kentucky corporation (the “Borrower”), the GUARANTORS listed on
the signature pages attached hereto, and JPMORGAN CHASE BANK, N.A., in its
capacity as Collateral Agent under the Credit Agreement (defined below) (the
“Collateral Agent”) for the Lenders.

RECITALS

A. The Borrower, the Guarantors listed on the signature pages attached thereto,
and the Collateral Agent entered into an Amended and Restated Pledge and
Security Agreement dated as of September 23, 2005 (as amended, restated,
modified or supplemented from time to time, the “Previous Security Agreement”).

B. The Borrower, JPMorgan Chase Bank, N.A., as Agent (the “Agent”), the
Guarantors party thereto, and the Lenders party thereto, entered into an Amended
and Restated Credit Agreement dated as of September 23, 2005 (as previously
amended, modified or supplemented from time to time, the “Previous Credit
Agreement”).

C. Concurrently with the execution and delivery of this Security Agreement, the
Borrower, the Agent, the Guarantors, and the Lenders party thereto are entering
into that certain Second Amended and Restated Credit Agreement dated as of the
date hereof (as may be amended, restated, modified or supplemented, the “Credit
Agreement”), amending and restating in its entirety the Previous Credit
Agreement and, pursuant to which, the Lenders have agreed to make certain Loans
and other financial accommodations to the Borrower.

D. The Loans and other Secured Obligations described in the Credit Agreement are
to remain, and continue to be, secured by the Collateral.

E. The Borrower and Guarantors listed on the signature pages attached hereto are
entering into this Security Agreement with the Collateral Agent to amend and
restate the Previous Security Agreement in order to induce the Lenders to enter
into and extend credit to the Borrower under the Credit Agreement.

ACCORDINGLY, the Borrower, the Guarantors listed on the signature pages attached
hereto and the Collateral Agent, on behalf of the Lenders and the other holders
of Secured Obligations, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Terms Defined in Credit Agreement. All capitalized terms used herein and
not otherwise defined shall have the meanings given them in the Credit
Agreement.

1.2. Terms Defined in Kentucky Uniform Commercial Code. Terms defined in the
Kentucky UCC which are not otherwise defined in this Security Agreement or the
Credit Agreement are used herein as defined in the Kentucky UCC.

 

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1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Recitals hereof, the
following terms shall have the following meanings:

“Accounts” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

“Chattel Paper” shall have the broadest meaning given that term by Article 9 of
the Kentucky UCC.

“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims,
Copyrights, Deposit Accounts, Documents, Equipment, Farm Products, Fixtures,
General Intangibles, Goods, Instruments, Inventory, Investment Property, letters
of credit, Letter of Credit Rights, Licenses, Patents, Pledged Deposits,
Supporting Obligations, Trademarks and Other Collateral, wherever located, in
which the Obligors now have or hereafter acquire any right or interest, and the
proceeds (including Stock Rights), insurance proceeds and products thereof,
together with all books and records, customer lists, credit files, computer
files, programs, printouts and other computer materials and records related
thereto, provided, however, the term Collateral shall not include (i) the
Horseman’s Account, (ii) Advance Wagering Deposits, (iii) the bond issued under
the Master Plan Bond Transaction and payments owed by one Loan Party to another
Loan Party in connection with the Master Plan Bond Transaction, (iv) ownership
interests of any Loan Party in (a) any Excluded Subsidiary, (b) any Excluded
Entity, and (c) those Persons listed on Schedule 3 to the Credit Agreement in
which, as of the Closing Date, a Loan Party directly or indirectly owns less
than 100% of the outstanding interest of such Person and in which the
organizational agreements governing such Person prohibit the applicable Loan
Party from granting a security interest in such ownership interest and (v) any
Chattel Paper, contract rights or other General Intangibles which are now held
or hereafter acquired by any Loan Party to the extent that such Chattel Paper,
contract rights or other General Intangibles (including, but not limited to,
licenses) are not assignable or capable of being encumbered (a) as a matter of
law or (b) under the terms of any agreement applicable thereto (but solely to
the extent that any such restriction is enforceable and not ineffective under
applicable law) without the consent of the other party to such agreement where
such consent has not been obtained, after the applicable Obligor has made a
reasonably diligent effort satisfactory to the Collateral Agent to obtain such
consent.

“Commercial Tort Claims” means those certain currently existing commercial tort
claims, as defined in the Kentucky UCC, of the Obligors which are more fully
described on Exhibit H, which specifically describe the claim (i.e. parties,
description of the dispute, case number).

“Control” shall have the broadest meaning given that term by Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the Kentucky
UCC.

“Copyrights” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all extensions of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

 

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“Default” means an event described in Section 5.1.

“Deposit Accounts” shall have the broadest meaning given that term by Article 9
of the Kentucky UCC.

“Deposit Account Control Agreement” means an agreement, in form and substance
satisfactory to the Collateral Agent, among any Obligor, a banking institution
holding such Obligor’s funds, and the Collateral Agent with respect to
collection and Control of all deposits and balances held in a deposit account
maintained by any Obligor with such banking institution.

“Documents” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“Equipment” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

“Farm Products” shall have the broadest meaning given that term by Article 9 of
the Kentucky UCC.

“Fixtures” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“General Intangibles” shall have the broadest meaning given that term by Article
9 of the Kentucky UCC. Without limiting the breath of that description, the
definition of “General Intangibles” shall include, without limitation, all of
the Obligors’ personal property (including things in action) other than Goods,
Accounts, Chattel Paper, Documents, Commercial Tort Claims and Instruments,
whether any Obligor has an interest in such personal property on the date of
this Security Agreement, or it is acquired thereafter, and shall include, but is
not limited to, all existing and future rents, late charges, penalties, fees,
interest, royalties, rights, claims, benefits and proceeds in, under or to any
leases, franchise agreements, insurance policies (whether held and/or maintained
by the Obligors, or otherwise), purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, choses or things in action, books, records, sales
contracts, licenses, tax and any other types of refunds, returned and unearned
insurance premiums, claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, Deposit
Accounts, Goods, Investment Property, negotiable Collateral, oil, gas or other
minerals before extraction, product designs, drawings, technical data, computer
programs, programming materials, computer tapes and software, catalogs, blue
prints, payment intangibles, contract rights, rights to payment, rights arising
under common law, statutes, or regulations, Patents and Patent applications,
Trademarks, trade secrets, trade names, URLs and domain names, other industrial
or Intellectual Property or rights therein or applications therefor, whether
under license or otherwise, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof and all applications in
connection therewith, Copyrights, rights and interests in Copyrights, works
protectable by Copyrights, Copyright registrations and Copyright applications
and any and all renewals of any of the foregoing, all income, royalties,
proceeds, damages and payments, and renewals thereof and all income, royalties,
damages and payments now or hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and payments for
past, present and future infringements of any of the foregoing and the right to
sue for past, present and future infringements of any of the foregoing and all
rights corresponding to any of the foregoing throughout the world and the
goodwill (including the goodwill associated with any Trademark) of Obligors’
business connected with the use of and symbolized by the foregoing.

 

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“Goods” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“Guarantors” means, collectively, Churchill Downs Management Company, LLC,
Churchill Downs Investment Company, Churchill Downs Simulcast Productions, LLC,
Charlson Industries, Inc., Calder Race Course, Inc., Tropical Park, Inc.,
Arlington Park Racecourse, LLC, Arlington OTB Corp., Quad City Downs, Inc.,
Churchill Downs Louisiana Horseracing Company, L.L.C., Churchill Downs Louisiana
Video Poker Company, L.L.C., Video Services, Inc., Churchill Downs Technology
Initiatives Company, Churchill Downs Entertainment Group, LLC, any Person who
becomes a Guarantor under Section 9.14 of the Credit Agreement , and the
successors and assigns of any of them, and “Guarantor” means any one or more of
these.

“Instruments” shall have the broadest meaning given that term by Article 9 of
the Kentucky UCC.

“Intellectual Property” means all Patents, Trademarks, Copyrights and any other
intellectual property.

“Intercreditor Agreement” shall have meaning given it by Section 5.2 of this
Security Agreement.

“Inventory” shall have the broadest meaning given that term by Article 9 of the
Kentucky UCC.

“Investment Property” shall have the broadest meaning given that term by Article
9 of the Kentucky UCC.

“Kentucky UCC” means the Kentucky Uniform Commercial Code as codified in the
Kentucky Revised Statutes 355.9-101, et seq., as it may be amended from time to
time.

“Lender Notes” means the Note(s) (as defined in the Credit Agreement), if any,
issued by the Borrower to the Lenders under the Credit Agreement.

“Lenders” means the lending institutions that are parties to the Credit
Agreement and their respective successors and assigns, together with any lending
institution that becomes a Lender under Section 12.3 of the Credit Agreement.
Unless otherwise specified, the term “Lenders” includes PNC Bank in its capacity
as Swing Line Lender.

“Letter of Credit Rights” shall have the broadest meaning given that term by
Article 9 of the Kentucky UCC.

“Licenses” means, with respect to any Person, all of such Person’s right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.

“Lien” means any lien (statutory or other), security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).

 

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“Loan Documents” shall have the meaning given it in the Credit Agreement.

“Obligations” has the meaning given it in the Credit Agreement.

“Obligations Secured” shall have meaning given it by Section 2.2 of this
Security Agreement.

“Obligor(s)” means, collectively, the Borrower, the Guarantors listed on the
signature pages attached to this Security Agreement and any additional
Guarantor, whether now existing or hereafter formed or acquired, which becomes
party to this Security Agreement from time to time, in accordance with the terms
of the Credit Agreement, by executing a Supplement hereto in substantially the
form of Annex I.

“Other Collateral” means any property of the Obligors, other than real estate,
not included within the defined terms Accounts, Chattel Paper, Commercial Tort
Claims, Copyrights, Deposit Accounts, Documents, Equipment, Farm Products,
Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Letter of Credit Rights, Licenses, Patents Pledged Deposits,
Supporting Obligations and Trademarks, including, without limitation, all cash
on hand, certificates, contract rights, franchise rights, letters of credit,
lease rights, licenses, permits and Stock Rights or other deposits (general or
special, time or demand, provisional or final) with any bank or other financial
institution, it being intended that the Collateral include all real and personal
property of the Obligors other than real estate.

“Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof;
(e) all rights to sue for past, present, and future infringements thereof; and
(f) all rights corresponding to any of the foregoing throughout the world.

“Pledged Deposits” means all time deposits of money (other than Deposit Accounts
and Instruments), whether or not evidenced by certificates, which the Collateral
Agent may from time to time designate as required to be pledged to the
Collateral Agent and all rights to receive interest on said deposits.

“Pledged Securities” means all Instruments, Securities and other Investment
Property owned by the Obligors, or in which any Obligor has any legal or
equitable interest whether on the date of this Security Agreement or thereafter
acquired, the certificates representing those shares and any stock powers
executed by the Obligors in connection with those shares, including but not
limited to, those securities listed on Exhibit E attached hereto.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments or Pledged Deposits, and any other rights or claims to receive money
which are General Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.

“Security” has the broadest meaning given that term by Article 8 of the Kentucky
UCC.

 

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“Stock Rights” means any Securities, dividends or other distributions and any
other right or property which the Obligors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any Securities, any right to receive Securities and
any right to receive earnings, in which the Obligors now have or hereafter
acquire any right, issued by an issuer of such Securities.

“Supporting Obligations” shall have the broadest meaning given that term by
Article 9 of the Kentucky UCC.

“Trademarks” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.

“Unmatured Default” means an event which but for the lapse of time or the giving
of notice, or both, would constitute a Default.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

ARTICLE II

REAFFIRMATION AND GRANT OF SECURITY INTEREST

2.1 Reaffirmation and Grant of Security Interest. Each Obligor party to the
Previous Security Agreement reaffirms the security interest granted under the
terms and conditions of the Previous Security Agreement and agrees that such
security interest remains in full force and effect and is hereby ratified,
reaffirmed and confirmed. Each Obligor party to the Previous Security Agreement
acknowledges and agrees with the Collateral Agent that the Previous Security
Agreement is amended, restated, and superseded in its entirety pursuant to the
terms hereof. Furthermore, the Obligors hereby pledge, assign and grant to the
Collateral Agent, for the benefit of the Lenders and the other holders of
Secured Obligations, a security interest in all of the Obligors’ right, title
and interest in and to the Collateral, including without limitation, the
following:

(1) all of the Obligors’ right, title and interest in and to their respective
Accounts;

(2) all of the Obligors’ right, title and interest in and to their respective
Chattel Paper;

(3) all of the Obligors’ right, title and interest in and to their respective
Commercial Tort Claims;

(4) all of the Obligors’ right, title and interest in and to their respective
Documents;

(5) all of the Obligors’ right, title and interest in and to their respective
Equipment;

 

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(7) all of the Obligors’ right, title and interest in and to their respective
Farm Products;

(8) all of the Obligors’ right, title and interest in and to their respective
Fixtures;

(9) all of the Obligors’ right, title and interest in and to their respective
General Intangibles;

(10) all of the Obligors’ right, title and interest in and to their respective
Instruments;

(11) all of the Obligors’ right, title and interest in and to their respective
Inventory;

(12) all of the Obligors’ right, title and interest in and to their respective
Investment Property;

(13) all of the Obligors’ right, title and interest in and to their respective
Pledged Deposits;

(14) all of the Obligors’ right, title and interest in and to their respective
Other Collateral;

(15) any and all cash on hand, certificates, contract rights, franchise rights,
Goods, letters of credit, Letter of Credit Rights, lease rights, licenses,
permits, Supporting Obligations, Stock Rights and Deposit Accounts or other
deposits (general or special, time or demand, provisional or final) with any
bank or other financial institution;

(16) any and all property of the Obligors, other than real estate, not otherwise
included within the defined terms Accounts, Chattel Paper, Commercial Tort
Claims, Documents, Equipment, Farm Products, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property, and Pledged Deposits;

(17) any and all other property, whether now existing or acquired subsequent to
the date of this Security Agreement, it being intended that the Collateral
include all property of the Obligors other than real estate; and

(18) any and all of the proceeds and products of any sale, exchange, collection
or other disposition of the above listed Collateral or any part thereof;

provided, however, the term Collateral shall not include (i) the Horseman’s
Account, (ii) Advance Wagering Deposits, (iii) the bond issued under the Master
Plan Bond Transaction and payments owed by one Loan Party to another Loan Party
in connection with the Master Plan Bond Transaction, (iv) ownership interests of
any Loan Party in (a) any Excluded Subsidiary, (b) any Excluded Entity, and
(c) those Persons listed on Schedule 3 to the Credit Agreement in which, as of
the Closing Date, a Loan Party directly or indirectly owns less than 100% of the
outstanding interest of such Person and in which the organizational agreements
governing such Person prohibit the applicable Loan Party from granting a
security interest in such ownership interest and (v) any Chattel Paper, contract
rights or other General Intangibles which are now held or hereafter acquired by
the any Loan Party to the extent that such Chattel Paper, contract rights or
other general intangibles (including, but not limited to, licenses) are not
assignable or capable of being encumbered (a) as a matter of law or (b) under
the terms of any agreement applicable thereto (but solely to the extent that any
such restriction is enforceable and not ineffective under applicable law)
without the consent of the other party to such agreement where such consent has
not been obtained, after the applicable Obligor has made a reasonably diligent
effort satisfactory to the Collateral Agent to obtain such consent. For the
avoidance of doubt, the grant of a security interest herein shall not be deemed
to be an assignment of intellectual property rights owned by the Obligors.

 

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2.2 Obligations Secured. The security interests granted by the Obligors hereby
secure any and all of the following obligations and indebtedness, contingent or
otherwise of the Obligors, whether now existing or hereafter arising, direct or
indirect, absolute or contingent (collectively, the “Obligations Secured”):

(A) all Secured Obligations of Borrowers and Guarantors, including without
limitation, all obligations, contingent or otherwise, under and/or in connection
with any Lender Notes, the Guaranty and/or the other Loan Documents, the
“Secured Obligations” as defined in any Intercreditor Agreement upon the
effectiveness of such Intercreditor Agreement, all Reimbursement Obligations and
other LC Obligations, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of any Loan Party to the
Lenders or to any Lender, the Agent, the Collateral Agent, the LC Issuer or any
indemnified party arising under the Loan Documents, whether they exist on the
date of this Security Agreement, or arise or are created or acquired after the
date of this Security Agreement; and

(B) any sums advanced by the Lenders or which may otherwise become due pursuant
to the provisions of the Lender Notes, the Credit Agreement or this Security
Agreement or pursuant to any other Loan Document, including any future advances
or any additional indebtedness, whether direct, indirect, existing, future,
contingent or otherwise, under the Credit Agreement, any Lender Notes and/or the
Loan Documents.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Obligors represent and warrant to the Collateral Agent, and each Obligor
that becomes a party to this Security Agreement pursuant to the execution of a
Security Agreement Supplement in substantially the form of Annex I represents
and warrants (after giving effect to supplements to each of the Exhibits hereto
with respect to such subsequent Obligor as attached to such Security Agreement
Supplement), that:

3.1. Title, Authorization, Validity and Enforceability. The Obligors have good
and valid rights in or the power to transfer the Collateral and title to the
Collateral with respect to which such Obligor has purported to grant a security
interest hereunder, free and clear of all Liens except for Permitted Liens, and
have full power and authority to grant to the Collateral Agent the security
interest in such Collateral pursuant hereto. The execution and delivery by each
of the Obligors of this Security Agreement has been duly authorized by proper
corporate partnership or other proceedings, and this Security Agreement
constitutes a legal, valid and binding obligation of each of the Obligors and
creates a security interest which is enforceable against each Obligor in all now
owned and hereafter acquired Collateral, except as enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws relating to or affecting the enforcement of creditors’ rights generally,
(ii) general equitable principles (whether considered in a proceeding in equity
or at law), and (iii) requirements of reasonableness, good faith and fair
dealing. When financing statements have been filed in the appropriate offices
against such Obligor in the locations listed in Exhibit F, the Collateral Agent
will have a fully perfected first priority security interest in the Collateral
owned by such Obligor in which a security interest may be perfected by filing of
a financing statement under the UCC, subject only to Liens permitted under
Section 4.1.6 hereof.

 

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3.2. Conflicting Laws and Contracts. Neither the execution and delivery by each
of the Obligors of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the each of the Obligors or
each of the Obligors’ respective articles or certificate of incorporation or
by-laws, partnership agreement, articles of organization or operating agreement,
or any other instrument or agreement to which each Obligor is a party or is
subject, or by which any such Obligor, or its respective property, is bound, or
conflict with or constitute a Default thereunder, or result in the creation or
imposition of any Lien pursuant to the terms of any other instrument or
agreement (other than any Lien of the Collateral Agent for the benefit of the
Lenders).

3.3. Type and Jurisdiction of Organization. Each of the Obligors is a
corporation or limited liability company organized under the laws of those
jurisdictions listed on Exhibit A, attached hereto.

3.4. Principal Location. Each of the Obligors’ respective mailing addresses and
the locations of their places of business or their chief executive offices are
disclosed in Exhibit A; the Obligors have no other places of business except
those set forth in Exhibit A.

3.5. Property Locations. The Inventory, Equipment and Fixtures are located
solely at the locations described in Exhibit A. All of said locations are owned
by the Obligors except for locations (i) which are leased by the Obligors as
lessee and designated in Part C of Exhibit A and (ii) at which Inventory is held
in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part D of Exhibit A, with respect to which Inventory the Obligors
have delivered bailment agreements, warehouse receipts, financing statements or
other documents satisfactory to the Collateral Agent to protect the Collateral
Agent’s security interest in such Inventory.

3.6. No Other Names. Within the past five (5) years, none of the Obligors have
conducted business under any name except the names in which the Obligors have
executed this Security Agreement, which are the exact names as appear in the
each of the Obligors’ organizational documents, as amended, as filed with the
Obligors’ jurisdiction of organization.

3.7. No Default. No Default or Unmatured Default exists under this Security
Agreement.

3.8. Accounts and Chattel Paper. The names of the Obligors, amounts owing, due
dates and other information with respect to the Accounts and Chattel Paper are
and will be correctly stated in all records of each of the Obligors relating
thereto and in all invoices and reports with respect thereto furnished to the
Collateral Agent by the Obligors from time to time. As of the time when each
Account or each item of Chattel Paper arises, the Obligors shall be deemed to
have represented and warranted that such Account or Chattel Paper, as the case
may be, and all records relating thereto, are genuine and in all respects what
they purport to be. With regard to Chattel Paper, all Chattel Paper in which any
Obligor has an interest on the date of this Security Agreement is described on
Exhibit I attached hereto, including the names of the obligors thereunder and
the Obligor with an interest therein.

3.9. Filing Requirements. None of the Equipment that is covered by any
certificate of title is, except for Permitted Liens, encumbered by any Lien.
None of the Collateral is of a type for which Liens may be perfected by filing
under any federal statute except for (i) the vehicles described in Part A of
Exhibit B and (ii) Patents, Trademarks and Copyrights held by the Obligors and
described in Part B of Exhibit B. The county and street address of the
Properties on which any Fixtures are located is set forth in Exhibit A together
with the name and address of the record owner of each such property.

 

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3.10. No Financing Statements. No financing statement describing all or any
portion of the Collateral which has not lapsed or been terminated naming any of
the Obligors as debtor has been filed in any jurisdiction except (i) financing
statements naming the Collateral Agent as the secured party, (ii) as described
in Exhibit D and (iii) financing statements with respect to Permitted Liens.

3.11. Federal Employer Identification Number. The Obligors’ Federal employer
identification numbers are those numbers listed on Exhibit G.

3.12. Pledged Securities and Other Investment Property. Exhibit E sets forth a
complete and accurate list of that portion of the Collateral relating to the
Instruments, Securities and other Investment Property. Each Obligor is the
direct and beneficial owner of each Instrument, Security and other type of
Investment Property listed on Exhibit E as being owned by it, free and clear of
any Liens, except for Permitted Liens. Each Obligor further represents and
warrants that (i) all such Instruments, Securities or other types of Investment
Property which are shares of stock in a corporation or ownership interests in a
partnership or limited liability company have been (to the extent such concepts
are relevant with respect to such Instrument, Security or other type of
Investment Property) duly and validly issued, are fully paid and non-assessable,
(ii) with respect to any certificates delivered to the Collateral Agent
representing an ownership interest in a partnership or limited liability
company, either such certificates are Securities as defined in Article 8 of the
Uniform Commercial Code of the applicable jurisdiction as a result of actions by
the issuer or otherwise, or, if such certificates are not Securities, the
Obligors have so informed the Collateral Agent so that the Collateral Agent may
take steps to perfect its security interest therein as a General Intangible and
(iii) to the extent requested by the Collateral Agent, all such Pledged
Securities held by a securities intermediary is covered by a control agreement
among such Obligor, the securities intermediary and the Collateral Agent
pursuant to which the Collateral Agent has Control.

3.13. Intellectual Property.

3.13.1. Exhibit B contains a complete and accurate listing as of the Closing
Date of all Intellectual Property of each of the Obligors, including, but not
limited to the following: (i) state, U.S. and foreign trademark registrations,
applications for trademark registration and common law trademarks, (ii) U.S. and
foreign patents and patents applications, together with all reissuances,
continuations, continuations in part, revisions, extensions, and reexaminations
thereof, (iii) U.S. and foreign copyright registrations and applications for
registration, (iv) foreign industrial design registrations and industrial design
applications, (v) trade secrets, (vi) domain names, (vii) proprietary computer
software, (viii) all forms of Intellectual Property described in clauses
(i)-(iii) above that are owned by a third party and licensed to the Obligors or
otherwise used by the Obligors under contract, and (ix) the names of any Person
who has been granted rights in respect thereof outside of the ordinary course of
business. All of the U.S. registrations, applications for registration or
applications for issuance of the Intellectual Property are valid and subsisting,
in good standing and are recorded or is in the process of being recorded in the
name of the applicable Obligor.

3.13.2. Such Intellectual Property is valid, subsisting, unexpired (where
registered) and enforceable and has not been abandoned or adjudged invalid or
unenforceable, in whole or in part except as could not be reasonably expected to
result in a Material Adverse Effect.

 

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3.13.3. No Person other than the respective Obligor has any right or interest of
any kind or nature in or to the Intellectual Property, including any right to
sell, license, lease, transfer, distribute, use or otherwise exploit the
Intellectual Property or any portion thereof outside of the ordinary course of
the respective Obligor’s business. Each Obligor has good, marketable and
exclusive title to, and the valid and enforceable power and right to sell,
license, transfer, distribute, use and otherwise exploit, its Intellectual
Property.

3.13.4. Each Obligor has taken or caused to be taken steps so that none of its
Intellectual Property, the value of which to the Obligors are contingent upon
maintenance of the confidentiality thereof, have been disclosed by such Obligor
to any Person other than employees, contractors, customers, representatives and
agents of the Obligors who are parties to customary confidentiality and
nondisclosure agreements with the Obligors.

3.13.5. To each Obligor’s knowledge, no Person has violated, infringed upon or
breached, or is currently violating, infringing upon or breaching, any of the
rights of the Obligors to the Intellectual Property or has breached or is
breaching any duty or obligation owed to the Obligors in respect of the
Intellectual Property except where those breaches, individually or in the
aggregate, could not be reasonably expected to result in a Material Adverse
Effect.

3.13.6. No settlement or consents, covenants not to sue, nonassertion
assurances, or releases have been entered into by any Obligor or to which any
Obligor is bound that adversely affects its rights to own or use any
Intellectual Property except as could not be reasonably expected to result in a
Material Adverse Effect, in each case individually or in the aggregate.

3.13.7. No Obligor has received any written notice that remains outstanding
challenging the validity, enforceability, or ownership of any Intellectual
Property except where those challenges could not reasonably be expected to
result in a Material Adverse Effect, and to such Obligor’s knowledge at the date
hereof there are no facts upon which such a challenge could be made.

3.13.8. Each Obligor owns directly or is entitled to use, by license or
otherwise, all Intellectual Property necessary for the conduct of such Obligor’s
business.

3.13.9. Each Obligor uses adequate standards of quality in the manufacture,
distribution, and sale of all products sold and in the provision of all services
rendered under or in connection with all trademarks and has taken all
commercially reasonable action necessary to insure that all licensees of the
trademarks owned or licensed by such Obligor use such adequate standards of
quality, except where the failure to use adequate standards of quality could not
reasonably be expected to result in a Material Adverse Effect.

3.13.10 The consummation of the transactions contemplated by the Loan Documents
will not result in the termination or material impairment of any of the
Intellectual Property.

 

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ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security
Agreement is terminated, each of the Obligors agrees, and from and after the
effective date of any Security Agreement Supplement applicable to any Obligor
(and after giving effect to supplements to each of the Exhibits hereto with
respect to such subsequent Obligor as attached to such Security Agreement
Supplement) and thereafter until this Security Agreement is terminated each such
subsequent Obligor agrees:

4.1. General.

4.1.1. Inspection. The Obligors will permit the Collateral Agent or any Lender,
by their respective representatives and agents (i) to inspect the Collateral,
(ii) to examine and make copies of the records of any of the Obligors relating
to the Collateral and (iii) to discuss the Collateral and the related records of
any of the Obligors with, and to be advised as to the same by, the Authorized
Officers (and, in the case of any Receivable, with any person or entity which is
or may be obligated thereon), all at such times and intervals as are permitted
by the terms of the Credit Agreement and all at the Obligors’ expense.

4.1.2. Taxes. The Obligors will pay when due all taxes, assessments and
governmental charges and levies upon the Collateral, except those which are
being contested in good faith by appropriate proceedings and with respect to
which no Lien exists.

4.1.3. Records and Reports; Notification of Default. The Obligors will maintain
complete and accurate books and records with respect to the Collateral, and
furnish to the Collateral Agent, with sufficient copies for each of the Lenders,
such reports relating to the Collateral as the Collateral Agent shall from time
to time request. The Obligors will give prompt notice in writing to the
Collateral Agent and the Lenders of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, which might
materially and adversely affect the Collateral.

4.1.4. Financing Statements and Other Actions; Defense of Title. The Obligors
hereby authorize the filing of any financing statements or continuation
statements, and amendments to financing statements, in any jurisdictions and
with any filing offices as the Collateral Agent may determine, in its sole
discretion, are necessary or advisable to perfect the security interest granted
to the Collateral Agent in connection with this Security Agreement. Such
financing statements may describe the Collateral in the same manner as described
in this Security Agreement, any other security agreement or pledge agreement
entered into by the parties in connection herewith, or may contain an indication
or description of collateral that describes such property in any other manner as
the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
collateral granted to the Collateral Agent in connection herewith, including,
without limitation, describing such property as “all assets” or “all personal
property,” and “whether now or hereafter owned”. The Obligors hereby authorize
the Collateral Agent to file, and if requested will execute and deliver to the
Collateral Agent, any other documents and take such other actions as may from
time to time be requested by the Collateral Agent in order to maintain a first
perfected security interest in (subject to Permitted Liens) and, if applicable,
Control of, the Collateral, including, but not limited to, the request by the
Collateral Agent to enter into a Deposit Account Control Agreement. The Obligors
will take any and all actions necessary to defend title to the Collateral
against all Persons and to defend the security interest of the Collateral Agent
in the Collateral and the priority thereof against any Lien not expressly
permitted hereunder.

4.1.5. Disposition of Collateral. The Obligors will not sell, lease or otherwise
dispose of the Collateral except (i) prior to the occurrence of a Default or
Unmatured Default, dispositions specifically permitted pursuant to Section 6.12
of the Credit Agreement, (ii) until such time following the occurrence of a
Default as an Obligor receives a notice from the Collateral Agent instructing
such Obligor to cease such transactions, sales or leases of Inventory in the
ordinary course of their respective business, (iii) until such time as an
Obligor receives a notice from the Collateral Agent pursuant to Article VII,
collections of proceeds of Inventory and Accounts collected in the ordinary
course of business, and (iv) abandonments or other dispositions of

 

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labels, Patents, Copyrights, rights of use of any name, trade secrets, trade
names, service marks, customer lists and advertising matter in the ordinary
course of such Obligor’s business and so long as such abandonment or other
disposition shall not have a Material Adverse Effect.

4.1.6. Liens. The Obligors will not create, incur, or suffer to exist any Lien
on the Collateral except (i) the security interest created by this Security
Agreement, (ii) existing Liens described in Exhibit D and (iii) Permitted Liens.

4.1.7. Change in Corporate Existence, Type or Jurisdiction of Organization,
Location, Name. Each of the Obligors will:

 

  (a) preserve its respective existence as a corporation, limited partnership,
general partnership, or limited liability company, and, except in compliance
with the terms of the Credit Agreement, not, in one transaction or a series of
related transactions, merge into or consolidate with any other Person, or sell
all or substantially all of its assets;

 

  (b) not change its respective state of organization;

 

  (c) not maintain its respective place of business (if it has only one) or its
respective chief executive office (if it has more than one place of business) at
a location other than a location specified on Exhibit A; and

 

  (d) not (i) have any Inventory, Equipment or Fixtures or proceeds or products
thereof (other than Inventory and proceeds thereof disposed of as permitted by
Section 4.1.5) at a location other than a location specified in Exhibit A,
(ii) change its respective name or taxpayer identification number or
(iii) change its respective mailing address,

unless the Obligors shall have given the Collateral Agent not less than 30 days’
prior written notice of such event or occurrence and the Collateral Agent shall
have either (x) determined that such event or occurrence will not adversely
affect the validity, perfection or priority of the Collateral Agent’s security
interest in the Collateral, or (y) taken such steps (with the cooperation of the
Obligors to the extent necessary or advisable) as are necessary or advisable to
properly maintain the validity, perfection and priority of the Collateral
Agent’s security interest in the Collateral.

4.1.8. Other Financing Statements. The Obligors will not sign or authorize the
signing on their behalf or the filing of any financing statement naming any of
the Obligors as debtor covering all or any portion of the Collateral, except as
permitted by Sections 4.1.4 and 4.1.6.

4.2. Receivables.

4.2.1. Certain Agreements on Receivables. The Obligors will not make or agree to
make any discount, credit, rebate or other reduction in the original amount
owing on a Receivable or accept in satisfaction of a Receivable less than the
original amount thereof, except that, prior to the occurrence of a Default, the
Obligors may reduce the amount of Accounts arising from the sale of Inventory in
accordance with their present policies and in the ordinary course of their
respective businesses.

 

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4.2.2. Collection of Receivables. Except as otherwise provided in this Security
Agreement, the Obligors will collect and enforce, at the Obligors’ sole expense,
all amounts due or hereafter due to the Obligors under the Receivables.

4.2.3. Delivery of Invoices. The Obligors will deliver to the Collateral Agent
immediately upon its request after the occurrence of a Default duplicate
invoices with respect to each Account bearing such language of assignment as the
Collateral Agent shall specify.

4.2.4. Disclosure of Counterclaims on Receivables. If (i) any discount, credit
or agreement to make a rebate or to otherwise reduce the amount owing on a
Receivable exists outside the ordinary course of business or (ii) if, to the
knowledge of the Obligors, any dispute, setoff, claim, counterclaim or defense
exists or has been asserted or threatened with respect to a Receivable outside
the ordinary course of business, the Obligors will disclose such fact to the
Collateral Agent in writing in connection with the inspection by the Collateral
Agent of any record of the Obligors relating to such Receivable and in
connection with any invoice or report furnished by the Obligors to the
Collateral Agent relating to such Receivable.

4.3. Inventory and Equipment.

4.3.1. Maintenance of Goods. The Obligors will do all things necessary to
maintain, preserve, protect and keep the Inventory and the Equipment in good
repair and working condition, ordinary wear and tear excepted and taking into
account the age and present condition of such Inventory and Equipment.

4.3.2. Insurance. The Obligors will (i) maintain fire and extended coverage
insurance on the Inventory and Equipment containing a lender’s loss payable
clause in favor of the Collateral Agent and providing that said insurance will
not be terminated except after at least 30 days’ written notice from the
insurance company to the Collateral Agent, (ii) maintain such other insurance on
the Collateral for the benefit of the Collateral Agent as the Collateral Agent
shall from time to time request, (iii) furnish to the Collateral Agent upon the
request of the Collateral Agent from time to time the originals of all policies
of insurance on the Collateral and certificates with respect to such insurance
and (iv) maintain general liability insurance naming the Collateral Agent as an
additional insured.

4.4. Instruments, Securities, Chattel Paper, Documents and Pledged Deposits. The
Obligors will (i) deliver to the Collateral Agent immediately upon execution of
this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral, (ii) hold in trust for the Collateral Agent
upon receipt and immediately thereafter deliver to the Collateral Agent any
Chattel Paper, Securities and Instruments constituting Collateral, (iii) upon
the designation of any Pledged Deposits (as set forth in the definition
thereof), (a) deliver to the Collateral Agent such Pledged Deposits which are
evidenced by certificates included in the Collateral endorsed in blank, marked
with such legends and assigned as the Collateral Agent shall specify and
(b) comply with Section 4.8 of this Security Agreement,, and (iv) upon the
Collateral Agent’s request, after the occurrence and during the continuance of a
Default after acceleration of the Obligations Secured, deliver to the Collateral
Agent (and thereafter hold in trust for the Collateral Agent upon receipt and
immediately deliver to the Collateral Agent) any Document evidencing or
constituting Collateral.

4.5. Uncertificated Securities and Certain Other Investment Property. The
Obligors will permit the Collateral Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral to mark
their books and records

 

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with the numbers and face amounts of all such uncertificated securities or other
types of Investment Property not represented by certificates and all rollovers
and replacements therefor to reflect the Lien of the Collateral Agent granted
pursuant to this Security Agreement. The Obligors will take any actions
necessary to cause (i) the issuers of uncertificated securities which are
Collateral and which are Securities and (ii) any financial intermediary which is
the holder of any Investment Property, to cause the Collateral Agent to have and
retain Control over such Securities or other Investment Property. Without
limiting the foregoing, the Obligors will, with respect to Investment Property
held with a financial intermediary, cause such financial intermediary to enter
into a control agreement with the Collateral Agent in form and substance
satisfactory to the Collateral Agent.

4.6. Stock and Other Ownership Interests.

4.6.1. Changes in Capital Structure of Issuers. Except in compliance with the
terms of the Credit Agreement, the Obligors will not (i) permit or suffer any
issuer of privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral to dissolve, liquidate, retire any of its capital stock
or other Instruments or Securities evidencing ownership, reduce its capital or
merge or consolidate with any other entity, or (ii) vote any of the Instruments,
Securities or other Investment Property in favor of any of the foregoing.

4.6.2. Issuance of Additional Securities. Except in compliance with the terms of
the Credit Agreement, the Obligors will not permit or suffer the issuer of
privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings,
except to the Obligors.

4.6.3. Registration of Pledged Securities and other Investment Property. The
Obligors will permit any registerable Collateral to be registered in the name of
the Collateral Agent or its nominee at any time.

4.6.4. Exercise of Rights in Pledged Securities and other Investment Property.
The Obligors will permit the Collateral Agent or its nominee at any time after
the occurrence of a Default, without notice, to exercise all voting and
corporate rights relating to the Collateral, including, without limitation,
exchange, subscription or any other rights, privileges, or options pertaining to
any corporate securities or other ownership interests or Investment Property in
or of a corporation, partnership, joint venture or limited liability company
constituting Collateral and the Stock Rights as if it were the absolute owner
thereof.

4.6.5. Limited Partnership Interests and Limited Liability Company Interests.
The Obligors agree that any limited partnership interests or ownership interests
in a limited liability company which are included within the Collateral shall at
any time constitute a Security or the issuer of any such interests shall take
any action to have such interests treated as a Security unless (i) all
certificates or other documents constituting such Security have been delivered
to the Collateral Agent and such Security is properly defined as such under
Article 8 of the Uniform Commercial Code of the applicable jurisdiction, whether
as a result of actions by the issuer thereof or otherwise, or (ii) the
Collateral Agent has entered into a control agreement with the issuer of such
Security or with a securities intermediary relating to such Security, whether as
a result of actions by the issuer thereof or otherwise.

4.7. Pledged Deposits. The Obligors will not withdraw all or any portion of any
Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Collateral Agent.

 

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4.8. Deposit Accounts. The Obligors will (i) upon the Collateral Agent’s
request, cause each bank or other financial institution in which they maintain
(a) a Deposit Account to enter into a control agreement with the Collateral
Agent, in form and substance satisfactory to the Collateral Agent, in order to
give the Collateral Agent Control of the Deposit Account or (b) other deposits
(general or special, time or demand, provisional or final) to be notified of the
security interest granted to the Collateral Agent hereunder and cause each such
bank or other financial institution to acknowledge such notification in writing
and (ii) upon the Collateral Agent’s request, deliver to each such bank or other
financial institution a letter, in form and substance acceptable to the
Collateral Agent, transferring ownership of the Deposit Account to the
Collateral Agent or transferring dominion and control over each such other
deposit to the Collateral Agent until such time as no Default exists. In the
case of deposits maintained with Lenders, the terms of such letter shall be
subject to the provisions of the Credit Agreement regarding setoffs.

4.9. Letter-of-Credit Rights. The Obligors will upon the Collateral Agent’s
request, cause each issuer of a letter of credit, to consent to the assignment
of proceeds of the letter of credit in order to give the Collateral Agent
Control of the letter-of-credit rights to such letter of credit.

4.10. Federal, State or Municipal Claims. The Obligors will notify the
Collateral Agent of any Collateral which constitutes a claim against the United
States government or any state or local government or any instrumentality or
agency thereof, the assignment of which claim is restricted by federal, state or
municipal law.

4.11. Intellectual Property.

4.11.1. If, after the date hereof, any Obligor obtains rights to, including, but
not limited to filing and acceptance of a statement of use or an amendment to
allege use with the United States Patent and Trademark Office, or applies for or
seeks registration of, any new patentable invention, Trademark or Copyright in
addition to the Patents, Trademarks and Copyrights described in Exhibit B, which
are all of such Obligor’s Patents, Trademarks and Copyrights as of the Closing
Date, then such Obligor shall give the Collateral Agent notice thereof, as part
of each compliance certificate provided to the Collateral Agent pursuant to the
Credit Agreement. Each Obligor agrees promptly upon request by the Collateral
Agent to execute and deliver to the Collateral Agent any supplement to this
Security Agreement or any other document reasonably requested by the Collateral
Agent to evidence such security interest in a form appropriate for recording in
the applicable federal office. Each Obligor also hereby authorizes the
Collateral Agent to modify this Security Agreement unilaterally (i) by amending
Exhibit B to include any future Patents, Trademarks and/or Copyrights of which
the Collateral Agent receives notification from such Obligor pursuant hereto and
(ii) by recording, in addition to and not in substitution for this Security
Agreement, a duplicate original of this Security Agreement containing in Exhibit
B a description of such future Patents, Trademarks and/or Copyrights.

4.11.2. As of the Closing Date, no Obligor has any interest in, or title to, any
Copyrights, Intellectual Property Licenses, Patents or Trademarks except as set
forth in Exhibit B. This Security Agreement is effective to create a valid and
continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and
Trademarks and, upon filing of the Confirmatory Grant of Security Interest in
Copyrights with the United States Copyright Office and filing of the
Confirmatory Grant of Security Interest in Patents with the United States Patent
and Trademark Office, and the filing of appropriate financing statements in the
jurisdictions listed in Exhibit F hereto, all action necessary or desirable to
protect and perfect the security interest in, to and on each Obligor’s Patents,
Trademarks or Copyrights has been taken and such perfected security interest is
enforceable as such as

 

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against any and all creditors of and purchasers from any Obligor. No Obligor has
any interest in any Copyright that is necessary in connection with the operation
of such Obligor’s business, except for those Copyrights identified in Exhibit B
attached hereto which have been registered with the United States Copyright
Office.

4.12. Commercial Tort Claims. If, after the date hereof, any Obligor identifies
the existence of a Commercial Tort Claim belonging to such Obligor that has
arisen in the course of such Obligor’s business in addition to the Commercial
Tort Claims described in Exhibit H, which are all of such Obligor’s Commercial
Tort Claims as of the Closing Date, then such Obligor shall give the Collateral
Agent prompt notice thereof, but in any event not less frequently than
quarterly. Each Obligor agrees promptly upon request by the Collateral Agent to
execute and deliver to the Collateral Agent any supplement to this Security
Agreement or any other document reasonably requested by the Collateral Agent to
evidence the grant of a security interest therein in favor of the Collateral
Agent.

4.13. Updates to Exhibits. At the request of the Collateral Agent which
requests, so long as no Default exists uncured, may be made no more frequently
than annually the Obligors shall provide the Collateral Agent in writing with
such revisions or updates to the Exhibits attached to this Security Agreement as
may be necessary or appropriate to update or correct the same due to such
Exhibits becoming outdated or incorrect in any respect.

ARTICLE V

DEFAULT

5.1 Defaults.The occurrence of any one or more of the following events shall
constitute a “Default” hereunder:

5.1.1 a failure to pay any Obligations Secured when due in accordance with the
terms of the Credit Agreement;

5.1.2 Obligors shall fail to perform or observe any of the obligations in
Article 3 or 4 of this Security Agreement when required or within any grace or
cure period provided therein or in the Credit Agreement.

5.1.3 a failure by any Obligor to duly perform and observe any other provision
in this Security Agreement, and such failure shall continue for a period of
thirty (30) days after notice from Collateral Agent;

5.1.4 a “Default” or “Event of Default” (as such quoted terms are defined in the
Credit Agreement) and, upon the effectiveness of any Intercreditor Agreement,
the occurrence of a “Default” or “Event of Default” (as such quoted term is
defined in such Intercreditor Agreement);

5.1.5 any attachment proceeding shall be commenced against Collateral Agent or
any Obligor or Guarantor of any of the Obligations Secured for the collection of
any Material Indebtedness;

5.1.6 proceedings shall be instituted against the Collateral upon any other Lien
whether alleged to be superior or junior to the Lien granted by this Security
Agreement and such proceeding continues undismissed or unstayed for a period of
30 consecutive days;

 

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5.1.7 a Term Substantial Portion or Twelve Month Substantial Portion of the
Collateral shall be substantially damaged or destroyed by an uninsured casualty;

5.1.8 Obligors shall fail to deliver any certification or other document or
instrument requested by Collateral Agent or the Lenders pursuant to the Loan
Documents within ten (10) Business Days after receipt of request or such other
time frame permitted by the Credit Agreement;

5.1.9 after any applicable required notice is given and any permitted period of
cure has expired, the Obligor shall fail to comply with any duty or obligation
imposed pursuant to any of the Loan Documents, or any warranty or representation
contained therein shall be materially incorrect or materially misleading; or

5.1.10 The Borrower or any other Obligor shall (i) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (ii) make an assignment for the benefit of creditors, (iii) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any Term
Substantial Portion or Twelve Month Substantial Portion of its Property,
(iv) institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate or
partnership action to authorize or effect any of the foregoing actions set forth
in this Section 5.1.10 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 5.1.11.

5.1.11 Without the application, approval or consent of the Borrower or any other
Obligor, a receiver, trustee, examiner, liquidator or similar official shall be
appointed for the Borrower or any other Obligor or any Term Substantial Portion
or Twelve Month Substantial Portion of its Property, or a proceeding described
in Section 5.1.10 shall be instituted against the Borrower or any other Obligor
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.

5.1.12 Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of any of the Obligors which, when taken together with all other
Property of the Obligors so condemned, seized, appropriated, or taken custody or
control of, during the twelve-month period ending with the month in which any
such action occurs, constitutes a Term Substantial Portion or Twelve Month
Substantial Portion of its Property.

5.1.13. Any material portion of the Collateral shall be transferred or otherwise
disposed of, either voluntarily or involuntarily, in any manner not permitted by
Section 4.1.5.

5.2. Rights and Remedies of the Collateral Agent. If a Default occurs,
Collateral Agent may, subject to the terms of any intercreditor agreement
entered into by the Collateral Agent in connection with the Secured Obligations
(an “Intercreditor Agreement”) and without demand, notice or delay, do one or
more of the following:

5.2.1(i) institute and maintain an action against the Collateral and the
interests of Obligors therein, (ii) enforce any security interest granted in any
personal property or fixtures herein, and (iii) take such other action at law or
in equity for the enforcement of any of the Loan Documents as the law may allow,
and in each such action the Collateral Agent shall be entitled to all costs of
suit and reasonable attorneys’ fees;

 

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5.2.2 require the Obligors or any of the them to assemble the Collateral and the
books and records with respect to the Collateral and make them available to the
Collateral Agent at a place or places to be designated by the Collateral Agent
which is reasonably convenient to the Obligors and the Collateral Agent;

5.2.3 require the Obligors or any of them to store all or any part of the
Collateral, at the Obligors’ own cost and risk, on behalf of the Collateral
Agent, after the Collateral Agent has taken possession of such Collateral.
Storage shall be in such manner as to prevent any deterioration of such
Collateral, and shall be for a reasonable time pending the sale or other
disposition of such Collateral.

5.2.4 sell the Pledged Securities or other Collateral at public or private sale
in one or more lots. The Collateral Agent shall be entitled to apply the
proceeds of any such sale to the satisfaction of the Obligations Secured and to
expenses incurred in realizing upon the Pledged Securities or other Collateral
in accordance with the Uniform Commercial Code.

(A) In the case of any sale by the Collateral Agent of the Pledged Securities or
other Collateral or any portion thereof on credit for future delivery, which may
be elected at the sole option and in the discretion of the Collateral Agent, the
Pledged Securities or other Collateral so sold may either be delivered to the
purchaser or retained by the Collateral Agent until the selling price is paid by
the purchaser, but in either event the Collateral Agent shall incur no liability
in case of failure of the purchaser to take up and pay for the Pledged
Securities or other Collateral so sold. In case of any such failure, such
Pledged Securities or other Collateral may be sold again by the Collateral Agent
in the manner provided in this Section.

(B) After deducting all its reasonable costs and expenses of every kind,
including without limitation, legal fees, registration fees required by law
(Securities and Exchange Commission (the “SEC”) and/or any other governmental
agency) and expenses, if any, the Collateral Agent shall apply the residue of
the proceeds of any sale or sales of the Pledged Securities or other Collateral.

(C) The Collateral Agent shall not incur any liability as a result of the sale
of the Pledged Securities or other Collateral at any private sale or sales, and
the Obligors hereby waive any claim arising by reason of (1) the fact that the
price or prices for which the Pledged Securities or other Collateral, or any
portion thereof, is sold at such public sale or sales is less than the price
which would have been obtained at a private sale or sales, or is less than the
amount due and the Collateral Agent accepted the first offer received and did
not offer the Pledged Securities or other Collateral, or portion thereof, to
more than one offeree; or (2) any delay by the Collateral Agent in selling the
Pledged Securities or other Collateral following a Default hereunder, even if
the value of the Pledged Securities or other Collateral thereafter declines; or
(3) the immediate sale of the Pledged Securities or other Collateral upon the
occurrence of a Default hereunder even if the holder shall remain jointly and
severally liable for any deficiency remaining due under this Security Agreement
or other Loan Documents; or (4) the fact that the Collateral Agent takes
actions, or refrains from taking actions, based on the Collateral Agent’s good
faith belief that such actions are required or prohibited, as the case may be,
by applicable law

 

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(including, without limitation, applicable federal and/or state and/or local
securities laws) and such taking or refraining from taking such actions results
in a lower price for the Pledged Securities or other Collateral; or (5) without
limiting the foregoing, the Collateral Agent’s sale or sales of the Pledged
Securities or other Collateral being delayed, or occurring in more than one lot,
or otherwise being affected by the Collateral Agent’s compliance with any rule
of the SEC and/or other federal, state and/or local laws and/or rules
(including, without limitation, securities laws and SEC Rules) (collectively,
“Securities Laws and Rules”) and/or market conditions.

5.2.5 notify the account debtors on all or any part of the Obligors’ Accounts
and/or other payment intangibles of the Collateral Agent’s interest therein and
to require such account debtors to begin making payments directly to the
Collateral Agent regardless of whether the Obligors were previously making
collections on all or any part of the Obligors’ Accounts or other payment
intangibles. The Collateral Agent shall have the right to proceed against any
such account debtors in its own name, or in the name of any Obligor (as
appropriate) with or without the consent of the Obligors. The Collateral Agent
may retain any such payments or collections and apply them to the satisfaction
of the Obligations Secured and to expenses incurred in collection, all in
accordance with the Uniform Commercial Code.

5.2.6 without releasing the Obligors or any Obligor or Guarantor of any of the
Obligations Secured from any obligation under any of the Loan Documents and
without waiving any Default, enter upon and take possession of the Collateral or
any portion thereof, with or without legal action and by force if necessary, or
have a receiver appointed without proof of depreciation or inadequacy of the
value of the Collateral, the insolvency of the applicable Obligor, or any other
proof. The Collateral Agent or said receiver may manage and operate the
Collateral, perform any acts and advance any sums which the Collateral Agent
deems proper to protect the security of the Collateral, all such sums to be
payable on demand, together with interest thereon at the rate set forth in
Section 2.13 of the Credit Agreement, from the date of such demand, and such
sums and interest to be secured by this Security Agreement.

5.2.7 take possession of the Collateral, or any portion thereof, and may use and
deal with the same to the same extent as the Obligors are entitled to do so and
may sell the same pursuant to law and exercise such other rights and remedies
with respect to the same as may be provided by law, and file such continuation
statements which it deems desirable.

5.2.8 recover all of the Collateral Agent’s expenses of collection, including,
without limitation, court costs and reasonable attorneys’ fees and disbursements
incurred in realizing upon the Collateral or enforcing or attempting to enforce
any provision of this Security Agreement or any of the other Loan Documents.

5.2.9 retain the Collateral and become the owner thereof, in accordance with the
provisions of the Kentucky UCC.

5.2.10 immediately possess the Pledged Securities or other Collateral not then
in the Collateral Agent’s possession without requirement of notice or demand or
of any legal process.

5.2.11 transfer the Pledged Securities or other Collateral, or any part of them,
into the Collateral Agent’s name to facilitate the Collateral Agent’s exercise
of other rights or remedies with respect to them.

 

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5.2.12 seek and/or require each Obligor to cooperate in any manner in the
Collateral Agent’s exercise of remedies, including without limitation, making
all appropriate filings with the SEC under any SEC rule or otherwise, and
providing all necessary information, representations and other support and
otherwise cooperating with the Collateral Agent as the Collateral Agent deems
appropriate to comply with Securities Laws and Rules, and each Obligor agrees to
so cooperate.

If, after the Credit Agreement has terminated by its terms and all of the
Obligations Secured have been paid in full, there remain Rate Management
Obligations or Banking Services Obligations outstanding, the Collateral Agent
may exercise the remedies provided in this Section 5.2 upon the occurrence of
any event which would allow or require the termination or acceleration of any
Rate Management Obligations pursuant to the terms of the agreement governing
such Rate Management Transaction or any Banking Services Obligations pursuant to
the terms of the agreement governing such Banking Services Obligations.

5.3. Obligors’ Obligations Upon Default. Upon the request of the Collateral
Agent after the occurrence of a Default, the Obligors shall:

5.3.1 assemble the Collateral and the books and records with respect thereto and
make them available to the Collateral Agent at a place or places to be
designated by the Collateral Agent which is reasonably convenient to the
Obligors and the Collateral Agent.

5.3.2 notify account debtors on all or any part of the Obligors’ Accounts and/or
payment intangibles of the Collateral Agent’s interest therein and to require
such account debtors to begin making payments directly to the Collateral Agent
regardless of whether the Obligors were previously making collections on all or
any part of the Obligors’ Accounts or other payment intangibles.

5.3.3 assume all of the Collateral Agent’s expenses of collection, including,
without limitation, court costs and reasonable attorneys’ fees and disbursements
incurred in realizing upon the Collateral or enforcing or attempting to enforce
any provision of this Security Agreement.

5.3.4 permit the Collateral Agent to enter any premises, in accordance with the
Kentucky UCC, where any Collateral may be located for the purpose of taking
possession or removing the same.

5.3.5 with respect to Pledged Securities, transfer into the Collateral Agent’s
name, or into the name of its nominee, all or any part of the Pledged
Securities, entitling the Collateral Agent thereafter to receive all dividends,
income or other distributions upon the Pledged Securities.

5.3.6 cooperate in any manner in the Collateral Agent’s exercise of remedies,
including without limitation, making all appropriate filings with the SEC under
any SEC rule or otherwise, and providing all necessary information,
representations and other support and otherwise cooperating with the Collateral
Agent as the Collateral Agent deems appropriate to comply with Securities Laws
and Rules, and each Obligor agrees to so cooperate.

5.3.7 not sell, transfer or attempt to sell or transfer the Collateral, or any
part thereof or interest therein.

 

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5.4. License. The Collateral Agent is hereby granted a license or other right to
use, following the occurrence and during the continuance of a Default, without
charge, the Obligors’ or Obligor’s labels, Patents, Copyrights, rights of use of
any name, trade secrets, trade names, Trademarks, service marks, customer lists
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral, and, following the occurrence and during the continuance of a
Default, the Obligors’ or Obligor’s rights under all licenses and all franchise
agreements shall inure to the Collateral Agent’s benefit. In addition, each
Obligor hereby irrevocably agrees that the Collateral Agent may, following the
occurrence and during the continuance of a Default, sell any of the Obligors’ or
Obligor’s Inventory directly to any Person, including without limitation Persons
who have previously purchased such Inventory from the Obligors and in connection
with any such sale or other enforcement of the Collateral Agent’s rights under
this Security Agreement, may sell Inventory which bears any Trademark owned by
or licensed to the Obligors and any Inventory that is covered by any Copyright
owned by or licensed to the Obligors and the Collateral Agent may finish any
work in process and affix any Trademark owned by or licensed to the Obligors and
sell such Inventory as provided herein.

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES

No delay or omission of the Collateral Agent or any Lender to exercise any right
or remedy granted under this Security Agreement shall impair such right or
remedy or be construed to be a waiver of any Default or an acquiescence therein,
and any single or partial exercise of any such right or remedy shall not
preclude any other or further exercise thereof or the exercise of any other
right or remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by the Collateral Agent. All rights and remedies
contained in this Security Agreement or by law afforded shall be cumulative and
all shall be available to the Collateral Agent and the Lenders until the
Obligations Secured have been paid in full.

ARTICLE VII

PROCEEDS; COLLECTION OF RECEIVABLES

7.1. Lockboxes. Upon request of the Collateral Agent after the occurrence of a
Default or Unmatured Default, the Obligors shall execute and deliver to the
Collateral Agent irrevocable lockbox agreements in the form provided by or
otherwise acceptable to the Collateral Agent, which agreements shall be
accompanied by an acknowledgment by the bank where the lockbox is located of the
Lien of the Collateral Agent granted hereunder and of irrevocable instructions
to wire all amounts collected therein to a special collateral account at the
Collateral Agent.

7.2. Collection of Receivables. Upon the occurrence of a Default, the Collateral
Agent may at any time in its sole discretion by giving the Obligors or any one
of them individually written notice, elect to require that the Receivables be
paid directly to the Collateral Agent for the benefit of the Lenders. In such
event, the Obligors or any one of them individually shall, and shall permit the
Collateral Agent to, promptly notify the account debtors or obligors under the
Receivables of the Collateral Agent’s interest therein and direct such account
debtors or obligors to make payment of all amounts then or thereafter due under
the Receivables directly to the Collateral Agent. Upon receipt of any such
notice from the Collateral Agent, the Obligors shall thereafter hold in trust
for the Collateral Agent, for the benefit of the Lenders, all amounts and
proceeds received by such Obligor with respect to the Receivables and Other
Collateral and immediately and at all times thereafter deliver to the Collateral
Agent all such amounts and proceeds in the

 

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same form as so received, whether by cash, check, draft or otherwise, with any
necessary endorsements. The Obligors shall forthwith, upon receipt of all
checks, drafts, cash and other remittances in payment or on account of Accounts
Receivable or payment intangibles or for the sale of Inventory or Equipment by
the Obligors, deposit the same in a special bank account maintained with the
Collateral Agent over which the Collateral Agent alone, to the exclusion of the
Obligors, has the power of withdrawal. Such proceeds paid on Accounts Receivable
and/or payment intangibles, and/or from the sale of Inventory or Equipment shall
be deposited in precisely the form received, except for the endorsement of the
Obligors where necessary to permit collection of items, which endorsement the
Obligors agree to make and which the Collateral Agent is also hereby authorized
to make in the Obligors’ name and on the Obligors’ behalf as attorney-in-fact.
Pending such deposit, the Obligors agree that the Obligors will not commingle
any such checks, drafts, cash and other remittances with any other funds or
property, but will hold them separate and apart therefrom in express trust for
the Collateral Agent until deposited in that special account. The Collateral
Agent shall hold and apply funds so received as provided by the terms of
Sections 7.3 and 7.4 of this Security Agreement.

7.3. Special Collateral Account. If any Default has occurred and is continuing,
the Collateral Agent may require all cash proceeds of the Collateral to be
deposited in a special non-interest bearing cash collateral account with the
Collateral Agent and held there as security for the Obligations Secured. The
Obligors shall have no control whatsoever over said cash collateral account.

7.4. Application of Proceeds. The proceeds of the Collateral shall be applied by
the Collateral Agent to payment of the Obligations Secured in the following
order, but subject to the terms of each Intercreditor Agreement, unless a court
of competent jurisdiction shall otherwise direct:

(a) FIRST, to payment of all costs, fees, indemnities and expenses of the Agent
and the Collateral Agent incurred in connection with the collection and
enforcement of the Obligations Secured or of the security interest granted to
the Collateral Agent pursuant to this Security Agreement;

(b) SECOND, to payment of that portion of the Obligations Secured constituting
accrued and unpaid interest and fees, pro rata among the Lenders and their
Affiliates in accordance with the amount of such accrued and unpaid interest and
fees owing to each of them;

(c) THIRD, to payment of the principal of the Obligations Secured and the net
early termination payments and any other Rate Management Obligations and Banking
Services Obligations then due and unpaid from the Borrower to any of the Lenders
or their Affiliates, pro rata among the Lenders and their Affiliates in
accordance with the amount of such principal and such net early termination
payments and other Rate Management Obligations and Banking Services Obligations
then due and unpaid owing to each of them;

(d) FOURTH, to payment of any Obligations Secured (other than those listed
above) pro rata among those parties to whom such Obligations Secured are due in
accordance with the amounts owing to each of them; and

(e) FIFTH, the balance, if any, after all of the Obligations Secured have been
satisfied, shall be deposited by the Collateral Agent into the Borrower’s
general operating account with the Collateral Agent.

 

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ARTICLE VIII

GENERAL PROVISIONS

8.1. Notice of Disposition of Collateral; Condition of Collateral. The Obligors
hereby waive notice of the time and place of any public sale or the time after
which any private sale or other disposition of all or any part of the Collateral
may be made. To the extent such notice may not be waived under applicable law,
any notice made shall be deemed reasonable if sent to the appropriately affected
Obligors, addressed as set forth in Article IX of this Security Agreement, at
least ten (10) days prior to (i) the date of any such public sale or (ii) the
time after which any such private sale or other disposition may be made.
Collateral Agent shall have no obligation to clean-up or otherwise prepare the
Collateral for sale. To the maximum extent permitted by applicable law, each
Obligor waives all claims, damages, and demands against the Collateral Agent or
any holder of Secured Obligations arising out of the repossession, retention or
sale of the Collateral, except such as arise solely out of the gross negligence
or willful misconduct of the Collateral Agent or such other holder of Secured
Obligations as finally determined by a court of competent jurisdiction. To the
extent it may lawfully do so, each Obligor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Collateral Agent or any other holder of Secured Obligations, any valuation,
stay, appraisal, extension, moratorium, redemption or similar laws and any and
all rights or defenses it may have as a surety now or hereafter existing which,
but for this provision, might be applicable to the sale of any Collateral made
under the judgment, order or decree of any court, or privately under the power
of sale conferred by this Security Agreement, or otherwise. Except as otherwise
specifically provided herein, each Obligor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.

8.2. Limitation on Collateral Agent’s and other holders of Secured Obligations’
Duty with Respect to the Collateral. The Collateral Agent shall have no
obligation to clean-up or otherwise prepare the Collateral for sale. The
Collateral Agent and each other holder of Secured Obligations shall use
reasonable care with respect to the Collateral in its possession or under its
control. Neither the Collateral Agent nor any other holder of Secured
Obligations shall have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of the
Collateral Agent or such other holder of Secured Obligations, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. To the extent that applicable law imposes duties on
the Collateral Agent to exercise remedies in a commercially reasonable manner,
each Obligor acknowledges and agrees that it is commercially reasonable for the
Collateral Agent (i) to fail to incur expenses deemed significant by the
Collateral Agent to prepare Collateral for disposition or otherwise to transform
raw material or work in process into finished goods or other finished products
for disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral,
(iv) to exercise collection remedies against account debtors and other Persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons, whether or
not in the same business as such Obligor, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Collateral Agent against risks of loss, collection or
disposition of Collateral or to provide to the Collateral Agent a guaranteed
return from the collection or

 

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disposition of Collateral, or (xii) to the extent deemed appropriate by the
Collateral Agent, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist the Collateral Agent in the
collection or disposition of any of the Collateral. Each Obligor acknowledges
that the purpose of this Section 8.2 is to provide non-exhaustive indications of
what actions or omissions by the Collateral Agent would be commercially
reasonable in the Collateral Agent’s exercise of remedies against the Collateral
and that other actions or omissions by the Collateral Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 8.2. Without limitation upon the foregoing, nothing contained in this
Section 8.2 shall be construed to grant any rights to any Obligor or to impose
any duties on the Collateral Agent that would not have been granted or imposed
by this Security Agreement or by applicable law in the absence of this
Section 8.2.

8.3. Compromises and Collection of Collateral. The Obligors and the Collateral
Agent recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Receivables, that certain of
the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, the Obligors agree that the
Collateral Agent may at any time and from time to time, if a Default has
occurred and is continuing, compromise with the obligor on any Receivable,
accept in full payment of any Receivable such amount as the Collateral Agent in
its sole discretion shall determine or abandon any Receivable, and any such
action by the Collateral Agent shall be commercially reasonable so long as the
Collateral Agent acts in good faith based on information known to it at the time
it takes any such action.

8.4. Collateral Agent Performance of Obligor Obligations. Without having any
obligation to do so, the Collateral Agent may perform or pay any obligation
which the Obligors have agreed to perform or pay in this Security Agreement and
the Obligors shall reimburse the Collateral Agent for any amounts paid by the
Collateral Agent pursuant to this Section 8.4. The Obligors’ obligation to
reimburse the Collateral Agent pursuant to the preceding sentence shall be an
Obligation Secured payable on demand.

8.5. Authorization for Collateral Agent to Take Certain Action. The Obligors
irrevocably authorize the Collateral Agent at any time and from time to time in
the sole discretion of the Collateral Agent and appoint the Collateral Agent as
their attorney in fact (i) to file financing statements necessary or desirable
in the Collateral Agent’s sole discretion to perfect and to maintain the
perfection and priority of the Collateral Agent’s security interest in the
Collateral, (ii) to indorse and collect any cash proceeds of the Collateral,
(iii) to file a carbon, photographic or other reproduction of this Security
Agreement or any financing statement with respect to the Collateral as a
financing statement and to file any other financing statement or amendment of a
financing statement (which does not add new collateral or add a debtor) in such
offices as the Collateral Agent in its sole discretion deems necessary or
desirable to perfect and to maintain the perfection and priority of the
Collateral Agent’s security interest in the Collateral, (iv) to contact and
enter into one or more agreements with the issuers of uncertificated securities
which are Collateral and which are Securities or with financial intermediaries
holding other Investment Property as may be necessary or advisable to give the
Collateral Agent Control over such Securities or other Investment Property,
(v) to enforce payment of the Receivables in the name of the Collateral Agent or
the Obligors, (vi) to apply the proceeds of any Collateral received by the
Collateral Agent to the Obligations Secured as provided herein and (vii) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral
(except for such Liens as are specifically permitted hereunder), and the
Obligors agree to reimburse the Collateral Agent on demand for any payment made
or any expense incurred by the Collateral Agent in connection therewith,
provided, that this authorization shall not relieve the Obligors of any of their
obligations under this Security Agreement or the Credit Agreement.

 

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8.6. Specific Performance of Certain Covenants. The Obligors acknowledge and
agree that a breach of any of the covenants contained in Sections 4.1.5, 4.1.6,
4.4, 5.3, or 8.8 or in Article VII will cause irreparable injury to the
Collateral Agent and the Lenders, that the Collateral Agent and the Lenders have
no adequate remedy at law in respect of such breaches and therefore agree,
without limiting the right of the Collateral Agent or the Lenders to seek and
obtain specific performance of other obligations of the Obligors contained in
this Security Agreement, that the covenants of the Obligors contained in the
Sections referred to in this Section 8.6 shall be specifically enforceable
against the Obligors.

8.7. Use and Possession of Certain Premises. Upon the occurrence of a Default,
the Collateral Agent, on behalf of the Lenders, shall be entitled to occupy and
use any premises owned or leased by the Obligors where any of the Collateral or
any records relating to the Collateral are located until the Obligations Secured
are paid or the Collateral is removed therefrom, whichever first occurs, without
any obligation to pay the Obligors for such use and occupancy.

8.8. Dispositions Not Authorized. The Obligors are not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1.5 and
notwithstanding any course of dealing between the Obligors and the Collateral
Agent and/or the Lenders or other conduct of the Collateral Agent and/or the
Lenders, no authorization to sell or otherwise dispose of the Collateral (except
as set forth in Section 4.1.5) shall be binding upon the Collateral Agent or the
Lenders unless such authorization is in writing signed by the Collateral Agent.

8.9. Benefit of Agreement. The terms and provisions of this Security Agreement
shall be binding upon and inure to the benefit of the Obligors, the Collateral
Agent, the Lenders and their respective successors and assigns (including all
Persons who become bound as an Obligor to this Security Agreement), except that
the Obligors shall not have the right to assign their rights or delegate their
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Lenders.

8.10. Survival of Representations. All representations and warranties of the
Obligors contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.

8.11. Taxes and Expenses. Any taxes payable or ruled payable by Federal or State
authority in respect of this Security Agreement shall be paid by the Obligors,
together with interest and penalties, if any. The Obligors shall reimburse the
Collateral Agent for any and all out-of-pocket expenses and internal charges
(including reasonable attorneys’, auditors’ and accountants’ fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Collateral Agent) paid or incurred by the Collateral Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including
the expenses and charges associated with any special audit of the Collateral).
Any and all costs and expenses incurred by the Obligors in the performance of
actions required pursuant to the terms hereof shall be borne solely by the
Obligors or any one of them individually.

8.12. Headings. The title of and section headings in this Security Agreement are
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Security Agreement.

8.13. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Obligations
Secured outstanding) until (i) the Credit Agreement has terminated pursuant to
its express terms and (ii) all of the Obligations Secured have been indefeasibly
paid and performed in full and no commitments of the Collateral Agent or the
Lenders which would give rise to any Obligations Secured are outstanding.

 

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8.14. Entire Agreement. This Security Agreement embodies the entire agreement
and understanding between the Obligors and the Collateral Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Obligors and the Collateral Agent relating to the Collateral.

8.15. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
COMMONWEALTH OF KENTUCKY, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.

8.16. CONSENT TO JURISDICTION. THE OBLIGORS HEREBY IRREVOCABLY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR COMMONWEALTH OF
KENTUCKY COURT SITTING IN LOUISVILLE, KENTUCKY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT AND THE OBLIGORS HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION THEY
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS
AGAINST THE OBLIGORS IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY THE OBLIGORS AGAINST THE COLLATERAL AGENT INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS SECURITY AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN LOUISVILLE,
KENTUCKY.

8.17. WAIVER OF JURY TRIAL. THE OBLIGORS AND THE COLLATERAL AGENT HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.

8.18. ACKNOWLEDGMENT. THE OBLIGORS ACKNOWLEDGE THAT THEY HAVE RECEIVED A COPY OF
THIS SECURITY AGREEMENT, AS FULLY EXECUTED BY THE PARTIES THERETO. THE OBLIGORS
ACKNOWLEDGE THAT THEY (A) HAVE READ THIS SECURITY AGREEMENT OR HAVE CAUSED SUCH
DOCUMENT TO BE EXAMINED BY THEIR REPRESENTATIVES OR ADVISORS; (B) ARE THOROUGHLY
FAMILIAR WITH THE TRANSACTIONS CONTEMPLATED IN THIS SECURITY AGREEMENT; AND
(C) HAVE HAD THE OPPORTUNITY TO ASK SUCH QUESTIONS TO REPRESENTATIVES OF THE
COLLATERAL AGENT, AND RECEIVE ANSWERS THERETO, CONCERNING THE TERMS AND
CONDITIONS OF THE TRANSACTIONS CONTEMPLATED IN THIS SECURITY AGREEMENT AS THEY
DEEM NECESSARY IN CONNECTION WITH THEIR DECISION TO ENTER INTO THIS SECURITY
AGREEMENT.

 

27

--------------------------------------------------------------------------------

8.19. Distribution of Reports. The Obligors authorize the Collateral Agent to
discuss with and furnish to its Affiliates and to the Lenders or to any other
Person authorized by the terms of the Credit Agreement all financial statements,
audit reports and other information pertaining to the Obligors whether such
information was provided by the Obligors or prepared or obtained by the
Collateral Agent. Neither the Collateral Agent nor any of its employees,
officers, directors or trustees makes any representation or warranty regarding
any audit reports or other analyses of the Obligors’ condition which the
Collateral Agent may in its sole discretion prepare and elect to distribute, nor
shall the Collateral Agent or any of its employees, officers, directors or
trustees be liable to any person or entity receiving a copy of such reports or
analyses for any inaccuracy or omission contained in or relating thereto.

8.20. Indemnity. The Obligors hereby agree to indemnify the Collateral Agent and
the Lenders, and their respective successors, assigns, trustees and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Collateral Agent, any
Lender or Note Holder is a party thereto) imposed on, incurred by or asserted
against the Collateral Agent or the Lenders, or their respective successors,
assigns, trustees and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Collateral Agent, the
Lenders or the Obligors, and any claim for Patent, Trademark or Copyright
infringement).

8.21. No Novation. The parties hereto hereby agree that the Liens granted to the
Collateral Agent pursuant to the Previous Security Agreement remain in full
force and effect and hereby are ratified, reaffirmed and confirmed. The
execution and delivery of this Security Agreement, and the performance of each
Obligor’s obligations hereunder, shall not constitute a termination or novation
of any of the Liens granted pursuant to the Previous Security Agreement. Such
Liens remain and continue to be granted, created, attached, perfected and
enforceable, and shall constitute first-priority perfected security interests of
the Collateral Agent, for the benefit of itself, the Lenders and the relevant
affiliates of the Lenders.

ARTICLE IX

NOTICES

9.1. Notices. All notices, requests and other communications to any party
hereunder shall be given or made by telecopier or other writing and telecopied,
or mailed or delivered to the intended recipient at its address or telecopier
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for such purpose by notice to the
Collateral Agent in accordance with the provisions of Article XIII of the Credit
Agreement. Except as otherwise provided in this Security Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent by
certified mail return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.

9.2 Change of Address. The Collateral Agent, any Obligor and/or any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.

ARTICLE X

COLLATERAL AGENT

JPMorgan Chase Bank, N.A. has been appointed Collateral Agent for the Lenders
hereunder pursuant to Article X of the Credit Agreement and the terms of each
Intercreditor Agreement. It is expressly understood and agreed by the parties to
this Security Agreement that any authority conferred upon the Collateral Agent
hereunder is subject to the terms of the delegation of authority

 

28

--------------------------------------------------------------------------------

made by the Lenders to the Collateral Agent pursuant to the Credit Agreement and
each Intercreditor Agreement, and that the Collateral Agent has agreed to act
(and any successor Collateral Agent shall act) as such hereunder only on the
express conditions contained in such Article X. Any successor Collateral Agent
appointed pursuant to Article X of the Credit Agreement and each Intercreditor
Agreement shall be entitled to all the rights, interests and benefits of the
Collateral Agent hereunder.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

29

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Obligors and the Collateral Agent have executed this
Security Agreement as of the date first above written.

 

CHURCHILL DOWNS INCORPORATED, as an Obligor By       Name:   Title: CHURCHILL
DOWNS MANAGEMENT COMPANY, LLC, as an Obligor By       Name:   Title: CHURCHILL
DOWNS INVESTMENT COMPANY, as an Obligor By       Name:   Title: CALDER RACE
COURSE, INC., as an Obligor By       Name:   Title:

Second Amended and Restated Pledge and Security Agreement

--------------------------------------------------------------------------------

TROPICAL PARK, INC., as an Obligor By       Name:   Title: ARLINGTON PARK
RACECOURSE, LLC, as an Obligor By       Name:   Title: ARLINGTON OTB CORP., as
an Obligor By       Name:   Title:

QUAD CITY DOWNS, INC., as an Obligor

By       Name:   Title:

CHURCHILL DOWNS LOUISIANA

HORSERACING COMPANY, L.L.C., as an Obligor

By       Name:   Title: CHURCHILL DOWNS LOUISIANA VIDEO POKER COMPANY, L.L.C.,
as an Obligor By       Name:   Title:

Second Amended and Restated Pledge and Security Agreement

--------------------------------------------------------------------------------

VIDEO SERVICES, INC., as an Obligor By       Name:   Title: CHURCHILL DOWNS
TECHNOLOGY INITIATIVES COMPANY, as an Obligor By       Name:   Title: CHURCHILL
DOWNS ENTERTAINMENT GROUP, LLC, as an Obligor By       Name:   Title:

Second Amended and Restated Pledge and Security Agreement

--------------------------------------------------------------------------------

Acknowledged and Agreed: JPMORGAN CHASE BANK, N.A., as Collateral Agent, on
behalf of the Lenders

By

     

Name:

 

Title:

Second Amended and Restated Pledge and Security Agreement

--------------------------------------------------------------------------------

EXHIBIT A

(See Sections 3.3, 3.4, 3.5 and 4.1.7 of Security Agreement)

Place of Business (if it has only one) or Chief Executive Office (if more than
one place of business) and Mailing Address:

 

  ____________________________

 

  ____________________________

 

  ____________________________

 

  ____________________________

Attention: ____________________

Locations of Inventory and Equipment and Fixtures:

 

A. Obligor – State of Incorporation or Formation

 

B. Properties Owned by the Obligors:

 

C. Properties Leased by the Obligors (Include Landlord’s Name):

 

D. Public Warehouses or other Locations pursuant to Bailment or Consignment
Arrangements

  (include name of Warehouse Operator or other Bailee or Consignee):

--------------------------------------------------------------------------------

EXHIBIT B

(See Section 3.9 of Security Agreement)

A. Aircraft/engines, ships, railcars and other vehicles governed by federal
statute:

 

Description

  

Registration Number

  

B. Patents, Copyrights, Trademarks protected under federal law*:

 

 

* For (i) Trademarks, show the Trademark itself, the registration date and the
registration number; (ii) Trademark applications, show the Trademark applied
for, the application filing date and the serial number of the application;
(iii) Patents, show the Patent number, issue date and a brief description of the
subject matter of the Patent; and (iv) Patent applications, show the serial
number of the application, the application filing date and a brief description
of the subject matter of the Patent applied for. Any licensing agreements for
Patents or Trademarks should be described on a separate schedule.

--------------------------------------------------------------------------------

EXHIBIT C

INTENTIONALLY OMITTED

--------------------------------------------------------------------------------

EXHIBIT D

(See Sections 3.10 and 4.1.6 of Security Agreement)

EXISTING LIENS ON THE COLLATERAL

 

Secured Party

  

Collateral

  

Principal Balance

  

Maturity

--------------------------------------------------------------------------------

EXHIBIT E

List of Pledged Securities

(See Section 3.12 of Security Agreement)

A. STOCKS:

 

Issuer

  

Certificate Number

  

Number of Shares

B. BONDS:

 

Issuer

  

Number

  

Face Amount

  

Coupon Rate

  

Maturity

C. GOVERNMENT SECURITIES:

 

Issuer

  

Number

  

Type

  

Face Amount

  

Coupon Rate

  

Maturity

D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED):

 

Issuer

  

Description of Collateral

  

Percentage Ownership Interest

****[Add description of custody accounts or arrangements with securities
intermediary, if applicable]***

--------------------------------------------------------------------------------

EXHIBIT F

(See Section 3.1 of Security Agreement)

OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED

Secretary of State of Delaware

Secretary of State of Illinois

Secretary of State of Iowa

Secretary of State of Kentucky

Secretary of State of Louisiana

Secretary of State of Florida

Secretary of State of Ohio

--------------------------------------------------------------------------------

EXHIBIT G

(See Section 3.11 of Security Agreement)

Federal Tax Identification Number of Each of the Obligors

 

Obligor

  

Federal Tax Identification Number

--------------------------------------------------------------------------------

Exhibit H

(See Section 1.3 of Security Agreement)

Commercial Tort Claims

--------------------------------------------------------------------------------

EXHIBIT I

(See Section 3.8 of Security Agreement)

List of all Chattel Paper

 

Type of Chattel Paper

   Names of Obligor    Amounts Owing    Due date

--------------------------------------------------------------------------------

ANNEX I

to

PLEDGE AND

SECURITY AGREEMENT

Reference is hereby made to the Second Amended and Restated Pledge and Security
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the “Agreement”), dated as of December 22, 2009, made by each of Churchill
Downs Incorporated, a Kentucky corporation (the “Borrower”) and the other
Subsidiaries of the Borrower listed on the signature pages thereto (together
with the Borrower and any additional Subsidiaries, including the undersigned,
which become parties thereto by executing a Supplement in substantially the form
hereof, the “Obligors”), in favor of the Collateral Agent. Capitalized terms
used herein and not defined herein shall have the meanings given to them in the
Agreement. By its execution below, the undersigned, [NAME OF NEW OBLIGOR], a
[                    ] [corporation/limited liability company/limited
partnership] (the “New Obligor”) agrees to become, and does hereby become, an
Obligor under the Agreement and agrees to be bound by the Agreement as if
originally a party thereto. By its execution below, the undersigned represents
and warrants as to itself that all of the representations and warranties
contained in the Agreement are true and correct in all respects as of the date
hereof. New Obligor represents and warrants that the supplements to the Exhibits
to the Agreement attached hereto are true and correct in all respects and such
supplements set forth all information required to be scheduled under the
Agreement. New Obligor shall take all steps necessary and required under the
Agreement to perfect, in favor of the Collateral Agent, a first-priority
security interest in and lien against New Obligor’s Collateral.

IN WITNESS WHEREOF, the New Obligor has executed and delivered this Annex I
counterpart to the Agreement as of this                          day of
                    , 20        .

 

[NAME OF NEW OBLIGOR] By:     Title:    

--------------------------------------------------------------------------------

EXHIBIT L

FORM OF LENDER JOINDER

This LENDER JOINDER (this “Joinder”) is dated as of the Commitment Increase
Effective Date provided below, and is among [Insert Name of New Commitment
Provider] (the “New Commitment Provider”), CHURCHILL DOWNS INCORPORATED
(“Borrower”), the GUARANTORS party hereto, the LENDERS party hereto, and
JPMORGAN CHASE BANK, N.A., in its capacity as contractual representative as
Agent for itself and the Lenders under the Credit Agreement referenced below
(the “Agent”).

1. Preliminary Matters.

1.1 The Borrower, the Guarantors party thereto, the Lenders party thereto, and
the Agent, entered into an Second Amended and Restated Credit Agreement dated as
of December 22, 2009, (as amended, modified, renewed, restated or extended from
time to time, the “Credit Agreement”), and certain Loan Documents (as defined in
the Credit Agreement). Capitalized terms used in this Joinder and not otherwise
defined shall have the meanings given them in the Credit Agreement.

1.2 The Borrower has requested that the Aggregate Commitment be increased in
accordance with the terms and conditions of the Credit Agreement, including
without limitation Section 2.22 of the Credit Agreement.

1.3 The New Commitment Provider, the Borrower, the Guarantors and the Agent
desire to supplement the Credit Agreement and the other Loan Documents pursuant
to this Joinder as set forth herein. The other Lenders are deemed in
Section 2.22.5(i) of the Credit Agreement to have consented and agreed as set
forth herein.

1.4 This Joinder is effective as of, and the “Commitment Increase Effective
Date” for purposes of Section 2.22 of the Credit Agreement is,
                        , 20__.

1.5 On the Commitment Increase Effective Date, the Aggregate Commitment will
increase from $             to $            .

2. The Increase in the Commitment.

2.1 Set forth below is the Commitment provided by the New Commitment Provider if
it is a New Lender:

 

Name of New Lender

   Amount of Commitment    Percentage of Aggregate
Commitment      

2.2 Set forth below is the increase in the New Commitment Provider’s existing
Commitment if the New Commitment Provider is an Existing Lender, and its
resulting new Commitment and new percentage:

 

New Commitment
Provider who is an
Existing Lender

  

Increase in Commitment

  

Resulting New
Commitment
Amount

  

Resulting New
Percentage of
Aggregate
Commitment

        

--------------------------------------------------------------------------------

2.3 The New Commitment Provider hereby purchases from the other Lenders such New
Commitment Provider’s Pro Rata Share in any Floating Rate Loans outstanding on
the Commitment Increase Effective Date, such purchase to be and become effective
on and as of the Commitment Increase Effective Date. The New Commitment Provider
shall purchase from the other Lenders such New Commitment Provider’s Pro Rata
Share in each outstanding Eurodollar Loan on the date, if any, after the
Commitment Increase Effective Date on which the Borrower either renews its
Eurodollar Loan election with respect to the Eurodollar Loan in question or
converts such Eurodollar Loan to a Floating Rate Loan (provided that each New
Commitment Provider shall not purchase an interest in such Loans from the
Lenders on the Commitment Increase Effective Date unless the Commitment Increase
Effective Date happens to be a renewal or conversion date as applicable). Each
New Commitment Provider shall participate in all Facility L/Cs outstanding on
the Commitment Increase Effective Date according to its Pro Rata Share and in
accordance with the terms of the Credit Agreement.

3. Representations, Warranties, and Certain Covenants.

3.1 The New Commitment Provider represents and warrants that (a) it has full
power and authority, and has taken all necessary action, to execute and deliver
this Joinder and to consummate the transactions contemplated hereby and to
become a Lender under the Credit Agreement, (b) confirms that none of the funds,
moneys, assets or other consideration being used in connection with its
obligations hereunder are “plan assets” as defined under ERISA and that all its
rights, benefits and interests in and under the Loan Documents will not be “plan
assets” under ERISA, and (c) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Joinder and to undertake its obligations as a Lender
on the basis of which it has made such analysis and decision independently and
without reliance on the Agent or any other Lender.

3.2 The New Commitment Provider agrees that (a) from and after the Commitment
Increase Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and shall have all other rights and obligations
of a Lender thereunder, to the same extent and with the same effect as the
Existing Lenders, (b) all references in the Loan Documents to “Lender” or
“Lenders” include the New Commitment Provider, (c) it will, independently and
without reliance on the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents,
and (d) it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed by it as a
Lender.

4. No Default. The Loan Parties represent and warrant that as of the date
hereof: (a) no Default or Unmatured Default has occurred and is continuing,
(b) the representations and warranties contained in Article V of the Credit
Agreement are true and correct in all material respects as of the Commitment
Increase Effective Date except to the extent any such representation is stated
to relate solely to an earlier date, in which case such representation was true
and correct on and as of such earlier date, and (c) the Borrower has complied
with Section 2.22 of the Credit Agreement in all respects and the increase in
the Aggregate Commitments provided in this Joinder on and as of the Commitment
Increase Effective Date is in accordance with all of the terms of the Credit
Agreement.

--------------------------------------------------------------------------------

5. General.

5.1 Except as expressly modified herein, the Loan Documents, as amended, are and
remain in full force and effect.

5.2 Nothing contained herein will be construed as waiving any Default or
Unmatured Default under the Loan Documents or will affect or impair any right,
power or remedy of Agent under or with respect to the Loan Documents, as
amended, or any agreement or instrument guaranteeing, securing or otherwise
relating to any of the Loans.

5.3 All representations and warranties made by the New Commitment Provider
herein will survive the execution and delivery of this Joinder.

5.4 This Joinder is binding upon and inures to the benefit of Borrower, the
Guarantors, the New Commitment Provider, the Agent, and the Lenders and their
respective successors and assigns.

5.5 The New Commitment Provider will pay Agent’s reasonable attorneys fees in
connection with this Joinder.

5.6 This Joinder will in all respects be governed and construed in accordance
with the laws of the Commonwealth of Kentucky.

Executed as of the Commitment Increase Effective Date.

 

NEW COMMITMENT PROVIDER:   By     Print Name:     Title:     Address:          
Telephone:   (    )       Fax:   (    )    

--------------------------------------------------------------------------------

AGENT: JPMORGAN CHASE BANK, N.A., as Agent By:      

Name:

    Title:  

--------------------------------------------------------------------------------

BORROWER: CHURCHILL DOWNS INCORPORATED By     Name:     Title:     GUARANTORS:
[GUARANTORS TO COME] By     Name:     Title:    

--------------------------------------------------------------------------------

EXHIBIT M

FORM OF

ACQUISITION COMPLIANCE CERTIFICATE

                                         , 20        

JPMorgan Chase Bank, N.A., as Agent

416 W. Jefferson Street

Louisville, Kentucky 40202

Attn:                                 

Ladies and Gentlemen:

This Acquisition Compliance Certificate (this “Certificate”) is furnished
pursuant to that certain Second Amended and Restated Credit Agreement dated as
of December 22, 2009 (as amended, modified, renewed, restated or extended from
time to time, the “Credit Agreement”) among Churchill Downs Incorporated (the
“Borrower”), the Guarantors party thereto, the Lenders party thereto, and
JPMorgan Chase Bank, N.A., as contractual representative as Agent for itself and
the Lenders as provided therein. Unless otherwise defined herein, capitalized
terms used in this Certificate have the meanings given them in the Credit
Agreement.

I,                                         , [President/Chief Executive
Officer/Chief Financial Officer/Treasurer select one] of the Borrower, hereby
submit this Certificate in connection with the proposed Acquisition that was the
subject of a Notice of Acquisition issued to Agent dated                     ,
20_, (the “Subject Acquisition”) and hereby certify on behalf of the Loan
Parties as of the [month/year most recently ended, i.e.,                     ,
20        ] (the “Report Date”), the following, after giving effect to the
Subject Acquisition:

 

1. Interest Coverage Ratio (Section 6.24.1)

The ratio of (A) Consolidated Adjusted EBITDA to (B) Consolidated Interest
Expense, for the four fiscal quarters ending as of the Report Date is
                         to 1.00 which is not less than 3.50 to 1.00. Such ratio
is computed as follows:

 

(A)   Consolidated Adjusted EBITDA for the four fiscal quarters ending as of the
Report Date.

   $ _______________

(B)   Consolidated Interest Expense for four fiscal quarters ending as of the
Report Date.

   $ _______________

(C)   Ratio of Item (A) to Item (B) equals Interest Coverage Ratio on the Report
Date.

                  to 1.00

 

2. Leverage Ratio (Section 6.24.2)

The ratio of (A) Consolidated Funded Indebtedness on the Report Date to
(B) Consolidated Adjusted EBITDA for the four fiscal quarters ending on the
Report Date is                  to 1.00, calculated as set forth below in this
Part 2, which is not greater than [3.25 to 1.00]8. Such ratio is computed as
follows:

 

(A)   Consolidated Funded Indebtedness as of the Report Date.

   $ _______________

 

8

Adjust per Section 6.24.2 of the Agreement if Material Greenfield Project has
commenced.

--------------------------------------------------------------------------------

(B)   Consolidated Adjusted EBITDA for the four fiscal quarters ending as of the
Report Date.

   $ _______________

(C)   Ratio of amount on Line (A) to amount on Line (B) equals Leverage Ratio.

     _______ to 1.00

 

3. Minimum Net Worth (Section 6.24.3).

As of the Report Date, (A) the Consolidated Net Worth is $                    ,
which is not less than (B) the base net worth (“Base Net Worth”) which is
$            . Such amounts are computed as follows:

Base Net Worth as of Report Date:

 

(i)     Minimum net worth.

   $ 350,000,000

(ii)    50% of Consolidated Net Income of the Borrower earned in each fiscal
year beginning with the Borrower’s fiscal year ending December 31, 2009.

   $ _______________

(iii)  100% of the proceeds from any public and/or private offering and/or sale
of any common and/or preferred stock and/or other equity security, and/or any
note, debenture or other security convertible, in whole or in part, to common
and/or preferred stock and/or other equity security, net of reasonable expenses,
commissions and fees associated with such sale, from and after the date of the
Agreement9.

   $ _______________

(iv)   Sum of item (i) plus item (ii) plus item (iii) equals the Base Net Worth
as of the Report Date.

   $ _______________

4.      Indebtedness (Section 6.10).

  

(A)   Total amount of Indebtedness secured by purchase money security interests
(may not exceed $5,000,000).

   $ _______________

(B)   Capitalized Lease Obligations (may not exceed $10,000,000).

   $ _______________

(C)   Indebtedness to sellers in connection with Permitted Acquisitions
subordinated as required in Section 6.10(vi) (in an aggregate amount may not
exceed $10,000,000).

   $ _______________

(D)   Indebtedness under the Master Plan Bond Transaction (may not exceed
$153,000,000).

   $ _______________

5.      Sale of Assets (Section 6.12)

  

(A)   Leases, sales or other dispositions of Property, including Property
previously leased, sold or disposed of during the twelve-month period ending
with the month in which any such lease, sale or other disposition occurs (may
not exceed a Twelve Month Substantial Portion).

   $ _______________

 

9

Provided, that, to the extent that the Borrower makes cash repurchases of its
Equity Interests in any fiscal year of the Borrower, up to $25,000,000 of such
amount expended by the Borrower shall be deducted from the Consolidated Net
Worth that would otherwise be required to be maintained pursuant to the terms of
Section 6.24.3 of the Agreement.

--------------------------------------------------------------------------------

(B)   Leases, sales or other dispositions of Property, including Property
previously leased, sold or disposed of from and after the Closing Date (may not
exceed a Term Substantial Portion).

   $ _______________

6.      Investments and Acquisitions (Section 6.13)

  

(A)   Investments in Excluded Entities subject to Section 6.13(ii)(c).

     $_______________

(B)   Acquisitions of Loan Parties not engaged in a Current Field of Enterprise
subject to Section 6.13(iii)(d)(4).

     $_______________

(C)   Acquisition of Excluded Entities subject to Section 6.13(iii)(e).

     $_______________

(D)   Acquisitions subject to Section 6.13(iii)(f)(3).

     $_______________

(E)   Total of amounts in Part 7(A), (B), (C), and (D) (as aggregated may not
exceed 25% of Consolidated Net Worth).

     $_______________

7.      Rentals (Section 6.18)

  

Obligations for Consolidated Rentals in the aggregate for current fiscal year
(may not exceed $15,000,000 in any one fiscal year).

   $ _______________

8.      Off-Balance Sheet Liabilities (Section 6.23)

  

Off-Balance Sheet Liabilities (may not, when aggregated as provided in Section
6.15, exceed $50,000,000).

   $ _______________

9.      Contingent Obligations (Section 6.34)

  

Contingent Obligations (prohibited except as provided in Section 6.34, including
guaranties of the obligations of Loan Parties not to exceed $10,000,000 in the
aggregate).

   $ _______________

10.    Restricted Payments (Section 6.37)

  

Restricted Payments (prohibited except as provided in Section 6.37, including
the repurchase by the Borrower of its capital stock (not to exceed $75,000,000
during the term of the Agreement) and additional Restricted Payments (not to
exceed $20,000,000 in the aggregate during any fiscal year of the Borrower).

   $ _______________

--------------------------------------------------------------------------------

  11. The total consideration to be paid in connection with the Subject
Acquisition (whether for interest(s) in a Person or for Property from a Person,
or both) is $                        . If the Person to be acquired in the
Subject Acquisition, or the Loan Party acquiring Property from a Person in the
Subject Acquisition, is not engaged in a Current Field of Enterprise, the
aggregate consideration paid for the Acquisition of and Investment in the Person
to be acquired, together with all other Acquisitions permitted under
Section 6.13 of the Credit Agreement, when aggregated with all of the
Investments under clause (ii)(c) of Section 6.13 and Acquisitions under clauses
(iii)(d)(4), (iii)(e) and (iii)(f)(3) of Section 6.13 is $                    ,
which shall not exceed 25% of Consolidated Net Worth at the time of the Subject
Acquisition of such Person.

 

  12. If the Person to be acquired in the Subject Acquisition is to be an
Excluded Entity, then:

 

(A) Evidence of the approval of the board of directors or other equivalent
governing body of the Person to be acquired in the Subject Acquisition is
attached to this Certificate; and

 

(B) Copies of any agreements entered into or proposed to be entered into by the
applicable Loan Parties in connection with the Subject Acquisition, together
with such other information about the Person to be acquired in the Subject
Acquisition and/or its Property as the Agent has reasonably required is attached
to this Certificate.

 

  13. The Borrower is in compliance with, and since the most recent Report Date
under the Compliance Certificate most recently delivered to the Agent by the
Borrower has at all times complied with, the provisions of the Credit Agreement,
including, without limitation, the provisions of Sections 6.10, 6.11, 6.12,
6.13, 6.14, 6.15, 6.16, 6.18, 6.19, 6.23, 6.24, 6.25, 6.26, 6.30, 6.32, 6.33,
6.34 and 6.37 after giving effect to the Subject Acquisition.

 

  14. There has been no change in any of the locations where any Collateral is
kept or any other change in the information set forth on Schedule A to the
Security Agreement. [List any exceptions.]

 

  15. No event which constitutes a Default or an Unmatured Default, has
occurred, will occur after giving effect to the Subject Acquisition, or is
continuing.

 

  16. If the Person proposed to be acquired will be or become a Loan Party,
attached hereto or delivered herewith are a properly executed Guarantor Joinder
and appropriate Collateral Documents signed by the appropriate Loan Parties,
provided that if and to the extent the Acquisition involves Restricted Assets,
the Loan Parties will comply in all respects with Section 6.13(iii)(d)(3) of the
Credit Agreement; the applicable horse racing and/or gaming regulators are:

 

  and those Restricted Assets are described as follows:                 

 

  17. This Certificate is being delivered together with the referenced Guarantor
Joinder and appropriate Collateral Documents at least 5 Business Days prior to
the closing of the Subject Acquisition, as required by Section 6.13(iii)(g) of
the Credit Agreement.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
Report Date but actually on the date set forth below.

 

CHURCHILL DOWNS INCORPORATED By     Name:     Title:   [President/Chief
Executive Officer/Chief Financial Officer/Treasurer] Date:  
                    , 20__

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EXHIBIT N

FORM OF

GUARANTOR JOINDER

This GUARANTOR JOINDER (this “Joinder”) is dated as of the Effective Date
provided below, and is among [Insert Name of New Guarantor] (the “New
Guarantor”), CHURCHILL DOWNS INCORPORATED (the “Borrower”), the GUARANTORS party
hereto, and JPMORGAN CHASE BANK, N.A., in its capacity as contractual
representative as Agent for and on behalf of itself and the Lenders under the
Credit Agreement referenced below (the “Agent”), who hereby agree as follows:

 

1. Preliminary Matters.

1.1 The Borrower, the Guarantors party thereto, the Lenders party thereto, and
the Agent entered into an Second Amended and Restated Credit Agreement dated as
of December 22, 2009, (as amended, modified, renewed, restated or extended from
time to time, the “Credit Agreement”), and certain Loan Documents (as defined in
the Credit Agreement). Capitalized terms used in this Joinder and not otherwise
defined shall have the meanings given them in the Credit Agreement.

1.2 The New Guarantor, the Borrower, the Guarantors, and the Agent, on behalf of
itself and the Lenders, desire to amend the Credit Agreement and all other
documents executed in connection therewith (collectively, the “Loan Documents”)
pursuant to this Joinder as set forth herein.

 

2. Joinder. Effective as of                                         , 20        
(the “Effective Date”):

2.1 All references in the Loan Documents to “Guarantor” or “Guarantors” on and
as of the Effective Date and thereafter include the New Guarantor.

2.2 All references in all of the Loan Documents to “Loan Party” or “Loan
Parties” on and as of the Effective Date and thereafter include the New
Guarantor.

2.3 The definition of “Guarantors” as set forth in Section 1.1 of the Guaranty
given by the Guarantors is hereby amended and restated to include the New
Guarantor. All references in the Guaranty to “Guarantors” shall be deemed on and
as of the Effective Date and thereafter to reference the New Guarantor as a
Guarantor, both in its singular and collective form.

2.4 The definitions of “Guarantors” and “Obligor(s)” as set forth in 1.3 of the
Pledge and Security Agreement is hereby amended and restated to include the New
Guarantor. All references in the Security Agreement to “Guarantors” and
“Obligor(s)” shall be deemed on and as of the Effective Date and thereafter to
reference the New Guarantor as a Guarantor and Obligor(s), both in their
singular and collective form.

2.5 [Include if appropriate: The New Guarantor is executing and delivering the
Mortgage(s) and other Collateral Documents listed on Schedule 2.5 to this
Joinder.]

 

3. Representations and Warranties. To induce Agent, on behalf of the Lenders, to
enter into this Joinder, the New Guarantor and the other Loan Parties represent
and warrant as follows:

3.1 The New Guarantor has the full power and authority, and has taken all
necessary action, to execute and deliver this Joinder and to consummate the
transactions contemplated hereby and to become a Guarantor and/or Obligor under
the Credit Agreement, the Guaranty, the Pledge and Security Agreement [include
if applicable the Mortgages] and the other Loan Documents to which it is or is
becoming a party.

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3.2 The representations and warranties contained in Article V of the Credit
Agreement and all other representations and warranties made in any other Loan
Document are true and correct in all material respects except to the extent such
representation is stated to relate solely to an earlier date, in which case such
representation was true and correct on and as of such earlier date.

3.3 No Default or Unmatured Default has occurred and is continuing.

3.4 The New Guarantor has received a copy of the Credit Agreement and other Loan
Documents, together with such other documents and information as it has
(i) deemed appropriate to decide that it is in its interest and to its financial
benefit to guarantee the obligations of the Borrower under the Credit Agreement,
any Notes, any Rate Management Transaction documents, and the other Loan
Documents (as well as any Banking Services Obligations) and (ii) enter into this
Joinder and undertake its obligations as a Guarantor on the basis of which it
has made such analysis and decision independently and without reliance on the
Agent, any other Lender or any other Guarantor.

 

4. Covenants.

4.1 From and after the Effective Date, the New Guarantor agrees: (a) to be bound
by the provisions of the Credit Agreement and the Guaranty as a Guarantor
thereunder and shall have all other rights and obligations of a Guarantor
thereunder, to the same extent and with the same effect as the Existing
Guarantors, (b) that all references in the Loan Documents to “Guarantor,”
“Guarantors,” “Loan Party” and/or “Loan Parties” include the New Guarantor,
(c) that it will perform in accordance with their terms all of the obligations,
covenants and conditions of the Guarantors under the Loan Documents to which any
of the Guarantors is a Loan Party, and (d) that it will perform in accordance
with their terms all of the obligations, covenants and conditions of the
Obligors under the Security Agreement to the same extent and with the same
effect as the existing Obligors.

4.2 The New Guarantor agrees that the Collateral Agent may file one or more
financing statements pursuant to the Uniform Commercial Code in form
satisfactory to Collateral Agent and the New Guarantor will pay the cost of
filing financing, continuation and termination statements in all public offices
where filing is deemed necessary or desirable by Agent. The New Guarantor will
execute and deliver to Collateral Agent from time to time such supplemental
assignments or other instruments as Collateral Agent may require for the purpose
of confirming Collateral Agent’s and the Lenders’ interest in any Collateral in
which the Guarantor has an interest. The New Guarantor hereby authorizes
Collateral Agent to execute and file on behalf of such New Guarantor all
financing statements and documents deemed necessary or appropriate to perfect
the Collateral Agent’s security interest in the Collateral.

4.3 The New Guarantor shall, from time to time, at its expense, (i) take such
steps as may be necessary and/or appropriate to faithfully preserve and protect
the Lien in favor of the Collateral Agent, for the benefit of the Lenders, on
and security interest in the Collateral more fully described in the Collateral
Documents as a continuing first priority perfected Lien, subject only to
Permitted Liens, (ii) shall do such other acts and things as the Agent in its
sole discretion may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and to
exercise and enforce its rights and remedies thereunder with respect to the
Collateral, and (iii) as Property is acquired and as required by the other
provisions of this Agreement and the Credit Agreement, enter into additional
documents from time to time in the form of the Collateral Documents (except as
to the applicable Loan Party and the Property subject thereto) and take such
other steps to grant and perfect first priority Liens, subject only to Permitted
Liens, on those assets to the Collateral Agent, for the benefit of the Lenders.

--------------------------------------------------------------------------------

5. General.

5.1 Except as expressly modified herein, the Loan Documents, as previously
amended and as amended and/or affected by this Joinder, are and remain in full
force and effect.

5.2 Nothing contained herein will be construed as waiving any Default or
Unmatured Default under the Loan Documents or will affect or impair any right,
power or remedy of Agent under or with respect to the Loan Documents, as
amended, or any agreement or instrument guaranteeing, securing or otherwise
relating to any of the Loans.

5.3 All representations and warranties made by the Borrower, the Guarantors and
the New Guarantor herein will survive the execution and delivery of this
Joinder.

5.4 This Joinder will be binding upon and inure to the benefit of the Borrower,
the Guarantors, the New Guarantor, the Agent, the Collateral Agent and the
Lenders and their respective successors and assigns.

5.5 New Guarantor will pay the Agent’s reasonable attorneys fees in connection
with this Joinder.

5.6 This Joinder will in all respects be governed and construed in accordance
with the laws of the Commonwealth of Kentucky.

5.7 A copy of this Joinder may be attached to any Notes as an allonge.

[THE BALANCE OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]

--------------------------------------------------------------------------------

Executed as of the Effective Date.

 

AGENT: JPMORGAN CHASE BANK, N.A., as Agent By:       Name:       Title:    

 

NEW GUARANTOR:   By:     Print Name:     Title:    

--------------------------------------------------------------------------------

BORROWER: CHURCHILL DOWNS INCORPORATED By     Name:     Title:     GUARANTORS:
[GUARANTORS TO COME] By     Name:     Title:    

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EXHIBIT O

FORM OF

INVESTMENT COMPLIANCE CERTIFICATE

                                         , 20        

JPMorgan Chase Bank, N.A., as Agent

416 W. Jefferson Street

Louisville, Kentucky 40202

Attn:                                         

Ladies and Gentlemen:

This Investment Compliance Certificate (this “Certificate”) is furnished
pursuant to that certain Second Amended and Restated Credit Agreement dated as
of December 22, 2009 (as amended, modified, renewed, restated or extended from
time to time, the “Credit Agreement”) among Churchill Downs Incorporated (the
“Borrower”), the Guarantors party thereto, the Lenders party thereto, and
JPMorgan Chase Bank, N.A., as contractual representative as Agent for itself and
the Lenders as provided therein. Unless otherwise defined herein, capitalized
terms used in this Certificate have the meanings given them in the Credit
Agreement.

I,                                         , [President/Chief Executive
Officer/Chief Financial Officer/Treasurer select one] of the Borrower, hereby
submit this Certificate in connection with the proposed Investment pursuant to
and in compliance with Section 6.13(ii)(c) of the Credit Agreement (the “Subject
Investment”) and hereby certify on behalf of the Loan Parties as of the
[month/year most recently ended, i.e.,                     , 20        ] (the
“Report Date”), the following:

1. The total consideration to be paid and/or invested in connection with the
Subject Investment is $                                . Such Subject Investment
amount, together with all other Investments and Acquisitions permitted under
Section 6.13 of the Credit Agreement, when aggregated with all other Investments
under clause (ii)(c) of Section 6.13 and Acquisitions under clauses (iii)(d)(4),
(iii)(e) and (iii)(f)(3) of Section 6.13 is $                , which shall not
exceed 25% of Consolidated Net Worth at the time of the Subject Investment.

2. The Borrower is in compliance with, and since the most recent Report Date
under the Compliance Certificate most recently delivered to the Agent by the
Borrower has at all times complied with, the provisions of the Credit Agreement,
including, without limitation, the provisions of Sections 6.10, 6.11, 6.12,
6.13, 6.14, 6.15, 6.16, 6.18, 6.19, 6.23, 6.24, 6.25, 6.26, 6.30, 6.32, 6.33,
6.34 and 6.37.

3. There has been no change in any of the locations where any Collateral is kept
or any other change in the information set forth on Schedule A to the Security
Agreement. [List any exceptions.]

4. No event has occurred and is continuing which constitutes a Default or an
Unmatured Default has occurred, will occur after giving effect to the Subject
Investment, or is continuing.

5. This Certificate is being at least 5 Business Days prior to the closing or
other making of the Subject Investment, as required by Section 6.13(ii)(c) of
the Credit Agreement.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
Report Date but actually on the date set forth below.

 

CHURCHILL DOWNS INCORPORATED By     Name:     Title:   [President/Chief
Executive Officer/Chief Financial Officer/Treasurer] Date:  
                    , 20__

--------------------------------------------------------------------------------

EXHIBIT P

FORM OF

CERTIFICATE OF CHIEF FINANCIAL OFFICER

JPMorgan Chase Bank, N.A., Agent

416 West Jefferson

Louisville, Kentucky 40202

Ladies and Gentlemen:

I refer to the Second Amended and Restated Credit Agreement dated as of
December 22, 2009 (as amended, modified, renewed, restated or extended from time
to time, the “Credit Agreement”) among Churchill Downs Incorporated (the
“Borrower”), the Lenders party thereto, the Guarantors party thereto and
JPMorgan Chase Bank, N.A., as contractual representative as Agent for itself and
the Lenders as provided in the Credit Agreement (“Agent”). Unless otherwise
defined herein, terms defined in the Credit Agreement are used herein with the
same meanings.

In connection with the initial Credit Extension, and pursuant to Sections
4.1(i)(d) and 4.1(i)(w) of the Credit Agreement, the undersigned, as Chief
Financial Officer of Borrower, does hereby certify to Agent that, as of the
initial Credit Extension Date:

 

  (i) no Default or Unmatured Default has occurred and is continuing;

 

  (ii) the representations and warranties contained in Article V of the Credit
Agreement are true and correct in all material respects except to the extent any
such representation or warranty is stated to relate solely to an earlier date,
in which case such representation or warranty is true and correct on and as of
such earlier date; and

 

  (iii) no Material Adverse Effect has occurred since December 31, 2008 or is
occurring, and all of the representations and warranties made by or on behalf of
any of the Loan Parties relating to the Credit Agreement and/or any of the other
Loan Documents remain true, correct and complete.

 

Sincerely, CHURCHILL DOWNS INCORPORATED By:     Name:     Title:   Chief
Financial Officer

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EXHIBIT Q

FORM OF REIMBURSEMENT AGREEMENT

Attached

--------------------------------------------------------------------------------

Reimbursement Agreement

for Standby Letter(s) of Credit

   PNC BANK

THIS REIMBURSEMENT AGREEMENT FOR STANDBY LETTER(S) OF CREDIT (this “Agreement”)
is made as of this 28th day of February, 2000, by Churchill Downs Incorporated
(the “Applicant”), with an address at 700 Central Avenue, Louisville, KY 40208
in favor of PNC BANK, NATIONAL ASSOCIATION (the (“Bank”), with an address at 237
Fifth Avenue, Third Floor Annex, Pittsburgh, PA 15222. From time to time by
submitting an application on a form approved by the Bank (an “Application”), the
Applicant may request the Bank to issue one or more letters of credit (each, a
“Credit”). The Bank may issue any such Credit, but the Bank shall have no
obligation to do so unless otherwise agreed in writing. The Applicant agrees
that the following terms and conditions shall apply in the event the Bank issues
any Credit:

1. Definitions and Interpretation. (a) In addition to terms defined elsewhere in
this Agreement: “Base Rate” means a fluctuating rate per annum equal to the
greater of (i) the interest rate per annum announced from time to time by the
Bank as its then prime rate, which rate may not be the lowest rate then being
charged commercial borrowers by the Bank; or (ii) the rate applicable to
overnight federal funds transactions, as reasonably determined by the Bank, plus
.50%; “Business Day” means any day other than a Saturday, Sunday or other day on
which banks in Pittsburgh, Pennsylvania, or any other city of which the Bank may
give the Applicant notice from time to time, are authorized or required by law
to close; “Dollar Equivalent” means, with respect to an amount in any currency
other than U.S. dollars, as of any date, the amount of U.S. dollars into which
such amount in such amount in such currency may be converted at the spot rate at
which U.S. dollars are offered by the Bank in Pittsburgh for such currency at
approximately 11:00 a.m., Prevailing Time, on such date, plus all actual costs
of settlement, including amounts incurred by the Bank to comply with currency
exchange requirements of any Governmental Authority; “Governmental Authority”
means any de facto or de jure domestic or foreign government court, tribunal,
agency, or other purported authority; “Prevailing Time” means the prevailing
time in Pittsburgh, Pennsylvania (or any other city of which the Bank may have
given the Applicant notice) on the date in question; “Taxes” means all taxes,
fees, duties, levies, imposts, deductions, charges or withholdings of any kind
(other than taxes on the Bank’s net income); and “UCP” means the Uniform Customs
and Practice for Documentary Credits (1993 Revision), Incorporational Chamber of
Commerce Publication No. 500, and any subsequent official revision thereof.

(b) If this Agreement is signed by two or more persons, each shall be deemed to
make to the Bank all the representations, warranties and covenants contained
herein, and each shall be jointly and severally liable hereunder. Any reference
herein to this Agreement, an Application, a Credit, or any other Instrument,
agreement or document related hereto or thereto shall be deemed to refer to all
amendments, modifications, extensions and renewals hereof and thereof. Except to
the extent the context clearly otherwise requires, terms not defined herein
shall have the respective meanings ascribed to them by the UCP or, if not
defined herein, then by relevant provisions of the Uniform Commercial Code (the
“UCC”) of Pennsylvania or such other jurisdiction of which the Bank may give the
Applicant notice, with the definitions of Article 5 of the UCC controlling over
any conflicting definitions in other UCC Articles. Determinations made by the
Bank pursuant to the terms hereof shall be conclusive absent manifest error.

2. Payments. (a) The Applicant will pay to the Bank the amount to be paid by the
Bank with respect to each draft or other payment demand made under a Credit no
later than 10 a.m., Prevailing Time, on the date such payment is to be made by
the Bank, or such earlier time as the Bank may reasonably require. If a Credit
calls for the delivery by the Bank of an Item other than money, the Applicant
shall deliver or cause to be delivered such Item to the Bank, at such time, in
advance of the time the Bank is to deliver such Item, as the Bank may reasonably
require.

(b) The Applicant will pay to the Bank upon receipt of the Bank’s Invoice
therefor (i) interest on all amounts payable to the Bank hereunder from the date
due to the date of payment, at the Base Rate plus         % (or, if the
preceding blank is not completed, the Base Rate plus 4%; or, if this Agreement
is delivered in connection with a separate credit agreement, loan agreement,
promissory note

--------------------------------------------------------------------------------

or other agreement governing the payment of interest by the Applicant to the
Bank, then at the rate of interest applicable following the occurrence of an
event of default thereunder); provided that in the event shall the Applicant pay
hereunder Interest in excess of the minimum rate permitted by applicable law;
(ii) the Bank’s fees, as separately agreed to by the Applicant and the Bank, as
well as the customary commissions and other charges regularly charged by the
Bank for letters of credit; and (iii) all charges and expenses paid or incurred
by the Bank or any of its correspondents in connection with this Agreement or
any Credit, including all reasonable legal fees and expenses. All periodic
interest, fees and commissions shall be calculated on the basis of the actual
days elapsed in a 360 day year, and Interest shall continue to accrue at the
applicable rate set forth herein notwithstanding one or more defaults or the
entry of any judgment.

(c) All amounts payable hereunder by the Applicant shall be paid to the Bank at
its address set forth above or at such other place as the Bank may give notice
from time to time, in immediately available funds in the currency specified by
the Bank, without set off, defense, recoupment, deduction, cross-claim or
counterclaim of any kind; and the free and clear of, and without deduction for,
any present or future Taxes. If the Bank or the Applicant pays any Taxes,
whether or not correctly or legally assessed, the amounts payable hereunder
shall be increased so that, after the payment of such Taxes, the Bank shall have
received an amount equal to the sum the Bank would have received had no such
Taxes been paid. If any amount payable hereunder is determined in a currency
other than U.S. dollars, the Applicant shall make payment in such currency or,
at the Bank’s option, shall pay the Dollar Equivalent thereof. To effect any
payment due hereunder, the Bank may debit any amount that the Applicant may have
with the Bank or any of its affiliates.

3. Nature of Obligations (a) The Applicant’s obligations to the Bank under this
Agreement are absolute, unconditional and irrevocable, and shall be paid and
performed in accordance with the terms hereof irrespective of any act, omission,
event or condition, including, without limitation (i) the form of any lack of
power or authority of any signer of, or the lack of validity, sufficiency,
accuracy, enforceability or genuineness of (or any defect in or forgery of any
signature or endorsement on) any draft, demand, document, certificate or
instrument presented in connection with any Credit, or any fraud or alleged
fraud in connection with any Credit or any obligation underlying any Credit, in
each case, even if the Bank or any of its correspondents have been notified
thereof (ii) any claim or breach of warranty that might be made by the Applicant
or the Bank against any beneficiary of a Credit, or the existence of any claims,
set off, recoupment, counterclaim, cross-claim, defense, or other right that the
Applicant may at any time have against any beneficiary, any successor
beneficiary, any transferee or assignee of the proceeds of a Credit, the Bank or
any correspondence or agent of the Bank, or any other person, however arising;
(iii) any acts or omissions by, or the solvency of, any beneficiary of any
Credit, or any other person having a role in any transaction or obligation
relating to a Credit; (iv) any failure by the Bank to issue any Credit in the
form requested by the Applicant, unless the Bank receives written notice from
the Applicant of such failure within one Business Day after the Applicant shall
have received (by facsimile transmission or otherwise) a copy of such Credit and
such error is material; and (v) any action or omission (including failure or
compulsion to honor a presentation under any Credit) by the Bank or any of its
correspondence in connection with a Credit, draft or other demand for payment,
document, or any property relating to a Credit, and resulting from any
censorship, law, regulation, order, control, restriction, or the like,
rightfully or wrongly exercised by any Governmental Authority, or from any other
cause beyond the reasonable control of the Bank or any of its correspondents, or
for any loss or damage to the Applicant or to anyone else, or to any property of
the Applicant or anyone else, resulting from any such action or omission.

(b) The Bank is authorized to honor any presentation under a Credit without
regard to, and without any duty on the Bank’s part to inquire into, any
transaction or obligation underlying such credit, or any disputes or
controversies between the Applicant and any beneficiary of a Credit, or any
other person, notwithstanding that the Bank may have assisted the Applicant in
the preparation of the wording of any Credit or documents required to be
presented thereunder or that the Bank may be aware of any underlying
transactions or obligation or be familiar with any of the parties thereto.

--------------------------------------------------------------------------------

(c) The Applicant agrees that any action or omission by the Bank or any of its
correspondents in connection with any Credit or presentation thereunder shall be
binding on the Applicant and shall not result in any liability to the Bank or
any of its correspondents in the absence of the gross negligence or willful
misconduct of the Bank. Without limiting the generality of the foregoing, the
Bank and each of its correspondents (i) may rely on any oral or other
communication believed in good faith by the Bank or such correspondent to have
been authorized or given by or on behalf of the Applicant; (ii) may honor any
presentation of the documents presented appear on their face substantially to
comply with the terms and conditions of the relevant Credit; (iii) shall not be
liable to the Applicant for any consequential, punitive or special damages, or
for any damages resulting from any change in the value of any property relating
to a Credit; (iv) may honor a previously dishonored presentation under a Credit,
whether such dishonor was pursuant to a court order, to settle or compromise any
claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement
to the same extent as if such presentation had initially been honored, together
with any interest paid by the Bank; (v) may honor any drawing that is payable
upon presentation of a statement advising negotiation or payment, upon receipt
of such statement (even if such statement indicated that a draft or other
document is being separately delivered), and shall not be liable for any failure
of any such draft or other document to arrive, or to conform in any way with the
relevant credit; and (vi) may pay any paying or negotiating bank claiming that
it rightfully honored under the laws or practices of the place where such bank
is located.

(d) If the Applicant or any other person seeks to delay or enjoin the honorer by
the Bank of a presentation under a Credit, the Bank shall have no obligation to
delay or refuse to honor the presentation until validly so ordered by a court of
competent jurisdiction.

4. Set Off. The Applicant grants the Bank a right of set off against, to the
fullest extent permitted under applicable law, all of the Applicant’s
(a) property relating to any Credit; (b) property relating to any transaction or
obligation underlying a Credit; and (c) property in the possession of, on
deposit with, or in transit to, the Bank, now or hereafter, regardless of how
obtained or held (whether in a general or special account or deposit jointly or
with someone else, in safekeeping, or otherwise). The Bank’s right of set off
may be exercised without demand on or notice to the Applicant. The Bank shall be
deemed to have exercised its right of set off immediately upon the occurrence of
an Event of Default, although the Bank may enter such set off on the books and
records at a later date. The Applicant waives mutuality and maturity of debt in
connection with such right of set off. The Applicant agrees from time to time to
deliver to the Bank, on demand, such security or additional security as the Bank
may require to further secure the Applicant’s obligations hereunder.

5. Representations, Warranties, Covenants. The Applicant represents, warrants,
and covenants that (a) if not a mutual person, the Applicant is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and duly qualified to do business in those jurisdictions in which
its ownership of property or the nature of its business activities makes such
qualification necessary; (b) the Applicant has the requisite power and authority
to execute and deliver this Agreement and to perform its obligations hereunder;
and all such action has been duly authorized by all necessary proceedings on the
Applicant’s part, and neither now nor hereinafter shall contravene or result in
a breach of any organizational document of the Applicant, any agreement,
document, or instrument binding on the Applicant or his property, or any law,
treaty, regulation, or order of any Governmental Authority, or require any
notice, filing, or other action to or by any Governmental Authority; (c) all
financial statements and other information received from the Applicant by the
Bank prior to the date hereof fairly and accurately present in financial
condition in accordance with generally accepted accounting principles, and there
shall occur no material adverse change in the Applicant’s financial condition or
business operations since the date hereof; (d) from time to time, the Applicant
shall execute and deliver such further instruments and agreements and make and
permit such further actions as may be reasonably necessary to carry out the
provisions and purposes of this Agreement, and the Applicant shall provide such
evidence of compliance with the terms hereof

--------------------------------------------------------------------------------

and such financial statements and other information concerning the Applicant’s
financial condition and/or business operations as the Bank may reasonably
request; and (e) the Applicant and each transaction and obligation underlying
each Credit are and shall remain in compliance with all laws, treaties, rules,
and regulations of any Governmental Authority, including, without limitation,
foreign exchange control. United States foreign assets control, and currency
reporting laws and regulations, now or thereafter applicable.

6. Events of Default. The occurrence of any of the following is an “Event of
Default” hereunder: (a) the Applicant’s failure to pay when due any obligation
to the Bank or any of its affiliates under this Agreement or otherwise; (b) the
Applicant’s failure to perform or observe any other term or covenant of this
Agreement, or any representation or warranty contained in this Agreement or in
any document given now or hereafter by the Applicant in connection herewith is
materially false, erroneous, or misleading; (c) the occurrence of any event of
default or default and the lapse of any notice or care period under any other
debt, liability or obligations of the Applicant to the Bank or any of it’s
affiliates; (d) the failure to pay or perform any material obligations to any
other person if such failure may cause any such obligation to be due or
performable immediately; (e) any levy, garnishment, attachment, or similar
proceeding is instituted against the Applicant’s property in possession of, on
deposit with, or in transit to, the Bank; (f) the Applicant’s dissolution or
termination, or the institution by or against the Applicant or any of its
property or any proceeding relating to bankruptcy, receivership, insolvency,
reorganization, liquidation, conservatorship, foreclosure, execution,
attachment, garnishment, levy, assignment for the benefit or creditors, relief
of debtors, or similar proceeding (and, in the case of any such proceeding
instituted against the Applicant, such proceeding is not dismissed or stayed
within 30 days of the commencement thereof); (g) the entry of a material fiscal
judgment against the Applicant and the failure of the Applicant to discharge the
judgment within 10 day of the final entry thereof; (h) any material adverse
change to the business, assets, operations, financial condition or results of
operations of the Applicant; (i) the death or legal incompetency of an
individual Applicant or, if the Applicant is a partnership, the death or legal
incompetency of any individual general partner; (j) the occurrence of any of the
above events with respect to any person which has now or hereafter guaranteed or
provided any collateral for any of the Applicant’s obligations hereunder; or
(k) any guarantee, or any document, instrument or agreement purporting to
provide the Bank security for the Applicant’s obligations hereunder shall be
challenged, repudiated or unenforceable for any reason.

7. Remedies. Upon the occurrence of any Event of Default (a) the Bank may
exercise from time to time any of the rights and remedies available to the Bank
under this Agreement, under any other documents now or in the future evidencing
or securing obligations of the Applicant to the Bank, or under applicable law,
and all such remedies shall be cumulative and not exclusive; and (b) the
Applicant shall promptly deliver to the Bank in immediately available funds, as
collateral for any and all obligations of the Applicant to the Bank, an amount
equal to 105% of the maximum aggregate amount then or at any time thereafter
available to be drawn under all outstanding Credits, and the Applicant hereby
pledges to the Bank and grants to the Bank a security interest in all such funds
as security for such obligations, acknowledges that the Bank shall at all times
have control of such funds and shall be authorized to give entitlement orders
(and defined in the UCC) with respect to such funds, without further consent of
the Applicant or any other person, and agrees promptly to do al further things
that the Bank may deem necessary in order to grant and perfect the Bank’s
security interests in such funds. The Applicant waives presentment, protest,
dishonor, notice of dishonor, demand, notices of protest, notices of
non-payment, and notices of acceptance of this Agreement, and any other notice
of demand of any kind from the Bank.

8. Subrogations. The Bank, at its option, shall be subrogated to the Applicant’s
rights against any person who may be liable to the Applicant on any transaction
or obligation underling any Credit, to the rights of any holder in due course or
person with similar status against the Applicant, and to the rights of any
beneficiary or any successor or assignee of any beneficiary.

--------------------------------------------------------------------------------

9. Indemnification. The Applicant shall indemnify and hold the Bank and its
affiliates and agents, and each of their respective officers, directors,
shareholders and employees (each, an “Indemnified Party”) harmless from and
against any and all claims, liabilities, losses, damages, Taxes, penalties,
interest, judgments, costs and expenses (including reasonable legal fees and
costs, whether of Internal or external counsel to the Bank), which may be
incurred by or awarded against any Indemnified Party, and which arise out of or
in connection with (a) any Credit, this Agreement, or the preparation for a
defense of any investigation, litigation, or proceeding arising out of or in
connection herewith or therewith (and irrespective of who may be the prevailing
party); (b) any payment or action taken in connection with any Credit,
including, without limitation, any action or proceeding seeking to restrain any
drawing under a Credit or to compel or restrain any payment or any other action
under a Credit or this Agreement (and irrespective of who may be the prevailing
party); (c) the enforcement of this Agreement or the collection or sale of any
property or collateral; and (d) any act or omission of any Governmental
Authority or other cause beyond the Bank’s reasonable control; except, in each
case, to the extent such claim, liability, loss, damage, Tax, penalty, interest,
judgment, cost or expense is found by a final judgment of a court of competent
jurisdiction to have resulted from the Bank’s gross negligence or willful
misconduct.

10. Miscellaneous. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder shall be in writing, will be
effective upon receipt, and shall be delivered by registered mail, return
receipt requested, by facsimile transmission with confirmation of delivery, or
by a nationally recognized overnight courier service, to the intended recipient
at this address set forth in this Agreement, or at such other address of which
such party shall have given notice to the other in accordance herewith. No delay
or omission of the Bank to exercise any right or power arising hereunder shall
impair any such right the power or be considered to be a waiver of any such
right or power. No modification, amendment or waiver of any provision of this
Agreement, or consent to any departure therefrom, will be effective unless made
in a writing signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. If
any provision of this Agreement is found to be invalid by a court, all the other
provisions of the Agreement will remain in full force and effect. If this
Agreement is executed by more than on applicant, each Applicant waives any and
all defenses to payment and performance hereunder based upon principles of
ownership, impairment of collateral, or otherwise and, without limiting the
generality of the foregoing, each Applicant consents to: any change in the time,
manner, or place of payment of or in any other term of all or any of the
obligations of any other applicant hereunder or otherwise, and any exchange or
release of any property or collateral, or the release of other amendment,
extensions, renewal, waiver of, or consent to departure from, the terms hereof
or of any guaranty or security agreement or any other agreement related hereto.
This Agreement will be binding upon and inure to the benefit of the applicant
and the Bank and their respective heirs, executors, administrators, successors
and assigns: provided, however, that the Applicant may not assign this Agreement
in whole or in part without the Bank’s prior written consent and the Bank may at
any time assign this Agreement in whole or in part. The Applicant hereby
authorizes the Bank, from time to time without notice to the Applicant, to
record telephonic and other electronic communications of the Applicant and
provide any information pertaining to the financial condition, business
operations or creditworthiness of the applicant to or at the direction of any
Governmental Authority, to any of the Bank’s correspondents, and the Bank’s
affiliates, and to any of its or their directors, officers, employees, auditors
and professional advisors, to any person which in the ordinary course of its
business makes credit reference inquiries, to any person which may succeed to or
participate in all or part of the Bank’s interest hereunder, and as may be
necessary or advisable for the preservation of the Bank’s rights hereunder. This
is a continuing Agreement and shall remain in full force and effect until no
obligations of the Applicant and no Credit exist hereunder; provided, however,
that termination of this Agreement shall not release the Applicant from any
payment or performance that is subsequently rescinded or recouped, and the
obligation to make any such payment or performance shall continue until paid or
performed as if no such payment or performance ever occurred. Provisions
concerning payment, indemnification, increased costs, Taxes, immunity, and
jurisdiction shall survive the termination of this Agreement.

11. Financial Protection Applicant. If one or two or more Applicants is a
financial institution (the “Financial Institution”), the Financial Institution
shall be deemed to request the issuance of any Credit for its customer (the
“Customer”) who has also executed this Agreement as an Applicant. In
consideration of any such issuance, and as a direct and primary obligation, the
Financial

--------------------------------------------------------------------------------

Institution agrees to pay the Bank all amounts that become due and payable to
the Bank under this Agreement, when and as due, in accordance with the terms
hereof. The Financial Institution hereby assigns to the Bank all security
interests now or at any time existing granted in favor of the Financial
Institution as security for the Customer’s obligations to the Financial
Institution arising out of this Agreement or any Credit, and agree to do all
things necessary from time to time to effect such assignment.

12. Representative of Applicant. If this Agreement is executed by more than one
Applicant and neither is a Financial Institution, the Applicant whose signature
is first shown below shall have the exclusive right to deal with the Bank in
connection with the matters addressed herein, notwithstanding conflicting
instructions or requests from any other Applicant.

13. Waiver of Immunity. The Applicant acknowledges that this Agreement is
entered into, and each Credit will be issued, for commercial purposes and, if
the Applicant now or hereunder acquires any immunity (sovereign or otherwise)
from the jurisdiction of any court or from any legal process with respect to
itself or any of its property, the Applicant hereby irrevocably waives such
immunity.

14. Jurisdiction. The Applicant hereby irrevocably consents to the non-exclusive
jurisdiction of any state or federal court in the judicial district or the state
in which the Bank’s office set forth above is located, provided that nothing
contained in this Agreement will prevent the Bank from bringing any action,
enforcing any award or judgment, or exercising any right against the Applicant
individually, against any security, or against ant property of the Applicant
within any other jurisdiction. The Applicant agrees that the venue provided
above is the most convenient forum for the Bank and the Applicant. The Applicant
waives any objection to venue and any objection based as a more convenient forum
in any action under this Agreement.

15. WAIVER OF JURY TRIAL. THE APPLICANT IRREVOCABLY WAIVES ALL RIGHTS APPLICANT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE
RELATING TO THIS AGREEMENT, ANY CREDIT, ANY DOCUMENTS EXECUTED IN CONNECTION
WITH THIS AGREEMENT OR ANY CREDIT, OR ANY OBLIGATION OR TRANSACTION UNDERLYING
ANY OF THE FOREGOING. THE APPLICANT ACKNOWLEDGES THAT THIS WAIVER IS KNOWING AND
VOLUNTARY.

16. Governing Law. This Agreement and each Credit shall be interpreted,
construed, and enforced according to (a) the laws of the Commonwealth of
Pennsylvania, including, without limitation, the UCC; and (b) the UCP, which is
Incorporated herein by reference and which shall control (to the extent not
prohibited by the law referred to in (a)) in the event of any inconsistent
provisions of such law. In the event that a body of law other than that set
forth above is applicable to a Credit, the Applicant shall be obligated to pay
and reimburse the Bank for any payment made under such Credit if such payment
is, in the Bank’s judgment, justified under either the law governing this
Agreement or the law governing such Credit.

 

Churchill Downs Incorporated       (First Applicant’s Name)     (Co-Applicant or
Correspondent’s Name) By:   /s/ Vicki L. Baumgardner     By:     Print Name:  
Vicki L. Baumgardner     Print Name:     Title:   V.P. Finance/Treasurer    
Title:    

--------------------------------------------------------------------------------

EXHIBIT R

FORM OF BORROWING NOTICE

 

To: JPMorgan Chase Bank, N.A., as the Agent for itself and the Lenders under
that certain Second Amended and Restated Credit Agreement dated as of
December 22, 2009 by and among Churchill Downs Incorporated (the “Borrower”),
the Guarantors party thereto, the institutions from time to time parties thereto
as Lenders (the “Lenders”) and the Agent (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).

On behalf of Borrower, the undersigned hereby gives to the Agent a Borrowing
Notice pursuant to Section 2.10 of the Credit Agreement, and the Borrower hereby
requests to borrow on                                      (the “Borrowing
Date”) Revolving Loans from the Lenders with Commitments on a pro rata basis an
aggregate principal amount of $                        :

 

1.            i

   a Floating Rate Advance   

2.            i

   a Eurodollar Advance       Applicable Interest Period:    one month       two
months       three months       six months       nine months       twelve months

The undersigned hereby certifies to the Agent and the Lenders that (i) the
representations and warranties of the undersigned contained in Article V of the
Credit Agreement are and shall be true and correct in all material respects on
and as of the date hereof and on and as of the Borrowing Date (unless such
representation and warranty is made as of a specific date, in which case, such
representation and warranty shall be true in all material respects as of such
date); (ii) no Default or Unmatured Default has occurred and is continuing on
the date hereof on the Borrowing Date or will result from the making of the
proposed Revolving Loans.

Unless otherwise defined herein, capitalized terms used in this Notice will have
the meanings given them in the Credit Agreement.

 

Dated:                                                       CHURCHILL DOWNS
INCORPORATED       By:           Print Name:           Title:    

--------------------------------------------------------------------------------

EXHIBIT S

FORM OF CONVERSION/CONTINUATION NOTICE

 

To: JPMorgan Chase Bank, N.A., as the Agent for itself and the Lenders under
that certain Second Amended and Restated Credit Agreement dated as of
December 22, 2009 by and among Churchill Downs Incorporated (the “Borrower”),
the Guarantors party thereto, the institutions from time to time parties thereto
as Lenders (the “Lenders”) and the Agent (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).

On behalf of Borrower, the undersigned hereby gives to the Agent a
Conversion/Continuation Notice pursuant to Section 2.11 of the Credit Agreement,
and the Borrower hereby requests:

 

  i Conversion of $_________ of Floating Rate Advance No. __________ made to
Borrower in the original principal amount of $________________ and of which
$____________ is outstanding on the date hereof, into a Eurodollar Advance.

 

Applicable Interest Period:

   one month    two months    three months    six months    nine months   
twelve months

 

  i Continuation of Eurodollar Advance No.                          made to
Borrower in the original principal amount of
$                                    .

 

Applicable Interest Period:

   one month    two months    three months    six months    nine months   
twelve months

The proposed date on which such Conversion or Continuation should be made is
______________, 20__ (must be a Business Day at least three Business Days prior
to the requested Conversion Date and such day must be the last day of the
current Interest Period).

The undersigned hereby certifies that all conditions precedent to any Advance or
Conversion requested hereunder have been fully and timely satisfied. The
approval of this Notice of Conversion/Continuation will not be deemed to be a
waiver by Agent of any Default or Unmatured Default, or of any of the conditions
precedent to Agent’s taking of any action requested hereby.

 

Date:                                          CHURCHILL DOWNS INCORPORATED    
  By:           Print Name:           Title:    

--------------------------------------------------------------------------------

ADMINISTRATIVE QUESTIONNAIRE

[TO BE PROVIDED]

--------------------------------------------------------------------------------

US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

 

1.      Notices Regarding Plans and Benefit Arrangements.

A.     Certain Events

(i)     Promptly upon becoming aware of the occurrence thereof, notice
(including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto) of:

(a)    any Reportable Event with respect to the Borrower or any other member of
the Controlled Group (regardless of whether the obligation to report said
Reportable Event to the PBGC has been waived),

(b)    any prohibited transaction prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could subject the
Borrower or any other member of the Controlled Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, any Benefit Arrangement or
any trust created thereunder,

(c)    any assertion of material withdrawal liability with respect to any
Multiemployer Plan,

(d)    any partial or complete withdrawal from a Multiemployer Plan by the
Borrower or any other member of the Controlled Group under Title IV of ERISA (or
assertion thereof), where such withdrawal is likely to result in material
withdrawal liability,

(e)    any cessation of operations (by the Borrower or any other member of the
Controlled Group) at a facility in the circumstances described in Section
4062(e) of ERISA,

(f)     withdrawal by the Borrower or any other member of the Controlled Group
from a Multiple Employer Plan,

(g)    a failure by the Borrower or any other member of the Controlled Group to
make a payment to a Plan required to avoid imposition of a Lien under Section
302(f) of ERISA,

(h)    the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or

(i)     any change in the actuarial assumptions or funding methods used for any
Plan, where the effect of such change is to materially increase or materially
reduce the unfunded benefit liability or obligation to make periodic
contributions.

--------------------------------------------------------------------------------

SCHEDULE 1

SUBSIDIARIES AND OTHER INVESTMENTS

 

Name:

   Arlington Park Racecourse, LLC

Jurisdiction:

   Illinois

Membership Interest:

   Uncertificated Units

Owner:

  

Churchill Downs Incorporated (100%)

 

Name:

   Arlington OTB Corp.

Jurisdiction:

   Delaware

Authorized Capital Stock:

   1,000 shares Common

Issued Shares:

   10

Owner:

  

Arlington Park Racecourse, LLC

 

Name:

   BRIS Data Corporation

Jurisdiction:

   Kentucky

Authorized Capital Stock:

   1,000 shares Common

Issued Share:

   100

Owner:

  

Churchill Downs Incorporated

 

Name:

   Calder Race Course, Inc.

Jurisdiction:

   Florida

Authorized Capital Stock:

   800,000 shares Common    190 shares Preferred

Issued Shares:

   667,440 shares Common

Owner:

  

Churchill Downs Management Company, LLC

 

Name:

   CD ContentCo HC, LLC

Jurisdiction:

   Kentucky

Membership Interest:

   100% Uncertificated Units

Owner:

  

Churchill Downs Investment Company

 

Name:

   CD HRTV HC, LLC

Jurisdiction:

   Kentucky

Membership Interest:

   Uncertificated Units

Owner:

  

Churchill Downs Investment Company (100%)

 

Name:

   Charlson Industries, Inc.

Jurisdiction:

   Ohio

Authorized Capital Stock:

   600 shares Common

Owner:

   111 shares (18.50%) owned by Churchill Downs Investment    Company    489
shares (81.50%) owned by Churchill Downs Simulcast    Productions, LLC

--------------------------------------------------------------------------------

Name:    Churchill Downs Entertainment Group, LLC Jurisdiction:    Delaware
Membership Interest:    Uncertificated Units

Owner:

 

   Churchill Downs Incorporated (100%) Name:    Churchill Downs Investment
Company Jurisdiction:    Kentucky Authorized Capital Stock:    1,000 shares
Common Issued Shares:    20 shares

Owner:

 

   Churchill Downs Incorporated Name:    Churchill Downs Louisiana Horseracing
   Company, L.L.C. Jurisdiction:    Louisiana Membership Interest:   
Uncertificated Units

Owner:

 

   Churchill Downs Management Company, LLC (100%) Name:    Churchill Downs
Louisiana Video Poker    Company, L.L.C. Jurisdiction:    Louisiana Membership
Interest:    Uncertificated Units

Owner:

 

   Churchill Downs Management Company, LLC (100%) Name:    Churchill Downs
Management Company, LLC Jurisdiction:    Kentucky Authorized Units:    1,000
Units Issued Units:    20 Units

Owner:

 

   Churchill Downs Incorporated Name:    Churchill Downs Simulcast Productions,
LLC    (f/k/a Charlson Broadcast Technologies, LLC) Jurisdiction:    Kentucky
Owner:    51% owned by Churchill Downs Investment Company   

49% owned by Charlson Industries, Inc.

 

Name:    Quad City Downs, Inc. Jurisdiction:    Iowa Authorized Capital Stock:
   900,000 shares Common A    900,000 shares Common B Issued Shares:    315,800
shares Common A Owner:    Arlington Park Racecourse, LLC

--------------------------------------------------------------------------------

Name:    Tomahawk Merger Corp. Jurisdiction:    Delaware
Authorized Capital Stock:    1,000 shares Common Issued Shares:    1,000 shares
Owner:   

Churchill Downs Incorporated

 

Name:    Tomahawk Merger LLC Jurisdiction:    Delaware Membership Interest:   
Uncertificated Units Owner:   

Churchill Downs Incorporated (100%)

 

Name:    Tracknet, LLC Jurisdiction:    Kentucky Membership Interest:   
Uncertificated Units Owner:   

Churchill Downs Investment Company (100%)

 

Name:    Tropical Park, Inc. Jurisdiction:    Florida Authorized Capital Stock:
   1,000 shares Common Issued Shares:    195 shares Owner:   

Churchill Downs Management Company, LLC

 

Name:    TSN Data Corporation Jurisdiction:    Kentucky Authorized Capital
Stock:    1,000 shares Common Issued Shares:    100 Owner:   

Churchill Downs Incorporated

 

Name:    Video Services, Inc. Jurisdiction:    Louisiana Authorized Capital
Stock:    510 Shares Class A (non-voting) Common    490 Shares Class B (voting)
Common Issued Shares:    510 Shares Class A (non-voting) Common    490 Shares
Class B (voting) Common Owner:   

Churchill Downs Louisiana Video Poker Company, L.L.C.

 

Name:    Churchill Downs Technology Initiatives Company Jurisdiction:   
Delaware Authorized Capital Stock:    1000 shares Common Issued Shares:    100
shares Common Owner:    Churchill Downs Incorporated

SEE ALSO SCHEDULE 3

--------------------------------------------------------------------------------

SCHEDULE 2

INDEBTEDNESS AND

EXISTING LIENS ON COLLATERAL

5.14 Liens:

Those granted pursuant to the Pledge and Security Agreement dated December 22,
2009, and the following liens:

 

Secured Party

  

Collateral

  

Debtor

   File Date Ameritech Credit Corporation    Leased Equipment -
telecommunication equipment    Churchill Downs Incorporated    2/25/02 US
Bancorp    Leased Equipment    Churchill Downs Incorporated    9/8/03 Deere
Credit Inc.    Leased Equipment - tractors    Churchill Downs Incorporated   
3/16/04 Deere Credit Inc.    Leased Equipment - tractor    Churchill Downs
Incorporated    3/29/04 Deere Credit, Inc.    Leased Equipment - tractor   
Churchill Downs Incorporated    4/10/06 Deere Credit, Inc.    Leased Equipment -
tractors    Churchill Downs Incorporated    4/10/06 Marlin Leasing Corp.   
Leased Equipment - copiers    Churchill Downs Incorporated    10/27/06 US
Bancorp    Leased Equipment - copiers    Churchill Downs Incorporated    1/3/07
Deere Credit, Inc.    Leased Equipment - tractors    Churchill Downs
Incorporated    1/17/07 US Bancorp    Leased Equipment - copiers    Churchill
Downs Incorporated    2/14/07 John Deere Credit    Leased Equipment - tractors
   Churchill Downs Incorporated    3/29/07 Deere Credit, Inc.    Leased
Equipment - tractor    Churchill Downs Incorporated    4/4/07 US Bancorp   
Leased Equipment - copier    Churchill Downs Incorporated    7/11/07

--------------------------------------------------------------------------------

US Bancorp    Leased Equipment    Churchill Downs Incorporated    10/8/07 US
Bancorp    Leased Equipment    Churchill Downs Incorporated    12/3/07 US
Bancorp    Leased Equipment    Churchill Downs Incorporated    1/3/08 US Bancorp
   Leased Equipment    Churchill Downs Incorporated    1/9/08 John Deere Credit,
Inc.    Leased Equipment - tractors    Churchill Downs Incorporated    4/14/09
John Deere Credit    Leased Equipment - tractor    Churchill Downs Incorporated
   4/28/09 US Bancorp    Leased Equipment    Churchill Downs Incorporated   
8/14/09 FPC Funding II LLC    Leased Equipment - printer    Arlington Park
Racecourse, LLC    12/15/04 US Bancorp    Leased Equipment - finisher   
Arlington Park Racecourse, LLC    9/12/05 Deere Credit, Inc.    Leased Equipment
- tractor    Arlington Park Racecourse, LLC    5/28/09 Deere Credit, Inc.   
Leased Equipment - tractor    Arlington Park Racecourse, LLC    5/28/09 Deere
Credit, Inc.    Leased Equipment - tractors    Arlington Park Racecourse, LLC   
5/28/09 Deere Credit Inc.    Leased Equipment    Arlington Park Racecourse, LLC
   5/28/09 John Deere Construction & Forestry Company    Equipment - grader   
Calder Race Course, Inc.    3/18/04 Deere Credit, Inc.    Leased Equipment -
tractors    Calder Race Course, Inc.    5/18/04 Deere Credit, Inc.    Leased
Equipment - tractors    Calder Race Course, Inc.    8/8/05 Deere Credit, Inc.   
Leased Equipment - tractors    Calder Race Course, Inc.    6/8/06 Deere Credit,
Inc.    Leased Equipment - tractors    Calder Race Course, Inc.    5/1/07

--------------------------------------------------------------------------------

Deere Credit, Inc.    Leased Equipment - tractors    Calder Race Course, Inc.   
5/23/08 Deere Credit, Inc.    Leased Equipment - tractors    Calder Race Course,
Inc.    6/30/09 Marlin Leasing Corp.    Leased Equipment - copiers    Churchill
Downs Louisiana Horseracing Company, L.L.C.    7/7/06 Marlin Leasing Corp.   
Leased Equipment - copiers    Churchill Downs Louisiana Horseracing Company,
L.L.C.    10/30/06 Marlin Leasing Corp.    Leased Equipment - copiers   
Churchill Downs Louisiana Horseracing Company, L.L.C.    1/15/08

--------------------------------------------------------------------------------

SCHEDULE 3

LESS THAN 100% SUBSIDIARIES

 

Name:

   HRTV, LLC Jurisdiction:    Delaware Interest:    Uncertificated Units Owner:
   CD HRTV HC, LLC (50%)   

Remaining 50% owned by Magna Entertainment Company (or an affiliate or
subsidiary thereof)

 

Name:    Kentucky Downs, LLC Jurisdiction:    Kentucky Membership Interest:   
Uncertificated Units Owner:   

Churchill Downs Incorporated (5%)

 

Name:    Kentucky Off-Track Betting, LLC Jurisdiction:    Kentucky
Membership Interest:    Uncertificated Units Owner:    Churchill Downs
Incorporated (25%)   

Remaining 75% owned by Ellis Park Racecourse, Inc. (25%),

Turfway Park LLC (25%) and Keeneland Association, Inc. (25%)

 

Name:    Nasrin Services, LLC Jurisdiction:    Delaware Membership Interest:   
Uncertificated Units Owner:    Tracknet, LLC (30%)   

Remaining 70% owned by Autotote Systems, Inc.

 

Name:    TrackNet Media Group, LLC Jurisdiction:    Delaware Interest:   
Uncertificated Units Owner:    CD ContentCo HC LLC (50%)   

Remaining 50% owned by Magna Entertainment Company (or an affiliate or
subsidiary thereof)

 

Name:    Equibase Holding Partners, LP Jurisdiction:    Kentucky Membership
Interest:    Limited partnership interest Owner:   

Churchill Downs Incorporated (5.65%)

 

Names:    ODS Technologies, L.P. d/b/a TVG Jurisdiction:    Delaware Interest:
   Contingent limited partnership ownership interest Owner:    Churchill Downs
incorporated (3.166%)

--------------------------------------------------------------------------------

Name:    Triple Crown Productions, LLC Jurisdiction:    Kentucky
Membership Interest:    Uncertificated Interests 33-1/3% Owner:    Churchill
Downs Incorporated (331/3%)    Remaining 66 2/3% owned by Maryland Jockey Club
(33 1/3%)    and New York Racing Association Inc. (33 1/3%)

--------------------------------------------------------------------------------

SCHEDULE 4.1(i)(p)

SEARCHES OF PERSONAL PROPERTY RECORDS

WITH AGENCIES

 

Debtor

  

Jurisdictions Searched

  

Type of Search

Churchill Downs Incorporated    Kentucky Secretary of State    UCC    Jefferson
County, Kentucky, Court Clerk    Federal Tax Liens; State Tax Liens; Judgments
Arlington OTB Corp.    Delaware Department of State; Division of Corporations   
UCC; Federal Tax Liens    Illinois Secretary of State    Federal Tax Liens   
Cook County, Illinois, Recorder    Federal Tax Liens; State Tax Liens; Judgments
Arlington Park Racecourse, LLC    Illinois Secretary of State    UCC; Federal
Tax Liens    Cook County, Illinois, Recorder    Federal Tax Liens; State Tax
Liens; Judgments Calder Race Course, Inc.    Florida Secretary of State    UCC
   Florida Department of State    Federal Tax Liens; Judgments; Pending Suits   
Miami-Date County, Florida County Clerk    Federal Tax Liens; State Tax Liens;
Judgments Charlson Industries, Inc.    Ohio Secretary of State    UCC   
Jefferson County, Kentucky, Court Clerk    Federal Tax Liens; State Tax Liens;
Judgments Churchill Downs Entertainment Group, LLC       Churchill Downs
Investment Company    Kentucky Secretary of State    UCC    Jefferson County,
Kentucky, Court Clerk    Federal Tax Liens; State Tax Liens; Judgments

--------------------------------------------------------------------------------

Churchill Downs Louisiana

Horseracing Company, L.L.C.

   Louisiana Secretary of State    UCC; Federal Tax Liens   

Orleans Parish, Louisiana,

Clerk

   UCC; Federal Tax Liens; State Tax Liens; Judgments

Churchill Downs Louisiana

Video Poker Company, L.L.C.

   Louisiana Secretary of State    UCC; Federal Tax Liens   

Orleans Parish, Louisiana,

Clerk

   UCC; Federal Tax Liens; State Tax Liens; Judgments

Churchill Downs Management

Company, LLC

   Kentucky Secretary of State    UCC   

Jefferson County, Kentucky,

Court Clerk

   Federal Tax Liens; State Tax Liens; Judgments

Churchill Downs Simulcast

Productions, LLC

   Kentucky Secretary of State    UCC   

Jefferson County, Kentucky,

Court Clerk

   Federal Tax Liens; State Tax Liens; Judgments

Churchill Downs Technology

Initiatives Company

  

Delaware Department of State;

Division of Corporations

   UCC; Federal Tax Liens   

Jefferson County, Kentucky,

Court Clerk

   Federal Tax Liens; State Tax Liens; Judgments Quad City Downs, Inc.    Iowa
Secretary of State    UCC; Federal Tax Liens    Illinois Secretary of State   
Federal Tax Liens   

Cook County, Illinois,

Recorder

   Federal Tax Liens; State Tax Liens; Judgments Tropical Park, Inc.    Florida
Secretary of State    UCC    Florida Department of State    Federal Tax Liens;
Judgments; Pending Suits   

Miami-Date County, Florida

County Clerk

   Federal Tax Liens; State Tax Liens; Judgments Video Services, Inc.   
Louisiana Secretary of State    UCC; Federal Tax Liens   

Jefferson Parish, Louisiana,

Clerk

   UCC; Federal Tax Liens; State Tax Liens; Judgments

--------------------------------------------------------------------------------

SCHEDULE 4.1(i)(q)

THIRD PARTY CONSENTS

Louisiana Gaming Control Board – On December 15, 2009, the Louisiana Gaming
Control Board did, in a duly noticed public meeting, approve the Borrower’s
request that it be allowed to enter into this Agreement and consummate the
transactions described in this Agreement, all as evidenced by a copy of the
minutes of the meeting of the Board.

--------------------------------------------------------------------------------

SCHEDULE 5.22

INTELLECTUAL PROPERTY

CHURCHILL DOWNS INCORPORATED

 

Patents:

  

Pending:

  

Open Pool Parimutuel Wagering Game and Method of Play

   Serial No. 61/207,262

Wagering Game

   Serial No. 12/459,556

Trademarks:

  

Federal (U.S.) Registrations:

  

Bloodstock Research Information Services

   Reg. No. 3,530,208

Brisnet.com

   Reg. No. 3,476,348

Chief Party Officer

   Reg. No. 3,520,088

Churchill Charlie

   Reg. No. 2,222,444

Churchill Downs

   Reg. No. 1,557,889

Churchill Downs

   Reg. No. 3,158,512

CPO

   Reg. No. 3,520,086

Derby Life

   Reg. No. 3,582,581

Green Pastures Program

   Reg. No. 2,706,752

Green Pastures Program & Design

   Reg. No. 2,690,637

Junior Jockey Club

   Reg. No. 2,443,645

Kentucky Derby

   Reg. No. 3,697,785

Kentucky Derby

   Reg. No. 997,385

Kentucky Oaks

   Reg. No. 3,615,279

Kentucky Oaks

   Reg. No. 1,713,541

Miscellaneous Design [Churchill Charlie]

   Reg. No. 2,231,670

Miscellaneous Design [twin spires]

   Reg. No. 2,568,139

Miscellaneous Design [twin spires]

   Reg. No. 2,565,972

Oaks Lily

   Reg. No. 3,332,516

Road to the Roses

   Reg. No. 2,744,388

The Handicapper’s Edge

   Reg. No. 3,504,268

The Kentucky Derby

   Reg. No. 1,534,197

The World’s Most Legendary Racetrack

   Reg. No. 2,071,030

Twinspires

   Reg. No. 3,454,766

Twinspires & Design

   Reg. No. 3,454,767

Ultimate PPS

   Reg. No. 3,611,026

--------------------------------------------------------------------------------

Federal (U.S.) Applications:

  

Bring the Derby Home

   Appl. No. 77/602,705

Camp Derby

   Appl. No. 77/751,234

Camp Derby

   Appl. No. 77/751,248

Camp Derby

   Appl. No. 77/751,252

Hullabalou & Design

   Appl. No. 77/874,204

Hullabalou & Design

   Appl. No. 77/873,615

K D & Design

   Appl. No. 77/606,379

K D & Design [lady and hat/color]

   Appl. No. 77/663,033

K D Kentucky Derby Party & Design [lady and hat]

   Appl. No. 77/663,269

K O Kentucky Oaks & Design

   Appl. No. 77/606,424

KD Kentucky Derby & Design

   Appl. No. 77/606,427

KD Kentucky Derby & Design [long-stemmed rose/    color]

   Appl. No. 77/663,255

Kentucky Derby

   Appl. No. 77/567,887

Kentucky Derby

   Appl. No. 77/567,892

Kentucky Derby

   Appl. No. 77/567,877

Kentucky Derby

   Appl. No. 77/568,812

Kentucky Derby & Design [horseshoe & rose]

   Appl. No. 77/606,430

Kentucky Derby & Design [horseshoe and rose]

   Appl. No. 77/663,232

Kentucky Oaks

   Appl. No. 77/570,238

Kentucky Oaks

   Appl. No. 77/570,243

Kentucky Oaks

   Appl. No. 77/570,251

Kentucky Oaks

   Appl. No. 77/570,262

Kentucky Oaks & Design

   Appl. No. 77/606,434

Kentucky Oaks & Design [horseshoe, lily]

   Appl. No. 77/663,294

Kentucky Oaks Ladies First (Stylized)

   Appl. No. 77/606,437    Appl. No. 77/663,310

KO Kentucky Oaks & Design [pink/gold with lily]

   Appl. No. 77/663,318

Miscellaneous Design [horse head with rose]

   Appl. No. 77/669,404

Miscellaneous Design [horseshoe and lily/color]

   Appl. No. 77/663,006

Miscellaneous Design [horseshoe and lily]

   Appl. No. 77/606,435

Miscellaneous Design [horseshoe and rose/color]

   Appl. No. 77/663,021

Miscellaneous Design [horseshoe and rose]

   Appl. No. 77/606,429

Oaks Day

   Appl. No. 77/712,397

Our Job Is Fun

   Appl. No. 77/649,059

Run for the Roses

   Appl. No. 77/572,477

Run for the Roses

   Appl. No. 77/572,869

Run for the Roses

   Appl. No. 77/572,872

Run for the Roses

   Appl. No. 77/574,645

Run for the Roses

   Appl. No. 77/574,638

Run for the Roses

   Appl. No. 77/574,650

Run for the Roses

   Appl. No. 77/712,389

Studz Poker Club

   Appl. No. 77/823,418

Z-5

   Appl. No. 77/661,528

State Registrations:

  

Derby 132 (Kentucky)

   Reg. No. 016270

Derby 133 (Kentucky)

   Reg. No. 016534

Derby 134 (Kentucky)

   Reg. No. 016830

--------------------------------------------------------------------------------

Derby 135 (Kentucky)

   Reg. No. 017242

Kentucky Derby 132 (Kentucky)

   Reg. No. 016269

Kentucky Derby 133 (Kentucky)

   Reg. No. 016536

Kentucky Derby 133 & Design (Kentucky)

   Reg. No. 016535

Kentucky Derby 134 (Kentucky)

   Reg. No. 016831

Kentucky Derby 134 May 3, 2008 & Design (Kentucky)

   Reg. No. 016829

Kentucky Derby Churchill Downs May 6, 2006 & Design (Kentucky)

   Reg. No. 016268

Kentucky Derby 135 (Kentucky)

   Reg. No. 017241

Kentucky Derby 135 & Design (Kentucky)

   Reg. No. 017240

Oaks 134 (Kentucky)

   Reg. No. 016933

Run for the Roses (Kentucky)

   Reg. No. 08682

International Registrations/Applications:

  

Churchill Downs

  

(Brazil)

   Reg. No. 006.282.229

(Canada)

   Appl. No. 1395840

(Canada)

   Reg. No. TMA217,236

(Canada)

   Reg. No. TMA373,075

(Japan)

   Reg. No. 2378909

(Japan)

   Reg. No. 2515017

Kentucky Derby

  

(Canada)

   Appl. No. 1395839

(Canada)

   Reg. No. TMA211,233

(Japan)

   Reg. No. 2435094

Twinspires

  

(Australia)

   Reg. No. 1203553

(China)

   Reg. No. 936 385

(European Union)

   Reg. No. 936 385

(Hong Kong)

   Reg. No. 300942598

(New Zealand)

   Reg. No. 774703

(WIPO)

   Reg. No. 936 385

Copyright Registrations:

  

Kentucky Derby 113 logo

   Reg. No. VA256465

Kentucky Derby 114 logo

   Reg. No. VA300797

Kentucky Derby 115 logo

   Reg. No. VA318109

Kentucky Derby 116 logo

   Reg. No. VA388760

Kentucky Derby 117 logo

   Reg. No. VA432815

Kentucky Derby 118 logo

   Reg. No. VA487209

Kentucky Derby 119 logo

   Reg. No. VA528216

Kentucky Derby 120 logo

   Reg. No. VA637781

Kentucky Derby 121 logo

   Reg. No. VA680014

Kentucky Derby 122 logo

   Reg. No. VA760665

Kentucky Derby 123 logo

   Reg. No. VA846345

Kentucky Derby 124 logo

   Reg. No. VA911899

Kentucky Derby 125 logo

   Reg. No. VA981153

--------------------------------------------------------------------------------

Kentucky Derby 126 logo

   Reg. No. VA1043682

Kentucky Derby 127 logo

   Reg. No. VA1076482

Kentucky Derby 128 logo

   Reg. No. VA1128464

Kentucky Derby 129 logo

   Reg. No. VA1188676

Kentucky Derby 130 logo

   Reg. No. VA1262443

Kentucky Derby 133 logo

   Reg. No. VA1663998

Kentucky Oaks 133 logo

   Reg. No. VA1654116

Kentucky Derby 134 logo

   Reg. No. VA1663997

Kentucky Derby 134 logo variant 1

   Reg. No. VA1653953

Kentucky Oaks 134 logo

   Reg. No. VA1654101

Kentucky Derby 135 logo

   Reg. No. VA1654848

Kentucky Oaks 135 logo

   Reg. No. VA1651583

Kentucky Derby Winner’s Ring (Jockey)

   Reg. No. VAu730035

Kentucky Derby Winner’s Ring (Trainer)

   Reg. No. VAu731799

Kentucky Derby Winner’s Ring (Owner)

   Reg. No. VAu960278

Kentucky Derby Trophy (Derby trophy julep cup)

   Reg. No. VAu160760

Derby Days

   Reg. No.PA1633883

Down & Derby

   Reg. No.PA1633868

Feeling Lucky

   Reg. No.PA1633871

Kentucky Girl

   Reg. No.PA1633866

Ladies First

   Reg. No.PA1633882

Mint Condition

   Reg. No.PA1637257

My Old Kentucky Home (Alt-Pop)

   Reg. No.PA1633877

My Old Kentucky Home (Country Rock)

   Reg. No.PA1637255

My Old Kentucky Home (Dance Mix)

   Reg. No.PA1633880

My Old Kentucky Home (Folk Rock)

   Reg. No.PA1637220

My Old Kentucky Home (Pop)

   Reg. No.PA1637273

Party Up at the Downs

   Reg. No.PA1637217

Party Up at the Downs – The Official

  

Party Playlist of the Kentucky Derby Vol.1

   Reg. No.SR625676

Saddle Up Derby

   Reg. No.PA1633886

Simulcast Performance System

   Reg. No.Txu991017

Toast Time

   Reg. No.PA1637269

Toast to the Post

   Reg. No.PA1637271

We Let the Party Go On

   Reg. No.PA1637256

Domain Names:

APLIFESTYLE.COM

ARLINGTONPARK.COM

ARLINGTONPARKLIVE.COM

ATTHEPOST.COM

CALDERCASINO.COM

CALDERCASINOANDRACECOURSE.COM

CALDERCRC.COM

CALDERGAMING.COM

CALDERRACECOURSE.COM

CAMPDERBY.COM

CAMPKENTUCKYDERBY.COM

CCNNET.NET

--------------------------------------------------------------------------------

CDI-RACING.COM

CDIDIGITIALMEDIA.COM

CDIHORSERACING.COM

CDILOGOS.COM

CDINET.NET

CDISEG.BIZ

CDISEG.COM

CDISEG.INFO

CDISEG.NET

CDISEG.ORG

CDITRACKMAIL.COM

CDITRACKS.COM

CDSN.NET

CHIEFPARTYOFFICER.COM

CHURCHILLDOWNS.COM

CHURCHILLDOWNS.TV

CHURCHILLDOWNSINCORPORATED.COM

CHURCHILLSEG.BIZ

CHURCHILLSEG.COM

CHURCHILLSEG.INFO

CHURCHILLSEG.NET

CHURCHILLSEG.ORG

DERBYPARTYCENTRAL.COM

DERBYU.COM

FAIRGROUNDSNETBET.COM

FAIRGROUNDSONLINE.COM

FAIRGROUNDSRACECOURSE.COM

FESTDATA.COM

FESTIDATA.COM

FESTPIX.COM

FGNETBET.COM

FGNO.COM

FINISHLINEOTB.COM

HOOSIERPARK.COM

KENTUCKYDERBY.COM

KENTUCKYDERBYPARTY.COM

KENTUCKYDERBYPOKER.US

KENTUCKYOAKS.COM

KYDERBY.COM

KYDERBYPOKER.COM

KYDERBYPOKER.NET

KYDERBYPOKER.US

KYOAKS.COM

POKERSTUDZ.COM

RACINGCDI.COM

ROADTOTHEBREEDERSCUP.COM

ROADTOTHEROSES.COM

STUDZPOKER.COM

STUDZPOKERCLUB.COM

THEDERBYSTORE.COM

THETRIPLECROWN.COM

--------------------------------------------------------------------------------

TOTHECUP.COM

TRACKNETMEDIA.COM

TRACKNETMG.COM

TRACKSIDEOTB.COM

TRIPLECROWNPRODUCTIONS.COM

TWINSPIRES.BIZ

TWINSPIRES.CO.UK

TWINSPIRES.COM

TWINSPIRES.INFO

TWINSPIRES.MOBI

TWINSPIRES.TV

TWINSPIRESCLUB.COM

TWINSPIRESPOKER.NET

TWINSPIRESPOKER.US

WINPLACESHOW.COM

CDENTERTAINMENT.COM

CDFESTIVILLE.COM

CHURCHILLENTERTAINMENTGROUP.COM

CHURCHILLENTERTAINMENTGROUP.INFO

CHURCHILLENTERTAINMENTGROUP.NET

CHURCHILLENTERTAINMENTGROUP.ORG

CHURCHILLENTERTAINMENTGROUP.US

GREATMIDWESTFOODANDWINEFESTIVAL.COM

GREATMIDWESTFOODANDWINEFESTIVAL.INFO

GREATMIDWESTFOODANDWINEFESTIVAL.NET

GREATMIDWESTFOODANDWINEFESTIVAL.ORG

GREATMIDWESTFOODANDWINEFESTIVAL.US

HULLABALOUFEST.COM

HULLABALOUFEST.NET

HULLABALOUFEST.ORG

HULLABALOUFEST.US

HULLABALOUFESTIVAL.COM

HULLABALOUFESTIVAL.INFO

HULLABALOUFESTIVAL.NET

HULLABALOUFESTIVAL.ORG

HULLABALOUFESTIVAL.US

HULLABALOUISVILLE.COM

HULLABALOUNGE.COM

HULLABAVILLE.COM

KENTUCKYDERBYPARTY.ORG

LEGENDS-IN-ROCK.COM

TASTEOFDERBY.COM

TASTEOFTHEDERBY.COM

TASTEOFTHEKYDERBY.COM

TRIPLECROWNOFPOKER.COM

TRIPLECROWNOFPOKER.INFO

TRIPLECROWNOFPOKER.NET

TRIPLECROWNOFPOKER.ORG

TRIPLECROWNOFPOKER.US

--------------------------------------------------------------------------------

Licensing Agreements:

Churchill Downs Incorporated is a party to numerous agreements in which it
(1) licenses (export) the simulcast racing signal produced by Churchill Downs
Racetrack to third parties for purposes of simulcast and advanced deposit
wagering on such signal and (2) licenses (import) the simulcast racing signal of
third party racetracks for the purposes of simulcast wagering at Churchill Downs
Racetrack and its secondary recipients.

CHURCHILL DOWNS MANAGEMENT COMPANY

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

CHURCHILL DOWNS INVESTMENT COMPANY

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

CHURCHILL DOWNS TECHNOLOGY INITIATIVES COMPANY

 

Patents:

  

Pending:

  

Personalized Transaction Management

   U.S. Patent Application

And Media Delivery System

   Pub. No. 20090270166

Trademarks:

  

Federal (U.S.) Applications:

  

Heads Up Horseracing

   Appl. No. 77/210,659

Copyright Registrations:

   None

--------------------------------------------------------------------------------

Licensing Agreements:

Churchill Downs Technology Initiatives Company is a party to numerous agreements
in which it licenses (import) the simulcast racing signal of third party
racetracks for the purposes of advanced deposit wagering.

CALDER RACE COURSE, INC.

 

Patents:

   None

Trademarks:

  

Common Law:

  

Festival of the Sun and Design

  

Summit of Speed

  

Copyright Registrations:

   None

Licensing Agreements:

Calder Race Course, Inc. is a party to numerous agreements in which it
(1) licenses (export) the simulcast racing signal produced by Calder Race Course
to third parties for purposes of simulcast and advanced deposit wagering on such
signal and (2) licenses (import) the simulcast racing signal of third party
racetracks for the purposes of simulcast wagering at Calder Race Course and its
secondary recipients.

Calder Race Course, Inc. is a party to numerous agreements regarding the
purchase or lease of gaming equipment for its casino facility. Such agreements
contain licenses for software and other intellectual property associated with
such equipment.

TROPICAL PARK, INC.

 

Patents:

   None

Trademarks:

  

Common Law:

  

Tropical Park

  

Copyright Registrations:

   None

Licensing Agreements:

Tropical Park Inc. is a party to numerous agreements in which it (1) licenses
(export) the simulcast racing signal of the Tropical Park meet held at Calder
Race Course to third parties for purposes of simulcast and advanced deposit
wagering on such signal.

--------------------------------------------------------------------------------

ARLINGTON PARK RACECOURSE, LLC

 

Patents:

   None

Trademarks:

  

Federal Registrations:

  

A & Design

   Reg. No. 1,643,068

American Derby

   Reg. No. 1,977,761

Arlington & Design

   Reg. No. 1,643,066

Arlington Classic

   Reg. No. 1,955,925

Arlington Handicap

   Reg. No. 1,972,394

Arlington International Racecourse & Design

   Reg. No. 1,696,540

Arlington Matron Handicap

   Reg. No. 1,969,474

Arlington Million

   Reg. No. 1,643,067

Arlington Million X & Design

   Reg. No. 1,665,281

Arlington Park

   Reg. No. 2,649,941

Arlington-Washington Futurity

   Reg. No. 1,955,931

Arlington-Washington Lassie

   Reg. No. 1,933,051

Beverly D

   Reg. No. 1,922,590

Hanshin Handicap

   Reg. No. 1,967,951

International Festival of Racing

   Reg. No. 1,980,602

Modesty Handicap

   Reg. No. 1,957,400

Pucker Up Stakes

   Reg. No. 1,957,401

Round Table Stakes

   Reg. No. 1,952,704

Sea O’Erin Handicap

   Reg. No. 1,928,105

Secretariat

   Reg. No. 1,986,605

Springfield Stakes

   Reg. No. 1,975,924

Washington Park Handicap

   Reg. No. 1,952,705

Copyright Registrations:

   None

Licensing Agreements:

Arlington Park Racecourse LLC is a party to numerous agreements in which it
(1) licenses (export) the simulcast racing signal produced by Arlington Park to
third parties for purposes of simulcast and advanced deposit wagering on such
signal and (2) licenses (import) the simulcast racing signal of third party
racetracks for the purposes of simulcast wagering at Arlington Park and its
secondary recipients.

ARLINGTON OTB CORP.

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

--------------------------------------------------------------------------------

QUAD CITY DOWNS, INC.

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

CHURCHILL DOWNS LOUISIANA HORSERACING COMPANY, L.L.C.

 

Patents:

   None

Trademarks:

  

Federal Registrations:

  

Fair Grounds

   Reg. No. 2,774,532

Fair Grounds Race Course

   Reg. No. 2,774,434

Fair Grounds

   Reg. No. 2,776,307

Fair Grounds Race Course

   Reg. No. 2,756,768

Fair Grounds Race Course

   Reg. No. 2,756,769

Fair Grounds Race Course

   Reg. No. 2,759,489

FGNETBET

   Reg. No. 2,935,274

FGNETBET.COM

   Reg. No. 2,938,503

NETBET

   Reg. No. 2,885,332

New Orleans Fair Grounds

   Reg. No. 2,774,533

Copyright Registrations:

   None

Licensing Agreements:

Churchill Downs Louisiana Horseracing Company LLC is a party to numerous
agreements in which it (1) licenses (export) the simulcast racing signal
produced by Fair Grounds Racecourse to third parties for purposes of simulcast
and advanced deposit wagering on such signal and/or (2) licenses (import) the
simulcast racing signal of third party racetracks for the purposes of simulcast
wagering at Fair Grounds Racecourse and its secondary recipients.

Churchill Downs Louisiana Horseracing Company LLC is a party to numerous
agreements regarding the purchase or lease of gaming equipment for its slots
facility. Such agreements contain licenses for software and other intellectual
property associated with such equipment.

--------------------------------------------------------------------------------

VIDEO SERVICES, INC.

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

CHURCHILL DOWNS ENTERTAINMENT GROUP, LLC

 

Patents:

   None

Trademarks:

   None

Copyright Registrations:

   None

Licensing Agreements:

   None

--------------------------------------------------------------------------------

Schedule 5.23

CHURCHILL DOWNS INCORPORATED PROPERTIES

COMMERCIAL LIABILITY COVERED LOCATIONS

 

1.    Churchill Downs    700 Central Ave., Louisville, KY 2.   
Trackside-Louisville    4520 Poplar Level Road, Louisville, KY       (4400
Brietenstein Ave.) 3.    Churchill Downs Racing    3750 Oakdale Avenue (also
3744, 3747, 3748)    Office (the “Church”)    4.    Calder Race Course    21001
NW 27th Ave., Miami, FL 5.    Arlington Park and    2000 Euclid Avenue,
Arlington Heights, IL 60006    Trackside-Arlington    6.    Trackside-Rockford
   5011 E. State St., Rockford, IL 61108       (We own this location, but it
will close for business       purposes on December 15, 2009.) 7.   
Trackside-Rockford II    4007 E. State Street, Rockford, IL 8.   
Trackside-Waukegan    630 S. Green Bay, Waukegan, IL 9.    Trackside-Chicago   
901 W. Weed St., Chicago, IL 60622 10.    Trackside-Quad City    5005 Morton
Drive, E. Moline, IL    Downs    11.    Trackside-Hodgkins    9301 63rd Street,
Hodgkins, IL 12.    Trackside-South Elgin    335 N. McLean Boulevard, Elgin, IL
60177 13.    Trackside-McHenry    621 Ridgeview Drive, McHenry, IL 60050 14.   
Trackside-So. Beloit    1322 Gardner Street, So. Beloit, IL 61080 15.   
Trackside-Lockport    1225 E. 9th Street, Lockport, IL 60441 16.    Fair Grounds
Race    1751 Gentilly Boulevard, New Orleans, LA 70119    Course    17.   
Property currently being    3100 Belfort Avenue, New Orleans, LA 70119    used
as the Fair Grounds       HR training site.    18.    Kenner Finish Line    1700
Joe Yenni Boulevard, Kenner, LA 70064

--------------------------------------------------------------------------------

19.    Gretna Finish Line    64A Westbank Expressway, Gretna, LA 70053 20.   
Elmwood Finish Line    5428 Citrus Boulevard, Harahan, LA 70123 21.    Elmwood
Parking Lot    5508 Citrus Boulevard, Harahan, LA 23.    Metairie Finish Line   
2700 Edenborn Avenue, Metairie, LA 70002 24.    Metairie Parking Lot   
adjoining above at Hessmer Avenue, Metairie, LA 25.    LaPlace Finish Line   
164 Belle Terre Boulevard, LaPlace, LA 70068 26.    Covington Finish Line    600
North Highway 190, Suite #1       Hollycrest Plaza Shopping Center, Covington,
LA       70434 27.    Houma Finish Line    111 Moss Lane, Houma, LA 70360 28.   
Thibodaux Finish Line    1766 Canal Boulevard, Thibodaux, LA 70301 29.    Boutte
Finish Line    12715 Highway 90, Suite 145, Luling, LA 70070 30.    Chalmette
Finish Line    8700 West Judge Perez Drive, Suite B, Chalmette, LA 31.   
Bloodstock Research    801 Corporate Drive, Suite 3000, Lexington, KY   
Information Services    32.    TrackNet, LLC    1941 Bishop Lane, Suite 800,
Louisville, KY    TrackNet Media Group, LLC    33.    Churchill Downs    800 W.
El Camino Real, Suite 400    Technology Initiatives    Mountain View, CA 94040
   Company   

PROPERTY LEASED TO OTHERS:

 

Wagner’s Pharmacy    Pharmacy/Diner at 3113 S. 4th Street, Louisville, KY
Sonatype, Inc.    12,000 S.F. Sublease of 800 W. El Camino Real, Mountain View,
CA

LOTS

(VACANT LOTS SURROUNDING LOUISVILLE TRACK USED FOR PARKING)

Bohannon: 3104, 3105, 3106, 3108, 3110, 3112, 3116, 3118, 3120, 3121, 3156,
3205, 3211, 3213, 3215, 4400 Breitenstein Ave., 756 Central Ave., 727 Heywood,
Homeview: 900, 901, 902, 903, 904, 905, 907, 908, 909, 910, 911, 912, 913, 914,
915, 917, 919, 921, 922, 923, 924, 926, 927, 928, 931, 932, 933, 935, 937, 947,
953, 955, 957, 1000, 1004, 1006, 1008, 1010, 1012, 1014, 1016, Longfield: 1009
1029, 1031, 1033, Oakdale: 3117, 3129, 3139, 3139  1/2, 3141, 3143, 3720, 3722,
3724, 3728, 3730, 3732, 3734, 3740, 3744, 3747, 3748, 3750, 3756, 3858, 3760,
3762, Queen Avenue: 1000, 1002, 1006, 1008, 1010, 1012, 1014, 1016, 1018,
Racine: 819, 900, 902, 906, 908, 910, 912, 913, 914, 915, 916, 917, 919, 920,
921, 923, 924, 925, 926, 927, 929, 930, 934, 936, 3800 Southern Parkway, Taylor
Boulevard: 3105, 3107, 3109 3111, Terrace Park: 32, 34, Thornberry: 923, 925,
927, 929, 931, 933, 1001, 1003, 1005, 1007, 1011, 1015, 1019, 1021, Warren:
3312, 3314, 3315, 3316, 3318, 3320, 3322, 3324, Wizard: 3317, 3319,

--------------------------------------------------------------------------------

3320, 3321, 3325, 3327, 3329, 3450, South Third Street: 3100, 3106, 3108, 3108
Rear, 3110, 3112, 3114, 3116, 3118, 3120, 3122, 3128, 3130, 3132, 3132  1/2,
3142, 3144, 4133, 3146, 3148, 3150, South Fourth Street: 3150, 3101, 3103, 3107,
3109, 3111, 3113, 3115, 3131, 3141, 3143, 3701, 3705, 3707, 3709, 3711, 3713,
South Sixth Street: 3106, 3018, 3024.

Properties Leased by the Obligors:

 

Rockford II    4007 E. State Street, Rockford, IL    Don Carter Lanes Waukegan
   630 S. Green Bay, Waukegan, IL    Ralph & Gregory Gesualdo Chicago    901 W.
Weed St., Chicago, IL 60622    Cole Taylor Bank Hodgkins    9301 63rd Street,
Hodgkins, IL    Salerno-Pincente South Elgin    335 N. McLean Boulevard, Elgin,
IL 60177    Lucky’s Bar & Grill McHenry    621 Ridgeview Drive, McHenry, IL
60050    Reprise, Corp. So. Beloit    1322 Gardner Street, So. Beloit, IL 61080
   TAD’s Sports Bar & Grill Lockport    1225 E. 9th Street, Lockport, IL 60441
   LaRocco Bros., Inc. Gretna    64A Westbank Expressway, Gretna, LA 70053   
American Comm. Rlty. Elmwood    5428 Citrus Boulevard, Harahan, LA 70123   
Piazza Seafood World Parking Lot    5508 Citrus Boulevard, Harahan, LA    ASI
Fed. Cred. Union Metairie    2700 Edenborn Avenue, Metairie, LA 70002   
Edenborn Properties Parking Lot    adjoining above at Hessmer Av., Metairie, LA
   Schully Strawn Invest. LaPlace    164 Belle Terre Boulevard, LaPlace, LA
70068    Belle Terre Plaza Covington    600 N Hwy 190, #1 Covington, LA 70434   
Hollycrest Shopping Houma    111 Moss Lane, Houma, LA 70360    Family Racing
Ventures Thibodaux    1766 Canal Boulevard, Thibodaux, LA 70301    M&M Rentals
of America Boutte    12715 Highway 90, Ste. 145, Luling, LA 70070    St. Charles
Plaza Ptnrs. Chalmette    8700 W. Judge Perez Dr. # B, Chalmette, LA    8700 W.
Judge Perez LLC BRIS    801 Corporate Dr., Suite 3000, Lexington, KY   
(requested) TrackNet    1941 Bishop Lane, Suite 800, Louisville, KY   
(requested) CDTIC    800 W. El Camino Real, # 400, Mntn. View, CA    Asset
Growth Partners

Public Warehouses or other Locations pursuant to Bailment or Consignment
Arrangements:

None.

 

Note: Real Property Collateral will exclude immaterial real estate as reasonably
determined by the Collateral Agent.

--------------------------------------------------------------------------------

Schedule 5.24

OPERATING LOCATIONS:

 

Churchill Downs Incorporated Churchill Downs Entertainment Group, LLC Churchill
Downs Management Company, LLC Churchill Downs Investment Company Churchill Downs
Simulcast Productions, LLC

Churchill Downs

   700 Central Ave., Louisville, KY

Trackside-Louisville

   4520 Poplar Level Road, Louisville, KY    (4400 Brietenstein Ave.)

Churchill Downs Racing

   3750 Oakdale Avenue (also 3744, 3747, 3748)

Office (the “Church”)

   Louisville, KY

Calder Race Course, Inc.

   21001 NW 27th Ave., Miami Gardens, FL 33056

Tropical Park, Inc.

   Arlington Park Racecourse, LLC    Arlington OTB Corp.   

Arlington Park and

   2200 Euclid Avenue, Arlington Heights, IL 60006

Trackside-Arlington

  

Trackside-Chicago

   901 W. Weed St., Chicago, IL

Trackside-Waukegan

   630 S. Green Bay, Waukegan, IL

Trackside-Hodgkins

   9301 63rd Street, Hodgkins, IL Quad City Downs, Inc.   

Trackside-Rockford

   5011 E. State St., Rockford, IL    (We own this location, but it will close
for business    purposes on December 15, 2009.)

Trackside-Rockford II

   4007 E. State Street, Rockford, IL

Trackside-Quad City Downs

   5005 Morton Drive, E. Moline, IL

Trackside-South Elgin

   335 N. McLean Boulevard, Elgin, IL

Trackside-McHenry

   621 Ridgeview Drive, McHenry, IL

Trackside-So. Beloit

   1322 Gardner Street, So. Beloit, IL

Trackside-Lockport

   1225 E. 9th Street, Lockport, IL Churchill Downs Louisiana Horseracing
Company, L.L.C. Churchill Downs Louisiana Video Poker Company, L.L.C.

Fair Grounds Race Course

   1751 Gentilly Boulevard, New Orleans, LA

Property currently being

   3100 Belfort Avenue, New Orleans, LA

used as the Fair Grounds

  

HR training site.

  

Kenner Finish Line

   1700 Joe Yenni Boulevard, Kenner, LA

Gretna Finish Line

   64A Westbank Expressway, Gretna, LA

Elmwood Finish Line

   5428 Citrus Boulevard, Harahan, LA

Metairie Finish Line

   2700 Edenborn Avenue, Metairie, LA

LaPlace Finish Line

   164 Belle Terre Boulevard, LaPlace, LA

Covington Finish Line

   600 North Highway 190, Suite #1    Hollycrest Plaza Shopping Center,
Covington, LA

Houma Finish Line

   111 Moss Lane, Houma, LA

--------------------------------------------------------------------------------

Thibodaux Finish Line

   1766 Canal Boulevard, Thibodaux, LA

Boutte Finish Line

   12715 Highway 90, Suite 145, Luling, LA

Chalmette Finish Line

   8700 West Judge Perez Drive, Suite B, Chalmette, LA

Churchill Downs Technology Initiatives Company

  

TSN Data Corporation

  

BRIS Data Corporation

  

Bloodstock Research

   801 Corporate Drive, Suite 3000, Lexington, KY

Information Services

  

Churchill Downs

   800 W. El Camino Real, Suite 400

Technology Initiatives

   Mountain View, CA

Company

  

TrackNet Media Group, LLC

   1941 Bishop Lane, Suite 800, Louisville, KY

--------------------------------------------------------------------------------

SCHEDULE 5.25

CERTAIN LICENSES

Arlington Park Racecourse, LLC - holds a license from the Illinois Racing Board
to conduct live thoroughbred races through 2010.

Arlington OTB Corp., - holds an inter-track wagering license from the Illinois
Racing Board for its Trackside location. It also holds inter-track wagering
location licenses for the locations in Chicago and Waukegan.

Churchill Downs Incorporated - holds a license issued by the Kentucky Racing
Commission to conduct live thoroughbred races through 2010.

Calder Race Course Inc. - holds a license issued by the Division of Pari-Mutuel
Wagering of Florida’s Department of Business and Professional Regulation to
conduct live thoroughbred races through 2010.

Calder Race Course, Inc. - holds a Florida Card Room license issued April 1,
2009 to March 31, 2010.

Calder Race Course, Inc. - holds a Florida Slot Machine License issued April 1,
2009 to March 31, 2010.

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds a ten-year racing
license from the Louisiana State Racing Commission to conduct race meetings for
the period April 16, 2005 through April 15, 2015.

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds a one-year racing
license from the Louisiana State Racing Commission to conduct a live
thoroughbred racing meet.

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds a license from the
Louisiana State Racing Commission to operate off-track wagering facilities at
the following locations:

See Attachment 1

Churchill Downs Louisiana Horseracing Company, L.L.C. d/b/a Fair Grounds Race
Course - holds Local Parish and State of Louisiana Liquor Licenses for Slots
facility and ten OTBs at the following locations:

See Attachment 1

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds nine Type IV video
poker establishment licenses from the Louisiana Gaming Control Board for the
authorization to conduct video poker gaming for nine OTBs at the following
locations:

See Attachment 2

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds a Type VI
Owner/Operator License from the Louisiana Gaming Control Board authorizing it to
own and operate video poker devices for a term expiring June 30, 2010.

--------------------------------------------------------------------------------

Churchill Downs Louisiana Horseracing Company, L.L.C. - holds a State of
Louisiana gaming license from the Louisiana Gaming Control Board for the conduct
of slot machine gaming at the Fair Grounds Race Course in New Orleans which
expires April 18, 2010. A renewal application was submitted October 20, 2009 to
the Louisiana State police and is currently undergoing investigation.

Churchill Downs Simulcast Productions, LLC - holds a California Vendor Simulcast
License May 2009 to May 2010.

Churchill Downs Technology Initiatives Company - holds a Multi-jurisdictional
Simulcasting & Interactive Wagering Totalizator Hub License issued by Oregon
Racing Commission July 1, 2009 to 6/30/2010.

Churchill Downs Technology Initiatives Company - holds the following ADW
licenses:

ADW License issued by California Horse Racing Board

ADW License issued by Virginia Horse Racing Commission

ADW License issued by Maryland Racing Commission

ADW License issued by Idaho State Police Racing Commission

ADW License issued by Massachusetts Racing Board Commission

ADW License issued by Illinois Horse Racing Board

ADW License issued by State of Washington Unified Business License

Quad City Downs, Inc. - holds Illinois OTB inter-track wagering and occupation
licenses for Trackside McHenry, Trackside Quad City Downs, Trackside Rockford,
Trackside South Beloit and Trackside South Elgin.

Tropical Park, Inc. - holds a license issued by the Division of Pari-Mutuel
Wagering of the Department of Florida’s Department of Business and Professional
Regulation to conduct live thoroughbred races through 2010.

Tropical Park, Inc. - holds a Florida Card Room license issued July 2009 to June
2010.

Video Services, Inc. - holds a Louisiana Video Poker device owner/operator
license (to operate slots at 9 OTB locations) issued 07/1/2004 to 6/30/2010. A
renewal application was submitted May 20, 2009 to the Louisiana State police and
is currently undergoing investigation.

--------------------------------------------------------------------------------

SCHEDULE 5.25

CERTAIN LICENSES

Attachment 1

 

Kenner Finish Line    1700 Joe Yenni Boulevard, Kenner, LA 70064 Gretna Finish
Line    64A Westbank Expressway, Gretna, LA 70053 Elmwood Finish Line    5428
Citrus Boulevard, Harahan, LA 70123 Metairie Finish Line    2700 Edenborn
Avenue, Metairie, LA 70002 LaPlace Finish Line    164 Belle Terre Boulevard,
LaPlace, LA 70068 Covington Finish Line    600 North Highway 190, Suite #1   
Hollycrest Plaza Shopping Center, Covington, LA 70434 Houma Finish Line    111
Moss Lane, Houma, LA 70360 Thibodaux Finish Line    1766 Canal Boulevard,
Thibodaux, LA 70301 Boutte Finish Line    12715 Highway 90, Suite 145, Luling,
LA 70070 St. Bernard/Chalmette    8700 West Judge Perez Drive, Suite B,
Chalmette, LA Finish Line   

--------------------------------------------------------------------------------

SCHEDULE 5.25

CERTAIN LICENSES

Attachment 2

 

Kenner Finish Line    1700 Joe Yenni Boulevard, Kenner, LA 70064 Gretna Finish
Line    64A Westbank Expressway, Gretna, LA 70053 Elmwood Finish Line    5428
Citrus Boulevard, Harahan, LA 70123 Metairie Finish Line    2700 Edenborn
Avenue, Metairie, LA 70002 LaPlace Finish Line    164 Belle Terre Boulevard,
LaPlace, LA 70068 Houma Finish Line    111 Moss Lane, Houma, LA 70360 Thibodaux
Finish Line    1766 Canal Boulevard, Thibodaux, LA 70301 Boutte Finish Line   
12715 Highway 90, Suite 145, Luling, LA 70070 St. Bernard/Chalmette    8700 West
Judge Perez Drive, Suite B, Chalmette, LA Finish Line   

--------------------------------------------------------------------------------

SCHEDULE 5.26

PREDECESSOR ENTITIES OF THE LOAN PARTY

See Schedule 1 for state of incorporation or organization.

See Schedule 5.23 for jurisdictional locations where collateral may have been
kept.

Arlington Park Racecourse, LLC

Arlington International Racecourse, Inc. and Turf Club of Illinois, Inc. –
merged into Arlington Park Racecourse, LLC

Arlington Management Services, Inc. merged into Arlington Park Racecourse, LLC;
Arlington Management Services, Inc., Arlington Global Services, Inc. and KFI
Corporation were previously merged into Arlington Management Services, LLC

Arlington OTB Corp.

None

Calder Race Course, Inc.

None

Churchill Downs Investment Company

None

Churchill Downs Management Company, LLC

Churchill Downs Management Company, LLC is successor to Churchill Downs
Management Company by a conversion which occurred on December 31, 2008

Quad City Downs, Inc.

None

Tropical Park, Inc.

None

Churchill Downs Louisiana Horseracing Company, L.L.C.

None

Churchill Downs Louisiana Video Poker Company, L.L.C.

None

--------------------------------------------------------------------------------

Churchill Downs Simulcast Productions, LLC

F/k/a Charlson Broadcast Technologies, LLC – name change recorded May 28, 2004
with Kentucky Secretary of State.

Video Services, Inc.

None

--------------------------------------------------------------------------------

SCHEDULE 6(a)

LOUISIANA MORTGAGES

Refer to Schedule 5.23

--------------------------------------------------------------------------------

SCHEDULE 6.22

EXISTING RATE MANAGEMENT TRANSACTIONS

None.