$100,000,000 REVOLVING CREDIT FACILITY

                                CREDIT AGREEMENT

                                  by and among

                          CHURCHILL DOWNS INCORPORATED,
                       CHURCHILL DOWNS MANAGEMENT COMPANY,
                       CHURCHILL DOWNS INVESTMENT COMPANY,
                          RACING CORPORATION OF AMERICA
                        AND ELLIS PARK RACE COURSE, INC.
                         (collectively, the "Borrowers")

                                       and

                             THE BANKS PARTY HERETO

                                       and

                    PNC BANK, NATIONAL ASSOCIATION, As Agent

                         Dated as of September 16, 1998









                                      

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                                          TABLE OF CONTENTS
                                                                            Page

1.  CERTAIN DEFINITIONS........................................................1
  1.1    Certain Definitions...................................................1
  1.2    Construction.........................................................17
         1.2.1  Number; Inclusion.............................................17
         1.2.2  Determination.................................................17
         1.2.3  Agent's Discretion and Consent................................17
         1.2.4  Documents Taken as a Whole....................................17
         1.2.5  Headings......................................................17
         1.2.6  Implied References to this Agreement..........................17
         1.2.7  Persons.......................................................17
         1.2.8  Modifications to Documents....................................18
         1.2.9  From, To and Through..........................................18
         1.2.10 Shall; Will...................................................18
         1.2.11 Consolidated Financial Information............................18
  1.3    Accounting Principles................................................18

2.  REVOLVING CREDIT FACILITY.................................................19
  2.1    Revolving Credit Commitments.........................................19
  2.2    Nature of Banks' Obligations with Respect to Revolving Credit Loans..19
  2.3    Non Usage Fees.......................................................19
  2.4    Closing Fee..........................................................20
  2.5    Revolving Credit Loan Requests.......................................20
  2.6    Making Revolving Credit Loans........................................21
  2.7    Revolving Credit Notes...............................................21
  2.8    Use of Proceeds......................................................21
  2.9    Letter of Credit Subfacility.........................................22
         2.9.1  Issuance of Letters of Credit.................................22
         2.9.2  Letter of Credit Fees.........................................22
         2.9.3  Disbursements, Reimbursement..................................22
         2.9.4  Repayment of Participation Advances...........................23
         2.9.5  Documentation.................................................24
         2.9.6  Determinations to Honor Drawing Requests......................24
         2.9.7  Nature of Participation and Reimbursement Obligations.........24
         2.9.8  Indemnity.....................................................25
         2.9.9  Liability for Acts and Omissions..............................26
  2.10   Extension by Banks of the Expiration Date............................26
         2.10.1 Requests; Approval by All Banks...............................26
         2.10.2 Approval by Required Banks....................................27
  2.11   Voluntary Reductions.................................................27

3.  SWING LINE LOANS..........................................................28
  3.1    Swing Line Credit Facility...........................................28
         3.1.1  Interest......................................................28

                                       -i-

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         3.1.2  Principal.....................................................28
         3.1.3  Swing Line Note...............................................29
         3.1.4  Conditions for Swing Line Loans...............................29
         3.1.5. General Provisions Regarding Payments of Swing Line Loans.....29
         3.1.6  Limitation....................................................30
  3.2    Use of Proceeds......................................................30

4.  INTEREST RATES............................................................30
  4.1    Interest Rate Options................................................30
         4.1.1  Revolving Credit Interest Rate Options........................31
  4.2    Swing Line Loan Interest Rate........................................31
  4.3    Interest Periods.....................................................32
         4.3.1  Amount of Borrowing Tranche...................................32
         4.3.2  Termination Before Expiration Date............................32
         4.3.3  Renewals......................................................32
  4.4    Interest After Default...............................................32
         4.4.1  Letter of Credit Fees, Interest Rate..........................32
         4.4.2  Other Obligations.............................................32
         4.4.3  Acknowledgment................................................33
  4.5    Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
         Available............................................................33
         4.5.1  Unascertainable...............................................33
         4.5.2  Illegality; Increased Costs; Deposits Not Available...........33
         4.5.3  Agent's and Banks' Rights.....................................34
  4.6    Selection of Interest Rate Options...................................34

5.  PAYMENTS..................................................................34
  5.1    Payments.............................................................34
  5.2    Pro Rata Treatment of Banks..........................................35
  5.3    Interest Payment Dates...............................................35
  5.4    Voluntary Prepayments................................................36
         5.4.1  Right to Prepay...............................................36
         5.4.2  Replacement of a Bank.........................................37
         5.4.3  Change of Lending Office......................................37
  5.5    Required Prepayments.................................................38
         5.5.1  Sale of Assets................................................38
         5.5.2  Application Among Interest Rate Options.......................38
  5.6    Additional Compensation in Certain Circumstances.....................38
         5.6.1  Increased  Costs or Reduced Return  Resulting from Taxes, 
         Reserves, Capital Adequacy Requirements, Expenses, Etc...............38
         5.6.2  Indemnity.....................................................39

6.  REPRESENTATIONS AND WARRANTIES............................................40
  6.1    Representations and Warranties.......................................40
         6.1.1  Organization and Qualification................................40
         6.1.2  Capitalization and Ownership..................................40

                                      -ii-

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         6.1.3  Subsidiaries..................................................40
         6.1.4  Power and Authority...........................................41
         6.1.5  Validity and Binding Effect...................................41
         6.1.6  No Conflict...................................................41
         6.1.7  Litigation....................................................41
         6.1.8  Title to Properties...........................................42
         6.1.9  Financial Statements..........................................42
         6.1.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries........42
         6.1.11 Taxes.........................................................43
         6.1.12 Consents and Approvals........................................43
         6.1.13 No Event of Default; Compliance with Instruments..............44
         6.1.14 Patents, Trademarks, Copyrights, Licenses, Etc................44
         6.1.15 Insurance.....................................................44
         6.1.16 Compliance with Laws..........................................44
         6.1.17 Material Contracts; Burdensome Restrictions...................45
         6.1.18 Investment Companies; Regulated Entities......................45
         6.1.19 Plans and Benefit Arrangements................................45
         6.1.20 Employment Matters............................................46
         6.1.21 Environmental Matters.........................................47
         6.1.22 Senior Debt Status............................................48
         6.1.23 Employee Benefit Plans........................................48
         6.1.24 Full Disclosure...............................................48
         6.1.25 Year 2000.....................................................49
  6.2    Updates to Schedules.................................................49

7.  CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT...................49
  7.1    First Loans and Letters of Credit....................................49
         7.1.1  Officer's Certificate.........................................49
         7.1.2  Secretary's Certificate.......................................50
         7.1.3  Delivery of Loan Documents....................................50
         7.1.4  Opinion of Counsel............................................50
         7.1.5  Legal Details.................................................51
         7.1.6  Payment of Fees...............................................51
         7.1.7  Consents......................................................51
         7.1.8  Officer's Certificate Regarding MACs..........................51
         7.1.9  No Violation of Laws..........................................51
         7.1.10 No Actions or Proceedings.....................................51
         7.1.11 Insurance Policies; Certificates of Insurance; Endorsements...52
         7.1.12 Administrative Questionnaire..................................52
  7.2    Each Additional Loan or Letter of Credit.............................52

8.  COVENANTS.................................................................52
  8.1    Affirmative Covenants................................................52
         8.1.1  Preservation of Existence, Etc................................53
         8.1.2  Payment of Liabilities, Including Taxes, Etc..................53
         8.1.3  Maintenance of Insurance......................................53

                                      -iii-

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         8.1.4  Maintenance of Properties and Leases..........................53
         8.1.5  Maintenance of Patents, Trademarks, Etc.......................54
         8.1.6  Visitation Rights.............................................54
         8.1.7  Keeping of Records and Books of Account.......................54
         8.1.8  Plans and Benefit Arrangements................................54
         8.1.9  Compliance with Laws..........................................55
         8.1.10 Use of Proceeds...............................................55
         8.1.11 Subordination of Intercompany Loans...........................55
  8.2    Negative Covenants...................................................55
         8.2.1  Indebtedness..................................................55
         8.2.2  No Liens; Negative Pledge.....................................56
         8.2.3  Guaranties....................................................56
         8.2.4  Loans and Investments.........................................56
         8.2.5  Liquidations, Mergers, Consolidations, Acquisitions...........57
         8.2.6  Dispositions of Assets or Subsidiaries........................58
         8.2.7  Affiliate Transactions........................................58
         8.2.8  Subsidiaries, Partnerships and Joint Ventures.................59
         8.2.9  No Material Change in Business................................59
         8.2.10 Plans and Benefit Arrangements................................59
         8.2.11 Fiscal Year...................................................60
         8.2.12 Issuance of Stock.............................................60
         8.2.13 Changes in Organizational Documents...........................60
         8.2.14 Maximum Ratio of Funded Debt to EBITDA........................61
         8.2.15 Interest Coverage Ratio.......................................61
         8.2.16 Minimum Tangible Net Worth....................................61
         8.2.17 Margin Stock..................................................61
         8.2.18 Other Agreements..............................................61
  8.3    Reporting Requirements...............................................61
         8.3.1  Quarterly Financial Statements................................62
         8.3.2  Annual Financial Statements...................................62
         8.3.3  Certificate of the Borrower...................................62
         8.3.4  Notice of Default.............................................63
         8.3.5  Notice of Litigation..........................................63
         8.3.6  Certain Events................................................63
         8.3.7  Other Reports and Information.................................63
         8.3.8  Notices Regarding Plans and Benefit Arrangements..............64

9.  DEFAULT...................................................................65
  9.1    Events of Default....................................................65
         9.1.1  Payments Under Loan Documents.................................65
         9.1.2  Breach of Warranty............................................65
         9.1.3  Breach of Negative Covenants or Visitation Rights.............66
         9.1.4  Breach of Other Covenants.....................................66
         9.1.5  Defaults in Other Agreements or Indebtedness..................66
         9.1.6  Other Material Obligations....................................66
         9.1.7  Final Judgments or Orders.....................................66

                                      -iv-

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         9.1.8  Loan Document Unenforceable...................................66
         9.1.9  Uninsured Losses; Proceedings Against Assets..................67
         9.1.10 Notice of Lien or Assessment..................................67
         9.1.11 Insolvency....................................................67
         9.1.12 Events Relating to Plans and Benefit Arrangements.............67
         9.1.13 Cessation of Business.........................................68
         9.1.14 Change of Control.............................................68
         9.1.15 Involuntary Proceedings.......................................68
         9.1.16 Voluntary Proceedings.........................................68
  9.2    Consequences of Event of Default.....................................69
         9.2.1  Events  of Default  Other  Than  Bankruptcy,  Insolvency  or
          Reorganization Proceedings..........................................69
         9.2.2  Bankruptcy, Insolvency or Reorganization Proceedings..........69
         9.2.3  Set-off.......................................................69
         9.2.4  Suits, Actions, Proceedings...................................70
         9.2.5  Application of Proceeds.......................................70
         9.2.6  Other Rights and Remedies.....................................71
  9.3    Reasonable Notice....................................................71

10.  THE AGENT................................................................71
  10.1   Appointment..........................................................71
  10.2   Delegation of Duties.................................................71
  10.3   Nature of Duties; Independent Credit Investigation...................71
  10.4   Actions in Discretion of Agent; Instructions From the Banks..........72
  10.5   Reimbursement and Indemnification of Agent by the Borrowers..........72
  10.6   Exculpatory Provisions; Limitation of Liability......................73
  10.7   Reimbursement and Indemnification of Agent by Banks..................74
  10.8   Reliance by Agent....................................................74
  10.9   Notice of Default....................................................74
  10.10  Notices..............................................................74
  10.11  Banks in Their Individual Capacities.................................75
  10.12  Holders of Notes.....................................................75
  10.13  Equalization of Banks................................................75
  10.14  Successor Agent......................................................76
  10.15  Agent's Fee..........................................................76
  10.16  Availability of Funds................................................76
  10.17  Calculations.........................................................77
  10.18  Beneficiaries........................................................77

11.  MISCELLANEOUS............................................................77
  11.1   Modifications, Amendments or Waivers.................................77
         11.1.1 Increase of Commitment; Extension or Expiration Date..........77
         11.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
         Modification of Terms of Payment.....................................78
         11.1.3 Miscellaneous.................................................78
  11.2   No Implied Waivers; Cumulative Remedies; Writing Required............78

                                       -v-

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  11.3   Reimbursement and Indemnification of Banks by the Borrowers; Taxes...78
  11.4   Holidays.............................................................79
  11.5   Funding by Branch, Subsidiary or Affiliate...........................79
         11.5.1 Notional Funding..............................................79
         11.5.2 Actual Funding................................................80
  11.6   Notices..............................................................80
  11.7   Severability.........................................................81
  11.8   Governing Law........................................................81
  11.9   No Prior Understanding...............................................81
  11.10  Duration; Survival...................................................81
  11.11  Successors and Assigns...............................................81
  11.12  Confidentiality......................................................83
         11.12.1       General................................................83
         11.12.2       Sharing Information With Affiliates of the Banks.......83
  11.13  Counterparts.........................................................84
  11.14  Agent's or Bank's Consent............................................84
  11.15  Exceptions...........................................................84
  11.16  CONSENT TO FORUM; WAIVER OF JURY TRIAL...............................84
  11.17  Tax Withholding Clause...............................................85
  11.18  Joinder of New Subsidiaries..........................................86
  11.19  No Joint Venture.....................................................86
  11.20  Indemnification......................................................86
  11.21  Survival of Covenants................................................87
  11.22  No Course of Dealing.................................................87
  11.23  Time of the Essence..................................................87
  11.24  Further Assurances...................................................87
  11.25  Incorporation by Reference...........................................87
  11.26  Entire Agreement.....................................................87
  11.27  Joint and Several Liability; Certain Limitations.....................87
  11.29  Acknowledgment.......................................................88


                                      -vi-

<PAGE>







                                   LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE 1.1(B)       -      COMMITMENTS OF BANKS AND ADDRESSES FOR
                             NOTICES

SCHEDULE 1.1(P)       -      PERMITTED LIENS

SCHEDULE 6.1.1        -      QUALIFICATIONS TO DO BUSINESS

SCHEDULE 6.1.2        -      CAPITALIZATION

SCHEDULE 6.1.3        -      SUBSIDIARIES

SCHEDULE 6.1.8        -      OWNED AND LEASED REAL PROPERTY

SCHEDULE 6.1.11       -      AGREEMENTS WITH RESPECT TO TAXES

SCHEDULE 6.1.12       -      CONSENTS AND APPROVALS

SCHEDULE 6.1.14       -      PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.

SCHEDULE 6.1.15       -      INSURANCE POLICIES

SCHEDULE 6.1.17       -      MATERIAL CONTRACTS

SCHEDULE 6.1.19       -      EMPLOYEE BENEFIT PLAN DISCLOSURES

SCHEDULE 6.1.21       -      ENVIRONMENTAL DISCLOSURES

SCHEDULE 8.2.1        -      PERMITTED INDEBTEDNESS

EXHIBITS

EXHIBIT 1.1(A)        -      ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT 1.1(G)(1)     -      JOINDER AGREEMENT

EXHIBIT 1.1(I)(1)     -      INDEMNITY


                                      -vii-

<PAGE>



EXHIBIT 1.1(I)(2)     -      INTERCOMPANY SUBORDINATION AGREEMENT

EXHIBIT 1.1(P)(iii)   -      PERMITTED CASH INVESTMENTS

EXHIBIT 1.1(P)(iv)    -      PERMITTED PARTNERSHIP AND LLC INVESTMENTS

EXHIBIT 1.1(R)        -      REVOLVING CREDIT NOTES

EXHIBIT 1.1(S)        -      SWING LINE NOTE

EXHIBIT 2.5           -      LOAN REQUEST

EXHIBIT 3.1.4         -      REQUEST FOR SWING LINE LOAN

EXHIBIT 7.1.4         -      OPINION OF COUNSEL

EXHIBIT 8.2.5         -      ACQUISITION COMPLIANCE CERTIFICATE

EXHIBIT 8.3.3         -      QUARTERLY COMPLIANCE CERTIFICATE



                                     -viii-

<PAGE>



                                CREDIT AGREEMENT

        This  is a  Credit  Agreement  dated  as of  September  16,  1998  among
CHURCHILL DOWNS INCORPORATED, a Kentucky corporation, CHURCHILL DOWNS MANAGEMENT
COMPANY, a Kentucky corporation,  CHURCHILL DOWNS INVESTMENT COMPANY, a Kentucky
corporation,  RACING  CORPORATION OF AMERICA,  a Delaware  corporation and ELLIS
PARK RACE COURSE, INC., a Kentucky corporation  (collectively the "Borrowers and
each  individually a Borrower"),  the BANKS (as  hereinafter  defined),  and PNC
BANK,  NATIONAL  ASSOCIATION,  in its capacity as agent for the Banks under this
Agreement (hereinafter referred to in such capacity as the "Agent").

                                   WITNESSETH:

        WHEREAS,  the Borrowers  have requested the Banks to provide a revolving
credit facility to the Borrowers in an aggregate  principal amount not to exceed
$100,000,000  including a swing line credit  facility in an aggregate  principal
amount not to exceed $10,000,000 which is a part of, and does not increase, that
revolving credit facility; and

        WHEREAS,  the  revolving  credit shall be used for repayment of existing
indebtedness,  general  corporate  and working  capital  purposes as well as the
acquisition of property, equipment and other entities; and

        WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;

        NOW,  THEREFORE,  the parties hereto,  in  consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:

                             1. CERTAIN DEFINITIONS

        1.1    Certain Definitions.

        In addition to words and terms defined elsewhere in this Agreement,  the
following  words and terms  shall  have the  following  meanings,  respectively,
unless the context hereof clearly requires otherwise:

               Affiliate  as to any Person shall mean any other Person (i) which
directly or indirectly  controls,  is controlled  by, or is under common control
with such Person, (ii) which beneficially owns or holds 15% or more of any class
of the voting or other equity interests of such Person,  or (iii) 15% or more of
any class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly,  by such Person. Control, as used in this
definition,  shall mean the possession,  directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise,  including
the power to elect a majority of the directors or trustees of a  corporation  or
trust, as the case may be.

               Agent  shall  mean  PNC  Bank,  National  Association,   and  its
successors and assigns.

                                        1

<PAGE>



               Agent's  Fee  shall  have the  meaning  assigned  to that term in
Section 10.15.

               Agent's  Letter  shall have the meaning  assigned to that term in
Section 10.15.

               Agreement  shall  mean  this  Credit  Agreement,  as  it  may  be
supplemented or amended from time to time, including all schedules and exhibits.

               Annual Statements shall have the meaning assigned to that term in
Section 6.1.9(i).

               Assignee  Bank shall have the  meaning  assigned  to such term in
Section 2.10.2.

               Assignment and Assumption  Agreement shall mean an Assignment and
Assumption  Agreement by and among a Purchasing  Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks,  substantially in the form
of Exhibit 1.1(A).

               Authorized  Officer shall mean those  individuals,  designated by
written notice to the Agent from the Borrowers,  authorized to execute  notices,
reports and other  documents on behalf of the Loan Parties  required  hereunder.
The  Borrowers  may amend such list of  individuals  from time to time by giving
written notice of such amendment to the Agent.

               Bank to be  Terminated  shall have the  meaning  assigned to that
term in Section 2.10.2.

               Banks  shall mean the  financial  institutions  named on Schedule
1.1(B) and their respective successors and assigns as permitted hereunder,  each
of which is referred to herein as a Bank.

               Base Net Worth shall mean Forty Five  Million One Hundred  Eighty
Eight Thousand Dollars ($45,188,000.00).

               Base Rate  shall  mean the  higher of (i) the  interest  rate per
annum most recently  designated and announced  publicly from time to time by the
Agent at its Principal  Office as its then prime rate, which rate may not be the
lowest rate then being charged  commercial  borrowers by the Agent,  or (ii) the
Federal Funds Effective Rate plus 1/2 %.

               Base  Rate  Option  shall  mean  the  Revolving Credit Base Rate
Option.

               Basis Point shall mean 0.01%.

               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 ERISA Group.

               Borrowers shall mean collectively,  Churchill Downs Incorporated,
a  corporation  organized  and existing  under the laws of the  Commonwealth  of
Kentucky,  Churchill  Downs  Management  Company,  a  corporation  organized and
existing  under  the  laws of the  Commonwealth  of  Kentucky,  Churchill  Downs
Investment  Company, a corporation  organized and existing under the laws of the
Commonwealth of

                                        2

<PAGE>



Kentucky,  Racing Corporation of America,  a corporation  organized and existing
under the laws of the State of  Delaware,  and Ellis Park Race  Course,  Inc., a
corporation  organized  and  existing  under  the  laws of the  Commonwealth  of
Kentucky,  and any other Person which joins this  Agreement as a Borrower  after
the date hereof pursuant to Section 11.18.

               Borrowing Date shall mean, with respect to any Loan, the date for
the making  thereof or the renewal or conversion  thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.

               Borrowing   Tranche  shall  mean  specified   portions  of  Loans
outstanding as follows:  (i) any Loans to which a Euro-Rate Option applies which
become  subject to the same  Interest Rate Option under the same Loan Request by
the  Borrowers  and which have the same  Interest  Period shall  constitute  one
Borrowing Tranche,  and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing  Tranche.  There shall be no more than seven  Borrowing
Tranches outstanding at any one time.

               Business  Day shall mean any day other than a Saturday  or Sunday
or a legal holiday on which  commercial  banks are  authorized or required to be
closed for business in Louisville,  Kentucky and, if the applicable Business Day
relates to any Loan to which the Euro-Rate Option applies, such day must also be
a day on which dealings are carried on in the London interbank market.

               Closing  Date shall mean the Business Day on which the first Loan
shall be made,  which  shall be  September  16,  1998 or, if all the  conditions
specified in Section 7 have not been satisfied or waived by such date, not later
than  September  16, 1998, as designated by the Borrowers by at least 3 Business
Days' advance notice to the Agent at its Principal Office, or such other date as
the parties agree. The closing shall take place at 10:30 a.m.,  Eastern Standard
Time,  on the Closing Date at the offices of Brown,  Todd and Heyburn,  PLLC, in
Louisville, Kentucky, or at such other time and place as the parties agree.

               Commercial Letter of Credit shall mean any Letter of Credit which
is a commercial  letter of credit  issued in respect of the purchase of goods or
services  by one or more of the Loan  Parties  in the  ordinary  course of their
business.

               Commitment  shall mean as to any Bank the amount of its Revolving
Credit  Commitment  and  Commitments  shall mean the  aggregate of the Revolving
Credit Commitments of all of the Banks.

               Commitment  Period  shall mean the period  beginning  on the date
hereof and extending to the Expiration Date.

               Consideration   shall  mean  with   respect   to  any   Permitted
Acquisition,  the  aggregate  of (i) the cash  paid by any of the Loan  Parties,
directly  or  indirectly,  to the  seller  in  connection  therewith,  (ii)  the
Indebtedness incurred or assumed by any of the Loan Parties, whether in favor of
the seller or  otherwise  and whether  fixed or  contingent,  (iii) any Guaranty
given or  incurred  by any Loan Party in  connection  therewith  (reduced by any
Indebtedness  secured by such Guaranty already included in (ii) above), and (iv)
any other  consideration given or obligation incurred by any of the Loan Parties
in connection therewith.

               Consolidated Dividends for any Period of determination shall mean
the aggregate Dividends

                                        3

<PAGE>



of the Borrowers for the period  determined,  except that any Dividends  paid by
one Loan Party to another Loan Party shall be excluded.

               Consolidated EBIT for any Period shall mean the consolidated EBIT
of all of the Borrowers for that period, consolidated in accordance with GAAP.

               Consolidated  EBITDA for any Period  shall mean the  consolidated
EBITDA of all of the Borrowers for that period,  consolidated in accordance with
GAAP.

               Consolidated  Funded  Indebtedness as of an date of determination
shall mean the  consolidated  Indebtedness  of the  Borrowers,  consolidated  in
accordance  with GAAP,  except that  obligations  of the Borrowers 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  (the
"Excluded  Amount")  shall not be  included in  Consolidated  Funded  Debt.  The
balance  of  all  obligations  of all or  any  of  the  Borrowers  with  respect
pari-mutuel  tickets  other  than  the  Excluded  Amount  shall be  included  in
Consolidated Funded Debt.

               Consolidated  Interest  Expense  for any Period of  determination
shall mean the interest  expense of the  Borrowers on a  consolidated  basis for
such period determined and consolidated in accordance with GAAP.

               Consolidated   Rent  Expense   shall  mean  as  of  any  date  of
determination the total expenses of the Borrowers on a consolidated  basis as of
such date,  determined and consolidated in accordance with GAAP, for rent and/or
other amounts under all real and personal property operating leases.

               Consolidated  Tangible  Net  Worth  shall  mean as of any date of
determination total stockholders' equity less intangible assets of the Borrowers
on a  consolidated  basis  as  of  such  date  determined  and  consolidated  in
accordance with GAAP.

               Controlling Interest shall mean an ownership interest in a Person
equal to more than 50% of the ownership  interest in such Person in  conjunction
with (i) the existence of a management agreement or other management arrangement
between such Person and the Borrower  which gives the Borrower  control over the
management  or  operations  of such  person and (ii) the  Borrower's  ability to
distribute  funds from the Person to the Borrower or other Borrowers at its sole
discretion.

               Default  Rate shall mean an annual rate equal to two percent (2%)
plus the Base Rate in effect from time to time.

               Dividend shall mean any amount  declared or paid, or set apart by
any  Borrower  for the  purpose  of  payment  of,  (a)  any  dividend  or  other
distribution  on or in  respect  of any  shares of any  class of any  Borrower's
capital stock, or (b) the purchase,  retirement,  reacquisition or redemption of
any shares of any class of any Borrower's capital stock, or (c) any distribution
by way of reduction of capital,  or (d) any other  distribution on or in respect
of any shares of any class of any Borrower's capital stock.

               Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful 
money of the United States of America.

                                        4

<PAGE>




               Drawing  Date shall  have the  meaning  assigned  to that term in
Section 2.9.3.2.

               EBIT for any Person for any  Period of  determination  shall mean
(i) that  Person's net income before tax plus that  Person's  interest  expense,
minus (ii) that Person's  non-cash credits to net income,  in each case for such
period determined in accordance with GAAP.

               EBITDA for any Person for any Period of determination  shall mean
(i) the sum of that  Person's  net  income,  depreciation,  amortization,  other
non-cash charges to net income,  interest expense and income tax expense,  minus
(ii) that Person's  non-cash credits to net income, in each case for such period
determined in accordance with GAAP.

               Environmental  Complaint shall mean any written complaint setting
forth a cause of action for  personal  or  property  damage or natural  resource
damage or equitable relief,  order, notice of violation,  citation,  request for
information  issued  pursuant to any  Environmental  Laws by an  Official  Body,
subpoena or other  written  notice of any type  relating to,  arising out of, or
issued  pursuant  to,  any  of  the  Environmental  Laws  or  any  Environmental
Conditions, as the case may be.

               Environmental   Conditions  shall  mean  any  conditions  of  the
environment,  including the workplace,  the ocean,  natural resources (including
flora or fauna),  soil,  surface  water,  groundwater,  any actual or  potential
drinking  water supply  sources,  substrata  or the ambient air,  relating to or
arising out of, or caused by, the use, handling, storage, treatment,  recycling,
generation,  transportation,  release,  spilling,  leaking,  pumping,  emptying,
discharging,   injecting,  escaping,  leaching,  disposal,  dumping,  threatened
release or other management or mismanagement of Regulated  Substances  resulting
from the use of, or operations on, any Property.

               Environmental  Laws  shall  mean all  federal,  state,  local and
foreign  Laws and  regulations,  including  permits,  licenses,  authorizations,
bonds, orders,  judgments, and consent decrees issued, or entered into, pursuant
thereto,  relating to pollution or protection of human health or the environment
or employee safety in the workplace.

               ERISA shall mean the Employee  Retirement  Income Security Act of
1974,  as the same may be amended  or  supplemented  from time to time,  and any
successor statute of similar import,  and the rules and regulations  thereunder,
as from time to time in effect.

               ERISA  Group  shall  mean,  at any time,  the  Borrowers  and all
members of a  controlled  group of  corporations  and all  trades or  businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrowers,  are treated as a single employer under Section 414
of the Internal Revenue Code.

                                        5

<PAGE>


               Euro-Rate  shall mean,  with respect to the Loans  comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum  determined by the Agent by dividing (the  resulting
quotient rounded upwards, if necessary,  to the nearest 1/100th of 1% per annum)
(i) the rate of interest  determined by the Agent in  accordance  with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the average of the London interbank offered rates for U.S.

Dollars  quoted by the British  Bankers'  Association  as set forth on Dow Jones
Markets Service  (formerly  known as Telerate) (or appropriate  successor or, if
the British Bankers' Association or its successor ceases to provide such quotes,
a comparable  replacement  determined  by the Agent)  display page 3750 (or such
other  display  page on the Dow Jones  Markets  Service  Systems as may  replace
display  page  3750)  two (2)  Business  Days  prior  to the  first  day of such
Euro-Rate Interest Period for an amount comparable to such Borrowing Tranche and
having a borrowing  date and a maturity  comparable to such  Euro-Rate  Interest
Period by (ii) a number equal to 1.00 minus the  Euro-Rate  Reserve  Percentage.
The Euro-Rate may also be expressed by the following formula:

                             Average of London interbank offered rates quoted by
                             BBA as shown on Dow Jones Markets  Service  display
                             page   3750   British   Bankers    Association   or
                             appropriate successor                        
               Euro-Rate =   1.00 - Euro-Rate Reserve Percentage

The Euro-Rate  shall be adjusted  with respect to any  Revolving  Credit Loan to
which the Euro-Rate  Option applies that is outstanding on the effective date of
any change in the Euro-Rate  Reserve  Percentage as of such effective  date. The
Agent shall give prompt  notice to the  Borrowers of the Euro-Rate as determined
or adjusted in  accordance  herewith,  which  determination  shall be conclusive
absent manifest error.

               Euro-Rate  Interest  Period shall mean the period of one (1), two
(2),  three (3) or six (6) months  selected by the  Borrowers  commencing on the
date of  disbursement  of  Revolving  Credit  Loan  and such  successive  period
selected by the Borrowers thereafter and may also mean the period of twelve (12)
months if a twelve (12) month  Euro-Rate  is then  available to the Banks and is
selected by the Borrowers,  however the Banks are under no obligation whatsoever
to  make  a  twelve  (12)  month  Euro-Rate  Interest  Period  available  to the
Borrowers,  if such rate is not then available to the Banks; provided, that if a
Euro-Rate  Interest  Period  would end on a day which is not a Business  Day, it
shall end on the next  succeeding  Business  Day,  unless  such day falls in the
succeeding  calendar month in which case the Euro-Rate Interest Period shall end
on the next  preceding  Business Day. In no event shall any  Euro-Rate  Interest
Period end on a day after the Expiration Date.

               Euro-Rate  Margin shall mean the percentage  rate per annum added
to the  Euro-Rate  to  determine  the  interest  rate per  annum  under  Section
4.1.1(ii)  in  accordance  with the  table  set out in  Section  4.1.1(ii).  The
Euro-Rate  Margin shall be  determined as of and effective as of the due date of
the Borrowers'  quarterly  financial  statements for the first three quarters of
each of the fiscal  quarters in each fiscal year and on the sooner of the actual
delivery of the Annual  Statements or 90 days after the  Borrowers'  fiscal year
end.


                                        6

<PAGE>

               Euro-Rate  Option  shall  mean  the  Revolving  Credi  Euro-Rate
Option.

               Euro-Rate Reserve Percentage shall mean the maximum percentage in
effect  on such day as  prescribed  by the  Board of  Governors  of the  Federal
Reserve  System (or any  successor)  for  determining  the reserve  requirements
(including,  without  limitation,  supplemental,  marginal and emergency reserve
requirements)  with respect to eurocurrency  funding  (currently  referred to as
"Eurocurrency Liabilities").

               Event  of  Default  shall  mean any  of  the events described in
Section 9.1 and referred to therein as an "Event of Default."

               Expiration Date shall mean, with respect to the Revolving  Credit
Commitments and the Swing Line Commitment, September 16, 2001.

               Extending  Bank shall have the  meaning  assigned to such term in
Section 2.10.2.

               Facility Fees shall mean the fees referred to in Sections 2.4.

               Federal Funds  Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%)  announced by the Federal  Reserve Bank of New York (or
any  successor)  on such day as  being  the  weighted  average  of the  rates on
overnight  federal funds  transactions  arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any  successor) in  substantially  the same manner as such Federal  Reserve Bank
computes and announces the weighted  average it refers to as the "Federal  Funds
Effective  Rate" as of the date of this  Agreement;  provided,  if such  Federal
Reserve  Bank (or its  successor)  does not  announce  such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.

               GAAP shall mean generally accepted  accounting  principles as are
in effect  from time to time,  subject to the  provisions  of Section  1.3,  and
applied on a consistent basis both as to classification of items and amounts.

               Governmental Acts shall have the meaning assigned to that term in
Section 2.9.8.

               Guarantor  shall  mean  any  party  to this  Agreement  which  is
designated  as a "Guarantor"  on the signature  page hereof and any other Person
which joins this Agreement as a Guarantor after the date hereof.

               Guaranty of any Person shall mean any  obligation  of such Person
guaranteeing or in effect  guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement to
indemnify  or hold  harmless any other  Person,  any  performance  bond or other
suretyship  arrangement  and any other form of assurance  against  loss,  except
endorsement of negotiable or other  instruments for deposit or collection in the
ordinary course of business.

                                       7

<PAGE>



a
               Historical  Statements  shall have the  meaning  assigned to that
term in Section 6.1.9(i).

               Indebtedness  shall mean,  as to any Person at any time,  any and
all  indebtedness,  obligations  or liabilities  (whether  matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or  several)  of such  Person for or in respect  of: (i)  borrowed  money,  (ii)
amounts  raised  under  or  liabilities  in  respect  of any  note  purchase  or
acceptance  credit  facility,  (iii)  reimbursement  obligations  (contingent or
otherwise)  under any letter of credit,  currency swap agreement,  interest rate
swap, cap,  collar or floor agreement or other interest rate management  device,
(iv) any other  transaction  (including  forward  sale or  purchase  agreements,
capitalized leases, operating leases that are so called synthetic leases,

 nd conditional sales agreements) having the commercial effect of a borrowing of
money  entered  into by  such  Person  to  finance  its  operations  or  capital
requirements  (but not including  trade  payables,  accrued  expenses,  deferred
revenue related to the annual running of the Kentucky Derby, 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),
or (v) any Guaranty of Indebtedness for borrowed money.

               Indemnity  shall  mean  the  Indemnity  Agreement  in the form of
Exhibit  1.1(I)(1) among the Banks,  the Agent and the Loan Parties  relating to
possible environmental liabilities associated with any of the Property.

               Ineligible  Security  shall  mean any  security  which may not be
underwritten  or dealt in by member  banks of the Federal  Reserve  System under
Section 16 of the Banking Act of 1933 (12 U.S.C.
Section 24, Seventh), as amended.

               Insolvency Proceeding shall mean, with respect to any Person, (a)
a case, action or proceeding with respect to such Person (i) before any court or
any other  Official Body under any  bankruptcy,  insolvency,  reorganization  or
other similar Law now or hereafter in effect,  or (ii) for the  appointment of a
receiver, liquidator,  assignee, custodian, trustee,  sequestrator,  conservator
(or  similar  official)  of  any  Loan  Party  or  otherwise   relating  to  the
liquidation,  dissolution,  winding-up  or  relief  of such  Person,  or (b) any
general  assignment  for the benefit of  creditors,  composition,  marshaling of
assets for creditors,  or other, similar arrangement in respect of such Person's
creditors  generally or any  substantial  portion of its  creditors;  undertaken
under any Law.

               Intercompany  Subordination  Agreement shall mean a Subordination
Agreement  among  the  Loan  Parties  in the form  attached  hereto  as  Exhibit
1.1(I)(2).

               Interest  Period shall have the meaning  assigned to such term in
Section 4.3.

               Interest Rate Option shall mean any Euro-Rate Option or Base Rate
Option.

               Interim  Statements  shall have the meaning assigned to that term
in Section 6.1.9(i).

                                        8

<PAGE>


               Internal  Revenue  Code shall mean the  Internal  Revenue Code of
1986,  as the same may be amended  or  supplemented  from time to time,  and any
successor statute of similar import,  and the rules and regulations  thereunder,
as from time to time in effect.

               Joinder  Agreement shall mean a joinder by a Person as a Borrower
under  this  Agreement,  and the other  Loan  Documents  in the form of  Exhibit
1.1(G)(1).

               Labor Contracts shall mean all employment agreements,  employment
contracts,  collective bargaining agreements and other agreements among any Loan
Party or Subsidiary of a Loan Party and its employees.

               Law shall  mean any law  (including  common  law),  constitution,
statute, treaty, regulation,  rule, ordinance,  opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.

               Letter of Credit shall have the meaning  assigned to that term in
Section 2.9.1.

               Letter of Credit  Borrowing  shall  mean an  extension  of credit
resulting  from a drawing  under any Letter of Credit  which shall not have been
reimbursed  on the date  when made and  shall  not have  been  converted  into a
Revolving Credit Loan under Section 2.9.3.2.

               Letter of Credit Fee shall have the meaning assigned to that term
in Section 2.9.2.

               Letters of Credit  Outstanding  shall mean at any time the sum of
(i) the aggregate undrawn face amount of outstanding  Letters of Credit and (ii)
the aggregate amount of all unpaid and outstanding Reimbursement Obligations.

               Lien  shall  mean any  mortgage,  deed of  trust,  pledge,  lien,
security  interest,  charge or other encumbrance or security  arrangement of any
nature whatsoever,  whether  voluntarily or involuntarily  given,  including any
conditional  sale or title retention  arrangement,  and any assignment,  deposit
arrangement  or lease  intended  as, or having the effect of,  security  and any
filed  financing  statement or other notice of any of the foregoing  (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

               Loan Documents shall mean this Agreement, the Agent's Letter, the
Indemnity,  the Intercompany  Subordination  Agreement,  the Notes and any other
instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith,  as the same may
be  supplemented  or  amended  from  time  to  time in  accordance  herewith  or
therewith, and Loan Document shall mean any of the Loan Documents.

               Loan Parties shall mean the Borrowers.

               Loan Request shall have the meaning given to such term in Section
2.5.

               Loans shall mean  collectively,  and Loan shall mean  separately,
all Revolving Credit Loans and the Swing Line Loans or any Revolving Credit Loan
or any Swing Line Loan.

                                        9

<PAGE>


               Material  Adverse Change shall mean any set of  circumstances  or
events  which  (a) has or could  reasonably  be  expected  to have any  material
adverse effect  whatsoever upon the validity or enforceability of this Agreement
or any  other  Loan  Document,  (b) is or could  reasonably  be  expected  to be
material and adverse to the business,  properties,  assets, financial condition,
results of  operations  or prospects of the Loan Parties  taken as a whole,  (c)
impairs  materially  or could  reasonably be expected to impair  materially  the
ability  of the Loan  Parties  taken as a whole  to duly and  punctually  pay or
perform their  Indebtedness,  or (d) impairs  materially or could  reasonably be
expected to impair  materially the ability of the Agent or any of the Banks,  to
the extent permitted, to enforce their legal remedies pursuant to this Agreement
or any other Loan Document.

               Month with  respect to an  Interest  Period  under the  Euro-Rate
Option,  shall mean the interval between the days in consecutive calendar months
numerically  corresponding  to the first  day of such  Interest  Period.  If any
Euro-Rate Interest Period begins on a day of a calendar month for which there is
no numerically  corresponding  day in the month in which such Interest Period is
to end,  the final month of such  Interest  Period shall be deemed to end on the
last Business Day of such final month.

               Multiemployer  Plan shall mean any employee benefit plan which is
a "multiemployer  plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the  Borrowers or any member of the ERISA Group is then making or accruing
an obligation to make  contributions  or, within the preceding  five Plan years,
has made or had an obligation to make such contributions.

               Multiple  Employer  Plan  shall mean a Plan which has two or more
contributing sponsors (including the Borrowers or any member of the ERISA Group)
at least two of whom are not under common  control,  as such a plan is described
in Sections 4063 and 4064 of ERISA.

               Non Usage Fees shall mean the fees referred to in Section 2.3.

               Notes  shall  mean  the  Revolving Credit  Notes  and  the Swing 
Line Notes.

               Notices  shall have the meaning  assigned to that term in Section
11.6.

               Obligation  shall mean any  obligation or liability of any of the
Loan  Parties to the Agent or any of the Banks,  howsoever  created,  arising or
evidenced,  whether direct or indirect, absolute or contingent, now or hereafter
existing,  or due or to become due, under or in connection  with this Agreement,
the Notes, the Letters of Credit, the Agent's Letter or any other Loan Document.

               Official Body shall mean any national,  federal,  state, local or
other  government or political  subdivision  or any agency,  authority,  bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

               Participation  Advance shall mean, with respect to any Bank, such
Bank's payment in respect of its  participation  in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.3.


                                       10

               PBGC  shall  mean  the  Pension  Benefit   Guaranty   Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.

               Period  shall mean the rolling four  quarter  period  immediately
preceding the date of determination.

               Permitted  Acquisitions  shall have the meaning  assigned to such
term in Section 8.2.5.

               Permitted Investments shall mean:

                      (i)    direct obligations of the United States of America 
or any agency or instrumentality thereof or obligations backed by the full faith
and  credit of the  United  States of America maturing in twelve (12) months or
less from the date of acquisition;

                      (ii)  commercial  paper maturing in 180 days or less rated
not  lower than A-1, by  Standard & Poor's or P-1 by  Moody's Investors Service,
Inc. on the date of acquisition; and

                      (iii)  demand deposits, time deposits or certificates of 
deposit maturing within one year in commercial banks whose obligations are rated
A-1, A or the equivalent or better  by  Standard  &  Poor's  on  the  date  of  
acquisition  including  cash investments  disclosed  on  Exhibit  1.1(P)(iii)  
(the demand  deposits,   time deposits,  or  certificates  of  deposit  maturing
within  one  year,  and cash investments of Hoosier Park, LP and Anderson Park,
Inc. shall not be included on Exhibit  1.1(P)(iii))  which are  specifically   
allowed  even  though  such  cash  investments  do  not  meet any of the other 
requirements  of  this  definition, and  in  addition,  the  Borrowers shall be
allowed to invest an additional  $5,000,000 in similar cash investments which 
shall also be "Permitted  Investments" under this definition;

                      (iv)  interests in various partnerships, limited liabilit
companies and other entities disclosed on Exhibit 1.1(P)(iv); and

                      (v)    other interests in partnerships, limited liability
companies, or other entities, or assets  acquired  from another  Person  other 
than  in the ordinary  course of business, not  to exceed $15,000,000  in  the 
aggregate (with any transaction which is a Permitted Acquisition not counting 
toward such $15,000,000 limit).

               Permitted Liens shall mean:

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

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

                                      -11-
<PAGE>
                      (iii)  Liens  of  mechanics,  materialmen, warehousemen, 
carriers, or other like Liens, securing  obligations  incurred in the ordinary 
course of business that are not
yet due and payable and Liens of  landlords  securing  obligations  to pay lease
payments that are not yet due and payable or in default;

                      (iv)   Good-faith pledges or deposits made in the ordinary
course of business  to secure  performance of bids, tenders,  contracts  (other 
than for the repayment of  borrowed  money) or  leases, no  in  excess of  the 
aggregate amount due thereunder, or to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in the ordinary 
course of business;

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

                      (vi)   Liens, security interests and mortgages in favor of
the Agent for the benefit of the Banks;

                      (vii)  Any Lien existing on the date of this Agreement and
described on Schedule 1.1(P),  or any lien filed against  Hoosier Park,  LP and
Anderson  Park,  Inc., provided that the principal  amount secured thereby is 
not hereafter  increased, and no additional assets become subject to such Lien;

                      (viii) Capitalized  lease financing  and operating lease 
financing to the extent of so-called  "synthetic  leasing,"  provided that the  
aggregate  amount of loans and deferred payments secured by such lease financing
shall not exceed $5,000,000 in the  aggregate  (excluding  for the  purpose  of 
this  computation  any loans or deferred payments secured by Liens described on 
Schedule 1.1(P));

                      (ix)   Purchase  Money  Security interests not  to exceed 
$5,000,000 in the aggregate;

                      (x)    Unsecured   seller  financing that  is  expressly 
subordinated  to  the Credit Facility  in an  aggregate  amount not to exceed
$10,000,000; and

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

                      (1) 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 GAAP and pays all
               such   taxes,   assessments   or  charges   forthwith   upon  the
               commencement of proceedings to foreclose any such Lien;

                                      -12-
<PAGE>




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

                      (3)   Claims   or   Liens   of   mechanics,   materialmen,
               warehousemen, carriers, or other statutory nonconsensual Liens.

                      (4)  Liens   resulting  from  final  judgments  or  orders
               described in Section 9.1.7.

               Person  shall  mean  any  individual,  corporation,  partnership,
limited   liability   company,   association,    joint-stock   company,   trust,
unincorporated organization,  joint venture, government or political subdivision
or agency thereof, or any other entity.

               Plan  shall mean at any time an  employee  pension  benefit  plan
(including a Multiple  Employer  Plan,  but not a  Multiemployer  Plan) which is
covered  by Title IV of ERISA or is  subject to the  minimum  funding  standards
under  Section 412 of the Internal  Revenue Code and either (i) is maintained by
any member of the ERISA Group for  employees of any member of the ERISA Group or
(ii) has at any time  within the  preceding  five  years been  maintained by any
entity which was at such time a member of the ERISA Group for  employees  of any
entity which was at such time a member of the ERISA Group.

               PNC  Bank  shall  mean  PNC  Bank,  National   Association,   its
successors and assigns.

               Principal  Office shall mean the main banking office of the Agent
in Louisville, Kentucky.

               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.

               Property shall mean all real property,  both owned and leased, of
any Loan Party or Subsidiary of a Loan Party.

               Purchase Money  Security  Interest shall mean Liens upon tangible
personal property securing loans to any Loan Party or Subsidiary of a Loan Party
or deferred  payments by such Loan Party or Subsidiary  for the purchase of such
tangible personal property.

               Purchasing  Bank shall mean a Bank which  becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.

               Ratable Share shall mean the proportion that a Bank's  Commitment
bears to the Commitments of all of the Banks.

                                       -13-

<PAGE>




               Regulated  Substances  shall mean any  substance,  including  any
solid, liquid, semisolid,  gaseous, thermal,  thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products, coproducts,
impurities,  dust,  scrap,  heavy  metals,  defined as a "hazardous  substance,"
"pollutant,"   "pollution,"   "contaminant,"  "hazardous  or  toxic  substance,"
"extremely  hazardous  substance,"  "toxic chemical," "toxic waste,"  "hazardous
waste,"  "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or
"regulated  substance" or any related materials,  substances or wastes as now or
hereafter  defined  pursuant  to  any  Environmental  Laws,  ordinances,  rules,
regulations  or  other   directives  of  any  Official  Body,  the   generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport,  recycling,  reclamation,  use, reuse,  spilling,  leaking,  dumping,
injection,  pumping,  leaching,  emptying,  discharge,  escape, release or other
management or mismanagement of which is regulated by the Environmental Laws.

               Regulation U shall mean Regulation U, T, G or X as promulgated by
the Board of Governors of the Federal  Reserve  System,  as amended from time to
time.

               Reimbursement  Obligation shall have the meaning assigned to such
term in Section 2.9.3.2.

               Reportable  Event  shall mean a  reportable  event  described  in
Section  4043 of ERISA and  regulations  thereunder  with  respect  to a Plan or
Multiemployer Plan.

               Request for Swing Line Loan shall mean a duly  completed  Request
for a Swing Line Loan in the form of Exhibit 3.1.4.

               Required Banks shall mean

                      (i)    if there are no Loans, Reimbursement Obligations or
Letter of Credit Borrowings  outstanding,  Banks whose Commitments aggregate at
least 66 2/3 % of the Commitments of all of the Banks, or

                      (ii)   if there are Loans, Reimbursement Obligations,  or
Letter of Credit Borrowings outstanding,  any Bank or group of Banks  if the sum
of the Loans,  Reimbursement Obligations  and  Letter of Credit  Borrowings  of 
such   Banks  then   outstanding   aggregates  at  least 66 2/3 % of the  total
principal amount of all of the Loans , Reimbursement  Obligations  and Letter of
Credit  Borrowings  then  outstanding. Reimbursement  Obligations and Letter of 
Credit Borrowings shall be deemed,  for purposes  of this  definition, to be  in
favor of the Agent and not a  participating Bank if  such  Bank has not made its
Participation  Advance in respect thereof and shall be deemed to be in favor of
such  Bank  to  the  extent  of  its  Participation  Advance  if it has made its
Participation Advance in respect thereof.

               Revolving  Credit  Activation Fee shall mean the fees referred to
in Section 2.4.

               Revolving  Credit Base Rate  Option  shall mean the option of the
Borrowers to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(i).

                                      -14-
<PAGE>

               Revolving  Credit  Commitment  shall mean,  as to any Bank at any
time, the amount initially set forth opposite its name on Schedule 1.1(B) in the
column labeled "Amount of Commitment for Revolving Credit Loans," and thereafter
on  Schedule I to the most  recent  Assignment  and  Assumption  Agreement,  and
Revolving  Credit   Commitments  shall  mean  the  aggregate   Revolving  Credit
Commitments of all of the Banks.  The Revolving  Credit  Commitment of the Swing
Line Lender at any time of  determination  for purposes of funding  requests for
Revolving  Credit Loans is the amount set out on Schedule  1.1(B) for "Amount of
Commitment for Revolving Credit Loans" (and thereafter on Schedule I to the most
recent  Assignment  and  Assumption  Agreement)  less the aggregate  outstanding
principal  of  Swing  Line  Loans,  in each  case at the  time  determined.  The
Revolving Credit Commitment of the Swing Line Lender for purposes of voting as a
Bank,  including without limitation  determining whether the Required Banks have
agreed  upon or directed  any  decision  and/or  action is the amount set out in
Schedule  1.1(B)  or  Schedule  I, as  appropriate,  without  reduction  for the
outstanding principal of Swing Line Loans.

               Revolving  Credit  Euro-Rate  Option shall mean the option of the
Borrowers to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(ii).

               Revolving  Credit  Loans shall mean  collectively  and  Revolving
Credit Loan shall mean  separately  all Revolving  Credit Loans or any Revolving
Credit Loan made by the Banks or one of the Banks to the  Borrowers  pursuant to
Section 2.1 or 2.9.3.

               Revolving  Credit  Notes  shall  mean collectively and  Revolving
Credit  Note  shall  mean separately  all the  Revolving  Credit  Notes  of the 
Borrowers  in the form of  Exhibit  1.1(R)   evidencing  the  Revolving  Credit 
Loans  together  with  all amendments,  extensions,  renewals,  replacements, 
refinancings  or  refundings thereof in whole or in part.

               Revolving  Facility  Usage  shall mean at any time the sum of the
Revolving Credit Loans outstanding and the Letters of Credit Outstanding.

               Revolving  Line of Credit  shall mean the sums  advanced or to be
advanced by the Banks to the Borrower for the purposes described in Section 2.8.

               Section  20  Subsidiary  shall  mean the  Subsidiary  of the bank
holding  company  controlling  any  Bank,  which  Subsidiary  has  been  granted
authority  by the  Federal  Reserve  Board to  underwrite  and  deal in  certain
Ineligible Securities.

               Shares  shall have the  meaning  assigned to that term in Section
6.1.2.

               Standard & Poor's shall mean Standard & Poor's Ratings  Services,
a division of The McGraw-Hill Companies, Inc.

               Standby  Letter of Credit shall mean a Letter of Credit issued to
support obligations of one or more of the Loan Parties, contingent or otherwise,
which  finance  the  working  capital  and  business  needs of the Loan  Parties
incurred in the ordinary course of business.

                                      -15-


<PAGE>

               Subsidiary  of  any  Person  at  any  time  shall  mean  (i)  any
corporation  or trust of which  more than 50% (by  number of shares or number of
votes)  of the  outstanding  capital  stock or  shares  of  beneficial  interest
normally  entitled to vote for the election of one or more directors or trustees
(regardless  of any  contingency  which does or may suspend or dilute the voting
rights) is at such time owned  directly or  indirectly  by such Person or one or
more of such Person's Subsidiaries, (ii) any partnership of which such Person is
a general partner or of which more than 50% of the  partnership  interests is at
the time  directly  or  indirectly  owned by such  Person or one or more of such
Person's Subsidiaries,  (iii) any limited liability company of which such Person
is a member of which more than 50% of the limited liability company interests is
at the time directly or  indirectly  owned by such Person or one or more of such
Person's  Subsidiaries  or (iv) any  corporation,  trust,  partnership,  limited
liability  company  or other  entity  which is  controlled  or  capable of being
controlled by such Person or one or more of such Person's Subsidiaries.

               Subsidiary Shares shall have the meaning assigned to that term in
Section 6.1.3.

               Swing Line  Commitment  Period shall mean the period of time from
the date of this Agreement through the Expiration Date.

               Swing Line Credit Facility shall mean the credit facility 
established in Section 3 of this Agreement.

               Swing Line Commitment at any time of determination shall mean the
lesser  of (a) the  dollar  amount  of the  aggregate  of the  Revolving  Credit
Commitments  of  all  of  the Banks minus the sum of (1) the aggregate   maximum
available   drawings   under  all  Letters  of  Credit  outstanding, and (2) the
aggregate  principal  of all Revolving  Credit Loans, in each  case at the  time
determined, or (b) Ten Million Dollars ($10,000,000).

               Swing Line of Credit shall mean the  Swing Line Credit Facility.

               Swing Line Lender shall mean PNC Bank,  National  Association and
its permitted successors and assigns.

               Swing  Line Loan  shall  have the  meaning  given to such term in
Section  3.1;  Swing Line Loans  shall mean  collectively  all of the Swing Line
Loans.

               Swing Line Note  shall mean the Swing Line Note of the  Borrowers
in the form of Exhibit 1.1(S)  evidencing the Swing Line Loans together with all
amendments, extensions, renewals, replacements,  refinancings or refunds thereof
in whole or in part.

               Transferor  Bank  shall  mean the  selling  Bank  pursuant  to an
Assignment and Assumption Agreement.

               Uniform Commercial Code shall mean the Uniform Commercial Code as
adopted in the Commonwealth of Kentucky from time to time.

                                      -16-
<PAGE>
    
           Unmatured  Default  shall  mean any  event or condition   which  with
notice,  passage of time or a determination  by the Agent or the Required Banks,
or any combination of the foregoing, would constitute an Event of Default.

        1.2    Construction.

        Unless the context of this Agreement  otherwise  clearly  requires,  the
following  rules of  construction  shall apply to this Agreement and each of the
other Loan Documents:

               1.2.1  Number; Inclusion.

               references to the plural  include the singular,  the plural,  the
part and the whole;  "or" has the inclusive  meaning  represented  by the phrase
"and/or," and "including" has the meaning  represented by the phrase  "including
without limitation";

               1.2.2  Determination.

               references  to  "determination"  of or by the  Agent or the Banks
shall be deemed to include  good-faith  estimates  by the Agent or the Banks (in
the case of quantitative  determinations) and good-faith beliefs by the Agent or
the Banks (in the case of  qualitative  determinations)  and such  determination
shall be conclusive absent manifest error;

               1.2.3  Agent's Discretion and Consent.
              whenever  the Agent or the Banks are granted the right  herein  to
act in its or their sole  discretion or to grant or withhold  consent such right
shall be exercised in good faith;

               1.2.4  Documents Taken as a Whole.

               the words "hereof," "herein,"  "hereunder,"  "hereto" and similar
terms in this  Agreement or any other Loan Document  refer to this  Agreement or
such other Loan Document as a whole and not to any particular  provision of this
Agreement or such other Loan Document;

               1.2.5  Headings.

               the section and other  headings  contained  in this  Agreement or
such other Loan  Document  and the Table of Contents  (if any),  preceding  this
Agreement or such other Loan Document are for reference  purposes only and shall
not  control or affect the  construction  of this  Agreement  or such other Loan
Document or the interpretation thereof in any respect;

               1.2.6  Implied References to this Agreement.

               article,  section,  subsection,   clause,  schedule  and  exhibit
references  are to this  Agreement or other Loan  Document,  as the case may be,
unless otherwise specified;

               1.2.7  Persons.

               reference to any Person  includes  such Person's  successors  and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;


                                      -17-
<PAGE>


               1.2.8  Modifications to Documents.

               reference to any  agreement  (including  this  Agreement  and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement,  document or instrument as amended,
modified, replaced, substituted for, superseded or restated;

               1.2.9  From, To and Through.

               relative to the determination of any period of time, "from" means
"from  and  including,"  "to"  means "to but  excluding,"  and  "through"  means
"through and including";

               1.2.10 Shall; Will.

               references to "shall" and "will" are intended to have the same
meaning; and

               1.2.11 Consolidated Financial Information.

               whenever  this  Agreement  uses  "consolidated" (whether or  not 
capitalized)  with  respect  to  accounting  or  financial   terms  or financial
statements relating to the Borrowers, that reference means only the "Borrowers" 
as defined in Section 1.1 consolidated with each other in accordance with GAAP, 
and otherwise  combined with each other as if they were consolidated  whether or
not required or permitted in accordance  with  GAAP;  but  that  reference  does
not  mean  the  Borrowers  consolidated  or  combined  with any other  Person,  
even if that Person is an Affiliate of one or more of the  Borrowers  (such as, 
by way of  example,  Hoosier  Park,  L.P.  and Anderson  Park,  Inc.) and  even
if  GAAP would  require or permit that  affiliated Person to be consolidated or 
combined with the Borrowers.

        1.3    Accounting Principles.

        Except as otherwise  provided in this Agreement,  all  computations  and
determinations   as  to  accounting  or  financial  matters  and  all  financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in  accordance  with  GAAP   (including   principles  of   consolidation   where
appropriate),  and all  accounting  or  financial  terms shall have the meanings
ascribed to such terms by GAAP;  provided,  however,  that all accounting  terms
used in Section 8.2  [Negative  Covenants]  (and all  defined  terms used in the
definition  of any  accounting  term used in Section 8.2) shall have the meaning
given to such  terms  (and  defined  terms)  under GAAP as in effect on the date
hereof  applied on a basis  consistent  with those used in preparing  the Annual
Statements referred to in Section 6.1.9(i) [Historical Statements]. In the event
of any change after the date hereof in GAAP,  and if such change would result in
the inability to determine  compliance with the financial covenants set forth in
Section 8.2 based upon the Borrowers' regularly prepared financial statements by
reason of the preceding sentence,  then the parties hereto agree to endeavor, in
good faith,  to agree upon an amendment to this Agreement that would adjust such
financial covenants in a manner that would not affect the substance thereof, but
would  allow  compliance  therewith  to be  determined  in  accordance  with the
Borrowers' financial statements at that time.

                                  -18-

<PAGE>

                                    2.  REVOLVING CREDIT FACILITY

        2.1    Revolving Credit Commitments.

        Subject  to the  terms  and  conditions  hereof  and  relying  upon  the
representations  and warranties  herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrowers at any time or from time to time on
or after the date  hereof to the  Expiration  Date  provided  that after  giving
effect  to such Loan the  aggregate  amount  of Loans  from such Bank  shall not
exceed such Bank's Revolving  Credit  Commitment minus such Bank's Ratable Share
of the Letters of Credit Outstanding.  Within such limits of time and amount and
subject to the other  provisions  of this  Agreement,  the Borrowers may borrow,
repay and reborrow pursuant to this Section 2.1.

        2.2    Nature of Banks' Obligations with Respect to Revolving Credit
Loans.

        Each  Bank  shall  be  obligated  to  participate  in each  request  for
Revolving Credit Loans pursuant to Section 2.5 [Revolving  Credit Loan Requests]
in accordance  with its Ratable  Share.  The aggregate of each Bank's  Revolving
Credit  Loans  outstanding  hereunder  to the  Borrowers at any time shall never
exceed its Revolving Credit  Commitment minus its Ratable Share of the Letter of
Credit  Outstandings.  The  obligations of each Bank hereunder are several.  The
failure of any Bank to perform its  obligations  hereunder  shall not affect the
Obligations  of the  Borrowers  to any other  party nor shall any other party be
liable for the failure of such Bank to perform its obligations  hereunder.  The 
Banks shall have no  obligation  to make  Revolving  Credit  Loans or issue any 
Letters of Credit hereunder on or after the Expiration Date.

        2.3    Non Usage Fees.

        Accruing from the date hereof until the  Expiration  Date, the Borrowers
agree to pay to the Agent for the account of each Bank, on a pro rata basis,  on
the first Business Day of each October,  January,  April and July so long as the
Revolving Credit Facility is in effect, a Non Usage Fee (the "Non Usage Fee") in
an amount equal to the average unused amount of the aggregate  Revolving  Credit
Commitments  multiplied by the applicable fee percentage based on the applicable
level in accordance  with the table set forth below.  Such average unused amount
shall  be  the  amount  by  which  the  average  principal  balance  of  amounts
outstanding  under the Revolving Credit Notes  (including the maximum  available
drawings under outstanding  Letters of Credit) and the amounts outstanding under
the Swing Line Note  beginning  on the date hereof,  for each quarter  beginning
October,  January,  April and July,  is less than the maximum  amount  available
under the Revolving Credit  Facility.  Such fee shall be determined by the Agent
effective  quarterly as of the due date of the  Borrowers'  quarterly  financial
statements for the first three  quarters of each of the fiscal  quarters in each
fiscal year and on the sooner of the actual delivery of the Annual Statements or
90 days after the Borrowers' fiscal year end. The Non Usage Fee shall be payable
upon the  Borrower's  receipt of the Agent's  invoice for such amount.  Such fee
shall be calculated on the basis of the number of days in the particular quarter
on the assumption  that an entire year's  interest is earned in 360 days, as the
case may be.

                                      -19-
<PAGE>
<TABLE>

<S>             <C>              <C>             <C>              <C>             <C>              <C>

                LEVEL I          LEVEL II        LEVEL III        LEVEL IV        LEVEL V          LEVEL VI
                -------          --------        ---------        --------        -------          --------

Basis for       If the ratio of  If the ratio of If the ratio of  If the ratio of If the ratio of  If the ratio of
Non Usage       the              the             the              the             the              the Borrowers'
Fee             Borrowers'       Borrowers'      Borrowers'       Borrowers'      Borrowers'       Total
                Total            Total           Total            Total           Total            Consolidated
                Consolidated     Consolidated    Consolidated     Consolidated    Consolidated     Funded
                Funded           Funded          Funded           Funded          Funded           Indebtedness
                Indebtedness     Indebtedness    Indebtedness     Indebtedness    Indebtedness     to the
                to The           to The          to the           to the          to the           Borrowers'
                Borrowers'       Borrowers'      Borrowers'       Borrowers'      Borrowers'       Consolidated
                Consolidated     Consolidated    Consolidated     Consolidated    Consolidated     EBITDA is
                EBITDA  is       EBITDA is       EBITDA is        EBITDA is       EBITDA is        equal to or
                less than 1.0    equal to or     equal to or      equal to or     equal to or      greater than
                to 1.0           greater than    greater than     greater than    greater than     3.5* to 1.0
                                 1.0 to 1.0      1.5 to 1.0       2.0 to 1.0      2.5 to 1.0 
                                 but less than   but less than    but less than   but less than
                                 1.5 to 1.0      2.0 to 1.0       2.5 to 1.0      3.5 to 1.0
                                 1.0

Then the        12.5 Basis       12.5 Basis      20 Basis         20 Basis        30 Basis         30 Basis
Fee             Points           Points          Points           Points          Points           Points
Percentage
is
</TABLE>

*From and after January 1, 2000, this number will become 3.25.
        2.4    Closing Fee.

        Borrowers  agree to pay to the Agent for the  account of each  Bank,  as
consideration  for such Bank's  Revolving  Credit  Commitment,  a  nonrefundable
facility fee equal to 1/8% of such Bank's Revolving Credit  Commitment,  payable
on the Closing Date.

        2.5    Revolving Credit Loan Requests.

        Except as otherwise provided herein, the Borrowers may from time to time
prior to the Expiration  Date request the Banks to make Revolving  Credit Loans,
or renew or convert the Interest Rate Option  applicable  to existing  Revolving
Credit Loans  pursuant to Section 4.3 [Interest  Periods],  by delivering to the
Agent,  not later than 10:00 a.m.,  Pittsburgh time, (i) three (3) Business Days
prior to the  proposed  Borrowing  Date with  respect to the making of Revolving
Credit Loans to which the Euro-Rate  Option  applies or the conversion to or the
renewal of the  Euro-Rate  Option for any Loans;  and (ii) one (1)  Business Day
prior to either  the  proposed  Borrowing  Date with  respect to the making of a
Revolving  Credit Loan to which the Base Rate Option  applies or the last day of
the preceding  Interest  Period with respect to the  conversion to the Base Rate
Option for any Loan, of a duly completed  request therefor  substantially in the
form of Exhibit 2.5 or a request by telephone  immediately  confirmed in writing
by letter,  facsimile or telex in such form (each, a "Loan  Request"),  it being
understood  that the Agent may rely on the  authority of any  individual  making
such a  telephonic  request  without the  necessity  of receipt of such  written
confirmation.  Each Loan Request shall be irrevocable  and shall specify (i) the
proposed  Borrowing  Date;  (ii) the  aggregate  amount  of the  proposed  Loans
comprising each Borrowing Tranche,  which shall be in whole integer multiples of
$100,000  and not less than  $500,000  for each  Borrowing  Tranche to which the
Euro-  Rate  Option  applies  and not less than the  lesser of  $500,000  or the
maximum  amount  available for Borrowing  Tranches to which the Base Rate Option
applies;  (iii) whether the Euro-Rate  Option or Base Rate Option shall apply to
the proposed Loans comprising the applicable  Borrowing Tranche; and (iv) in the
case  of  a  Borrowing  Tranche  to  which  the  Euro-Rate  Option  applies,  an
appropriate Interest Period for the Loans comprising such Borrowing Tranche.

                                      -20-
<PAGE>

        2.6    Making Revolving Credit Loans.

        The Agent shall, promptly after receipt by it of a Loan Request pursuant
to Section 2.5 [Revolving Credit Loan Requests], notify the Banks of its receipt
of such Loan Request  specifying:  (i) the proposed  Borrowing Date and the time
and method of disbursement of the Revolving Credit Loans requested thereby; (ii)
the  amount  and type of each  such  Revolving  Credit  Loan and the  applicable
Interest  Period (if any); and (iii) the  apportionment  among the Banks of such
Revolving Credit Loans as determined by the Agent in accordance with Section 2.2
[Nature of Banks'  Obligations].  Each Bank shall remit the principal  amount of
each Revolving  Credit Loan to the Agent such that the Agent is able to, and the
Agent  shall,  to the extent the Banks have made funds  available to it for such
purpose and subject to Section 7.2 [Each Additional  Loan],  fund such Revolving
Credit Loans to the Borrowers in U.S. Dollars and immediately available funds at
the Principal  Office prior to 2:00 p.m.,  Pittsburgh  time,  on the  applicable
Borrowing Date, provided that if any Bank fails to remit such funds to the Agent
in a timely manner, the Agent may elect in its sole discretion to fund with its 
own funds the Revolving Credit Loans of such Bank on such Borrowing Date, and  
such Bank shall be subject to the repayment obligation in Section 10.16 
[Availability of Funds].

        2.7    Revolving Credit Notes.

        The Obligation of the Borrowers to repay the aggregate  unpaid principal
amount of the  Revolving  Credit  Loans made to it by each Bank,  together  with
interest  thereon,  shall be  evidenced  by a  Revolving  Credit  Note dated the
Closing  Date  payable to the order of such Bank in a face  amount  equal to the
Revolving Credit Commitment of such Bank.

        2.8    Use of Proceeds.

        The  proceeds of the  Revolving  Credit  Loans shall be used for general
corporate  and  working  capital  purposes  and  also  for  the  acquisition  of
equipment,  property and other  entities and in accordance  with Section  6.1.10
[Use of Proceeds; Margin Stock; Section 20 Subsidiaries] and Section 8.1.10 [Use
of Proceeds].

                                      -21-
<PAGE>

        2.9    Letter of Credit Subfacility.

               2.9.1 Issuance of Letters of Credit.

               Borrowers  may request the issuance of a letter of credit (each a
"Letter of Credit") on behalf of itself or another Loan Party by  delivering  to
the Agent a completed  application  and  agreement for letters of credit in such
form as the Agent may  specify  from time to time by no later than  10:00  a.m.,
Pittsburgh time, at least three (3) Business Days, or such shorter period as may
be agreed to by the Agent,  in advance of the proposed  date of  issuance.  Each
Letter of Credit  shall be  either a  Standby  Letter of Credit or a  Commercial
Letter of Credit.  Subject to the terms and conditions hereof and in reliance on
the  agreements of the other Banks set forth in this Section 2.9, the Agent will
issue a Letter of Credit  provided  that each Letter of Credit  shall (A) have a
maximum maturity of twelve (12) months from the date of issuance,  and (B) in no
event expire later than ten (10) Business Days prior to the Expiration  Date and
provided  further  that in no event shall (i) the Letters of Credit  Outstanding
exceed,  at any one  time,  $10,000,000  or (ii) the  Revolving  Facility  Usage
exceed, at any one time, the Revolving Credit Commitments.

               2.9.2  Letter of Credit Fees.

               The Borrowers  shall pay to the Agent for the ratable  account of
the  Banks a fee (the  "Letter  of  Credit  Fee")  equal to the  applicable  Fee
Percentage as determined  from the chart set forth in Section 4.1.1,  which fees
shall be computed on the daily average  Letters of Credit  Outstanding and shall
be payable  quarterly in arrears  commencing with the first Business Day of each
October, January, April and July following issuance of each Letter of Credit and
on the  Expiration  Date.  The  Borrowers  shall  also pay to the  Agent for the
Agent's sole account a fee in the amount of 1/8% of the amount of any Letters of
Credit issued per annum, payable quarterly in arrears commencing on the first
Business Day of each October, January, April and July.

               2.9.3  Disbursements, Reimbursement.

                      2.9.3.1 Immediately upon the  Issuance of each  Letter of 
Credit,   each  Bank  shall  be  deemed   to,  and  hereby  irrevocably  and  
unconditionally  agrees to, purchase  from the Agent a  participation  in such 
Letter  of  Credit  and each drawing  thereunder  in an  amount  equal to such 
Bank's  Ratable  Share of the maximum amount  available to be drawn under such 
Letter of Credit and the amount of such drawing, respectively.

                      2.9.3.2 In the event of any request for a drawing under a
Letter of Credit by the  beneficiary or transferee  thereof,  the Agent will
promptly  notify the Borrowers. Provided that it shall have received such
notice, the Borrowers shall reimburse (such obligation to reimburse the Agent
shall sometimes be referred to as a "Reimbursement  Obligation") the Agent prior
to 12:00 noon, Pittsburgh time on each date that an  amount  is paid by the 
Agent  under any  Letter of Credit (each such date, an "Drawing  Date") in an 
amount equal to the amount so paid by the Agent.  In the event the Borrowers 
fail to reimburse the Agent for the full amount of any drawing under any Letter 
of Credit by 12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will 
promptly  notify each Bank thereof,  and the Borrowers shall be deemed to have 
requested that Revolving  Credit Loans be made by the Banks under the Base Rate
Option to be  disbursed  on the  Drawing  Date under such Letter of Credit,  
subject to the amount of the unutilized portion of the  Revolving  Credit 
Commitment  and subject to the  conditions  set forth in Section  7.2 [Each  
Additional Loan]  other than any notice  requirements.  Any notice  given by the
Agent pursuant  to this  Section  2.9.3.2  may be oral if immediately  confirmed
in writing; provided  that the lack of such an immediate confirmation  shall not
affect  the  conclusiveness  or  binding  effect of suchotice.

                                      -22-
<PAGE>

                      2.9.3.3  Each Bank shall upon any notice pursuant to 
Section 2.9.3.2 make available  to the Agent an amount in  immediately available
funds equal to its Ratable Share of the amount of the drawing,  whereupon the  
participating  Banks shall  (subject  to  Section  2.9.3.4)  each be deemed to 
have made a  Revolving Credit Loan under the Base Rate Option to the  Borrowers
in that amount. If any Bank so  notified  fails to make  available  to the Agent
for the account of the Agent the amount of such  Bank's  Ratable  Share of such
amount by no later than 2:00 p.m.,  Pittsburgh  time on the Drawing Date,  then
interest shall accrue on such Bank's  obligation to make such payment,  from the
Drawing Date to the date on which  such Bank  makes  such  payment (i) at a rate
per annum equal to the Federal Funds Effective  Rate during the first three days
following the Drawing Date and (ii) at a rate per annum  equal to the rate  
applicable  to Loans under the Revolving  Credit Base Rate Option on and after 
the fourth day following the Drawing  Date.  The Agent will promptly give notice
of the  occurrence  of the Drawing  Date,  but  failure of the Agent to give any
such notice on the Drawing Date or in sufficient time to enable any Bank to 
effect such payment on such date shall not relieve such Bank from its obligation
under this Section 2.9.3.3.

                      2.9.3.4     With respect to any unreimbursed drawing that 
is not converted into Revolving  Credit Loans under the Base Rate Option to the
Borrowers in whole or in part as contemplated by Section 2.9.3.2, because of the
Borrowers' failure to satisfy the  conditions  set forth in Section 7.2 [Each 
Additional  Loan] other than any notice requirements or for any other reason,
the Borrowers shall be deemed to have incurred from the Agent a Letter of Credit
Borrowing in the amount of such drawing.  Such Letter of Credit  Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the rate per annum  applicable to the Revolving Credit Loans under the Base Rate
Option.  Each Bank's payment to the Agent  pursuant to Section  2.9.3.3 shall be
deemed to be a payment in respect of its  participation in such Letter of Credit
Borrowing  and  shall  constitute  a  Participation  Advance  from  such Bank in
satisfaction of its participation obligation under this Section 2.9.3.

               2.9.4  Repayment of Participation Advances.

                      2.9.4.1     Upon (and only upon) receipt by the Agent for 
its account of immediately  available  funds from the  Borrowers  (i) in  
reimbursement  of any payment  made by the Agent under the Letter of Credit wit
respect to which any Bank has made a  Participation  Advance  to the  Agent,  or
(ii) in  payment  of interest on such a payment made by the Agent under such a 
Letter of Credit,  the Agent will pay to each Bank,  in the same funds as those
received by the Agent, the amount of such Bank's  Ratable  Share of such funds, 
except the Agent shall retain  the amount of the  Ratable  Share of such funds 
of any Bank that did not make a Participation Advance in respect of such payment
by Agent.

                      2.9.4.2     If the Agent is required at any time to return
to any Loan Party, or
                                      -23-
<PAGE>

to a trustee, receiver, liquidator, custodian, or any official in any Insolvency
Proceeding,  any  portion  of the  payments  made by any Loan Party to the Agent
pursuant to Section 2.9.4.1 in  reimbursement of a payment made under the Letter
of Credit or interest or fee thereon,  each Bank shall,  on demand of the Agent,
forthwith  return to the Agent the amount of its Ratable Share of any amounts so
returned by the Agent plus interest thereon from the date such demand is made to
the date such  amounts  are  returned  by such Bank to the Agent,  at a rate per
annum equal to the Federal Funds Effective Rate in effect from time to time.

               2.9.5  Documentation.

               Each Loan  Party  agrees to be bound by the terms of the  Agent's
application  and  agreement  for  letters  of  credit  and the  Agent's  written
regulations and customary  practices relating to letters of credit,  though such
interpretation  may be different from the such Loan Party's own. In the event of
a conflict  between such  application  or  agreement  and this  Agreement,  this
Agreement shall govern.  It is understood and agreed that, except in the case of
gross  negligence or willful  misconduct,  the Agent shall not be liable for any
error,  negligence  and/or  mistakes,  whether of  omission  or  commission,  in
following  any Loan Party's  instructions  or those  contained in the Letters of
Credit or any modifications, amendments or supplements thereto.

               2.9.6  Determinations to Honor Drawing Requests.

               In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Agent shall be responsible only
to determine that the documents and certificates  required to be delivered under
such  Letter of Credit  have been  delivered  and that they comply on their face
with the requirements of such Letter of Credit.

               2.9.7  Nature of Participation and Reimbursement Obligations.

               Each Bank's  obligation in accordance with this Agreement to make
the Revolving Credit Loans or Participation Advances, as contemplated by Section
2.9.3, as a result of a drawing under a Letter of Credit, and the Obligations of
the Borrowers to reimburse the Agent upon a draw under a Letter of Credit, shall
be absolute,  unconditional and irrevocable,  and shall be performed strictly in
accordance with the terms of this Section 2.9 under all circumstances, including
the following circumstances:

                      (i)    any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Agent, the Borrowers or any 
other Person for any reason whatsoever;

                      (ii)   the failure of any Loan Party or any other Person 
to comply, in connection with a Letter of Credit  Borrowing, with the conditions
set forth in Section  2.1  [Revolving  Credit   Commitments],   2.5  [Revolving
Credit  Loan Requests],  2.6 [Making Revolving Credit Loans] or 7.2 [Each 
Additional Loan] or as otherwise set forth in this  Agreement  for the making o
a Revolving  Credit Loan, it being acknowledged that such conditions are not 
required for the making of a  Letter  of  Credit  Borrowing  and the  obligatio
of the  Banks  to make Participation Advances under Section 2.9.3;

                                      -24-
<PAGE>

                      (iii)  any lack of validity or enforceability of any
Letter of Credit;

                      (iv)   the existence of any claim, set-off, defense or
other right which any Loan  Party  or any  Bank may have at any  time  against 
a  beneficiary  or any transferee of any Letter of Credit (or any Persons for 
whom any such  transferee may be  acting),  the  Agent or any Bank or any  other
Person  or,  whether  in connection  with this Agreement,  the  transactions  
contemplated  herein or any unrelated  transaction  (including any underlying 
transaction  between any Loan Party or  Subsidiaries  of a Loan Party and the 
beneficiary for which any Letter of Credit was procured);

                      (v)    any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged,  fraudulent,  invalid
or  insufficient in any respect or any  statement  therein being untrue or
inaccurate in any respect even if the Agent has been notified thereof;

                      (vi)   payment by the Agent under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;

                      (vii)  any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any Loan
Party or Subsidiaries of a Loan Party;

                      (viii) any breach of this Agreement or any other Loan
Document by any party thereto;

                      (ix)   the occurrence or continuance of an Insolvency
Proceeding with respect to any Loan Party;

                      (x)    the fact that an Event of Default or a Unmatured
Default shall have occurred and be continuing;

                      (xi) the fact that the  Expiration  Date shall have passed
or this Agreement or the Commitments hereunder shall have been terminated; and

                      (xii)  any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.

               2.9.8  Indemnity.

               In  addition  to amounts  payable  as  provided  in Section  10.5
[Reimbursement  of Agent by  Borrowers,  Etc.],  the  Borrowers  hereby agree to
protect, indemnify, pay and save harmless the Agent from and against any and all
claims,  demands,  liabilities,  damages,  losses,  costs,  charges and expenses
(including  reasonable  fees,  expenses and  disbursements of counsel) which the
Agent may incur or be subject to as a  consequence,  direct or indirect,  of (i)
the  issuance  of any Letter of Credit,  other than as a result of (A) the gross
negligence or willful  misconduct of the Agent as determined by a final judgment
of a court of  competent  jurisdiction  or (B) subject to the  following  clause
(ii),  the  wrongful  dishonor by the Agent of a proper  demand for payment made
under any Letter of Credit,  or (ii) the failure of the Agent to honor a drawing
under any such  Letter of  Credit  as a result of any act or  omission,  whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental  authority (all such acts or omissions herein called  "Governmental
Acts").

                                      -25-
<PAGE>

               2.9.9  Liability for Acts and Omissions.

               As between any Loan Party and the Agent,  such Loan Party assumes
all risks of the acts and  omissions  of, or misuse of the Letters of Credit by,
the respective  beneficiaries of such Letters of Credit.  In furtherance and not
in limitation of the foregoing,  the Agent shall not be responsible for: (i) the
form,  validity,  sufficiency,  accuracy,  genuineness  or legal  effect  of any
document  submitted  by any  party in  connection  with the  application  for an
issuance of any such Letter of Credit,  even if it should in fact prove to be in
any or all respects  invalid,  insufficient,  inaccurate,  fraudulent  or forged
(even if the Agent  shall have been  notified  thereof);  (ii) the  validity  or
sufficiency  of any  instrument  transferring  or  assigning  or  purporting  to
transfer  or  assign  any such  Letter  of  Credit  or the  rights  or  benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective  for any reason;  (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be  transferred,  to comply fully with any conditions  required in order to draw
upon such  Letter of Credit or any other  claim of any Loan  Party  against  any
beneficiary  of such Letter of Credit,  or any such  transferee,  or any dispute
between or among any Loan Party and any  beneficiary  of any Letter of Credit or
any  such  transferee;  (iv)  errors,  omissions,  interruptions  or  delays  in
transmission or delivery of any messages,  by mail, cable,  telegraph,  telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms;  (vi) any loss or delay in the transmission or otherwise of any
document  required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit;  or
(viii) any  consequences  arising  from causes  beyond the control of the Agent,
including any  Governmental  Acts, and none of the above shall affect or impair,
or prevent  the  vesting  of,  any of the  Agent's  rights or powers  hereunder.
Nothing in the preceding sentence shall relieve the Agent from liability for the
Agent's  gross  negligence or willful  misconduct in connection  with actions or
omissions described in such clauses(i) through (viii) of such sentence.

               In  furtherance  and  extension  and  not  in  limitation  of the
specific  provisions  set forth above,  any action taken or omitted by the Agent
under or in connection  with the Letters of Credit issued by it or any documents
and certificates delivered thereunder,  if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrowers or any Bank.

        2.10   Extension by Banks of the Expiration Date.

               2.10.1 Requests; Approval by All Banks.

               Upon or promptly  after  delivery by the  Borrowers of the annual
financial  statements  to be provided  under  Section  8.3.2  [Annual  Financial
Statements]  for the fiscal year  ending  December  31,  1998 or any  subsequent
fiscal year,  the Borrowers may request a one-year  extension of the  Expiration
Date by written notice to the Agent on behalf of the Banks,  and the Banks agree
to respond to the Borrowers' request for an extension by the later of sixty (60)
days  following  Agent's  receipt of the request;  provided,  however,  that the
failure of any Bank to respond  within such time period  shall not in any manner
constitute an agreement by such Bank to extend the Expiration Date. If all Banks
elect to extend, the Expiration Date shall be extended for a period of one year.
If one or more Banks decline to extend or do not respond to Borrowers'  request,
the provisions of Section 2.10.2 shall apply.

                                      -26-
<PAGE>

               2.10.2 Approval by Required Banks.

               In the event  that one or more  Banks do not agree to extend  the
Expiration Date or do not respond to Borrowers'  request for an extension within
the time required under Section 2.10.1 (each a "Bank to be Terminated"), but the
Required  Banks  agree to such  extension  within such time then the Banks which
have agreed to such  extension  within the time required  under  Section  2.10.1
(each an "Extending Bank") may, with the prior written approval of the Borrowers
and the Agent, arrange to have one or more other banks (each an "Assignee Bank")
purchase all of the outstanding  Loans, if any, of the Bank to be Terminated and
succeed  to and assume  the  Commitments  and all other  rights,  interests  and
obligations of the Bank to be Terminated under this Agreement and the other Loan
Documents.  Any  such  purchase  and  assumption  shall  be (1)  pursuant  to an
Assignment  and  Assumption  Agreement,  (2) subject to and in  accordance  with
Section 11.11 [Successors and Assigns], and (3) effective on the last day of the
Interest Period if any Loans are  outstanding  under the Euro-Rate  Option.  The
Borrowers  shall pay all amounts due and payable to the Bank to be Terminated on
the effective date of such  Assignment and  Assumption  Agreement.  In the event
that the Agent shall  become a Bank to be  Terminated,  the  provisions  of this
Section 2.10 shall be subject to Section 10.14 [Successor  Agent]. In the event 
that the Loans and Commitments of a Bank to be  Terminated  are not fully 
assigned and assumed  pursuant  to Section 2.10.2 then the Expiration Date shal
not be extended for any Bank.

        2.11 Voluntary  Reductions.  So long as no Event of Default or Unmatured
Default has occurred and continues  uncured,  the  Borrowers may make  voluntary
reductions in the amount of the Revolving  Line of Credit,  and the  concomitant
aggregate  Revolving Credit  Commitments of all the Banks, at any time after the
Closing Date and after  satisfaction of all conditions  provided in Section 7 of
this  Agreement,  including  payment  of all fees and  expenses,  subject to the
following:

               (i)    each  request  for a voluntary  reduction  shall be in the
                      amount  of   $10,000,000.00  or  more,  in  whole  integer
                      multiples of $1,000,000;

               (ii)   the Borrowers  shall have  submitted  written  notice of a
                      request  for a voluntary  reduction  to the Banks not less
                      than thirty (30) nor more than ninety (90) days before the
                      date on which the Borrowers desire the voluntary reduction
                      to become effective;

               (iii)  the written notice of a request for a voluntary  reduction
                      submitted  to the Banks  shall set forth the date on which
                      the voluntary  reduction shall be effective and the amount
                      of the requested voluntary reduction;

               (iv)   a written  notice of  request  for a  voluntary  reduction
                      shall be  irrevocable,  and may be withdrawn only with the
                      consent of the Agent;

                                      -27-
<PAGE>

               (v)    on the date provided in the Borrowers' notice of voluntary
                      reduction  given in accordance with  subsections  2.11(ii)
                      and (iii)  above,  the  Revolving  Line of Credit  and the
                      concomitant  aggregate Revolving Credit Commitments of all
                      of the Banks,  shall be permanently  reduced by the amount
                      stated in that notice of voluntary reduction;

               (vi)   any reduction in the Revolving Line of Credit shall result
                      in  the   reduction  of  each  Bank's   Revolving   Credit
                      Commitment on a pro rata basis; and

               (vii)  any requested  voluntary  reduction that would result in a
                      prepayment of all or any part of any Revolving Credit Loan
                      or  Revolving   Credit  Loans  shall  be  subject  to  and
                      conditioned  upon the Borrowers'  compliance with Sections
                      5.4 and 5.6 of this Agreement.

                               3. SWING LINE LOANS

        Subject to the terms and  conditions  of this Loan  Agreement,  PNC Bank
hereby  agrees to make Swing Line  Loans to the  Borrowers  under the Swing Line
Credit Facility.

        3.1    Swing Line Credit Facility.
        From the date hereof  throughout the Swing Line Commitment  Period,  and
subject to the terms,  conditions and other  provisions of this  Agreement,  PNC
Bank  agrees to make Swing Line  Loans to the  Borrowers  from time to time in a
total  amount  not  exceeding  the lesser of the Swing  Line  Commitment  or Ten
Million Dollars ($10,000,000) in amounts of $500,000 and whole integer multiples
of $500,000 in excess thereof. The Swing Line Credit Facility is established for
the administrative convenience of the Borrowers, the Agent and the Banks. During
the Swing Line  Commitment  Period the Borrowers  may borrow and repay  advances
under the Swing Line Credit  Facility in whole or in part,  and  reborrow all in
accordance  with the terms,  conditions and other  provisions of this Agreement.
The making of each Swing Line Loan shall be subject to the further provisions of
this  Section  3.1,  and shall be  subject to all of the  conditions  of lending
stated in Section 7.2 being  fulfilled at the time of each Swing Line Loan,  and
provided  further that each Swing Line Loan shall be on the terms and subject to
the conditions hereinafter stated.

               3.1.1 Interest.

               Swing Line Loans shall bear interest  (calculated on the basis of
an  assumed  year of 365 or 366 days) from the date of each such Swing Line Loan
until  repaid  at an  annual  rate  equal to the Base  Rate  minus  1/2%.  After
maturity,  whether by acceleration or scheduled maturity, until paid in full, or
when and so long as there shall exist any uncured  Event of Default,  Swing Line
Loans shall bear interest at the applicable Default Rate.  Interest with respect
to the principal of a Swing Line Loan shall be due and payable to the Swing Line
Lender on the date the principal of that Swing Line Loan is due and payable, and
on the Expiration Date.

               3.1.2  Principal.

                                      -28-
<PAGE>

               The Borrowers shall pay all  outstanding and unpaid  principal of
Swing Line Loans on the Expiration Date.

               3.1.3  Swing Line Note.

               The  obligations of the Borrowers to repay Swing Line Loans shall
be evidenced by a promissory note (the "Swing Line Note")  substantially  in the
from of Exhibit 1.1(S) attached hereto.

               3.1.4  Conditions for Swing Line Loans.

               So long as no Event of Default or  Unmatured  Default  shall have
occurred  and be  continuing,  during  the Swing  Line  Commitment  Period,  the
Borrowers may borrow, repay and reborrow under the Swing Line Credit Facility on
any Business Day, subject to the terms,  conditions and other provisions of this
Agreement.  The making of Swing Line Loans will be  conditioned  upon receipt by
the Swing Line  Lender  from the  Borrowers  of a Request for Swing Line Loan by
12:00 noon Pittsburgh time on the Business Day of the requested Swing Line Loan.
Notwithstanding  the  foregoing,   the  Swing  Line  Lender  may,  in  its  sole
discretion, accept an oral or written request made on behalf of the Borrowers by
an  Authorized  Officer by  telephone,  telex,  facsimile  or some other form of
written electronic  communication,  in which case the Swing Line Lender shall be
entitled to rely on any such oral or written  request  received  by the Swing
Line Lender in good faith from  anyone  reasonably  believed  by the Swing Line
Lender to be an Authorized Officer.  The Borrowers shall promptly confirm any 
such communication by delivery  of a Request for Swing Line Loan in the form of 
Exhibit  3.1.4 upon request of the Swing Line  Lender.  Disbursements  of, and
payments of principal with respect to Swing Line Loans may be evidenced by 
notations of the Swing Line Lender or its electronic data processing equipment.
The aggregate amount of all disbursements  of Swing Line  Loans  made and shown
on the Swing  Line  Lender's electronic data processing equipment, over all of 
the payments of principal made by the  Borrowers  and  recorded  on the Swing 
Line  Lender's  electronic  data processing equipment shall be prima facie 
evidence of the outstanding  principal balance due under the Swing Line Note.

               3.1.5. General Provisions Regarding Payments of Swing Line Loans.

                      3.1.5.1       Manner and Time of Payment.  All payments of
principal, interest and fees  hereunder  and under the Swing  Line Note by the  
Borrowers  shall be made without defense,  setoff  and  counterclaim  and in the
same days funds and delivered to PNC Bank not later than 11:00 a.m. (Pittsburgh,
PA time) on the due date therefor at its office  located in  Pittsburgh,  PA; 
funds  received by PNC Bank after that time shall be deemed to have been paid by
the  Borrowers  on the next succeeding Business Day.

                      3.1.5.2       Borrowings to Repay Amounts Outstanding 
Under the Swing Line of Credit. The Swing Line Lender shall, five (5) days after
an advance is made under the Swing Line of Credit,  demand repayment of that 
advance under the Swing Line of Credit, and each Bank shall make a Loan pursuant
to the Revolving Line of Credit in an amount equal to such Bank's  Ratable Share
of the aggregate principal amount of that advance under the Swing Line of Credit
plus, if the Swing Line Lender so requests,  accrued interest thereon,  provided
that no Bank shall be obligated in any event to make loans  pursuant to the  
Revolving Line of Credit in excess of its  Commitment.  Loans  made  under the 
Revolving  Line of Credit made pursuant to the preceding  sentence  shall bear
interest at the Base Rate and shall be deemed to have been  properly  requested 
in  accordance  with Section 2.5 without regard to any of the  requirements  of 
that  provision.  The Swing Line Lender shall provide  notice to the Banks
(which may be telephonic or written  notice by  letter,  facsimile  or  telex)  
that  such  Loans  under the Revolving  Line of Credit are to be made under this
Section  3.1.5.2 and of the apportionment among the Banks, and that Bank shall  
be unconditionally  obligated to fund its  Ratable  Share of such  Loans  under 
the  Revolving  Line of Credit (whether or not the conditions specified in 
Section 7 are then satisfied) by the time the Swing Line Lender so  requests,   
which  shall not be earlier  than 3:00 p.m.  Pittsburgh  time on the  Banking   
Day next succeeding  the date that Bank receives such notice from the Swing Line
Lender.

                                      -29-


<PAGE>

                      3.1.5.3       Payments on Business Days. Whenever any
payment to be made hereunder  or under the Swing Line  Facility  shall be stated
to be due on a day that is not a Business Day,  such payment  shall be made on  
the next  succeeding Business Day (unless no further Business Day occurs in such
month, in which case payment shall be made on the next preceding  Business Day) 
and such extension of time shall be included in the  computation of the payment 
of interest  hereunder or under the Swing Line Note.

               3.1.6  Limitation.

               The Borrowers may not request that the Swing Line Lender make any
Swing Line Loan if, after making such Swing Line Loan,  (a) the total  aggregate
principal  amount of  outstanding  Swing Line  Loans  would  exceed Ten  Million
Dollars  ($10,000,000.00)  or  (b)  the  total  utilization  of  Revolving  Loan
Commitments  plus the  Letters  of Credit  outstanding  plus  Swing  Line  Loans
outstanding and requested would exceed the Revolving Loan Commitments.

        3.2    Use of Proceeds.

               The  principal of the Swing Line Loans shall be used by Borrowers
for general  corporate and working  capital  purposes,  and in  accordance  with
Section  6.1.10 [Use of Proceeds;  Margin Stock;  Section 20  Subsidiaries]  and
Section 8.1.10 [Use of Proceeds].

                                4. INTEREST RATES

        4.1    Interest Rate Options.

        The Borrowers  shall pay interest in respect of the  outstanding  unpaid
principal  amount of the  Revolving  Credit Loans at the rate or rates per annum
selected by it from the Base Rate Option or Euro-Rate Option set forth below, it
being  understood  that,  subject  to the  provisions  of  this  Agreement,  the
Borrowers may select  different  Interest  Rate Options and  different  Interest
Periods  to  apply  simultaneously  to the  Revolving  Credit  Loans  comprising
different  Borrowing  Tranches and may convert to or renew one or more  Interest
Rate  Options  with  respect to all or any portion of the Loans  comprising  any
Borrowing Tranche,  provided that there shall not be at any one time outstanding
more  than  seven  (7)  Borrowing  Tranches  in the  aggregate  among all of the
Revolving Credit Loans.  Each Borrowing  Tranche shall bear interest at the same
Interest Rate Option.  If at any time the designated rate applicable to any Loan
made by any Bank exceeds such Bank's  highest  lawful rate, the rate of interest
on such Bank's Loan shall be limited to such Bank's highest lawful rate.

                                      -30-
<PAGE>

               4.1.1  Revolving Credit Interest Rate Options.

               The  Borrowers  shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans:

                      (i)    Revolving Credit Base Rate Option:  A fluctuating
rate per annum (computed  on the basis of an assumed  year of 365 or 366 days,  
and actual days elapsed) equal to the Base Rate, such interest rate to change 
automatically from time to time effective as of the effective date of each 
change in the Base Rate; or

                      (ii)   Revolving Credit Euro-Rate Option: A rate per annum
(computed on the basis of an assumed year of 360 days and actual days  elapsed)
equal to the applicable Euro-Rate for the Interest Period properly selected for
the Revolving Credit  Loan or  Loans,  plus the  applicable  Euro-Rate  Margin  
determined  in accordance with the following table:
<TABLE>
<S>           <C>              <C>               <C>             <C>                <C>              <C>
              LEVEL I          LEVEL II          LEVEL III       LEVEL IV           LEVEL V          LEVEL VI
 Basis for    If the ratio of  If the ratio of   If the ratio of If the ratio of    If the ratio of  If the ratio of the
Euro-         the Borrowers'   the Borrowers'    the             the Borrowers'     the Borrowers'   Borrowers' Total
Rate          Total            Total             Borrowers'      Total              Total            Consolidated
Margin        Consolidated     Consolidated      Total           Consolidated       Consolidated     Funded
              Funded           Funded            Consolidated    Funded             Funded           Indebtedness to
              Indebtedness     Indebtedness      Funded          Indebtedness to    Indebtedness     the Borrowers'
              to the           to the            Indebtedness    the Borrowers'     to the           Consolidated
              Borrowers'       Borrowers'        to the          Consolidated       Borrowers'       EBITDA is
              Consolidated     Consolidated      Borrowers'      EBITDA is          Consolidated     equal to or
              EBITDA is        EBITDA is         Consolidated    equal to or        EBITDA is        greater than 3.5*
              less than 1.0 to equal to or       EBITDA is       greater than 2.0   equal to or      to 1.0
              1.0.             greater than      equal to or     to 1.0 but less    greater than
                               1.0 to 1.0 but    greater than    than 2.5 to 1.0    2.5 to 1.0 but
                               less than 1.5 to  1.5 to 1.0 but                     less than 3.5*
                               1.0               less than 2.0                      to 1.0
                                                 to 1.0
Then the      50 Basis Points  62.5 Basis        75 Basis        87.5 Basis         100 Basis        112.5 Basis
Euro-                          Points            Points          Points             Points           Points
Rate
Margin is
</TABLE>

*From and after January 1, 2000, this number will become 3.25.

        4.2    Swing Line Loan Interest Rate.

               The  Borrowers  shall pay interest in respect of the  outstanding
unpaid principal amount of the Swing Line Loans outstanding from time to time at
a fluctuating rate per annum (computed on the basis of an assumed year of 365 or
366 days and  actual  days  elapsed)  equal to the Base Rate  minus  1/2%,  such
interest  rate to change  automatically  from time to time  effective  as of the
effective date of each change in the Base Rate.
                                      -31-
<PAGE>

        4.3    Interest Periods.

        At any time  when the  Borrowers  shall  select,  convert  to or renew a
Euro-Rate  Option,  the Borrowers  shall notify the Agent thereof at least three
(3)  Business  Days  prior to the  effective  date of such  Euro-Rate  Option by
delivering a Loan Request.  The notice shall specify a Euro-Rate Interest period
(the "Interest Period") during which such Interest Rate Option shall apply, such
Interest  Period to be (i) one, two, three or six Months,  or (ii) twelve Months
if Borrowers  select the Euro-Rate Option and a twelve Month Euro-Rate Option is
then  available to the Banks for offering to the  Borrowers.  The Banks shall be
under  no  obligation  to  provide  a  twelve  Month  Euro-Rate  Option  if then
unavailable to the Banks.  Notwithstanding the preceding sentence, the following
provisions  shall apply to any  selection  of,  renewal of, or  conversion  to a
Euro-Rate Option:

               4.3.1  Amount of Borrowing Tranche.

               Each  Borrowing  Tranche  of  Euro-Rate  Loans  shall be in whole
integer multiples of $100,000.00 and not less than $500,000.00;

               4.3.2  Termination Before Expiration Date.

               The Borrowers  shall not select,  convert to or renew an Interest
Period for any  portion of the Loans that would end after the  Expiration  Date;
and

               4.3.3  Renewals.

               In the case of the renewal of a Euro-Rate Option at the end of an
Interest Period,  the first day of the new Interest Period shall be the last day
of the preceding Interest Period, without duplication in payment of interest for
such day.

        4.4    Interest After Default.

        To the  extent  permitted  by Law,  upon the  occurrence  of an Event of
Default  and until  such time such  Event of  Default  shall  have been cured or
waived;

               4.4.1  Letter of Credit Fees, Interest Rate.

               The Letter of Credit Fees and the rate of interest  for each Loan
otherwise  applicable  pursuant  to Section  2.9.2  [Letter  of Credit  Fees] or
Section 4.1 [Interest  Rate Options],  respectively,  shall be increased by 2.0%
per annum from the time such Obligation  becomes due and payable and until it is
paid in full; and

               4.4.2  Other Obligations.

                                      -32-
<PAGE>

               Each other  Obligation  hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest  otherwise
applicable under the Revolving Credit Base Rate Option plus an additional 2% per
annum from the time such Obligation becomes due and payable and until it is paid
in full.

               4.4.3  Acknowledgment.

               The Borrowers  acknowledge that the increase in rates referred to
in this Section 4.4.3 reflects,  among other things, the fact that such Loans or
other  amounts  have become a  substantially  greater  risk given their  default
status and that the Banks are entitled to additional compensation for such risk;
and all such interest shall be payable by Borrowers upon demand by Agent.

        4.5    Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits 
Not Available.

               4.5.1  Unascertainable.

        If  the  Agent  determines  (which  determination  shall  be  final  and
conclusive) that, by reason of circumstances  affecting the interbank eurodollar
market generally,  deposits in dollars (in the applicable amounts) are not being
offered to banks in the interbank  eurodollar  market for the selected  term, or
adequate means do not exist for ascertaining the Euro-Rate, then the Agent shall
give notice thereof to the Borrowers and the other Banks. Thereafter,  until the
Agent  notifies the Borrower and the other Banks that the  circumstances  giving
rise to such suspension no longer exist,  (a) the  availability of the Euro-Rate
Option shall be suspended,  and (b) the interest  rate for all Revolving  Credit
Loans then bearing interest under the Euro-Rate Option shall be converted at the
expiration  of the then current  Euro-Rate  Interest  Period(s) to the Base Rate
Option.

               4.5.2  Illegality; Increased Costs; Deposits Not Available.

        If, after the date of this Agreement,  the Agent shall determine  (which
determination shall be final and conclusive) that any enactment, promulgation or
adoption of or any change in any  applicable  law,  rule or  regulation,  or any
change  in  the  interpretation  or  administration  thereof  by a  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof, or compliance by the Agent with any guideline,  request
or  directive  (whether  or not having the force of law) of any such  authority,
central bank or comparable  agency shall make it unlawful or impossible  for the
Agent to make or maintain or fund loans under the  Euro-Rate  Option,  the Agent
shall  notify the  Borrower  and the other  Banks.  Upon receipt of such notice,
until the Agent notifies the Borrower and the other Banks that the circumstances
giving rise to such  determination  no longer apply, (a) the availability of the
Euro-Rate Option shall be suspended,  and (b) the interest rate on all Revolving
Credit Loans then bearing interest under the Euro-Rate Option shall be converted
to the Base Rate Option either (i) on the last day of the then current Euro-Rate
Interest  Period(s)  if the Agent may  lawfully  continue to maintain  Revolving
Credit Loans under the Euro-Rate  Option to such day, or (ii) immediately if the
Agent may not  lawfully  continue to maintain  Revolving  Credit Loans under the
Euro-Rate Option.

                                      -33-
<PAGE>

               4.5.3  Agent's and Banks' Rights.

               In the case of any event  specified in Section  4.5.1 above,  the
Agent shall promptly so notify the Banks and the Borrowers  thereof,  and in the
case of an event  specified in Section 4.5.2 above,  such Bank shall promptly so
notify the Agent and endorse a  certificate  to such  notice as to the  specific
circumstances  of such notice,  and the Agent shall promptly send copies of such
notice and  certificate  to the other Banks and the Borrower.  Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given),  the  obligation of (A) the Banks,  in the case of such notice
given by the Agent,  or (B) such Bank,  in the case of such notice given by such
Bank, to allow the Borrowers to select,  convert to or renew a Euro-Rate  Option
shall be suspended  until the Agent shall have later  notified the Borrower,  or
such Bank shall have later notified  the  Agent,  of the  Agent's  or  such  
Bank's,  as the  case  may be, determination that the circumstances giving rise 
to such previous  determination no longer exist.  If at any time the Agent makes
a  determination under Section 4.5.1 and the Borrowers have previously  notified
the Agent of its selection of, conversion to or renewal of a Euro-Rate Option  
and such Interest Rate Option has not yet gone into  effect,  such  notification
shall be deemed to  provide  for selection  of,  conversion  to or  renewal  of 
the Base  Rate  Option  otherwise available  with  respect  to such  Loans.  If 
any Bank  notifies  the Agent of a determination  under  Section  4.5.2,  the   
Borrowers  shall, subject  to  the Borrowers' indemnification  Obligations under
Section 5.6.2 [Indemnity],  as to any Loan of the Bank to which a Euro-Rate 
Option applies, on the date specified in such notice  either  convert  such Loan
to the Base Rate  Option  otherwise available  with  respect  to such Loan or 
prepay  such Loan in  accordance  with Section 5.4  [Voluntary  Prepayments].  
Absent due notice from the  Borrowers of conversion or prepayment, such Loan 
shall automatically be converted to the Base Rate Option  otherwise  available 
with respect to such Loan upon such specified date.

        4.6    Selection of Interest Rate Options.

        If the  Borrowers  fail to select a new Interest  Period to apply to any
Borrowing  Tranche of Loans under the Euro-Rate  Option at the  expiration of an
existing Interest Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.3 [Interest Periods],  the Borrowers shall be deemed
to have  converted  such  Borrowing  Tranche to the  Revolving  Credit Base Rate
Option commencing upon the last day of the existing Interest Period.

                                   5. PAYMENTS

        5.1 Payments.

        All  payments  and  prepayments  to be made  in  respect  of  principal,
interest,  Commitment Fees, Letter of Credit Fees,  Agent's Fee or other fees or
amounts due from the Borrowers  hereunder  shall be payable prior to 11:00 a.m.,
Pittsburgh time, on the date when due without  presentment,  demand,  protest or
notice of any kind,  all of which are hereby  expressly  waived by the Borrower,
and without  set-off,  counterclaim  or other  deduction  of any nature,  and an
action  therefor shall  immediately  accrue.  Such payments shall be made to the
Agent at the Principal Office for the ratable accounts of the Banks with respect
to the Loans in U.S.  Dollars and in immediately  available funds, and the Agent
shall promptly  distribute  such amounts to the Banks in  immediately  available
funds,  provided  that  in the  event  payments  are  received  by  11:00  a.m.,
Pittsburgh  time,  by the Agent with respect to the Loans and such  payments are
not  distributed  to the Banks on the same day received by the Agent,  the Agent
shall pay the Banks the Federal Funds  Effective Rate with respect to the amount
of such  payments  for each day held by the  Agent  and not  distributed  to the
Banks.  The  Agent's  and each  Bank's  statement  of  account,  ledger or other
relevant  record shall,  in the absence of manifest  error, be conclusive as the
statement  of the amount of  principal  of and  interest  on the Loans and other
amounts owing under this Agreement and shall be deemed an "account stated."

                                      -34-
<PAGE>

        5.2    Pro Rata Treatment of Banks.

        Each borrowing  shall be allocated to each Bank according to its Ratable
Share,  and each  selection  of,  conversion  to or renewal of any Interest Rate
Option  and  each  payment  or  prepayment  by the  Borrowers  with  respect  to
principal,  interest,  Commitment  Fees,  Letter of Credit  Fees,  or other fees
(except for the Agent's Fee) or amounts due from the Borrowers  hereunder to the
Banks with  respect to the Loans,  shall  (except as provided  in Section  4.5.3
[Agent's  and Bank's  Rights] in the case of an event  specified  in Section 4.5
[Euro-Rate  Unascertainable;  Etc.],  5.4.2  [Replacement  of  a  Bank]  or  5.6
[Additional Compensation in Certain Circumstances]) be made in proportion to the
applicable  Loans  outstanding  from each Bank  and,  if no such  Loans are then
outstanding, in proportion to the Ratable Share of each Bank.

        5.3    Interest Payment Dates.

        Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the first Business Day of each October, January, April and
July after the date hereof and on the Expiration  Date or upon  acceleration  of
the Notes.  Interest on Loans to which the Euro-Rate Option applies shall be due
and payable on the last day of each Interest Period for those Loans and, if such
Interest  Period is longer than three (3)  Months,  also on the 90th day of such
Interest Period, at 90 day intervals thereafter during such Interest Period, and
on the last day of such Interest  Period.  Interest on mandatory  prepayments of
principal  under Section 5.5  [Mandatory  Prepayments]  shall be due on the date
such mandatory  prepayment is due. Interest on the principal amount of each Loan
or other  monetary  Obligation  shall be due and  payable  on demand  after such
principal amount or other monetary  Obligation  becomes due and payable (whether
on the stated maturity date, upon acceleration or otherwise).

                                      -35-
<PAGE>

        5.4    Voluntary Prepayments.

               5.4.1 Right to Prepay.

               The  Borrowers  shall have the right at their option from time to
time to prepay the Loans in whole or part, without premium or penalty (except as
provided in Section 5.4.2 below or in Section 5.6  [Additional  Compensation  in
Certain Circumstances]):

                      (i)    at any time with respect to any Loan to which the
Base Rate Option applies so long as such payments are in an amount not less than
$500,000 and in integers of $500,000,

                      (ii) daily at any time with respect to any Swing Line Loan
so long as such payments are in an amount not less than $100,000 and in whole 
integer multiples of $100,000,

                      (iii)  on the last day of the applicable Interest Period 
with respect to Loans to which a Euro-Rate Option applies so long as such 
payments are in an amount not less than $5,000,000 and in whole integer 
multiples of $500,000,

                      (iv)   on the date specified in a notice by any Bank
pursuant to Section 4.5 [Euro-Rate Unascertainable,  Etc.] with respect to any 
Loan to which a Euro-Rate Option applies.

               Whenever the Borrowers desire to prepay any part of the Loans not
bearing interest at the Base Rate, they shall provide a prepayment notice to the
Agent by 1:00 p.m.  Pittsburgh,  PA time, at least one (1) Business Day prior to
the date of prepayment of Loans setting forth the following information:

                      (x)    the date, which shall be a Business Day, on which  
the proposed prepayment is to be made;

                      (y)    a statement indicating the application of the 
prepayment between the Revolving Credit Loans and Swing Line Loans; and

                      (z)    the total principal amount of such prepayment.

               All prepayment notices shall be irrevocable. The principal amount
of the Loans for which a prepayment  notice is given,  together with interest on
such principal amount except with respect to Loans to which the Base Rate Option
applies,  shall be due and  payable  on the date  specified  in such  prepayment
notice as the date on which the  proposed  prepayment  is to be made.  Except as
provided in Section 4.5.3 [Agent's and Bank's Rights], if the Borrowers prepay a
Loan but fail to specify the  applicable  Borrowing  Tranche which the Borrowers
are prepaying,  the  prepayment  shall be applied (i) first to Swing Line Loans,
then to Revolving  Credit Loans; and (ii) after giving effect to the allocations
in clause (i) above and in the preceding  sentence,  first to Loans to which the
Base Rate Option applies,  then to Loans to which the Euro-Rate  Option applies.
Any  prepayment  hereunder  shall be subject  to the  Borrowers'  Obligation  to
indemnify the Banks under Section 5.6.2 [Indemnity].

                                      -36-
<PAGE>

               5.4.2  Replacement of a Bank.

               In the  event  any  Bank  (i)  gives  notice  under  Section  4.5
[Euro-Rate Unascertainable, Etc.] or Section 5.6.1 [Increased Costs, Etc.], (ii)
does not fund  Revolving  Credit  Loans  because  the making of such Loans would
contravene any Law applicable to such Bank, (iii) does not approve any action as
to which  consent  of the  Required  Banks is  requested  by the  Borrowers  and
obtained  hereunder,  or (iv) becomes subject to the control of an Official Body
(other than normal and customary supervision), then the Borrowers shall have the
right at their  option,  with the  consent  of the  Agent,  which  shall  not be
unreasonably  withheld, to prepay the Loans of such Bank in whole, together with
all interest accrued thereon, and terminate such Bank's Commitment within ninety
(90) days after (w) receipt of such Bank's notice under  Section 4.5  [Euro-Rate
Unascertainable,  Etc.] or 5.6.1 [Increased Costs, Etc.], (x) the date such Bank
has  failed  to  fund  Revolving Credit Loans because  the  making of such Loans
would   contravene  Law  applicable  to  such  Bank, (y)  the  date of
obtaining  the consent  which such Bank has not  approved,  or (z) the date such
Bank became subject to the control of an Official Body, as applicable;  provided
that the  Borrowers  shall also pay to such Bank at the time of such  prepayment
any amounts  required  under  Section 5.6  [Additional  Compensation  in Certain
Circumstances] and any accrued interest due on such amount and any related fees;
provided,  however, that the Commitment of such Bank shall be provided by one or
more of the  remaining  Banks or a  replacement  bank  acceptable  to the Agent;
provided,  further,  the remaining  Banks shall have no obligation  hereunder to
increase their Commitments. Notwithstanding the foregoing, the Agent may only be
replaced  subject to the  requirements  of Section 10.14  [Successor  Agent] and
provided that all Letters of Credit have expired or been terminated or replaced,
and all Swing Line Loans and related  accrued but unpaid interest have been paid
in full.

               5.4.3  Change of Lending Office.

               Each Bank agrees  that upon the  occurrence  of any event  giving
rise to increased costs or other special payments under Section 5.6.1 [Increased
Costs,  Etc.] with respect to such Bank,  it will if requested by the  Borrower,
use reasonable  efforts (subject to overall policy  considerations of such Bank)
to designate  another lending office for any Loans or Letters of Credit affected
by such event,  provided that such  designation  is made on such terms that such
Bank  and  its  lending   office   suffer  no  economic,   legal  or  regulatory
disadvantage,  with the object of avoiding the  consequence  of the event giving
rise to the  operation  of such  Section.  Nothing is this  Section  5.4.3 shall
affect or postpone  any of the  Obligations  of the  Borrowers or any other Loan
Party or the rights of the Agent or any Bank provided in this Agreement.

                                      -37-
<PAGE>

        5.5    Required Prepayments.

               5.5.1  Sale of Assets.

               Within five (5) Business Days of any sale of assets authorized by
Section  8.2.6  [Disposition  of Assets or  Subsidiaries]  and which  causes the
aggregate amount of such sales to be equal to $10,000,000 or more, the Banks may
reasonably require the Borrowers to make a mandatory  prepayment of principal on
the Revolving Credit Loans equal to no more than the after-tax  proceeds of such
sale  (as  estimated  in good  faith by the  Borrower),  together  with  accrued
interest on such  principal  amount.  All  prepayments  pursuant to this Section
5.5.2  shall be  applied  to  payment  in full of the  principal  amount  of the
Revolving Credit Loans by application to the unpaid installments of principal in
the inverse order of scheduled maturities.

               5.5.2  Application Among Interest Rate Options.

               All prepayments required pursuant to this Section 5.5 shall first
be applied among the Interest Rate Options to the principal  amount of the Loans
subject to the Base Rate Option, then to Loans subject to a Euro-Rate Option. In
accordance  with Section 5.6.2  [Indemnity],  the Borrowers  shall indemnify the
Banks for any loss or expense, including loss of margin, incurred with respect
to any such  prepayments  applied against Loans subject to a Euro-Rate Option on
any day other than the last day of the applicable Interest Period.

        5.6    Additional Compensation in Certain Circumstances.

               5.6.1  Increased  Costs or Reduced  Return  Resulting from Taxes,
                      Reserves, Capital Adequacy Requirements, Expenses, Etc.

               If any Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application  thereof by any Official Body charged
with the interpretation or administration thereof or compliance with any request
or  directive  (whether or not having the force of Law) of any  central  bank or
other Official Body:

                      (i)    subjects any Bank to any tax or changes the basis
of taxation with respect to this Agreement,  the Notes, the Loans or payments by
the Borrowers of principal,  interest, Fees, or other amounts due from the 
Borrowers hereunder or under the Notes (except for taxes on the overall net 
income of such Bank),

                      (ii)   imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments to extend
credit extended by, or assets  (funded or  contingent)  of, deposits with or for
the account of, or other acquisitions of funds by, any Bank, or

                                      -38-
<PAGE>
    
                  (iii)  imposes, modifies or deems applicable any capital  
adequacy or similar requirement (A) against assets (funded or contingent) of, or
letters of credit, other credits or commitments  to extend  credit  extended by,
any Bank, or (B) otherwise applicable to the obligations of any Bank under this 
Agreement; and

                      (iv)   the result of any of the foregoing is to increase 
the cost to, reduce the income receivable by, or impose any expense  (including 
loss of margin) upon any Bank with respect to this  Agreement,  the Notes or the
making, maintenance  or funding of any part of the Loans (or, in the case of any
capital  adequacy  or similar  requirement,  to have the effect of reducing  the
rate of return on any Bank's capital,  taking into  consideration  such Bank's  
customary policies with respect to capital adequacy) by an amount which such  
Bank in its sole discretion deems to be material, such Bank shall from time to 
time notify the Borrowers and the Agent of the amount determined  in good  faith
(using any averaging  and attribution  methods  employed  in good faith) by such
Bank to be  necessary  to compensate such Bank for such increase in cost, 
reduction of income, additional expense or reduced  rate of return.  Such notice
shall set forth in  reasonable detail the basis for such  determination,  and 
shall be conclusive  and binding absent manifest error. Such amount shall be due
and payable by the Borrowers to the Agent for payment to such Bank ten (10) 
Business  Days after such notice is given.

               5.6.2  Indemnity.

               In  addition  to  the  compensation  required  by  Section  5.6.1
[Increased  Costs,  Etc.],  the Borrowers  shall indemnify each Bank against all
liabilities,  losses or expenses  (including loss of margin, any loss or expense
incurred in liquidating or employing deposits from third parties and any loss or
expense incurred in connection with funds acquired by a Bank to fund or maintain
Loans  subject to a Euro-Rate  Option)  which such Bank  sustains or incurs as a
consequence of any

                      (i)    payment, prepayment, conversion or renewal of any 
Loan to which a Euro-Rate Option applies on a day other than the last day of the
corresponding Interest  Period  (whether  or not such  payment  or  prepayment  
is  mandatory, voluntary or automatic  and whether or not such  payment or  
prepayment  is then due),

                      (ii)   attempt by the Borrowers to revoke (expressly, by 
later inconsistent notices or  otherwise)  in whole or part any Loan  Requests  
under  Section  2.5 [Revolving  Credit Loan  Requests] or Section 4.3  [Interest
Periods] or notice relating to prepayments under Section 5.4 [Voluntary  
Prepayments], or

                      (iii)  default by the Borrowers in the performance or 
observance of any covenant or condition  contained in this  Agreement or any 
other Loan  Document, including  any  failure of the  Borrowers  to pay when due
(by  acceleration  or otherwise)  any  principal,  interest,  Commitment  Fee or
any other  amount due hereunder.
                                      -39-

<PAGE>

               If any Bank sustains or incurs any such loss or expense, it shall
from time to time notify the Borrowers of the amount determined in good faith by
such Bank (which  determination  may include such  assumptions,  allocations  of
costs and expenses and averaging or attribution  methods as such Bank shall deem
reasonable)  to be necessary  to  indemnify  such Bank for such loss or expense.
Such  notice  shall  set  forth  in   reasonable   detail  the  basis  for  such
determination.  Such amount  shall be due and payable by the  Borrowers  to such
Bank ten (10) Business Days after such notice is given.

                        6. REPRESENTATIONS AND WARRANTIES

        6.1 Representations and Warranties.

        The Loan Parties,  jointly and  severally,  represent and warrant to the
Agent and each of the Banks as follows:

               6.1.1 Organization and Qualification.

               Each Loan  Party  and each  Subsidiary  of each  Loan  Party is a
corporation,  partnership or limited liability  company duly organized,  validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
organization. Each Loan Party and each Subsidiary of each Loan Party has the
lawful  power to own or lease its  properties  and to engage in the  business it
presently  conducts or proposes to conduct.  Each Loan Party and each Subsidiary
of each Loan Party is duly  licensed or qualified  and in good  standing in each
jurisdiction  listed on Schedule 6.1.1 and in all other  jurisdictions where the
property owned or leased by it or the nature of the business transacted by it or
both makes such licensing or qualification necessary.

               6.1.2  Capitalization and Ownership.

               The authorized capital stock of each Borrower,  and the number of
each Borrower's  shares which are issued and outstanding  (referred to herein as
the "Shares") are issued and  outstanding and are owned as indicated on Schedule
6.1.2.  All of the  Shares  have been  validly  issued  and are  fully  paid and
nonassessable.  There are no options,  warrants or other rights  outstanding  to
purchase any such shares except as indicated on Schedule 6.1.2.

               6.1.3  Subsidiaries.

               Schedule  6.1.3  states  the  name  of  each  of  the  Borrowers'
Subsidiaries,  its jurisdiction of incorporation,  its authorized capital stock,
the  issued  and  outstanding  shares  (referred  to herein  as the  "Subsidiary
Shares")  and the owners  thereof.  The  Borrowers  and each  Subsidiary  of the
Borrowers has good and valid title to all of the Subsidiary  Shares, it purports
to own, free and clear in each case of any Lien.  All  Subsidiary  Shares,  have
been validly issued, and all Subsidiary Shares are fully paid and nonassessable.
There are no options,  warrants or other rights outstanding to purchase any such
Subsidiary Shares, except as indicated on Schedule 6.1.3.

                                      -40-
<PAGE>

               6.1.4  Power and Authority.

               Each Loan Party has full power to enter  into,  execute,  deliver
and  carry out this  Agreement  and the other  Loan  Documents  to which it is a
party,  to incur the  Indebtedness  contemplated  by the Loan  Documents  and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its part.

               6.1.5  Validity and Binding Effect.

               This  Agreement has been duly and validly  executed and delivered
by each Loan  Party,  and each  other  Loan  Document  which  any Loan  Party is
required  to execute and deliver on or after the date hereof will have been duly
executed and  delivered  by such Loan Party on the required  date of delivery of
such Loan Document. This Agreement and each other Loan Document constitutes,  or
will constitute,  legal, valid and binding  obligations of each Loan Party which
is or will  be a party  thereto  on and  after  its  date of  delivery  thereof,
enforceable  against such Loan Party in accordance with its terms, except to the
extent  that  enforceability  of any of such Loan  Document  may be  limited  by
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting  the  enforceability  of creditors'  rights  generally or limiting the
right of specific performance.

               6.1.6  No Conflict.

               Neither the execution and delivery of this Agreement or the other
Loan Documents by any Loan Party nor the consummation of the transactions herein
or therein  contemplated or compliance  with the terms and provisions  hereof or
thereof by any of them will conflict with,  constitute a default under or result
in  any  breach  of  (i)  the  terms  and  conditions  of  the   certificate  of
incorporation,  articles  of  incorporation,  bylaws,  or  other  organizational
documents  of any  Loan  Party  or (ii)  any Law or any  material  agreement  or
instrument  or order,  writ,  judgment,  injunction  or decree to which any Loan
Party  or  any of its  Subsidiaries  is a  party  or by  which  it or any of its
Subsidiaries  is bound or to which it is subject,  or result in the  creation or
enforcement of any Lien, charge or encumbrance whatsoever upon any property (now
or hereafter acquired) of any Loan Party or any of its Subsidiaries.

               6.1.7  Litigation.

               There  are  no  actions,  suits,  proceedings  or  investigations
pending or, to the  knowledge  of any Loan Party,  threatened  against such Loan
Party or any  Subsidiary of such Loan Party at law or equity before any Official
Body which  individually or in the aggregate may result in any Material  Adverse
Change.  None of the Loan  Parties or any  Subsidiaries  of any Loan Party is in
violation of any order,  writ,  injunction  or any decree of any  Official  Body
which may result in any Material Adverse Change.

                                      -41-
<PAGE>

               6.1.8  Title to Properties.

               The  Property  owned  or  leased  by each  Loan  Party  and  each
Subsidiary of each Loan Party (other than Hoosier  Park,  LP and Anderson  Park,
Inc.) is described on Schedule  6.1.8.  Each Loan Party and each  Subsidiary  of
each Loan Party has good and marketable title to or valid leasehold  interest in
all  properties,  assets and other  rights  which it purports to own or lease or
which are reflected as owned or leased on its books and records,  free and clear
of all Liens and  encumbrances  except Permitted Liens, and subject to the terms
and  conditions  of the  applicable  leases.  All leases of property are in full
force and effect  without the necessity for any consent which has not previously
been obtained upon  consummation of the transactions  contemplated  hereby.  The
Borrower  shall provide the Agent with an updated  version of Schedule  6.1.8 on
each anniversary of the Closing Date.

               6.1.9  Financial Statements.

                      (i)    Historical Statements. The Borrowers have delivered
to the Agent copies of its audited  consolidated  year-end financial statements 
for and as of the end of the  Borrowers' fiscal  years ended  December  31, 1997
(the  "Annual Statements"). In addition,  the Borrowers  have  delivered to the 
Agent copies of its unaudited  consolidated interim financial statements for the
fiscal year to date and as of the end of the fiscal quarter ended March 31, 1998
(the  "Interim   Statements")   (the  Annua  and  Interim  Statements   being 
collectively   referred  to  as the  "Historical  Statements").  The Historical 
Statements were compiled from the books and records maintained by the Borrowers'
management, are  correct  and  complete  and  fairly represent the consolidated 
financial  condition of the Borrowers and their  respective  Subsidiaries  as of
their dates and the results of operations for the fiscal  periods then ended and
have been  prepared  in  accordance  with  GAAP  consistently  applied,  subject
(in the case of the Interim Statements) to normal year-end audit adjustments.

                      (ii)   Accuracy  of Financial  Statements.  Neither  the  
Borrowers nor any Subsidiary  of the Borrowers has any  liabilities,  contingent
or otherwise,  or forward  or  long-term  commitments  that are  required to be 
disclosed or in the  notes  thereto and are not so disclosed in the  Historical 
Statements or in the notes  thereto, and except as  disclosed  therein  there 
are no unrealized  or anticipated losses from any  commitments  of the Borrowers
or any Subsidiary of  the Borrowers which may cause a Material  Adverse  Change.
Since  December 31, 1997, no Material Adverse Change has occurred.

               6.1.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.

                      6.1.10.1      General.

                      The  Loan  Parties intend to use the proceeds of the Loans
in   accordance  with  Sections  2.8 [Use  of  Proceeds], 3.2 and 8.1.10 [Use of
Proceeds].

                                      -42-
<PAGE>

                      6.1.10.2      Margin Stock.

                      None of the Loan Parties or any Subsidiaries of  any Loan 
Party engages or  intends to engage  principally,  or as  one of its important  
activities,  in the business of  extending  credit for the purpose, immediately,
incidentally  or ultimately, of purchasing  or  carrying  margin  stock  (within
the meaning of Regulation  U).  No part of the  proceeds of any Loan has been or
will be used, immediately,  incidentally or ultimately, to purchase or carry any
margin  stock or to extend  credit to others for the purpose of  purchasing  or
carrying any margin stock or to refund Indebtedness originally incurred for such
purpose,  or  for  any  purpose  which  entails  a  violation  of  or  which is 
inconsistent  with the provisions of the  regulations of the Board of Governors
of the Federal  Reserve System.  None of the Loan Parties or any  Subsidiary  of
any Loan Party holds or intends  to hold  margin  stock  in  such  amounts  that
more   than   25%  of  the  reasonable value of  the assets of any Loan Party or
Subsidiary of any Loan Party are or will be represented by margin stock.

                      6.1.10.3      Section 20 Subsidiaries.

                      The  Loan  Parties  do not intend to use and shall not use
any  portion  of  the proceeds  of  the  Loans,   directly  or  indirectly  to  
purchase   during   the   underwriting   period,  or  for  30  days  thereafter,
Ineligible  Securities being underwritten by a Section 20 subsidiary.
 
              6.1.11 Taxes.

               All federal,  state, local and other tax returns required to have
been filed with  respect  to each Loan  Party and each  Subsidiary  of each Loan
Party have been filed,  and payment or adequate  provision has been made for the
payment of all taxes,  fees,  assessments and other  governmental  charges which
have or may become due  pursuant  to said  returns or to  assessments  received,
except to the extent that such taxes,  fees,  assessments  and other charges are
being contested in good faith by appropriate  proceedings  diligently  conducted
and for which such reserves or other appropriate provisions, if any, as shall be
required  by GAAP  shall  have been  made.  There are no  agreements  or waivers
extending the statutory  period of limitations  applicable to any federal income
tax  return of any Loan  Party or  Subsidiary  of any Loan  Party for any period
except as set forth on Schedule 6.1.11.

               6.1.12 Consents and Approvals.

               No consent, approval,  exemption, order or authorization of, or a
registration  or filing with,  any Official Body or any other Person is required
by any Law or any  agreement  in  connection  with the  execution,  delivery and
carrying out of this  Agreement and the other Loan  Documents by any Loan Party,
except as listed on Schedule  6.1.12,  all of which shall have been  obtained or
made on or prior to the Closing Date except as  otherwise  indicated on Schedule
6.1.12.

                                      -43-
<PAGE>

               6.1.13 No Event of Default; Compliance with Instruments.

               No event has occurred and is continuing  and no condition  exists
or will exist after  giving  effect to the  borrowings  or other  extensions  of
credit to be made on the Closing  Date under or  pursuant to the Loan  Documents
which  constitutes  an Event of Default or Unmatured  Default.  None of the Loan
Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of
its certificate of incorporation,  bylaws,  certificate of limited  partnership,
partnership  agreement,  certificate  of formation,  limited  liability  company
agreement or other  organizational  documents or (ii) any material  agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound  where  such  violation  would  constitute  a Material  Adverse
Change.

               6.1.14 Patents, Trademarks, Copyrights, Licenses, Etc.

               Each Loan Party and each Subsidiary  (other than Hoosier Park, LP
and Anderson  Park,  Inc.) of each Loan Party owns or possesses all the material
patents,   trademarks,   service  marks,  trade  names,  copyrights,   licenses,
registrations,  franchises,  permits and rights necessary to own and operate its
properties and to carry on its business as presently conducted and planned to be
conducted by such Loan Party or Subsidiary,  without known possible,  alleged or
actual  conflict with the rights of others.  All material  patents,  trademarks,
service  marks,  trade names,  copyrights,  licenses  related to conducting  the
Borrowers' primary business, registrations,  franchises and permits of each Loan
Party  and each  Subsidiary  of each Loan  Party are  listed  and  described  on
Schedule 6.1.14.

               6.1.15 Insurance.

               Schedule  6.1.15 lists all insurance  policies and other material
bonds to which any Loan Party or Subsidiary of any Loan Party is a party, all of
which are valid and in full force and effect.  No notice has been given or claim
made and no grounds  exist to cancel or avoid any of such  policies  or material
bonds or to reduce the coverage  provided  thereby.  Such  policies and material
bonds provide adequate coverage from reputable and financially sound insurers in
amounts  sufficient  to insure  the assets and risks of each Loan Party and each
Subsidiary of each Loan Party in accordance  with prudent  business  practice in
the industry of the Loan Parties and their Subsidiaries.

               6.1.16 Compliance with Laws.

               The Loan Parties and their  Subsidiaries are in compliance in all
material respects with all applicable Laws (other than  Environmental Laws which
are  specifically  addressed in Section  6.1.21  [Environmental  Matters] in all
jurisdictions  in  which  any  Loan  Party or  Subsidiary  of any Loan  Party is
presently or will be doing business  except where the failure to do so would not
constitute a Material Adverse Change.

                                      -44-
<PAGE>

               6.1.17 Material Contracts; Burdensome Restrictions.

               Schedule  6.1.17 lists all  contracts  equal to $100,000 or more,
the breach of which could result in a Material  Adverse Change,  relating to the
business  operations of each Loan Party and each Subsidiary  (except for Hoosier
Park,  LP and Anderson  Park,  Inc.) of any Loan Party,  including  all employee
benefit  plans and any  Labor  Contracts.  All such  material  contracts  of the
Borrowers are valid,  binding and enforceable upon such Loan Party or Subsidiary
and each of the other parties thereto in accordance with their respective terms,
and there is no default thereunder, to the Loan Parties' knowledge, with respect
to parties other than such Loan Party or Subsidiary. None of the Loan Parties or
their  Subsidiaries  is bound by any contractual  obligation,  or subject to any
restriction in any organization  document, or any requirement of Law which could
result in a Material Adverse Change.

               6.1.18 Investment Companies; Regulated Entities.

               None of the Loan Parties or any Subsidiaries of any Loan Party is
an  "investment  company"  registered  or  required to be  registered  under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are  defined in the  Investment  Company Act of 1940 and shall not
become such an "investment  company" or under such  "control."  None of the Loan
Parties or any Subsidiaries of any Loan Party is subject to any other Federal or
state  statute or  regulation  limiting  its ability to incur  Indebtedness  for
borrowed money.

               6.1.19 Plans and Benefit Arrangements.

               Except as set forth on Schedule 6.1.19:

                      (i)    The Borrowers  and  each other  member of the ERISA
Group are in compliance in  all material respects with any applicable provisions
of  ERISA with  respect to all Benefit  Arrangements,  Plans  and  Multiemployer
Plans. There has been no Prohibited  Transaction  with  respect to any Benefit 
Arrangement or any Plan or, to the  best  knowledge  of  the  Borrower,   with  
respect  to any Multiemployer Plan or Multiple Employer Plan, which could result
in  any  material  liability  of the Borrowers or any other member of the ERISA 
Group. The Borrowers and all other members of the ERISA Group have made when due
any  and  all  payments  required  to be made under any agreement  relating to a
Multiemployer  Plan or  a  Multiple Employer Plan or any Law pertaining thereto.
With respect to each Plan and  Multiemployer  Plan, the Borrowers and each other
member of the ERISA Group  (i)  have  fulfilled in all material  respects their
obligations under the minimum funding standards of ERISA, (ii) have not incurre
any  liability to the PBGC, and (iii)  have  not had asserted  against them any 
penalty for failure to fulfill the minimum funding requirements of ERISA.

                      (ii)   To  the  best  of  the  Borrowers' knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.

                                      -45-
<PAGE>

                      (iii)  Neither the  Borrowers nor any other member of the 
ERISA Group has instituted or intends to institute proceedings to terminate any 
Plan.

                      (iv)   No event requiring notice to the PBGC under Section
302(f)(4)(A) of  ERISA  has occurred  or  is  reasonably  expected to occur with
respect to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.

                      (v)    Neither the Borrowers  nor any other member of the 
ERISA Group has incurred or reasonably expects to incur any material withdrawal 
liability under  ERISA  to  any  Multiemployer  Plan  or Multiple Employer Plan.
Neither the Borrowers nor any other member of the ERISA Group has been  notified
by  any  Multiemployer Plan  or  Multiple  Employer Plan that such Multiemployer
Plan or Multiple Employer Plan has been terminated  within the  meaning of Title
IV of ERISA and,  to the best knowledge of the Borrower,  no Multiemployer Plan
or   Multiple   Employer   Plan  is  reasonably  expected to be reorganized  or
terminated,  within the meaning of Title IV of ERISA.

                      (vi)   To  the  extent  that  any  Benefit Arrangement is 
insured, the Borrowers and all other  members  of the  ERISA  Group  have  paid 
when  due  all  premiums required to be paid for all periods through the Closing
Date.  To  the  extent that  any Benefit  Arrangement is funded other than with 
insurance, the Borrowers and all other members  of the  ERISA  Group  have  made
when  due  all   contributions  required  to be paid for all periods through the
Closing Date.

                      (vii)  All Plans, Benefit  Arrangements and Multiemployer
Plans have been administered in accordance with their terms and applicable Law.

               6.1.20 Employment Matters.

               Each of the Loan  Parties  and each of their  Subsidiaries  is in
compliance  with any Labor  Contracts to which it is a party and all  applicable
federal,  state and local labor and employment  Laws including  those related to
equal employment  opportunity and affirmative action,  labor relations,  minimum
wage, overtime,  child labor, medical insurance continuation,  worker adjustment
and  relocation  notices,  immigration  controls  and  worker  and  unemployment
compensation,  where the failure to comply would  constitute a Material  Adverse
Change.  There are no  outstanding  grievances,  arbitration  awards or  appeals
therefrom  arising out of the Labor Contracts or current or threatened  strikes,
picketing, handbilling or other work stoppages or slowdowns at facilities of any
of the Loan  Parties  or any of  their  Subsidiaries  which  in any  case  would
constitute a Material Adverse Change.

                                      -46-
<PAGE>

               6.1.21 Environmental Matters.

               Except as disclosed on Schedule 6.1.21:

                      (i)    None of the Loan Parties or any Subsidiaries of any
Loan Party has received any  Environmental  Complaint  from any Official Body or
private Person alleging  that such Loan Party or Subsidiary  or any prior  owne
of any of the Property  is  a   potentially   responsible   party   under  the 
Comprehensive Environmental Response,  Cleanup and Liability Act, 42 U.S.C. ss.
9601, et seq., and  none  of  the  Loan  Parties  has  any  reason  to  believe 
that  such  an Environmental Complaint might be received.  There are no pending
or, to any Loan Party's  knowledge, threatened Environmental Complaints relating
to  any  Loan  Party  or  Subsidiary  of  any Loan Party or, to any Loan Party's
knowledge,  any prior  owner of any of the  Property  pertaining  to, or arising
out of,  any Environmental Conditions.

                      (ii)   There  are  no circumstances at, on or under any of
the  Property  that  constitute  a  breach of or non-compliance with any of the
Environmental  Laws,  and  there are no past or present Environmental Conditions
at, on or under any of the Property or, to any Loan Party's  knowledge,  at, on
or under adjacent property, that prevent compliance with the Environmental Laws
at any of the Property.

                      (iii)  Neither  any  of  the  Property nor any structures,
improvements,  equipment,  fixtures,  activities  or facilities  thereon  or 
thereunder  contain  or   use  Regulated  Substances except  in compliance with 
Environmental Laws. There are no processes,  facilities,  operations,  equipment
or other activities at, on or under any of the Property, or, to any Loan Party's
knowledge,   at, on  or  under  adjacent  property, that currently result in the
release or threatened release of Regulated  Substances onto any of the Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.

                      (iv)   There are no aboveground storage tanks, underground
storage tanks or underground  piping  associated  with such tanks,  used for the
management of Regulated Substances  at, on or under any of the Property that (a
do not have, to the extent required by Environmental  Laws,  a full  operational
secondary containment  system in place,  and (b) are not otherwise in compliance
with  all Environmental  Laws.  There  are  no  abandoned  underground  storage 
tanks  or underground  piping  associated  with  such  tanks,   previously  used
for  the management of Regulated Substances at, on or under any of the Property 
that have not either been closed in place in accordance with Environmental Laws 
or  removed  in  compliance  with  all  applicable  Environmental  Laws  and no
contamination  associated  with  the  use of  such  tanks  exists  on any of the
Property that is not in compliance with Environmental Laws.

                      (v)    Each  Loan  Party  and  each Subsidiary of any Loan
Party has all  material  permits, licenses, authorizations,  plans and approvals
necessary under the Environmental Laws for the  conduct of the  business of such
Loan  Party or  Subsidiary as  presently  conducted.  Each  Loan  Party and each
Subsidiary of any Loan  Party has  submitted  all  material  notices,  reports  
and other  filings required by the  Environmental  Laws to be submitted  to an 
Official  Body   which  pertain  to  past  and  current operations on any of the
Property.

                                      -47-
<PAGE>

                      (vi)   All  past and present on-site generation, storage, 
processing,  treatment,  recycling,  reclamation,  disposal  or  other  use or  
management of  Regulated Substances at, on, or under any of the Property and all
off-site transportation, storage, processing, treatment, recycling, reclamation
disposal or other use or management  of  Regulated  Substances  have  been  done
in  accordance  with the Environmental Laws.

                      (vii) The Borrowers  have obtained  Phase I  Environmental
audits with respect to all commercial properties owned by the Borrower with the 
exception of 700  Central Avenue. The  Borrowers'  representations with  respect
to  the commercial  properties  as stated  in this  section  are  based on such 
Phase I Environmental audits.

               6.1.22 Senior Debt Status.

               The  Obligations  of each Loan Party  under this  Agreement,  the
Notes and each of the other  Loan  Documents  to which it is a party do rank and
will rank at least pari passu in priority of payment with all other Indebtedness
of such Loan Party except  Indebtedness of such Loan Party to the extent secured
by  Permitted  Liens.  There  is no  Lien  upon or  with  respect  to any of the
properties  or income of any Loan Party or  Subsidiary  of any Loan Party  which
secures  indebtedness  or other  obligations  of any Person except for Permitted
Liens.

               6.1.23 Employee Benefit Plans.

               As of the  date  hereof  the  Borrowers  do  maintain  a Plan  in
compliance in all material  respects with all applicable  laws and  regulations.
Neither a "reportable event" nor a "prohibited  transaction" has occurred under,
nor has there  occurred any complete or partial  withdrawal  from, nor has there
occurred the  appointment  of a trustee to administer  any Plan  maintained  for
employees  of any of the  Borrowers  or any  Affiliate,  all within the meanings
ascribed by ERISA.

               6.1.24 Full Disclosure.

               Neither  this  Agreement  nor any other  Loan  Document,  nor any
certificate,  statement,  agreement or other documents furnished to the Agent or
any Bank in connection herewith or therewith, contains any untrue statement of a
material fact or omits to state a material  fact  necessary in order to make the
statements  contained herein and therein,  in light of the  circumstances  under
which they were made, not  misleading.  There is no fact known to any Loan Party
which materially  adversely affects the business,  property,  assets,  financial
condition, results of operations or prospects of any Loan Party or Subsidiary of
any  Loan  Party  which  has not  been set  forth  in this  Agreement  or in the
certificates,  statements, agreements or other documents furnished in writing to
the Agent and the Banks  prior to or at the date hereof in  connection  with the
transactions contemplated hereby.

                                      -48-
<PAGE>

               6.1.25 Year 2000.

        The  Borrowers  have  reviewed  the  areas  within  their  business  and
operations  which could be  adversely  affected  by, and have  developed  or are
developing  a program  to  address  on a timely  basis,  the risk  that  certain
computer applications used by the Borrowers (or any of their respective material
suppliers, customers or vendors) may be unable to recognize and perform properly
date-sensitive  functions  involving  dates prior to and after December 31, 1999
(the "Year 2000  Problem").  The Year 2000 Problem  should not result and is not
reasonably  expected to result in any material  adverse  effect on the business,
properties,  assets, financial condition,  results of operations or prospects of
the Borrowers, or the ability of any of the Borrowers to duly and punctually pay
or perform their obligations hereunder and under other Loan Documents.

        6.2    Updates to Schedules.

        Should any of the  information  or  disclosures  provided  on any of the
Schedules  attached hereto become outdated or incorrect in any material respect,
the Borrowers shall promptly provide the Agent in writing with such revisions or
updates to such Schedule as may be necessary or appropriate to update or correct
same; provided,  however, that no Schedule shall be deemed to have been amended,
modified or superseded by any such correction or update, nor shall any breach of
warranty or  representation  resulting from the inaccuracy or  incompleteness of
any such  Schedule  be deemed to have been cured  thereby,  unless and until the
Required  Banks, in their sole and absolute  discretion,  shall have accepted in
writing such revisions or updates to such Schedule.

           7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT.

        The  obligation  of each  Bank to make  Loans  and of the Agent to issue
Letters of Credit  hereunder is subject to the  performance  by each of the Loan
Parties of its  Obligations to be performed  hereunder at or prior to the making
of any such Loans or issuance of such Letters of Credit and to the  satisfaction
of the following further conditions:

        7.1    First Loans and Letters of Credit.

        On the Closing Date:

               7.1.1  Officer's Certificate.

               The  representations  and  warranties of each of the Loan Parties
contained in Section 6 and in each of the other Loan Documents shall be true and
accurate  on and as of the  Closing  Date with the same  effect  as though  such
representations  and  warranties  had been made on and as of such  date  (except
representations  and warranties  which relate solely to an earlier date or time,
which  representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties shall
have  performed  and  complied  with all cove  nants and  conditions  hereof and
thereof,  no Event of Default or Unmatured  Default  shall have  occurred and be
continuing  or shall  exist;  and there shall be  delivered to the Agent for the
benefit  of each  Bank a  certificate  of each of the Loan  Parties,  dated  the
Closing  Date and  signed by the Chief  Executive  Officer,  President  or Chief
Financial Officer of each of the Loan Parties, to each such effect.

                                      -49-
<PAGE>

               7.1.2  Secretary's Certificate.

               There  shall be  delivered  to the Agent for the  benefit of each
Bank a  certificate  dated the Closing  Date and signed by the  Secretary  or an
Assistant  Secretary of each of the Loan Parties,  certifying as  appropriate as
to:

                      (i)    all action taken by each Loan Party in connection
with this Agreement and the other Loan Documents;

                      (ii)   the names of the officer or officers authorized to 
sign this Agreement and the other Loan Documents and the true signatures of such
officer or officers and specifying the Authorized  Officers  permitted to act on
behalf of each Loan Party for purposes of this Agreement and the true signatures
of such officers, on which the Agent and each Bank may conclusively rely; and

                      (iii)  copies  of  its organizational documents, including
its  certificate  of  incorporation, bylaws, certificate of limited partnership
partnership agreement, certificate of formation,  and limited  liability company
agreement as in effect on the Closing Date certified by the appropriate  state  
official  where  such  documents  are filed  in a  state  office  together  with
certificates from the appropriate state officials as to the continued  existence
and  good  standing  of  each  Loan  Party  in each  state  where  organized  or
qualified  to do  business  and a  bring-down certificate by facsimile dated the
 Closing Date.

               7.1.3  Delivery of Loan Documents.

               The Intercompany  Subordination Agreement and the Indemnity shall
have been duly executed and delivered to the Agent for the benefit of the Banks.

               7.1.4  Opinion of Counsel.

               There  shall be  delivered  to the Agent for the  benefit of each
Bank a written opinion of Wyatt,  Tarrant & Combs,  counsel for the Loan Parties
(who may rely on the opinions of such other  counsel as may be acceptable to the
Agent),  dated the Closing Date and in form and  substance  satisfactory  to the
Agent and its counsel:

                      (i)    as to the matters set forth in Exhibit 7.1.4; and

                                      -50-
<PAGE>

                      (ii)   as  to such other matters   incident  to the trans-
actions contemplated herein as the Agent may reasonably request.

               7.1.5  Legal Details.

               All  legal  details  and   proceedings  in  connection  with  the
transactions  contemplated  by this Agreement and the other Loan Documents shall
be in form and  substance  satisfactory  to the Agent and counsel for the Agent,
and the Agent  shall have  received  all such  other  counterpart  originals  or
certified or other copies of such documents and  proceedings in connection  with
such  transactions,  in form and  substance  satisfactory  to the Agent and said
counsel, as the Agent or said counsel may reasonably request.

               7.1.6  Payment of Fees.

               The  Borrowers  shall have paid or caused to be paid to the Agent
for itself and for the  account of the Banks to the extent not  previously  paid
all commitment and other fees accrued through the Closing Date and the costs and
expenses for which the Agent and the Banks are entitled to be reimbursed.

               7.1.7  Consents.

               All material  consents  required to effectuate  the  transactions
contemplated hereby as set forth on Schedule 6.1.12 shall have been obtained.

               7.1.8  Officer's Certificate Regarding MACs.

               Since  December 31, 1997, no Material  Adverse  Change shall have
occurred; prior to the Closing Date, there shall have been no material change in
the  management  of any Loan Party or  Subsidiary  of any Loan Party;  and there
shall  have  been  delivered  to the  Agent  for  the  benefit  of  each  Bank a
certificate  dated the Closing Date and signed by the Chief  Executive  Officer,
President or Chief Financial Officer of each Loan Party to each such effect.

               7.1.9  No Violation of Laws.

               The making of the Loans and the issuance of the Letters of Credit
shall not contravene any Law applicable to any Loan Party or any of the Banks.

               7.1.10 No Actions or Proceedings.

               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.

                                      -51-
<PAGE>

               7.1.11 Insurance Policies;Certificates of Insurance;Endorsements.

               The Loan Parties shall have delivered evidence  acceptable to the
Agent that adequate  insurance in compliance with Section 8.1.3  [Maintenance of
Insurance]  is in full force and effect and that all  premiums  then due thereon
have been paid,  together with a  certificate  of casualty  insurance  policy or
policies evidencing coverage satisfactory to the Agent.

               7.1.12 Administrative Questionnaire.

               Each of the Banks and the  Borrowers  shall  have  completed  and
delivered to the Agent the Agent's form of administrative questionnaire.

        7.2    Each Additional Loan or Letter of Credit.

        At the time of making any Loans or issuing any  Letters of Credit  other
than Loans made or Letters of Credit issued on the Closing Date and after giving
effect to the proposed  extensions of credit: the representations and warranties
of the Loan Parties contained in Section 6 and in the other Loan Documents shall
be true on and as of the date of such  additional  Loan or Letter of Credit with
the same effect as though such  representations  and warranties had been made on
and as of such date  (except  representations  and  warranties  which  expressly
relate solely to an earlier date or time, which representations  and  warranties
shall  be true  and  correct on and as of the specific  dates or times  referred
to therein) and  the  Loan  Parties  shall have performed and complied with all 
covenants  and  conditions  hereof;  no  Event of Default or Unmatured  Default 
shall have  occurred and be  continuing or shall exist;  the making of the Loans
or issuance  of such Letter of Credit  shall not contravene  any Law applicable 
to any Loan Party or Subsidiary of any Loan Party or any of the Banks;  and the
Borrowers shall have delivered to the Agent a duly  executed and completed Loan 
Request or application for a Letter of Credit as the case may be.

                                  8. COVENANTS

        8.1    Affirmative Covenants.

        The Loan Parties,  jointly and severally,  covenant and agree that until
payment in full of the  Loans,  Reimbursement  Obligations  and Letter of Credit
Borrowings,  and interest  thereon,  expiration or termination of all Letters of
Credit,  satisfaction  of all of the Loan Parties' other  Obligations  under the
Loan Documents and termination of the Commitments, the Loan Parties shall comply
at all times with the following affirmative covenants:

                                      -52-
<PAGE>

               8.1.1  Preservation of Existence, Etc.

               Each Loan Party shall,  and shall cause each of its  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 as otherwise
expressly permitted in Section 8.2.5 [Liquidations, Mergers, Etc.].

               8.1.2  Payment of Liabilities, Including Taxes, Etc.

               Each Loan Party shall,  and shall cause each of its  Subsidiaries
to, duly pay and discharge all  liabilities  to which it is subject or which are
asserted against it, promptly as and when the same shall become due and payable,
including all taxes,  assessments and governmental charges upon it or any of its
properties,  assets,  income or  profits,  prior to the date on which  penalties
attach thereto,  except to the extent that such  liabilities,  including  taxes,
assessments or charges, are being contested in good faith and by appropriate and
lawful  proceedings  diligently  conducted  and for which such  reserve or other
appropriate  provisions,  if any,  as shall be  required by GAAP shall have been
made,  but only to the extent that  failure to  discharge  any such  liabilities
would not result in any additional  liability  and/or Lien which would adversely
affect  to a  material  extent  the  financial  condition  of any Loan  Party or
Subsidiary  of any  Loan  Party,  provided  that  the  Loan  Parties  and  their
Subsidiaries  will pay all such  liabilities  forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.

               8.1.3  Maintenance of Insurance.

               Each Loan Party shall,  and shall cause each of its  Subsidiaries
to,  insure its  properties  and assets  against loss or damage by fire and such
other insurable  hazards as such assets are commonly  insured  (including  fire,
extended coverage, property damage, workers' compensation,  public liability and
business  interruption  insurance) and against other risks (including errors and
omissions)  in such  amounts as  similar  properties  and assets are  insured by
prudent companies in similar circumstances  carrying on similar businesses,  and
with reputable and financially sound insurers,  including  self-insurance to the
extent customary,  all as reasonably  determined by the Agent. At the request of
the Agent, the Loan Parties shall deliver to the Agent and each of the Banks (x)
on the Closing Date and annually thereafter an original certificate of insurance
signed  by  the  Loan  Parties'  independent  insurance  broker  describing  and
certifying  as to the  existence of the  insurance  required to be maintained by
this Agreement and the other Loan Documents from time to time a summary schedule
indicating all insurance then in force with respect to each of the Loan Parties.

               8.1.4  Maintenance of Properties and Leases.

               Each Loan Party shall,  and shall cause each of its  Subsidiaries
to, maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of similar
character and size, all of those properties useful or necessary to its business,
and  from  time to  time,  such  Loan  Party  will  make or cause to be made all
appropriate repairs, renewals or replacements thereof.

                                      -54-
<PAGE>

               8.1.5  Maintenance of Patents, Trademarks, Etc.

               Each Loan Party shall,  and shall cause each of its  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 Change.

               8.1.6  Visitation Rights.

               Each Loan Party shall,  and shall cause each of its  Subsidiaries
to, permit any of the officers or authorized employees or representatives of the
Agent or any of the  Banks to visit and  inspect  any of its  properties  and to
examine and make excerpts (subject to the confidentiality  provisions  contained
herein)  from its books and records and discuss its business  affairs,  finances
and  accounts  with its  officers,  all in such  detail and at such times and as
often as any of the Banks may reasonably request,  provided that each Bank shall
provide the Borrowers and the Agent with reasonable notice prior to any visit or
inspection,  provided,  further that so long as no Event of Default or Unmatured
Default has occurred and is continuing,  no such  inspection  shall occur during
the two week period  preceding  the day of the running of the Kentucky  Derby or
the two week period  preceding the running of the Breeder's Cup if the Breeder's
Cup is to be held at Churchill  Downs.  In the event any Bank desires to conduct
an audit of any Loan Party, such Bank shall make a reasonable effort to conduct 
such audit  contemporaneously  with any audit to be performed by the Agent.

               8.1.7  Keeping of Records and Books of Account.

               The  Borrowers  shall,  and shall  cause each  Subsidiary  of the
Borrowers to,  maintain and keep proper books of record and account which enable
the Borrowers and their respective Subsidiaries to issue financial statements in
accordance  with  GAAP  and as  otherwise  required  by  applicable  Laws of any
Official Body having  jurisdiction  over the Borrowers or any  Subsidiary of the
Borrower,  and in which  full,  true and  correct  entries  shall be made in all
material respects of all its dealings and business and financial affairs.

               8.1.8  Plans and Benefit Arrangements.

               The  Borrowers  shall,  and shall cause each other  member of the
ERISA  Group  to,  comply  with  ERISA,  the  Internal  Revenue  Code and  other
applicable Laws applicable to Plans and Benefit  Arrangements  except where such
failure,  alone or in conjunction with any other failure,  would not result in a
Material Adverse Change.  Without limiting the generality of the foregoing,  the
Borrowers shall cause all of its Plans and all Plans maintained by any member of
the ERISA Group to be funded in accordance with the minimum funding requirements
of ERISA and shall make,  and cause each member of the ERISA Group to make, in a
timely  manner,  all  contributions  due  to  Plans,  Benefit  Arrangements  and
Multiemployer Plans.

                                      -54-
<PAGE>

               8.1.9  Compliance with Laws.

               Each  of  the  Borrowers  shall  and  shall  cause  each  of  its
Subsidiaries  to comply with all applicable  Laws,  including all  Environmental
Laws, in all respects, provided that it shall not be deemed to be a violation of
this  Section  8.1.9 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 Change.

               8.1.10 Use of Proceeds.

               The Loan  Parties will use the Letters of Credit and the proceeds
of the Loans only for the  purposes  set forth in Section 2.8 [Use of  Proceeds]
and shall not use the  Letters of Credit and the  proceeds  of the Loans for any
purposes which contravenes any applicable Law or any provision hereof.

               8.1.11 Subordination of Intercompany Loans.

               Each Loan Party shall cause any intercompany Indebtedness,  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.

        8.2    Negative Covenants.

        The Loan Parties,  jointly and severally,  covenant and agree that until
payment in full of the  Loans,  Reimbursement  Obligations  and Letter of Credit
Borrowings  and interest  thereon,  expiration or  termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder and
termination of the Commitments, the Loan Parties shall comply with the following
negative covenants:

               8.2.1  Indebtedness.

               Each of the Loan  Parties  shall not, and shall not permit any of
its  Subsidiaries to, at any time create,  incur,  assume or suffer to exist any
Indebtedness, except:

                      (i)    Indebtedness under the Loan Documents;

                      (ii)   Existing  Indebtedness  as  set  forth on Schedule 
8.2.1 (including any extensions  or renewals  thereof),  provided   there is no
increase in the amount thereof or other significant change in the terms  thereof
unless  otherwise specified on Schedule 8.2.1;

                                      -55-

<PAGE>


                      (iii)  Indebtedness of a Loan Party to another Loan Party 
which  is  subordinated  in  accordance  with  the  provisions of Section 8.1.11
[Subordination of Intercompany Loans];

                      (iv)   Indebtedness secured by any Permitted Lien;

                      (v)    Senior unsecured notes issued pursuant to a private
placement provided  that all of the proceeds of such private  placement are used
to repay  outstanding  indebtedness  under  the  Credit  Facility and subject to
demonstration of pro forma covenant compliance; and
                      (vi)   Any  asset  securitization financing  provided that
the  proceeds from  such asset  securitization  financing  repay  outstanding 
indebtedness   under  the  Credit  Facility  and  the Credit  Facility  shall be
permanently  reduced by the amount of such financing and such financing shall be
subject to demonstration of pro forma covenant compliance.

               8.2.2  No Liens; Negative Pledge.

               Each of the Loan  Parties  shall not, and shall not permit any of
its  Subsidiaries to, at any time create,  incur,  assume or suffer to exist any
Lien on any of its property or assets,  tangible and/or intangible,  real and/or
personal now owned or hereafter  acquired,  or agree or become  liable to do so,
except Permitted Liens. Each of the Loan Parties shall not, and shall not permit
any of its  Subsidiaries  to, at any time  agree  with any party  other than the
Agent and the Banks in the Loan Documents to refrain from creating, incurring or
suffering to exist any Lien on any of its property or assets.

               8.2.3  Guaranties.

               Each of the Loan  Parties  shall not, and shall not permit any of
its Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty,  or assume,  guarantee,  become surety for,  endorse or
otherwise agree,  become or remain directly or contingently  liable upon or with
respect  to  any  obligation  or  liability  of any  other  Person,  except  for
Guaranties  entered  into in the  ordinary  course  of  business  on  behalf  of
Borrowers or a Borrower not to exceed  $5,000,000 in the aggregate and which are
otherwise permitted hereunder.

               8.2.4  Loans and Investments.

               Each of the Loan  Parties  shall not, and shall not permit any of
its Subsidiaries  to, at any time make or suffer to remain  outstanding any loan
or advance to, or purchase, acquire or own any stock, bonds, notes or securities
of,  or any  partnership  interest  (whether  general  or  limited)  or  limited
liability  company  interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain liable
to do any of the foregoing, except:

                                      -56-
<PAGE>

                      (i)    trade credit extended on usual and customary terms 
in the ordinary course of business;

                      (ii)   advances to employees to meet expenses incurred by 
such employees in the ordinary course of business;

                      (iii)  Permitted Investments;

                      (iv)   Permitted Acquisitions; and

                      (v) loans and advances to, and  investments in, other Loan
Parties.

               8.2.5  Liquidations, Mergers, Consolidations, Acquisitions.

                      Other  than  Permitted  Investments,  which  are expressly
permitted,  each  of  the Borrowers  shall  not, and shall not permit any of its
Subsidiaries (other than Hoosier Park, LP and Anderson Park, Inc.) to, dissolve,
liquidate  or  wind-up  its affairs,  or  become  a  party  to  any  merger  or 
consolidation,  or  acquire  by purchase, lease or otherwise the assets, capital
stock  or   ownership  interests  of  any  other  Person,  provided   that  the 
following  transactions  shall  not be prohibited by this Section 8.2.5 (each, a
"Permitted Acquisition")

                      (1)    any  Loan  Party  other  than  the  Borrower   may
consolidate  or  merge  into another  Loan Party which is wholly-owned by one or
more of the other Loan Parties, and

                      (2)    any  Loan  Party may  merge, consolidate or acquire
by purchase, lease or otherwise, (A) the capital stock or ownership interests of
another  Person  or (B) assets  of  another  Person,  provided  that each of the
following  requirements is met:

                             (i)    if  the  Loan  Parties  are  acquiring the 
capital  stock or  ownership interests in such Person,  which is a  Controlling
Interest, such Person shall execute a Joinder Agreement and join this  Agreement
as a Borrower  pursuant to Section  11.18  [Joinder  of New  Subsidiaries] on or
before  the date of such Permitted Acquisition;

                             (ii)   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 also shall have delivered to the Banks 
written evidence of the approval of the board of directors (or equivalent  body)
of such Person for such Permitted Acquisition;

                             (iii)  the  business  acquired,  or  the  business
conducted by the Person whose  ownership  interests  are  being  acquired,   as
applicable,   shall  be substantially  the same,  similar to, in  furtherance of
or incidental to one or more line or lines of business  conducted  by the Loan  
Parties and shall comply with Section 8.2.9 [No Material Change in Business]

                                      -57-

<PAGE>


                             (iv)   no  Unmatured  Default or Event  of  Default
shall exist  immediately prior to and  after giving  effect  to  such  Permitted
Acquisition;

                             (v)    the Loan Parties shall demonstrate that they
shall be in compliance with the covenants  contained in Sections 8.2.14 through 
8.2.16 after giving  effect  to such  Permitted  Acquisition   by  delivering at
least five (5) Business Days prior to such  Permitted  Acquisition a certificate
in the form of Exhibit 8.2.5  evidencing such compliance and pro forma financial
statements of the Borrowers and such Person as if such Permitted Acquisition had
occurred, and the actual  Financial Statements  of such  Person used by the Loan
Parties to create Exhibit 8.2.5;

               (3) Any Loan Party may acquire  assets in the ordinary  course of
business.

               8.2.6  Dispositions of Assets or Subsidiaries.

               Each of the Loan  Parties  shall not, and shall not permit any of
its Subsidiaries (except for Hoosier Park, LP and Anderson Park, Inc.) to, sell,
convey,  assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or  involuntarily,  any of its  properties  or assets,  tangible  or  intangible
(including sale, assignment, discount or other disposition of accounts, contract
rights, chattel paper, equipment or general intangibles with or without recourse
or of capital stock,  shares of beneficial  interest,  partnership  interests or
limited liability company interests of a Subsidiary of such Loan Party), except:

                      (i)    transactions involving the sale or use for a fee of
simulcast signals or other assets or rights in the ordinary course of business;

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

                      (iii)  any sale, transfer or lease of assets by any wholly
owned Subsidiary of such Loan Party to another Loan Party;

                      (iv)   any sale, transfer or lease of assets, other than 
those specifically excepted  pursuant  to clauses (i) through (iii) above, which
is approved in writing by the  Required  Banks prior to such sale,  transfer or 
lease of assets which approval shall not be unreasonably withheld.

               8.2.7  Affiliate Transactions.

               Each of the Loan  Parties  shall not, and shall not permit any of
its  Subsidiaries  to, enter into or carry out any transaction with an Affiliate
(including  purchasing property or services from or selling property or services
to any  Affiliate of any Loan Party)  unless such  transaction  is not otherwise
prohibited by this Agreement, is entered into in the ordinary course of business
upon fair and reasonable  arm's-length  terms and on conditions  which are fully
disclosed to the Agent and is in accordance with all applicable Law.

                                      -58-
<PAGE>

               8.2.8  Subsidiaries, Partnerships and Joint Ventures.

               Except as otherwise permitted in this Agreement, each of the Loan
Parties  shall  not,  and shall not permit  any of its  Subsidiaries  to, own or
create  directly or indirectly  any  Subsidiaries  other than (i) any Subsidiary
which has joined this  Agreement as Borrower on the Closing  Date;  and (ii) any
Subsidiary  formed  after the  Closing  Date  which  joins this  Agreement  as a
Borrower pursuant to Section 11.18 [Joinder of New Subsidiaries],  provided that
the Required Banks shall have consented to such formation and joinder. Except as
otherwise permitted in this Agreement, each of the Loan Parties shall not become
or agree to become (1) a general or  limited  partner in any  general or limited
partnership,  except that the Loan Parties may be general or limited partners in
other  Loan  Parties,  (2) 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 interests in,
other Loan Parties,  or (3) a joint venturer or hold a joint venture interest in
any joint venture.

               8.2.9  No Material Change in Business.

               Each of the Loan  Parties  shall not,  and shall not allow any of
its  Subsidiaries  to, permit any material change in the business  conducted and
operated by such Loan Party or Subsidiary during the present fiscal year, except
that Borrowers may own or lease and operate video lottery  terminals and may own
and/or  operate  or may be  party to a joint  venture  with  respect  to a hotel
located on the property at 700 Central Avenue.

               8.2.10 Plans and Benefit Arrangements.

               Each of the Loan  Parties  shall not, and shall not permit any of
its Subsidiaries to:

                      (i)    fail to satisfy the minimum funding requirements of
ERISA and the Internal Revenue Code with respect to any Plan;

                      (ii)   request a minimum funding waiver from the Internal 
Revenue Service with respect to any Plan;

                      (iii)  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 Change;

                      (iv)   permit the aggregate actuarial present value of all
benefit liabilities (whether or not vested)  under any Plan  which is not in a 
Multi-employer  Plan, determined  on a  plan  termination  basis,  as  disclosed
in the  most  recent actuarial  report  completed   with  respect to such Plan, 
to exceed,  as  of  any  actuarial valuation date, the fair market value of the 
assets of such Plan;

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

                                      -59-
<PAGE>

                      (vi)   withdraw  (completely  or  partially)  from  any  
Multiemployer Plan or withdraw (or be deemed  under  Section  4062(e) of ERISA 
to  withdraw)  from any Multiple  Employer  Plan,  where  any such  withdrawal  
is  likely  to  result in a material liability of the Borrowers or any member of
the ERISA Group;

                      (vii)  terminate,  or  institute proceedings to terminate,
any Plan, where such termination is likely to result in a material liability to
the Borrowers or any member of the ERISA Group;

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

                      (ix)   fail  to  give  any  and  all notices and make all 
disclosures  and  governmental  filings  required  under ERISA  or  the Internal
Revenue  Code,  where  such  failure  is  likely to result in a Material Adverse
Change.

               8.2.11 Fiscal Year.

               The Borrowers  shall not, and shall not permit any  Subsidiary of
the Borrowers to, change its fiscal year from the twelve-month  period beginning
January 1 and ending December 31.

               8.2.12 Issuance of Stock.

               Each of the Loan Parties other than Churchill Downs  Incorporated
shall not, and shall not permit any of its Subsidiaries to, issue any additional
shares of its capital stock or any options,  warrants or other rights in respect
thereof to any Person not a Loan Party.

               8.2.13 Changes in Organizational Documents.

               On or after June 19, 1998,  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,  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 the Banks and,  in the event such
change  would be  adverse  to the Banks as  determined  by the Agent in its sole
discretion, obtaining the prior written consent of the Required Banks.

                                      -60-
<PAGE>

               8.2.14 Maximum Ratio of Funded Debt to EBITDA.

               The Loan  Parties  shall not  permit  the  ratio of  Consolidated
Funded  Debt as of the  last day of each of the  Borrowers'  fiscal  quarter  to
Consolidated  EBITDA for the four fiscal  quarters ending on that date to exceed
3.50 to 1.0 from the Closing  Date through and  including  December 31, 1999 and
3.25 to 1.0 from January 1, 2000.  For purposes of this  covenant,  EBITDA shall
include the rolling  four quarter  results of any entity  being  acquired by the
Borrowers if such entity will become a Borrower hereunder.

               8.2.15 Interest Coverage Ratio.

               The Loan  Parties  shall not permit  their ratio of  Consolidated
EBIT plus Consolidated Rent Expense to the sum of Consolidated  Interest Expense
plus Consolidated Rent Expense, in each case for the four fiscal quarters ending
on the last day of each of the Borrowers' fiscal quarters to be less than 3.0 to
1.0.

               8.2.16 Minimum Tangible Net Worth.

               The Loan Parties shall not permit their Consolidated Tangible Net
Worth to be less than the Base Net Worth plus an amount  equal to Fifty  Percent
(50%) of the  Borrowers'  Consolidated  net income  cumulatively  for every year
after fiscal year 1997, plus One Hundred Percent (100%) of the net 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.

               8.2.17 Margin Stock.

               The Borrowers will not use or cause or permit the proceeds of the
Loan to be  used,  either  directly  or  indirectly,  for the  purpose,  whether
immediate,  incidental  or ultimate,  of purchasing or carrying any margin stock
within the  meaning of  Regulation  U of the board of  Governors  of the Federal
Reserve System, as amended from time to time.

               8.2.18 Other Agreements.

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

        8.3    Reporting Requirements.

        The Loan Parties,  jointly and severally,  covenant and agree that until
payment in full of the  Loans,  Reimbursement  Obligations  and Letter of Credit
Borrowings  and interest  thereon,  expiration or  termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder and
under the other Loan  Documents and  termination  of the  Commitments,  the Loan
Parties  will  furnish  or cause to be  furnished  to the  Agent and each of the
Banks:
                                      -61-
<PAGE>


               8.3.1  Quarterly Financial Statements.

               As soon as  available  and in any event  within  forty-five  (45)
calendar  days after the end of each of the first three fiscal  quarters in each
fiscal year, financial statements of the Borrowers, consisting of a consolidated
balance  sheet as of the end of such fiscal  quarter  and  related  consolidated
statements of income,  stockholders'  equity [retained  earnings] and cash flows
for the fiscal  quarter then ended and the fiscal year through that date, all in
reasonable detail and certified  (subject to normal year-end audit  adjustments)
by the Chief  Executive  Officer,  President or Chief  Financial  Officer of the
Borrowers as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative  form the respective  financial  statements for
the corresponding date and period in the previous fiscal year.

               8.3.2  Annual Financial Statements.

               As soon as  available  and in any event  within  ninety (90) days
after the end of each fiscal year of the Borrowers, audited financial statements
of the  Borrowers  consisting of a  consolidated  balance sheet as of the end of
such fiscal year, and related consolidated  statements of income,  stockholders'
equity and cash flows for the fiscal year then ended for all of the Borrowers on
a consolidated  basis, all in reasonable detail and setting forth in comparative
form the  financial  statements  as of the end of and for the  preceding  fiscal
year,  together  with (i) a report  certified by  independent  certified  public
accountants of nationally  recognized  standing  satisfactory to the Agent,  and
(ii) a Certificate of Compliance from the Chief Executive Officer,  President or
Chief  Financial  Officer  of  the  Borrowers.  The  certificate  or  report  of
accountants shall be free of qualifications (other than any consistency  quali-
fication  that  may  result  from  a  change  in  the method used to prepare the
financial   statements   as  to  which  such  accountants concur)  and shall not
indicate  the  occurrence or  existence  of any  event, condition or contingency
which  would  materially  impair  the  prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan Documents.

               8.3.3  Certificate of the Borrower.

               Concurrently  with  the  financial  statements  of the  Borrowers
furnished to the Agent and to the Banks  pursuant to Sections  8.3.1  [Quarterly
Financial Statements] and 8.3.2 [Annual Financial Statements],  a certificate of
the  Borrowers  signed  by the  Chief  Executive  Officer,  President  or  Chief
Financial  Officer of the Borrower,  in the form of Exhibit 8.3.3, to the effect
that, except as described pursuant to Section 8.3.4 [Notice of Default], (i) the
representations  and  warranties of the Borrowers  contained in Section 6 and in
the other Loan Documents are true on and as of the date of such certificate with
the same effect as though such  representations  and warranties had been made on
and as of such date  (except  representations  and  warranties  which  expressly
relate  solely to an earlier date or time) and the Loan  Parties have  performed
and complied with all covenants and conditions hereof,  (ii) no Event of Default
or Unmatured  Default  exists and is continuing on the date of such  certificate
and (iii) containing calculations in sufficient detail to demonstrate compliance
as of the  date  of such  financial  statements  with  all  financial  covenants
contained in Section 8.2 [Negative Covenants].

                                      -62-
<PAGE>

               8.3.4  Notice of Default.

               Promptly  after any  officer of any Loan Party has learned of the
occurrence of an Event of Default or Unmatured  Default, a certificate signed by
the Chief Executive  Officer,  President or Chief Financial Officer of such Loan
Party  setting  forth the details of such Event of Default or Unmatured  Default
and the action which the such Loan Party proposes to take with respect thereto.

               8.3.5  Notice of Litigation.

               Promptly after the commencement  thereof,  notice of all actions,
suits, proceedings or investigations before or by any Official Body or any other
Person  against any Loan Party or  Subsidiary  of any Loan Party which relate to
any Person  and,  involve a claim or series of claims in excess of  $500,000  or
which if adversely determined would constitute a Material Adverse Change.

               8.3.6  Certain Events.

               Written notice to the Agent:

                      (i)    at  least  sixty (60)  calendar days prior thereto
with  respect to  any  proposed sale or  transfer of assets pursuant to Section
8.2.6(iv), and

                      (ii)   within the time limits set forth in Section 8.2.13
[Changes  in  Organizational  Documents], any  amendment  to the organizational
documents of any Loan Party.

               8.3.7  Other Reports and Information.

               Promptly upon their becoming available to the Borrower:

                      (i)    any reports including management letters submitted 
to  the  Borrowers  by  independent  accountants  in connection with any annual,
interim or special audit related to or revealing a Material Adverse Change,

                      (ii)   any reports, notices or proxy statements generally 
distributed  by the  Borrowers  to  its stockholders on a date no later than th
date supplied to such stockholders,

                      (iii)  regular or periodic reports, including Forms 10-K,
10-Q and 8-K,  registration  statements and prospectuses, filed by the Borrowers
with the Securities and Exchange Commission,

                      (iv)   a copy of any order requiring any Borrower or any
subsidiary  of  a  Borrower  to  pay a judgment  in  excess  of $500,000 in any
proceeding to which the Borrowers  or any of their  respective  Subsidiaries  is
a party  issued  by any Official Body, and

                      (v)    such   other  reports and information as any of the
Banks may from time to time reasonably  request. The Borrowers shall also notify
the Banks promptly of the  enactment or adoption of any Law which may result in
a Material  Adverse Change.
                                      -63-

<PAGE>


               8.3.8  Notices Regarding Plans and Benefit Arrangements.

                      8.3.8.1       Certain Events.

                      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:

                             (i)    any  Reportable  Event with  respect to the 
Borrowers  or any  other member of the  ERISA  Group  (regardless of whether the
obligation to report said Reportable Event to the PBGC has been waived),

                             (ii)   any  Prohibited  Transaction  which  could  
subject the Borrowers or any other member of the ERISA 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,

                             (iii)  any   assertion  of  material  withdrawal 
liability with respect to any Multiemployer Plan,

                             (iv)   any   partial  or complete withdrawal from a
Multiemployer Plan by the Borrowers or any other member of the ERISA Group under
Title  IV  of ERISA (or assertion thereof),  where  such withdrawal is likely to
result in material withdrawal liability,

                             (v)    any  cessation  of  operations  (by the
Borrowers  or any  other member of the ERISA Group) at a facility in the circum-
stances described in Section 4062(e) of ERISA,

                             (vi)   withdrawal   by  the  Borrowers or any other
member of the ERISA Group from a Multiple Employer Plan,

                             (vii)  a  failure  by  the  Borrowers  or any other
member  of   the  ERISA  Group  to  make  a  payment to a Plan required to avoid
imposition of a Lien under Section 302(f) of ERISA,

                             (viii) the  adoption  of   an  amendment to a  Plan
requiring  the  provision  of  security  to such Plan pursuant to Section 307 of
ERISA, or
                                      -64-
<PAGE>


                             (ix)   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.

                8.3.8.2   Notices of Involuntary Termination and Annual Reports.

                      Promptly after receipt thereof, copies of (a) all notices 
received   by the Borrowers  or any  other   member  of the  ERISA  Group of the
PBGC's intent to terminate any Plan  administered or maintained by the Borrowers
or any  member  of the ERISA Group, or to have a trustee appointed to administer
any  such Plan; and (b) at  the  request of  the Agent or any Bank each  annual
report (IRS Form 5500 series) and all accompanying  schedules,  the most recent 
actuarial   reports,  the  most  recent  financial  information   concerning the
financial status of each Plan administered  or  maintained  by the  Borrowers or
any  other   member  of  the  ERISA  Group, and  schedule  showing  the  amount
contributed  to  each  such Plan by or on behalf of the  Borrowers  or any other
member of the ERISA Group in which any of their  personnel  participate or from 
which  such  personnel  may  derive  a  benefit, and each  Schedule B (Actuarial
Information)  to the annual report filed by the Borrowers  or any other  member 
of the ERISA Group  with the  Internal Revenue Service with respect to each such
 Plan.

                      8.3.8.3       Notice of Voluntary Termination.

                      Promptly upon the filing thereof, copies of any Form 5310,
or  any  successor or  equivalent  form to Form 5310,  filed  with the PBGC in 
connection  with the termination of any Plan.

                                   9. DEFAULT

        9.1 Events of Default.


        An Event of Default shall mean the occurrence or existence of any one or
more of the  following  events or conditions  (whatever the reason  therefor and
whether voluntary, involuntary or effected by operation of Law):

               9.1.1  Payments Under Loan Documents.

               The  Borrowers  shall  fail  to pay  any  principal  of any  Loan
(including scheduled  installments,  mandatory prepayments or the payment due at
maturity),  Reimbursement Obligation or Letter of Credit Borrowing or shall fail
to pay any interest on any Loan ,  Reimbursement  Obligation or Letter of Credit
Borrowing or any other amount owing  hereunder or under the other Loan Documents
within five calendar days after such principal, interest or other amount becomes
due in accordance with the terms hereof or thereof;

               9.1.2  Breach of Warranty.

               Any  representation  or  warranty  made at any time by any of the
Loan Parties herein or by any of the Loan Parties in any other Loan Document, or
in any  certificate,  other  instrument or statement  furnished  pursuant to the
provisions  hereof or thereof,  shall prove to have been false or  misleading in
any material respect as of the time it was made or furnished;

                                      -65-
<PAGE>


               9.1.3  Breach of Negative Covenants or Visitation Rights.

               Any of the  Loan  Parties  shall  default  in the  observance  or
performance of any covenant  contained in Section 8.1.6  [Visitation  Rights] or
Section 8.2 [Negative Covenants];

               9.1.4  Breach of Other Covenants.

               Any of the  Loan  Parties  shall  default  in the  observance  or
performance of any other covenant, condition or provision hereof or of any other
Loan Document and such default  shall  continue  unremedied  for a period of ten
(10) Business  Days after any Senior Vice  President,  or the Vice  President of
Finance/Treasurer  of any Loan Party  becomes  aware of the  occurrence  thereof
(such  grace  period to be  applicable  only in the event  such  default  can be
remedied by corrective  action of the Loan Parties as determined by the Agent in
its sole discretion);

               9.1.5  Defaults in Other Agreements or Indebtedness.

               A default or event of default  shall  occur at any time under the
terms of any other agreement involving borrowed money or the extension of credit
or any other  Indebtedness  under which any Loan Party or Subsidiary of any Loan
Party may be  obligated  as a borrower or guarantor in excess of $500,000 in the
aggregate,  and such breach, default or event of default consists of the failure
to pay (beyond  any period of grace  permitted  with  respect  thereto,  whether
waived  or not) any  indebtedness  when due  (whether  at  stated  maturity,  by
acceleration  or otherwise)  or if such breach or default  permits or causes the
acceleration  of any  indebtedness  (whether  or not such right  shall have been
waived) or the termination of any commitment to lend;

               9.1.6  Other Material Obligations.

        Subject to the expiration of any applicable grace period, default in the
payment  when  due,  or in  the  performance  or  observance  of,  any  material
obligation  of, or condition  agreed to by any of the Borrowers  with respect to
any  material  purchase or lease of goods or services  except to the extent that
the  existence of any such default is being  contested by the  Borrowers in good
faith and by  appropriate  proceedings  and where  failure to cure such  default
would result in the occurrence of a Material Adverse Change.

               9.1.7  Final Judgments or Orders.

               Any final  judgments or orders for the payment of money in excess
of $500,000 in the aggregate  shall be entered against any Loan Party by a court
having jurisdiction in the premises, which judgment is not discharged,  vacated,
bonded or stayed  pending  appeal  within a period of thirty  (30) days from the
date of entry;

               9.1.8  Loan Document Unenforceable.

                                      -66-

<PAGE>


               Any of the Loan  Documents  shall  cease to be  legal,  valid and
binding  agreements  enforceable  against the party  executing  the same or such
party's  successors  and  assigns (as  permitted  under the Loan  Documents)  in
accordance  with the respective  terms thereof or shall in any way be terminated
(except in accordance  with its terms) or become or be declared  ineffective  or
inoperative  or shall in any way be  challenged or contested or cease to give or
provide  the  respective  rights,  interests,  remedies,  powers  or  privileges
intended to be created thereby;

               9.1.9  Uninsured Losses; Proceedings Against Assets.

               There shall occur any material uninsured damage to or loss, theft
or destruction  of any of the  Borrowers'  property in excess of $500,000 or the
Borrowers'  property  or  any  other  of the  Loan  Parties'  or  any  of  their
Subsidiaries' assets are attached, seized, levied upon or subjected to a writ or
distress warrant;  or such come within the possession of any receiver,  trustee,
custodian  or assignee  for the benefit of  creditors  and the same is not cured
within thirty (30) days thereafter;

               9.1.10 Notice of Lien or Assessment.

               A notice of Lien or assessment in excess of $500,000 which is not
a Permitted  Lien is filed of record  with  respect to all or any part of any of
the Loan Parties' or any of their Subsidiaries'  assets by the United States, or
any department,  agency or  instrumentality  thereof,  or by any state,  county,
municipal or other  governmental  agency,  including  the PBGC,  or any taxes or
debts owing at any time or times  hereafter to any one of these becomes  payable
and the same is not paid within thirty (30) days after the same becomes  payable
except that the  Borrower  may  refrain  from paying any amount that it would be
required  to pay  pursuant  to this  Section  9.1.10 if the  validity  or amount
thereof is being  contested  in good  faith by  appropriate  proceedings  timely
instituted  which shall operate to prevent the  collection or enforcement of the
obligation  contested,  provided  that  if  the  Borrower  is  engaged in such a
contest,  it shall have set aside on its books appropriate reserves with respect
thereto. If the validity or amount  of any such  obligations  in  excess of Five
Hundred   Thousand   Dollars  ($500,000)  shall  be  contested  pursuant  to the
provisions of this subparagraph, the Borrower shall notify the Banks immediately
upon the  institution  of the proceeding contesting the obligation;

               9.1.11 Insolvency.

               Any Loan Party or any  Subsidiary  of a Loan  Party  ceases to be
solvent or admits in writing its inability to pay its debts as they mature;

               9.1.12 Events Relating to Plans and Benefit Arrangements.

               Any of the following occurs:  (i) any Reportable Event, which the
Agent  determines in good faith  constitutes  grounds for the termination of any
Plan by the PBGC or the  appointment of a trustee to administer or liquidate any
Plan, shall have occurred and be continuing;  (ii)  proceedings  shall have been
instituted or other action taken to terminate any Plan, or a termination  notice
shall  have  been  filed  with  respect  to any Plan;  (iii) a trustee  shall be
appointed to administer  or liquidate any Plan;  (iv) the PBGC shall give notice
of its intent to  institute  proceedings  to  terminate  any Plan or Plans or to
appoint a trustee to administer  or liquidate any Plan;  and, in the case of the
occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good faith
that the  amount of the  Borrowers'  liability  is  likely to exceed  10% of its
Consolidated  Tangible Net Worth;  (v) the  Borrowers or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a Multiemployer
Plan;  (vi) the  Borrowers or any other member of the ERISA Group shall make any
amendment to a Plan with respect to which security is required under Section 307
of ERISA;  (vii) the  Borrowers  or any other  member of the ERISA  Group  shall
withdraw completely or partially from a Multiemployer Plan; (viii) the Borrowers
or any other member of the ERISA Group shall  withdraw (or shall be deemed under
Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable  Law is adopted,  changed or  interpreted  by any Official  Body with
respect to or  otherwise  affecting  one or more Plans,  Multiemployer  Plans or
Benefit  Arrangements  and, with respect to any of the events  specified in (v),
(vi),  (vii),  (viii) or (ix), the Agent  determines in good faith that any such
occurrence  would be reasonably  likely to materially  and adversely  affect the
total enterprise represented by the Borrowers and the other members of the ERISA
Group;
                                      -67-

<PAGE>


               9.1.13 Cessation of Business.

               Any Loan Party or  Subsidiary  of a Loan Party  ceases to conduct
its business as contemplated,  except as expressly permitted under Section 8.2.5
[Liquidations, Mergers, Etc.] or 8.2.6 [Dispositions of Assets or Subsidiaries],
or any Loan Party or  Subsidiary  of a Loan Party is enjoined,  restrained or in
any way prevented by court order from conducting all or any material part of its
business  and  such  injunction,  restraint  or  other  preventive  order is not
dismissed within thirty (30) days after the entry thereof;

                9.1.14 Change of Control.

               Any Person or group of persons  (within  the  meaning of Sections
13(d) or 14(a) of the  Securities  Exchange Act of 1934, as amended)  shall have
acquired  beneficial  ownership of (within the meaning of Rule 13d-3 promulgated
by the  Securities  and Exchange  Commission  under said Act) 51% or more of the
voting  capital  stock of the  Borrower;  or (ii) within a period of twelve (12)
consecutive calendar months,  individuals who were directors of the Borrowers on
the first day of such period  shall cease to  constitute a majority of the board
of directors of the Borrower;

               9.1.15 Involuntary Proceedings.

               A  proceeding  shall  have  been  instituted  in a  court  having
jurisdiction in the premises  seeking a decree or order for relief in respect of
any Loan Party or  Subsidiary of a Loan Party in an  involuntary  case under any
applicable  bankruptcy,  insolvency,  reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator,  conservator (or similar official) of any Loan
Party or Subsidiary of a Loan Party for any substantial part of its property, or
for the  winding-up or  liquidation of its affairs,  and such  proceeding  shall
remain  undismissed  or  unstayed  and in  effect  for a period  of  sixty  (60)
consecutive days or such court shall enter a decree or order granting any of the
relief sought in such proceeding; or

               9.1.16 Voluntary Proceedings.

                                      -68-
<PAGE>


               Any Loan Party or  Subsidiary  of a Loan Party  shall  commence a
voluntary case under any applicable  bankruptcy,  insolvency,  reorganization or
other  similar law now or hereafter in effect,  shall consent to the entry of an
order for relief in an involuntary  case under any such law, or shall consent to
the  appointment  or taking  possession  by a  receiver,  liquidator,  assignee,
custodian,  trustee,  sequestrator,  conservator (or other similar  official) of
itself  or for any  substantial  part of its  property  or shall  make a general
assignment  for the benefit of  creditors,  or shall fail  generally  to pay its
debts as they become due, or shall take any action in  furtherance of any of the
foregoing.

        9.2    Consequences of Event of Default.

               9.2.1  Events  of  Default  Other Than  Bankruptcy, Insolvency or
Reorganization Proceedings.

               If an Event of Default  specified  under  Sections  9.1.1 through
9.1.14 shall occur and be continuing,  the Banks and the Agent shall be under no
further obligation to make Loans or issue Letters of Credit, as the case may be,
and the Agent may,  and upon the  request of the  Required  Banks,  shall (i) by
written notice to the Borrower, declare the unpaid principal amount of the Notes
then outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness  of the  Borrowers  to the Banks  hereunder  and  thereunder  to be
forthwith  due  and  payable,  and  the  same  shall  thereupon  become  and  be
immediately  due and payable to the Agent for the  benefit of each Bank  without
presentment,  demand,  protest or any other notice of any kind, all of which are
hereby expressly  waived,  and (ii) require the Borrowers  to, and the Borrowers
shall thereupon,  deposit in a  non-interest-bearing  account with the Agent, as
cash collateral for its Obligations under the Loan Documents, an amount equal to
the maximum amount currently or at any time thereafter  available to be drawn on
all outstanding  Letters of Credit, and the Borrowers hereby pledge to the Agent
and the Banks, and grant to the Agent and the Banks a security interest in, all
such cash as security  for such  Obligations.  Upon curing all  existing  Events
of Default  to the  satisfaction of the Required Banks, the Agent  shall  return
such cash collateral to the Borrower; and

               9.2.2  Bankruptcy, Insolvency or Reorganization Proceedings.

               If  an  Event  of  Default   specified   under   Section   9.1.15
[Involuntary  Proceedings] or 9.1.16  [Voluntary  Proceedings]  shall occur, the
Banks  shall be under no further  obligations  to make Loans  hereunder  and the
unpaid  principal  amount of the Loans then outstanding and all interest accrued
thereon,  any unpaid fees and all other  Indebtedness  of the  Borrowers  to the
Banks  hereunder and thereunder  shall be immediately  due and payable,  without
presentment,  demand,  protest  or notice of any kind,  all of which are  hereby
expressly waived; and

               9.2.3  Set-off.

               If an Event of Default shall occur and be continuing, any Bank to
whom any Obligation is owed by any Loan Party  hereunder or under any other Loan
Document or any participant of such Bank which has agreed in writing to be bound
by the  provisions  of Section  10.13  [Equalization  of Banks] and any  branch,
Subsidiary or Affiliate of such Bank or participant  anywhere in the world shall
have the right,  in addition to all other rights and  remedies  available to it,
without  notice to such Loan  Party,  to set-off  against  and apply to the then
unpaid  balance of all the Loans and all other  Obligations of the Borrowers and
the other Loan Parties hereunder or under any other Loan Document any debt owing
to, and any other funds held in any manner for the account of, the  Borrowers or
such other Loan Party by such Bank or participant or by such branch,  Subsidiary
or  Affiliate,  including  all funds in all deposit  accounts  (whether  time or
demand,  general or  special,  provisionally  credited or finally  credited,  or
otherwise) now or hereafter maintained by the Borrowers or such other Loan Party
for its own account (but not including funds held in custodian or trust accounts
or the  "Horseman's  Account")  with such Bank or  participant  or such  branch,
Subsidiary or  Affiliate.  Such right shall exist whether or not any Bank or the
Agent  shall  have made any  demand  under  this  Agreement  or any  other  Loan
Document, whether or not such debt owing to or funds held for the account of the
Borrowers or such other Loan Party is or are matured or unmatured and regardless
of the  existence  or adequacy of any Guaranty or any other  security,  right or
remedy available to any Bank or the Agent; and

                                      -69-
<PAGE>


               9.2.4  Suits, Actions, Proceedings.

               If an Event of Default shall occur and be continuing, and whether
or not the Agent shall have accelerated the maturity of Loans pursuant to any of
the foregoing provisions of this Section 9.2, the Agent or any Bank, if owed any
amount with respect to the Loans,  may proceed to protect and enforce its rights
by suit in equity, action at law  and/or other  appropriate proceeding,  whether
for the specific  performance of any covenant or agreement  contained in  this  
Agreement or the other Loan Documents, including as permitted by applicable Law 
the obtaining of the ex parte appointment of a receiver, and, if such amount 
shall have become  due,  by  declaration  or  otherwise,  proceed to enforce the
payment thereof or any other legal or equitable right of the Agent or such Bank;
and

               9.2.5  Application of Proceeds.

               From and after  the date on which the Agent has taken any  action
pursuant to this Section 9.2 and until all  Obligations of the Loan Parties have
been paid in full,  or the exercise of any other  remedy by the Agent,  shall be
applied as follows:

                      (i)    first,  to  reimburse  the Agent and  the Banks for
out-of-pocket costs, expenses and disbursements, including reasonable attorneys'
and paralegals' fees and  legal  expenses,  incurred  by the Agent or the  Banks
in  connection  with collection of any  Obligations  of any of the Loan Parties
under any of the Loan Documents;

                      (ii)   second, to  the repayment  of all Indebtedness then
due and unpaid of the Loan Parties to the Banks incurred under this Agreement or
any of the other Loan Documents, whether of principal, interest, fees, expenses
or otherwise, in such manner as the Agent may determine in its discretion; and

                      (iii)  the balance, if any, as required by Law.

                                      -70-


               9.2.6  Other Rights and Remedies.

               The Banks shall have all rights and  remedies  contained  in this
Agreement or in any of the other Loan Documents, or other applicable Law, all of
which rights and remedies shall be cumulative and  non-exclusive,  to the extent
permitted  by Law.  The Agent may,  and upon the request of the  Required  Banks
shall, exercise all post-default rights granted to the Agent and the Banks under
the Loan Documents or applicable Law.

        9.3    Reasonable Notice.

        Any  notice  required  to be given by the  Agent if given  not less than
seven (7) days  prior to any  proposed  action,  shall  constitute  commercially
reasonable and fair notice thereof to the Borrower.

                                  10. THE AGENT

        10.1 Appointment.

        Each Bank hereby  irrevocably  designates,  appoints and  authorizes PNC
Bank to act as Agent for such Bank  under  this  Agreement  and to  execute  and
deliver or accept on behalf of each of the Banks the other Loan Documents.  Each
Bank hereby irrevocably authorizes, and each holder of any

Note by the acceptance of a Note shall be deemed  irrevocably to authorize,  the
Agent to take such action on its behalf under the  provisions of this  Agreement
and the other Loan Documents and any other  instruments and agreements  referred
to herein,  and to exercise such powers and to perform such duties  hereunder as
are  specifically  delegated  to or required  of the Agent by the terms  hereof,
together with such powers as are reasonably  incidental thereto. PNC Bank agrees
to act as the  Agent on  behalf  of the  Banks to the  extent  provided  in this
Agreement.

        10.2   Delegation of Duties.

        The Agent may perform any of its duties  hereunder by or through  agents
or employees  (provided such delegation does not constitute a relinquishment  of
its duties as Agent) and,  subject to Sections 10.5  [Reimbursement  of Agent by
Borrower,  Etc.] and 10.6  [Exculpatory  Provisions;  Limitation of  Liability],
shall be entitled to engage and pay for the advice or services of any attorneys,
accountants  or other experts  concerning  all matters  pertaining to its duties
hereunder and to rely upon any advice so obtained.

        10.3   Nature of Duties; Independent Credit Investigation.

        The  Agent  shall  have  no  duties  or  responsibilities  except  those
expressly  set forth in this  Agreement  and no  implied  covenants,  functions,
responsibilities,  duties,  obligations,  or liabilities shall be read into this
Agreement or otherwise  exist.  The duties of the Agent shall be mechanical  and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary  or trust  relationship  in respect of any Bank;  and  nothing in this
Agreement,  expressed or implied,  is intended to or shall be so construed as to
impose upon the Agent any  obligations  in respect of this  Agreement  except as
expressly set forth herein.  Without  limiting the  generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any  fiduciary  or other  implied (or  express)  obligations
arising under agency doctrine of any applicable Law. Instead,  such term is used
merely as a matter of market  custom,  and is intended to create or reflect only
an administrative  relationship between independent  contracting  parties.  Each
Bank expressly  acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken,  including any
review of the affairs of any of the Loan Parties,  shall be deemed to constitute
any  representation  or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make,  without reliance upon the Agent, its own independent
investigation  of the  financial  condition and affairs and its own appraisal of
the  creditworthiness  of each of the  Loan  Parties  in  connection  with  this
Agreement  and the  making and  continuance  of the Loans  hereunder;  and (iii)
except  as  expressly  provided  herein,  that the Agent  shall  have no duty or
responsibility,  either initially or on a continuing  basis, to provide any Bank
with any credit or other  information with respect thereto,  whether coming into
its possession before the making of any Loan or at any time or times thereafter.

                                      -71-
<PAGE>



        10.4   Actions in Discretion of Agent; Instructions From the Banks.

        The Agent agrees,  upon the written  request of the Required  Banks,  to
take or refrain from taking any action of the type specified as being within the
Agent's rights,  powers or discretion herein,  provided that the Agent shall not
be required to take any action which exposes the Agent to personal  liability or
which is contrary to this  Agreement  or any other Loan  Document or  applicable
Law. In the  absence of a request by the  Required  Banks,  the Agent shall have
authority,  in its sole  discretion,  to take or not to take  any  such  action,
unless this Agreement specifically requires the consent of the Required Banks or
all of  the  Banks.  Any  action  taken  or  failure  to act  pursuant  to  such
instructions  or  discretion  shall be binding on the Banks,  subject to Section
10.6  [Exculpatory  Provisions;   Limitation  of  Liability].   Subject  to  the
provisions of Section 10.6 [Exculpatory Provisions; Limitation of Liability], no
Bank shall have any right of action whatsoever  against the Agent as a result of
the Agent acting or  refraining  from acting  hereunder in  accordance  with the
instructions of the Required Banks, or in the absence of such  instructions,  in
the absolute discretion of the Agent.

        10.5   Reimbursement and Indemnification of Agent by the Borrowers.

        The  Borrowers  unconditionally  agree to pay or reimburse the Agent and
hold the Agent harmless  against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements,  including fees and expenses of
counsel appraisers and environmental  consultants,  incurred by the Agent (i) in
connection with the development,  negotiation, preparation, printing, execution,
administration,  syndication,  interpretation  and performance of this Agreement
and the other Loan Documents, (ii) relating to any requested amendments, waivers
or consents  pursuant to the  provisions  hereof,  (iii) in connection  with the
enforcement  of this  Agreement  or any other Loan  Document  or  collection  of
amounts due hereunder or thereunder or the proof and  allowability  of any claim
arising under this Agreement or any other Loan  Document,  whether in bankruptcy
or  receivership   proceedings  or  otherwise,   and  (iv)  in  any  workout  or
restructuring  or in connection with the protection,  preservation,  exercise or
enforcement  of any of the terms hereof or of any rights  hereunder or under any
other  Loan  Document  or in  connection  with any  foreclosure,  collection  or
bankruptcy proceedings, and (b) all liabilities,  obligations,  losses, damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind or nature  whatsoever  which may be imposed  on,  incurred  by or  asserted
against the Agent,  in its  capacity as such,  in any way relating to or arising
out of this Agreement or any other Loan Documents or any action taken or omitted
by the Agent  hereunder or thereunder,  provided that the Borrowers shall not be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements if the
same results from the Agent's gross negligence or willful misconduct,  or if the
Borrowers  were not given  notice of the subject  claim and the  opportunity  to
participate in the defense  thereof,  at its expense  (except that the Borrowers
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrower),  or if the same results from a compromise or settlement
agreement  entered into without the consent of the Borrower,  which shall not be
unreasonably  withheld. In the event of a suspected Material Adverse Change, the
Borrowers  agree to reimburse and pay all reasonable  out-of-pocket  expenses of
the Agent's  regular  employees and agents engaged to perform audits of the Loan
Parties' books, records and business properties.

                                      -72-

<PAGE>



        10.6   Exculpatory Provisions; Limitation of Liability.

        Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates  shall (a) be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith including
pursuant  to  any  Loan  Document,  unless  caused  by its or  their  own  gross
negligence or willful misconduct, (b) be responsible in any manner to any of the
Banks for the effectiveness,  enforceability,  genuineness,  validity or the due
execution  of this  Agreement  or any other Loan  Documents  or for any recital,
representation,  warranty, document,  certificate, report or statement herein or
made or furnished  under or in connection  with this Agreement or any other Loan
Documents, or (c) be under any obligation to any of the Banks to ascertain or to
inquire as to the  performance  or observance of any of the terms,  covenants or
conditions  hereof or thereof on the part of the Loan Parties,  or the financial
condition of the Loan  Parties,  or the  existence or possible  existence of any
Event of Default or Unmatured  Default.  No claim may be made by any of the Loan
Parties, any Bank, the Agent or any of their respective Subsidiaries against the
Agent,  any  Bank or any of their  respective  directors,  officers,  employees,
agents,  attorneys or Affiliates,  or any of them, for any special,  indirect or
consequential  damages  or, to the  fullest  extent  permitted  by Law,  for any
punitive  damages in respect of any claim or cause of action  (whether  based on
contract,  tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the  transactions  contemplated  hereby or
any act,  omission or event  occurring in  connection  therewith,  including the
negotiation, documentation,  administration or collection of the Loans, and each
of the Loan Parties, (for itself and on behalf of each of its Subsidiaries), the
Agent and each Bank hereby waive, releases and agree never to sue upon any claim
for any such  damages,  whether  such claim now exists or  hereafter  arises and
whether or not it is now known or  suspected  to exist in its  favor.  Each Bank
agrees that, except for notices,  reports and other documents expressly required
to be  furnished  to the Banks by the Agent  hereunder or given to the Agent for
the  account  of or with  copies  for  the  Banks,  the  Agent  and  each of its
directors,  officers,  employees, agents, attorneys or Affiliates shall not have
any  duty or  responsibility  to  provide  any  Bank  with an  credit  or  other
information concerning the business, operations,  property, condition (financial
or otherwise),  prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors,  officers,  employees,
agents, attorneys or Affiliates.

                                      -73-
<PAGE>

        10.7   Reimbursement and Indemnification of Agent by Banks.

        Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrowers and without limiting the Obligation of the Borrowers
to do so) in proportion  to its Ratable Share from and against all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or   disbursements,   including   attorneys'  fees  and  disbursements
(including the allocated  costs of staff  counsel),  and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on,  incurred by or asserted  against the Agent, in its capacity as such, in any
way relating to or arising out of this  Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder,  provided that
no Bank  shall be  liable  for any  portion  of such  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements   (a)  if the  same   results  from  the  Agent's
gross negligence or willful misconduct, or (b) if such Bank was not given notice
of the subject claim and the opportunity to participate in the defense  thereof,
at its expense  (except  that such Bank shall  remain  liable to the extent such
failure to give  notice  does not  result in a loss to the Bank),  or (c) if the
same results from a compromise and settlement agreement entered into without the
consent of such Bank,  which shall not be  unreasonably  withheld.  In addition,
each Bank agrees  promptly upon demand to reimburse the Agent (to the extent not
reimbursed by the Borrowers and without limiting the Obligation of the Borrowers
to do so) in  proportion to its Ratable Share for all amounts due and payable by
the Borrowers to the Agent in connection with the Agent's  periodic audit of the
Loan Parties' books, records and business properties.

        10.8   Reliance by Agent.

        The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution,  notice, consent, certificate,  letter, cablegram,
statement,  order or other  document or  conversation  by telephone or otherwise
believed by it to be genuine and correct and to have been  signed,  sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel and
other  professional  advisers  selected  by the Agent.  The Agent shall be fully
justified  in failing or refusing to take any action  hereunder  unless it shall
first be  indemnified  to its  satisfaction  by the  Banks  against  any and all
liability  and  expense  which  may be  incurred  by it by  reason  of taking or
continuing to take any such action.

        10.9   Notice of Default.

        The  Agent  shall  not be  deemed  to have  knowledge  or  notice of the
occurrence  of any  Unmatured  Default or Event of Default  unless the Agent has
received  written  notice  from  a Bank  or  the  Borrowers  referring  to  this
Agreement,  describing  such  Unmatured  Default or Event of Default and stating
that such notice is a "notice of default."

        10.10  Notices.
                                      -74-
<PAGE>


        The  Agent  shall  promptly  send  to each  Bank a copy  of all  notices
received from the Borrowers  pursuant to the provisions of this Agreement or the
other Loan  Documents  promptly upon receipt  thereof.  The Agent shall promptly
notify the Borrowers and the other Banks of each change in the Base Rate and the
effective date thereof.

        10.11  Banks in Their Individual Capacities.

        With respect to its Revolving  Credit  Commitment,  the Revolving Credit
Loans, the Swing Line Loan Commitment and the Swing Line Loan made by it and any
other  rights and  powers  given to it as a Bank  hereunder  or under any of the
other Loan Documents,  the Agent shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not the Agent, and
the term "Banks"  shall,  unless the context  otherwise  indicates,  include the
Agent in its  individual  capacity.  PNC Bank and its Affiliates and each of the
Banks and their respective Affiliates may, without liability to account,  except
as  prohibited  herein,  make loans to, accept deposits  from,  discount  drafts
for, act as trustee under  indentures  of, and  generally engage in any  kind of
banking  or  trust business with, the Loan Parties and their Affiliates,  in the
case of the Agent, as though it were not acting as Agent  hereunder  and in the 
case of each Bank,  as though  such  Bank were not a Bank hereunder.  The Banks
acknowledge that,  pursuant to such activities,  the Agent or its Affiliates may
(i) receive information  regarding the Loan Parties (including  information that
may be subject  to  confidentiality  obligations in favor of the Loan   Parties)
and  acknowledge  that the Agent  shall   be under no obligation to provide such
information   to  them, and (ii) accept fees and other  consideration   from the
Loan  Parties  for  services  in  connection  with  this Agreement and otherwise
without having to account for the same to the Banks.

        10.12  Holders of Notes.

        The Agent may deem and treat any payee of any Note as the owner  thereof
for all purposes  hereof  unless and until written  notice of the  assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent  of any  Person who at the time of making  such  request or giving  such
authority or consent is the holder of any Note shall be  conclusive  and binding
on any subsequent holder,  transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.

        10.13  Equalization of Banks.

        The Banks and the holders of any participations in any Notes agree among
themselves  that,  with respect to all amounts  received by any Bank or any such
holder for  application on any  Obligation  hereunder or under any Note or under
any such  participation,  whether received by voluntary payment,  by realization
upon  security,  by the  exercise of the right of set-off or banker's  lien,  by
counterclaim or by any other non-pro rata source,  equitable  adjustment will be
made in the manner stated in the following sentence so that, in effect, all such
excess  amounts  will be shared  ratably  among the  Banks and such  holders  in
proportion to their  interests in payments under the Notes,  except as otherwise
provided in Section 4.5.3 [Agent's and Bank's Rights],  5.4.2  [Replacement of a
Bank] or 5.6 [Additional  Compensation in Certain  Circumstances].  The Banks or
any such holder  receiving any such amount shall  purchase for cash from each of
the other Banks an interest in such Bank's  Loans in such amount as shall result
in a ratable  participation  by the Banks and each such holder in the  aggregate
unpaid  amount  under the  Notes,  provided  that if all or any  portion of such
excess  amount is thereafter  recovered  from the Bank or the holder making such
purchase,  such purchase  shall be rescinded and the purchase  price restored to
the extent of such recovery,  together with interest or other  amounts,  if any,
required  by law  (including  court  order) to be paid by the Bank or the holder
making such purchase.

                                      -75-
<PAGE>


        10.14  Successor Agent.

        The  Agent  (i) may  resign  as  Agent  or  (ii)  shall  resign  if such
resignation  is  requested by the  Required  Banks (if the Agent is a Bank,  the
Agent's Loans and its Commitment shall be considered in determining  whether the
Required  Banks have requested  such  resignation)  or required by Section 5.4.2
[Replacement  of a Bank],  in either case of (i) or (ii) by giving not less than
thirty (30)  days'  prior written  notice  to  the Borrower. If  the Agent shall
resign under this Agreement, then  either (a) the  Required Banks  shall appoint
from among the Banks a successor  agent for the Banks, subject to the consent of
the  Borrower,  such  consent  not  to  be unreasonably   withheld,  or (b) if a
successor agent shall not be so appointed  and approved  within the thirty (30) 
day period following  the Agent's  notice to the Banks of its  resignation, then
the Agent shall appoint, with the consent of the Borrowers, such consent not to 
be unreasonably withheld, a successor agent who shall serve as Agent until such 
time as the Required Banks appoint and the Borrowers' consent to the appointment
of a successor agent. Upon its appointment pursuant to either clause (a) or (b) 
above, such successor agent shall  succeed to the  rights,  powers  and  duties 
of the  Agent,  and the term "Agent" shall mean such successor agent, effective 
upon its appointment, and the former Agent's  rights, powers and duties as Agent
shall  be  terminated  without  any other or further act or deed on the part  of
such former Agent or any of the parties to this Agreement. After the resignation
of any Agent  hereunder,  the provisions  of this  Section 10 shall inure to the
benefit of such former  Agent and such former  Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was an Agent under this Agreement.

        10.15  Agent's Fee.

        The Borrower  shall pay to the Agent a  nonrefundable  fee (the "Agent's
Fee") under the terms of a letter (the "Agent's Letter") dated ___________, 1998
between the Borrower and Agent, as amended from time to time.

        10.16  Availability of Funds.

        The Agent may assume  that each Bank has made or will make the  proceeds
of a Loan  available to the Agent  unless the Agent shall have been  notified by
such Bank on or before the later of (1) the close of  Business  on the  Business
Day  preceding  the  Borrowing  Date with  respect to such Loan or two (2) hours
before the time on which the Agent  actually  funds the proceeds of such Loan to
the  Borrowers  (whether  using its own funds  pursuant to this Section 10.16 or
using  proceeds  deposited  with the Agent by the Banks and whether such funding
occurs  before or after the time on which  Banks are  required  to  deposit  the
proceeds  of such Loan with the Agent).  The Agent may,  in  reliance  upon such
assumption  (but shall not be required  to),  make  available to the Borrowers a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank, the Agent shall be entitled to recover such amount on
demand from such Bank (or, if such Bank fails to pay such amount  forthwith upon
such demand from the Borrower)  together with  interest  thereon,  in respect of
each day during the period commencing on the date such amount was made available
to the  Borrowers and ending on the date the Agent  recovers  such amount,  at a
rate per annum equal to (i) the Federal  Funds  Effective  Rate during the first
three (3) days after such interest shall begin to accrue and (ii) the applicable
interest rate in respect of such Loan after the end of such three-day period.

                                      -76-

<PAGE>



        10.17  Calculations.

        In the  absence of gross  negligence  or willful  misconduct,  the Agent
shall not be liable for any error in  computing  the amount  payable to any Bank
whether  in respect of the  Loans,  fees or any other  amounts  due to the Banks
under this  Agreement.  In the event an error in computing any amount payable to
any Bank is made,  the  Agent,  the  Borrowers  and each  affected  Bank  shall,
forthwith  upon  discovery  of such  error,  make such  adjustments  as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.

        10.18  Beneficiaries.

        Except as expressly  provided herein,  the provisions of this Section 10
are solely for the  benefit  of the Agent and the  Banks,  and the Loan  Parties
shall not have any rights to rely on or enforce any of the provisions hereof. In
performing  its functions and duties under this  Agreement,  the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
of the Loan Parties.

                                11. MISCELLANEOUS

        11.1   Modifications, Amendments or Waivers.

        With the written  consent of the Required  Banks,  the Agent,  acting on
behalf of all the Banks,  and the Borrower,  on behalf of the Loan Parties,  may
from time to time  enter  into  written  agreements  amending  or  changing  any
provision  of this  Agreement  or any other Loan  Document  or the rights of the
Banks or the Loan Parties hereunder or thereunder,  or may grant written waivers
or consents to a departure from the due  performance  of the  Obligations of the
Loan Parties  hereunder or thereunder,  including,  without  limitation,  making
modifications to the requirements of Section 8.1 [Affirmative Covenants] and 8.2
[Negative  Covenants].  Any such  agreement,  waiver or  consent  made with such
written  consent  shall be effective to bind all the Banks and the Loan Parties;
provided, that, without the written consent of all the Banks, no such agreement,
waiver or consent may be made which will:

               11.1.1 Increase of Commitment; Extension or Expiration Date.

                                      -77-
<PAGE>


               Increase  the  amount of  the Revolving  Credit Commitment of any
Bank hereunder or extend the Expiration Date;

               11.1.2 Extension  of  Payment; Reduction of Principal Interest or
Fees; Modification of Terms of Payment.

               Whether  or not any Loans are  outstanding,  extend  the time for
payment of  principal  or  interest of any Loan  (excluding  the due date of any
mandatory  prepayment  of a  Loan  or  any  mandatory  Commitment  reduction  in
connection  with such a  mandatory  prepayment  hereunder  except for  mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal  amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to  any  Bank, or otherwise  affect the terms of payment of the  principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;

               11.1.3 Miscellaneous.

               Amend   Section  5.2  [Pro  Rata   Treatment   of  Banks],   10.6
[Exculpatory  Provisions;  Limitation of Liability]  or 10.13  [Equalization  of
Banks]  or this  Section  11.1,  alter  any  provision  regarding  the pro  rata
treatment of the Banks,  change the definition of Required  Banks, or change any
requirement  providing  for the Banks or the  Required  Banks to  authorize  the
taking of any action hereunder;  provided, further, that no agreement, waiver or
consent which would modify the interests,  rights or obligations of the Agent in
its  capacity as Agent or as the issuer of Letters of Credit  shall be effective
without the written consent of the Agent.

        11.2   No Implied Waivers; Cumulative Remedies; Writing Required.

        No course of dealing and no delay or failure of the Agent or any Bank in
exercising  any right,  power,  remedy or privilege  under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver  thereof,  nor shall any single or partial  exercise  thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege  preclude any further exercise  thereof or of any other right,  power,
remedy or  privilege.  The rights and  remedies of the Agent and the Banks under
this  Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies  which they would  otherwise  have.  Any waiver,  permit,
consent  or  approval  of any kind or  character  on the part of any Bank of any
breach or default  under this  Agreement or any such waiver of any  provision or
condition of this  Agreement  must be in writing and shall be effective  only to
the extent specifically set forth in such writing.

        11.3 Reimbursement and Indemnification of Banks by the Borrowers; Taxes.

        The Borrowers jointly and severally agree unconditionally upon demand to
pay or reimburse to each Bank (other than the Agent,  as to which the Borrowers'
Obligations are set forth in Section 10.5  [Reimbursement and Indemnification of
Agent by the Borrower]) and to save such Bank harmless against (i) liability for
the payment of all reasonable  out-of-pocket  costs,  expenses and disbursements
(including fees and expenses of counsel for each Bank except with respect to (a)
and (b) below),  incurred by such Bank (a) in connection with the administration
and interpretation of this Agreement,  and other instruments and documents to be
delivered  hereunder,  (b)  relating  to any  amendments,  waivers  or  consents
pursuant to the provisions  hereof,  (c) in connection  with the  enforcement of
this  Agreement  or any other  Loan  Document,  or  collection  of  amounts  due
hereunder or thereunder or the proof and allowability of any claim arising under
this Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings  or  otherwise,  and  (d)  in any  workout  or  restructuring  or in
connection with the protection,  preservation, exercise or enforcement of any of
the terms hereof or of any rights  hereunder or under any other Loan Document or
in connection with any  foreclosure,  collection or bankruptcy  proceedings,  or
(ii) all liabilities,

                                      -78-

<PAGE>



obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind or nature  whatsoever which may be imposed
on,  incurred by or asserted  against such Bank, in its capacity as such, in any
way relating to or arising out of this  Agreement or any other Loan Documents or
any action taken or omitted by such Bank hereunder or thereunder,  provided that
the  Borrowers  shall  not be  liable  for  any  portion  of  such  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or  disbursements  (A) if the same  results  from  such  Bank's  gross
negligence or willful misconduct,  or (B) if the Borrowers were not given notice
of the subject claim and the opportunity to participate in the defense  thereof,
at its expense (except that the Borrowers shall remain liable to the extent such
failure to give notice does not result in a loss to the Borrower), or (C) if the
same results from a compromise or settlement  agreement entered into without the
consent of the Borrower,  which shall not be  unreasonably  withheld.  The Banks
will attempt to minimize  the fees and  expenses of legal  counsel for the Banks
which are subject to reimbursement by the Borrowers hereunder by considering the
usage of one law firm to represent the Banks and the Agent if appropriate  under
the  circumstances.  The  Borrowers  agree  unconditionally  to pay  all  stamp,
document,  transfer,  recording or filing taxes or fees and similar  impositions
now or hereafter determined by the Agent or any Bank to be payable in connection
with  this  Agreement  or any  other  Loan  Document,  and the  Borrowers  agree
unconditionally  to save the Agent and the Banks  harmless  from and against any
and all  present or future  claims,  liabilities  or losses  with  respect to or
resulting  from any  omission to pay or delay in paying any such taxes,  fees or
impositions.

        11.4   Holidays.

        Whenever payment of a Loan to be made or taken hereunder shall be due on
a day which is not a Business Day such payment shall be due on the next Business
Day and such extension of time shall be included in computing interest and fees,
except that the Loans shall be due on the Business Day preceding the  Expiration
Date if the  Expiration  Date is not a Business  Day.  Whenever  any  payment or
action to be made or taken hereunder  (other than payment of the Loans) shall be
stated to be due on a day which is not a Business  Day,  such  payment or action
shall be made or taken on the next following Business Day (except as provided in
Section  4.3  [Interest  Periods]  with  respect to Interest  Periods  under the
Euro-Rate Option), and such extension of time shall not be included in computing
interest or fees, if any, in connection with such payment or action.

        11.5   Funding by Branch, Subsidiary or Affiliate.

               11.5.1 Notional Funding.

                                      -79-
<PAGE>


               Each Bank shall have the right from time to time,  without notice
to the  Borrower,  to deem any branch,  Subsidiary  or Affiliate  (which for the
purposes of this Section 11.5 shall mean any corporation or association which is
directly or  indirectly  controlled  by or is under  direct or  indirect  common
control  with any  corporation  or  association  which  directly  or  indirectly
controls such Bank) of such Bank to have made,  maintained or funded any Loan to
which the  Euro-Rate  Option  applies  at any time,  provided  that  immediately
following (on the assumption  that a payment were then due from the Borrowers to
such other office), and as a result of such change, the Borrowers would not
be under any greater  financial  obligation  pursuant to Section 5.6 [Additional
Compensation in Certain Circumstances] than it would have been in the absence of
such  change.  Notional  funding  offices may be  selected by each Bank  without
regard to such Bank's actual methods of making, maintaining or funding the Loans
or any sources of funding actually used by or available to such Bank.

               11.5.2 Actual Funding.

               Each  Bank  shall  have the  right  from  time to time to make or
maintain any Loan by  arranging  for a branch,  Subsidiary  or Affiliate of such
Bank to make or maintain  such Loan subject to the last sentence of this Section
11.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or maintain
any part of the Loans  hereunder,  all terms and  conditions  of this  Agreement
shall,  except where the context clearly  requires  otherwise,  be applicable to
such  part of the  Loans  to the  same  extent  as if such  Loans  were  made or
maintained by such Bank,  but in no event shall any Bank's use of such a branch,
Subsidiary  or  Affiliate  to make or maintain  any part of the Loans  hereunder
cause such Bank or such  branch,  Subsidiary  or  Affiliate to incur any cost or
expenses payable by the Borrowers  hereunder or require the Borrowers to pay any
other  compensation  to any Bank  (including  any  expenses  incurred or payable
pursuant  to Section 5.6  [Additional  Compensation  in Certain  Circumstances])
which would otherwise not be incurred.

        11.6   Notices.

        All notices, requests,  demands, directions and other communications (as
used in this Section 11.6,  collectively  referred to as "notices")  given to or
made upon any party hereto under the  provisions of this  Agreement  shall be by
telephone  or in writing  (including  telex or facsimile  communication)  unless
otherwise  expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the  respective  parties at the  addresses and numbers set forth
under their respective names on Schedule 1.1(B) hereof or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall,  except as otherwise  expressly herein provided,  be effective (a) in the
case of telex or facsimile,  when received,  (b) in the case of hand-  delivered
notice,  when  hand-delivered,  (c) in the case of telephone,  when  telephoned,
provided,  however,  that in order to be effective,  telephonic  notices must be
confirmed  in writing no later than the next day by letter,  facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mail with first-class  postage  prepaid,  return receipt  requested,  and (e) if
given by any other means (including by air courier),  when delivered;  provided,
that notices to the Agent shall not be effective until received. Any Bank giving
any notice to any Loan Party  shall  simultaneously  send a copy  thereof to the
Agent,  and the Agent shall promptly notify the other Banks of the receipt by it
of any such notice.
                                      -80-

<PAGE>


        11.7   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  an   other 
jurisdiction  or the  remaining  provisions  hereof in any jurisdiction.

        11.8   Governing Law.

        Each Letter of Credit and  Section  2.9  [Letter of Credit  Subfacility]
shall be subject to the Uniform  Customs and  Practice for  Documentary  Credits
(1993 Revision),  International  Chamber of Commerce Publication No. 500, as the
same may be  revised  or  amended  from  time to  time,  and to the  extent  not
inconsistent  therewith,  the  internal  laws of the  Commonwealth  of  Kentucky
without  regard to its  conflict  of laws  principles  and the  balance  of this
Agreement shall be deemed to be a contract under the Laws of the Commonwealth of
Kentucky and for all purposes shall be governed by and construed and enforced in
accordance with the internal laws of the Commonwealth of Kentucky without regard
to its conflict of laws principles.

        11.9   No Prior Understanding.

        This  Agreement  and  the  other  Loan  Documents  supersede  all  prior
understandings  and  agreements,  whether  written or oral,  between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.

        11.10  Duration; Survival.

        All  representations and warranties of the Loan Parties contained herein
or made in connection herewith shall survive the making of Loans and issuance of
Letters of Credit and shall not be waived by the  execution and delivery of this
Agreement,  any  investigation  by the Agent or the Banks,  the making of Loans,
issuance of Letters of Credit,  or payment in full of the Loans.  All  covenants
and  agreements  of the Loan  Parties  contained  in Sections  8.1  [Affirmative
Covenants],  8.2 [Negative  Covenants] and 8.3 [Reporting  Requirements]  herein
shall  continue  in full force and effect from and after the date hereof so long
as the  Borrowers  may borrow or request  Letters of Credit  hereunder and until
termination of the  Commitments  and payment in full of the Loans and expiration
or  termination  of all Letters of Credit.  All covenants and  agreements of the
Borrowers  contained  herein  relating  to the payment of  principal,  interest,
premiums,  additional  compensation or expenses and  indemnification,  including
those  set  forth  in  the  Notes,   Section  5  [Payments]  and  Sections  10.5
[Reimbursement   and   Indemnification   of   Agent  by  the   Borrower],   10.7
[Reimbursement   and   Indemnification   of  Agent  by  the   Banks]   and  11.3
[Reimbursement  and  Indemnification  of Banks by the  Borrower],  shall survive
payment in full of the Loans, expiration or termination of the Letters of Credit
and termination of the Commitments.

        11.11  Successors and Assigns.

               (i) This  Agreement  shall be binding upon and shall inure to the
benefit  of the  Banks,  the  Agent,  the  Loan  Parties  and  their  respective
successors  and  assigns,  except  that none of the Loan  Parties  may assign or
transfer any of its rights and Obligations hereunder or any interest

                                      -81-

<PAGE>



herein.   Each  Bank  may,  at  its  own  cost,  make  assignments  of  or  sell
participations in all or any part of its Commitments and the Loans made by it to
one or more banks or other entities, subject to the consent of the Borrowers and
the Agent with  respect to any  assignee,  such  consent not to be  unreasonably
withheld, provided that (1) no consent of the Borrowers shall be required (A) if
an  Event  of  Default  exists  and is  continuing,  or (B)  in the  case  of an
assignment by a Bank to an Affiliate of such Bank,  and (2) any  assignment by a
Bank to a Person other than an Affiliate of such Bank may not be made in amounts
less than the  lesser of  $10,000,000  or the  amount  of the  assigning  Bank's
Commitment. In the case of an assignment,  upon receipt by the Agent of the duly
executed and delivered Assignment and Assumption  Agreement,  the assignee shall
have, to the extent of such assignment (unless otherwise provided therein),  the
same  rights,  benefits  and  obligations  as it  would  have  if it had  been a
signatory Bank hereunder,  the Commitments  shall be adjusted  accordingly,  and
upon  surrender  of any Note subject to such  assignment,  the  Borrowers  shall
execute and deliver a new Note to the  assignee in an amount equal to the amount
of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note
to the  assigning  Bank in an amount equal to the  Revolving  Credit  Commitment
retained by it hereunder. Any Bank which assigns any or all of its Commitment or
Loans to a Person  other than an  Affiliate  of such Bank and not the  Borrowers
shall  pay to the  Agent a  service  fee in the  amount  of  $2,000.00  for each
assignment. In the case of a participation,  the participant shall only have the
rights  specified in Section 9.2.3 [Set-off] (the  participant's  rights against
such  Bank in  respect  of such  participation  to be  those  set  forth  in the
agreement executed by such Bank in favor of the participant relating thereto and
not to include  any voting  rights  except  with  respect to changes of the type
referenced in Sections 11.1.1 [Increase of Commitment,  Etc.], 11.1.2 [Extension
of Payment,  Etc.], all of such Bank's  obligations  under this Agreement or any
other Loan Document shall remain unchanged,  and all amounts payable by any Loan
Party  hereunder or thereunder  shall be determined as if such Bank had not sold
such participation.

        Except when an Event of Default and/or an Unmatured Default has occurred
and is  continuing,  the  Borrowers may suggest from time to time that the Banks
consider  as  a  possible   assignee  and/or   participant   certain   financial
institutions  named by the  Borrowers if and when any of the Banks  exercise any
right or rights of assignment  and/or  participation  under this  Section.  Upon
receiving a written  notice from the Borrowers  specifying one or more financial
institutions  as a proposed  assignee and/or  participant any Bank(s)  otherwise
proposing or considering an assignment and/or  participation  under this Section
shall (1) meet with the Borrowers at a time  reasonably  convenient to that Bank
(or those Banks) and the  Borrowers,  to discuss the  financial  institution  or
institutions   the   Borrowers   suggested,   and  (2)  consider  the  financial
institutions suggested by the Borrowers.  Nonetheless, such Bank(s) shall not be
obliged to assign or participate  any interest in the Loans and/or the Revolving
Credit.  Rather,  such  Bank  will be  entitled  to make  such  decision  in its
reasonable  discretion.  In any event,  all of the terms,  conditions  and other
provisions  of  any  such  assignment  and/or  participation  would  have  to be
satisfactory to such Bank and the Agent.

               (ii) Any assignee or participant which is not incorporated  under
the Laws of the United States of America or a state thereof shall deliver to the
Borrowers and the Agent the form of certificate  described in Section 11.17 [Tax
Withholding Clause] relating to federal income tax

                                      -82-

<PAGE>



withholding. Each Bank may furnish any publicly available information concerning
any Loan Party or its Subsidiaries and any other information concerning any Loan
Party or its  Subsidiaries  in the  possession of such Bank from time to time to
assignees and participants  (including  prospective  assignees or participants),
provided  that  such  assignees  and  participants  agree  to be  bound  by  the
provisions of Section 11.12 [Confidentiality].

               (iii) Notwithstanding any other provision in this Agreement,  any
Bank may at any time  pledge or grant a security  interest in all or any portion
of its rights under this Agreement, its Note and the other Loan Documents to any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section  203.14  without notice to or consent of the Borrowers
or the Agent.  No such pledge or grant of a security  interest shall release the
transferor Bank of its obligations hereunder or under any other Loan Document.

        11.12  Confidentiality.

               11.12.1       General.

               The Agent  and the  Banks  each  agree to keep  confidential  all
information  obtained from any Loan Party or its Subsidiaries which is nonpublic
and  confidential  or  proprietary  in nature  (including  any  information  the
Borrowers  specifically  designates as confidential),  except as provided below,
and to use such information only in connection with their respective  capacities
under this Agreement and for the purposes contemplated hereby. The Agent and the
Banks shall be  permitted  to disclose  such  information  (i) to outside  legal
counsel,  accountants  and  other  professional  advisors  who need to know such
information  in  connection  with the  administration  and  enforcement  of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii)  subject  to  the  confidentiality   provisions  herein  to  assignees  and
participants as contemplated by Section 11.11 [Successors and Assigns], (iii) to
the extent  requested by any bank  regulatory  authority  or, with notice to the
Borrower,  as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising out
of the transactions  contemplated by this Agreement, (iv) if it becomes publicly
available  other  than as a result  of a breach  of this  Agreement  or  becomes
available from a source not known to be subject to confidentiality restrictions,
or (v) if the Borrowers shall have consented to such disclosure.

               11.12.2       Sharing Information With Affiliates of the Banks.

               Each Loan  Party  acknowledges  that from time to time  financial
advisory,  investment  banking and other  services may be offered or provided to
the  Borrowers  or one or  more  of its  Affiliates  (in  connection  with  this
Agreement or otherwise) by any Bank or by one or more Subsidiaries or Affiliates
of such Bank and each of the Loan Parties hereby  authorizes  each Bank to share
any information  delivered to such Bank by such Loan Party and its  Subsidiaries
pursuant to this  Agreement,  or in connection with the decision of such Bank to
enter into this Agreement,  to any such Subsidiary or Affiliate of such Bank, it
being  understood  that any such  Subsidiary or Affiliate of any Bank  receiving
such   information   shall  be  bound  by  the   provisions   of  Section  11.12
[Confidentiality]  as if it  were a Bank  hereunder.  Such  Authorization  shall
survive the repayment of

                                      -83-

<PAGE>



the Loans and other Obligations and the termination of the Commitments.

        11.13  Counterparts.

        (a) This Agreement may be signed by each party upon a separate copy, and
in such case one  counterpart of this Agreement  shall consist of enough of such
copies to reflect the signature of each party.

        (b) This Agreement may be executed in two or more counterparts,  each of
which shall be deemed an original, and it shall not be necessary in making proof
of this  Agreement or the terms  thereof to produce or account for more than one
such counterparts.

        11.14  Agent's or Bank's Consent.

        Whenever  the  Agent's or any Bank's  consent is required to be obtained
under this  Agreement  or any of the other Loan  Documents as a condition to any
action,  inaction,  condition  or  event,  the  Agent  and  each  Bank  shall be
authorized to give or withhold such consent in its sole and absolute  discretion
and to  condition  its consent  upon the giving of  additional  collateral,  the
payment of money or any other matter.

        11.15  Exceptions.

        The representations,  warranties and covenants contained herein shall be
independent of each other, and no exception to any  representation,  warranty or
covenant  shall  be  deemed  to be an  exception  to any  other  representation,
warranty or covenant contained herein unless expressly  provided,  nor shall any
such  exceptions  be deemed to permit  any action or  omission  that would be in
contravention of applicable Law.

        11.16  CONSENT TO FORUM; WAIVER OF JURY TRIAL.

        EACH  LOAN  PARTY  HEREBY  IRREVOCABLY   CONSENTS  TO  THE  NONEXCLUSIVE
JURISDICTION  OF THE CIRCUIT  COURT OF  JEFFERSON  COUNTY AND THE UNITED  STATES
DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY, AND WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS  THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY  CERTIFIED  OR  REGISTERED  MAIL  DIRECTED  TO SUCH  LOAN  PARTY  AT THE
ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT THEREOF.

        EACH LOAN PARTY WAIVES ANY  OBJECTION TO  JURISDICTION  AND VENUE OF ANY
ACTION  INSTITUTED  AGAINST IT AS  PROVIDED  HEREIN AND AGREES NOT TO ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.

        EACH LOAN PARTY HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY

                                      -84-

<PAGE>



TRIAL OF ANY  CLAIM  OR  CAUSE  OF  ACTION  BASED  UPON OR  ARISING  OUT OF THIS
AGREEMENT,  THE REVOLVING  CREDIT  NOTES,  THE SWING LINE NOTE OR THE OTHER LOAN
DOCUMENTS.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE  ALL-ENCOMPASSING  OF ANY
AND ALL  DISPUTES  THAT MAY BE FILED IN ANY COURT  THAT  RELATE  TO THE  SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS,  BREACH OF DUTY CLAIMS,  AND ALL OTHER COMMON LAW AND STATUTORY  CLAIMS.
THE LOAN PARTIES  ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH
SUCH PARTY TO ENTER INTO A BUSINESS  RELATIONSHIP,  AND THAT EACH LOAN PARTY HAS
ALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE DEALINGS WITH THE OTHERS. THE
LOAN PARTIES  FURTHER  WARRANT AND REPRESENT  THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL,  AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL  RIGHTS  FOLLOWING   CONSULTATION  WITH  LEGAL  COUNSEL.  THIS  WAIVER  IS
IRREVOCABLE,  MEANING THAT IT MAY NOT BE MODIFIED  EITHER  ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS, SUPPLEMENTS
OR MODIFICATIONS  TO THIS AGREEMENT,  THE REVOLVING CREDIT NOTES, THE SWING LINE
NOTE OR THE OTHER LOAN DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

        11.17  Tax Withholding Clause.

        Each Bank or assignee or participant of a Bank that is not  incorporated
under the Laws of the United States of America or a state thereof agrees that it
will  deliver  to each of the  Borrowers  and the Agent  two (2) duly  completed
copies of the following: (i) Internal Revenue Service Form W-9, 4224 or 1001, or
other  applicable form prescribed by the Internal  Revenue  Service,  certifying
that such Bank,  assignee or participant  is entitled to receive  payments under
this Agreement and the other Loan Documents  without deduction or withholding of
any United States federal  income taxes,  or is subject to such tax at a reduced
rate under an applicable tax treaty,  or (ii) Internal  Revenue Service Form W-8
or other applicable form or a certificate of such Bank,  assignee or participant
indicating  that no such  exemption or reduced rate is allowable with respect to
such payments.  Each Bank,  assignee or  participant  required to deliver to the
Borrowers and the Agent a form or certificate pursuant to the preceding sentence
shall  deliver  such form or  certificate  as follows:  (A) each Bank which is a
party hereto on the Closing Date shall deliver such form or certificate at least
five (5) Business Days prior to the first date on which any interest or fees are
payable by the  Borrowers  hereunder  for the  account  of such  Bank;  (B) each
assignee or participant shall deliver such form or certificate at least five (5)
Business Days before the  effective  date of such  assignment  or  participation
(unless  the  Agent  in its  sole  discretion  shall  permit  such  assignee  or
participant to deliver such form or certificate less than five (5) Business Days
before  such  date in which  case it shall be due on the date  specified  by the
Agent).  Each Bank,  assignee or participant  which so delivers a Form W-8, W-9,
4224 or 1001 further undertakes to deliver to each of the Borrowers and

                                      -85-

<PAGE>



the Agent two (2)  additional  copies of such form (or a  successor  form) on or
before  the date  that  such  form  expires  or  becomes  obsolete  or after the
occurrence of any event  requiring a change in the most recent form so delivered
by it, and such amendments  thereto or extensions or renewals  thereof as may be
reasonably  requested by the Borrowers or the Agent, either certifying that such
Bank,  assignee  or  participant  is  entitled  to receive  payments  under this
Agreement and the other Loan Documents  without  deduction or withholding of any
United States  federal  income taxes or is subject to such tax at a reduced rate
under an applicable tax treaty or stating that no such exemption or reduced rate
is  allowable.  The Agent shall be entitled to withhold  United  States  federal
income  taxes  at the  full  withholding  rate  unless  the  Bank,  assignee  or
participant  establishes an exemption or that it is subject to a reduced rate as
established pursuant to the above provisions.

        11.18  Joinder of New Subsidiaries.

        Any Subsidiary of the Borrowers which is required to join this Agreement
as a Borrower pursuant to Section 8.2.5 [Liquidations,  Mergers, Consolidations,
Acquisitions] and/or 8.2.8 [Subsidiaries, Partnerships and Joint Ventures] shall
execute and deliver to the Agent (i) a Joinder  Agreement in  substantially  the
form attached hereto as Exhibit  1.1(G)(1)  pursuant to which it shall join as a
Borrower  each of the  documents to which the  Borrowers  are parties;  and (ii)
documents  in the forms  described  in Section  7.1 [First  Loans and Letters of
Credit] modified as appropriate to relate to such  Subsidiary.  The Loan Parties
shall deliver such Joinder  Agreement 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 an  acquisition  agreement  in the case of a  Permitted
Acquisition.

        11.19  No Joint Venture.

        Notwithstanding  anything to the contrary  herein  contained or implied,
neither the Agent, the Guarantor,  nor the other Lenders, by this Agreement,  or
by any  action  pursuant  hereto,  shall not be deemed to be a partner  of, or a
joint venturer with any other party.

        11.20  Indemnification.

        The  Borrowers  agree to  indemnify  the  Agent,  the  Banks,  and their
permitted successors and assigns (including any assignee and/or purchaser of any
participation  in the  Loans),  and their  directors,  officers  and  employees,
against all losses, claims, costs, damages, liabilities and expenses, including,
without  limitation,  all expense of  litigation  or  preparation  therefore  (a
"Loss"),  which it may pay or incur in  connection  with or  arising  out of the
making of any Loans  hereunder  and/or the operations of the Borrowers.  Without
limiting the generality of the foregoing,  the Borrowers  agree to indemnify and
hold harmless the Agent, the Banks and their  successors and assigns  (including
any purchaser of a participation in the Loans) and their directors, officers and
employees  from  and  against  any  Loss  which  any of them may pay or incur in
investigating,   preparing  for,  defending  against,   or  providing  evidence,
producing  documents or taking any other  action in respect of any  commenced or
threatened   litigation,   administrative   proceeding   or   investigation   or
investigation

                                      -86-

<PAGE>



under any federal, state and/or local law, rule or regulation.

        11.21  Survival of Covenants.

        All covenants,  agreements,  warranties and representations  made by the
Borrowers  herein shall  survive the making of the Loans and any  modifications,
extensions  or renewals  thereof,  and the  execution  and  delivery of the Loan
Documents.

        11.22  No Course of Dealing.

        No course of dealing  between the  Borrowers  and the Agent or the Banks
shall operate as a waiver of any of the Agent's or the other Banks' rights under
any of the Loan Documents.

        11.23  Time of the Essence.

        Time shall be of the essence in the performance of all of the Borrowers'
obligations under the Loan Documents.

        11.24  Further Assurances.

        The Borrowers shall sign such documents or instruments  and/or take such
other action as the Agent and the Banks may reasonably request from time to time
more  fully to create,  perfect,  continue,  maintain  or  terminate  the rights
intended to be granted or created pursuant to this Agreement.

        11.25  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.

        11.26  Entire Agreement.

        This Agreement,  the exhibits and annexes hereto,  and the documents and
instruments  referred to herein  constitute the entire  agreement of the parties
with  respect  to  the  subject   matter   hereof,   and   supersede  all  prior
understandings   with  respect  to  the  subject  matter   hereof.   No  change,
modification,  addition  or  termination  of this  Agreement  or any of the Loan
Documents shall be enforceable unless in writing and signed by the party against
whom enforcement is sought.

        11.27  Joint and Several Liability; Certain Limitations.

        The  obligations of all of the Loan Parties under the Loan Documents are
joint and several,  provided that the  obligations  of each Borrower  other than
Churchill  Downs  Incorporated,  and each  Subsidiary  that  becomes a  Borrower
pursuant  to  Section  11.18  shall be  limited  to an amount  not to exceed the
greater  of  (1)  the  aggregate   benefit  received  by  such  Borrower  and/or
Subsidiary;  (2)  ninety-five  percent  (95%) of the net worth of that  Borrower
and/or Subsidiary on the date it becomes

                                      -87-

<PAGE>



a party to this Agreement;  or (3) ninety-five percent (95%) of the net worth of
that Borrower and/or Subsidiary as of the date of an Event of Default leading to
the exercise of remedies by the Banks.  The foregoing  limitations  shall not be
applicable  to Churchill  Downs  Incorporated,  whose  obligations  shall not be
limited.

        11.29  Acknowledgment.

        The  Borrowers  acknowledge  that  they  have  received  a copy  of this
Agreement and each of the other Loan Documents, as fully executed by the parties
thereto.  The  Borrowers  acknowledge  that the  Borrowers  (a) have  READ  THIS
AGREEMENT  AND THE OTHER LOAN  DOCUMENTS  OR HAVE  CAUSED SUCH  DOCUMENTS  TO BE
EXAMINED BY THE BORROWERS' OR THE GUARANTORS'  REPRESENTATIVES OR ADVISORS;  (b)
are thoroughly familiar with the transactions contemplated in this Agreement and
the other Loan Documents; and (c) have had the opportunity to ask such questions
to  representatives  of the Banks, and receive answers  thereto,  concerning the
terms and conditions of the transactions  contemplated in this Agreement and the
other Loan Documents as the Borrowers  deem  necessary in connection  with their
decision to enter into this Agreement.

        IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized,  have executed this Agreement as of the date set out in the preamble
of this Agreement.



                                            CHURCHILL DOWNS INCORPORATED

                                            By _______________________________

                                            Title: _____________________________

                                            Date: _____________________________



                                            CHURCHILL DOWNS MANAGEMENT
                                            COMPANY

                                            By _________________________________

                                            Title:______________________________

                                            Date: ______________________________


                                      -88-
<PAGE>



                                            CHURCHILL DOWNS INVESTMENT
                                            COMPANY

                                            By ________________________________

                                            Title: _____________________________

                                            Date: ______________________________



                                            RACING CORPORATION OF AMERICA

                                            By ________________________________

                                            Title: _____________________________

                                            Date: ______________________________



                                                    ELLIS PARK RACE COURSE, INC.

                                            By _______________________________

                                            Title: _____________________________

                                            Date: _____________________________

                                            PNC BANK, NATIONAL ASSOCIATION,
                                            individually and as Agent

                                            By ______________________________

                                            Title: ____________________________

                                            Date: _____________________________

                                            BANK ONE, KENTUCKY, NA

                                            By ________________________________

                                            Title: ___________________________
 
                                            Date: ______________________________



                                      -89-
<PAGE>



                                            STAR BANK, NATIONAL ASSOCIATION

                                            By ________________________________

                                            Title: _____________________________

                                            Date: ______________________________



                                            BANK OF LOUISVILLE
                                            By ______________________________

                                            Title: ____________________________

                                            Date: _____________________________



                                            THE CITIZENS NATIONAL BANK OF
                                            EVANSVILLE

                                            By ______________________________

                                            Title: ____________________________

                                            Date: _____________________________


                                            SUNTRUST BANK, NASHVILLE, N.A.

                                            By ______________________________

                                            Title: ____________________________

                                             Date: _____________________________



                                            WELLS FARGO BANK, N.A.

                                            By ______________________________

                                            Title: ____________________________

                                            Date: _____________________________

                                                                             
                                      -90-

<PAGE>



                                 SCHEDULE 1.1(B)

                 COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES

                                   Page 1 of 3

Part 1 - Commitments of Banks and Addresses for Notices to Banks


                                    Amount of
                                   Commitment
                                  for Revolving
                Bank               Credit Loans       Commitment  Ratable Share
PNC Bank, National Association

Citizens Plaza                      $30,000,000      $30,000,000            30%

500 West Jefferson Street

Louisville, KY 40202-2823

Attn: Susan C. Snyder

Telephone: (502) 581-3980

Facsimile: (502) 581-3355


PNC Bank, National Association

One PNC Plaza

249 5th Avenue

Pittsburgh, PA 15222

Attn: Arlene Ohler

Telephone: (412) 762-3627

Facsimile: (412) 762-8672


Bank One, Kentucky, NA

416 West Jefferson Street

Louisville, KY 40202

Attn: H. Joseph Brenner             $17,000,000      $17,000,000            17%


<PAGE>



Telephone: (502) 566-2789

Facsimile: (502) 566-2367

<PAGE>






Star Bank, NA

425 Walnut Street, M.L. 8160

Cincinnati, OH 45201-1038
                                    $17,000,000      $17,000,000            17%
Attn: Richard W. Neltner, V.P.

Telephone: (513) 632-4073

Facsimile: (513) 632-2068


Bank of Louisville

500 West Broadway

6th Floor

Louisville, KY 40202                 $9,000,000       $9,000,000             9%

Attn:  John Barr

Telephone: (502) 562-5823

Facsimile: (502) 562-5464


The Citizens National Bank of
Evansville

20 N.W. 3rd Street

Evansville, IN 47736
                                     $9,000,000       $9,000,000             9%
Attn:  Dwight Hamilton

Telephone: (812) 456-3394

Facsimile: (812) 456-3331



<PAGE>






SunTrust Bank, Nashville, N.A.

201 Fourth Avenue North

Nashville, TN 37219                  $9,000,000       $9,000,000             9%

Attn:  Scott T. Corley

Telephone: (615) 748-5715

Facsimile: (615) 748-5269


Wells Fargo Bank

3800 Howard Hughes Pkwy

4th Floor

Las Vegas, NV 89109                  $9,000,000       $9,000,000             9%

Attn: Kathy Stone

Telephone: (702) 791-6351

Facsimile: (702) 791-6365
        Total                      $100,000,000     $100,000,000           100%



<PAGE>



                                       SCHEDULE 1.1(B)



                        COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES



                                         Page 2 of 3



Part 2 - Addresses for Notices to Agent and Borrowers:



AGENT



Name:          PNC Bank, National Association



Address:       500 West Jefferson Street

               Louisville, KY 40202-2823

Attention:     Susan C. Snyder



Telephone:     (502) 581-3980



Facsimile:     (502) 581-3355














<PAGE>



BORROWERS:



Name:          Churchill Downs Incorporated


Address:       700 Central Avenue

               Louisville, KY 40208

Attention:     Robert L. Decker



Telephone:     (502) 636-4400


Telecopy:      (502) 636-4439





Name:          Churchill Downs Management Company


Address:       700 Central Avenue

               Louisville, KY 40208

Attention:     Robert L. Decker



Telephone:     (502) 636-4400


Telecopy:      (502) 636-4439






<PAGE>



                                       SCHEDULE 1.1(B)



                        COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES



                                         Page 3 of 3



Name:          Churchill Downs Investment Company


Address:       700 Central Avenue

               Louisville, KY 40208

Attention:     Robert L. Decker



Telephone:     (502) 636-4400


Telecopy:      (502) 636-4439





Name:          Racing Corporation of America


Address:       700 Central Avenue

               Louisville, KY 40208

Attention:     Robert L. Decker



Telephone:     (502) 636-4400


Telecopy:      (502) 636-4439




<PAGE>




Name:          Ellis Park Race Course, Inc.


Address:       700 Central Avenue

               Louisville, KY 40208

Attention:     Robert L. Decker



Telephone:     (502) 636-4400


Telecopy:      (502) 636-4439